Confidential Draft No. 3 as confidentially submitted to the U.S. Securities and Exchange Commission on February 17, 2023. This draft registration statement has not been publicly filed with the Securities and Exchange Commission and all information herein remains strictly confidential.

Registration No. 333-[●]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM F-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

XUHANG HOLDINGS LIMITED

(Exact name of registrant as specified in its charter)

Cayman Islands	7310	Not Applicable
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

Building 2, Shangtanghe 198 Cultural and Creative Park, 198 Shenban Road

Gongshu District, Hangzhou City, Zhejiang Province

The People’s Republic of China, 310000

+86-0571-88583100

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

[●]

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

With a Copy to:

Ying Li, Esq. Lisa Forcht, Esq. Hunter Taubman Fischer & Li LLC
950 Third Avenue, 19th Floor
New York, NY 10022
212-530-2206 David Danovitch, Esq. Angela Gomes, Esq. Sullivan & Worcester LLP 1633 Broadway New York, NY 10019 212-660-3060

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

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

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

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

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

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

Emerging growth company  ☒

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

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

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

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

SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED [●], 2023

[●] Ordinary Shares

XUHANG HOLDINGS LIMITED

This is an initial public offering on a firm commitment basis of our ordinary shares, par value US$0.002 per share (“Ordinary Shares”). Prior to this offering, there has been no public market for our Ordinary Shares. We expect the initial public offering price to be in the range of US$[●] to US$[●] per Ordinary Share. The offering is being made on a “firm commitment” basis by the underwriters. See “Underwriting.” We have reserved the symbol [●] for purposes of listing our Ordinary Shares on the Nasdaq Capital Market (“Nasdaq”) and plan to apply to list our Ordinary Shares on Nasdaq. At this time, Nasdaq has not yet approved our application to list our Ordinary Shares. The closing of this offering is conditioned upon Nasdaq’s final approval of our listing application, and there is no guarantee or assurance that our Ordinary Shares will be approved for listing on Nasdaq.

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

Unless otherwise stated, as used in this prospectus, the terms “we,” “us,” “our,” “Xuhang Cayman,” “our Company,” and the “Company” refer to XUHANG HOLDINGS LIMITED, a Cayman Islands exempted company; “Xuhang BVI” refers to XUHANG LTD, a company formed under the laws of the British Virgin Islands, which is wholly owned by Xuhang Cayman; “Xuhang HK” refers to XUHANG (HK) LIMITED, a Hong Kong corporation and a wholly owned subsidiary of Xuhang BVI; “Xuhang Network” refers to Hangzhou Xuhang Network Technology Co., Ltd., a limited liability company organized under the laws of the People’s Republic of China (the “PRC”), which is wholly owned by Xuhang HK; and the terms “Huzhou Yinzhiya” and “Wuhan Yinzhiya” refer to Huzhou Yinzhiya Network Technology Co., Ltd., and Wuhan Yinzhiya Network Technology Co., Ltd., respectively, both limited liability companies organized under the laws of the PRC that are wholly owned by Xuhang HK.

We are a holding company incorporated in the Cayman Islands with no material operations of our own and are not a Chinese operating company. As a result, we conduct a substantial majority of our operations through our operating entities established in the PRC. The Ordinary Shares offered in this prospectus are shares of the Cayman Islands holding company instead of shares of our operating entities in the PRC. Holders of our Ordinary Shares do not directly own any equity interests in our PRC subsidiaries, but will instead own shares of a Cayman Islands holding company. The Chinese regulatory authorities could disallow our corporate structure, which would likely result in a material change in our operations and/or a material change in the value of our Ordinary Shares, including that it could cause the value of our Ordinary Shares to significantly decline or become worthless. See “Risk Factors—Risks Relating to Doing Business in the PRC—Chinese regulatory authorities could disallow our holding company structure, which may result in a material change in our operations and/or a material change in the value of the securities we are registering for sale, including that it could cause the value of such securities to significantly decline or become worthless.”

We are subject to certain legal and operational risks associated with business operations of our PRC subsidiaries being based in China, which could cause the value of our securities to significantly decline or become worthless. Applicable PRC laws and regulations governing such current business operations are sometimes vague and uncertain, and as a result these risks may result in material changes in the operations of our PRC subsidiaries, significant depreciation or a complete loss of the value of our Ordinary Shares, or a complete hindrance of our ability to offer, or continue to offer, our securities to investors. Recently, the PRC government adopted a series of regulatory actions and issued statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. On December 28, 2021, 13 governmental departments of the PRC, including the Cyberspace Administration of China (the “CAC”), issued the Cybersecurity Review Measures, which became effective on February 15, 2022. As of the date of this prospectus, neither we nor our subsidiaries have been involved in any investigations on cybersecurity review initiated by any PRC regulatory authority, nor has any of them received any inquiry, notice, or sanction related to cybersecurity review under the Cybersecurity Review Measures. As confirmed by our PRC counsel, AllBright Law Offices Hangzhou Office (“AllBright”), we are not subject to cybersecurity review or network data security review by the CAC under the Cybersecurity Review Measures, or if the draft Regulations on the Network Data Security Administration (Draft for Comments) (the “Security Administration Draft”) are enacted as proposed, since our PRC subsidiaries are not critical information infrastructure operators (“CIIOs”) or online platform operators with personal information of more than one million users. See “Risk Factors—Risks Relating to Doing Business in the PRC—Recent greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our PRC subsidiaries’ business and our offering.” As of the date of this prospectus, neither we nor our subsidiaries have received any inquiry, notice, warning, or sanction regarding our overseas listing from the China Securities Regulatory Commission (the “CSRC”) or any other PRC governmental authorities. Since these statements and regulatory actions are newly published, however, official guidance and related implementation rules have not been issued. It is highly uncertain what the potential impact such modified or new laws and regulations will have on the daily business operations of our subsidiaries, our ability to accept foreign investments, and our listing on a U.S. exchange. The Standing Committee of the National People’s Congress (the “SCNPC”) or PRC regulatory authorities may in the future promulgate laws, regulations, or implementing rules that require us and our subsidiaries to obtain regulatory approval from Chinese authorities before listing in the U.S.

The same legal and operational risks associated with operations in China also apply to operations in Hong Kong. Hong Kong was established as a special administrative region of the PRC in accordance with Article 31 of the Constitution of the PRC. The Basic Law of the Hong Kong Special Administrative Region of the PRC (the “Basic Law”) was adopted and promulgated on April 4, 1990 and became effective on July 1, 1997, when the PRC resumed the exercise of sovereignty over Hong Kong. Pursuant to the Basic Law, Hong Kong is authorized by the National People’s Congress of the PRC to exercise a high degree of autonomy and enjoy executive, legislative, and independent judicial power, under the principle of “one country, two systems,” and the PRC laws and regulations shall not be applied in Hong Kong except for those listed in Annex III of the Basic Law (which is confined to laws relating to national defense, foreign affairs, and other matters that are not within the scope of autonomy). However, there is no assurance that there will not be any changes in the economic, political, and legal environment in Hong Kong in the future. Due to the uncertainty of the PRC legal system and changes in laws, regulations, or policies, the Basic Law may be revised in the future, and thus, we may face the same legal and operational risks associated with operating in the PRC. If there is a significant change to current political arrangements between mainland China and Hong Kong, or if the applicable laws, regulations, or interpretations change, our Hong Kong subsidiaries—which include Xuhang HK and Hong Kong Lehui Network Technology Co., Ltd. (“HK Lehui”)—may become subject to PRC laws or authorities. As a result, our Hong Kong subsidiaries could incur material costs to ensure compliance, be subject to fines, experience devaluation of securities or delisting, no longer conduct offerings to foreign investors, and no longer be permitted to continue their current business operations. The main legislation in Hong Kong concerning data security is the Personal Data (Privacy) Ordinance (Cap. 486 of the Laws of Hong Kong) (the “PDPO”), which regulates the collection, usage, storage, and transfer of personal data and imposes a statutory duty on data users to comply with the six data protection principles contained therein. As of the date of this prospectus, we confirm that we and each of our Hong Kong subsidiaries have complied with the laws and requirements in respect of data security in Hong Kong. However, the laws on cybersecurity and data privacy are constantly evolving and can be subject to varying interpretations, resulting in uncertainties about the scope of our responsibilities in that regard. Failure to comply with the cybersecurity and data privacy requirements in a timely manner, or at all, may subject us or our Hong Kong subsidiaries to consequences, including government enforcement actions and investigations, fines, penalties, and suspension or disruption of our Hong Kong subsidiaries’ operations. In addition, the Competition Ordinance (Cap. 619 of the Laws of Hong Kong) prohibits and deters undertakings in all sectors from adopting anti-competitive conduct which has the object or effect of preventing, restricting, or distorting competition in Hong Kong. It provides for general prohibitions in three major areas of anti-competitive conduct described as the first conduct rule, the second conduct rule, and the merger rule. As of the date of this prospectus, we and our Hong Kong subsidiaries have complied with all three areas of anti-competition laws and requirements in Hong Kong. As confirmed by our Hong Kong counsel, Ince & Co, neither the data security nor antimonopoly laws and regulations in Hong Kong restrict our ability to accept foreign investment or impose limitation on our ability to list on any U.S. stock exchange under Hong Kong laws and regulations. See “Risk Factors—Risks Relating to Doing Business in the PRC—Some of our subsidiaries are subject to various evolving Hong Kong laws and regulations regarding data security or antimonopoly, which could subject them to government enforcement actions and investigations, fines, penalties, and suspension or disruption of their operations.”

In addition, our Ordinary Shares may be prohibited from trading on a national exchange under the Holding Foreign Companies Accountable Act, or the HFCA Act, if the Public Company Accounting Oversight Board (United States) (the “PCAOB”) is unable to inspect our auditors for three consecutive years beginning in 2022. 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, a Special Administrative Region of the PRC, because of positions taken by PRC authorities in those jurisdictions. Our auditor is headquartered in San Mateo, California, and has been inspected by the PCAOB on a regular basis, with the last inspection in October 2019. The PCAOB currently has access to inspect the working papers of our auditor and our auditor is not subject to the determinations announced by the PCAOB on December 16, 2021. If trading in our Ordinary Shares is prohibited under the HFCA Act in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at such future time, Nasdaq may determine to delist our Ordinary Shares and trading in our Ordinary Shares could be prohibited. On December 23, 2022, the Accelerating Holding Foreign Companies Accountable Act was enacted, 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, thus reducing the time period for triggering the delisting of our Company and the prohibition of trading in our securities if the PCAOB is unable to inspect our accounting firm at such future time. On August 26, 2022, the CSRC, the Ministry of Finance of the PRC (the “MOF”), and the PCAOB signed a Statement of Protocol (the “Protocol”), governing inspections and investigations of accounting firms based in mainland China and Hong Kong, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong. Pursuant to the fact sheet with respect to the Protocol disclosed by the U.S. Securities and Exchange Commission (the “SEC”), the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. 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 29, 2022, legislation entitled “Consolidated Appropriations Act, 2023” (the “Consolidated Appropriations Act”), was signed into law by President Biden. The Consolidated Appropriations Act contained, among other things, an identical provision to Accelerating Holding Foreign Companies Accountable Act, which reduces the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two. See “Risk Factors—Risks Relating to Doing Business in the PRC—Recent joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and the HFCA Act all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our continued listing or future offerings of our securities in the U.S.”

As of the date of this prospectus, none of our subsidiaries have made any dividends or distributions to our Company and our Company has not made any dividends or distributions to our shareholders. We intend to keep any future earnings to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future. If we determine to pay dividends on any of our Ordinary Shares in the future, as a holding company, we will be dependent on receipt of funds from Xuhang HK, which will in turn rely on payments made from Xuhang Network, Huzhou Yinzhiya, and Wuhan Yinzhiya, all of which are our PRC subsidiaries. However, as the PRC government imposes control over currency conversion, it has the authority to conduct exchange transfer reviews, which may impose certain limitations on our ability to transfer cash between our Company, our subsidiaries, and our investors, primarily reflected in the following aspects: (i) we are restricted from injecting capital or providing loans to our PRC subsidiaries, which may adversely affect the operations of our PRC subsidiaries; (ii) our PRC subsidiaries may be restricted from paying dividends to us; and (iii) if we are unable to obtain dividends from our PRC subsidiaries, it may adversely impact our dividends distribution to investors. See “Summary of Risk Factors,” “Risk Factors—Risks Relating to Doing Business in the PRC—PRC regulations relating to offshore investment activities by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital into our PRC subsidiaries, limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us,” “Risk Factors—Risks Relating to Doing Business in the PRC—PRC regulation of parent/subsidiary loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of offshore offerings to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect their liquidity and their ability to fund and expand their business,” and “Risk Factors—Risks Relating to Doing Business in the PRC—Governmental control of currency conversion may affect the value of your investment and our payment of Dividends.” Further, to the extent cash or assets in the business are in the PRC/Hong Kong or a PRC/Hong Kong entity, the funds or assets may not be available to fund operations or for other use outside of the PRC/Hong Kong, due to interventions in or the imposition of restrictions and limitations on the ability of our Company or our subsidiaries by the PRC government to transfer cash or assets. There is no assurance the PRC government will not intervene in or impose restrictions on the ability of our Company or our subsidiaries to transfer cash or assets. See “Prospectus Summary—Dividends or Distributions Made to Our Company and U.S. Investors and Tax Consequences,” “Prospectus Summary—Business Overview—Summary of Risk Factors,” and “Risk Factors—Risks Relating to Doing Business in the PRC—To the extent cash or assets in the business are in the PRC/Hong Kong or a PRC/Hong Kong entity, the funds or assets may not be available to fund operations or for other use outside of the PRC/Hong Kong, due to interventions in or the imposition of restrictions and limitations on the ability of our Company or our subsidiaries by the PRC government to transfer cash or assets.” We have established controls and procedures for cash flows within our organization based on internal cash management policies established by our finance department, discussed, considered, and reviewed by the relevant departments in our Company, and approved by our Chairman of the Board of Directors. Specifically, our finance department supervises cash management, following the instructions of our management. Our finance department is responsible for establishing our cash operation plan and coordinating cash management matters among our subsidiaries and departments. Each subsidiary and department initiates a cash request by putting forward a cash demand plan, which explains the specific amount and timing of cash requested, and submitting it to our finance department. The finance department reviews the cash demand plan and prepares a summary for the management of our Company. Management examines and approves the allocation of cash based on the sources of cash and the priorities of the needs. Other than the above, we currently do not have other cash management policies or procedures that dictate how funds are transferred. As of the date of this prospectus, no cash transfer or transfer of other assets has occurred between our Company and our subsidiaries except that between November and December 2022, Xuhang Cayman transferred an aggregate of US$151,945.44 to Xuhang HK for working capital purposes. See “Prospectus Summary—Asset Transfers Between Our Company and Our Subsidiaries,” “Prospectus Summary—Dividends or Distributions Made to Our Company and U.S. Investors and Tax Consequences,” and our audited consolidated financial statements for the years ended December 31, 2020 and 2021 and our unaudited condensed consolidated interim financial statements for the nine months ended September 30, 2022.

We are an “emerging growth company” as defined under the federal securities laws and will be subject to reduced public company reporting requirements. Please read the disclosures beginning on page 18 of this prospectus for more information.

	Per Share	Total Without Over-Allotment Option	Total With Over-Allotment Option
Initial public offering price	US$	US$	US$
Underwriters’ discounts(1)	US$	US$	US$
Proceeds to our company before expenses(2)	US$	US$	US$

(1) Represents underwriting discounts equal to 4.82% of the gross proceeds from the sale of Ordinary Shares in this offering.

(2) In addition to the underwriting discounts listed above, we have agreed to issue, upon closing of this offering, warrants to Univest Securities, LLC, as representative of the several underwriters (the “Representative”), exercisable commencing on the date of commencement of sales of Ordinary Shares in this offering for a period of three years, entitling the Representative to purchase 5% of the total number of Ordinary Shares sold in this offering (including any Ordinary Shares sold as a result of the exercise of the underwriters’ over-allotment option) at a per share price equal to 130% of the public offering price (the “Representative’s Warrants”). The registration statement of which this prospectus is a part also covers the Representative’s Warrants and the Ordinary Shares issuable upon the exercise thereof. See “Underwriting” for additional information regarding total underwriter compensation.

We have granted the Representative an option for a period of 30 days from the date of this prospectus to purchase up to 15% of the total number of the Ordinary Shares to be offered by us pursuant to this offering (excluding Ordinary Shares subject to this option), solely for the purpose of covering over-allotments, if any, at the public offering price less the underwriting discounts. If the Representative exercises the option in full, the total underwriting discounts payable will be US$[●], based on an assumed public offering price of US$[●] per Ordinary Share, which is the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus, and the total gross proceeds to us, before underwriting discounts and expenses, will be US$[●].

The underwriters expect to deliver the Ordinary Shares against payment in U.S. dollars in New York, New York on or about [●], 2023.

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

Prospectus dated [●], 2023

TABLE OF CONTENTS

	Page
PROSPECTUS SUMMARY		1
RISK FACTORS		23
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS		63
ENFORCEABILITY OF CIVIL LIABILITIES		64
USE OF PROCEEDS		66
DIVIDEND POLICY		67
CAPITALIZATION		69
DILUTION		70
CORPORATE HISTORY AND STRUCTURE		71
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		75
INDUSTRY		95
BUSINESS		104
REGULATIONS		134
MANAGEMENT		149
PRINCIPAL SHAREHOLDERS		153
RELATED PARTY TRANSACTIONS		155
DESCRIPTION OF SHARE CAPITAL		162
SHARES ELIGIBLE FOR FUTURE SALE		178
MATERIAL INCOME TAX CONSIDERATION		180
UNDERWRITING		188
EXPENSES RELATING TO THIS OFFERING		194
LEGAL MATTERS		195
EXPERTS		195
WHERE YOU CAN FIND ADDITIONAL INFORMATION		195
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS		F-1

i

ABOUT THIS PROSPECTUS

We and the underwriters have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses prepared by us or on our behalf or to which we have referred you. We take no responsibility for and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the Ordinary Shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted or where the person making the offer or sale is not qualified to do so or to any person to whom it is not permitted to make such offer or sale. For the avoidance of doubt, no offer or invitation to subscribe for Ordinary Shares is made to the public in the Cayman Islands. The information contained in this prospectus is current only as of the date on the front cover of the prospectus. Our business, financial condition, results of operations, and prospects may have changed since that date.

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

Conventions that Apply to this Prospectus

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

• “China” or the “PRC” are to the People’s Republic of China;

• “conversion rates” are to the proportion of visitors who take action to go beyond the casual content view or web page visit and perform a designated action by the marketer, such as downloading an app, signing up a new account, or making a purchase, to the number of total visitors who viewed or clicked the marketing campaign. The calculation method of the conversion rate varies among marketing campaigns and depends on the designated action that the marketers seek to achieve. For example, it may refer to the click-through rate as defined above, or the proportion of visitors who take specific actions, such as downloading an app, to the total number of visitors who clicked the marketing campaign;

• “cooperative accounts” are to we-media accounts (i) that are not self-operated accounts (defined below) but (ii) over which we have the operational or management authority through cooperative agreements with the accounts’ actual owners;

• “CPA” are to a performance-based pricing model where marketers are charged based on the number of designated actions performed by the user such as download, installation, or registration;

• “CPC” are to a pricing model where marketers are charged based on the number of clicks on the advertisement, typically, a unit price is charged for each click;

• “CPM” are to a non-performance-based pricing model where marketers are charged on the basis of thousand impressions (defined below);

• “followers” are to fans who follow an account/publisher on digital media platforms such as social media platforms, short video platforms, live streaming platforms, and e-commerce platforms, and references to the number of followers in this prospectus are to the simple sum of the followers of the relevant accounts on different digital media platforms, and therefore, a single fan may be included multiple times if the fan follows more than one accounts across different digital media platforms;

ii

• “GMV” are to gross merchandise value, which represents the aggregate value of the merchandise ordered in the live KOL/KOC (defined below) sales services provided by our PRC subsidiaries, regardless of whether the merchandise is actually sold, delivered, or returned, and GMV does not represent our revenue;

• “impressions” are to non-action-based exposures in which an audience sees an advertisement (for example, an impression occurs any time a user opens an app or website and an advertisement is visible);

• “KOCs” are to key opinion customers;

• “KOLs” are to key opinion leaders;

• “live e-commerce” are to a form of digital commerce in which individuals, such as KOLs and KOCs, use social media platforms and live-streaming platforms to promote and sell products to their followers;

• “MCN institutions” are to for-profit organizations or entities that work with multiple channels and content creators on new media platforms (such as WeChat, Weibo, and Douyin) in a multi-channel network model, primarily by contracting with and incubating KOLs, as well as providing services such as planning, positioning, content creation guidance, marketing, and seeking commercial endorsement opportunities for these KOLs and their new media accounts;

• “our we-media publisher base” are to we-media accounts wholly or partially controlled by our PRC subsidiaries, including our self-operated accounts (defined below) and cooperative accounts;

• “Renminbi” or “RMB” are to the legal currency of China;

• “SDKs” are to software development kits, typically a set of software development tools that allows the creation of applications;

• “self-operated accounts” are to we-media accounts (i) owned by our PRC subsidiaries or by MCN institutions registered thereunder, and (ii) over which our PRC subsidiaries have operational or management authority;

• “shares,” “Shares,” or “Ordinary Shares” are to the ordinary shares of Xuhang Cayman, par value US$0.002 per share;

• “the PRC subsidiaries” or “our PRC subsidiaries” are to Xuhang Network and its subsidiaries, Huzhou Yinzhiya, and Wuhan Yinzhiya;

• “U.S. dollars,” “US$,” or “dollars” are to the legal currency of the United States;

• “user traffic” are to the flow of audiences on media platforms, such as social media platforms, live streaming platforms, and short video platforms;

• “we-media” are to a media form that allows everyone to spread information independently, and unlike traditional media, we-media does not rely on the centralization of information—specifically, users of we-media could use media platforms, including social media platforms, news platforms, live streaming platforms, and short video platforms, to share information and communicate with other users or followers in various format types, such as text, picture, audio, or video content; and

• “we-media account” or “we-media publisher” are to an online account, which is registered by the user on media platforms (websites or apps) including social media platforms, news platforms, live streaming platforms, and short video platforms, and publishes text, picture, audio, or video content to the public.

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

iii

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements included elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in our Ordinary Shares, discussed under “Risk Factors,” before deciding whether to buy our Ordinary Shares.

Unless otherwise indicated, all share numbers and per share numbers in this prospectus have been presented giving effect to a subdivision of each of our existing issued and unissued shares of US$1.00 each at a ratio of 500-for-1 share approved by our shareholders and board of directors on December 2, 2022 (the “Subdivision”).

Our Corporate Structure

We are a holding company incorporated in the Cayman Islands and not a Chinese operating company. As a result, we conduct a substantial majority of our operations through our operating entities established in the PRC. The Ordinary Shares offered in this prospectus are shares of the Cayman Islands holding company instead of shares of our operating entities in the PRC. Holders of our Ordinary Shares do not directly own any equity interests in our PRC subsidiaries, but will instead own shares of a Cayman Islands holding company. The Chinese regulatory authorities could disallow our corporate structure, which would likely result in a material change in our operations and/or a material change in the value of our Ordinary Shares, including that it could cause the value of our Ordinary Shares to significantly decline or become worthless. See “Risk Factors—Risks Relating to Doing Business in the PRC—Chinese regulatory authorities could disallow our holding company structure, which may result in a material change in our operations and/or a material change in the value of the securities we are registering for sale, including that it could cause the value of such securities to significantly decline or become worthless.”

The following diagram illustrates our corporate structure as of the date of this prospectus and upon the completion of this offering, assuming the sales of all of the Ordinary Shares we are offering at an assumed public offering price of US$[●] per share and no exercise of the Representative’s over-allotment option. For more details on our corporate history, please refer to “Corporate History and Structure.”

1

Notes:

(1) Represents 21,012,915 Ordinary Shares held by TIAN HANG GROUP LIMITED, a British Virgin Islands company, which is 100% owned by XUHANG (BVI) LTD, which is in turn 100% owned by Tianhang Xiao as of the date of this prospectus.

(2) Represents 3,403,616 Ordinary Shares held by MIGHTY HUGE INVESTMENT LIMITED, which is 100% owned by XH Fortune Success Trust, a trust established under the laws of the Island of Jersey by Mr. Tianhang Xiao, managed by Trident Trust Company (HK) Limited, as trustee, with Mr. Tianhang Xiao being the trust’s beneficiary as of the date of this prospectus.

(3) Represents 1,948,622 Ordinary Shares held by Shanghai Qishu Enterprise Management Consulting L.P., a PRC limited partnership that is 99% owned by Hangzhou Xuli Network Technology Limited, which is in turn 99% owned by Tianhang Xiao, as of the date of this prospectus.

(4) Represents 3,078,562 Ordinary Shares indirectly held by Congcong Wei, the 100% owner of WCC CAPITAL LIMITED, as of the date of this prospectus.

(5) Represents an aggregate of 29,361,244 Ordinary Shares held by 33 shareholders, each one of which holds less than 5% of our Ordinary Shares, as of the date of this prospectus.

Significant subsidiaries of Xuhang Network consist of the following entities:

No.	Name	Place of incorporation	Date of incorporation or acquisition	Percentage of direct or indirect ownership			Principal activities
1	Horgos Xumi Network Technology Co., Ltd.	PRC	February 8, 2017		100	%	Advertising design and production; technical services
2	Horgos Pinyue Network Technology Co., Ltd.	PRC	November 10, 2017		100	%	Advertising design and production; technical services; digital advertising services
3	Hong Kong Lehui Network Technology Co., Ltd.	Hong Kong	November 10, 2017		100	%	Digital advertising services
4	Horgos Weizan Network Technology Co., Ltd.	PRC	November 13, 2017		100	%	Marketing planning and Advertising production
5	Hangzhou Xingkong Internet Culture Communication Co., Ltd.	PRC	November 13, 2020		100	%	Advertising design and production
6	Hangzhou Jinting Conference Co., Ltd.	PRC	November 13, 2020		100	%	Conference services; cultural and artistic exchange activities planning
7	Jiangxi Ku’o Technology Co., Ltd.	PRC	March 16, 2020		100	%	Advertising production; graphic design and production
8	Hangzhou Xingxiu Network Technology Co., Ltd.	PRC	June 16, 2021		51	%	Advertising production and technical services
9	Jiangsu Xuhang New Economy Technology Co., Ltd.	PRC	September 29, 2020		80	%	Advertising production and technical services
10	Qingdao Xuhang Digital New Economy Technology Co., Ltd.	PRC	October 29, 2020		61	%	Advertising production and technical services
11	Shanghai Xumi Digital Technology Co., Ltd.	PRC	March 19, 2021		90	%	Advertising production and technical services
12	Xiamen Xuhang Digital Technology Co., Ltd.	PRC	April 1, 2021		75	%	Marketing planning and advertising production

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No.	Name	Place of incorporation	Date of incorporation or acquisition	Percentage of direct or indirect			Principal activities
13	Shanghai Pinzhang Network Technology Co., Ltd.	PRC	March 24, 2021		51	%	Advertising production and technical services
14	Qingdao Pinzhang Network Technology Co., Ltd.	PRC	April 15, 2021		51	%	Advertising production and technical services
15	Hangzhou Pusheng Network Technology Co., Ltd.	PRC	August 25, 2020		51	%	Advertising production and technical services
16	Hangzhou Ruirong Network Technology Co., Ltd.	PRC	February 7, 2021		51	%	Advertising production and technical services
17	Henan New Circle Network Technology Co., Ltd.	PRC	January 17, 2020		100	%	Advertising production and technical services
18	Xuhang Shuzhiyun Technology (Hangzhou) Co., Ltd.	PRC	June 2, 2021		100	%	Technical services and consultation; advertisement production
19	Xuhang Digital (Henan) Technology Co., Ltd.	PRC	January 22, 2021		51	%	Technical services and consultation
20	Hangzhou Xiqi Cultural Tourism Technology Co., Ltd.	PRC	May 12, 2021		100	%	Technical services and consultation
21	Yunnan Xumi Digital Technology Co., Ltd.	PRC	July 2, 2021		51	%	Marketing planning and advertising production
22	Jiangxi Xuzhixing Technology Co., Ltd.	PRC	July 19, 2021		51	%	Marketing planning and advertising production
23	Shanghai Huihang Network Technology Co., Ltd.	PRC	May 25, 2021		51	%	Marketing planning and advertising production
24	Hangzhou Youyou Culture and Tourism Technology Co., Ltd.	PRC	July 14, 2021		51	%	Marketing planning and advertising production
25	Anhui Jiayuan Information Technology Co., Ltd.	PRC	April 14, 2016		100	%	Advertising production and technical services
26	Henan Xuhang Network Technology Co., Ltd.	PRC	November 29, 2019		99	%	Internet advertising services
27	Wenzhou Xumi Network Technology Co., Ltd.	PRC	March 4, 2020		100	%	Marketing planning and advertising production
28	Xumi (Fujian) Digital Technology Co., Ltd.	PRC	February 8, 2021		85	%	Advertising production and technical services
29	Wuhan Xuhang Digital Technology Co., Ltd.	PRC	October 27, 2021		65	%	Digital cultural creative content services; technical consultation
30	Huangshan Xumi Digital Technology Co., Ltd.	PRC	September 16, 2021		90	%	Advertising design and production
31	Wuxi Xumi Creative Technology Co., Ltd.	PRC	September 10, 2021		75	%	Marketing planning and advertising production
32	Yangzhou Xumi Digital Technology Co., Ltd.	PRC	November 2, 2021		56.7	%	Marketing planning and branding management
33	Linyi Xumi Network Technology Co., Ltd.	PRC	August 26, 2021		60	%	Marketing planning and advertising production
34	Suzhou New Circle Network Technology Co., Ltd.	PRC	July 29, 2020		100	%	Technical services and consultation

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No.	Name	Place of incorporation	Date of incorporation or acquisition	Percentage of direct or indirect			Principal activities
35	Shanghai Xumi Digital Advertising Co., Ltd.	PRC	November 9, 2021		100	%	Advertising design and production
36	Shanghai Suhang Digital Technology Co., Ltd.	PRC	July 27, 2021		51	%	Marketing planning and advertising production
37	Hangzhou Xupai Technology Co., Ltd.	PRC	December 21, 2021		51	%	Technical services and consultation
38	Shanghai Hexian Lianhai Technology Group Co., Ltd.	PRC	January 18, 2022		51	%	Marketing planning and advertising production
39	Chengdu Xumi Digital Technology Co., Ltd.	PRC	February 28, 2022		80	%	Technical services and consultation
40	Hubei Xuhang Shuzhi Culture Co., Ltd.	PRC	February 28, 2022		90	%	Marketing planning and advertising production
41	Beijing Hexian Lianjing Technology Co., Ltd.	PRC	March 31, 2022		100	%	Advertising design and production
42	Beijing Xuhangyi Visual Technology Co., Ltd.	PRC	April 25, 2022		51	%	Advertising design and production

We are subject to certain legal and operational risks associated with business operations of our PRC subsidiaries being based in China, which could cause the value of our securities to significantly decline or become worthless. Applicable PRC laws and regulations governing such current business operations are sometimes vague and uncertain, and as a result these risks may result in material changes in the operations of our PRC subsidiaries, significant depreciation of the value of our Ordinary Shares, or a complete hindrance of our ability to offer, or continue to offer, our securities to investors. Recently, the PRC government adopted a series of regulatory actions and issued statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. As of the date of this prospectus, neither we nor our subsidiaries have been involved in any investigations on cybersecurity review initiated by any PRC regulatory authority, nor has any of them received any inquiry, notice, or sanction related to cybersecurity review under the Cybersecurity Review Measures. On December 28, 2021, 13 governmental departments of the PRC, including the CAC, issued the Cybersecurity Review Measures, which became effective on February 15, 2022. As confirmed by our PRC counsel, AllBright, we are not subject to cybersecurity review or network data security review by the CAC under the Cybersecurity Review Measures or if the Security Administration Draft is enacted as proposed, because our PRC subsidiaries are not CIIOs or online platform operators with personal information of more than one million users. See “Risk Factors—Risks Relating to Doing Business in the PRC—Recent greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our PRC subsidiaries’ business and our offering.” According to our PRC counsel, AllBright, no relevant laws or regulations in the PRC explicitly require us to seek approval from the CSRC for our overseas listing. As of the date of this prospectus, neither we nor our subsidiaries have received any inquiry, notice, warning, or sanctions regarding our overseas listing from the CSRC or any other PRC governmental authorities. Since these statements and regulatory actions are newly published, however, official guidance and related implementation rules have not been issued. It is highly uncertain what the potential impact such modified or new laws and regulations will have on the daily business operations of our subsidiaries, our ability to accept foreign investments, and our listing on a U.S. exchange. The SCNPC or PRC regulatory authorities may in the future promulgate laws, regulations, or implementing rules that require us and our subsidiaries to obtain regulatory approval from Chinese authorities for listing in the U.S. If we do not receive or maintain the approval, or inadvertently conclude that such approval is not required, or applicable laws, regulations, or interpretations change such that we are required to obtain approval in the future, we may be subject to an investigation by competent regulators, fines or penalties, or an order prohibiting us from conducting

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an offering, and 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 offer or continue to offer securities to investors, or cause such securities to significantly decline in value or become worthless.

The same legal and operational risks associated with operations in China also apply to operations in Hong Kong. Hong Kong was established as a special administrative region of the PRC in accordance with Article 31 of the Constitution of the PRC. The Basic Law of the Hong Kong Special Administrative Region of the PRC (the “Basic Law”) was adopted and promulgated on April 4, 1990 and became effective on July 1, 1997, when the PRC resumed the exercise of sovereignty over Hong Kong. Pursuant to the Basic Law, Hong Kong is authorized by the National People’s Congress of the PRC to exercise a high degree of autonomy and enjoy executive, legislative, and independent judicial power, under the principle of “one country, two systems,” and the PRC laws and regulations shall not be applied in Hong Kong except for those listed in Annex III of the Basic Law (which is confined to laws relating to national defense, foreign affairs, and other matters that are not within the scope of autonomy). However, there is no assurance that there will not be any changes in the economic, political, and legal environment in Hong Kong in the future. Due to the uncertainty of the PRC legal system and changes in laws, regulations, or policies, the Basic Law may be revised in the future, and thus, we may face the same legal and operational risks associated with operating in the PRC. If there is a significant change to current political arrangements between mainland China and Hong Kong, or if the applicable laws, regulations, or interpretations change, our Hong Kong subsidiaries may become subject to PRC laws or authorities. As a result, our Hong Kong subsidiaries could incur material costs to ensure compliance, be subject to fines, experience devaluation of securities or delisting, no longer conduct offerings to foreign investors, and no longer be permitted to continue their current business operations. The main legislation in Hong Kong concerning data security is the PDPO, which regulates the collection, usage, storage, and transfer of personal data and imposes a statutory duty on data users to comply with the six data protection principles contained therein. As of the date of this prospectus, we confirm that we and each of our Hong Kong subsidiaries have complied with the laws and requirements in respect of data security in Hong Kong. However, the laws on cybersecurity and data privacy are constantly evolving and can be subject to varying interpretations, resulting in uncertainties about the scope of our responsibilities in that regard. Failure to comply with the cybersecurity and data privacy requirements in a timely manner, or at all, may subject us or our Hong Kong subsidiaries to consequences, including, but not limited to, government enforcement actions and investigations, fines, penalties, and suspension or disruption of our Hong Kong subsidiaries’ operations. In addition, the Competition Ordinance (Cap. 619 of the Laws of Hong Kong) prohibits and deters undertakings in all sectors from adopting anti-competitive conduct which has the object or effect of preventing, restricting, or distorting competition in Hong Kong. It provides for general prohibitions in three major areas of anti-competitive conduct described as the first conduct rule, the second conduct rule, and the merger rule. As of the date of this prospectus, we and our Hong Kong subsidiaries have complied with all three areas of anti-competition laws and requirements in Hong Kong. As confirmed by our Hong Kong counsel, Ince & Co, neither the data security nor antimonopoly laws and regulations in Hong Kong restrict our ability to accept foreign investment or impose limitation on our ability to list on any U.S. stock exchange under Hong Kong laws and regulations. See “Risk Factors—Risks Relating to Doing Business in the PRC—Some of our subsidiaries are subject to various evolving Hong Kong laws and regulations regarding data security or antimonopoly, which could subject them to government enforcement actions and investigations, fines, penalties, and suspension or disruption of their operations.”

In addition, our Ordinary Shares may be prohibited from trading on a national exchange under the HFCA Act if the PCAOB is unable to inspect our auditors for three consecutive years beginning in 2022. On December 23, 2022, the Accelerating Holding Foreign Companies Accountable Act was enacted, 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, thus reducing the time period for triggering the delisting of our Company and the prohibition of trading in our securities if the PCAOB is unable to inspect our accounting firm at such future time. On December 16, 2021, the PCAOB issued a report on its

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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 PRC authorities in those jurisdictions. Our auditor is headquartered in San Mateo, California, and has been inspected by the PCAOB on a regular basis, with the last inspection in October 2019. The PCAOB currently has access to inspect the working papers of our auditor and our auditor is not subject to the determinations announced by the PCAOB on December 16, 2021. If trading in our Ordinary Shares is prohibited under the HFCA Act in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at such future time, Nasdaq may determine to delist our Ordinary Shares. On August 26, 2022, the CSRC, the MOF, and the PCAOB signed the Protocol, governing inspections and investigations of accounting firms based in mainland China and Hong Kong, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. 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 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 Holding Foreign Companies Accountable Act, which reduces the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two. See “Risk Factors—Risks Relating to Doing Business in the PRC—Recent joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and the HFCA Act all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our continued listing or future offerings of our securities in the U.S.”

Business Overview

Our Company

We are a holding company incorporated in the Cayman Islands and not a Chinese operating company. As a holding company with no material operations of our own, we conduct all of our operations primarily through our PRC subsidiaries.

Our PRC subsidiaries are content-driven marketing service providers that offer a package of integrated marketing solutions across a broad range of distribution channels with a primary focus on new media content marketing. Leveraging our PRC subsidiaries’ expertise in content production and operation, extensive distribution channels, and cross-platform new media account base, our PRC subsidiaries aim to provide customers with efficient and effective integrated marketing solutions that address their marketing needs in the context of the new media era. Customers utilize our PRC subsidiaries’ marketing services to achieve their branding and marketing goals across multiple channels with a primary focus on we-media platforms such as WeChat official accounts (微信公众号), Weibo (微博), Xiaohongshu (小红书), Toutiao (今日头条), Douyin (抖音), Kuaishou (快手), and Baidu Baijiahao (百度百家号). As of October 31, 2022, our PRC subsidiaries had delivered short videos and advertorials that generated over 156 billion views in total; our PRC subsidiaries’ new media account base comprised 524 self-operated accounts and 491 cooperative accounts, which collectively reached approximately 207 million Internet followers. Customers of our PRC subsidiaries include large Internet platform companies and small- to medium-sized local businesses in all segments of urban life, including catering, entertainment, and travel. As of December 31, 2020 and 2021 and September 30, 2022, our PRC subsidiaries had a marketer base of 656, 810, and 867, respectively.

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Currently, our PRC subsidiaries provide two categories of marketing services: (i) new media integrated content marketing services, which rely on creating and distributing relevant, engaging, and valuable content in order to attract and retain audiences to promote brands and sell products and services, and (ii) digital advertising services, which emphasize the need to choose better-matched ad distribution channels with the target audience to maximize marketing effectiveness.

Our PRC subsidiaries started their business in 2014 with digital advertising services, where they help marketers—typically app developers and operators and advertising agents thereof—optimize their marketing efforts by identifying, engaging, and activating target audiences for user acquisition. Our PRC subsidiaries publish advertisements for their customers’ products or services via their digital advertising channels, which consist primarily of mobile apps embedded with their distribution software development kit (the “Xuhang SDK-embedded Apps”). With their analysis and optimization capabilities in advertisement placement, their industry expertise, and the distribution channel resources they have accumulated over the years, our PRC subsidiaries are able to provide customers with effective digital advertising services through better matching the products to be advertised with suitable distribution channels.

Since 2017, our PRC subsidiaries have launched and expanded their new media integrated marketing services that address the growing demands of marketers for social, entertaining, and trendy marketing content in the new media area. Specifically, our PRC subsidiaries’ new media integrated marketing services are mainly composed of two models—the service-to-business (“S2B”) model and the service-to-platform (“S2P”) model. For the S2B business, our PRC subsidiaries provide customers with a package of new media integrated content marketing service solutions—specifically, our PRC subsidiaries (i) provide creative marketing services to merchants and brands by producing entertaining and trendy marketing content, such as promotional short videos and advertorials, and publishing them via their self-operated and cooperative we-media accounts; (ii) plan, organize, and implement live streaming events on behalf of marketers, such as e-commerce merchants and local businesses, for promoting their products or services on high-profile live streaming platforms, or provide them with new media live broadcast training services; and (iii) organize online and offline marketing activities for large brands, business centers, commercial complexes, and tourist attractions, based on their needs for an “online-offline-linkage” marketing strategy. In addition, to supplement their new media integrated content marketing services, our PRC subsidiaries have recently developed affiliated businesses, which currently account for a small percentage of their total revenue, but are expected to drive their future growth. Specifically, our PRC subsidiaries (a) license self-developed software products and services to third-party business, and (b) cooperate with cultural institutions, including museums and tourist attractions, such as Daming Palace National Heritage Park and Huashan Scenic Area, to help them issue, promote, and sell IP-related digital products that are becoming increasingly popular among young people on platforms such as Ali Auction (阿里拍卖), NetEase Planet (网易星球), and Xinhua Shucang (新华数藏).

With respect to the S2P business, our PRC subsidiaries provide online traffic services to large Internet media platforms by generating or directing user traffic to those media platforms through editing and producing captivating short videos from authorized TV dramas, movies, and variety shows and posting such short videos on high-profile media platforms, such as Toutiao, Douyin, Xigua Video (西瓜视频), Baidu Baijiahao, Kuaishou, Youku (优酷), Tencent Video (腾讯视频), and iQIYI (爱奇艺). As of September 30, 2022, our PRC subsidiaries had an in-house new media content production and operation team consisting of 185 employees, including senior media professionals, senior marketers, or people with professional backgrounds in design, journalism, and writing. This strong content team enables our PRC subsidiaries to consistently produce creative, entertaining, and interactive marketing content. With their in-depth industry insight and strong content production capabilities, our PRC subsidiaries provide a package of multi-channel marketing solutions that address their customers’ different marketing needs. We believe that, with their extensive distribution channels and marketing methods, our PRC subsidiaries can maximize marketing effectiveness for their customers within their marketing budgets.

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Our PRC subsidiaries’ business has experienced rapid growth since their inception. For the years ended December 31, 2020 and 2021 and the nine months ended September 30, 2022, we had total revenue of RMB350.9 million, RMB471.4 million (US$66.3 million), and RMB339.3 million (US$47.7 million), respectively, and net income of RMB44.7 million, RMB69.2 million (US$9.7 million), and RMB52.4 million (US$7.4 million), respectively. Revenue derived from new media integrated content marketing services accounted for approximately 46.4%, 77.4%, and 87.5% of our total revenue for those years and period, respectively. Revenue derived from digital advertising services accounted for approximately 53.6%, 22.6%, and 12.5% of our total revenue for those years and period, respectively. For the years ended December 31, 2020 and 2021 and the nine months ended September 30, 2022, our cost of revenue was RMB243.5 million, RMB329.9 million (US$46.4 million), and RMB221.2 million (US$31.1 million), respectively.

Competitive Strengths

We believe the following competitive strengths are essential for our PRC subsidiaries’ success and differentiate them from their competitors:

• content-driven new media integrated marketing enabled by our PRC subsidiaries’ expertise in advertising idea creation and content production;

• capability of offering a package of integrated marketing solutions of various forms;

• diverse network of we-media accounts with hundreds of millions of followers;

• full stack technology solutions for new media businesses;

• business expansion mode through cooperation with local state-owned enterprises;

• solid marketer base spanning a wide range of industries; and

• visionary and experienced management and business teams with strong technical and operational expertise.

Growth Strategies

Our PRC subsidiaries intend to develop their business and strengthen brand loyalty by implementing the following strategies:

• further expand our PRC subsidiaries’ business scale and secure new marketers;

• continue to invest in technology research and development to develop and commercialize new software systems and expand business and profitability;

• further expand we-media resources; and

• pursue additional strategic and financially attractive acquisitions.

Corporate Information

Our principal executive offices are located at Building 2, Shangtanghe 198 Cultural and Creative Park, 198 Shenban Rd, Gongshu District, Hangzhou City, Zhejiang Province, China, and our phone number is +86-0571-88583100. Our registered office in the Cayman Islands is located at the offices of WB Corporate Services (Cayman) Ltd., PO Box 2775, Artemis House, 67 Fort Street, Grand Cayman, KY1-1111, Cayman Islands, and the phone number of our registered office is +1-345-7493999. We maintain a corporate website at www.sunhighgroup.com. The information contained in, or accessible from, our website or any other website is not incorporated into, and does not constitute a part of this prospectus or the registration statement of which it forms a part. Our agent for service of process in the United States is [●], located at [●].

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Summary of Risk Factors

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

Risks Relating to Doing Business in the PRC (for a more detailed discussion, see “Risk Factors—Risks Relating to Doing Business in the PRC” beginning on page 23 of this prospectus)

We face risks and uncertainties relating to doing business in the PRC in general, including, but not limited to, the following:

• changes in China’s economic, political, or social conditions or government policies could have a material adverse effect on our PRC subsidiaries’ business and operations (see page 23 of this prospectus);

• uncertainties in the interpretation and enforcement of PRC laws and regulations and changes in policies, rules, and regulations in China, which may be quick with little advance notice, could limit the legal protection available to you and us (see page 24 of this prospectus);

• 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 prospectus based on foreign laws. It may also be difficult for you or overseas regulators to conduct investigations or collect evidence within China (see page 24 of this prospectus);

• given the Chinese government’s significant oversight and discretion over the conduct of our PRC subsidiaries’ business, the Chinese government may intervene or influence their operations at any time, which could result in a material change in our PRC subsidiaries’ operations and/or the value of our Ordinary Shares (see page 25 of this prospectus);

• any actions by the Chinese government, including any decision to intervene or influence the operations of our PRC subsidiaries or to exert control over any offering of securities conducted overseas and/or foreign investment in China-based issuers, may cause us to make material changes to the operations of our PRC subsidiaries, may limit or completely hinder our ability to offer or continue to offer securities to investors, and may cause the value of such securities to significantly decline or be worthless (see page 25 of this prospectus);

• recent greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our PRC subsidiaries’ business and our offering (see page 26 of this prospectus);

• the Opinions recently issued by the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council may subject us to additional compliance requirements in the future (see page 27 of this prospectus);

• recent joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and the HFCA Act all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our continued listing or future offerings of our securities in the U.S. (see page 27 of this prospectus);

• to the extent cash or assets in the business are in the PRC/Hong Kong or a PRC/Hong Kong entity, the funds or assets may not be available to fund operations or for other use outside of the PRC/Hong Kong, due to interventions in or the imposition of restrictions and limitations on the ability of our Company or our subsidiaries by the PRC government to transfer cash or assets (see page 29 of this prospectus);

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• increases in labor costs in the PRC may adversely affect our PRC subsidiaries’ business and profitability (see page 30 of this prospectus);

• our PRC subsidiaries have not made adequate social insurance and housing fund contributions for all employees as required by PRC regulations, which may subject them to penalties (see page 30 of this prospectus);

• PRC regulations relating to offshore investment activities by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital into our PRC subsidiaries, limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us (see page 31 of this prospectus);

• PRC regulation of parent/subsidiary loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of offshore offerings to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect their liquidity and their ability to fund and expand their business (see page 32 of this prospectus);

• fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment (see page 33 of this prospectus);

• under the PRC Enterprise Income Tax Law, we may be classified as a PRC “resident enterprise” for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment (see page 34 of this prospectus);

• we face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies (see page 34 of this prospectus);

• our PRC subsidiaries are subject to restrictions on paying dividends or making other payments to us, which may have a material adverse effect on our ability to conduct our business (see page 35 of this prospectus);

• governmental control of currency conversion may affect the value of your investment and our payment of dividends (see page 36 of this prospectus);

• there are significant uncertainties under the EIT Law relating to the withholding tax liabilities of our PRC subsidiaries, and dividends payable by our PRC subsidiaries to our offshore subsidiaries may not qualify to enjoy certain treaty benefits (see page 36 of this prospectus);

• 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 (see page 37 of this prospectus);

• the disclosures in our reports and other filings with the SEC and our other public pronouncements are not subject to the scrutiny of any regulatory bodies in the PRC (see page 37 of this prospectus);

• the approval of the CSRC may be required in connection with this offering under a regulation adopted in August 2006, and, if required, we cannot assure you that we will be able to obtain such approval, in which case we may face sanctions by the CSRC or other PRC regulatory agencies for failure to seek the CSRC approval for this offering (see page 37 of this prospectus);

• the M&A Rules and certain other PRC regulations establish complex procedures for certain acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China (see page 38 of this prospectus); and

• Chinese regulatory authorities could disallow our holding company structure, which may result in a material change in our operations and/or a material change in the value of the securities we are

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registering for sale, including that it could cause the value of such securities to significantly decline or become worthless (see page 39 of this prospectus).

Risks Related to Our Business and Industry (for a more detailed discussion, see “Risk Factors—Risks Related to Our Business” beginning on page 40 of this prospectus)

Risks and uncertainties related to our business include, but are not limited to, the following:

• cutbacks on advertising budgets by marketers or failure to maintain and grow our PRC subsidiaries’ marketer base could materially and adversely affect their business and financial condition (see page 40 of this prospectus);

• failure to retain existing marketers and new media accounts or attract and grow new marketers and new media accounts may negatively impact our PRC subsidiaries’ revenue and business (see page 40 of this prospectus);

• failure to maintain the quality of our PRC subsidiaries’ marketing content production may materially and adversely impact their business and financial condition (see page 41 of this prospectus);

• the regulatory environment of the new media integrated content marketing industry and the digital advertising industry is rapidly evolving. If our PRC subsidiaries fail to obtain and maintain the requisite licenses and approvals applicable to their businesses in China from time to time, their business, financial condition, and results of operations may be materially and adversely affected (see page 41 of this prospectus);

• regulation and censorship of information disseminated through we-media publishers and we-media platforms in the PRC may adversely affect our PRC subsidiaries’ business (see page 42 of this prospectus);

• our PRC subsidiaries are subject to, and may expend significant resources in defending against, government actions and civil claims in connection with false, fraudulent, misleading, or otherwise illegal marketing content provided through our PRC subsidiaries’ services (see page 42 of this prospectus);

• our PRC subsidiaries are in the highly competitive new media integrated content marketing industry and the digital advertising industry, and may not be able to compete successfully against existing or new competitors, which could reduce their market share and adversely affect their competitive position and financial performance (see page 43 of this prospectus);

• our PRC subsidiaries rely on a number of digital media platforms to conduct their business. However, operators of the platforms may curtail or inhibit their ability to use the platforms, or there may be material disruption of the platforms (see page 43 of this prospectus);

• our PRC subsidiaries may be subject to product liability claims that could be costly and time-consuming (see page 44 of this prospectus);

• our PRC subsidiaries may incur liability for counterfeit, unauthorized, illegal, or infringing products sold or misleading information available through their live streaming sales (see page 44 of this prospectus);

• if our PRC subsidiaries fail to improve our services to keep up with the rapidly changing demand, preferences, or advertising trends in the new media integrated content marketing industry or the digital advertising industry, their revenue and growth could be adversely affected (see page 45 of this prospectus);

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• if our PRC subsidiaries sustain cyber-attacks or other privacy or data security incidents that result in security breaches, they could be subject to increased costs, liabilities, reputational harm, or other negative consequences (see page 45 of this prospectus);

• our PRC subsidiaries may experience systems disruption, software defects, computer viruses and breakdowns, distributed denial of service attacks, or other hacking and phishing attacks on their systems (see page 46 of this prospectus);

• non-compliance with laws and regulations on the part of any third parties with which our PRC subsidiaries conduct business could expose our PRC subsidiaries to legal expenses, compensations to third parties, penalties, and disruption of their business, which may adversely affect their results of operations and financial performance (see page 46 of this prospectus);

• seasonal fluctuations in advertising activities could have a material impact on our revenue, cash flow, and operating results (see page 46 of this prospectus);

• our PRC subsidiaries’ business is subject to complex and evolving laws and regulations in countries in addition to the PRC regarding privacy, data protection, and other matters. Many of these laws and regulations are subject to change and uncertain interpretation, and could result in increased compliance cost, changes to our PRC subsidiaries’ business practices, increased operating costs, and other harms to their business (see page 47 of this prospectus);

• our PRC subsidiaries plan to continue expanding their operations globally so they may enter new international markets where they have more limited operating experience, and this may subject them to increased business, economic, and legal risks that could affect their financial results (see page 47 of this prospectus);

• our PRC subsidiaries may not effectively manage their growth, which could materially harm their business (see page 48 of this prospectus);

• our PRC subsidiaries may not be able to obtain the additional capital they need in a timely manner or on acceptable terms, or at all (see page 48 of this prospectus);

• our PRC subsidiaries’ financial condition and operating results may be adversely affected by epidemics, natural disasters, and other catastrophes including but not limited to the novel coronavirus (COVID-19) (see page 49 of this prospectus);

• the ongoing COVID-19 pandemic in China may have a material adverse effect on our PRC subsidiaries’ business (see page 49 of this prospectus);

• any negative publicity about our PRC subsidiaries, their services, and their management may materially and adversely affect their reputation and business (see page 50 of this prospectus);

• our PRC subsidiaries may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt their business and operations (see page 50 of this prospectus);

• unauthorized use of our PRC subsidiaries’ intellectual property by third parties and expenses incurred in protecting our PRC subsidiaries’ intellectual property rights may adversely affect their business, reputation, and competitive edges (see page 51 of this prospectus);

• if our PRC subsidiaries fail to manage their growth or execute their strategies and future plans effectively, they may not be able to take advantage of market opportunities or meet the demand of their customers (see page 51 of this prospectus);

• our PRC subsidiaries’ business depends on the continued efforts of their senior management. If one or more of their key executives were unable or unwilling to continue in their present positions, their business may be severely disrupted (see page 52 of this prospectus);

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• future acquisitions may have an adverse effect on our PRC subsidiaries’ ability to manage their business (see page 53 of this prospectus);

• our PRC subsidiaries may from time to time be subject to claims, controversies, lawsuits, and legal proceedings, which could adversely affect their business, prospects, results of operations, and financial condition (see page 53 of this prospectus);

• our PRC subsidiaries may be the subject of allegations, harassment, or other detrimental conduct by third parties, which could harm their reputation and cause them to lose market share, users, and customers (see page 53 of this prospectus);

• our PRC subsidiaries current insurance policies may not provide adequate levels of coverage against all claims and they may incur losses that are not covered by their insurance (see page 54 of this prospectus); and

• some of our subsidiaries are subject to various evolving Hong Kong laws and regulations regarding data security or antimonopoly, which could subject them to government enforcement actions and investigations, fines, penalties, and suspension or disruption of their operations (see page 54 of this prospectus).

Risks Relating to this Offering and the Trading Market (for a more detailed discussion, see “Risk Factors—Risks Relating to this Offering and the Trading Market” beginning on page 55 of this prospectus)

In addition to the risks described above, we are subject to general risks and uncertainties relating to this offering and the trading market, including, but not limited to, the following:

• there has been no public market for our Ordinary Shares prior to this offering, and you may not be able to resell our Ordinary Shares at or above the price you pay for them, or at all (see page 55 of this prospectus);

• the initial public offering price for our Ordinary Shares may not be indicative of prices that will prevail in the trading market and such market prices may be volatile (see page 55 of this prospectus);

• you will experience immediate and substantial dilution in the net tangible book value of Ordinary Shares you purchased (see page 55 of this prospectus);

• if we fail to implement and maintain an effective system of internal controls or fail to remediate the material weaknesses in our internal control over financial reporting that have been identified, we may fail to meet our reporting obligations or be unable to accurately report our results of operations or prevent fraud, and investor confidence and the market price of our Ordinary Shares may be materially and adversely affected (see page 56 of this prospectus);

• we will incur substantial increased costs as a result of being a public company (see page 57 of this prospectus);

• substantial future sales of our Ordinary Shares or the anticipation of future sales of our Ordinary Shares in the public market could cause the price of our Ordinary Shares to decline (see page 57 of this prospectus);

• we do not intend to pay dividends for the foreseeable future (see page 57 of this prospectus);

• if securities or industry analysts do not publish research or reports about our business, or if they publish a negative report regarding our Ordinary Shares, the price of our Ordinary Shares and trading volume could decline (see page 58 of this prospectus);

• the market price of our Ordinary Shares may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the initial public offering price (see page 58 of this prospectus);

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• our management has broad discretion to determine how to use the funds raised in the offering and may use them in ways that may not enhance our results of operations or the price of our Ordinary Shares (see page 59 of this prospectus);

• if we cease to qualify as a foreign private issuer, we would be required to comply fully with the reporting requirements of the Exchange Act applicable to U.S. domestic issuers, and we would incur significant additional legal, accounting and other expenses that we would not incur as a foreign private issuer (see page 59 of this prospectus);

• because we are a foreign private issuer and intend to take advantage of exemptions from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer (see page 59 of this prospectus);

• if we cannot continue to satisfy the listing requirements and other rules of the Nasdaq Capital Market, our securities may be delisted, which could negatively impact the price of our securities and your ability to sell them (see page 60 of this prospectus);

• anti-takeover provisions in our fourth amended and restated memorandum and articles of association may discourage, delay, or prevent a change in control (see page 60 of this prospectus);

• because we are an “emerging growth company,” we may not be subject to requirements that other public companies are subject to, which could affect investor confidence in us and our Ordinary Shares (see page 61 of this prospectus);

• the laws of the Cayman Islands may not provide our shareholders with benefits comparable to those provided to shareholders of corporations incorporated in the United States (see page 61 of this prospectus);

• you may be unable to present proposals before annual general meetings or extraordinary general meetings not called by shareholders (see page 62 of this prospectus);

• if we are classified as a PFIC, United States taxpayers who own our Ordinary Shares may have adverse United States federal income tax consequences (see page 62 of this prospectus); and

• our pre-IPO shareholders will be able to sell their shares upon completion of this offering subject to restrictions under Rule 144 under the Securities Act (see page 62 of this prospectus).

Impact of COVID-19 on Our Operations and Financial Performance

From late January 2020 to the middle of April 2020, our PRC subsidiaries’ business was moderately impacted by the COVID-19 pandemic, mainly due to a slowdown of the business of their marketer customers, which negatively affected those customers’ marketing needs with our PRC subsidiaries. Nonetheless, their operations quickly resumed, starting from the second quarter of 2020, and achieved an increase in revenue in 2020 as compared to 2019. During the year ended December 31, 2021 and the nine months ended September 30, 2022, the COVID-19 pandemic did not have a material net impact on our financial positions and operating results. The extent of the impact on the operating entities’ future financial results will depend on future developments, such as the length and severity of the pandemic, the potential resurgence of the pandemic, future government actions in response to the crisis, and the overall impact of the COVID-19 pandemic on the global economy and capital markets, among many other factors, all of which remain highly uncertain and unpredictable. Given this uncertainty, we are currently unable to quantify the expected impact of the COVID-19 pandemic on our future operations, financial condition, liquidity, and results of operations if the current situation continues. See “Risk Factors—Risks Relating to Our Business—The ongoing COVID-19 pandemic in China may have a material adverse effect on our business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—COVID-19 Pandemic Affecting Our Results of Operations.”

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Permissions or Approval Required from the PRC Authorities for Our Operations and Offering

Our PRC legal counsel, AllBright, has advised us that, in order to operate our business activities as currently conducted in China, each of our PRC subsidiaries is required to obtain a business license from the State Administration for Market Regulation (“SAMR”). As of the date of this prospectus, confirmed by AllBright, our PRC legal counsel, each of our PRC subsidiaries has obtained a valid business license from the SAMR and no application for any such license has been denied. Furthermore, some of our PRC subsidiaries have obtained Food Business Licenses and Import and Export Commodity Consignee and Consigner Customs Declaration Registration Certificates. According to the related PRC Laws and Regulations, such licenses and certificates are required to conduct food sales and import and export operations. Some of our PRC subsidiaries applied for such permits for the possibility of engaging in related businesses to supplement their current operations, but not for compliance with mandatory requirements of PRC authorities upon their ongoing business. As of the date of this prospectus, none of our PRC subsidiaries are conducting operations regarding food sales or import and export operations. Therefore, under the requirements of PRC laws and regulations, despite such permits remaining valid, our PRC subsidiaries are not required to maintain such permits for their current operations. However, it is uncertain whether we or our PRC subsidiaries will be required to obtain additional approvals, licenses, or permits in connection with our business operations pursuant to evolving PRC laws and regulations, and whether we would be able to obtain and renew such approvals on a timely basis or at all. Failing to do so could result in a material change in our operations, and the value of our Ordinary Shares could depreciate significantly or become worthless. See “Risk Factors—Risks Relating to Our Business—The regulatory environment of the new media integrated content marketing industry and the digital advertising industry is rapidly evolving. If our PRC subsidiaries fail to obtain and maintain the requisite licenses and approvals applicable to their businesses in China from time to time, their business, financial condition, and results of operations may be materially and adversely affected.”

As of the date of this prospectus, our PRC counsel, AllBright, has advised us that neither we nor our PRC subsidiaries (1) are required to obtain permission from any of the PRC authorities to operate and issue our Ordinary Shares to foreign investors, (2) are subject to approval requirements from the CSRC, the CAC, or any other entity to approve our operations, and (3) have been denied such permissions by any PRC authorities. Recently, however, 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,” which were made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities and the need to strengthen the supervision over overseas listings by Chinese 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-concept overseas-listed companies and the demand for cybersecurity and data privacy protection.

The Cybersecurity Review Measures, which became effective on February 15, 2022, provides that, in addition to CIIOs that intend to purchase Internet products and services, online platform operators engaging in data processing activities that affect or may affect national security must be subject to cybersecurity review by the Cybersecurity Review Office of the PRC. According to the Cybersecurity Review Measures, a cybersecurity review assesses potential national security risks that may be brought about by any procurement, data processing, or overseas listing. The Cybersecurity Review Measures further require that CIIOs and data processing operators that possess personal data of at least one million users must apply for a review by the Cybersecurity Review Office of the PRC before conducting listings in foreign countries. As of the date of this prospectus, we have not received any notice from any authorities identifying any of our PRC subsidiaries as a CIIO or requiring us to go through cybersecurity review or network data security review by the CAC. We believe the operations of our PRC subsidiaries will not be subject to cybersecurity review by the CAC for this offering, because our PRC subsidiaries are not CIIOs or online platform operators with personal information of more than one million users.

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There remains uncertainty, however, as to how the Cybersecurity Review Measures 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 Cybersecurity Review Measures. For further details, see “Risk Factors—Risks Relating to Doing Business in the PRC—Recent greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our PRC subsidiaries’ business and our offering.”

On December 24, 2021, the CSRC promulgated the Administrative provisions of State Council on Overseas Issuance and Listing of Securities by Domestic Enterprises (Draft for Comments) (the “Draft Overseas Listing Regulations”) and the Administrative Measures for the Record-filing of Overseas Issuance and Listing of Securities by Domestic Enterprises (Draft for Comments) (the “Draft Overseas Listing Record-filing Measures,” together with the Draft Overseas Listing Regulations, the “New Overseas Listing Rules”) for public comments. The New Overseas Listing Rules, if they become law, will require Chinese companies applying to list on overseas exchanges to report and file certain documents with the CSRC within three working days after submitting listing applications and subsequent amendments. Given the current PRC regulatory environment, it is uncertain whether we or our PRC subsidiaries will be required to obtain approvals from the PRC government to offer securities to foreign investors in the future, and whether we would be able to obtain such approvals. If we are unable to obtain such approvals if required in the future, or inadvertently conclude that such approvals are not required then the value of our Ordinary Shares may depreciate significantly or become worthless. See “Regulations—Regulations Relating to Overseas Listings” and “Risk Factors—Risks Relating to Doing Business in the PRC—The Opinions recently issued by the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council may subject us to additional compliance requirements in the future.”

To operate business activities in Hong Kong, every company must register its business with the Business Registration Office of the Inland Revenue Department in Hong Kong and make an application for business registration within one month of commencement of business. Any person who fails to comply is subject to a maximum fine of HK$5,000 and one year of imprisonment. As of the date of this prospectus, we confirm that each of our Hong Kong subsidiaries has obtained a valid business registration certificate. There is no statutory or mandatory permission or regulatory approval required for the provision of new media integrated content marketing or digital advertising services in Hong Kong. As of the date of this prospectus, our Hong Kong counsel, Ince & Co, has advised us that neither we nor our Hong Kong subsidiaries are required to obtain (i) any permission or approval from Hong Kong authorities to offer the securities being registered to foreign investors outside Hong Kong, or (ii) any permission or approval from Hong Kong authorities to operate their business, except for the aforementioned business registration certificates. However, it is uncertain whether we or our Hong Kong subsidiaries will be required to obtain additional permissions or approval from Hong Kong authorities to operate business or offer securities to foreign investors in the future, and whether we would be able to obtain such permissions or approvals. If we are unable to obtain such permissions or approval if required in the future because applicable laws, regulations, or interpretations change, or inadvertently conclude that such permissions or approval are not required, then the value of our Ordinary Shares may depreciate significantly or become worthless.

Asset Transfers Between Our Company and Our Subsidiaries

As of the date of this prospectus, no cash transfer or transfer of other assets has occurred between our Company and our subsidiaries, except that between November and December 2022, Xuhang Cayman transferred an aggregate of US$151,945.44 to Xuhang HK for working capital purposes. We have established controls and procedures for cash flows within our organization based on internal cash management policies established by our finance department, which were discussed, considered, and reviewed by the relevant departments in our Company, and approved by our Chairman of the Board of Directors. Specifically, our finance department

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supervises cash management, following the instructions of our management. Our finance department is responsible for establishing our cash operation plan and coordinating cash management matters among our subsidiaries and departments. Each subsidiary and department initiates a cash request by putting forward a cash demand plan, which explains the specific amount and timing of cash requested, and submitting it to our finance department. The finance department reviews the cash demand plan and prepares a summary for the management of our Company. Management examines and approves the allocation of cash based on the sources of cash and the priorities of the needs. Other than the above, we currently do not have other cash management policies or procedures that dictate how funds are transferred.

Dividends or Distributions Made to Our Company and U.S. Investors and Tax Consequences

As of the date of this prospectus, none of our subsidiaries have made any dividends or distributions to our Company and our Company has not made any dividends or distributions to our shareholders. We intend to keep any future earnings to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future. Subject to the passive foreign investment company (“PFIC”) rules, the gross amount of distributions we make to investors with respect to our Ordinary Shares (including the amount of any taxes withheld therefrom) will be taxable as a dividend, to the extent that the distribution is paid out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles.

Under the Cayman Islands law, a Cayman Islands company may pay a dividend on its shares out of either profit or share premium amount, provided that in no circumstances may a dividend be paid out of share premium if this would result in the company being unable to pay its debts as they fall due in the ordinary course of business.

If we determine to pay dividends on any of our Ordinary Shares in the future, as a holding company, we will be dependent on receipt of funds from Xuhang HK. However, as the PRC government imposes control over currency conversion, it has the authority to conduct exchange transfer reviews, which may impose certain limitations on our ability to transfer cash between our Company, our subsidiaries, and our investors, primarily reflected in the following aspects: (i) we are restricted from providing capital or providing loans to our PRC subsidiaries, which may adversely affect the operations of our PRC subsidiaries; (ii) our PRC subsidiaries may be restricted from paying dividends to us; and (iii) if we are unable to obtain dividends from our PRC subsidiaries, it may adversely impact our dividends distribution to investors. See “Summary of Risk Factors,” “Risk Factors—Risks Relating to Doing Business in the PRC—PRC regulations relating to offshore investment activities by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital into our PRC subsidiaries, limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us,” “Risk Factors—Risks Relating to Doing Business in the PRC—PRC regulation of parent/subsidiary loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of offshore offerings to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect their liquidity and their ability to fund and expand their business,” and “Risk Factors—Risks Relating to Doing Business in the PRC—Governmental control of currency conversion may affect the value of your investment and our payment of Dividends.” Further, to the extent cash or assets in the business are in the PRC/Hong Kong or a PRC/Hong Kong entity, the funds or assets may not be available to fund operations or for other use outside of the PRC/Hong Kong, due to interventions in or the imposition of restrictions and limitations on the ability of our Company or our subsidiaries by the PRC government to transfer cash or assets. There is no assurance the PRC government will not intervene in or impose restrictions on the ability of our Company or our subsidiaries to transfer cash or assets. See “—Business Overview—Summary of Risk Factors,” and “Risk Factors—Risks Relating to Doing Business in the PRC—To the extent cash or assets in the business are in the PRC/Hong Kong or a PRC/Hong Kong entity, the funds or assets may not be available to fund operations or for other use outside of the PRC/Hong Kong, due to interventions in or the imposition of restrictions and limitations on the ability of our Company or our subsidiaries by the PRC government to transfer cash or assets.”

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Current PRC regulations permit our PRC subsidiaries to pay dividends to Xuhang HK only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of our PRC subsidiaries is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital.

The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. For instance, the Circular on Promoting the Reform of Foreign Exchange Management and Improving Authenticity and Compliance Review, or “SAFE Circular 3,” issued on January 26, 2017, provides that banks shall, when dealing with dividend remittance transactions from a domestic enterprise to its offshore shareholders of more than US$50,000, review the relevant board resolutions, original tax filing form, and audited financial statements of such domestic enterprise based on the principle of genuine transaction. Furthermore, if our PRC subsidiaries incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments. If we or our PRC subsidiaries are unable to receive all of the revenue from our operations, we may be unable to pay dividends on our Ordinary Shares.

Cash dividends, if any, on our Ordinary Shares will be paid in U.S. dollars. Xuhang HK may be considered a non-resident enterprise for tax purposes, so that any dividends Xuhang Network, Huzhou Yinzhiya, and Wuhan Yinzhiya pay to Xuhang HK may be regarded as China-sourced income and as a result may be subject to PRC withholding tax at a rate of up to 10%. See “Material Income Tax Consideration—Enterprise Taxation in Mainland China.”

In order for us to pay dividends to our shareholders, we will rely on payments made from Xuhang Network, Huzhou Yinzhiya, and Wuhan Yinzhiya to Xuhang HK as dividends from these three PRC subsidiaries, and then the distribution of such payments to our Company as dividends from Xuhang HK. If Huzhou Yinzhiya, Wuhan Yinzhiya, or Xuhang Network or its subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us.

Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income (the “Double Tax Avoidance Arrangement”), the 10% withholding tax rate may be lowered to 5% if a Hong Kong resident enterprise owns no less than 25% of a PRC project. The 5% withholding tax rate, however, does not automatically apply and certain requirements must be satisfied, including without limitation that (a) the Hong Kong project must be the beneficial owner of the relevant dividends; and (b) the Hong Kong project must directly hold no less than 25% share ownership in the PRC project during the 12 consecutive months preceding its receipt of the dividends. In current practice, a Hong Kong project must obtain a tax resident certificate from the Hong Kong tax authority to apply for the 5% lower PRC withholding tax rate. As the Hong Kong tax authority will issue such a tax resident certificate on a case-by-case basis, we cannot assure you that we will be able to obtain the tax resident certificate from the relevant Hong Kong tax authority and enjoy the preferential withholding tax rate of 5% under the Double Taxation Arrangement with respect to any dividends paid by Xuhang Network, Huzhou Yinzhiya, and Wuhan Yinzhiya to their immediate holding company, Xuhang HK. As of the date of this prospectus, we have not applied for the tax resident certificate from the relevant Hong Kong tax authority. Xuhang HK intends to apply for the tax resident certificate if and when Xuhang Network, Huzhou Yinzhiya, and Wuhan Yinzhiya plan to declare and pay dividends to Xuhang HK. See “Risk Factors—Risks Relating to Doing Business in the PRC—There are significant uncertainties under the EIT Law relating to the withholding tax liabilities of our PRC subsidiary, and dividends payable by our PRC subsidiaries to our offshore subsidiaries may not qualify to enjoy certain treaty benefits.”

Implications of Being an “Emerging Growth Company”

As a company with less than US$1.235 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the “JOBS Act.” An

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“emerging growth company” may take advantage of reduced reporting requirements that are otherwise applicable to larger public companies. In particular, as an emerging growth company, we:

• may present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations;

• are not required to provide a detailed narrative disclosure discussing our compensation principles, objectives and elements and analyzing how those elements fit with our principles and objectives, which is commonly referred to as “compensation discussion and analysis”;

• are not required to obtain an attestation and report from our auditors on our management’s assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002;

• are not required to obtain a non-binding advisory vote from our shareholders on executive compensation or golden parachute arrangements (commonly referred to as the “say-on-pay,” “say-on frequency,” and “say-on-golden-parachute” votes);

• are exempt from certain executive compensation disclosure provisions requiring a pay-for-performance graph and CEO pay ratio disclosure;

• are eligible to claim longer phase-in periods for the adoption of new or revised financial accounting standards under §107 of the JOBS Act; and

• will not be required to conduct an evaluation of our internal control over financial reporting until our second annual report on Form 20-F following the effectiveness of our initial public offering.

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

Under the JOBS Act, we may take advantage of the above-described reduced reporting requirements and exemptions until we no longer meet the definition of an emerging growth company. The JOBS Act provides that we would cease to be an “emerging growth company” at the end of the fiscal year in which the fifth anniversary of our initial sale of common equity pursuant to a registration statement declared effective under the Securities Act occurred, if we have more than US$1.235 billion in annual revenue, have more than US$700 million in market value of our Ordinary Shares held by non-affiliates, or issue more than US$1 billion in principal amount of non-convertible debt over a three-year period.

Foreign Private Issuer Status

We are a foreign private issuer within the meaning of the rules under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As such, we are exempt from certain provisions applicable to United States domestic public companies. For example:

• we are not required to provide as many Exchange Act reports, or as frequently, as a domestic public company;

• for interim reporting, we are permitted to comply solely with our home country’s requirements, which are less rigorous than the rules that apply to domestic public companies;

• we are not required to provide the same level of disclosure on certain issues, such as executive compensation;

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• we are exempt from provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information;

• we are not required to comply with the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; and

• we are not required to comply with Section 16 of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and establishing insider liability for profits realized from any “short-swing” trading transaction.

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THE OFFERING

Ordinary Shares offered by us [●] Ordinary Shares, based on an assumed offering price of US$[●] per Ordinary Share, which is the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus

Price per Ordinary Share We currently estimate that the initial public offering price will be in the range of US$[●] to US$[●] per Ordinary Share.

Ordinary Shares outstanding prior to completion of this offering 58,804,977 Ordinary Shares

Ordinary Shares outstanding immediately after this offering [●] Ordinary Shares, assuming no exercise of the underwriters’ over-allotment option and excluding [●] Ordinary Shares underlying the Representative’s Warrants

[●] Ordinary Shares, assuming full exercise of the underwriters’ over-allotment option and excluding [●] Ordinary Shares underlying the Representative’s Warrants

Listing We will apply to have our Ordinary Shares listed on the Nasdaq Capital Market. At this time, Nasdaq has not yet approved our application to list our Ordinary Shares. The closing of this offering is conditioned upon Nasdaq’s final approval of our listing application, and there is no guarantee or assurance that our Ordinary Shares will be approved for listing on Nasdaq.

Proposed ticker symbol “[●]”

Transfer Agent [●]

Over-allotment Option We have granted to the Representative an option, exercisable within 30 days from the date of this prospectus, to purchase up to an aggregate of [●] additional Ordinary Shares

Use of proceeds We intend to use the proceeds from this offering to expand our main business to further improve our integrated marketing services, invest in technology research and development, and acquire high-quality companies within the same industry or upstream and downstream entities across the new media integrated content marketing value chain, and for working capital and other general corporate purposes. See “Use of Proceeds” on page 66 for more information.

Lock-up All of our directors and officers and our shareholders owning 5% or more of our Ordinary Shares have agreed with the Representative not to sell, transfer, or dispose of, directly or indirectly, any of our Ordinary Shares or securities convertible into or exercisable or exchangeable for our Ordinary Shares for a period of six months after the date of this prospectus. See “Shares Eligible for Future Sale” and “Underwriting” for more information.

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Risk factors The Ordinary Shares offered hereby involve a high degree of risk. You should read “Risk Factors,” beginning on page 23 for a discussion of factors to consider before deciding to invest in our Ordinary Shares.

Representative’s Warrants The registration statement of which this prospectus is a part also registers for sale the Representative’s Warrants to purchase Ordinary Shares equal to 5% of the total number of Ordinary Shares sold in this offering, including the number of Ordinary Shares upon the exercise of the Representative’s over-allotment option, as a portion of the underwriting compensation payable to the underwriters in connection with this offering. The Representative’s Warrants will be exercisable commencing on the date of commencement of sales of Ordinary Shares in this offering for a period of three years at a per share exercise price of US$[●] (130% of the public offering price of the Ordinary Shares, based on an assumed offering price of US$[●] per Ordinary Share, which is the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus). Please see “Underwriting—The Representative’s Warrants” for a description of these warrants.

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RISK FACTORS

An investment in our Ordinary Shares involves a high degree of risk. Before deciding whether to invest in our Ordinary Shares, you should consider carefully the risks described below, together with all of the other information set forth in this prospectus, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes. If any of these risks actually occurs, our business, financial condition, results of operations, or cash flow could be materially and adversely affected, which could cause the trading price of our Ordinary Shares to decline, resulting in a loss of all or part of your investment. The risks described below and discussed in other parts of this prospectus are not the only ones that we face. Additional risks not presently known to us or that we currently deem immaterial may also affect our business. You should only consider investing in our Ordinary Shares if you can bear the risk of loss of your entire investment.

Risks Relating to Doing Business in the PRC

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

Substantially all of our PRC subsidiaries’ assets and operations are currently located in China. Accordingly, our PRC subsidiaries’ 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, including 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 by 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. 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 PRC subsidiaries’ business and operating results, reduce demand for their products, and weaken their 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 our PRC subsidiaries. For example, our PRC subsidiaries’ 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 adjustments, to control the pace of economic growth. These measures may cause decreased economic activities in China, which may adversely affect our PRC subsidiaries’ business and operating results.

Furthermore, our Company, our PRC subsidiaries, and our investors may face uncertainty about future actions by the government of China that could significantly affect our PRC subsidiaries’ financial performance and operations. As of the date of this prospectus, neither our Company nor our PRC subsidiaries have received or were denied permission from Chinese authorities to list on U.S. exchanges. However, there is no guarantee that our Company or our PRC subsidiaries will receive or not be denied permission from Chinese authorities to list on U.S. exchanges in the future.

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Uncertainties in the interpretation and enforcement of PRC laws and regulations and changes in policies, rules, and regulations in China, which may be quick with little advance notice, could limit the legal protection available to you and us.

The PRC legal system is based on written statutes. Unlike common law systems, it is a system in which legal cases have limited value as precedents. In the late 1970s, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The legislation over the past three decades has significantly increased the protection afforded to various forms of foreign or private-sector investment in China. Our PRC subsidiaries are subject to various PRC laws and regulations generally applicable to companies in China. Since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, however, the interpretations of many laws, regulations, and rules are not always uniform and enforcement of these laws, regulations, and rules involve uncertainties.

From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, however, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy in the PRC legal system than in more developed legal systems. Furthermore, the PRC legal system is based in part on government policies, internal rules, and regulations (some of which are not published in a timely manner or at all) that may have retroactive effect and may change quickly with little advance notice. As a result, we may not be aware of our violation of these policies and rules until sometime after the violation. Such uncertainties, including uncertainties over the scope and effect of our contractual, property (including intellectual property), and procedural rights, and any failure to respond to changes in the regulatory environment in China could materially and adversely affect our business and impede our ability to continue our operations.

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 prospectus based on foreign laws. It may also be difficult for you or overseas regulators to conduct investigations or collect evidence within China.

As a company incorporated under the laws of the Cayman Islands, we conduct substantially all of our operations in China and substantially all of our assets are located in China. In addition, all of our senior executive officers reside within China for a significant portion of the time and are PRC nationals. As a result, it may be difficult for you to effect service of process upon those persons inside mainland China. It may be difficult for you to enforce judgements obtained in U.S. courts based on civil liability provisions of the U.S. federal securities laws against us and our officers and directors who do not currently reside in the U.S. or have substantial assets in the U.S. 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 U.S. or any state.

The recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions. China does not have any treaties or other forms of written arrangement with the United States 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.

It may also be difficult for you or overseas regulators to conduct investigations or collect evidence within China. For example, in China, there are significant legal and other obstacles to obtaining information needed for shareholder investigations or litigation outside China or otherwise with respect to foreign entities. Although the

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authorities in China may establish a regulatory cooperation mechanism with counterparts of another country or region to monitor and oversee cross border securities activities, such regulatory cooperation with the securities regulatory authorities in the United States may not be efficient in the absence of a practical cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, or “Article 177,” which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigations or evidence collection activities within the territory of the PRC. Article 177 further provides that Chinese entities and individuals are not allowed to provide documents or materials related to securities business activities to foreign agencies without prior consent from the securities regulatory authority of the State Council and the competent departments of the State Council. While detailed interpretation of or implementing rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase difficulties faced by you in protecting your interests.

Given the Chinese government’s significant oversight and discretion over the conduct of our PRC subsidiaries’ business, the Chinese government may intervene or influence their operations at any time, which could result in a material change in our PRC subsidiaries’ operations and/or the value of our Ordinary Shares.

The Chinese government has significant oversight and discretion over the conduct of our PRC subsidiaries’ business and may intervene or influence their operations at any time as the government deems appropriate to further regulatory, political, and societal goals, which could result in a material change in our PRC subsidiaries’ operations and/or the value of our Ordinary Shares.

The Chinese government has recently published new policies that significantly affected certain industries such as the education and internet industries, and we cannot rule out the possibility that it will in the future release regulations or policies regarding the digital marketing industry that could adversely affect our PRC subsidiaries’ business, financial condition, and results of operations. Furthermore, if China adopts more stringent standards with respect to certain areas such as environmental protection or corporate social responsibilities, our PRC subsidiaries’ may incur increased compliance costs or become subject to additional restrictions in their operations. Certain areas of the law, including intellectual property rights and confidentiality protections, in China may also not be as effective as in the United States or other countries. In addition, our PRC subsidiaries cannot predict the effects of future developments in the PRC legal system on their business operations, including the promulgation of new laws, or changes to existing laws or the interpretation or enforcement thereof. These uncertainties could limit the legal protections available to us and our investors, including you.

Any actions by the Chinese government, including any decision to intervene or influence the operations of our PRC subsidiaries or to exert control over any offering of securities conducted overseas and/or foreign investment in China-based issuers, may cause us to make material changes to the operations of our PRC subsidiaries, may limit or completely hinder our ability to offer or continue to offer securities to investors, and may cause the value of such securities to significantly decline or be worthless.

The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. The ability of our subsidiaries to operate in China may be impaired by changes in its laws and regulations, including those relating to taxation, environmental regulations, land use rights, foreign investment limitations, and other matters. The central or local governments of China may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts for our PRC subsidiaries to ensure their compliance with such regulations or interpretations. As such, our PRC subsidiaries may be subject to various government and regulatory interference in the provinces in which they operate in China. They could be subject to regulation by various political and regulatory entities, including various local and municipal agencies and government sub-divisions. They may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply.

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Furthermore, it is uncertain when and whether we will be required to obtain permission from the PRC government to list on U.S. exchanges in the future, and even when such permission is obtained, whether it will be later denied or rescinded. Although we believe our Company and our PRC subsidiaries are currently not required to obtain permission from any Chinese authorities and have not received any notice of denial of permission to list on the U.S. exchange as of the date of this prospectus, our operations could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to our business or industry, particularly in the event permission to list on U.S. exchanges may be later required, or withheld or rescinded once given.

Accordingly, government actions in the future, including any decision to intervene or influence the operations of our PRC subsidiaries at any time or to exert control over an offering of securities conducted overseas and/or foreign investment in China-based issuers, may cause us to make material changes to the operations of our PRC subsidiaries, may limit or completely hinder our ability to offer or continue to offer securities to investors, and/or may cause the value of such securities to significantly decline or be worthless.

Recent greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our PRC subsidiaries’ business and our offering.

On December 28, 2021, 13 governmental departments of the PRC, including the CAC, jointly promulgated the Cybersecurity Review Measures, which became effective on February 15, 2022. The Cybersecurity Review Measures provide that, in addition to CIIO that intend to purchase Internet products and services, net platform operators engaging in data processing activities that affect or may affect national security must be subject to cybersecurity review by the Cybersecurity Review Office of the PRC. According to the Cybersecurity Review Measures, a cybersecurity review assesses potential national security risks that may be brought about by any procurement, data processing, or overseas listing. The Cybersecurity Review Measures require that an online platform operator which possesses the personal information of at least one million users must apply for a cybersecurity review by the CAC if it intends to be listed in foreign countries.

On November 14, 2021, the CAC published the Security Administration Draft. The Security Administration Draft provides that data processors shall apply for a cybersecurity review under certain circumstances, such as mergers, restructurings, and divisions of Internet platform operators that hold large amount of data relating to national security, economic development, or public interest which affects or may affect the national security, overseas listings of data processors that process personal data for more than one million individuals, Hong Kong listings of data processors that affect or may affect national security, and other data processing activities that affect or may affect the national security. The deadline for public comments on the Security Administration Draft was December 13, 2021.

As of the date of this prospectus, we have not received any notice from any authorities identifying our PRC subsidiaries as CIIOs or requiring us to go through cybersecurity review or network data security review by the CAC. As confirmed by our PRC counsel, AllBright, neither the operations of our PRC subsidiaries, nor our listing are expected to be affected, and that we are not subject to cybersecurity review by the CAC under the Cybersecurity Review Measures, nor will any such entity be subject to the Security Administration Draft, if it is enacted as proposed, given that our PRC subsidiaries are not CIIOs or online platform operators with personal information of more than one million users. There remains uncertainty, however, as to how the Cybersecurity Review Measures and the Security Administration Draft 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 Cybersecurity Review Measures and the Security Administration Draft. If any such new laws, regulations, rules, or implementation and interpretation come into effect, we expect to take all reasonable measures and actions to comply and to minimize the adverse effect of such laws on us. We cannot guarantee, however, that our PRC subsidiaries will not be subject to cybersecurity review and network data security review in the future. During such reviews, our PRC subsidiaries may be required to suspend their operations or experience other disruptions to their operations. Cybersecurity review and network data security review could also result in negative publicity with respect to our Company and diversion of our managerial and

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financial resources, which could materially and adversely affect our business, financial conditions, and results of operations.

The Opinions recently issued by the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council may subject us to additional compliance requirements in the future.

Recently, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the Opinions, which were made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies. These opinions proposed to take effective measures, such as promoting the construction of relevant regulatory systems, to deal with the risks and incidents facing China-based overseas-listed companies and the demand for cybersecurity and data privacy protection. On December 24, 2021, the CSRC promulgated the New Overseas Listing Rules for public comments. The New Overseas Listing Rules require Chinese domestic enterprise to complete filings with governmental authority and report related information. See “Regulations—Regulations Relating to Overseas Listings.” The aforementioned policies and any related implementation rules to be enacted may subject us to additional compliance requirements in the future. As the Opinions and the New Overseas Listing Rules were recently issued, their official guidance and interpretation remain unclear in several respects at this time. Therefore, we cannot assure you that we will remain fully compliant with all new regulatory requirements of the Opinions or the New Overseas Listing Rules or any future implementation rules on a timely basis, or at all.

Recent joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and the HFCA Act all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our continued listing or future offerings of our securities in the U.S.

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 controlled by a foreign government if the PCAOB is unable to audit specified reports because the company uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect the company’s auditors for three consecutive years, the issuer’s securities are prohibited to trade on a national exchange. 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 March 24, 2021, the SEC announced the adoption of interim final amendments to implement the submission and disclosure requirements of the HFCA Act. In the announcement, the SEC clarifies that before any issuer will have to comply with the interim final amendments, the SEC must implement a process for identifying covered issuers. The announcement also states that the SEC staff is actively assessing how best to implement the other requirements of the HFCA Act, including the identification process and the trading prohibition requirements.

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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 board of directors of a company 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 adopted amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act, which became effective on January 10, 2022. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions. For example, on December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions.

On December 16, 2021, the PCAOB issued a report on its determinations that the Board 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 PRC authorities in those jurisdictions. The Board made these determinations pursuant to PCAOB Rule 6100, which provides a framework for how the PCAOB fulfills its responsibilities under the HFCA Act.

On December 23, 2022, the Accelerating Holding Foreign Companies Accountable Act was enacted, 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.

The lack of access to the PCAOB inspection in China prevents the PCAOB from fully evaluating audits and quality control procedures of the auditors based in China. As a result, investors may be deprived of the benefits of such PCAOB inspections. The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of these accounting firm’s audit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which could cause existing and potential investors in our Ordinary Shares to lose confidence in our audit procedures and reported financial information and the quality of our financial statements.

Our auditor, the independent registered public accounting firm that issues the audit report included elsewhere in this prospectus, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. Our auditor is headquartered in San Mateo, California, and has been inspected by the PCAOB on a regular basis, with the last inspection in October 2019. The PCAOB currently has access to inspect the working papers of our auditor and our auditor is not subject to the determinations announced by the PCAOB on December 16, 2021. However, the recent developments would add uncertainties to our offering and we cannot assure you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria to us since we are an emerging growth company and the majority of our operations are conducted in China. Furthermore, if the PCAOB is unable to inspect our accounting firm in the future, the HFCA Act, which requires that the PCAOB be permitted to inspect an issuer’s public accounting firm within three years, will prohibit trading in our securities, and, as a result, an exchange may determine to delist our securities and trading in our securities could be prohibited. On December 23, 2022, the Accelerating Holding Foreign Companies Accountable Act was enacted, 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, thus reducing the time period for triggering the delisting of our Company and the prohibition of trading in our securities if the PCAOB is unable to inspect our accounting firm at such future time.

On August 26, 2022, the CSRC, the MOF, and the PCAOB signed the Protocol, governing inspections and investigations of accounting firms based in mainland China and Hong Kong, taking the first step toward opening

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access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. 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 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 Holding Foreign Companies Accountable Act, which reduces the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two.

To the extent cash or assets in the business are in the PRC/Hong Kong or a PRC/Hong Kong entity, the funds or assets may not be available to fund operations or for other use outside of the PRC/Hong Kong, due to interventions in or the imposition of restrictions and limitations on the ability of our Company or our subsidiaries by the PRC government to transfer cash or assets.

Relevant PRC laws and regulations permit the companies in the PRC to pay dividends only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Additionally, each of the companies in the PRC are required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. The companies in the PRC are also required to further set aside a portion of their after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at their discretion. These reserves are not distributable as cash dividends. Furthermore, in order for us to pay dividends to our shareholders, we will rely on payments made from Xuhang Network, Huzhou Yinzhiya, and Wuhan Yinzhiya to Xuhang HK as dividends from these three PRC subsidiaries, and then the distribution of such payments to our Company as dividends from Xuhang HK. If Huzhou Yinzhiya, Wuhan Yinzhiya, or Xuhang Network or its subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us.

Our cash dividends, if any, will be paid in U.S. dollars. If we are considered a tax resident enterprise of the PRC for tax purposes, any dividends we pay to our overseas shareholders may be regarded as China-sourced income and as a result may be subject to PRC withholding tax. See “—Risks Relating to Doing Business in the PRC—Under the PRC Enterprise Income Tax Law, we may be classified as a PRC ‘resident enterprise’ for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment.”

The PRC government also imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of the PRC. The majority of our PRC subsidiaries’ income is 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 the State Administration of Foreign Exchange (“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 the PRC to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may, at its discretion, impose restrictions on access to foreign currencies for current account transactions and if this occurs in the future, we may not be able to pay dividends in foreign currencies to our shareholders.

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As of the date of this prospectus, there are no restrictions or limitations imposed by the Hong Kong government on the transfer of capital within, into, and out of Hong Kong (including funds from Hong Kong to mainland China), except for the transfer of funds involving money laundering and criminal activities. However, there is no guarantee that the Hong Kong government will not promulgate new laws or regulations that may impose such restrictions in the future. There is no assurance the PRC government will not intervene in or impose restrictions on our ability to transfer cash or assets.

As a result of the above, to the extent cash or assets in the business are in the PRC/Hong Kong or a PRC/Hong Kong entity, such funds or assets may not be available to fund operations or for other use outside of the PRC/Hong Kong, due to interventions in or the imposition of restrictions and limitations on the ability of our Company or our subsidiaries by the competent government to the transfer of cash or assets.

Increases in labor costs in the PRC may adversely affect our PRC subsidiaries’ business and profitability.

China’s economy has experienced increases in labor costs in recent years. China’s overall economy and the average wage in China are expected to continue to grow. The average wage level for our PRC subsidiaries’ employees has also increased in recent years. We expect that their labor costs, including wages and employee benefits, will continue to increase. Unless our PRC subsidiaries are able to pass on these increased labor costs to their customers by increasing prices for their products or services, their profitability and results of operations may be materially and adversely affected.

In addition, our PRC subsidiaries have been subject to stricter regulatory requirements in terms of entering into labor contracts with their 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 their employees. Pursuant to the PRC Labor Contract Law, or the “Labor Contract Law,” that became effective in January 2008 and its amendments that became effective in July 2013 and its implementing rules that became effective in September 2008, employers are subject to stricter requirements in terms of signing labor contracts, minimum wages, paying remuneration, determining the term of employees’ probation, and unilaterally terminating labor contracts. In the event that our PRC subsidiaries decide to terminate some of their employees or otherwise change their employment or labor practices, the Labor Contract Law and its implementation rules may limit their ability to effect those changes in a desirable or cost-effective manner, which could adversely affect their business and results of operations.

As the interpretation and implementation of labor-related laws and regulations are still evolving, we cannot assure you that our PRC subsidiaries’ employment practices do not and will not violate labor-related laws and regulations in China, which may subject our PRC subsidiaries to labor disputes or government investigations. If our PRC subsidiaries are deemed to have violated relevant labor laws and regulations, they could be required to provide additional compensation to their employees and their business, and, in such case, our financial condition, and results of operations could be materially and adversely affected.

Our PRC subsidiaries have not made adequate social insurance and housing fund contributions for all employees as required by PRC regulations, which may subject them to penalties.

According to the PRC Social Insurance Law and the Administrative Regulations on the Housing Funds, companies operating in China are required to participate in pension insurance, work-related injury insurance, medical insurance, unemployment insurance, maternity insurance (collectively known as “social insurance”), and housing funds plans, and the employers must pay all or a portion of the social insurance premiums and housing funds for their employees. For more details, please see “Regulations—Regulations Relating to Labor and Social Insurance.” The requirement of social insurance and housing fund has not been implemented consistently by the local governments in China given the different levels of economic development in different locations.

Our PRC subsidiaries have not made adequate social insurance and housing fund contributions for all employees, and they may be required to make up for the shortfall in the social insurance contributions as well as to pay late

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fees at the rate of 0.05% per day of the outstanding amount from the due date. If they fail to make up for the shortfalls within the prescribed time limit, the relevant administrative authorities will impose a fine of one to three times the outstanding amount upon them. With respect to housing fund plans, our PRC subsidiaries may be required to pay and/or deposit housing funds in full and on time within the prescribed time limit. If they fail to do so, relevant authorities could impose a fine of not less than RMB10,000 nor more than RMB50,000 and file applications to competent courts for compulsory enforcement of payment and deposit. As of December 31, 2022, we estimate that the amount of outstanding social insurance premiums and housing funds was approximately RMB1,027,625 (US$148,968) and the amount of late fees and potential fines was in the range of RMB200,000 (US$28,993) and RMB1,000,000 (US$144,963). We have not made accruals for the expected amounts owed, including late fees and fines that may be imposed by the relevant local government authorities in the financial statements. There are a number of policies providing that local governmental authorities shall act carefully to avoid burdensome measures over the small- and medium-size entities. For example, pursuant to the Emergency Notice on Practicing Principles of the State Council Executive Meeting and Stabilizing Work on Collecting Social Insurance Premiums, promulgated by the Ministry of Human Resources and Social Security on September 21, 2018, local authorities are prohibited from recovering the unpaid social insurance premiums from enterprises without permission in a centralized manner. Although we have not received any inquiry, notice, warning, or sanctions regarding such late fees or fines, the interpretation and implementation of labor-related laws and regulations are still constantly evolving which may be further amended from time to time. If the relevant PRC authorities determine that our PRC subsidiaries shall make supplemental social insurance and housing fund contributions or that they are subject to fines and legal sanctions in relation to their failure to make social insurance and housing fund contributions in full for their employees, their business, financial condition, and results of operations may be adversely affected.

PRC regulations relating to offshore investment activities by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital into our PRC subsidiaries, limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us.

On July 4, 2014, SAFE issued the Circular on Issues Concerning Foreign Exchange Control over the Overseas Investment and Financing and Round-trip Investment by Domestic Residents via Special Purpose Vehicles, or “SAFE Circular 37.” According to SAFE Circular 37, prior registration with the local SAFE branch is required for PRC residents, (including PRC individuals and PRC corporate entities as well as foreign individuals that are deemed as PRC residents for foreign exchange administration purpose), in connection with their direct or indirect contribution of domestic assets or interests to offshore special purpose vehicles, or “SPVs.” SAFE Circular 37 further requires amendments to the SAFE registrations in the event of any changes with respect to the basic information of the offshore SPV, such as change of a PRC individual shareholder, name, and operation term, or any significant changes with respect to the offshore SPV, such as an increase or decrease of capital contribution, share transfer or exchange, or mergers or divisions. 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. In February 2015, SAFE promulgated a Circular on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or “SAFE Circular 13,” effective in June 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.

In addition to SAFE Circular 37 and SAFE Circular 13, our ability to conduct foreign exchange activities in China may be subject to the interpretation and enforcement of the Implementation Rules of the Administrative Measures for Individual Foreign Exchange promulgated by SAFE in January 2007 (as amended and supplemented, the “Individual Foreign Exchange Rules”). Under the Individual Foreign Exchange Rules, any PRC individual seeking to make a direct investment overseas or engage in the issuance or trading of negotiable securities or derivatives overseas must make the appropriate registrations in accordance with SAFE provisions, the failure of which may subject such PRC individual to warnings, fines, or other liabilities.

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As of the date of this prospectus, our current shareholders who are subject to the SAFE Circular 37 or SAFE Circular 13 have completed the initial registrations with the qualified banks as required by the regulations. We may not be informed of the identities of all the PRC residents holding direct or indirect interest in our Company, however, and we have no control over any of our future beneficial owners. Thus, we cannot provide any assurance that our current or future PRC resident beneficial owners will comply with our request to make or obtain any applicable registrations or continuously comply with all registration procedures set forth in these SAFE regulations. Such failure or inability of our PRC residents beneficial owners to comply with these SAFE regulations may subject us or our PRC resident beneficial owners to fines and legal sanctions, restrict our cross-border investment activities, or limit our PRC subsidiaries’ ability to distribute dividends to or obtain foreign-exchange-dominated loans from us, or prevent us from being able to make distributions or pay dividends, as a result of which our business operations and our ability to distribute profits to you could be materially and adversely affected.

PRC regulation of parent/subsidiary loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of offshore offerings to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect their liquidity and their ability to fund and expand their business.

We are an offshore holding company conducting our operations in China through our PRC subsidiaries, to which we can make loans and make additional capital contributions. Most of these loans or contributions are subject to PRC regulations and approvals or registration. For example, any loans to Xuhang Network, Huzhou Yinzhiya, and Wuhan Yinzhiya, which are treated as foreign-invested enterprises under PRC law, are subject to PRC regulations and foreign exchange loan registrations. Furthermore, loans made by us to Xuhang Network, Huzhou Yinzhiya, and Wuhan Yinzhiya to finance their activities cannot exceed statutory limits and must be registered with the local counterpart of SAFE, or filed with SAFE in its information system. Pursuant to relevant PRC regulations, we may provide loans to Xuhang Network, Huzhou Yinzhiya, and Wuhan Yinzhiya up to the larger amount of (i) the balance between the registered total investment amount and registered capital of these entities, or (ii) twice the amount of the net assets of these entities calculated in accordance with the PBOC Circular 9. Moreover, any medium or long-term loan to be provided by us to Xuhang Network, Huzhou Yinzhiya, Wuhan Yinzhiya, or other domestic PRC entities must also be filed and registered with the NDRC. We may also decide to finance Xuhang Network, Huzhou Yinzhiya, and Wuhan Yinzhiya by means of capital contributions. These capital contributions are subject to registration with the SAMR or its local branch, reporting of foreign investment information with the MOFCOM, or registration with other governmental authorities in China.

On March 30, 2015, SAFE issued the Notice of the State Administration of Foreign Exchange on Reforming the Administrative Approach Regarding the Settlement of the Foreign Exchange Capital of Foreign-invested Enterprises, or “SAFE Circular 19,” which took effect and replaced previous regulations effective on June 1, 2015, and was amended on December 30, 2019. Pursuant to SAFE Circular 19, up to 100% of foreign currency capital of a foreign-invested enterprise may be converted into RMB capital according to the actual operation, and within the business scope, of the enterprise at its will. Although SAFE Circular 19 allows for the use of RMB converted from the foreign currency-denominated capital for equity investments in the PRC, the restrictions continue to apply as to foreign-invested enterprises’ use of the converted RMB for purposes beyond their business scope, for entrusted loans or for inter-company RMB loans. On June 9, 2016, 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 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-affiliated enterprises. SAFE Circular 19 and SAFE Circular 16 may significantly limit our ability to transfer any foreign currency we hold, including the net proceeds from our offshore offerings, to Xuhang Network, Huzhou Yinzhiya, and Wuhan Yinzhiya, which may adversely affect our liquidity and our ability to fund and expand our business in China. On October 23, 2019, SAFE issued the Notice of the State Administration of Foreign Exchange on Further

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Facilitating Cross-border Trade and Investment, or “SAFE Circular 28,” which, among other things, expanded the use of foreign exchange capital to domestic equity investment area. Non-investment foreign-funded enterprises are allowed to lawfully make domestic equity investments by using their capital on the premise without violation to prevailing Special Administrative Measures for Access of Foreign Investments (Edition 2021), or the “Negative List,” and the authenticity and compliance with the regulations of domestic investment projects. However, since SAFE Circular 28 is newly promulgated, it is unclear how SAFE and competent banks will carry it out in practice.

In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, including SAFE Circular 19, SAFE Circular 16, and other relevant rules and regulations, we cannot assure you that we will be able to complete the necessary registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to future loans or capital contributions to Huzhou Yinzhiya, Wuhan Yinzhiya, and Xuhang Network and its subsidiaries. As a result, uncertainties exist as to our ability to provide prompt financial support to Huzhou Yinzhiya, Wuhan Yinzhiya, and Xuhang Network and its subsidiaries when needed. If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds we received or expect to receive from our offshore offerings and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our PRC subsidiaries’ business, including their liquidity and their ability to fund and expand their business.

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

The value of the RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions in China and by China’s foreign exchange policies. On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the RMB to the U.S. dollar, and the RMB appreciated more than 20% against the U.S. dollar over the following three years. Between July 2008 and June 2010, this appreciation halted and the exchange rate between the RMB and the U.S. dollar remained within a narrow band. Since June 2010, the RMB has fluctuated against the U.S. dollar, at times significantly and unpredictably. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future.

Our business is conducted in the PRC through our PRC subsidiaries, and their books and records are maintained in RMB. The financial statements that we file with the SEC and provide to our shareholders are partly presented in U.S. dollars. Changes in the exchange rates between the RMB and U.S. dollar affect the value of our PRC subsidiaries’ assets and results of operations, when presented in U.S. dollars. The value of the RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions and perceived changes in the economy of the PRC and the United States. Any significant revaluation of the RMB may materially and adversely affect our cash flows, revenue, and financial condition. Further, our Ordinary Shares offered in the U.S. are offered in U.S. dollars, we need to convert the net proceeds we receive into RMB in order to use the funds for our PRC subsidiaries’ business. Changes in the conversion rate among the U.S. dollar and the RMB will affect the amount of proceeds we will have available for our PRC subsidiaries’ business.

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 RMB into foreign currency. As a result, fluctuations in exchange rates may have a material adverse effect on your investment.

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Under the PRC Enterprise Income Tax Law, we may be classified as a PRC “resident enterprise” for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment.

Under the PRC Enterprise Income Tax Law (the “EIT Law”), which became effective in January 2008, an enterprise established outside the PRC with “de facto management bodies” within the PRC 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 rules to the EIT Law, a “de facto management body” is defined as a body that has material and overall management and control over the manufacturing and business operations, personnel and human resources, finances, and properties of an enterprise. In April 2009, the State Administration of Taxation (the “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, or “SAT Circular 82,” which was amended in December 2017. SAT Circular 82 specifies that certain offshore incorporated enterprises controlled by PRC enterprises or PRC enterprise groups will be classified as PRC resident enterprises if the following are located or resident in the PRC: senior management personnel and departments that are responsible for daily production, operation and management; financial and personnel decision-making bodies; key properties, accounting books, company seal, and minutes of board meetings and shareholders’ meetings; and half or more of the senior management or directors having voting rights. In addition to SAT Circular 82, the SAT issued the Measures for the Administration of Enterprise Income Tax of Chinese-Controlled Overseas Registered Enterprises as Resident Enterprises (for Trial Implementation), or “SAT Bulletin 45,” which took effect in September 2011 and was amended in April 2015, to provide more guidance on the implementation of SAT Circular 82 and clarify the reporting and filing obligations of such “Chinese-controlled offshore incorporated resident enterprises.” SAT Bulletin 45 provides procedures and administrative details for the determination of resident status and administration on post-determination matters. Although both SAT Circular 82 and SAT Bulletin 45 only apply to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreign individuals, the determining criteria set forth in SAT Circular 82 and SAT Bulletin 45 may reflect the SAT’s general position on how the “de facto management body” test should be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises, PRC enterprise groups, or by PRC or foreign individuals.

If the PRC tax authorities determine that the actual management organ of Xuhang Cayman is within the territory of China, Xuhang Cayman may be deemed to be a PRC resident enterprise for PRC enterprise income tax purposes and a number of unfavorable PRC tax consequences could follow. First, we will be subject to the uniform 25% enterprise income tax on our world-wide income, which could materially reduce our net income. In addition, we will also be subject to PRC enterprise income tax reporting obligations. Finally, dividends payable by us to our investors and gains on the sale of our shares may become subject to PRC withholding tax, at a rate of 10% in the case of non-PRC enterprises or 20% in the case of non-PRC individuals (in each case, subject to the provisions of any applicable tax treaty), if such gains are deemed to be from PRC sources. It is unclear whether non-PRC shareholders of our Company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise. Any such tax may reduce the returns on your investment in our shares. Although up to the date of this prospectus, Xuhang Cayman has not been notified or informed by the PRC tax authorities that it has been deemed to be a resident enterprise for the purpose of the EIT Law, we cannot assure you that it will not be deemed to be a resident enterprise in the future.

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

In February 2015, SAT issued a Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Tax Resident Enterprises, or “SAT Circular 7.” SAT Circular 7 provides

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comprehensive guidelines relating to indirect transfers of PRC taxable assets (including equity interests and real properties of a PRC resident enterprise) by a non-resident enterprise. In addition, in October 2017, SAT issued an Announcement on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises, or “SAT Circular 37,” effective in December 2017, which, among others, amended certain provisions in SAT Circular 7 and further clarify the tax payable declaration obligation by non-resident enterprise. Indirect transfer of equity interest and/or real properties in a PRC resident enterprise by their non-PRC holding companies are subject to SAT Circular 7 and SAT Circular 37.

SAT Circular 7 provides clear criteria for an 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. As stipulated in SAT Circular 7, indirect transfers of PRC taxable assets are considered as reasonable commercial purposes if the shareholding structure of both transaction parties falls within the following situations: (i) the transferor directly or indirectly owns 80% or above equity interest of the transferee, or vice versa; (ii) the transferor and the transferee are both 80% or above directly or indirectly owned by the same party; and (iii) the percentages in bullet points (i) and (ii) shall be 100% if over 50% the share value of a foreign enterprise is directly or indirectly derived from PRC real properties. Furthermore, SAT Circular 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 PRC taxable assets indirectly by disposing of the equity interests of an overseas holding company, which is an indirect transfer, the non-resident enterprise as either transferor or transferee, or the PRC entity that directly owns the taxable assets, may report such indirect transfer to the relevant tax authority and 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.

According to SAT Circular 37, where the non-resident enterprise fails to declare the tax payable pursuant to Article 39 of the EIT 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. If the non-resident enterprise, however, 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 assessment of reasonable commercial purposes and future transactions where PRC taxable assets are involved, such as offshore restructuring, sale of the shares in our offshore subsidiaries, and investments. In the event of being assessed as having no reasonable commercial purposes in an indirect transfer transaction, we may be subject to filing obligations or taxed if we are a transferor in such transactions, and may be subject to withholding obligations (to be specific, a 10% withholding tax for the transfer of equity interests) if we are a transferee in such transactions, under SAT Circular 7 and SAT Circular 37. For transfer of shares by investors who are non-PRC resident enterprises, our PRC subsidiaries may be requested to assist in the filing under the SAT circulars. As a result, we may be required to expend valuable resources to comply with the SAT circulars or to request the relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish that we should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations.

Our PRC subsidiaries are subject to restrictions on paying dividends or making other payments to us, which may have a material adverse effect on our ability to conduct our business.

We are a holding company incorporated in the Cayman Islands. We may need dividends and other distributions on equity from our PRC subsidiaries to satisfy our liquidity requirements, including the funds necessary to pay

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dividends and other cash distributions to our shareholders and service any debt we may incur. If our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to us.

Current PRC regulations permit our PRC subsidiaries to pay dividends to us only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, our PRC subsidiaries are required to set aside at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of their respective registered capital. Our PRC subsidiaries may also allocate a portion of their respective after-tax profits based on PRC accounting standards to employee welfare and bonus funds at their discretion. These reserves are not distributable as cash dividends. These limitation on the ability of our PRC subsidiaries 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.

Governmental control of currency conversion may affect the value of your investment and our payment of dividends.

The PRC government imposes controls on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency out of China. We receive substantially all of our revenue in RMB. Under our current corporate structure, Xuhang Cayman may rely on dividend payments from Xuhang Network, Huzhou Yinzhiya, and Wuhan Yinzhiya to fund any cash and financing requirements we may have. Under existing PRC foreign exchange 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 SAFE by complying with certain procedural requirements. Therefore, our PRC subsidiaries are able to pay dividends in foreign currencies to us without prior approval from SAFE, subject to the condition that the remittance of such dividends outside of the PRC complies with certain procedures under PRC foreign exchange regulation, such as the overseas investment registrations by our shareholders or the ultimate shareholders of our corporate shareholders who are PRC residents. Approval from or registration with appropriate government authorities is, however, required where the RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demand, we may not be able to pay dividends in foreign currencies to our shareholders.

There are significant uncertainties under the EIT Law relating to the withholding tax liabilities of our PRC subsidiaries, and dividends payable by our PRC subsidiaries to our offshore subsidiaries may not qualify to enjoy certain treaty benefits.

Under the EIT Law and its implementation rules, the profits of a foreign-invested enterprise generated through operations, which are distributed to its immediate holding company outside the PRC, will be subject to a withholding tax rate of 10%. Pursuant to the Double Tax Avoidance Arrangement, a withholding tax rate of 10% may be lowered to 5% if the enterprise in mainland China is at least 25% held by a Hong Kong enterprise for at least 12 consecutive months prior to distribution of the dividends and is determined by the relevant PRC tax authority to have satisfied other conditions and requirements under the Double Tax Avoidance Arrangement and other applicable PRC laws.

However, based on the Circular on Certain Issues with Respect to the Enforcement of Dividend Provisions in Tax Treaties, or the “SAT Circular 81,” which became effective on February 20, 2009, if the relevant PRC tax authorities determine, in their discretion, that a company benefits from such reduced income tax rate due to a structure or arrangement that is primarily tax-driven, such PRC tax authorities may adjust the preferential tax treatment. According to Circular on Several Issues regarding the “Beneficial Owner” in Tax Treaties, which

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became effective as of April 1, 2018, when determining an applicant’s status as the “beneficial owner” regarding tax treatments in connection with dividends, interests, or royalties in the tax treaties, several factors will be taken into account. Such factors include whether the business operated by the applicant constitutes actual business activities, and whether the counterparty country or region to the tax treaties does not levy any tax, grant tax exemption on relevant incomes, or levy tax at an extremely low rate. This circular further requires any applicant who intends to be proved of being the “beneficial owner” to file relevant documents with the relevant tax authorities. Our PRC subsidiaries is wholly owned by Xuhang HK. However, we cannot assure you that our determination regarding our qualification to enjoy the preferential tax treatment will not be challenged by the relevant PRC tax authority or we will be able to complete the necessary filings with the relevant PRC tax authority and enjoy the preferential withholding tax rate of 5% under the Double Tax Avoidance Arrangement with respect to dividends to be paid by our PRC subsidiaries to Xuhang HK, in which case, we would be subject to the higher withdrawing tax rate of 10% on dividends received.

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, have 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 could 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.

The disclosures in our reports and other filings with the SEC and our other public pronouncements are not subject to the scrutiny of any regulatory bodies in the PRC.

We are regulated by the SEC, and our reports and other filings with the SEC are subject to SEC review in accordance with the rules and regulations promulgated by the SEC under the Securities Act and the Exchange Act. Our SEC reports and other disclosure and public pronouncements are not subject to the review or scrutiny of any PRC regulatory authority. For example, the disclosure in our SEC reports and other filings are not subject to the review by the CSRC, a PRC regulator that is responsible for oversight of the capital markets in China. Accordingly, you should review our SEC reports, filings, and our other public pronouncements with the understanding that no local regulator has done any review of us, our SEC reports, other filings, or any of our other public pronouncements.

The approval of the CSRC may be required in connection with this offering under a regulation adopted in August 2006, and, if required, we cannot assure you that we will be able to obtain such approval, in which case we may face sanctions by the CSRC or other PRC regulatory agencies for failure to seek the CSRC approval for this offering.

The Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the “M&A Rules,” adopted by six PRC regulatory agencies in 2006 and amended in 2009, requires an overseas SPV formed

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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 SPV’s securities on an overseas stock exchange. In September 2006, the CSRC published a notice on its official website specifying documents and materials required to be submitted to it by an SPV seeking the CSRC approval of its overseas listings. The application of the M&A Rules remains unclear.

Our PRC legal counsel has advised us, based on their understanding of the current PRC law, rules, and regulations that the CSRC’s approval is not required for the listing and trading of our Ordinary Shares on the Nasdaq Capital Market in the context of this offering, given that (i) the CSRC currently has not issued any definitive rule or interpretation concerning whether offerings under this prospectus are subject to the M&A Rule; and (ii) we established our PRC subsidiaries by means of direct investment rather than by merger with or acquisition of PRC domestic companies as defined in the M&A Rules.

Our PRC legal counsel, however, has further advised us that there remains some uncertainty as to how the M&A Rules will be interpreted or implemented in the context of an overseas offering and its opinions summarized above are subject to any new laws, rules and regulations or detailed implementations and interpretations in any form relating to the M&A Rules. We cannot assure you that relevant PRC governmental agencies, including the CSRC, would reach the same conclusion as we have. If it is determined that the CSRC approval is required for our offerings in the U.S., we may face sanctions by the CSRC or other PRC regulatory agencies for failure to seek the CSRC approval for our offerings in the U.S. These sanctions may include fines and penalties on our operations in the PRC, limitations on our operating privileges in the PRC, delays in or restrictions on the repatriation of the proceeds from our offerings in the U.S. into the PRC, restrictions on or prohibition of the payments or remittance of dividends by our PRC subsidiaries, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation, and prospects, as well as the trading price of our Ordinary Shares. The CSRC or other PRC regulatory agencies may also take actions requiring us, or making it advisable for us, to halt our offerings in the U.S. before the settlement and delivery of the Ordinary Shares that we are offering. Consequently, if you engage in market trading or other activities in anticipation of and prior to the settlement and delivery of the shares we are offering, you would be doing so at the risk that the settlement and delivery may not occur.

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

The M&A Rules and recently adopted PRC 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 have or may have impact on the 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. Mergers or acquisitions that allow one market player to take control of or to exert decisive impact on another market player must also be notified in advance to MOFCOM when the threshold under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings, or the “Prior Notification Rules,” issued by the State Council in August 2008 is triggered. In addition, the Provisions of the Ministry of Commerce on the Implementation of the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the “Security Review Rules”) issued by MOFCOM that became effective in September 2011 specify that mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by MOFCOM, and the Security Review Rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement. In the future, we may grow our business by acquiring complementary businesses. Complying with

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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. It is clear that our PRC subsidiaries’ business would not be deemed to be in an industry that raises “national defense and security” or “national security” concerns. MOFCOM or other government agencies, however, may publish explanations in the future determining that our PRC subsidiaries’ business is in an industry subject to the security review, in which case our future acquisitions in the PRC, including those by way of entering into contractual control arrangements with target entities, may be closely scrutinized or prohibited. Our PRC subsidiaries’ ability to expand their business or maintain or expand their market share through future acquisitions would as such be materially and adversely affected.

Chinese regulatory authorities could disallow our holding company structure, which may result in a material change in our operations and/or a material change in the value of the securities we are registering for sale, including that it could cause the value of such securities to significantly decline or become worthless.

We indirectly hold the equity of our PRC subsidiaries through Xuhang HK, and thus our PRC subsidiaries are directly or indirectly foreign-invested enterprises. Although the PRC government has increasingly open attitude towards absorbing foreign investment in general, it still implements the Negative List, which restricts or prohibits overseas enterprises from holding the equity of Chinese companies whose operations are included in the Negative List. As the boundaries stipulated in the Negative List are relatively vague, they are subject to further determination and clarification by the Chinese government. As of the date of this prospectus, the business operated by our PRC subsidiaries has not been included in the Negative List, but we cannot fully guarantee that the Chinese government will not make a different interpretation, so as to disallow our holding corporate structure. Moreover, the Chinese government revises the Negative List from time to time; although the scope of the Negative List is narrowing as a whole, it remains uncertain whether our existing business or future business will be included in future revisions. If the business of our PRC subsidiaries is deemed as a restricted or prohibited business based on the Negative List, our existing corporate structure may be considered illegal and required to be restructured by the Chinese government, which may adversely affect our operations and the value of the securities we are registering for sale.

On July 4, 2014, SAFE issued the SAFE Circular 37, which requires PRC residents, including PRC individuals and institutions, to register with SAFE or its local branches in connection with their direct establishment or indirect control of an offshore special purpose vehicle, for the purpose of overseas investment and financing, with such PRC residents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests. In addition, such PRC residents must update their foreign exchange registrations with SAFE or its local branches when the offshore special purpose vehicles in which such residents directly hold equity interests undergo material events relating to any changes of basic information (including changes of such PRC individual shareholders, names, and operation terms), increases or decreases in investment amount, share transfers or exchanges, or mergers or divisions. As of the date of this prospectus, our current shareholders who are subject to the SAFE Circular 37 have completed the initial registrations with the qualified banks as required by the regulations. However, we may not be fully informed of the identities of all our shareholders or beneficial owners who are PRC residents, and therefore, we may not be able to identify all our shareholders or beneficial owners who are PRC residents to ensure their compliance with the SAFE Circular 37 or other related rules. In addition, we cannot provide any assurance that all of our shareholders and beneficial owners who are PRC residents will comply with our request to make, obtain, or update any applicable registrations or comply with other requirements required by the SAFE Circular 37 or other related rules in a timely manner. Even if our shareholders and beneficial owners who are PRC residents comply with such request, we cannot provide any assurance that they will successfully obtain or update any registration required by the SAFE Circular 37 or other related rules in a timely manner. If any of our shareholders who is a PRC resident, as determined by SAFE Circular 37, fails to fulfill the required foreign exchange registration, it will be deemed illegal for such shareholder to directly or indirectly hold our equity under the PRC laws. Furthermore, if PRC authorities disallow such shareholder to own our equity, our PRC subsidiaries may be prohibited from distributing dividends

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to us or from carrying out other subsequent cross-border foreign exchange activities, and we may be restricted in our ability to contribute additional capital to our PRC subsidiaries, which may adversely affect our operations and our values of the securities we are registering for sale.

Furthermore, if future laws, administrative regulations, or provisions mandate further actions to be taken by us or our PRC subsidiaries with respect to our existing corporate structure, 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, resulting in a material change in our operations and/or a material change in the value of our Ordinary Shares, including that it could cause the value of our Ordinary Shares to significantly decline or become worthless.

Risks Related to Our Business and Industry

Cutbacks on advertising budgets by marketers or failure to maintain and grow our PRC subsidiaries’ marketer base could materially and adversely affect their business and financial condition.

Our PRC subsidiaries derive their revenue primarily from both performance-based and non-performance-based service fees for their new media integrated content marketing services and digital advertising services (depending on the specific services provided), which are essentially the fees they charge their marketer customers. As such, our PRC subsidiaries’ revenue base and profitability are primarily driven by their gross billing with their marketers. The willingness of marketers to spend their advertising budget through our PRC subsidiaries is critical to their business and their ability to generate grossing billing. The demand of our PRC subsidiaries’ marketers for advertising services can be influenced by a variety of factors, including:

• macro-economic and social factors: domestic, regional, and global social, economic, and political conditions (such as concerns over a severe or prolonged slowdown in China’s economy and threats of political unrest), economic and geopolitical challenges (such as trade disputes between countries such as the United States and China), economic, monetary, and fiscal policies (such as the introduction and winding-down of qualitative easing programs);

• industry-related factors: such as the trends, preferences, and habits of audiences towards online media and their receptiveness towards digital advertising as well as the development of emerging and varying forms of online media and content; and

• marketer-specific factors: marketers’ specific development strategies, business performance, financial condition, and sales and marketing plans.

A change in any of the above factors may result in significant cutbacks on advertising budgets by our PRC subsidiaries’ marketers, which would in turn result in a reduction of their revenue. As a result, our PRC subsidiaries’ business, results of operations, and financial condition could be materially and adversely affected.

Failure to retain existing marketers and new media accounts or attract and grow new marketers and new media accounts may negatively impact our PRC subsidiaries’ revenue and business.

During the years ended December 31, 2020 and 2021 and the nine months ended September 30, 2022, 46.4%, 77.4%, and 87.5% of our PRC subsidiaries’ revenue was generated from their new media integrated content marketing services, respectively, which, to a large extent, rely on our PRC subsidiaries’ we-media account base for publication and distribution of their marketing content. See “Business—New Media Integrated Content Marketing Services—Ad Distribution Channels.” Our PRC subsidiaries’ ability to generate sustainable revenue depends on their ability to retain existing marketers, deepen or expand their relationships with those marketers, as well as attract new business. In order to do so, our PRC subsidiaries need to ensure that their marketer customers are satisfied with the effectiveness of their services. These marketers may have business relationships with a number of marketing service providers at the same time. If they determine that their expenditures on our PRC

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subsidiaries’ marketing services do not generate sufficient returns, they may reduce their marketing budgets or terminate marketing arrangements with our PRC subsidiaries. Failure to retain existing marketers or attract new marketers may materially and adversely affect our PRC subsidiaries’ business, financial condition, and results of operations.

While our PRC subsidiaries benefit from a diverse network of self-operated and cooperative we-media accounts at their disposal, they need to timely provide and update more appealing and entertaining content on those new media accounts to expand their follower bases and retain their value as marketing platforms. These efforts in production of creative content are costly and time-consuming, and there can be no guarantee that these efforts will be effective. Further, from time to time, our PRC subsidiaries source online traffic from other third-party media publishers as deemed suitable for their marketing campaigns. For that reason, our PRC subsidiaries’ marketing services also rely on those third-party new media publishers for access to a suitable network of ad distribution channels, but there is no assurance that our PRC subsidiaries will continue to maintain the business cooperation with them at the same level, or at all. In the event that our PRC subsidiaries lose those we-media publishers or access to their traffic inventories, our PRC subsidiaries may not be able to complete their services for marketers in a timely manner or at all, and may incur significant costs in finding new publishers or new traffic inventories, which may adversely affect their business, financial condition, results of operations and prospects.

Failure to maintain the quality of our PRC subsidiaries’ marketing content production may materially and adversely impact their business and financial condition.

As content-driven marketing service providers, our PRC subsidiaries pride themselves on their ability to consistently design and produce original, customized, and appealing marketing ideas, content, and materials catering to potential customers. Our PRC subsidiaries’ continued growth will primarily depend on their ability to leverage their expertise in content production to offer effective marketing service solutions, which facilitate high conversion rates. As of September 30, 2022, our PRC subsidiaries had an in-house new media content production and operation team consisting of 185 employees, including senior media professionals, senior marketers, or people with professional backgrounds in design, journalism, and writing. However, there is no assurance that our PRC subsidiaries will continue to maintain their content production and operation team or that the team will maintain the quality of their content production at the same level, given that the demand of audiences in the new media integrated content marketing is changing rapidly and the loss of any key personnel in the content production and operation team could be detrimental to our PRC subsidiaries’ service quality, financial performance, and business prospects. If our PRC subsidiaries failed to provide appealing and creative marketing content in a timely or cost-effective manner, their reputation may be damaged and their services may become less attractive to marketers. As a result, our PRC subsidiaries’ business, financial condition, and results of operations may be adversely affected.

The regulatory environment of the new media integrated content marketing industry and the digital advertising industry is rapidly evolving. If our PRC subsidiaries fail to obtain and maintain the requisite licenses and approvals applicable to their businesses in China from time to time, their business, financial condition, and results of operations may be materially and adversely affected.

As confirmed by our PRC counsel, AllBright, our PRC subsidiaries have obtained all material licenses, permits, or approvals from the regulatory authorities in China that are required for their business undertakings. However, the regulatory requirements within the new media integrated content marketing industry and the digital advertising industry, particularly in China, are constantly evolving and subject to the interpretation of the competent authorities, and our PRC subsidiaries may be subject to more stringent regulatory requirements due to changes in the political or economic policies in the relevant jurisdictions. There can be no guarantee that our PRC subsidiaries will be able to satisfy such regulatory requirements and they may be unable to retain, obtain, or renew relevant licenses, permits, or approvals in the future, and as a result, their business operations may be materially and adversely affected.

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Regulation and censorship of information disseminated through we-media publishers and we-media platforms in the PRC may adversely affect our PRC subsidiaries’ business.

A substantial portion of our PRC subsidiaries’ marketing services rely on their we-media resources. See “Business—Our Business Model” and “Business—New Media Integrated Content Marketing Services.” The we-media industry is subject to stringent rules, regulations, policies, and requirements on information disseminated through we-media publishers and we-media platforms. In enforcing these rules, regulations, policies, and requirements, relevant government authorities may suspend services or revoke licenses of any service provider or we-media publisher that is deemed to provide illicit content, and such activities may be intensified in connection with any ongoing government actions to eliminate prohibited content.

Our PRC subsidiaries endeavor to eliminate illicit content provided through their services. However, government standards and interpretations may change in a manner that could render their current monitoring efforts insufficient. There is no assurance that our PRC subsidiaries’ business and operations will not be subject to government actions or sanctions in the future. If government actions or sanctions are brought against our PRC subsidiaries or their we-media publishers, or if there are widespread rumors that government actions or sanctions have been brought against our PRC subsidiaries, their marketers, or their we-media publishers, our PRC subsidiaries’ ability to generate sustainable and increased revenue and their reputation and brand could be harmed. Our PRC subsidiaries may lose their marketers and we-media publishers, and their revenue and results of operation may be materially and adversely affected.

Our PRC subsidiaries are subject to, and may expend significant resources in defending against, government actions and civil claims in connection with false, fraudulent, misleading, or otherwise illegal marketing content provided through our PRC subsidiaries’ services.

Under the Advertising Law of the PRC (the “Advertising Law”), where an advertising operator provides advertising design, production, or agency services with respect to an advertisement when it knows or should have known that the advertisement is false, fraudulent, misleading, or otherwise illegal, the competent PRC authority may confiscate the advertising operator’s advertising revenue from such services, impose penalties, order it to cease dissemination of such false, fraudulent, misleading, or otherwise illegal advertisement, or correct such advertisement, or suspend or revoke its business licenses under certain serious circumstances. See “Regulations—Regulation Relating to Advertisement Advertising Business.”

Under the Advertising Law, “advertising operators” include any natural person, legal person, or other organization that provides advertising design, production, or agency services to advertisers for their advertising activities. Since our PRC subsidiaries’ services involve the provision of advertising design, production, and agency services to marketers, including helping them create content catering to their potential audiences and identify, engage, and convert audiences across suitable media and platforms, our PRC subsidiaries are deemed to be “advertising operators” under the PRC Advertising Law. Therefore, our PRC subsidiaries are required to examine advertising content for which they provide marketing services for compliance with applicable laws.

Although our PRC subsidiaries have established internal policies to review the advertising content before distribution to ensure compliance with applicable laws, there is no assurance that each advertisement for which our PRC subsidiaries provide marketing services complies with all PRC laws and regulations relevant to advertising activities, that supporting documentation provided by our PRC subsidiaries’ advertisers is authentic or complete, or that our PRC subsidiaries are able to identify and rectify all instances of non-compliance in a timely manner. Moreover, civil claims may be filed against our PRC subsidiaries for fraud, defamation, subversion, negligence, copyright or trademark infringement, or other violations due to the nature and content of the information for which our PRC subsidiaries provide marketing services. In the event our PRC subsidiaries are subject to government actions or civil claims in connection with false, fraudulent, misleading, or otherwise illegal marketing content for which they provide marketing services, their reputation and operating results may be materially and adversely affected.

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Our PRC subsidiaries are in the highly competitive new media integrated content marketing industry and the digital advertising industry, and may not be able to compete successfully against existing or new competitors, which could reduce their market share and adversely affect their competitive position and financial performance.

There are numerous companies that specialize in the provision of new media integrated content marketing services or digital advertising services in China. Our PRC subsidiaries compete primarily with their competitors and potential competitors for access to the quality advertiser base and ad inventory. The new media integrated content marketing industry and the digital advertising industry in China are rapidly evolving. Competition can be increasingly intensive and is expected to increase significantly in the future. Increased competition may result in price reductions for advertising services and reduced margins and loss of our PRC subsidiaries’ market share. Our PRC subsidiaries compete with other competitors in China primarily on the following bases:

• brand recognition;

• quality of services;

• effectiveness of sales and marketing efforts;

• creativity in the design and content of advertisements;

• optimization capability;

• strategic relationships; and

• hiring and retention of talented staff.

Our PRC subsidiaries’ existing competitors may in the future achieve greater market acceptance and recognition, secure authorized agency status with an increasing number of popular media, and gain a greater market share. It is also possible that potential competitors may emerge and acquire a significant market share. If our PRC subsidiaries’ existing and potential competitors enjoy competitive advantages, such as longer operating history, greater brand recognition, larger advertiser base, greater access to ad inventory, and significantly greater financial, technical, and marketing resources, our PRC subsidiaries’ business, results of operations, and financial condition would be negatively affected. In addition, our PRC subsidiaries also compete with traditional forms of media, such as newspapers, magazines, and radio and television broadcast, for advertisers and advertising revenue. If our PRC subsidiaries fail to compete successfully, they could lose out in procuring advertisers or acquiring access to ad inventory, which could result in an adverse impact to their business, results of operations, and prospects. There is also no assurance that our PRC subsidiaries’ strategies will remain competitive or that they will continue to be successful in the future. Increasing competition could result in pricing pressure and loss of our PRC subsidiaries’ market share, either of which could have a material adverse effect on their financial condition and results of operations.

Our PRC subsidiaries rely on a number of digital media platforms to conduct their business. However, operators of the platforms may curtail or inhibit their ability to use the platforms, or there may be material disruption of the platforms.

Our PRC subsidiaries provide their new media integrated content marketing services primarily through multiple digital media platforms, such as social media platforms, short video platforms, live streaming platforms, and e-commerce platforms. Over the years, our PRC subsidiaries have grown a wide-ranging portfolio of text-based or video-based we-media publishers, currently encompassing multiple WeChat public accounts, short video accounts, and other new media accounts on high-profile media platforms in China, such as Douyin, Weibo, Kuaishou, and Xiaohongshu. See “Business—New Media Integrated Content Marketing Services—Ad Distribution Channels—Distribution Through We-Media Publishers/Accounts.” While these digital media platforms are generally open to all users, they have no obligation to allow our PRC subsidiaries to use their platforms in the long term. The platform operators may decide at any time to curtail or inhibit our PRC subsidiaries’ ability to use such platforms if our PRC subsidiaries breach the terms of use of such platforms or for

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any other reason, for example, by banning or closing our PRC subsidiaries’ user accounts. Additionally, these platforms may increase their fees or make changes to their respective business models, terms of use, policies, or systems, and those changes could impair or restrict our PRC subsidiaries’ ability to post content and sell products. Further, digital media platforms including social media platforms, live streaming platforms, and e-commerce platforms could cease operations unexpectedly due to a number of events, including interruptions in telecommunication services, computer viruses, and security breaches. Any of the above could reduce our PRC subsidiaries’ ability to post marketing content, drive user traffic, and reach target audiences, and thus impair our PRC subsidiaries’ ability to service their marketers, any of which could affect their ability to achieve profitability or have a material adverse effect on their business, financial condition and results of operations.

Our PRC subsidiaries may be subject to product liability claims that could be costly and time-consuming.

As part of our PRC subsidiaries’ new media integrated content marketing services, they promote and sell third-party brands’ products via live streaming sales on media platforms, such as Douyin. If any product that our PRC subsidiaries sell were to cause personal injury or injury to property, the injured party or parties could bring claims against them. Our PRC subsidiaries could also be subject to claims that consumers were harmed due to their reliance on our PRC subsidiaries’ promotion of products and services of third-party brands and merchants. If a successful claim were brought against our PRC subsidiaries, it could adversely affect their business. Our PRC subsidiaries may have the right under applicable laws, rules, and regulations to recover from the relevant manufacturers or third-party brands or merchants compensation that our PRC subsidiaries are required to make to consumers in connection with product liability, personal injury, or a similar claim, if such relevant party is found responsible. However, there can be no assurance that our PRC subsidiaries will be able to recover all or any amounts from these parties. Although our PRC subsidiaries have indemnity clauses in most of their contracts with such third-party brands and merchants, the reputation of their services may be adversely affected. Any product liability claim, regardless of its merit or success, could result in the expenditure of funds and management time and adverse publicity and could have a negative impact on our PRC subsidiaries’ reputation, business, financial condition, and results of operations.

Our PRC subsidiaries may incur liability for counterfeit, unauthorized, illegal, or infringing products sold or misleading information available through their live streaming sales.

For their live e-commerce services, our PRC subsidiaries help third-party brands and merchants conduct live streaming sales and receive service fees based on the effective gross merchandise value (the “Effective GMV”) generated, which represents the aggregate value of the merchandise actually ordered and paid for by consumers in the live KOL/KOC sales services provided by our PRC subsidiaries, after deducting the value underlying cancelled orders and returned merchandise. However, such third-party brands’ and merchants’ measures of safeguarding against counterfeit, unauthorized, illegal, or infringing products sold through live-streaming platforms or e-commerce platforms may not be adequate. Although our PRC subsidiaries have indemnity clauses in most of their contracts with third-party brands and merchants, their reputation may be adversely affected. Our PRC subsidiaries may be subject to sanctions under applicable laws and regulations if they are deemed to have participated or assisted in infringement activities associated with counterfeit goods, which may include injunctions to cease infringing activities, rectification, compensation, administrative penalties, and even criminal liability, depending on the gravity of such misconduct. Furthermore, counterfeit products may be defective or inferior in quality as compared to authentic products and may pose safety risks to consumers. If consumers are injured by counterfeit, unauthorized, illegal, or infringing products sold via our PRC subsidiaries’ live streaming sales, our PRC subsidiaries may be subject to lawsuits, severe administrative penalties, and criminal liability. See “—Our PRC subsidiaries may be subject to product liability claims that could be costly and time-consuming.” Our PRC subsidiaries believe their reputation is extremely important to their success and competitive position. The discovery of counterfeit, unauthorized, illegal, or infringing products promoted or sold through our PRC subsidiaries’ live streaming sales may severally damage their reputation among brand partners, who may refrain from using our PRC subsidiaries’ services in the future, which would materially and adversely affect our PRC subsidiaries’ operations and financial results.

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If our PRC subsidiaries fail to improve their services to keep up with the rapidly changing demand, preferences, or advertising trends in the new media integrated content marketing industry or the digital advertising industry, their revenue and growth could be adversely affected.

The new media integrated content marketing industry and the digital advertising industry are growing and changing rapidly, as our PRC subsidiaries face (i) constant changes in audiences’ interests, preferences, and receptiveness over different advertisement formats, (ii) evolution of the needs of marketers in response to shifts in their business needs and marketing strategies, and (iii) innovations in the means on digital advertising. As a result, our PRC subsidiaries’ success depends not only on their ability to offer creative advertising ideas and content, provide proper ad distribution channels, and deliver effective optimization services, but also on their ability to adapt to rapidly changing online trends and technologies to enhance the quality of existing services and develop and introduce new services to address advertisers’ changing demands.

As the new media advertising market boomed, our PRC subsidiaries enjoyed rapid business growth as one of the early movers in the market, but there is no assurance that our PRC subsidiaries will be able to timely identify and respond to new trends and market demand in the future. The new services our PRC subsidiaries introduce may not achieve widespread market acceptance, and their investment in such services may not achieve the level of returns that they anticipated. Our PRC subsidiaries may experience difficulties that could delay or prevent the successful development, introduction, or marketing of their new services. If our PRC subsidiaries fail to keep pace with changing trends, continue to offer creative advertising ideas to the satisfaction of their advertisers, or introduce successful and well-accepted services for their existing and potential advertisers, our PRC subsidiaries may lose their advertisers and their revenue and growth could be adversely affected.

If our PRC subsidiaries sustain cyber-attacks or other privacy or data security incidents that result in security breaches, they could be subject to increased costs, liabilities, reputational harm, or other negative consequences.

Our PRC subsidiaries’ information technology may be subject to cyber-attacks, viruses, malicious software, break-ins, theft, computer hacking, phishing, employee error or malfeasance, or other security breaches. Hackers and data thieves are increasingly sophisticated and operate large-scale and complex automatic hacks. Experienced computer programmers and hackers may be able to penetrate our PRC subsidiaries’ security controls and misappropriate or compromise sensitive proprietary or confidential information, create system disruptions, or cause shutdowns. They also may be able to develop and deploy malicious software programs that attack our PRC subsidiaries’ systems or otherwise exploit any security vulnerabilities. Our PRC subsidiaries’ systems and the data stored on those systems also may be vulnerable to security incidents or security attacks, acts of vandalism or theft, coordinated attacks by activist entities, misplaced or lost data, human errors, or other similar events that could negatively affect our PRC subsidiaries’ systems and the data stored on or transmitted by those systems, including the data of our PRC subsidiaries’ marketers.

Although our PRC subsidiaries take measures to protect sensitive data from unauthorized access, use, or disclosure, their protective measures may not be effective and their information technology may still be vulnerable to attacks. In the event of such attacks, the costs to eliminate or address the foregoing security threats and vulnerability before or after a cyber-incident could potentially be significant. Our PRC subsidiaries’ remediation efforts may not be successful and could result in interruptions or delays of services. As threats related to cyber-attacks develop and grow, our PRC subsidiaries may also find it necessary to take further steps to protect their data and infrastructure, which could be costly and therefore impact their results of operations. In the event that our PRC subsidiaries are unable to prevent, detect, and remediate the foregoing security threats and vulnerabilities in a timely manner, their operations could be interrupted or they could incur financial, legal, or reputational losses arising from misappropriation, misuse, leakage, falsification, or intentional or accidental release or loss of information maintained in their systems. The number and complexity of these threats continue to increase over time. Although our PRC subsidiaries have not experienced any cyber-attacks or other privacy or data security incidents as of the date of this prospectus, and they inspect their systems on a regular basis to prevent these events from occurring, the possibility of these events occurring cannot be eliminated entirely.

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Our PRC subsidiaries may experience systems disruption, software defects, computer viruses and breakdowns, distributed denial of service attacks, or other hacking and phishing attacks on their systems.

The stable operation of our PRC subsidiaries’ technologies and platforms (such as Xuhang Live Streaming E-commerce Cloud and Xuhang Conference Cloud), telecommunication networks, computer systems, servers, and other hardware, are critical to our PRC subsidiaries’ business. Our PRC subsidiaries rely on the uninterrupted and secure operation of their technologies and platforms and the safekeeping of user information and historical marketing records. Any system outage or data loss or other disruption owing to the events that may be beyond their control would cause damage to our PRC subsidiaries’ business and reputation and expose them to liability to third parties.

Our PRC subsidiaries are susceptible to computer viruses, system breakdowns, power loss, or telecommunications failure. In addition, their infrastructure may be subject to distributed denial of service attacks or other hacking and phishing attacks on their platforms in the future. There can be no guarantee that any applicable recovery system, security protocol, network protection mechanisms, or other defense procedures are or will be adequate to prevent such network or service interruptions, system failures, or data losses. Our PRC subsidiaries’ infrastructure and platforms may also be breached if any vulnerabilities therein are exploited by unauthorized third parties. If our PRC subsidiaries fail to repair or maintain their platforms in a timely manner, their business may have to be temporarily disrupted, which could have a material adverse impact on their business.

Non-compliance with laws and regulations on the part of any third parties with which our PRC subsidiaries conduct business could expose our PRC subsidiaries to legal expenses, compensations to third parties, penalties, and disruption of their business, which may adversely affect their results of operations and financial performance.

Third parties with which our PRC subsidiaries conduct business may be subject to regulatory penalties or punishments because of their regulatory compliance failures or may be infringing upon other parties’ legal rights, which may, directly or indirectly, disrupt our PRC subsidiaries’ business. Our PRC subsidiaries cannot be certain whether such third parties have violated any regulatory requirements or infringed or will infringe any other parties’ legal rights, which could expose our PRC subsidiaries to legal expenses or compensation to third parties.

Our PRC subsidiaries, therefore, cannot rule out the possibility of incurring liabilities or suffering losses due to any non-compliance by third parties. There is no assurance that our PRC subsidiaries will be able to identify irregularities or non-compliance in the business practices of third parties our PRC subsidiaries conduct business with, or that such irregularities or non-compliance will be corrected in a prompt and proper manner. Any legal liabilities and regulatory actions affecting third parties involved in our PRC subsidiaries’ business may affect their business activities and reputations, and may in turn affect their business, results of operations, and financial performance.

Moreover, regulatory penalties or punishments against our PRC subsidiaries’ business stakeholders such as marketers and third party media publishers and platforms, even without resulting in any legal or regulatory implications upon our PRC subsidiaries, may nonetheless cause business interruptions or even suspension of these business stakeholders of our PRC subsidiaries, and may result in abrupt changes in our PRC subsidiaries’ business emphasis, such as changes in advertising and/or ad inventory offering strategies, any of which could disrupt our PRC subsidiaries’ usual course of business with their business stakeholders and result in a material negative impact on their financial condition and results of operations.

Seasonal fluctuations in advertising activities could have a material impact on our PRC subsidiaries’ revenue, cash flow, and operating results.

Our PRC subsidiaries’ revenue, cash flow, operating results, and other key operating and performance metrics may vary from quarter to quarter due to the seasonal nature of their marketers’ budgets and spending on

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advertising campaigns. For example, advertising expenditure tends to rise in holiday seasons with consumer holiday spending, or closer to end-of-year in fulfillment of their annual advertising budgets, which may lead to an increase in our PRC subsidiaries’ revenue and cash flow. Moreover, advertising inventory in holiday seasons may be more expensive due to increased demand for advertising inventory. While our PRC subsidiaries’ historical revenue growth may have, to some extent, masked the impact of seasonality, if their growth rate declines or seasonal spending becomes more pronounced, seasonality could have a material impact on their revenue, cash flow, and operating results from period to period.

Our PRC subsidiaries’ business is subject to complex and evolving laws and regulations in countries in addition to the PRC regarding privacy, data protection, and other matters. Many of these laws and regulations are subject to change and uncertain interpretation, and could result in increased compliance cost, changes to our PRC subsidiaries’ business practices, increased operating costs, and other harms to their business.

Although the majority of our PRC subsidiaries’ business is conducted in the PRC, they endeavor to continue their international expansion of business operations into countries including Indonesia and other Southeast Asian countries or regions as needed. As a result, certain jurisdictions may claim that our PRC subsidiaries are required to comply with their laws, including even jurisdictions where our PRC subsidiaries have no local entity, employees, or infrastructure.

This may subject our PRC subsidiaries to a variety of laws and regulations in the countries in addition to the PRC that involve matters central to our PRC subsidiaries’ business, including advertising, marketing, data protection and security, intellectual property, user privacy, rights of publicity, competition, consumer protection, and taxation. The expansion of our PRC subsidiaries’ services and activities in certain jurisdictions, or other actions that they may take may subject them to additional laws, regulations, or other government scrutiny.

These laws and regulations in countries around the world are constantly evolving and can be subject to significant change. Thus, the application, interpretation, and enforcement of these laws and regulations are often uncertain, particularly in the new and rapidly evolving industry in which our PRC subsidiaries operate. For example, our PRC subsidiaries are also subject to evolving laws and regulations that guard against false, fraudulent, misleading, or otherwise illegal marketing content, or that dictate whether, how, and under what circumstances they can transfer, process, and/or receive certain data that is critical to their operations, including data shared between countries or regions in which they operate and data shared among their products and services. These laws and regulations, as well as any associated claims, inquiries, investigations, or any other government actions, have in the past led to, and may in the future lead to, unfavorable outcomes including increased compliance costs, delays or impediments in the development of new services, negative publicity and reputational harm, increased operating costs, diversion of management time and attention, and remedies that harm our PRC subsidiaries’ business, including fines or demand or orders that they modify or cease existing business practices.

Our PRC subsidiaries plan to continue expanding their operations globally so they may enter new international markets, where they have more limited operating experience, and this may subject them to increased business, economic, and legal risks that could affect their financial results.

As of the date of this prospectus, the overseas business operations of our PRC subsidiaries are limited to Indonesia, which contributed approximately 0.0%, 0.3%, and 0.0% to the total revenue for the years ended December 31, 2020 and 2021 and the nine months ended September 30, 2022, respectively. Our PRC subsidiaries plan to continue expanding their business operations globally. Our PRC subsidiaries may enter new international markets where they have limited or no experience in selling and deploying their new media integrated content marketing services and digital advertising services. If they fail to deploy, manage, or oversee their international operations successfully, their business may suffer. In addition, our PRC subsidiaries are subject to a variety of risks inherent in doing business internationally, including:

• political, social, or economic instability;

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• risks related to legal, regulatory, and other government scrutiny applicable to them, with respect to marketing, advertising, privacy, tax, law enforcement, content, trade compliance, competition, consumer protection, and intellectual property matters;

• potential damage to their brand and reputation due to compliance with local laws;

• fluctuations in currency exchange rates and compliance with currency controls;

• foreign exchange controls and tax and other regulations and orders that might prevent them from repatriating cash earned in countries or otherwise limit their ability to move cash freely, and impede their ability to invest such cash efficiently;

• burdens of complying with a variety of foreign laws, including laws related to marketing, advertising, taxation, data collection, live e-commerce, and regulatory oversight;

• reduced protection for intellectual property rights in some countries;

• difficulties in staffing, managing, and overseeing global operations and the increased travel, infrastructure, and legal compliance costs associated with multiple international locations, including difficulties arising from personnel working remotely during the COVID-19 pandemic; and

• geopolitical events affecting our PRC subsidiaries, their marketers, or their industry, including trade disputes and pandemics.

If our PRC subsidiaries are unable to expand internationally and manage the complexity of their global operations successfully, their financial results could be adversely affected.

Our PRC subsidiaries may not effectively manage their growth, which could materially harm their business.

Our PRC subsidiaries’ business has become increasingly complex in terms of both the type and scale of their operations, which may place a significant strain on their management, personnel, systems, and resources. As our PRC subsidiaries expect to scale up their new media integrated content marketing services and digital advertising services domestically and internationally, they must continue to improve their operational and financial systems and managerial controls and procedures, and they will need to continue to expand, train, and manage their technology and workforce. There is no assurance that our PRC subsidiaries will manage their growth effectively. If they fail to do so, their business could be materially harmed.

Our PRC subsidiaries’ continued growth will require their increased investment in technology, facilities, personnel, and financial and management systems and controls. This also will require expansion of their procedures for monitoring and assuring their compliance with applicable regulations, and they will need to integrate, train, and manage a growing employee base. The expansion of our PRC subsidiaries’ existing businesses and the resulting growth of their employee base will increase the need for more extensive internal audit and monitoring processes. Our PRC subsidiaries may not be successful in identifying or implementing all of the necessary processes. Further, unless our PRC subsidiaries’ growth results in a revenue increase proportionate to the increase in their associated costs, their operating margins and profitability will be adversely affected.

Our PRC subsidiaries may not be able to obtain the additional capital they need in a timely manner or on acceptable terms, or at all.

Although our PRC subsidiaries believe that their anticipated cash flows from operating activities, together with cash on hand and short-term or long-term borrowings, will be sufficient to meet their anticipated working capital requirements and capital expenditures in the ordinary course of business for the next twelve months, there is no assurance that further on our PRC subsidiaries would not have needs for additional capital and cash resources for their growth and expansion plan. Our PRC subsidiaries may also need additional cash resources in the future if

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they find and wish to pursue opportunities for investment, acquisition, capital expenditure, or similar actions. If they determine that their cash requirements exceed the amount of cash and cash equivalents they have on hand at the time, they may seek to issue equity or debt securities or obtain credit facilities. The issuance and sale of additional equity would result in further dilution to their shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict their operations. There is no assurance that additional financing will be available in amounts or on terms acceptable to our PRC subsidiaries, if at all.

Our PRC subsidiaries’ financial condition and operating results may be adversely affected by epidemics, natural disasters, and other catastrophes including but not limited to the novel coronavirus (COVID-19).

Our PRC subsidiaries’ business could be materially and adversely affected by the outbreak of epidemics, including COVID-19, swine influenza, avian influenza, middle east respiratory syndrome (MERS-CoV), severe acute respiratory syndrome (SARS-CoV), and other catastrophes. Their business could be materially and adversely affected in the event that any slowdown or suspension due to any such event is sustained for a long period of time. During such an epidemic outbreak, China may adopt certain hygiene measures, including quarantining visitors from places where any of the contagious diseases were rampant. Those restrictive measures may adversely affect and slow down the national economic development during that period. Any prolonged restrictive measures implemented in order to control the contagious disease or other adverse public health developments in China or our PRC subsidiaries’ other targeted markets may have a material and adverse effect on their business operations.

Similarly, natural disasters, wars (including the potential of war), terrorist activity (including threats of terrorist activity), social unrest and heightened travel security measures instituted in response, and travel-related accidents, as well as geopolitical uncertainty and international conflict, will affect travel volume and may in turn have a material adverse effect on our PRC subsidiaries’ business and results of operations. In addition, our PRC subsidiaries may not be adequately prepared in contingency planning or recovery capability in relation to a major incident or crisis, and as a result, their operational continuity may be adversely and materially affected, which in turn may harm their reputation.

The ongoing COVID-19 pandemic in China may have a material adverse effect on our PRC subsidiaries’ business.

Our PRC subsidiaries’ business operations could be materially and adversely affected by the ongoing COVID-19 pandemic. The pandemic has resulted in the implementation of significant governmental measures in China, including lockdowns, closures, quarantines, and travel bans, intended to control the spread of the virus. Such governmental actions, together with the development of the COVID-19 pandemic, could materially disrupt our PRC subsidiaries’ business and operations, slow down the overall economy, curtail consumer spending, and make it difficult to adequately staff their operations.

From late January 2020 to the middle of April 2020, our PRC subsidiaries’ business was moderately impacted by the COVID-19 pandemic, mainly due to a slowdown in the business of marketer customers who need offline marketing services. Despite this, our PRC subsidiaries quickly resumed operations starting from the second quarter of 2020 and they achieved an increase in revenue in 2020 as compared to 2019, which was primarily attributable to: (i) a significant surge in demand for online businesses and new media integrated content marketing services in lieu of offline transactions as a result of lock-downs and social distancing measures that led to a higher demand for our PRC subsidiaries’ services in general; and (ii) an increase in demand for certain industry verticals, such as games, food, fast-moving consumer goods, and e-commerce, which boosted the demand of marketers in those industries for our PRC subsidiaries’ services. In response to the COVID-19 pandemic, our PRC subsidiaries have taken a series of precautionary measures in compliance with the government’s requirements and maintained a safe and hygienic working environment for their employees, including (i) distributing free hand sanitizers and facemasks regularly to employees, (ii) implementing remote

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working policies and arrangements and, where necessary, switching offline meetings to online meetings to reduce the risk of COVID-19 exposure, (iii) conducting a complete cleanup and disinfection of their offices on a regular basis, (iv) keeping all employees informed of their COVID-19 precautions and handling measures, and (v) closely following up with and requiring any employees who have been to an affected area or in contact with any suspicious case to promptly notify them, conduct COVID-19 tests or quarantines as required by the government.

However, there remain uncertainties surrounding the COVID-19 pandemic and its further development as a global pandemic. China is experiencing a severe Omicron-induced resurgence of COVID outbreaks in various cities, particularly in Shanghai, which is in close proximity to Hangzhou City, where Xuhang Network’s headquarter is located. China has again taken emergency measures to combat the COVID-19 resurgence in those cities, including imposing lockdowns, travel restrictions, mandatory cessations of business operations, mandatory quarantines, work-from-home and other alternative working arrangements, and limitations on social and public gatherings and lockdowns of cities or regions, which may impact businesses of our PRC subsidiaries’ customers and media publishers and in turn may negatively affect our PRC subsidiaries’ results of operations. The extent to which the COVID-19 pandemic may impact our PRC subsidiaries will depend on future developments, which are highly uncertain and cannot be predicted, including new information on the effectiveness of the mitigation strategies, the duration, spread, severity, and recurrence of COVID-19, and the efficacy of COVID-19 vaccines, which may also take an extended period of time to be widely and adequately distributed. A potential COVID-19 resurgence may negatively affect the execution of client contracts and the collection of client payments. In addition, the continued uncertainties associated with COVID-19 may cause our PRC subsidiaries’ revenue and cash flows to underperform in the next 12 months. The extent of any future impact of COVID-19 on our PRC subsidiaries’ business operations is still highly uncertain and cannot be predicted as of the date of this prospectus.

Any negative publicity about our PRC subsidiaries, their services, and their management may materially and adversely affect their reputation and business.

Our PRC subsidiaries may from time to time receive negative publicity about them, or their management or business. Certain of such negative publicity may be the result of malicious harassment or unfair competition acts by third parties. Our PRC subsidiaries may even be subject to government or regulatory investigation as a result of such third-party conduct and may be required to spend significant time and incur substantial costs to defend themselves against such third-party conduct, and our PRC subsidiaries may not be able to conclusively refute each of the allegations within a reasonable period of time, or at all. Harm to their reputation can also arise for other reasons, including misconduct of their employees or any third-party business partners with whom they conduct business. Our PRC subsidiaries may be materially and adversely affected as a result of any negative publicity, which in turn may cause them to lose market share, marketing customers, industry partners, and other business partnerships.

Our PRC subsidiaries may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt their business and operations.

There is no assurance that our PRC subsidiaries’ operations or any aspects of their business do not or would not infringe upon or otherwise violate trademarks, patents, copyrights, or other intellectual property rights held by third parties. Our PRC subsidiaries may from time to time become subject to legal proceedings and claims relating to the intellectual property rights of others. In addition, there may be other third-party intellectual property that is infringed by our PRC subsidiaries’ products, services, or other aspects of their business, such as their self-developed technology, data management system, and/or their specific marketing content. There could also be existing intellectual property of which our PRC subsidiaries are not aware that their products and services may inadvertently infringe.

If any third-party infringement claims are brought against our PRC subsidiaries, they may be forced to divert management’s time and other resources from their business and operations to defend against these claims,

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regardless of the merits of the claims. Additionally, the application and interpretation of intellectual property laws and the procedures and standards for granting trademarks, patents, copyrights, know-how, or other intellectual property rights are evolving and may be uncertain, and there is no assurance that courts or regulatory authorities would agree with their analysis. Such claims, even if they do not result in liability, may harm our PRC subsidiaries’ reputation. If our PRC subsidiaries were found to have violated the intellectual property rights of others, they may be subject to liability for their infringement activities or may be prohibited from using such intellectual property, and they may incur licensing fees or be forced to develop alternatives of their own. As a result, our PRC subsidiaries’ business and financial performance may be materially and adversely affected.

Unauthorized use of our PRC subsidiaries’ intellectual property by third parties and expenses incurred in protecting our PRC subsidiaries’ intellectual property rights may adversely affect their business, reputation, and competitive edges.

Our PRC subsidiaries regard their software copyrights, trademarks, domain names, and similar intellectual property as important to their success, and they rely on a combination of intellectual property laws and contractual arrangements, including confidentiality and non-compete agreements with their employees and others to protect their proprietary rights. For details, please refer to “Business — Intellectual property.”

Despite these measures, any of their intellectual property rights could be challenged, invalidated, circumvented, or misappropriated, or such intellectual property may not be sufficient to provide our PRC subsidiaries with competitive advantages. It may be difficult to maintain and enforce intellectual property rights in China. Statutory laws and regulations are subject to judicial interpretation and enforcement and may not be applied consistently. Confidentiality, invention assignment, and non-compete agreements may be breached by counterparties, and there may not be adequate remedies available to our PRC subsidiaries for any such breach. Accordingly, our PRC subsidiaries may not be able to effectively protect their intellectual property rights or enforce their contractual rights in all jurisdictions.

Preventing any unauthorized use of their intellectual property is difficult and costly and the steps they take may be inadequate to prevent the misappropriation of their intellectual property. In the event that our PRC subsidiaries resort to litigation to enforce their intellectual property rights, such litigation could result in substantial costs and a diversion of their managerial and financial resources. There can be no guarantee that our PRC subsidiaries will prevail in such litigation.

In addition, our PRC subsidiaries’ trade secrets may be leaked or otherwise become available to, or be independently discovered by, their competitors. To the extent that their employees use intellectual property owned by others in their work for our PRC subsidiaries, disputes may arise as to the rights in related know-how and inventions. Any failure in protecting or enforcing their intellectual property rights could have a material adverse effect on our PRC subsidiaries’ business, reputation, and competitive edges.

If our PRC subsidiaries fail to manage their growth or execute their strategies and future plans effectively, they may not be able to take advantage of market opportunities or meet the demand of their customers.

Our PRC subsidiaries’ business has grown substantially since their inception, and they expect to continue to grow in terms of the scale and diversity of operations. For example, our PRC subsidiaries endeavor to attract more high-profile and sizeable marketers from various industries and plan to expand and diversify their we-media account base by establishing more we-media accounts on various platforms. In addition, they plan to continue expanding their business through the Star Project in the future. These endeavors increase the complexity of their operations and may cause strain on their managerial, operational, and financial resources. Our PRC subsidiaries must continue to hire, train, and effectively manage new employees. In the event that their new hires fail to perform as expected, or if our PRC subsidiaries fail to hire, train, manage, and integrate new employees, their business, financial condition, and results of operations may be materially adversely affected. Their expansion will also require them to maintain consistency in the quality of their marketing services so that their reputation is not damaged by any deviations in quality, whether actual or perceived.

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Our PRC subsidiaries’ future results of operations also depend largely on their ability to execute their future plans successfully. In particular, their continued growth may subject them to the following additional challenges and constraints:

• our PRC subsidiaries face challenges in ensuring the productivity of a large employee base and recruiting, training, and retaining highly skilled personnel, including areas of procurement, sales and marketing, and information technology for their growing operations;

• our PRC subsidiaries face challenges in responding to evolving industry standards and government regulations that impact their business and the new media integrated content marketing industry and the digital advertising industry in general;

• technological or operational challenges may arise from the expansion of business operations;

• the execution of the future plan will be subject to the availability of funds to support the relevant capital investment and expenditures; and

• the successful execution of our PRC subsidiaries’ strategies is subject to factors beyond their control, such as general market conditions, and economic and political development in China and globally.

All of these endeavors involve risks and will require significant management, financial, and human resources. We cannot assure you that our PRC subsidiaries will be able to effectively manage their growth or implement their strategies successfully. Besides, there is no assurance that the investment to be made by our PRC subsidiaries as contemplated under their future plans will be successful and generate the expected return. If our PRC subsidiaries are not able to manage their growth or execute their strategies effectively, or at all, their business, results of operations, and prospects may be materially and adversely affected.

Our PRC subsidiaries’ business depends on the continued efforts of their senior management. If one or more of their key executives were unable or unwilling to continue in their present positions, their business may be severely disrupted.

Our PRC subsidiaries’ future success depends significantly on the continued services of their senior executives, senior management, and other key employees who have valuable experience, knowledge, and connection in the new media integrated content marketing industry and the digital advertising industry. In particular, our PRC subsidiaries rely on the expertise and experience of Mr. Tianhang Xiao, Mr. Congcong Wei, Mr. Yang Yang, Ms. Lilian Liu, and Mr. Xiaowen Wang, especially in the areas of mobile Internet, creative content production, technology research and development, and financial management. There is no assurance that these key personnel will not voluntarily terminate their employment with our PRC subsidiaries. The loss of any of these key personnel could be detrimental to our PRC subsidiaries’ ongoing operations. If they lose the services of any senior management, our PRC subsidiaries may not be able to identify suitable or qualified replacements and may incur additional expenses to recruit and train new personnel, which could severely disrupt their business and prospects and prolong their expansion strategies and plans. Furthermore, if any of our PRC subsidiaries’ executive officers joins a competitor or forms a competing company, they may lose a significant number of marketer customers, crucial business secrets, and other valuable resources, notwithstanding their contractual arrangements designed to mitigate this loss. As a result, our PRC subsidiaries’ business, financial condition, and results of operations may be adversely affected.

Our PRC subsidiaries’ failure to conduct research and development could render their technologies obsolete and may adversely affect their business, financial condition, and results of operations.

Our PRC subsidiaries have been investing in technology research and development to support the rapid growth of their business and to establish a technology-driven growth edge for the future. Based on current market demand, technology development trends, and our actual development needs, we plan to invest approximately 20% of the proceeds received from this offering in research and development to attract and retain experienced talent and

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professionals and provide crucial support for the development of our products. Because we account for research and development costs as operating expenses, these expenditures will adversely affect our earnings in the future. Further, during the implementation of research and development projects, we may encounter uncertainties such as research failures and unmet project expectations. For example, research and development involving new technologies may not result in the expected results, or may even fail entirely; a project’s economic benefits may not meet expectations if the products developed do not achieve widespread market acceptance; and new research and development expenses may also result in a decrease in return on net assets. All of such uncertainties may lead to the failure of our PRC subsidiaries’ research and development efforts, which may adversely affect their business, financial condition, and results of operations.

Future acquisitions may have an adverse effect on our PRC subsidiaries’ ability to manage their business.

Our PRC subsidiaries may acquire businesses, technologies, services, or products that are complementary to their new media integrated content marketing and digital advertising businesses. Future acquisitions may expose them to potential risks, including risks associated with the integration of new operations, services, and personnel, unforeseen or hidden liabilities, the diversion of resources from their existing business and technology, their potential inability to generate sufficient revenue to offset new costs, the expenses of acquisitions, or the potential loss of or harm to relationships with both employees and customers resulting from their integration of new businesses.

Any of the potential risks listed above could have a material adverse effect on our PRC subsidiaries’ ability to manage their business, revenue, and net income. Our PRC subsidiaries may need to raise additional debt funding or sell additional equity securities to make such acquisitions. The raising of additional debt funding by our PRC subsidiaries, if required, would result in increased debt service obligations and could result in additional operating and financing covenants, or liens on their assets, that would restrict their operations. As a result, their business, financial condition, and results of operations may be adversely affected.

Our PRC subsidiaries may from time to time be subject to claims, controversies, lawsuits, and legal proceedings, which could adversely affect their business, prospects, results of operations, and financial condition.

Our PRC subsidiaries may from time to time become subject to or involved in various claims, controversies, lawsuits, and legal proceedings. However, claims and threats of lawsuits are subject to inherent uncertainties, and our PRC subsidiaries are uncertain whether any of these claims would develop into a lawsuit. Lawsuits, or any type of legal proceeding, may cause them to incur defense costs, utilize a significant portion of their resources, and divert management’s attention from day-to-day operations, any of which could harm their business. Any settlements or judgments against our PRC subsidiaries could have a material adverse impact on their financial condition, results of operations, and cash flows. In particular, our PRC subsidiaries have been involved in contract disputes arising in the ordinary course of their business with various customers and third parties, which nonetheless did not result in any payment liabilities or overdue payments our PRC subsidiaries are unable to collect. Although these contract disputes and proceedings did not materially adversely affect the business of our PRC subsidiaries or their financial condition and results of operations, our PRC subsidiaries may, in the future, be subject to allegations, claims, and legal actions that result in judgments, fines, or settlements involving payment of a material sum of money. As a result, it could materially and adversely affect our PRC subsidiaries’ business, financial condition, and results of operations. In addition, negative publicity could adversely affect the reputation and brand of our PRC subsidiaries. Even the successful defense of these proceedings may cause our PRC subsidiaries to incur substantial legal costs and may divert management’s attention and resources.

Our PRC subsidiaries may be the subject of allegations, harassment, or other detrimental conduct by third parties, which could harm their reputation and cause them to lose market share, users, and customers.

Our PRC subsidiaries may be subject to allegations by third parties or purported former employees, negative Internet postings, and other adverse public exposure on their business, operations, and staff compensation. Our

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PRC subsidiaries may also become the target of harassment or other detrimental conduct by third parties or disgruntled former or current employees. Such conduct may include complaints to regulatory agencies, media, or other organizations. Our PRC subsidiaries may be subject to government or regulatory investigation or other proceedings as a result of such third-party conduct and may be required to spend significant time and incur substantial costs to address such third-party conduct, and there is no assurance that our PRC subsidiaries will be able to conclusively refute each of the allegations within a reasonable period of time, or at all. Additionally, allegations, directly or indirectly against our PRC subsidiaries, may be posted on the Internet, including on social media platforms by anyone on an anonymous basis. Any negative publicity on our PRC subsidiaries or their management can be quickly and widely disseminated. Social media platforms and devices immediately publish the content often without filters or checks on the accuracy of the content posted. The information posted may be inaccurate and may harm our PRC subsidiaries’ reputation and business prospects. The harm may be immediate without affording them an opportunity for redress or correction. Our PRC subsidiaries’ reputation may be negatively affected as a result of the public dissemination of negative and potentially false information about their business and operations, which in turn may cause them to lose market share, users, or customers.

Our PRC subsidiaries’ current insurance policies may not provide adequate levels of coverage against all claims and they may incur losses that are not covered by their insurance.

We believe our PRC subsidiaries maintain insurance coverage that is customary for businesses of their sizes and types. See “Business—Insurance.” However, they may be unable to insure against certain types of losses or claims, or the cost of such insurance may be prohibitive. Uninsured losses or claims, if they occur, could have a material adverse effect on our PRC subsidiaries’ reputation, business, results of operations, financial condition, or prospects.

Some of our subsidiaries are subject to various evolving Hong Kong laws and regulations regarding data security or antimonopoly, which could subject them to government enforcement actions and investigations, fines, penalties, and suspension or disruption of their operations.

Our Hong Kong subsidiaries, including Xuhang HK and HK Lehui, operate in Hong Kong and are thus subject to laws and regulations in Hong Kong in respect of data privacy, data security, and data protection. The main legislation in Hong Kong concerning data security is the PDPO, which regulates the collection, usage, storage, and transfer of personal data and imposes a statutory duty on data users to comply with the six data protection principles contained therein. Pursuant to section 33 of the PDPO, the PDPO is applicable to the collection and processing of personal data if such activities take place in Hong Kong, or if the personal data is collected by a data user whose principal place of business is in Hong Kong. As of the date of this prospectus, we confirm that our Hong Kong subsidiaries have complied with the laws and requirements in respect of data security in Hong Kong. Our directors confirm that: (i) each of our directors and our Hong Kong subsidiaries has not been involved in any litigation or regulatory action relating to breach of the PDPO; and (ii) they are not aware of any non-compliance incidents relating to breach of the PDPO since the date of incorporation of our Hong Kong subsidiaries. Since our PRC subsidiaries conduct substantially all of their business operations in mainland China, we believe that the incumbent data security statutory requirements under Hong Kong laws do not materially affect their business. However, the laws on cybersecurity and data privacy are constantly evolving and can be subject to varying interpretations, resulting in uncertainties about the scope of our responsibilities in that regard. Failure to comply with the cybersecurity and data privacy requirements in a timely manner, or at all, may subject us or our Hong Kong subsidiaries to consequences, including, but not limited to, government enforcement actions and investigations, fines, penalties, and suspension or disruption of our Hong Kong subsidiaries’ operations.

The Competition Ordinance (Cap. 619 of the Laws of Hong Kong) prohibits and deters undertakings in all sectors from adopting anti-competitive conduct which has the object or effect of preventing, restricting, or distorting competition in Hong Kong. It provides for general prohibitions in three major areas of anti-competitive conduct described as the first conduct rule, the second conduct rule, and the merger rule. The first conduct rule

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prohibits undertakings from making or giving effect to agreements or decisions or engaging in concerted practices that have as their object or effect the prevention, restriction, or distortion of competition in Hong Kong. The second conduct rule prohibits undertakings that have a substantial degree of market power in a market from engaging in conduct that has as its object or effect the prevention, restriction, or distortion of competition in Hong Kong. The merger rule prohibits mergers that have or are likely to have the effect of substantially lessening competition in Hong Kong. The scope of application of the merger rule is limited to carrier licenses issued under the Telecommunications Ordinance (Cap. 106 of the Laws of Hong Kong). As of the date of this prospectus, we and our Hong Kong subsidiaries have complied with all three areas of anti-competition laws and requirements in Hong Kong. Our Hong Kong subsidiaries have not engaged in any concerted practices that have an object or effect to prevent, restrict, or distort competition in Hong Kong. Additionally, neither we nor our Hong Kong subsidiaries possess a substantial degree of market power in the Hong Kong market that could trigger the second conduct rule. The merger rule is equally not applicable to us or our Hong Kong subsidiaries since neither we nor our Hong Kong subsidiaries hold any carrier license issued under the Telecommunications Ordinance.

Accordingly, as confirmed by our Hong Kong counsel, Ince & Co, the data security or antimonopoly laws and regulations in Hong Kong do not restrict our ability to accept foreign investment or impose limitation on our ability to list on any U.S. stock exchange under Hong Kong laws and regulations.

Risks Relating to this Offering and the Trading Market

There has been no public market for our Ordinary Shares prior to this offering, and you may not be able to resell our Ordinary Shares at or above the price you pay for them, or at all.

Prior to this offering, there has not been a public market for our Ordinary Shares. We plan to apply for the listing of our Ordinary Shares on the Nasdaq Capital Market. At this time, Nasdaq has not yet approved our application to list our Ordinary Shares. The closing of this offering is conditioned upon Nasdaq’s final approval of our listing application, and there is no guarantee or assurance that our Ordinary Shares will be approved for listing on Nasdaq. In addition, an active public market for our Ordinary Shares, however, may not develop or be sustained after the offering, in which case the market price and liquidity of our Ordinary Shares will be materially and adversely affected.

The initial public offering price for our Ordinary Shares may not be indicative of prices that will prevail in the trading market and such market prices may be volatile.

The initial public offering price for our Ordinary Shares will be determined by negotiations between us and the underwriters and may not bear a direct relationship to our earnings, book value, or any other indicia of value. We cannot assure you that the market price of our Ordinary Shares will not decline significantly below the initial public offering price. The financial markets in the United States and other countries have experienced significant price and volume fluctuations in the last few years. Volatility in the price of our Ordinary Shares may be caused by factors outside of our control and may be unrelated or disproportionate to changes in our results of operations.

You will experience immediate and substantial dilution in the net tangible book value of Ordinary Shares purchased.

The initial public offering price of our Ordinary Shares is substantially higher than our net tangible book value per share of our Ordinary Shares. Consequently, when you purchase our Ordinary Shares in the offering, upon completion of the offering you will incur immediate dilution of US$[●] per share, assuming an initial public offering price of US$[●], which is the midpoint of the estimated range of the initial public offering price shown on the front cover of this prospectus. See “Dilution.” In addition, you may experience further dilution to the extent that additional Ordinary Shares are issued upon exercise of outstanding options we may grant from time to time.

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

Prior to this offering, we have been a private company with limited accounting personnel and other resources with which to address our internal controls and procedures. Our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. However, in preparing our consolidated financial statements as of and for the years ended December 31, 2021 and 2020, we have identified material weaknesses in our internal control over financial reporting, as defined in the standards established by the PCAOB, and other control deficiencies. The material weaknesses identified included (i) a lack of sufficient skilled staff with U.S. GAAP knowledge and the SEC reporting knowledge for the purpose of financial reporting as well as a lack of formal accounting policies and procedures manual to ensure proper financial reporting in accordance with U.S. GAAP and SEC reporting requirements; (ii) a lack of formal policies and procedures to establish risk assessment process and internal control framework; and (iii) information technology-related deficiencies in the areas of: a) risk and vulnerability assessment, b) third-party (service organization) vendor management, c) backup management, disaster recovery, and proper equipment in physical environment control, and d) system security and access.

Following the identification of the material weaknesses and control deficiencies, we have taken the following remedial measures: (i) setting up an internal audit function as well as engaging an external consulting firm to assist us with assessment of Sarbanes-Oxley compliance requirements and improvement of overall internal control; and (ii) adopting directors’ resolutions to appoint independent directors, establish an audit committee, and strengthen corporate governance.

We plan to take additional remedial measures, including (i) hiring more qualified accounting personnel with relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen the financial reporting function and to set up a financial and system control framework; and (ii) implementing regular and continuous U.S. GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel.

However, the implementation of these measures may not fully address the material weaknesses in our internal control over financial reporting. Our failure to correct the material weaknesses or our failure to discover and address any other material weaknesses or control deficiencies could result in inaccuracies in our financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. As a result, our business, financial condition, results of operations and prospects, as well as the trading price of our Ordinary Shares, may be materially and adversely affected. Moreover, ineffective internal control over financial reporting significantly hinders our ability to prevent fraud.

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

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We will incur substantial increased costs as a result of being a public company.

Upon consummation of this offering, we will incur significant legal, accounting, and other expenses as a public company that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and Nasdaq, impose various requirements on the corporate governance practices of public companies.

Compliance with these rules and regulations increases our legal and financial compliance costs and makes some corporate activities more time-consuming and costlier. We have incurred additional costs in obtaining director and officer liability insurance. In addition, we incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons to serve on our board of directors or as executive officers.

We are an “emerging growth company,” as defined in the JOBS Act and 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 this offering, (b) in which we have total annual gross revenue of at least US$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 US$700 million as of the prior December 31, and (2) the date on which we have issued more than US$1.0 billion in non-convertible debt during the prior three-year period. 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 in the assessment of the emerging growth company’s internal control over financial reporting and permission to delay adopting new or revised accounting standards until such time as those standards apply to private companies.

After we are no longer an “emerging growth company,” or until five years following the completion of our initial public offering, whichever is earlier, we expect to incur significant additional expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 and the other rules and regulations of the SEC. For example, as a public company, we have been required to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures.

We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.

Substantial future sales of our Ordinary Shares or the anticipation of future sales of our Ordinary Shares in the public market could cause the price of our Ordinary Shares to decline.

Sales of substantial amounts of our Ordinary Shares in the public market after this offering, or the perception that these sales could occur, could cause the market price of our Ordinary Shares to decline. An aggregate of 58,804,977 Ordinary Shares are outstanding before the consummation of this offering. An aggregate of [●] Ordinary Shares will be outstanding immediately after the consummation of this offering, assuming no exercise of the Representative’s over-allotment option, and [●] Ordinary Shares will be outstanding immediately after the consummation of this offering, assuming the full exercise of the over-allotment option. Sales of these shares into the market could cause the market price of our Ordinary Shares to decline.

We do not intend to pay dividends for the foreseeable future.

We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. As a result, you may only receive a return on your investment in our Ordinary Shares if the market price of our Ordinary Shares increases.

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If securities or industry analysts do not publish research or reports about our business, or if they publish a negative report regarding our Ordinary Shares, the price of our Ordinary Shares and trading volume could decline.

Any trading market for our Ordinary Shares may depend in part on the research and reports that industry or securities analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade us, the price of our Ordinary Shares would likely decline. If one or more of these analysts cease coverage of our Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price of our Ordinary Shares and the trading volume to decline.

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

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

• actual or anticipated fluctuations in our revenue and other operating results;

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

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

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

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

• lawsuits threatened or filed against us; and

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

In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have filed securities class litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business.

The price of our Ordinary Shares could be subject to rapid and substantial volatility.

There have been instances of extreme stock price run-ups followed by rapid price declines and strong stock price volatility with recent initial public offerings, especially among those with relatively smaller public floats. As a relatively small-capitalization company with a relatively small public float, we may experience greater stock price volatility, extreme price run-ups, lower trading volume, and less liquidity than large-capitalization

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companies. In particular, our Ordinary Shares may be subject to rapid and substantial price volatility, low volumes of trades, and large spreads in bid and ask prices. Such volatility, including any stock run-ups, may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Ordinary Shares.

In addition, if the trading volumes of our Ordinary Shares are low, persons buying or selling in relatively small quantities may easily influence the price of our Ordinary Shares. This low volume of trades could also cause the price of our Ordinary Shares to fluctuate greatly, with large percentage changes in price occurring in any trading day session. Holders of our Ordinary Shares may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of our Ordinary Shares. As a result of this volatility, investors may experience losses on their investment in our Ordinary Shares. A decline in the market price of our Ordinary Shares also could adversely affect our ability to issue additional Ordinary Shares or other of our securities and our ability to obtain additional financing in the future. No assurance can be given that an active market in our Ordinary Shares will develop or be sustained. If an active market does not develop, holders of our Ordinary Shares may be unable to readily sell the shares they hold or may not be able to sell their shares at all.

Our management has broad discretion to determine how to use the funds raised in the offering and may use them in ways that may not enhance our results of operations or the price of our Ordinary Shares.

We anticipate that we will use the net proceeds from this offering to expand our main business to further improve our integrated marketing services, invest in technology research and development, and acquire high-quality companies within the same industry or upstream and downstream entities across the new media integrated content marketing value chain, and for working capital and other general corporate purposes. Our management will have significant discretion as to the use of the net proceeds to us from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance the market price of our Ordinary Shares.

If we cease to qualify as a foreign private issuer, we would be required to comply fully with the reporting requirements of the Exchange Act applicable to U.S. domestic issuers, and we would incur significant additional legal, accounting and other expenses that we would not incur as a foreign private issuer.

We expect to qualify as a foreign private issuer upon the completion of this offering. As a foreign private issuer, we will be exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders will be exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as United States domestic issuers, and we will not be required to disclose in our periodic reports all of the information that United States domestic issuers are required to disclose. While we currently expect to qualify as a foreign private issuer immediately following the completion of this offering, we may cease to qualify as a foreign private issuer in the future, in which case we would incur significant additional expenses that could have a material adverse effect on our results of operations.

Because we are a foreign private issuer and are exempt from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer.

Nasdaq listing rules require listed companies to have, among other things, a majority of its board members be independent. As a foreign private issuer, however, we are permitted to, and we may follow home country practice in lieu of the above requirements, or we may choose to comply with the above requirement within one year of listing. The corporate governance practice in our home country, the Cayman Islands, does not require a majority of our board to consist of independent directors. Thus, although a director must act in the best interests of our

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Company, it is possible that fewer board members will be exercising independent judgment and the level of board oversight on the management of our Company may decrease as a result. In addition, Nasdaq listing rules also require U.S. domestic issuers to have a compensation committee, a nominating/corporate governance committee composed entirely of independent directors, and an audit committee with a minimum of three members. We, as a foreign private issuer, are not subject to these requirements. Nasdaq listing rules may require shareholder approval for certain corporate matters, such as requiring that shareholders be given the opportunity to vote on all equity compensation plans and material revisions to those plans, certain ordinary share issuances. We intend to comply with the requirements of Nasdaq listing rules in determining whether shareholder approval is required on such matters and to appoint a nominating and corporate governance committee. We may, however, consider following home country practice in lieu of the requirements under Nasdaq listing rules with respect to certain corporate governance standards which may afford less protection to investors.

If we cannot continue to satisfy the listing requirements and other rules of the Nasdaq Capital Market, our securities may be delisted, which could negatively impact the price of our securities and your ability to sell them.

We plan to apply to have our Ordinary Shares listed on the Nasdaq Capital Market upon consummation of this offering. It is a condition to the closing of this offering that our Ordinary Shares qualify for listing on a national securities exchange. Following this offering, in order to maintain our listing on the Nasdaq Capital Market, we will be required to comply with certain rules of the Nasdaq Capital Market, including those regarding minimum stockholders’ equity, minimum share price, minimum market value of publicly held shares, and various additional requirements. Even if we initially meet the listing requirements and other applicable rules of the Nasdaq Capital Market, we may not be able to continue to satisfy these requirements and applicable rules. If we are unable to satisfy the Nasdaq Capital Market criteria for maintaining our listing, our securities could be subject to delisting.

If the Nasdaq Capital Market subsequently delists our securities from trading, we could face significant consequences, including:

• a limited availability for market quotations for our securities;

• reduced liquidity with respect to our securities;

• a determination that our Ordinary Shares are a “penny stock,” which will require brokers trading in our Ordinary Shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our Ordinary Shares;

• limited amount of news and analyst coverage; and

• a decreased ability to issue additional securities or obtain additional financing in the future.

Anti-takeover provisions in our fourth amended and restated memorandum and articles of association may discourage, delay, or prevent a change in control.

Some provisions of our fourth amended and restated memorandum and articles of association, which will become effective on or before the completion of this offering, may discourage, delay, or prevent a change in control of our Company or management that shareholders may consider favorable, including, among other things, the following:

• provisions that authorize our board of directors to issue shares with preferred, deferred, or other special rights or restrictions without any further vote or action by our shareholders; and

• provisions that restrict the ability of our shareholders to call meetings and to propose special matters for consideration at shareholder meetings.

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Because we are an “emerging growth company,” we may not be subject to requirements that other public companies are subject to, which could affect investor confidence in us and our Ordinary Shares.

For as long as we remain an “emerging growth company,” as defined in the JOBS Act, we will elect to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of shareholder approval of any golden parachute payments not previously approved. Because of these lessened regulatory requirements, our shareholders would be left without information or rights available to shareholders of more mature companies. Further, we elected to use the extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (1) are no longer an emerging growth company or (2) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. If some investors find our Ordinary Shares less attractive as a result, there may be a less active trading market for our Ordinary Shares and our share price may be more volatile. See “Implications of Our Being an Emerging Growth Company.”

The laws of the Cayman Islands may not provide our shareholders with benefits comparable to those provided to shareholders of corporations incorporated in the United States.

We are an exempted company incorporated under the laws of the Cayman Islands with limited liability. Our corporate affairs are governed by our memorandum and articles of association, the Companies Act (As Revised) of the Cayman Islands and by the common law of the Cayman Islands. The rights of shareholders to take action against our 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 in the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands and from English common law. Decisions of the Privy Council (which is the final Court of Appeal for British overseas territories such as the Cayman Islands) are binding on a court in the Cayman Islands. Decisions of the English courts, and particularly the Supreme Court and the Court of Appeal are generally of persuasive authority but are not binding in the courts of the Cayman Islands. Decisions of courts in other Commonwealth jurisdictions are similarly of persuasive but not binding authority. 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 precedents in the United States. In particular, the Cayman Islands has a less developed body of securities laws relative to the United States. Therefore, our public shareholders may have more difficulty protecting their interests in the face of actions by our management, directors or controlling shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States.

Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of the register of members of these companies. Our directors have discretion under our articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

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 our management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States. For a discussion of significant differences between the provisions of the Companies Act of the Cayman Islands and the laws applicable to companies incorporated in the United States and their shareholders, see “Description of Share Capital—Differences in Corporate Law.”

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You may be unable to present proposals before annual general meetings or extraordinary general meetings not called by shareholders.

Cayman Islands law does not provide shareholders with any right to requisition a general meeting or put any proposal before a general meeting. These rights, however, may be provided in a company’s articles of association. Our articles of association allow our shareholders holding shares representing in aggregate not less than one-third of our voting share capital in issue, to requisition a general meeting of our shareholders, in which case our directors are obliged to call such meeting. Advance notice of at least 10 clear days is required for the convening of our annual general shareholders’ meeting and any other general meeting of our shareholders. A quorum required for a meeting of shareholders consists of at least one shareholder present or by proxy, representing not less than one-third of the total issued shares carrying the right to vote at a general meeting of our Company. For these purposes, “clear days” means that period excluding (a) the day when the notice is given or deemed to be given and (b) the day for which it is given or on which it is to take effect.

If we are classified as a PFIC, 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 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.

Depending on the amount of cash we raise in this offering, together with any other assets held for the production of passive income, it is possible that, for our 2022 taxable year or for any subsequent year, more than 50% of our assets may be assets which produce passive income, in which case we would be deemed a PFIC, which could have adverse U.S. federal income tax consequences for U.S. taxpayers who are shareholders. We will make this determination following the end of any particular tax year. 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 or are determined to be a PFIC, see “Material Income Tax Consideration—United States Federal Income Taxation—PFIC.”

Our pre-IPO shareholders will be able to sell their shares upon completion of this offering subject to restrictions under Rule 144 under the Securities Act.

Our pre-IPO shareholders may be able to sell their Ordinary Shares under Rule 144 after the completion of this offering. See “Shares Eligible for Future Sale.” Because these shareholders have paid a lower price per Ordinary Share than participants in this offering, when they are able to sell their pre-IPO shares under Rule 144, they may be more willing to accept a lower sales price than the IPO price. This fact could impact the trading price of the Ordinary Shares following the completion of the offering, to the detriment of participants in this offering. Under Rule 144, before our pre-IPO shareholders can sell their shares, in addition to meeting other requirements, they must meet the required holding period. We do not expect any of the Ordinary Shares to be sold pursuant to Rule 144 during the pendency of this offering.

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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

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

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

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

• current and future economic and political conditions;

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

• our ability to attract clients and further enhance our brand recognition;

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

• the COVID-19 pandemic;

• trends and competition in the new media integrated content marketing industry and the digital advertising industry; and

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

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

Industry Data and Forecasts

This prospectus contains data related to the new media integrated marketing industry in China that we obtained from various government and private entity publications, including the industry report of Frost & Sullivan Limited (“Frost & Sullivan”) which we commissioned. This industry data includes projections that are based on a number of assumptions which have been derived from industry and government sources which we believe to be reasonable. The new media integrated marketing industry may not grow at the rate projected by industry data, or at all. The failure of the industry to grow as anticipated is likely to have a material adverse effect on our business and the market price of our Ordinary Shares. In addition, the rapidly changing nature of the new media integrated marketing industry subjects any projections or estimates relating to the growth prospects or future condition of our industry to significant uncertainties. Furthermore, if any one or more of the assumptions underlying the industry data turns out to be incorrect, actual results may, and are likely to, differ from the projections based on these assumptions.

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ENFORCEABILITY OF CIVIL LIABILITIES

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

Substantially all of our assets are located in the PRC. In addition, all of our directors and officers are nationals or residents of the PRC 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 these persons, or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States.

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

Conyers Dill & Pearman, our counsel with respect to the laws of the Cayman Islands, AllBright, our counsel with respect to PRC law, and Ince & Co, our counsel with respect to the laws of Hong Kong, have advised us that there is uncertainty as to whether the courts of the Cayman Islands or the PRC or Hong Kong would (i) recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States or (ii) entertain original actions brought in the Cayman Islands or the PRC or Hong Kong against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.

Conyers Dill & Pearman has further advised us that there is currently no statutory enforcement or treaty between the United States and the Cayman Islands providing for enforcement of judgments. A judgment obtained in the United States, however, may be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination on the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment: (i) is given by a foreign court of competent jurisdiction; (ii) is final; (iii) is not in respect of taxes, a fine or a penalty; and (iv) was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or public policy of the Cayman Islands. Furthermore, it is uncertain that Cayman Islands courts would enforce: (1) judgments of U.S. courts obtained in actions against us or other persons that are predicated upon the civil liability provisions of the U.S. federal securities laws; or (2) original actions brought against us or other persons predicated upon the Securities Act. Conyers Dill & Pearman has informed us that there is uncertainty with regard to Cayman Islands law relating to whether a judgment obtained from the U.S. courts under civil liability provisions of the securities laws will be determined by the courts of the Cayman Islands as penal or punitive in nature.

AllBright has further advised us that the recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedure Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedure Law based either on treaties between China and the country where the judgment is made or on reciprocity between jurisdictions. There are no treaties or other forms of reciprocity between China and the United States for the mutual recognition and enforcement of court judgments. AllBright has further advised us that under PRC law, PRC courts will not enforce a foreign judgment against us or our officers and directors if the court decides that such judgment violates the basic principles of PRC law or national sovereignty, security or public interest, thus making the recognition and enforcement of a U.S. court judgment in China difficult.

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Ince & CO has further advised us that there are currently no treaties or other arrangements between Hong Kong and the United States that provide reciprocal enforcement of foreign judgments. However, Hong Kong’s common law permits an action to be brought upon a foreign judgment. A foreign judgment itself may form the basis for a cause of action as judgment may be regarded as creating a debt between the parties. In a common law action for the enforcement of a foreign judgment in Hong Kong, enforcement is subject to various conditions, including, but not limited to: (i) the foreign judgment is final, (ii) the foreign judgment is for a liquidated amount in a civil matter and not in respect of taxes, fines, penalties, or similar charges, (iii) the proceedings in which the judgment was obtained were not contrary to natural justice, and (iv) the enforcement of the judgment is not contrary to the public policy of Hong Kong. Such a judgment must be for a fixed sum and come from a competent court as determined by the private international law applied by the Hong Kong courts. The defenses available to a defendant in a common law action brought on the basis of a foreign judgment include lack of jurisdiction, breach of natural justice, fraud, and contrary to public policy. However, a separate legal action for debt must be commenced in Hong Kong in order to recover such debt from the judgment debtor.

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USE OF PROCEEDS

We estimate that the net proceeds from the sale of [●] Ordinary Shares in this offering will be approximately US$[●], after deducting the underwriting discounts and estimated offering expenses payable by us, based on the assumed initial public offering price of [●] per Ordinary Share, the midpoint of the estimated price range set forth on the cover page of this prospectus. If the Representative exercises its over-allotment option in full, we estimate that the net proceeds to us from this offering will be approximately US$[●], after deducting the underwriting discounts and estimated offering expenses payable by us.

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

• approximately 50% for expanding our business, such as enhancing our content production capability, to further improve our integrated marketing services;

• approximately 20% for investing in technology research and development;

• approximately 20% for mergers and acquisitions of high-quality companies within the same industry, as well as upstream and downstream entities across the new media integrated content marketing value chain, although we have not yet identified nor entered into preliminary negotiations with any specific acquisition target as of the date of this prospectus; and

• the balance to fund working capital and for other general corporate purposes.

The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering. Our management, however, will have significant flexibility and discretion to apply the net proceeds of this offering. If an unforeseen event occurs or business conditions change, we may use the proceeds of this offering differently than as described in this prospectus. See “Risk Factors—Risks Relating to this Offering and the Trading Market—Our management has broad discretion to determine how to use the funds raised in the offering and may use them in ways that may not enhance our results of operations or the price of our Ordinary Shares.” To the extent that the net proceeds we receive from this offering are not immediately used for the above purposes, we intend to invest our net proceeds in short-term, interest-bearing bank deposits or debt instruments.

In using the proceeds of this offering, we are permitted under PRC laws and regulations to utilize the proceeds from this offering to fund our PRC subsidiaries by making loans or additional capital contributions, subject to applicable government registration and approval requirements. We cannot assure you that we will be able to obtain these government registrations or approvals on a timely basis, if at all. See “Risk Factors—Risks Relating to Doing Business in the PRC—PRC regulation of parent/subsidiary loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of offshore offerings to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.”

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DIVIDEND POLICY

As of the date of this prospectus, none of our PRC subsidiaries have made any dividends or distributions to our Company and our Company has not made any dividends or distributions to our shareholders. We intend to keep any future earnings to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future. Subject to the PFIC rules, the gross amount of distributions we make to investors with respect to our Ordinary Shares (including the amount of any taxes withheld therefrom) will be taxable as a dividend, to the extent that the distribution is paid out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles.

Under Cayman Islands law, a Cayman Islands company may pay a dividend on its shares out of either profit or share premium amount, provided that in no circumstances may a dividend be paid out of share premium if this would result in the company being unable to pay its debts as they fall due in the ordinary course of business.

If we determine to pay dividends on any of our Ordinary Shares in the future, as a holding company, we will be dependent on receipt of funds from Xuhang HK.

Current PRC regulations permit Xuhang Network, Huzhou Yinzhiya, and Wuhan Yinzhiya, all of which are our PRC subsidiaries, to pay dividends to Xuhang HK only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of our PRC subsidiaries is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital.

The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. For instance, SAFE Circular 3 issued on January 26, 2017, provides that banks shall, when dealing with dividend remittance transactions from a domestic enterprise to its offshore shareholders of more than US$50,000, review the relevant board resolutions, original tax filing form, and audited financial statements of such domestic enterprise based on the principle of genuine transaction. Furthermore, if our PRC subsidiaries incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments. If we or our PRC subsidiaries are unable to receive all of the revenue from our operations, we may be unable to pay dividends on our Ordinary Shares.

Cash dividends, if any, on our Ordinary Shares will be paid in U.S. dollars. Xuhang HK may be considered a non-resident enterprise for tax purposes, so that any dividends Xuhang Network, Huzhou Yinzhiya, and Wuhan Yinzhiya pay to Xuhang HK may be regarded as China-sourced income and as a result may be subject to PRC withholding tax at a rate of up to 10%. See “Material Income Tax Consideration—Enterprise Taxation in Mainland China.”

In order for us to pay dividends to our shareholders, we will rely on payments made from Xuhang Network, Huzhou Yinzhiya, and Wuhan Yinzhiya to Xuhang HK as dividends from these three PRC subsidiaries, and then the distribution of such payments to our Company as dividends from Xuhang HK. If Huzhou Yinzhiya, Wuhan Yinzhiya, or Xuhang Network or its subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to us.

Pursuant to the Double Tax Avoidance Arrangement, the 10% withholding tax rate may be lowered to 5% if a Hong Kong resident enterprise owns no less than 25% of a PRC project. The 5% withholding tax rate, however, does not automatically apply and certain requirements must be satisfied, including, without limitation, that (a) the Hong Kong project must be the beneficial owner of the relevant dividends; and (b) the Hong Kong project must directly hold no less than 25% share ownership in the PRC project during the 12 consecutive months preceding its receipt of the dividends. In current practice, a Hong Kong project must obtain a tax resident certificate from the Hong Kong tax authority to apply for the 5% lower PRC withholding tax rate. As the Hong Kong tax authority will issue such a tax resident certificate on a case-by-case basis, we cannot assure you that we will be

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able to obtain the tax resident certificate from the relevant Hong Kong tax authority and enjoy the preferential withholding tax rate of 5% under the Double Taxation Arrangement with respect to any dividends paid by Xuhang Network, Huzhou Yinzhiya, and Wuhan Yinzhiya to their immediate holding company, Xuhang HK. As of the date of this prospectus, we have not applied for the tax resident certificate from the relevant Hong Kong tax authority. Xuhang HK intends to apply for the tax resident certificate if and when Xuhang Network, Huzhou Yinzhiya, and/or Wuhan Yinzhiya plan to declare and pay dividends to Xuhang HK. See “Risk Factors—Risks Relating to Doing Business in the PRC—There are significant uncertainties under the EIT Law relating to the withholding tax liabilities of our PRC subsidiaries, and dividends payable by our PRC subsidiaries to our offshore subsidiaries may not qualify to enjoy certain treaty benefits.”

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CAPITALIZATION

The following table sets forth our capitalization as of September 30, 2022:

• on an actual basis; and

• on an as adjusted basis to reflect the issuance and sale of [●] Ordinary Shares by us in this offering at the assumed initial public offering price of US$[●] per Ordinary Share, which is the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus, after deducting the estimated discounts to the underwriters and the estimated offering expenses payable by us and assuming no exercise of the Representative’s over-allotment option.

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

	September 30, 2022
	Actual		As adjusted
	US$		US$
	(in thousands)
Loans		3,514
Stockholders’ Equity:
Ordinary Shares, US$0.002 par value, 500,000,000 Ordinary Shares authorized, 58,804,977 Ordinary Shares issued and outstanding*; [●] Ordinary Shares issued and outstanding, as adjusted assuming the over-allotment option is not exercised, and [●] Ordinary Shares issued and outstanding		—
Additional paid-in capital(1)		39,900
Statutory reserves		710
Retained earnings		43,273
Accumulated other comprehensive loss		958
Non-controlling interest		7,467
Total Shareholders’ Equity		92,308
Total Capitalization		95,822

* Retrospectively restated for the Subdivision.

(1) Reflects the sale of [●] Ordinary Shares in this offering at an assumed initial public offering price of US$[●] per share, and after deducting the estimated underwriting discounts and estimated offering expenses payable by us. The pro forma as adjusted information is illustrative only, and we will adjust this information based on the actual initial public offering price and other terms of this offering determined at pricing. Additional paid-in capital reflects the net proceeds we expect to receive, after deducting the underwriting discounts and estimated offering expenses payable by us. We estimate that such net proceeds will be approximately US$[●].

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

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DILUTION

Unless otherwise indicated, all share numbers and per share numbers in this prospectus have been presented giving effect to the Subdivision.

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

Our net tangible book value as of September 30, 2022, was US$[●], or US$[●] per Ordinary Share. Net tangible book value represents the amount of our total consolidated tangible assets, less the amount of our total consolidated liabilities. Dilution is determined by subtracting the net tangible book value per Ordinary Share (as adjusted for the offering) from the initial public offering price per Ordinary Share and after deducting the estimated underwriting discounts and the estimated offering expenses payable by us.

After giving effect to our sale of [●] Ordinary Shares offered in this offering based on the initial public offering price of US$[●] per Ordinary Share after deduction of the estimated underwriting discounts and the estimated offering expenses payable by us, our as adjusted net tangible book value as of September 30, 2022, would have been US$[●], or US$[●] per outstanding Ordinary Share. This represents an immediate increase in net tangible book value of US$[●] per Ordinary Share to the existing shareholders, and an immediate dilution in net tangible book value of US$[●] per Ordinary Share to investors purchasing Ordinary Shares in this offering. The as adjusted information discussed above is illustrative only.

The following table illustrates such dilution:

	Post-Offering
Assumed Initial public offering price per Ordinary Share	US$
Net tangible book value per Ordinary Share as of September 30, 2022	US$
As adjusted net tangible book value per Ordinary Share attributable to payments by new investors	US$
Pro forma net tangible book value per Ordinary Share immediately after this offering	US$
Amount of dilution in net tangible book value per Ordinary Share to new investors in the offering	US$

The pro forma as adjusted net tangible book value per Ordinary Share after the offering would be US$[●], the increase in net tangible book value per Ordinary Share to existing shareholders would be US$[●], and the immediate dilution in net tangible book value per Ordinary Share to new investors in this offering would be US$[●].

The following tables summarize, on a pro forma as adjusted basis as of September 30, 2022, the differences between existing shareholders and the new investors with respect to the number of Ordinary Shares purchased from us, the total consideration paid and the average price per Ordinary Share before deducting the estimated underwriting discounts and the estimated offering expenses payable by us.

	Ordinary Shares purchased			Total consideration			Average price per Ordinary Share
	Number	Percent		Amount	Percent
	(US$ in thousands)
Existing shareholders			%	US$		%	US$
New investors			%	US$		%	US$
Total			%	US$		%	US$

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

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CORPORATE HISTORY AND STRUCTURE

Our Corporate History

Xuhang Network was established on September 16, 2014, as a limited liability company organized under the laws of the PRC. Xuhang Network has formed or acquired 42 wholly or partially owned subsidiaries pursuant to PRC and Hong Kong laws, as specifically disclosed in “—Our Corporate Structure.”

In connection with this offering, we have undertaken a reorganization of our corporate structure (the “Reorganization”) in the following steps:

• On June 16, 2020, we incorporated Xuhang Cayman under the laws of the Cayman Islands;

• On July 31, 2020, we incorporated Xuhang BVI pursuant to the laws of the British Virgin Islands as a wholly owned subsidiary of Xuhang Cayman;

• On November 2, 2020, we incorporated Xuhang HK in Hong Kong as a wholly owned subsidiary of Xuhang BVI;

• On June 7, 2021, Xuhang HK incorporated Huzhou Yinzhiya as a limited liability company organized under the laws of the PRC and a wholly owned subsidiary;

• On September 23, 2021, Xuhang HK incorporated Wuhan Yinzhiya as a limited liability company organized under the laws of the PRC and a wholly owned subsidiary; and

• As of October 27, 2021, Xuhang HK had acquired 100% of the equity interests in Xuhang Network from Xuhang Network’s original shareholders. Consequently, Xuhang HK, through a restructuring which is accounted for as a reorganization of entities under common control, became the ultimate holding company of all other entities mentioned above.

Our Corporate Structure

The following diagram illustrates our corporate structure as of the date of this prospectus and upon completion of our IPO based on a proposed number of [●] Ordinary Shares being offered, assuming no exercise of the Representative’s over-allotment option.

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Notes:

(1) Represents 21,012,915 Ordinary Shares held by TIAN HANG GROUP LIMITED, a British Virgin Islands company, which is 100% owned by XUHANG (BVI) LTD, which is in turn 100% owned by Tianhang Xiao as of the date of this prospectus.

(2) Represents 3,403,616 Ordinary Shares held by MIGHTY HUGE INVESTMENT LIMITED, which is 100% owned by XH Fortune Success Trust, a trust established under the laws of Island of Jersey by Mr. Tianhang Xiao, managed by Trident Trust Company (HK) Limited, as trustee, with Mr. Tianhang Xiao being the trust’s beneficiary as of the date of this prospectus.

(3) Represents 1,948,622 Ordinary Shares held by Shanghai Qishu Enterprise Management Consulting L.P., a PRC limited partnership that is 99% owned by Hangzhou Xuli Network Technology Limited, which is in turn 99% owned by Tianhang Xiao, as of the date of this prospectus.

(4) Represents 3,078,562 Ordinary Shares indirectly held by Congcong Wei, the 100% owner of WCC CAPITAL LIMITED, as of the date of this prospectus.

(5) Represents an aggregate of 29,361,262 Ordinary Shares held by 33 shareholders, each one of which holds less than 5% of our Ordinary Shares, as of the date of this prospectus.

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

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Significant subsidiaries of Xuhang Network consist of the following entities:

No.	Name	Place of incorporation	Date of incorporation or acquisition	Percentage of direct or indirect ownership			Principal activities
1	Horgos Xumi Network Technology Co., Ltd.	PRC	February 8, 2017		100	%	Advertising design and production; technical services
2	Horgos Pinyue Network Technology Co., Ltd.	PRC	November 10, 2017		100	%	Advertising design and production; technical services; digital advertising services
3	Hong Kong Lehui Network Technology Co., Ltd.	Hong Kong	November 10, 2017		100	%	Digital advertising services
4	Horgos Weizan Network Technology Co., Ltd.	PRC	November 13, 2017		100	%	Marketing planning and Advertising production
5	Hangzhou Xingkong Internet Culture Communication Co., Ltd.	PRC	November 13, 2020		100	%	Advertising design and production
6	Hangzhou Jinting Conference Co., Ltd.	PRC	November 13, 2020		100	%	Conference services; cultural and artistic exchange activities planning
7	Jiangxi Ku’o Technology Co., Ltd.	PRC	March 16, 2020		100	%	Advertising production; graphic design and production
8	Hangzhou Xingxiu Network Technology Co., Ltd.	PRC	June 16, 2021		51	%	Advertising production and technical services
9	Jiangsu Xuhang New Economy Technology Co., Ltd.	PRC	September 29, 2020		80	%	Advertising production and technical services
10	Qingdao Xuhang Digital New Economy Technology Co., Ltd.	PRC	October 29, 2020		61	%	Advertising production and technical services
11	Shanghai Xumi Digital Technology Co., Ltd.	PRC	March 19, 2021		90	%	Advertising production and technical services
12	Xiamen Xuhang Digital Technology Co., Ltd.	PRC	April 1, 2021		75	%	Marketing planning and advertising production
13	Shanghai Pinzhang Network Technology Co., Ltd.	PRC	March 24, 2021		51	%	Advertising production and technical services
14	Qingdao Pinzhang Network Technology Co., Ltd.	PRC	April 15, 2021		51	%	Advertising production and technical services
15	Hangzhou Pusheng Network Technology Co., Ltd.	PRC	August 25, 2020		51	%	Advertising production and technical services
16	Hangzhou Ruirong Network Technology Co., Ltd.	PRC	February 7, 2021		51	%	Advertising production and technical services
17	Henan New Circle Network Technology Co., Ltd.	PRC	January 17, 2020		100	%	Advertising production and technical services
18	Xuhang Shuzhiyun Technology (Hangzhou) Co., Ltd.	PRC	June 2, 2021		100	%	Technical services and consultation; advertisement production
19	Xuhang Digital (Henan) Technology Co., Ltd.	PRC	January 22, 2021		51	%	Technical services and consultation
20	Hangzhou Xiqi Cultural Tourism Technology Co., Ltd.	PRC	May 12, 2021		100	%	Technical services and consultation

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No.	Name	Place of incorporation	Date of incorporation or acquisition	Percentage of direct or indirect			Principal activities
21	Yunnan Xumi Digital Technology Co., Ltd.	PRC	July 2, 2021		51	%	Marketing planning and advertising production
22	Jiangxi Xuzhixing Technology Co., Ltd.	PRC	July 19, 2021		51	%	Marketing planning and advertising production
23	Shanghai Huihang Network Technology Co., Ltd.	PRC	May 25, 2021		51	%	Marketing planning and advertising production
24	Hangzhou Youyou Culture and Tourism Technology Co., Ltd.	PRC	July 14, 2021		51	%	Marketing planning and advertising production
25	Anhui Jiayuan Information Technology Co., Ltd.	PRC	April 14, 2016		100	%	Advertising production and technical services
26	Henan Xuhang Network Technology Co., Ltd.	PRC	November 29, 2019		99	%	Internet advertising services
27	Wenzhou Xumi Network Technology Co., Ltd.	PRC	March 4, 2020		100	%	Marketing planning and advertising production
28	Xumi (Fujian) Digital Technology Co., Ltd.	PRC	February 8, 2021		85	%	Advertising production and technical services
29	Wuhan Xuhang Digital Technology Co., Ltd.	PRC	October 27, 2021		65	%	Digital cultural creative content services; technical consultation
30	Huangshan Xumi Digital Technology Co., Ltd.	PRC	September 16, 2021		90	%	Advertising design and production
31	Wuxi Xumi Creative Technology Co., Ltd.	PRC	September 10, 2021		75	%	Marketing planning and advertising production
32	Yangzhou Xumi Digital Technology Co., Ltd.	PRC	November 2, 2021		56.7	%	Marketing planning and branding management
33	Linyi Xumi Network Technology Co., Ltd.	PRC	August 26, 2021		60	%	Marketing planning and advertising production
34	Suzhou New Circle Network Technology Co., Ltd.	PRC	July 29, 2020		100	%	Technical services and consultation
35	Shanghai Xumi Digital Advertising Co., Ltd.	PRC	November 9, 2021		100	%	Advertising design and production
36	Shanghai Suhang Digital Technology Co., Ltd.	PRC	July 27, 2021		51	%	Marketing planning and advertising production
37	Hangzhou Xupai Technology Co., Ltd.	PRC	December 21, 2021		51	%	Technical services and consultation
38	Shanghai Hexian Lianhai Technology Group Co., Ltd.	PRC	January 18, 2022		51	%	Marketing planning and advertising production
39	Chengdu Xumi Digital Technology Co., Ltd.	PRC	February 28, 2022		80	%	Technical services and consultation
40	Hubei Xuhang Shuzhi Culture Co., Ltd.	PRC	February 28, 2022		90	%	Marketing planning and advertising production
41	Beijing Hexian Lianjing Technology Co., Ltd.	PRC	March 31, 2022		100	%	Advertising design and production
42	Beijing Xuhangyi Visual Technology Co., Ltd.	PRC	April 25, 2022		51	%	Advertising design and production

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

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

Unless otherwise indicated, all share numbers and per share numbers in this prospectus have been presented giving effect to the Subdivision.

Overview

We are a holding company incorporated in the Cayman Islands. As a holding company with no substantive operations of our own, we conduct all of our operations primarily through our PRC subsidiaries, which are content-driven marketing companies that provide comprehensive marketing services across a broad range of distribution channels with a primary focus on new media integrated content marketing. Leveraging their expertise in content production and operation, extensive distribution channels, and cross-platform new media account base, our PRC subsidiaries aim to provide customers with efficient and effective integrated marketing solutions that address their specific needs in the context of the new media era.

Customers utilize our PRC subsidiaries’ marketing services to achieve their branding and marketing goals across multiple channels with a primary focus on we-media platforms such as Weibo, WeChat official, Douyin, Kuaishou, and Xiaohongshu. As of October 31, 2022, our PRC subsidiaries’ new media account base comprised 524 self-operated accounts and 491 cooperative accounts, which collectively reached approximately 207 million Internet followers. As of December 31, 2020 and 2021 and September 30, 2022, our PRC subsidiaries had a marketer base of 656, 810, and 867, respectively.

Our PRC subsidiaries started their business in 2014 with digital advertising services, where they help marketers—typically app developers and operators and advertising agents thereof—optimize their marketing efforts by identifying, engaging, and activating target audiences for user acquisition.

Since 2017, our PRC subsidiaries have launched and expanded their new media integrated content marketing services that address the growing demands of marketers for social, entertaining, and trendy marketing content in the new media area. Specifically, our PRC subsidiaries’ new media integrated content marketing services are mainly composed of two models—the S2B model and the S2P model. For the S2B business, our PRC subsidiaries provide customers with a package of new media integrated content marketing service solutions—specifically, our PRC subsidiaries (i) provide creative marketing services to merchants and brands by producing entertaining and trendy marketing content, such as promotional short videos and advertorials, and publishing them via their self-operated and cooperative we-media accounts; (ii) plan, organize, and implement live streaming events on behalf of marketers, such as e-commerce merchants and local businesses, for promoting their products or services on high-profile live streaming platforms, or provide them with new media live broadcast training services; and (iii) organize online and offline marketing activities for large brands, business centers, commercial complexes, and tourist attractions, based on their needs for an “online-offline-linkage” marketing strategy. In addition, our PRC subsidiaries have recently developed new businesses. First, they have continually improved their research and development capabilities, and are committed to launching technological services enabled by low-code and user-experience-driven development. Currently, our PRC subsidiaries have independently developed multiple business software products for new media live streaming broadcasting and conference/event services, and have licensed the self-developed software products and services to third-party businesses. Second, as our PRC subsidiaries closely monitor industry developments to combine their advantages to expand their business, they have collaborated, since October 2021, with cultural institutions, such as museums and tourist attractions, to help them issue, promote, and sell IP-related digital products that are becoming

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increasingly popular among young people on platforms such as Ali Auction, NetEase Planet, and Xinhua Shucang. Such digital products are similar to non-fungible token (“NFT”) products, except they cannot be exchanged upon issuance in the PRC.

With respect to the S2P business, our PRC subsidiaries provide online traffic services to large Internet media platforms by generating or directing user traffic to those media platforms through editing and producing captivating short videos from authorized TV dramas, movies, and variety shows and posting such short videos on high-profile media platforms Toutiao, Douyin, Xigua Video, Baidu Baijiahao, Kuaishou, Youku, Tencent Video, and iQIYI.

Our PRC subsidiaries’ business has experienced rapid growth since their inception. For the years ended December 31, 2020 and 2021, we had total revenue of RMB350.9 million and RMB471.4 million (US$66.3 million), respectively, and net income of RMB44.7 million and RMB69.2 million (US$9.7 million), respectively. Revenue derived from new media integrated content marketing services accounted for approximately 46.4% and 77.4% of our total revenue for those years, respectively. Revenue derived from digital advertising services accounted for approximately 53.6% and 22.6% of our total revenue for those fiscal years, respectively. For the nine months ended September 30, 2021 and 2022, we had total revenue of RMB313.0 million and RMB339.3 million (US$47.7 million), respectively, and net income of RMB41.4 million and RMB52.4 million (US$7.4 million), respectively. Revenue derived from new media integrated content marketing services accounted for approximately 71.2% and 87.5% of our total revenue for those periods, respectively. Revenue derived from digital advertising services accounted for approximately 28.8% and 12.5% of our total revenue for those periods, respectively. For the years ended December 31, 2020 and 2021 and the nine months ended September 30, 2022, our cost of revenue was RMB243.5 million, RMB329.9 million (US$46.4 million), and RMB221.2 million (US$31.1 million), respectively.

Key Factors Affecting Our Results of Operations

In addition to the general factors affecting the Chinese and global economy and our industry, our results of operations and financial condition are affected by a number of industry- and company-specific factors, including those set out below:

• Risk of changing marketing media and methods: The Internet era has brought about the emergence and constant evolution of different social media platforms with varying characteristics facing different consumer groups. In recent years, our PRC subsidiaries have closely followed the development of social media platforms, from social media with both communication and sharing functions, such as Weibo and WeChat, to social media specializing in original video content, such as Douyin (抖音), Bilibili, and Kuaishou, and further to content community channels, such as Zhihu and Xiaohongshu. By doing so, our PRC subsidiaries have continually expanded their coverage of mainstream social media platforms. If, however, our PRC subsidiaries are unable to cope with rapidly changing new media, exploit relevant new media platform resources, or adjust research and development orientations, resource allocations, and business expansion strategies on a timely basis, they will not be able to meet the diversified needs of their customers, thus adversely affecting the profitability of our Company.

• Risk of rising prices of media resources: Our PRC subsidiaries have accumulated massive media resources on major mainstream social media platforms. Additionally, they have established long-term, stable relationships with mainstream media resource suppliers and have accumulated their own purchasing advantages. Due to China’s continuous and rapid growth of social media marketing, the bargaining power of high-quality media resources may improve further, resulting in higher prices for media resources. Our PRC subsidiaries’ operating performance may be adversely impacted if the price level of social media resources continues to rise in the future, and they have no effective means to transmit or digest the rising costs.

• Risk of rising labor costs and expenses: As a social media marketing company, we must attract and retain talent in the technical, marketing, management, and other key areas to ensure sustainable growth.

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In recent years, social media platforms have become increasingly popular, and their commercial value has increased. Consequently, social media marketing is becoming increasingly competitive for human resources. To remain competitive and sustainable, our PRC subsidiaries may face higher human capital costs if the cost of high-quality human capital rises substantially in the industry.

• Risk of market competition: The new media integrated content marketing industry and the digital advertising industry are highly competitive. Increasing penetration of the Internet will lead to an increase in advertisers’ demand for new media integrated content marketing services and digital advertising services, which will attract more capital into the industry. Furthermore, some traditional advertising companies have also entered the new media integrated marketing business, resulting in a more diversified market and increased competition. We may face greater competitive pressure in the future if our PRC subsidiaries fail to enhance their service quality, technological innovation, and customer service capabilities.

COVID-19 Pandemic Affecting Our Results of Operations

The COVID-19 pandemic has had a material adverse impact on the global economy since the beginning of 2020. In response, the PRC government has implemented numerous measures to contain the virus, including travel bans and restrictions, quarantines, stay-at-home or shelter-in-place orders, and business shutdowns. Although our PRC subsidiaries never suspended their business operations during the pandemic, their service capabilities have been affected by such restrictive measures, resulting in delays in procurement and service delivery, as well as restrictions on customer development and other marketing activities. The COVID-19 pandemic in places where our PRC subsidiaries’ customers and suppliers are located may affect the daily business activities of upstream and downstream companies across the new media integrated content marketing value chain, which may in turn affect the implementation of our PRC subsidiaries’ marketing projects, causing delays in service delivery and sometimes even the cancellation of offline businesses. From late January 2020 to the middle of April 2020, our PRC subsidiaries’ business was moderately impacted by the COVID-19 pandemic, mainly due to a slowdown of the business of their marketer customers, which negatively affected those customers’ marketing needs with our PRC subsidiaries. Nonetheless, their operations quickly resumed starting from the second quarter of 2020, and achieved an increase in revenue in 2020 as compared to 2019, which was primarily attributable to: (i) a significant surge in demand for online businesses and new media integrated content marketing services in lieu of offline transactions as a result of lock-downs and social distancing measures that led to a higher demand for our PRC subsidiaries’ services in general and (ii) an increase in demand for certain industry verticals, such as games, food, fast-moving consumer goods, and e-commerce, which boosted the demand of marketers in those industries for our PRC subsidiaries’ services. During the year ended December 31, 2021 and the nine months ended September 30, 2022, the COVID-19 pandemic did not have a material net impact on our financial positions and operating results.

The extent to which the COVID-19 pandemic may impact our PRC subsidiaries’ future financial results will depend on future developments, such as new information on the effectiveness of the mitigation strategies, the duration, spread, severity, and recurrence of COVID-19 and any COVID-19 variants, the related travel advisories and restrictions, the overall impact of the COVID-19 pandemic on the global economy and capital markets, and the efficacy of COVID-19 vaccines, which may also take extended time to be widely and adequately distributed, all of which remain highly uncertain and unpredictable. Restrictive measures implemented by government authorities may remain in place for a significant period of time and may adversely affect downstream customers’ marketing budgets, our PRC subsidiaries’ ability to deliver their products and services on time, as well as their market development, especially cross-regional expansion. After the initial outbreak of COVID-19, from time to time, some instances of COVID-19 infections have emerged in various regions of China, including the infections caused by the Omicron variants in early 2022, and varying levels of temporary restrictions and other measures were reinstated to contain the infections, including those in Shanghai in March 2022. Given this uncertainty, our PRC subsidiaries are currently unable to quantify the expected impact of the COVID-19 pandemic on their future operations, financial condition, liquidity, and results of operations if the current situation continues.

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Results of Operations

The following table sets forth our selected consolidated profit or loss data, both in absolute amount and as a percentage of total revenue, for the periods indicated. This information should be read together with our consolidated financial statements and related notes included elsewhere in this prospectus. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.

	For the year ended December 31,															For the nine months ended September 30,
	2020						2021									2021						2022
	RMB			%			RMB			US$			%			RMB			%			RMB			US$			%
	(in thousands, except for percentages)
Net revenues:
Digital advertising services		188,192			53.6	%		106,316			14,946			22.6	%		90,191			28.8	%		42,466			5,970			12.5	%
New media content marketing services		162,712			46.4	%		365,130			51,329			77.4	%		222,824			71.2	%		296,864			41,732			87.5	%
Total net revenues		350,904			100.0	%		471,446			66,275			100.0	%		313,015			100.0	%		339,330			47,702			100.0	%
Cost of revenues		(243,546	)		-69.4	%		(329,888	)		(46,374	)		-70.0	%		(215,919	)		-69.0	%		(221,772	)		(31,176	)		-65.4	%
Gross profit		107,358			30.6	%		141,558			19,900			30.0	%		97,096			31.0	%		117,558			16,526			34.6	%
Sales and marketing expenses		(4,649	)		-1.3	%		(6,984	)		(982	)		-1.5	%		(4,906	)		-1.6	%		(3,721	)		(523	)		-1.1	%
General and administrative expenses		(35,071	)		-10.0	%		(59,827	)		(8,410	)		-12.7	%		(42,624	)		-13.6	%		(53,674	)		(7,545	)		-15.8	%
Research and development expenses		(7,448	)		-2.1	%		(2,926	)		(411	)		-0.6	%		(2,190	)		-0.7	%		(1,938	)		(272	)		-0.6	%
Allowance for doubtful debt and inventory		(318	)		-0.1	%		5,073			713			1.1	%		—			0.0	%		(935	)		(132	)		-0.2	%
Total operating expenses		(47,486	)		-13.5	%		(64,664	)		(9,090	)		-13.7	%		(49,720	)		-15.9	%		(60,268	)		(8,472	)		-17.7	%
Operating income		59,872			17.1	%		76,894			10,810			16.3	%		47,376			15.1	%		57,290			8,054			16.9	%
Other income		1,657			0.5	%		4,420			621			0.9	%		4,939			1.6	%		3,781			532			1.1	%
Other expenses		(280	)		-0.1	%		(993	)		(140	)		-0.2	%		(974	)		-0.3	%		(1,088	)		(153	)		-0.3	%
Interest income		274			0.1	%		264			37			0.1	%		241			0.1	%		160			22			0.0	%
Interest expense		(11,707	)		-3.3	%		(7,562	)		(1,063	)		-1.6	%		(7,309	)		-2.3	%		(128	)		(18	)		0.0	%
Government subsidy		962			0.3	%		4,204			591			0.9	%		1,083			0.3	%		1,023			144			0.3	%
Impairment of long-term investment		—			0.0	%		—			—			0.0	%		—			0.0	%		(1,628	)		(229	)		-0.5	%
Investment income		(115	)		-0.1	%		135			19			0.1	%		64			0.0	%		1,619			228			0.4	%
Income before income taxes		50,663			14.4	%		77,362			10,875			16.4	%		45,420			14.5	%		61,029			8,580			18.0	%
Income tax expense		(5,944	)		-1.7	%		(8,116	)		(1,141	)		-1.8	%		(4,003	)		-1.3	%		(8,607	)		(1,210	)		-2.5	%
Net Income		44,719			12.7	%		69,246			9,734			14.7	%		41,417			13.2	%		52,422			7,370			15.4	%
Less: net loss attributable to non-controlling interest		206			0.1	%		8,057			1,133			1.7	%		4,492			1.5	%		5,194			731			1.5	%
Net income attributable to the Company’s ordinary shareholders		44,925			12.8	%		77,303			10,867			16.4	%		45,909			14.7	%		57,616			8,101			17.0	%

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Revenue

Revenue represented the services provided to customers in our digital advertising services and new media integrated content marketing services. The following table sets forth the breakdown of our revenue by category, both in absolute amount and as a percentage of total revenue for each category for the periods indicated:

	For the Year ended December 31,												For the Nine months ended September 30,
	2020					2021							2021					2022
	RMB		%			RMB		US$		%			RMB		%			RMB		US$		%
	(in thousands, except for percentages)
Digital advertising services		188,192		53.6	%		106,316		14,946		22.6	%		90,191		28.8	%		42,466		5,970		12.5	%
New media content marketing services		162,712		46.4	%		365,130		51,329		77.4	%		222,824		71.2	%		296,864		41,732		87.5	%
Total		350,904		100.0	%		471,446		66,275		100.0	%		313,015		100.0	%		339,330		47,702		100.0	%

Revenue from digital advertising services primarily included revenue from the provision of digital advertising services by us. The revenue is recognized when the related services are delivered based on the specific terms of the contract, which are commonly based on specified actions (such as CPA or other preferences agreed upon with advertisers).

New media integrated content marketing services targeted social networks and applications to spread brand awareness or promote particular products. We provide integrated marketing solutions to customers by utilizing media resources. Market solutions generally include the following: (i) formulation of marketing strategies, (ii) establishment and/or operation of new media accounts as requested and on behalf of the customers, (iii) content production of marketing materials, and (iv) identifying the media resources and organizing the new media integrated content marketing campaigns.

Our net revenue increased by approximately RMB120.5 million, or 34.4%, from approximately RMB350.9 million for the year ended December 31, 2020 to approximately RMB471.4 million (US$66.3 million) for the year ended December 31, 2021. The increase in net revenue was mainly due to the following:

Our digital advertising services revenue accounted for 53.6% and 22.6% of our total revenue for the years ended December 31, 2020 and 2021, respectively. Revenue from digital advertising services decreased by approximately RMB81.9 million, or 43.5%, from RMB188.2 million for the year ended December 31, 2020 to RMB106.3 million (US$14.9 million) for the year ended December 31, 2021. The decrease in revenue from digital advertising services was mainly attributable to our new business strategy to increase the portion of new media integrated content marketing services and contract the digital advertising business.

Our new media integrated content marketing services revenue accounted for 46.4% and 77.4% of our total revenue for the years ended December 31, 2020 and 2021, respectively. Revenue from new media integrated content marketing services increased by approximately RMB202.4 million, or 124.4%, from RMB162.7 million for the year ended December 31, 2020 to RMB365.1 million (US$51.3 million) for the year ended December 31, 2021. The increase in revenue from new media integrated content marketing services was mainly attributable to (i) the acquisition of Hangzhou Xingkong Internet Culture Communication Co., Ltd. (“Hangzhou Xingkong”) in November 2020, which contributed approximately RMB99.9 million; and (ii) the establishment of new subsidiaries in several cities in China to operate local new media services, which contributed the remaining.

Our net revenue increased by approximately RMB26.3 million, or 8.4%, from approximately RMB313.0 million for the nine months ended September 30, 2021 to approximately RMB339.3 million (US$47.7 million) for the nine months ended September 30, 2022. The increase in net revenue was mainly due to the following:

Our digital advertising services revenue accounted for 28.8% and 12.5% of our total revenue for the nine months ended September 30, 2021 and 2022, respectively. Revenue from digital advertising services decreased by

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approximately RMB47.7 million, or 52.9%, from RMB90.2 million for the nine months ended September 30, 2021 to RMB42.5 million (US$6.0 million) for the nine months ended September 30, 2022. The decrease in revenue from digital advertising services was mainly attributable to the change of our new business strategy as mentioned above.

Our new media integrated content marketing services revenue accounted for 71.2% and 87.5% of our total revenue for the nine months ended September 30, 2021 and 2022, respectively. Revenue from new media integrated content marketing services increased by approximately RMB74.0 million, or 33.2%, from RMB222.8 million for the nine months ended September 30, 2021 to RMB296.9 million (US$41.7 million) for the nine months ended September 30, 2022. The increase in revenue from new media integrated content marketing services was mainly attributable to the increase in the number of our clients from 579 for the nine months ended September 30, 2021 to 847 for the nine months ended September 30, 2022.

Cost of Revenue

The following table sets forth the breakdown of our cost of revenue by category, both in absolute amount and as a percentage of the cost of revenue, for the periods indicated:

	For the year ended December 31,												For the nine months ended September 30,
	2020					2021							2021					2022
	RMB		%			RMB		US$		%			RMB		%			RMB		US$		%
	(in thousands, except for percentages)
Digital advertising services		158,549		65.1	%		91,206		12,821		27.6	%		78,949		36.6	%		33,022		4,642		14.9	%
New media content marketing services		84,997		34.9	%		238,682		33,553		72.4	%		136,970		63.4	%		188,750		26,534		85.1	%
Total		243,546		100.0	%		329,888		46,374		100.0	%		215,919		100.0	%		221,772		31,176		100.0	%

Cost of revenue consists primarily of (i) staff and welfare costs; (ii) costs of new media integrated content marketing services procured from suppliers and traffic intermediary costs procured from suppliers; (iii) amortization of official accounts; (iv) lease expenses for office space; and (v) taxes and surcharges.

Cost of revenue increased by 35.5% from RMB243.5 million in 2020 to RMB329.9 million (US$46.4 million) in 2021, which was primarily attributable to (i) the increase in staff headcount due to our business expansion in 2021; and (ii) the increase in procured new media integrated content marketing services costs to fulfill our revenue growth in 2021.

Cost of revenue increased by 2.7% from RMB215.9 million for the nine months ended September 30, 2021 to RMB221.7 million (US$31.2 million) for the nine months ended September 30, 2022, which was primarily attributable to the combined impact that: (i) RMB42.6 million decrease in digital advertising services due to the contraction of our digital advertising business, and (ii) RMB48.5 million increase in new media content marketing services to fulfill our revenue growth in new media content marketing business.

Gross Profit

As a result of changes in net revenue and cost of revenue, our gross profit increased by RMB34.2 million, or 31.9% from RMB107.4 million for the year ended December 31, 2020 to RMB141.6 million (US$19.9 million) for the year ended December 31, 2021. Our gross profit increased by RMB20.4 million, or 21.0%, from RMB97.1 million for the nine months ended September 30, 2021 to RMB117.6 million (US$16.5 million) for the nine months ended September 30, 2022.

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The following table sets forth a breakdown of gross profit by services offered for the periods indicated:

	For the year ended December 31,						For the nine months ended September 30,
	2020		2021				2021		2022
	RMB		RMB		US$		RMB		RMB		US$
	(in thousands, except for percentages)
Digital advertising services		29,643		15,110		2,124		11,242		9,444		1,328
New media content marketing services		77,715		126,448		17,776		85,854		108,114		15,198
Total		107,358		141,558		19,900		97,096		117,558		16,526

Operating expenses

The following table sets forth our operating expenses, both in absolute amount and as a percentage of the total operating expenses, for the periods indicated:

	For the year ended December 31,														For the nine months ended September 30,
	2020					2021									2021					2022
	RMB		%			RMB			US$			%			RMB		%			RMB		US$		%
	(in thousands, except for percentages)
Sales and marketing expenses		4,649		9.8	%		6,984			982			10.8	%		4,906		9.9	%		3,721		523		6.2	%
General and administrative expenses		35,071		73.9	%		59,827			8,410			92.5	%		42,624		85.7	%		53,674		7,545		89.1	%
Research and development expenses		7,448		15.7	%		2,926			411			4.5	%		2,190		4.4	%		1,938		272		3.2	%
Allowance for doubtful debt and inventory		318		0.7	%		(5,073	)		(713	)		-7.8	%		—		0.0	%		935		132		1.6	%
Total		47,486		100.0	%		64,664			9,090			100.0	%		49,720		100.0	%		60,268		8,472		100.0	%

Selling and marketing expenses

Selling and marketing expenses included (i) salaries and benefits of our sales and marketing staff; (ii) advertising fees; and (iii) other expenses, such as transportation expenses and entertainment expenses for our sales office. The selling expenses increased by 50.2% from RMB4.6 million in 2020 to RMB7.0 million (US$1.0 million) in 2021. This increase was primarily attributable to the increase in advertising fees for the promotion activities.

The selling expenses decreased by 24.2% from RMB4.9 million for the nine months ended September 30, 2021 to RMB3.7 million (US$0.5 million) for the nine months ended September 30, 2022. This decrease was primarily attributable to a decrease in advertising fees for cost saving purposes.

The following table sets forth the breakdown of selling expenses, both in absolute amount and as a percentage of the total selling expenses, for the periods indicated:

	For the year ended December 31,												For the nine months ended September 30,
	2020					2021							2021					2022
	RMB		%			RMB		US$		%			RMB		%			RMB		US$		%
	(in thousands, except for percentages)
Staff salaries and benefits		4,574		98.4	%		4,967		698		71.1	%		3,618		73.7	%		3,178		447		85.4	%
Advertising fee		50		1.1	%		994		140		14.2	%		755		15.4	%		213		30		5.7	%
Others		25		0.5	%		1,023		144		14.6	%		533		10.9	%		330		46		8.9	%
Total		4,649		100.0	%		6,984		982		100.0	%		4,906		100.0	%		3,721		523		100.0	%

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General and administrative expenses

General and administrative expenses primarily include research and development expenses and administrative expenses. Administrative expenses include (i) salaries and benefits of our management, finance, operations, and other administrative staff; (ii) professional service fees such as audit fees and legal fees; (iii) rental expense; (iv) depreciation and amortization; (v) office expense; (vi) entertainment fee; (vii) transportation fee and (viii) other expenses. General and administrative expenses increased by 70.6% from RMB35.1 million in 2020 to RMB59.8 million (US$8.4 million) in 2021. This increase was primarily attributable to the increase in our headcount which led to the increase in staff cost and rental and office expense as the result of our business expansion.

General and administrative expenses increased by 25.9% from RMB42.6 million for the nine months ended September 30, 2021 to RMB53.7 million (US$7.5 million) for the nine months ended September 30, 2022. This increase was primarily attributable to (i) RMB3.8 million increase in our staff cost and (ii) RMB3.6 million increase in depreciation and amortization expense related to our leasehold improvement in new offices.

The following table sets forth the breakdown of general and administrative expenses, both in absolute amount and as a percentage of the total general and administrative expenses, for the periods indicated:

	For the year ended December 31,												For the nine months ended September 30,
	2020					2021							2021					2022
	RMB		%			RMB		US$		%			RMB		%			RMB		US$		%
	(in thousands, except for percentages)
Staff salaries and benefits		10,624		30.3	%		20,803		2,924		34.8	%		15,072		35.4	%		18,862		2,652		35.1	%
Professional service fees		12,129		34.6	%		12,389		1,742		20.7	%		10,865		25.5	%		10,325		1,451		19.2	%
Rental expense		4,226		12.0	%		7,492		1,053		12.5	%		5,396		12.7	%		6,345		892		11.8	%
Depreciation and amortization expense		1,772		5.1	%		6,090		856		10.2	%		2,415		5.7	%		6,035		848		11.2	%
Office expense		1,799		5.1	%		6,074		854		10.2	%		3,343		7.8	%		2,920		410		5.4	%
Entertainment fee		2,328		6.6	%		3,176		446		5.3	%		2,312		5.4	%		3,388		476		6.3	%
Transportation fee		715		2.0	%		1,742		245		2.9	%		1,384		3.2	%		1,196		168		2.2	%
Others		1,478		4.2	%		2,061		290		3.4	%		1,837		4.3	%		4,603		648		8.6	%
Total		35,071		100.0	%		59,827		8,410		100.0	%		42,624		100.0	%		53,674		7,545		100.0	%

Research and development expenses

Research and development expenses include (i) salaries and benefits of our research and development staff; (ii) outsourced development expenses; and (iii) other expenses such as transportation expenses for our research and development office. The research and development expense decreased by 60.7% from RMB7.4 million in 2020 to RMB2.9 million (US$0.4 million) in 2021, primarily because the majority of our research and development projects were completed in 2020.

The research and development expense decreased by 11.5% from RMB2.2 million for the nine months ended September 30, 2021 to RMB1.9 million (US$0.3 million) for the nine months ended September 30, 2022, primarily due to a decrease in outsourced development costs.

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The following table sets forth the breakdown of research and development expenses, both in absolute amount and as a percentage of the total research and development expenses, for the periods indicated:

	For the year ended December 31,												For the nine months ended September 30,
	2020					2021							2021					2022
	RMB		%			RMB		US$		%			RMB		%			RMB		US$		%
	(in thousands, except for percentages)
Staff salaries and benefits		787		10.6	%		2,405		338		82.2	%		1,673		76.4	%		1,938		272		100.0	%
Outsourced development cost		6,604		88.7	%		513		72		17.5	%		513		23.4	%		—		—		0.0	%
Others		57		0.8	%		8		1		0.3	%		4		0.2	%		—		—		0.0	%
Total		7,448		100.0	%		2,926		411		100.0	%		2,190		100.0	%		1,938		272		100.0	%

Our research and development in 2019 focused primarily on developing products and tools relating to digital advertising technology. In 2020, our research and development focused primarily on developing tools and products for new media marketing management. Our research and development in 2021 mainly focused on software product commercialization, and we developed Xuhang Live Streaming E-commerce Cloud and Xuhang Conference Cloud. In the future, we plan to establish new growth points through the commercialization of software products, and further develop technological services and software covering more business scenarios pertaining to city life, including living, traveling, and entertaining business scenarios. In summary, we currently focus our research and development efforts primarily on our new media integrated content marketing business, along with developing new products and pursuing new markets. As of the date of this prospectus, our research and development investment is relatively small, having a limited impact on our current financial condition—during the year ended December 31, 2019, 2020, and 2021 and the nine months ended September 30, 2022, our research and development expenditure amounted to RMB1.2 million, RMB7.4 million, RMB2.9 million, and RMB1.9 million, respectively. However, to achieve the rapid growth of our business and to establish a technology-driven growth edge for the future, the current research and development environment, equipment, and personnel will not be enough to support our future research and development needs. For a detailed discussion of our future research and development needs, please refer to “Business—Our Growth Strategies—Continue to Invest in Technology Research and Development to Develop and Commercialize New Software Systems and Expand business and Profitability.” Based on current market demand, technology development trends, and our actual development needs, we plan to invest approximately 20% of the proceeds received from this offering in research and development to attract and retain experienced talent and professionals and provide crucial support for the development of our products. Nonetheless, during the implementation of research and development projects, we may encounter uncertainties such as research failures and unmet project expectations. For example, research and development involving new technologies may not result in the expected results, or even fail entirely; a project’s economic benefits may not meet expectations if the products developed do not achieve widespread market acceptance; and new research and development expenses and/or depreciation and amortization may also result in a decrease in return on net assets. See “Risk Factors—Risks Relating to Our Business—Our PRC subsidiaries’ failure to conduct research and development could render their technologies obsolete and may adversely affect their business, financial condition, and results of operations.”

Allowance/(reversal) for doubtful debt and inventory

Reversal for doubtful debt and inventory were RMB5.1 million (US$0.7 million) for the year ended December 31, 2021, as compared to allowance for doubtful debt and inventory of RMB0.3 million for the year ended December 31, 2020, which was mainly attributable to our collection of the bad debts during 2021.

Allowance for doubtful debt and inventory were RMB0.9 million (US$0.1 million) for the nine months ended September 30, 2022, as compared to allowance for doubtful debt and inventory of nil for the nine months ended September 30, 2021, which was mainly attributable to our Company’s recognition of bad debts for the nine months ended September 30, 2022.

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Other income

Other income increased by 166.7%, from RMB1.7 million for the year ended December 31, 2020 to RMB4.4 million (US$0.7 million) for the year ended December 31, 2021, which was mainly attributable to our one-off additional accessory revenue related to our new media integrated content marketing services customers.

Other income decreased by 23.4%, from RMB4.9 million for the nine months ended September 30, 2021 to RMB3.8 million (US$0.5 million) for the nine months ended September 30, 2022, which was mainly attributable to a decrease in one-off additional accessory revenue related to our new media integrated content marketing services customers.

Interest expenses

Interest expenses decreased by 35.4%, from RMB11.7 million for the year ended December 31, 2020 to RMB7.6 million (US$1.1 million) for the year ended December 31, 2021, mainly because part of our loan was converted into shares in 2021, resulting in a decrease in the average loan balance from 2020 to 2021.

Interest expenses decreased by 98.2%, from RMB7.3 million for the nine months ended September 30, 2021 to

RMB0.1 million (US$0.02 million) for the nine months ended September 30, 2022, which was mainly attributable to the conversion of our convertible promissory notes in December, 2021.

Government subsidy

Government subsidy increased by 337.0%, from RMB1.0 million for the year ended December 31, 2020 to RMB4.2 million (US$0.6 million) for the year ended December 31, 2021, which was mainly attributable to the amortization of our government grant for the decoration of our new offices.

Government subsidy maintained stable for the nine months ended September 30, 2022 as compared to the same period in 2021.

Income tax expense

Income tax provisions were RMB8.1 million (US$1.1 million) for the year ended December 31, 2021, as compared to RMB5.9 million for the year ended December 31, 2020. The increase was primarily attributable to our business expansion in 2021.

Income tax provisions were RMB8.6 million (US$1.2 million) for the nine months ended September 30, 2022, as compared to RMB4.0 million for the nine months ended September 30, 2021. The increase was primarily attributable to our continuous business expansion in 2022.

Net Income

As a result of the foregoing, we reported a net income of RMB69.2 million (US$9.7 million) for the year ended December 31, 2021, as compared to RMB44.7 million for the year ended December 31, 2020.

As a result of the foregoing, we reported a net income of RMB52.4 million (US$7.4 million) for the nine months ended September 30, 2022, as compared to RMB41.4 million for the nine months ended September 30, 2021.

Liquidity and Capital Resources

Our primary source of liquidity historically has been cash generated from our business operations, bank loans, equity contributions from our shareholders and borrowings, which have historically been sufficient to meet our working capital and capital expenditure requirements.

84

As of December 31, 2020, 2021 and September 30, 2022, our cash and cash equivalents were RMB57.1 million, RMB113.4 million and RMB85.7 million (US$12.1 million), respectively. Our cash and cash equivalents primarily consist of cash on hand and highly liquid investments placed with banks, which are unrestricted to withdrawal and use and have original maturities of less than twelve months.

On February 23, 2021, Xuhang Network obtained a line of credit of RMB20.0 million (US$2.8 million) from Hangzhou Branch of China Merchants Bank Co., Ltd. Through this line of credit, Xuhang Network borrowed a total of RMB7.0 million (US$1.0 million) with a loan period from February 23, 2021 to February 22, 2022. The loan was repaid in advance by Xuhang Network on December 22, 2021. Additionally, China Merchants Bank Co., Ltd. provided another loan of RMB7.0 million (US$1.0 million) to Xuhang on December 24, 2021 on the basis of the original credit line, which expired on August 22, 2022. As of the date of this prospectus, the loan has been repaid.

On September 1, 2021, Hangzhou Pusheng Network Technology Co., Ltd., one of our PRC subsidiaries, borrowed RMB5.0 million (US$0.7 million) from Shangtang Branch of Hangzhou United Rural Commercial Bank Co., Ltd., with a maturity date of August 31, 2022. As of the date of this prospectus, the loan has been repaid.

On September 1, 2021, Hangzhou Jinting Conference Co., Ltd. (“Hangzhou Jinting”), one of our PRC subsidiaries, borrowed RMB5.0 million (US$0.7 million) from Shangtang Branch of Hangzhou United Rural Commercial Bank Co., Ltd., with a maturity date of August 31, 2022. This loan has been repaid as of the date of this prospectus.

On July 19, 2022, Beijing Hexian Lianjing Technology Co., Ltd. (“Hexian Lianjing”), one of our PRC subsidiaries, entered into revolving lines of credit in the form of overdraft agreements with Huaxia Bank Beijing Shangdi branch to obtain aggregate maximum loans of up to RMB15.0 million (US$2.1 million). Through these lines of credit, Hexian Lianjing borrowed a total of RMB15.0 million (US$2.1 million) with a loan period from July 19, 2022 to July 8, 2023, with an interest rate of 4.785% per annum. Hexian Lianjing expects to repay such loans upon maturity.

On September 5, 2022, Xuhang Network entered into revolving lines of credit in the form of overdraft agreements with Shangtang Branch of Hangzhou United Rural Commercial Bank Co., Ltd. to obtain aggregate maximum loans of up to RMB10.0 (US$1.4 million). Through these lines of credit, Xuhang Network and its subsidiaries borrowed a total of RMB10.0 million (US$1.4 million) with a loan period from September 5, 2021 to September 1, 2023, with interest rates ranging from 4.70% to 5.20% per annum. Xuhang Network and its subsidiaries expect to repay the loans upon maturity.

We believe that our existing cash and cash equivalents, anticipated cash raised from financings, and anticipated cash flow from operations, together with the net proceeds from this offering, will be sufficient to meet our anticipated cash needs for the next 12 months from the date of this prospectus. We intend to use a portion of the net proceeds from this offering to fund our operations over the next 12 months. See “Use of Proceeds.” However, the exact amount of proceeds we use for our operations and expansion plans will depend on the amount of cash generated from our operations and any strategic decisions we may make that could alter our expansion plans and the amount of cash necessary to fund these plans. We may, however, decide to enhance our liquidity position or increase our cash reserve for future investments through additional capital and finance funding. We may need additional cash resources in the future if we experience changes in business conditions or other developments, or if we find and wish to pursue opportunities for investments, acquisitions, capital expenditures, or similar actions. If we determine that our cash requirements exceed the amount of cash and cash equivalents we have on hand at the time, we may seek to issue equity or debt securities or obtain credit facilities. The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.

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Our ability to manage our working capital, including receivables and other assets and liabilities and accrued liabilities, may materially affect our financial condition and results of operations.

The following table sets forth our selected consolidated cash flow data for the periods indicated:

	For the year ended December 31,									For the nine months ended September 30,
	2020			2021						2021			2022
	RMB			RMB			US$			RMB			RMB			US$
	(in thousands, except for percentages)
Net cash provided by operating activities		(5,042	)		38,656			5,434			(19,147	)		(2,222	)		(312	)
Net cash used in investing activities		(21,412	)		(82,062	)		(11,536	)		(87,932	)		(50,415	)		(7,087	)
Net cash (used in) provided by financing activities		(5,055	)		98,907			13,904			105,591			17,718			2,491
Effect of exchange rate changes		(230	)		812			114			(632	)		7,288			1,023
Net (decrease)/increase in cash, cash equivalents and restricted cash		(31,739	)		56,313			7,916			(2,120	)		(27,631	)		(3,885	)
Cash and cash equivalents at the beginning of the year		88,826			57,087			8,026			57,087			113,400			15,942
Cash and cash equivalents at the end of the year		57,087			113,400			15,942			54,967			85,769			12,057

Operating Activities

Net cash used in operating activities for 2020 was RMB5.0 million, which primarily reflected our net profit of RMB44.7 million as mainly adjusted for (i) depreciation and amortization of RMB3.0 million, and (ii) non-cash interest expenses of RMB10.8 million as the interest expense was related to convertible promissory notes that transferred to the shares of our Company in December 2021. Net income was further adjusted by the changes in working capital. Adjustment for changes in working capital primarily consisted of (i) RMB23.8 million decrease in advance to suppliers as our prepayment for procurement of we-media accounts that mainly occurred in 2018 and 2019 while we continued to use these accounts in 2020, (ii) RMB32.4 million increase in accounts payables, as the result of business expansion and increase in purchases, partially offset by (i) RMB28.8 million increase in account receivables, net as we expanded our business and the revenue increased compared to 2019, (ii) RMB48.9 million increase in other receivables related to our investment deposit, (iii) RMB28.1 million decrease of accrued expenses and other payables attributable to the settlement of our daily operating payables, and (iv) RMB23.5 million increase in other non-current assets as we provided a loan to a third party in 2020.

Net cash provided by operating activities for the year ended December 31, 2021 was RMB38.7 million (US$5.4 million), which primarily reflected our net income of RMB69.2 million (US$9.7 million) as mainly adjusted for (i) depreciation and amortization of RMB2.3 million (US$0.3 million), (ii) RMB5.1 million (US$0.8 million) reversal of bad debt allowance, and (iii) non-cash interest expenses of RMB6.7 million (US$0.9 million) as the interest expenses were related to convertible promissory notes converted into our Ordinary Shares in December 2021. Net income was further adjusted by the changes in working capital. Adjustment for changes in working capital primarily consisted of (i) RMB10.3 million (US$1.4 million) increase in accrued liabilities and other payables attributable to an increase in customer deposit as a result of our business expansion, (ii) RMB9.7 million (US$1.4 million) decrease in amounts due from related parties as we collected the related parties receivables that occurred in 2020, (iii) RMB12.1 million (US$1.7 million) decrease in other non- current assets as we collected part of a loan from a third party, partially offset by (i) RMB38.3 million (US$5.4 million) increase in account receivables, net as our revenue increased by RMB120.5 million from 2020 to 2021, (ii) RMB15.1 million (US$2.1 million) decrease in accounts payables as we settled part of payables related to digital advertising business as a result of contraction in digital advertising business, and (iii) RMB13.7 million (US$1.9 million) increase in other receivables attributable to an increase in project deposit related to our new media business.

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Net cash used in operating activities was RMB5.0 million for the year ended December 31, 2020, compared to

RMB38.7 million provided by operating activities for the year ended December 31, 2021, which was primarily due to the RMB24.5 million increase in net income as the result of our business expansion and collection of receivables from related parties in 2021.

Net cash used in operating activities for the nine months ended September 30, 2021 was RMB19.1 million, which primarily reflected our net profit of RMB41.4 million as mainly adjusted for (i) depreciation and amortization of RMB0.7 million, and (ii) non-cash interest expenses of RMB6.7 million as the interest expense was related to convertible promissory notes that transferred to the shares of our Company in December 2021. Net income was further adjusted by the changes in working capital. Adjustment for changes in working capital primarily consisted of (i) RMB12.6 million decrease in other non-current assets as we collected part of a loan from a third party, offset by (i) RMB32.2 million increase in account receivables, net as we expanded our business and the revenue increased compared to 2020, (ii) RMB39.3 million increase in other receivables related to the increase in project deposit related to our new media business, (iii) RMB13.3 million decrease in accounts payables attributable to the settlement of part of payables related to digital advertising business as a result of contraction in digital advertising business, and (iv) RMB8.9 million increase in advance to suppliers attributable to the increase of payment related to our new media content integrated marketing business.

Net cash used in operating activities for the nine months ended September 30, 2022 was RMB2.2 million (US$0.3 million), which primarily reflected our net income of RMB52.4 million (US$7.4 million) as mainly adjusted for depreciation and amortization of RMB6.6 million (US$0.9 million). Net income was further adjusted by the changes in working capital. Adjustment for changes in working capital primarily consisted of (i) RMB9.0 million (US$1.3 million) decrease in other non-current assets as we collected part of a loan from a third party, (ii) RMB11.9 million (US$1.7 million) increase in account payables attributable to the expansion of procurement related to our new media content integrated marketing business, partially offset by (i) RMB65.4 million (US$9.2 million) increase in account receivables due to the increase of our account receivable turnover days as a result of the deteriorating economic conditions in China, and (ii) RMB23.3 million (US$3.2 million) increase in advance to suppliers attributable to the increase of payment for preparing marketing activities related to the fourth quarter shopping season in China.

Net cash used in operating activities decreased by 88.4% from RMB19.1 million for the nine months ended September 30, 2021 to RMB2.2 million for the nine months ended September 30, 2022. This decrease was primarily due to the decrease in the project deposits in other receivables after a number of large projects were completed that required large amounts of deposit payments.

We recorded negative operating cash flows for the nine months ended September 30, 2022, primarily due to an increase in our account receivable turnover days as a result of the deteriorating economic conditions in China. To meet our cash requirements, we intend to decrease our receivable turnover days by establishing a more effective account receivable management policy.

We expect our negative cash flows to turn positive in 2023. The general economic environment in China is expected to recover in 2023 as a result of the easing of COVID-19 prevention and control policies, which may facilitate our collection of accounts receivable from our customers.

Investing Activities

Net cash used in investing activities for the year ended December 31, 2020 was RMB21.4 million, mainly attributable to the proceeds from short-term investments of RMB10.0 million and payments for the acquisitions of RMB30.0 million.

Net cash used in investing activities for the year ended December 31, 2021 was RMB82.1 million (US$12.9 million), mainly attributable to the purchase of property and equipment of RMB21.2 million (US$3.0 million) and cash paid for the acquisitions of RMB46.9 million (US$6.6 million).

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Net cash used in investing activities for the nine months ended September 30, 2021 was RMB87.9 million, mainly attributable to (i) the purchase of property and equipment of RMB19.6 million, (ii) the payment for short-term investments of RMB14.3 million, and (iii) payments for the acquisitions of RMB46.9 million.

Net cash used in investing activities for the nine months ended September 30, 2022 was RMB50.4 million (US$7.1 million), mainly attributable to the payment for short-term investment of RMB28.3 million (US$3.9 million) and cash paid for the acquisitions of RMB20.0 million (US$2.8 million).

Financing Activities

Net cash used in financing activities for the year ended December 31, 2020 was RMB5.0 million, mainly attributable to proceeds from (i) proceeds from loans in the amount of RMB17.2 million, (ii) cash contribution from minority shareholders in the amount of RMB12.5 million, and (iii) repayment to related parties, net in the amount of RMB34.8 million.

Net cash provided by financing activities for the year ended December 31, 2021 was RMB98.9 million (US$13.9 million), mainly attributable to the proceeds from cash contribution from minority shareholders in the amount of RMB56.9 million (US$8.0 million) and proceeds from related parties, net in the amount of RMB38.5 million (US$5.4 million).

Net cash provided by financing activities for the nine months ended September 30, 2021 was RMB105.6 million, mainly attributable to the proceeds from cash contribution from minority shareholders in the amount of RMB54.1 million and proceeds from related parties, net in the amount of RMB48.0 million.

Net cash provided by financing activities for the nine months ended September 30, 2022 was RMB17.7 million (US$2.5 million), mainly attributable to (i) the proceeds from loans in the amount of RMB8.0 million (US$1.1 million), (ii) the proceeds from cash contribution from minority shareholders in the amount of RMB6.2 million (US$0.9 million), and (iii) the proceeds from related parties, net in the amount of RMB3.6 million (US$0.5 million).

Capital Expenditures

For the years ended December 31, 2020 and 2021, we made capital expenditures of RMB5.5 million and RMB21.2 million (US$3.3 million), respectively. In these periods, our capital expenditures were mainly used for (i) procurement of equipment such as office equipment and electronic products, and (ii) addition of leasehold improvements.

For the nine months ended September 30, 2021 and 2022, we made capital expenditures of RMB19.6 million and RMB1.5 million (US$0.2 million), respectively. In these periods, our capital expenditures were mainly used for

(i) procurement of equipment such as office equipment and electronic products, and (ii) addition of leasehold improvements.

We plan to fund our future capital expenditures with our existing cash balance and proceeds from this offering. We will continue to make capital expenditures to meet the expected growth of our business, including for office equipment, intangible assets, and leasehold improvements.

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Contractual Obligations and Commitments

The following table sets forth our contractual obligations as of September 30, 2022:

	Payment due by period
	Total		Less than one year		One to three years		Three to five years		More than five years
	RMB		RMB		RMB		RMB		RMB
	(in thousands, except for percentages)
Loan		25,000		25,000		—		—		—
Operating lease obligations		12,343		2,242		9,361		740		—
Total		37,343		27,242		9,361		740		—

Off Balance Sheet Commitments and Arrangements

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

Quantitative and Qualitative Disclosures about Market Risks

Concentration of Credit Risk

Financial instruments that potentially expose us to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. We place our cash and cash equivalents with financial institutions with high credit ratings and quality.

We conduct credit evaluations of our customers, and generally do not require collateral or other security from them. We establish an allowance for doubtful accounts primarily based upon the age of the receivables and factors surrounding the credit risk of specific customers.

Liquidity Risk

Our policy is to regularly monitor our liquidity requirements and our compliance with lending covenants, to ensure that we maintain sufficient reserves of cash and readily realizable marketable securities and adequate committed lines of funding from major financial institutions to meet our liquidity requirements in the short and longer term. See “—Liquidity and Capital Resources” for details.

Currency Risk

Our operations are primarily in China. Our reporting currency is denominated in Renminbi. We are exposed to currency risk primarily through sales and purchases which give rise to receivables, payables, and cash balances that are denominated in a currency other than the functional currency of the operations to which the transactions relate. Thus, our revenue and results of operations may be impacted by exchange rate fluctuations between RMB, Hong Kong dollars, and U.S. dollars. We incurred a foreign currency translation gain of RMB0.4 million and a translation loss of RMB0.2 million (US$0.02 million) in the years ended December 31, 2020 and 2021, respectively. We also incurred a foreign currency translation gain of RMB3.0 million and RMB5.2 million (US$0.7 million) in the nine months ended September 30, 2021 and 2022, as a result of changes in the exchange rate.

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Inflation

To date, inflation in mainland China and Hong Kong has not materially affected our results of operations. According to the National Bureau of Statistics of China, the consumer price index in mainland China increased by 0.2% and 0.9% year-over-year in December 2020 and 2021, respectively. Although we have not been materially affected by inflation in the past, we may be affected if mainland China experiences higher rates of inflation in the future.

Critical Accounting Estimates

An accounting policy is considered critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time such estimate is made, and if different accounting estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements.

We prepare our financial statements in conformity with the U.S. GAAP, which requires us to make judgments, estimates, and assumptions. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experiences, and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates. Some of our accounting policies require a higher degree of judgment than others in their application and require us to make significant accounting estimates.

The following descriptions of critical accounting policies, judgments, and estimates should be read in conjunction with our consolidated financial statements and accompanying notes and other disclosures included in this prospectus. When reviewing our financial statements, you should consider our selection of critical accounting policies, the judgments and other uncertainties affecting the application of such policies, and the sensitivity of reported results to changes in conditions and assumptions.

The consolidated financial statements include the financial statements of our Company and our subsidiaries for which we or a subsidiary of ours is the primary beneficiary.

Revenue Recognition

We have adopted the new revenue standard, ASC 606, Revenue from Contracts with Customers (Topic 606) for all periods presented. Consistent with the criteria of Topic 606, we recognize revenue to depict the transfer of promised services to customers in an amount that reflects the consideration to which we expect to receive in exchange for those services. Value-added tax that we collect concurrent with revenue-producing activities is excluded from revenue.

We recognize revenue as it satisfies a performance obligation when its customer obtains control of promised services, in an amount that reflects the consideration that the entity expects to receive in exchange for those services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We only apply the five-step model to contracts when it is probable that the entity will collect the consideration to which it is entitled in exchange for the services it transfers to the customer.

Once a contract is determined to be within the scope of ASC 606 at contract inception, we review the contract to determine which performance obligations it must deliver and which of these performance obligations are distinct. We recognize revenue based on the amount of the transaction price that is allocated to each performance obligation when that performance obligation is satisfied or as it is satisfied.

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Our Company is a principal and records revenue on a gross basis, since our Company (a) is primarily responsible for fulfilling the service, (b) has discretion in establishing pricing, and (c) controls the promised service before transferring that service to customers. Otherwise, we record revenue at the net amounts as commissions.

The following is a description of the accounting policy for the principal revenue streams of our Company:

Digital advertising services

Digital advertising services revenue primarily includes revenue from the provision of digital advertising services by our Company. The revenue is recognized when the related services are delivered based on the specific terms of the contract, which are commonly based on specified actions, such as cost per action (“CPA”), cost per mille (“CPM”), cost per click (“CPC”) or other preferences agreed upon with advertisers.

Revenue is recognized on a CPA, CPM or CPC basis at a point in time when agreed actions (such as download, installation, one thousand impressions of the advertisement, and click) are performed. The settlement of our digital advertising services is monthly when the monthly statement of our services is accepted by clients, and we recognize the relevant revenue monthly based on the monthly statements. While none of the factors individually are considered presumptive or determinative, because we are the primary obligor and are responsible for (i) identifying and contracting with third-party advertisers that we view as customers; (ii) identifying media publishers to provide ad inventory (media space) where we view the media publishers as suppliers; (iii) establishing the selling prices of CPA, CPM, or CPC pricing model; (iv) performing all billing and collection activities, including retaining credit risk; and (v) bearing sole responsibility for fulfillment of the advertising, we act as the principal of these arrangements and therefore recognize revenue earned and costs incurred related to these transactions on a gross basis.

New media integrated content marketing services

New media integrated content marketing services target social networks and applications to spread brand awareness or promote particular products. We offer a service package comprising a variety of integrated marketing solutions, including marketing strategy and creativity consulting, writing advertorials, shooting and producing promotional videos/short videos, managing and operating customers’ social media accounts or online stores, planning and implementing live e-commerce events, and organizing offline marketing events or public relations activities. Customers may select one or more types of the integrated marketing services for us to implement based on their respective marketing targets, demand, budgets, and other factors.

The process of the new media integrated content marketing services refers to the following:

(i) We sign contracts with customers. The contracts normally are framework agreements with terms typically within one year. According to the framework agreement, we are required to carry out marketing activities on a regular or irregular basis according to customers’ specific requirements.

(ii) After signing the contract, we provide a new media integrated content marketing campaign plan that is expected to be implemented in a certain period of time (normally a month). The plan is a new media integrated marketing service product package, which includes a variety of services. We provide the services included in the service package for a certain period of time specified in the plan (normally a month).

(iii) If the customers accept the plan, we provide related services to the customers, including: training of the customers’ employees who participate in the new media integrated content marketing campaign, marketing content production, setting up new media accounts, marketing channel procurement, release of new media marketing content, and monitoring and evaluating the result and effectiveness of the marketing campaigns.

(iv) After provision of all the related services in the period of time specified in the contracts, we send customers working reports or other acceptable references to confirm whether new media integrated content marketing campaign fulfilled the requirements of the signed contracts.

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(v) Revenue derived from the provision of new media integrated content marketing services is recognized at the point in time when the new media integrated content marketing campaigns are implemented and accepted by customers (all the new media marketing services included in a particular service package have been implemented), according to the terms of the contracts, and the satisfaction of the performance obligation is measured based on the implementation of new media integrated content marketing services.

We generally ask customers to pay for the services after all the services have been completed and accepted by the customers. Occasionally, we receive advance payment from customers (of no more than 30%). The advance payment is generally paid after a contract is signed. The remaining balance will be paid after all the services have been completed and accepted by the customers.

We are a principal and record revenue on a gross basis when we are primarily responsible for fulfilling the new media integrated content marketing services. When we purchase ancillary services related to new media integrated content marketing campaigns on behalf of customers, such as purchasing air tickets and hotels for customers, we recognize revenue at the net amount deducted from the purchasing amount as commissions.

We do not provide warranties, refunds, discounts, or rebates. The services provided by us are fully delivered when they have been completed and accepted by the customer (namely, the quality of the services has been approved by the customer). We do not have any after-sales guarantee obligations.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are stated at the historical carrying amount net of allowance for doubtful accounts.

We maintain an allowance for doubtful accounts which reflects our best estimate of amounts that potentially will not be collected. We determine the allowance for doubtful accounts taking into consideration various factors including historical collection experience, the creditworthiness of the debtors, and the age of the individual receivables balance. Additionally, we make specific bad debt provisions based on any specific knowledge we have acquired that might indicate that an account is uncollectible. The facts and circumstances of each account may require us to use substantial judgment in assessing its collectability.

Operating Leases

We adopted ASC Topic 842, Lease (“ASC 842”) on January 1, 2020, using the modified retrospective method. We determine if an arrangement is a lease at inception. Leases are classified as operating or finance leases in accordance with the recognition criteria in ASC 842-20-25. Our leases do not contain any material residual value guarantees or material restrictive covenants.

We have elected the package of practical expedients, which allows us not to reassess (1) whether any expired or existing contracts as of the adoption date are or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date and (3) initial direct costs for any expired or existing leases as of the adoption date. Lastly, we elected the short-term lease exemption for all contracts with a lease term of 12 months or less.

At the commencement date of a lease, we determine the classification of the lease based on the relevant factors present and record a right-of-use (“ROU”) asset and lease liability for operating lease. ROU assets acquired through the lease represent the right to use an underlying asset for the lease term, and operating lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are calculated as the present value of the lease payments not yet paid. If the rate implicit in our leases is not readily available, we use an incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. This incremental borrowing rate reflects the fixed rate at which we could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. ROU assets include any lease prepayments and are reduced by lease incentives. Operating lease expense for lease payments is recognized on a straight-line basis over the lease term. Lease terms are based on the non-cancellable term of the lease.

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Leases with an initial lease term of 12 months or less are not recorded on the consolidated balance sheets. Lease expense for these leases is recognized on a straight-line basis over the lease term.

Business combinations and asset acquisitions

Business combinations are recorded using the acquisition method of accounting. The purchase price of the acquisition is allocated to the tangible assets, liabilities, identifiable intangible assets acquired, and non-controlling interest, if any, based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill. Acquisition-related expenses are expensed as incurred. The consideration transferred in a business acquisition is measured at the fair value as of the date of acquisition. Transaction costs directly attributable to the acquisition are expensed as incurred.

If investment involves the acquisition of an asset or group of assets that does not meet the definition of a business, the transaction is accounted for as an asset acquisition. An asset acquisition is recorded at cost, which includes capitalized transaction costs, and does not result in the recognition of goodwill. The cost of the acquisition is allocated to the assets acquired on the basis of relative fair values.

Fair value is determined based upon the guidance of ASC Topic 820, Fair Value Measurements and Disclosures, and is generally determined using Level 2 inputs and Level 3 inputs. The determination of fair value involves the use of significant judgment and estimates. We utilize the assistance of a third-party appraiser to determine the fair value as of the date of acquisition.

Goodwill

Goodwill represents the excess of the purchase price over the amounts assigned to the fair value of the assets acquired and the liabilities assumed of an acquired business. In accordance with ASC Topic 350, Goodwill and Other Intangible Assets (“ASC 350”), recorded goodwill amounts are not amortized, but rather are tested for impairment annually or more frequently if there are indicators of impairment present.

In accordance with ASC 350, we assigned and assessed goodwill for impairment at the reporting unit level. A reporting unit is an operating segment or one level below the operating segment. As of December 31, 2021 and 2020, our Company as a whole is one reporting unit.

Pursuant to ASC 350, in 2020 and 2021, we evaluated all relevant factors, including macroeconomic conditions, industry and market conditions, and financial performance. We weighed all factors in their entirety and concluded that it was not more-likely-than-not the fair value was less than the carrying amount of the reporting unit, and further impairment testing on goodwill was unnecessary. No impairment loss of goodwill was recognized for the years ended December 31, 2020 and 2021.

Recently accounting pronouncements

The Company is an emerging growth company (“EGC”) as defined by the Jumpstart Our Business Startups Act (“JOBS Act”). The JOBS Act provides that an EGC can take advantage of extended transition periods for complying with new or revised accounting standards. This allows an EGC to delay adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company elected to take advantage of the extended transition periods. However, this election will not apply should the Company cease to be classified as an EGC.

On December 18, 2019, the FASB issued ASU No. 2019-12, Income taxes (Topic 740), Simplifying the Accounting for Income Taxes. This guidance amends ASC Topic 740 and addresses several aspects including 1) evaluation of step-up tax basis of goodwill when there is not a business combination, 2) policy election to not allocate taxes on a separate entity basis to entities not subject to income tax, 3) accounting for tax law changes or

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rates during interim periods, 4) ownership changes from equity method investment to subsidiary or vice versa, 5) elimination of exception to intrapetrous allocation when there is gain in discontinued operations and a loss from continuing operations, and 6) treatment of franchise taxes that are partially based on income. The amendments in this Update are effective for the Company for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company is evaluating the impact of this guidance on its financial statements and related disclosures.

The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s balance sheets, statements of income and statements of cash flows.

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INDUSTRY

All the information and data presented in this section have been derived from the industry report of Frost & Sullivan commissioned by us in September 2022 entitled “China Digital Marketing Market Study, Independent Market Research Report” (the “Frost & Sullivan Report”) unless otherwise noted. Frost & Sullivan has advised us that the statistical and graphical information contained herein is drawn from its database and other sources. The following discussion contains projections for future growth, which may not occur at the rates that are projected or at all.

Overview of China’s Integrated Marketing Market

Definition and Classification

Integrated marketing is a type of marketing activity intended to help brands or enterprises approach and interact with their target customers by unifying all aspects of marketing communication such as advertising, sales promotion campaigns, and public relations events. Typically, integrated marketing is designed to ensure that all messages and communication strategies are consistent across all channels and are centered on the customers. Integrated marketing is implemented by formulating a comprehensive marketing plan, evaluating the strategic roles of a variety of communication channels, and combining them to provide clarity, consistency, and maximum marketing impact. In practice, the strategies of integrated marketing mainly consist of experiential marketing, digital marketing, public relations, and offline marketing. Typically, a company involved in more than one type of marketing service will be classified as an integrated marketing services provider.

Experiential marketing, also known as event marketing, refers to a promotion strategy that involves face-to-face contact and interaction between companies and their customers at special events like conferences, trade shows, seminars, and roundtables. There are many forms of event marketing and each can be catered to address a marketer’s specific goals, including introducing new products or services, improving brand awareness, and generating immediate feedback from target customers.

Digital marketing refers to the promotion of products or services through digital channels, such as social media, mobile apps, and websites, including short video marketing, Key Opinions Leader (“KOL”) marketing, and social media marketing. These emerging marketing approaches utilize the latest trend to help promote brand awareness and boost sales. Compared with traditional marketing channels, such as newspapers, magazines, and televisions, digital media is so pervasive that consumers have access to advertising information at any fragmented time and at any place. Meanwhile, digital marketing could assist advertisers or their agencies to measure the performance of marketing activities. Lastly, digital advertising serves as a pivotal subset of digital marketing during the process of implementing digital marketing strategies.

Public relations generally refer to the practice of managing the spread of information between an individual or an organization and the public, and the individual or organization may gain exposure to its target audiences through the topics of public interest and new items.

Offline marketing refers to marketing activities that aim to help brand advertisers establish and enhance their brand image as well as promote their products via common marketing channels, such as newspapers, magazines, TV, and out-of-home media.

Value Chain Analysis

In general, integrated marketing service providers serve as the intermediaries between advertisers and distribution channels. They serve on behalf of advertisers to liaise with distribution channels and offer a wide spectrum of services and solutions to help advertisers match publishing resources and efficiently implement marketing campaigns to the target audience. Compared to normal marketing service providers, integrated marketing service providers are able to provide a suite of marketing services for advertisers to carry out accurate and efficient campaigns.

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Value Chain Analysis of the Integrated Marketing Industry

Source: Frost & Sullivan Analysis

Market Size of China’s Integrated Marketing Market

For brands or companies, marketing strategy is a long-term and forward-looking approach to planning with the fundamental goal of achieving sustainable competitive advantages. High-quality strategic marketing planning involves the thorough analysis of the company’s strategic initial situation prior to the formulation, evaluation, and selection of a market-oriented competitive position that contributes to the brands’ goals and marketing objectives. Professional integrated marketing service providers usually draft a specialized marketing and communication plan and utilize direct or indirect media to help the brands or companies create and maintain a positive image and a strong relationship with their target audience. Currently, an increasing number of brands or companies tend to acquire professional integrated marketing services to build positive social reputation and promote products and services.

The market size of the integrated marketing market in China experienced rapid growth at a compound annual growth rate (“CAGR”) of 17.8% between 2016 and 2020, increasing from approximately RMB571.7 billion to approximately RMB1,100.5 billion. Integrated marketing plays an increasingly significant role in public perception of a brand by influencing the media and maintaining relationships with stakeholders. Meanwhile, along with the proliferation of the Internet, particularly on mobile terminals, digital marketing has become a preferred choice of many brands and companies. The rapidly growing advertising platforms in each marketing channel have created difficulties for brands to select the most effective advertising platforms and engage them at a low cost. Given integrated marketing service providers’ expertise in this field and their ability to negotiate favorable terms with the advertising platforms, brands have started to delegate integrated marketing service providers to select and engage the advertising platforms in different marketing channels on their behalf. Therefore, digitalization is likely to serve as the critical driving force behind the sustainable growth of the integrated marketing market. The market size of the integrated marketing market in China is forecasted to reach approximately RMB1,941.1 billion by 2025, yielding a CAGR of approximately 12.0% between 2020 and 2025.

Integrated Marketing Services Market Breakdown (China), 2016-2025E

CAGR	Total			Public Relations			Digital Marketing			Offline Marketing			Experiential Marketing
2016-2020		17.8	%		8.7	%		30.7	%		-2.2	%		6.9	%
2020-2025E		12.0	%		6.8	%		15.0	%		0.9	%		4.0	%

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Note: The market size refers to the total expenditure of advertisers on integrated marketing services.

Source: Frost & Sullivan Analysis and Estimates

Digital marketing plays a critical role in integrated marketing strategies, thereby accounting for the largest proportion, approximately 71.6%, of the total market size in 2020. Meanwhile, digital marketing has shown the greatest growth momentum compared with other types of integrated marketing services, and its market size increased at an impressive CAGR of approximately 30.7% between 2016 and 2020. By 2025, the market size of digital marketing is projected to reach approximately RMB1583.2 billion, yielding a CAGR of approximately 15.0% between 2020 and 2025.

Due to the COVID-19 pandemic, people’s living style has changed substantially. Due to the implementation of significant governmental measures intended to control the spread of the virus, including lockdowns, closures, quarantines, and travel bans, in the context of a less dynamic economy where consumers are less willing to spend, the advertisers’ budgets have been adversely impacted by the pandemic and decreased significantly since 2020. In general, advertisers have been striving to reach more consumers with diversified distribution channels and less capital investment. Attributable to the convenience of bulk programmatic advertising purchases and the high efficiency of enormous user acquisition and traffic aggregation, integrated marketing plays an essential role in content distribution and consumer attraction. Also, since brands and advertisers are expected to place a strong emphasis on online portals, integrated marketing service providers are able to capture such opportunities through utilizing their competitive edges and comprehensive services to customers.

Market Driver Analysis

Consumption Upgrade Promotes Rising Brand Awareness of Consumers

As the economic model gradually transformed into a consumption-driven one, Chinese consumers have shown rising purchasing power and ever-changing consumption needs. In the early stage of economic development, Chinese consumers focused more on the ingredients, price, and value-in-use of products and services. Along with continuous economic development, increasing income levels of consumers, and affluent product supply available in the market, Chinese consumers have extended their focus to the appearance, quality, experience, and brand image of goods and services. In such cases, Chinese consumers have shown increasing consumption demands with the purpose of reflecting their social status, and therefore pay more attention to the brand and concept of the products and services. The consumption upgrade and personalized consumption habits of Chinese consumers contribute to their growing brand awareness and brand loyalty, driving the rising demand for marketing and brand building for companies.

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Integrated Marketing Industry Evolves More Diverse Tools and Channels

Presently, the market economy in China has become more mature, which is characterized by intensified market competition and the entrance to an information explosion era. The increase of Internet and mobile Internet penetration rates and the emergence of diverse mobile devices such as portable watches, and out-of-home televisions in the elevators and buses have largely extended the time consumers spend on media channels. Emerging media channels such as social media, online videos, and out-of-door televisions boost the exposure of the advertisers and target marketing towards different customer segments. In addition, the introduction of diverse marketing tools including KOL marketing, digital marketing, and native advertising have completed and enlarged the strategy and tool profiles of integrated marketing, better meeting various marketing demands of advertisers.

Technological Innovations Enable Better Integrated Marketing Experiences and Performance

With the enlarging base of Internet users and the advance of innovative technologies, more intelligent integrated marketing activities with precise customer targeting and more convenient integrated marketing services, such as programmatic buying which creates real-time and accurate connections between advertisers and media channels have gradually replaced the dominant role of traditional marketing and become a new driver behind the growth of the integrated marketing industry in China. Given the nature of unlimited usage of space and time with mobile devices, big data and AI technologies are able to gather tremendous data and information about customer behaviors and realize targeting integrated marketing based on customer profiles. As a result, integrated marketing services are able to provide more effective marketing results and better marketing experiences, which in turn encourage companies to invest in integrated marketing activities.

Entry Barriers Analysis

Abundant Industry Expertise. Sophisticated industry know-how and management capability are key success factors for marketing companies. To establish a marketing company requires professional management of various operation processes, including but not limited to designing advertisement or campaign events, organizing marketing activities, and designing integrated branding strategies for the target customer segment on diverse media channels. Abundant industry expertise requires a long period of time to accumulate and this may pose a barrier for the new entrants.

Client and Media Resources Accumulation. Easy access to advertisers and marketing channels is critical for integrated marketing companies. Such access is built through years of providing appropriate infrastructure and investments in market know-how, social connection, and customer behavior tracking to establish an integrated and efficient resource network. Existing players have established integrated advertisers and media networks while new entrants, due to the limited capital support, experience, and low bargaining power, are expected to face difficulties in obtaining advertisers and media resources to support their business within a short period of time.

Application of Marketing Technology. The ability to adopt or develop advanced technologies serve as the core competency of integrated marketing companies. An experienced integrated marketing service provider with a sizable market share and business scale tends to have more technology establishment covering multiple business types, including CRM systems and public opinion monitoring tools. An experienced market player is likely to provide more financial support to strengthen their R&D and technology development to support and drive their business growth, and such technical capacities are likely to pose barriers for the new entrants.

Future Trends Analysis

Comprehensive Utilization of Multiple Media and Marketing Channels. With the increasing Internet penetration rate, lower-tiered cities have shown strong demand for social media marketing services, including leisure, cultural and lifestyle aspects. In parallel, local brands and advertisers start to cooperate with new media

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integrated marketing service providers to promote and market their brands through short videos, public accounts, and other channels with high-profile content distribution and enormous user traffic. Besides, due to the long-tailed nature of media resources and continuous diversification of outdoor exposure tools and Internet platforms, publishing channels and media resources are expected to enrich continuously and become more diversified in the future to meet advertisers’ demands.

More Diversified Advertisers. With the development of the macro-economy and expansion of business entities, an increasing number of Chinese advertisers have shown growing demands for integrated marketing services and the types of advertisers have gradually extended to different business sectors such as finance, healthcare, and entertainment. As traditional industries gradually develop recognition and awareness of brand image management and integrated marketing, the affluence of advertisers is expected to continue to increase. In the long run, integrated marketing service providers will continue to help advertisers to capture the value of their customer base and strengthen their monetization capacities.

Technology-Enabled Integrated Marketing. Technology capacity has become the core competency for integrated marketing service providers. Presently, well-established service providers have been striving to offer one-step integral marketing solutions to advertisers. For instance, programmatic buying has become one of the most over-hyped technologies in marketing. Real-time bidding enables more precise targeting by constantly monitoring consumers’ real time purchasing behaviors and browsing habits. Big data and cloud computing technologies allow marketing companies to gather a large amount of customer behavior information and establish comprehensive customer profiles for integrated marketing services based on multiple tools and platforms. As more advanced technologies emerge and become prevalent in the market, marketing companies are likely to become more integrated and technology-oriented.

Performance-Based Marketing solutions. Technology has radically changed the marketing industry and empowered advertisers to become specific about how they target potential consumers. Advertisers are able to aggregate search data and social media data to paint precise customer profiles. With the increasing Internet penetration rate, both advertisers and integrated marketing service providers are expected to shift their focus from offline to online and the marketing campaigns distributed online have become increasingly performance-oriented. In the future, the prevalence of marketing technologies is projected to further help advertisers to enhance campaign efficiency and effectiveness in order to maximize their return on investment.

Competitive Landscape Overview

The integrated marketing market in China is relatively concentrated, since the top five leading companies accounted for more than a 50% market share in 2020. These major companies possess strong capabilities and resources in respect of premium advertising content, traffic conversion, and market influence. Although the integrated marketing market in China is highly competitive, medium-and small-scale participants still have considerable potential to grow and capture demand by proactively leveraging their capabilities and customized marketing solutions in respect of brand building and promotion, creative planning, and project implementation and execution.

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Ranking for the Integrated Marketing Service Providers (China), 2020

Source: Frost & Sullivan Analysis and Estimates

Overview of China’s Digital Marketing Market

Market Size of China’s Digital Marketing Market

Promoting Internet technology innovation has become one of the main items on the Chinese government’s agenda in recent years. In 2020, the number of Internet users and mobile internet users reached approximately 989.0 million and approximately 985.5 million, respectively. The increasing penetration rates of Internet and mobile Internet lay the foundation for China’s digital marketing due to the favorable nature of Internet and mobile internet, including inclusiveness, promptness, and unlimited geographic coverage.

The digital marketing market in China reached approximately RMB788.4 billion in 2020. The market is further expected to grow at a CAGR of approximately 15.0% between 2020 and 2025 to reach a value of approximately RMB1,583.2 billion by 2025. The future growth prospects of the digital marketing market are projected to be high due to the rising population of consumers and the widespread application of digital marketing technologies.

The market size of digital marketing through mobile channels in China was valued at approximately RMB608.0 billion in 2020 and is expected to grow at a CAGR of approximately 18.0% from 2020 to 2025. Mobile marketing is one of the key digital marketing strategies adopted by organizations to promote their products and services. It enables the integration of new, innovative methods of advertisements with the same marketing strategies to increase their impact and approachability in terms of target users.

Digital Marketing Market Breakdown by Terminal (China), 2016-2025E

CAGR	Total			Personal Computer			Mobile
2016-2020		30.7	%		7.9	%		45.1	%
2020-2025E		15.0	%		1.4	%		18.0	%

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Source: Frost & Sullivan Analysis and Estimates

There are multiple digital marketing methods provided by integrated marketing service providers to help advertisers to effectively connect with clients and maximize marketing impacts, such as short video marketing, social media marketing, ad inventory purchasing, and KOL marketing.

Short videos, typically lasting between 15 seconds to a few minutes, have gained popularity rapidly in China, with a multitude of apps emerging in the market that focus on this particular form of content. Short-video content is expected to drastically change the way users consume content. The period of 2018-2020 was the first period when digital marketers in China began taking advantage of short videos for their marketing effort. In 2020, the revenue of the online short video advertising market in China amounted to approximately RMB133.5 billion, and is poised to gain momentum between 2020 and 2025, recording a CAGR of approximately 32.4%. The leading online video platforms have incorporated e-commerce marketing into their video content.

KOL marketing refers to the partnership between a brand and people with expertise on a specific subject to distribute content featuring the brand’s products. KOL marketing often occurs on social networks or social video sites. In some cases, the KOL have built their names on popular blogs. In 2020, the KOL digital marketing in China was valued at approximately RMB131.5 billion and it is expected to reach approximately RMB419.5 billion by the end of 2025, with a CAGR of approximately 26.1% between 2020 and 2025. In addition, the decline of celebrity KOLs and the rising power of micro-influencers is one digital marketing trend in China that will have a huge impact on KOL marketing for the next few years.

Overview of China’s We-Media Marketing Market

Market Size of China’s We-Media Marketing Market

Driven by the popularity of top we-media platforms, including Douyin, Kuaishou, WeChat, Weibo, and Xiaohongshu, that increasingly attracted the attention of mobile internet users, marketers have devoted more time and resources to we-media marketing. The market size of the we-media marketing market increased from approximately RMB47.7 billion to approximately RMB242.8 billion with a CAGR of 50.2% between 2016 and 2020. As we-media platforms penetrate more aspects of users’ lives, we-media marketing is expected to grow at a CAGR of 20.4% between 2020 and 2025, rising from approximately RMB242.8 billion to RMB776.2 billion.

We-Media Marketing Market (China), 2016-2025E

CAGR	2016-2020		2020-2025E
We-Media Marketing Market	50.2	%	26.2	%

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Overview of China’s Live Streaming Market

Definition

Live streaming refers to a type of online streaming media that is simultaneously being recorded and broadcast in real-time. Typically, live-streaming platforms encompass various types, including game live-streaming platforms, social media live-streaming platforms, and sports live-streaming platforms, where users are engaged in a wide spectrum of topics and interact with streamers. Traditionally, live-streaming platforms monetize primarily through a reward-based model, where viewers purchase virtual gifts for streamers who could later exchange virtual assets for money.

Value Chain Analysis

The participants in the upstream consist of various types of content providers, including retailers, brands, and other content copyright owners. In the midstream, the live-streaming platforms, which allow streamers to interact with viewers, are responsible for the platforms’ operation, management, and traffic attraction. There are diversified live-streaming platforms, namely entertainment live-streaming platforms, long video and short video live-streaming platforms, game live-streaming platforms, sports live-streaming platforms, and education live-streaming platforms. In the downstream, content providers cooperate with KOLs, celebrities, and live-streaming platforms to reach out to their target viewers. In addition, there are other third-party service providers engaged through the whole value chain, covering from technological support to payment solutions to operation management.

Market Size of China’s Live Streaming Market

In the past few years, China’s live-streaming market grew rapidly with a CAGR of 61.7%, increasing from approximately RMB25.2 billion in 2016 to approximately RMB174.5 billion in 2020, attributable to the substantial growth of the Internet users with increasing willingness to pay and gradually matured monetization models during the period. By 2025, the live-streaming market in China is expected to reach approximately RMB569.3 billion at a CAGR of 26.7% between 2020 and 2025.

Market Driver Analysis

Consumption Demand for Diversified Entertainment Products and Services. With the robust economic growth in China over time, the increase in disposable income of residents has facilitated the consumption need in the

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culture and entertainment field. People are more willing to pay for entertainment products. The per capita annual consumption expenditure on education, culture, and entertainment increased from approximately RMB2,847 to RMB3,322 at a CAGR of 3.9% between 2017 and 2021. Nowadays, people care more about their spiritual entertainment activities, whether through user contributions for the pleasure of live interaction or a high willingness to purchase live streaming items recommended by streamers, demonstrating the enormous potential for traffic monetization in the live streaming market. Therefore, spiritual entertainment activities have become a key driving force behind the market’s expansion.

Better Experiences Enabled by Technological Innovation. With the development of communication technologies, the live-streaming industry has benefited a lot from technological innovation in terms of reducing the cost of traffic and content distribution networks. For instance, live-streaming platforms adopted technological innovation applications such as PCDN, narrow-band High Definition, and High-Efficiency Video Coding (H.265), continuously to enhance viewing experience and interaction. On the other hand, the live-streaming industry has been more convenient and intelligent for streamers under the waves of technological innovation as well as reducing the threshold of live-streaming, which brings a boom in user generated content production.

The Rise of Diversified Live-streaming Content. Taking advantage of short-video applications and platforms, the live-streaming market, which originates from the gaming industry, has proactively expanded its business scope to include e-commerce, social media, and other pan-entertainment fields in order to gain market presence. The emergence of diversified live-streaming applications and platforms has driven the prosperity and development of the whole industry. On the other hand, customer experiences have become a critical factor for platforms to retain and gain new viewers. As the platforms’ focus shifts to customer experiences, diversified content helps enhance viewers’ experiences and improve monetization capability.

Future Trends analysis

Application of 5G Technology. As one of the main application areas of 5G technology, the live streaming market will be significantly benefited and boosted by 5G technology innovation. 5G’s ultra-high definition (“UHD”) technology brings low latency and high broadband to the live streaming industry. UHD technology will eliminate lag and enhance picture quality during live streaming, which will improve user experiences and enhance user retention rate. Along with the maturity and popularity of VR, the development of the Internet of Things (“IoT”), AI, and other in-depth applications in the field of live streaming, platforms are able to diversify revenue streams. Moreover, the upgrade of live streaming technology will, to a certain extent, promote the continuous development of the industry, and will also redefine the content production methods and forms.

Diverse Content and Monetization Methods. The live streaming market in China gradually matures and diversifies, enriching the content and monetization methods of the market players. Attributable to the strong marketing functions and huge traffic influence of live streaming, various industries start to explore new business models combined with live streaming and these industries are presenting great synergy, including but not limited to e-commerce, social media, and audio and live broadcast. Taking the real-time connection function, for example, potential customers through live streaming e-commerce are able to get answers to post questions and gain a more comprehensive impression of the products, making promotional activities more convincing and effective. In addition, live streaming has gradually been embraced by mainstream media in China and is playing a positive role in solving social problems.

Intensified Competition for Existing Viewers. In the foreseeable future, live-streaming platforms might witness the stagnant growth of new viewers and the increasingly fierce competition in the market. Live-streaming platforms take methods to attract more viewers by focusing on streamer resources, platform features, and original content, which are all essential factors to survive the fast-growing live-streaming market. Therefore, it is important for live-streaming platforms to enhance their differentiated strategies to increase user activity, while actively exploring new opportunities to catch up with the evolving live streaming industry. Various live streaming platforms began to explore and broaden the industry both horizontally and vertically. Platforms continue to develop new business models to improve user retention rates, such as synergizing live-streaming with e-commerce, live-streaming with social media, and live-streaming with audio to maintain long-term loyalty between platforms and viewers.

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BUSINESS

Overview

We are a holding company incorporated in the Cayman Islands and not a Chinese operating company. As a holding company with no material operations of our own, we conduct all of our operations primarily through our PRC subsidiaries.

Our PRC subsidiaries are content-driven marketing service providers that offer a package of integrated marketing solutions across a broad range of distribution channels with a primary focus on new media content marketing. Leveraging our PRC subsidiaries’ expertise in content production and operation, extensive distribution channels, and cross-platform new media account base, our PRC subsidiaries aim to provide customers with efficient and effective integrated marketing solutions that address their marketing needs in the context of the new media era. Customers utilize our PRC subsidiaries’ marketing services to achieve their branding and marketing goals across multiple channels with a primary focus on we-media platforms such as WeChat official accounts, Weibo, Xiaohongshu, Toutiao, Douyin, Kuaishou, and Baidu Baijiahao. As of October 31, 2022, our PRC subsidiaries had delivered short videos and advertorials that generated over 156 billion views in total; our PRC subsidiaries’ new media account base comprised 524 self-operated accounts and 491 cooperative accounts, which collectively reached approximately 207 million Internet followers. Customers of our PRC subsidiaries include large Internet platform companies and small- to medium-sized local businesses in all segments of urban life, including catering, entertainment, and travel. As of December 31, 2020 and 2021 and September 30, 2022, our PRC subsidiaries had a marketer base of 656, 810, and 867, respectively.

Currently, our PRC subsidiaries provide two categories of marketing services: (i) new media integrated content marketing services, which rely on creating and distributing relevant, engaging, and valuable content in order to attract and retain audiences to promote brands and selling products and services, and (ii) digital advertising services, which emphasize the need to choose better-matched ad distribution channels with the target audience to maximize marketing effectiveness.

Our PRC subsidiaries started their business in 2014 with digital advertising services, where they help marketers—typically app developers and operators and advertising agents thereof—optimize their marketing efforts by identifying, engaging, and activating target audiences for user acquisition. Our PRC subsidiaries publish advertisements for their customers’ products or services via their digital advertising channels, which consist primarily of Xuhang SDK-embedded Apps. With their analysis and optimization capabilities in advertisement placement, their industry expertise, and the distribution channel resources they have accumulated over the years, our PRC subsidiaries are able to provide customers with effective digital advertising services through better matching the products to be advertised with suitable distribution channels.

Since 2017, our PRC subsidiaries have launched and expanded their new media integrated content marketing services that address the growing demands of marketers for social, entertaining, and trendy marketing content in the new media area. Specifically, our PRC subsidiaries’ new media integrated content marketing services are mainly composed of two models—the S2B model and the S2P model. For the S2B business, our PRC subsidiaries provide customers with a package of new media integrated content marketing service solutions—specifically, our PRC subsidiaries (i) provide creative marketing services to merchants and brands by producing entertaining and trendy marketing content, such as promotional short videos and advertorials, and publishing them via their self-operated and cooperative we-media accounts; (ii) plan, organize, and implement live streaming events on behalf of marketers, such as e-commerce merchants and local businesses, for promoting their products or services on high-profile live streaming platforms, or provide them with new media live broadcast training services; and (iii) organize online and offline marketing activities for large brands, business centers, commercial complexes, and tourist attractions, based on their needs for an “online-offline-linkage” marketing strategy. In addition, to supplement their new media integrated content marketing services, our PRC subsidiaries have recently developed affiliated businesses, which currently account for a small percentage of their

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total revenue, but are expected to drive their future growth. Specifically, our PRC subsidiaries (a) license self-developed software products and services to third-party business, and (b) cooperate with cultural institutions, including museums and tourist attractions, such as Daming Palace National Heritage Park and Huashan Scenic Area, to help them issue, promote, and sell IP-related digital products that are becoming increasingly popular among young people on platforms such as Ali Auction, NetEase Planet, and Xinhua Shucang.

With respect to the S2P business, our PRC subsidiaries provide online traffic services to large Internet media platforms by generating or directing user traffic to those media platforms through editing and producing captivating short videos from authorized TV dramas, movies, and variety shows and posting such short videos on high-profile media platforms, such as Toutiao, Douyin, Xigua Video, Baidu Baijiahao, Kuaishou, Youku, Tencent Video, and iQIYI. As of September 30, 2022, our PRC subsidiaries had an in-house new media content production and operation team consisting of 185 employees, including senior media professionals, senior marketers, or people with professional backgrounds in design, journalism, and writing. This strong content team enables our PRC subsidiaries to consistently produce creative, entertaining, and interactive marketing content. With their in-depth industry insight and strong content production capabilities, our PRC subsidiaries provide a package of multi-channel marketing solutions that address their customers’ different marketing needs. We believe that, with their extensive distribution channels and marketing methods, our PRC subsidiaries can maximize marketing effectiveness for their customers within their marketing budgets.

Our PRC subsidiaries’ business has experienced rapid growth since their inception. For the years ended December 31, 2020 and 2021 and September 30, 2022, we had total revenue of RMB350.9 million, RMB471.4 million (US$66.3 million), and RMB339.3 million (US$47.7 million), respectively, and net income of RMB44.7 million, RMB69.2 million (US$9.7 million), and RMB52.4 million (US$7.4 million), respectively. Revenue derived from new media integrated content marketing services accounted for approximately 46.4%, 77.4%, and 87.5% of our total revenue for those years and period, respectively. Revenue derived from digital advertising services accounted for approximately 53.6%, 22.6%, and 12.5% of our total revenue for those years and period, respectively. For the years ended December 31, 2020 and 2021 and the nine months ended September 30, 2022, our cost of revenue was RMB243.5 million, RMB329.9 million (US$46.4 million), and RMB221.2 million (US$31.1 million), respectively.

Our Competitive Strengths

We believe the following competitive strengths are essential for our PRC subsidiaries’ success and differentiate them from their competitors:

Content-Driven New Media Integrated Marketing Enabled by Our PRC Subsidiaries’ Expertise in Advertising Idea Creation and Content Production

Our PRC subsidiaries are early movers focusing on content marketing by leveraging the increasing popularity of we-media platforms. They understand that Internet technology and content are changing the marketing industry and everyone involved in it. As content marketing has become a widely established practice, consumers expect to obtain fun, entertaining, and even educational and interactive content from advertising and have become accustomed to such standards set by the most innovative marketing campaigns.

In contrast to traditional media, which relies heavily on channels, new media integrated content marketing focuses primarily on content that appeals to the target audience. In the era of new media, anyone can produce and disseminate content. While abstract and tedious content may be valuable from a professional perspective, content that is friendly, interesting, and eye-catching is more likely to be loved by the public and gain significant Internet traffic.

Since 2017, we have been researching consumer behavior and preferences, thus gathering an in-depth understanding of market trends, and have built an experienced team to meet customers’ constantly changing

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needs. Compared with their competitors, our PRC subsidiaries are better equipped to develop a marketing strategy that targets end consumers while offering attractive, customized marketing solutions that maximize marketing returns. As of September 30, 2022, our PRC subsidiaries had 170 employees in their in-house content production team, which consisted of senior media people, senior marketers, and professionals in design, journalism, and writing. Their team’s size and diversity allow them to produce professional, intriguing, and approachable content and marketing ideas. Currently, our PRC subsidiaries are capable of producing 160,966 short videos and 188 advertisements per month. Their expertise in content production sets them apart from their competitors.

Our PRC subsidiaries provide creative marketing services for merchants and brands, and produce entertaining and fashionable marketing content, including advertorials, short videos, and other marketing materials. As of October 31, 2022, they have produced over 19,310 advertorials and over 4,329,144 short videos, which have been published through over 14 content distribution platforms. Our PRC subsidiaries also provide online traffic services to Internet media platforms by generating or directing user traffic to those media platforms through editing and producing captivating short videos from authorized TV dramas, movies, and variety shows, and posting such short videos on high-profile media platforms, such as Douyin, Toutiao, Xigua Video, Baidu Baijiahao, Youku, and Tencent Video. Customers we serve include ByteDance (Toutiao, Xigua Video, Douyin), Alibaba (UC and Youku), Tencent (Tencent Video and WeChat Official Account), Baidu (Haokan Video and Quanmin Video); Bilibili, Kuaishou, NetEase, and iQIYI. As of October 31, 2022, our PRC subsidiaries are capable of producing 5,365 short videos each day, and have produced more than 4,329,144 short videos in total since their incorporation, generating over 155.56 billion views in total.

Capability of Offering a Package of Integrated Marketing Solutions of Various Forms

Integrated marketing refers to the marketing activities that help brands or enterprises reach and interact with their target customers through multiple marketing methods and marketing channels. A typical integrated marketing strategy includes digital marketing, content promotion, live streaming events, public relations, and offline event marketing.

Our PRC subsidiaries are committed to providing customers with a package of integrated marketing solutions through multiple marketing channels and in different forms. They have therefore attracted customers with a variety of needs by enabling them to select the most appropriate and effective marketing methods. With their diverse marketing services—including creative marketing planning consultation, writing advertorials, producing promotional videos, operating social media accounts, implementing live streaming sales, and organizing offline marketing activities—our PRC subsidiaries help marketers reach their target audiences and maximize their return on marketing investment. For example, our PRC subsidiaries offer digital advertising services for Alibaba’s Taobao App to help customers better identify the App so as to attract and engage target audiences. Furthermore, their new media integrated content marketing capabilities enable them to provide short video content operation services for Alibaba’s Youku Video and UC browser. Specifically, our PRC subsidiaries help Youku Video and UC browser increase online views and attract and retain new users through editing, producing, and posting captivating short videos on high-profile media platforms and thereby directing large user traffic therefrom to their customers. Additionally, our PRC subsidiaries also provide new media advertising and offline activity services based on an “online-offline-linkage” marketing strategy for Taobao, Tmall’s “618,” “Double 11,” “Double 12,” and other promotional campaigns.

With their multi-channel marketing solutions that address different marketing needs, we believe our PRC subsidiaries can maximize marketing effectiveness for their customers within their marketing budgets. We expect our PRC subsidiaries’ integrated marketing solutions strategy to increase the stability of their client base and sustain their growth in the future.

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Diverse Network of We-Media Accounts with Hundreds of Millions of Followers

Our PRC subsidiaries’ high-quality and diverse network of we-media accounts, including self-operated and cooperative we-media accounts, is crucial to their business. See “—Ad Distribution Channels—Distribution Through We-Media Publishers/Accounts.” Our PRC subsidiaries have a diverse network of we-media accounts across multiple we-media platforms, which primarily cater to new media formats and are rapidly gaining popularity and user base in China. As of October 31, 2022, our PRC subsidiaries operated over 1010 new media accounts, representing online traffic of approximately 207 million Internet followers—specifically, approximately 70.97 million followers from Toutiao, approximately 61.90 million followers from Douyin, approximately 40.35 million from Baidu Baijiahao, approximately 20.54 million from Kuaishou, approximately 7.96 million from WeChat public accounts, approximately 5.21 million followers from other Internet media and e-commerce platforms (including Dayu (大鱼号), Bilibili(哔哩哔哩), and Qi’e Hao (企鹅号). We believe that our PRC subsidiaries’ ability to operate these next-generation we-media accounts will benefit them in their business expansion in the future.

Full Stack Technology Solutions for New Media Businesses

We provide full-stack technology solutions with an experienced IT R&D team. Our self-developed technologies are based on low-code, cloud-based platforms, and user-experience-driven development, where we apply well-designed user interface components and data processing techniques to improve development efficiency and platform stability. We have developed software to support different lines of business for our PRC subsidiaries, including the live streaming broadcast, conference hosting, and local life live broadcast. Meanwhile, our PRC subsidiaries have licensed self-developed software products and services to third-party businesses.

Business Expansion Mode Through Cooperation with Local State-Owned Enterprises

In order to (i) fully utilize our expertise in digital marketing, (ii) cater to the growing demand for digital marketing in traditional industries due to the COVID-19 pandemic, and (iii) capitalize on local governments’ desire to promote local economic growth through digital marketing, our PRC subsidiaries launched the Star Project in 2020, a key business initiative to further develop our new media integrated content marketing business in the local and regional markets of first- and second-tier cities in China. Specifically, Xuhang Network, one of our PRC subsidiaries, has been seeking cooperation with local governments or state-owned enterprises through the establishment of joint ventures (the “Project Companies”), in which Xuhang Network is responsible for day-to-day operations, local governments provide financial support, business referrals, business premises, and tax benefits, and both parties are entitled to share profits based on their equity interests in the Project Companies. The established Project Companies are partially owned by Xuhang Network, and thus are also our subsidiaries in the PRC. In a typical cooperation agreement entered into between Xuhang Network and a local government, Xuhang Network is required to manage a Project Company’s day-to-day operations to achieve predetermined revenue and profit targets and to provide new media marketing services and other related services to serve local merchants and communities, while the local government is required to (i) designate a state-owned enterprise to provide initial capital contributions to the Project Company in exchange for an equity interest therein; (ii) provide business support and referrals of local customers through coordination of local customer and media resources including related state-owned enterprises and local media organizations, and prioritizing the purchase of Project Company services when comparable services are available; (iii) provide office space with rent subsidies for the Project Company, usually 100% rent subsidies for the first three years and 50% rent subsidies for the following two years, depending on specific local policies; (iv) offer applicable tax deductions or benefits, such as a 100% tax exemption of local taxes for the first three years followed by a 50% exemption for the next two years, depending on local tax policies; and (v) provide subsidies for talent recruitment as well as other support, pursuant to favorable policies, to facilitate Xuhang Network’s growth and expansion in local markets. Generally, the cooperation agreements have a term of up to five years and are renewable upon mutual consent of the parties. The agreements may be terminated upon certain default events by either party. Additionally, some of the agreements allow early termination by the local government partners upon certain conditions, such as Xuhang

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Network’s failure to meet the profit guarantee clause. The cooperation agreements typically do not contain terms of revenue-sharing arrangements. Rather, the parties to the cooperation agreements are entitled to the distribution of profits of the Project Companies based on their respective equity interests. In some cooperation agreements, local governments are promised a profit guarantee for a prescribed period of time. Through referrals of local customer resources by local governments, coupled with Xuhang Network’ expertise in content production and marketing services, the Project Companies are able to rapidly expand their business by gaining corporate orders to serve local cultural and tourist attractions, commercial complexes, and local brands or merchants. In addition to achieving rapid market expansion and customer acquisition, the Project Companies help improve urban consumption and industrial digitalization while serving the local economy. The referred local corporate customers typically operate in traditional industries and lack marketing experience suitable for the Internet era. Leveraging their expertise in new media integrated content marketing, the Project Companies help such local companies in traditional industries to promote their brand, increase sales, and achieve operating efficiencies. Meanwhile, the Project Companies help local governments create new IPs with respect to culture, tourism, and sports to promote their cities’ identity and improve their reputation and visibility in China. To date, Xuhang Network has established nine Project Companies in several Chinese cities, including Shanghai, Nanjing, Qingdao, Chengdu, Wuhan, Wuxi, Linyi, and Huangshan. For the year ended December 31, 2021 and the nine months ended September 30, 2022, Xuhang Network served 63 and 82 customers through the joint venture projects, which represented 7.8% and 9.5% of our total customers, respectively. For the year ended December 31, 2021 and the nine months ended September 30, 2022, Xuhang Network generated RMB16.6 million and RMB17.1 million in revenue under the Star Project, which represented 3.5% and 5.0% of our total revenue in those periods, respectively. For the year ended December 31, 2021 and the nine months ended September 30, 2022, Xuhang Network served eight and nine customers that were acquired through government referrals, which represented 0.1% and 0.1% of our total customers, respectively. For the year ended December 31, 2021 and the nine months ended September 30, 2022, Xuhang Network generated RMB0.3 million and RMB0.3 million in revenue from customers acquired through government referrals, which accounted for 0.1% and 0.1% of our total revenue in those periods, respectively. Due to the relatively low percentage of revenue generated from the Star Project and the relatively low number of customers acquired through government referrals, the Star Project has had no material impact on our PRC subsidiaries’ operations and financial results for the year ended December 31, 2021 and the nine months ended September 30, 2022. Our PRC subsidiaries plan to continue expanding their business through the Star Project in the future.

Solid Marketer Base Spanning a Wide Range of Industries

Our PRC subsidiaries’ marketer base grew substantially during 2020 and 2021. The number of marketers our PRC subsidiaries served grew from 656 in 2020 to 810 in 2021, and to 867 as of September 30, 2022. Our PRC subsidiaries’ marketer base includes media platforms and corporate clients. The industries of our PRC subsidiaries’ marketer base vary from e-commerce, commercial complex, retailing, catering, and online media platforms, to tourism, leisure and entertainment, and games apps, including well-known brands such as Alibaba, Intime City, 3M, Walmart, Starbucks, KFC, ByteDance, Huawei, China Construction Bank, and Shanghai Tower.

We believe our PRC subsidiaries’ broad and diverse marketer base helps them compete with other service providers. Our PRC subsidiaries’ relationships with marketers of a broad industry spectrum also enable them to understand the demands and requirements of the marketers and communicate with their marketers in an accurate and efficient manner, which serves as their primary source to stay informed of the trends and evolutions of the new media integrated content marketing industry.

We believe our PRC subsidiaries’ relationships with their marketers help them build a reputation of quality services featuring creative advertising ideas and appealing content production via new media, which helps attract and secure potential marketers, thus forming a virtuous cycle for our PRC subsidiaries’ growth. As our PRC subsidiaries continue to build and optimize their marketer base, we are confident that they will be seen by merchants as a desirable place for marketers who look for digital marketing of their products and services and a valuable source and channel to drive consumer demand, increase sales, and achieve operating efficiencies.

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Visionary and Experienced Management and Business Teams with Strong Technical and Operational Expertise

Our success is attributable to the deep industry experience and proven execution track record of our senior management and business teams, with global perspectives and insightful knowledge of the Internet and media industries. Mr. Tianhang Xiao, our founder and Chairman of the Board of Directors with over 12 years of experience in media marketing and digital advertising, served as a senior product manager at Hangzhou Sky Network Technologies Co., Ltd., and co-founded Hangzhou Zhenqu Network Technology Co., Ltd., a company specializing in mobile advertisement placement and game services. With deep connections and extensive experience in the field of mobile Internet operations, Mr. Xiao spearheaded our growth with his valuable insight in corporate internal control and high-level strategizing and business planning.

Members of the business teams have extensive and complementary experiences in a wide range of fields, covering Internet technology, media, and digital marketing. Mr. Congcong Wei, the head of the new media S2B business sector, has more than 11 years of advertising and marketing experience. As an entrepreneur in the we-media industry, Mr. Wei excels at content production, traffic management, and brand marketing on platforms such as Weibo, Douyin, and WeChat. Mr. Yang Yang, the head of the new media S2P business sector, has more than 10 years of experience in advertising and marketing. As one of the high-quality content creators on multiple well-known We-media platforms, Mr. Yang is skilled at creating and operating short video content, and well versed in monetization and operation of online traffic. Ms. Lilian Liu, the head of the new-media and conference services, has 15 years of experience in media and conference services and is an expert In the Internet media Industry and conference management. Mr. Xiaowen Wang, the head of the technology center, has more than 20 years of experience in product architecture and R&D management and he is an all-around management expert with a technical background as well as expertise in user experience, product management, and business operations. We rely on our visionary, experienced, and passionate senior management team to drive our business growth. Under the leadership of the management, our PRC subsidiaries have successfully identified and capitalized on the opportunities for growth in the digital advertising and new media industries.

Our Growth Strategies

Our PRC subsidiaries intend to develop their business and strengthen brand loyalty by implementing the following strategies:

Further Expand Our PRC Subsidiaries’ Business Scale and Secure New Marketers

The integrated marketing industry in China is evolving rapidly. According to the Frost & Sullivan Report, the market size of the integrated marketing industry in China has increased from approximately RMB571.7 billion in 2016 to approximately RMB1,255.8 billion in 2021, representing a CAGR of approximately 14.01%, and it is expected to further increase to approximately RMB1,941.1 billion in 2025, with a CAGR of approximately 9.10%. See “Industry—Overview of China’s Integrated Marketing Market.” We believe the growth of the digital advertising market will fuel the need for new media content marketing and digital advertising services, as marketers seek to optimize their digital marketing strategies, which will create an enormous opportunity for digital advertising service providers like our PRC subsidiaries.

To capture the potential growth of the digital advertising service market, our PRC subsidiaries will continue to actively endeavor to attract new marketers to plan and implement their integrated marketing and digital advertising campaigns and seek to increase the advertising spend of their existing marketers. Our PRC subsidiaries will also seek to include more high-profile and sizeable marketers from various industries. We believe this will reinforce our PRC subsidiaries’ reputation as reliable digital advertising service providers in different industries, which we believe would extend their reach to marketers in those industries. In particular, our PRC subsidiaries have conducted a variety of sales and marketing activities, such as increasing their social media presence and attending industry conferences and business development activities. In addition, they have

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collaborated with local government partners for business referrals and market expansion opportunities, by launching the “Star Project” in 2020, a key business initiative to further develop their new media creative marketing business in the local and regional markets of first- and second-tier cities in China. See “—Our Competitive Strengths—Business Expansion Mode Through Cooperation with Local State-Owned Enterprises.” We believe that such strategies have contributed to our PRC subsidiaries’ significant revenue growth in 2020 and 2021, and will continue to do so in the future.

Continue to Invest in Technology Research and Development to Develop and Commercialize New Software Systems and Expand business and Profitability

Our PRC subsidiaries’ continuous investment in technology research and development supports the rapid growth of the business and establishes a technology-driven growth edge for the future. Our PRC subsidiaries are developing software products for related industries and will establish new growth points through the commercialization of software products in the future. Research and development in the future will focus on the following areas:

• Software product commercialization. Our PRC subsidiaries will (i) continue to develop software products for related industries, including Xuhang Live Streaming E-commerce Cloud and Xuhang Conference Cloud, while optimizing technology solutions, integrating upstream and downstream services, and improving the one-stop user experience; and (ii) promote and commercialize software products and establish an operation team and a customer growth team to ensure business growth.

• New business expansion. Our PRC subsidiaries will further develop technological services and software covering more business scenarios pertaining to city life, expanding to living, traveling, and entertaining business scenarios, such as developing applications that provide living solutions for intelligent communities and intelligent hotels (intelligent communities are a new form of community governance that integrates a wide range of resources within the community through leveraging big data, cloud computing, artificial intelligence, and other information technologies, while intelligent hotels utilize big data, the IoT, voice artificial intelligence, augmented reality, and other technologies to achieve hotel digitalization and intelligence, enhance customer interaction, and enhance hotel management and service levels), and to metaverse city business scenarios (such as developing an immersive virtual world that enhances the interaction between consumers and merchants in different business districts by leveraging modeling, augmented reality, and other technologies). Our PRC subsidiaries expect to expand their technology team, when the team is capable of independently taking on business from customers and meeting their specific needs, and to create special business and operation teams for further expansion.

• Developing an advanced data system and improving the data team. Our PRC subsidiaries will (i) build a database to screen potential merchant customers and conduct consumer portraits, as well as build membership systems for both merchants and consumers; and (ii) develop a data-driven intelligent business engine to achieve business intelligence and automation (e.g., supplier and project scoring systems and customer dimension analysis system) to optimize related industry services.

Further Expand We-media Resources

To strengthen their capabilities in providing high-quality new media integrated content marketing services, our PRC subsidiaries plan to expand and diversify their we-media account base by establishing more we-media accounts on various platforms and developing specific-interest we-media resources, such as multiple we-media accounts focusing on more trendy topics, including food, entertainment, and cultural tourism. Meanwhile, by leveraging their advantages in content production and operation, our PRC subsidiaries plan to continue to create engaging and interesting content to grow the follower base for their existing and prospective we-media accounts. Further, our PRC subsidiaries plan to increase collaboration with popular third-party we-media publishers to direct their user traffic to our PRC subsidiaries’ self-operated and cooperative we-media accounts. In this regard, our PRC subsidiaries also plan to establish strategic cooperation with upstream and downstream industry participants, such as agents of large we-media platforms.

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Pursue Additional Strategic and Financially Attractive Acquisitions

Our PRC subsidiaries have a track record of successfully identifying, acquiring, and integrating businesses that complement and expand their marketing offerings, ad distribution channels, and client relationships while achieving synergies and generating attractive returns that are well in excess of their cost of capital. Using their disciplined approach for screening and evaluating potential opportunities, our PRC subsidiaries intend to continue to seek strategically and financially attractive acquisition targets that provide them with new capabilities. Our PRC subsidiaries have significant internal resources dedicated to tracking potential acquisition prospects which are formally reviewed by senior management on a regular basis. We believe that our PRC subsidiaries will continue to be an acquirer of choice in their industry and transact with smaller players at valuation levels that are attractive on a relative basis.

Our Business Model

Our PRC subsidiaries currently generate revenue from the following principal sources:

• New Media Integrated Content Marketing Services. Our PRC subsidiaries provide marketers with integrated marketing solutions across a wide spectrum of marketing channels, both online and offline, with a primary focus on content creation of entertaining and trendy marketing materials, such as promotional short videos and advertorials, to be published via their self-operated and cooperative we-media accounts. Our PRC subsidiaries also plan, organize, and implement live streaming events on behalf of marketers, such as e-commerce merchants and local businesses, for promoting their products or services on high-profile media platforms. In addition, our PRC subsidiaries help generate or direct vast amounts of user traffic to those media platforms by editing and producing captivating short videos based on authorized TV dramas, movies, and variety shows, and posting such short videos on high-profile video-sharing platforms such as Douyin. Our PRC subsidiaries typically receive non-performance-based service fees for their integrated marketing services, and performance-based service fees for their live streaming services and online traffic services. In addition, our PRC subsidiaries operate affiliated businesses including (a) licensing self-developed software products and services to marketing agencies, and (b) cooperating with cultural institutions, such as museums, to issue IP-based digital products on e-commerce platforms and receive a portion of the sales revenue as service fees for their services. Overall, our PRC subsidiaries offer a service package comprising a variety of integrated marketing solutions, including marketing strategy and creativity consulting, drafting advertorials, producing promotional short videos, managing and operating their customers’ social media accounts, planning and implementing live e-commerce events, and organizing offline marketing events or public relations activities. Customers may select one or more types of services based on their respective marketing targets, demand, budgets, and other factors. As different customers tend to have different goals and focuses in their marketing campaigns, our PRC subsidiaries provide customized services to meet their specific needs.

• Digital Advertising Services. Our PRC subsidiaries provide marketers—typically app developers and operators, and their advertising agents—with services to identify, engage, and activate target audiences for user acquisition, by leveraging their insight and experience in digital advertising and their understanding of customer needs and the characteristics of ad distribution channels. Marketers are typically charged with performance-based service fees for our PRC subsidiaries’ advertising services.

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The following tables present our revenue and gross profit for the years ended December 31, 2020 and 2021 and the nine months ended September 30, 2022. See also “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations.”

	Revenue						Gross Profit
	Year Ended December 31,						Year Ended December 31,
	2020		2021				2020		2021
	RMB		RMB		US$		RMB		RMB		US$
	(in thousands, except for percentages)						(in thousands, except for percentages)
Digital advertising services		188,192		106,316		14,946		29,643		15,110		2,124
New media integrated content marketing services		162,712		365,130		51,329		77,715		126,448		17,776
Total		350,904		471,446		66,275		107,358		141,558		19,900

	Revenue						Gross Profit
	For the Nine Months Ended September 30,						For the Nine Months Ended September 30,
	2021		2022				2021		2022
	RMB		RMB		US$		RMB		RMB		US$
	(in thousands, except for percentages)						(in thousands, except for percentages)
Digital advertising services		90,191		42,466		5,970		11,242		9,444		1,328
New media integrated content marketing services		222,824		296,864		41,732		85,854		108,114		15,198
Total		313,015		339,330		47,702		97,096		117,558		16,526

New Media Integrated Content Marketing Services

New media integrated content marketing services are and will be the primary focus of our PRC subsidiaries’ business. Our PRC subsidiaries commenced their new media integrated content marketing services in China in 2017 when they established and started operating multiple we-media accounts designed to be potential marketing platforms. Over the years, our PRC subsidiaries have grown a wide-ranging portfolio of we-media accounts, currently encompassing WeChat public accounts, short video accounts, and other new media accounts on high-profile media platforms in China, such as Douyin, Weibo, Kuaishou, and Xiaohongshu, which provide a variety of vibrant and engaging content to their followers. These we-media accounts have become the gateway for follower acquisition and traffic aggregation in connection with our PRC subsidiaries’ new media integrated content marketing business. They also provide monetization opportunities as our PRC subsidiaries utilize the sizable online traffic generated from these new media accounts for serving the marketing needs of customers, including brands, merchants, and media platforms. As part of the new media integrated content marketing services, our PRC subsidiaries help marketers operate, or provide operational strategies for, their new media accounts. While those accounts are not owned by us, they become our cooperative new media accounts, which contribute to our we-media account base for new media integrated content marketing campaigns. See “—Ad Distribution Channels—Distribution Through We-Media Publisher/Accounts.”

In addition, with the emergence of popular live e-commerce and live streaming platforms attracting numerous viewers and consumers, marketers are increasingly receptive to the idea of conducting their marketing campaigns through live streaming events, such as live streaming sales and live video broadcasts, where viewers can share an immersive and interactive experience with the streamer/broadcaster. Blending entertainment with instant purchasing, live e-commerce offers retailers, brands, and digital platforms a new channel with enormous scope for creating value. Similarly, live video broadcasts are changing the way brands and merchants interact with their audiences by engaging viewers in immediate and authentic ways that other social media formats cannot. In this regard, by leveraging their expertise in the production of marketing content, our PRC subsidiaries also plan,

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organize, and implement live streaming events on behalf of marketers, including e-commerce merchants and local businesses, for promoting those marketers’ products or services on new media platforms such as Douyin and Kuaishou. Our PRC subsidiaries have a professional live video broadcast team and operate two full-fledged live streaming bases for the provision of high-quality live streaming services. Having accumulated extensive experience in local-life related live video broadcasts and live streaming sales, our PRC subsidiaries are able to plan and implement effective live streaming marketing campaigns, including services of live video idea creation, scriptwriting, and filming, and live streaming account maintenance, which have been highly recognized by their customers.

For the years ended December 31, 2020 and 2021 and the nine months ended September 30, 2022, our PRC subsidiaries’ revenue from new media integrated marketing services was RMB162.7 million, RMB365.1 million (US$51.3 million), and RMB296.9 million (US$41.7 million), respectively, accounting for 46.4%, 77.4%, and 87.5% of their total revenue for the respective years and period, respectively.

Types of Services

Our PRC subsidiaries offer multi-channel marketing services with a primary focus on content-driven we-media marketing. Their new media integrated content marketing services are organized into two principal models, the S2B model and the S2P model.

S2B model

Our PRC subsidiaries provide marketers with integrated marketing solutions across a wide spectrum of marketing channels, both online and offline, with a primary focus on we-media marketing. Our PRC subsidiaries primarily focus on conducting entertaining and trendy new media integrated content marketing via their we-media account base including self-operated and cooperative accounts. Our PRC subsidiaries’ creative marketing services generally include (i) formulation of marketing strategies, (ii) establishment and/or operation of we-media accounts as requested and on behalf of the marketers, (iii) content production of marketing materials, such as promotional short videos and advertorials, (iv) identifying and sourcing the most appropriate media resources and formats to maximize the marketing effects, (v) organizing and coordinating the implementation of the new media integrated content marketing campaigns, (vi) monitoring and evaluating the result and effectiveness of the marketing campaigns, and (vii) organizing offline marketing events to meet customers’ needs for an integrated “online-offline-linkage” marketing strategy. Our PRC subsidiaries typically receive service fees that vary according to the scope of service for each marketing campaign as determined by advertiser customers in accordance with their respective demand and budgets. In addition, our PRC subsidiaries plan, organize, and implement live streaming events on behalf of marketers, such as e-commerce merchants and local life businesses, for promoting their products or services on media platforms such as Douyin and Kuaishou. The live streaming services provided by our PRC subsidiaries mainly include (i) live e-commerce services and (ii) local life live video broadcast services. For live e-commerce services, our PRC subsidiaries typically enter into cooperation agreements with brands and merchants for specified terms, under which our KOLs or KOCs will promote and sell the marketers’ products or services on a live streaming platform. The marketers are charged with service fees, which generally represent a pre-determined percentage of the Effective GMV generated from the live streaming sales, which represents the aggregate value of the merchandise actually sold and delivered to consumers in the live KOL/KOC sales services provided by our PRC subsidiaries, after deducting the value underlying cancelled orders and returned merchandise. The percentage, typically ranging from 10% to 25%, is determined based on a variety of factors, including the Effective GMV sold in such live streaming sales, types of products and services facilitated, live streaming time, the popularity of the KOL/KOC, and other market factors. For example, our PRC subsidiaries have organized and implemented 450 live streaming sales events on Douyin for Teenie Weenie KIDS (“TW KIDS”). See “—New Media Integrated Content Marketing Services—Representative New Media Integrated Content Marketing Projects—Case Study for S2B Live Streaming Services: Project for TW KIDS.” As of June 30, 2022, our PRC subsidiaries had performed more than 2,930 live streaming sales events for 36 customers, including apparel, electronics, and home furnishings since May 2021. In

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addition, our PRC subsidiaries plan and broadcast local life live videos for purposes of promoting local businesses such as restaurants and tourist attractions, through which viewers can enjoy an immersive and interactive exploration of local businesses with the streamer/broadcaster. As of June 30, 2022, our PRC subsidiaries had conducted more than 700 local life live broadcasts for more than 270 local life merchants across catering, tourism, beauty, fast-moving consumer goods, and other industries since May 2021. Our PRC subsidiaries typically receive performance-based service fees for their live streaming services.

To supplement their new media integrated content marketing business, our PRC subsidiaries have also developed software licensing and digital product distribution businesses, which currently account for a small percentage of their total revenue, but are expected to drive their future growth. First, our PRC subsidiaries have continually improved their research and development capabilities, and are committed to developing technological services enabled by low-code and user-experience-driven development. Currently, our PRC subsidiaries have independently developed business software products for live streaming sales, conference event services, and local life live broadcasting, and they have launched licensed Business to customers the self-developed software products and service, including Xuhang Live Streaming E-commerce Cloud and Xuhang Conference Cloud. As our PRC subsidiaries closely monitor industry developments to combine their advantages to expand their business, they have collaborated, since October 2021, with cultural institutions, including museums and tourist attractions, such as Daming Palace National Heritage Park and Huashan Scenic Area, to help them issue, promote, and sell IP-related digital products that are becoming increasingly popular among young people on platforms such as Ali Auction, NetEase Planet, and Xinhua Shucang. Those cultural institutions typically possess considerable IP resources but lack the means to monetize them beyond selling tickets. Our PRC subsidiaries’ services include (i) designing digital collections by refining the proprietary IP elements provided by those cultural institutions and utilizing blockchain technology to create corresponding digital copyright works on the Ali Auction platform, (ii) assisting those cultural institutions in operating their e-commerce stores selling such IP-related digital collections, and (iii) leveraging our PRC subsidiaries’ media advertising distribution channels to contribute to the promotion and sale of relevant digital collections. Such digital products are similar to NFT products, except they cannot be exchanged upon issuance in the PRC. Our PRC subsidiaries are entitled to receive a portion of the sales revenue as service fees for their services.

S2P model

Leveraging their expertise in producing fun and entertaining content, our PRC subsidiaries provide services of directing viewer traffic to large Internet media platforms operated by their customers. Specifically, our PRC subsidiaries edit and produce captivating short videos from TV dramas, movies, and variety shows as authorized by the large Internet media platforms or other relevant copyright owners or licensors, and post these short videos via our PRC subsidiaries’ self-operated and cooperative we-media accounts on high-profile short video platforms such as Douyin for generating and direction of a large amount of viewer traffic to customers’ digital media platforms. Typically, our PRC subsidiaries receive performance-based online traffic service fees from media platforms based on the type of videos and the number of views, followers, and likes the videos receive, among other factors as determined by the large Internet media platforms. To a lesser extent, we may also receive the advertising fees received by the large Internet media platforms from such we-media accounts for which we help generate viewer traffic.

The sources of content, based on which our PRC subsidiaries produce short videos, are generally from (i) the media platforms that are the copyright owners or licensors of such content and thus have the legal right to authorize production of any derivative works thereof, (ii) copyright owners or licensors (other than the media platforms) that sublicense our PRC subsidiaries to edit such content for generating online traffic and with whom our PRC subsidiaries share a pre-determined portion of the online traffic service fees and advertising fees, if applicable, they receive from media platforms, and (iii) copyright owners or licensors from whom our PRC subsidiaries purchase the relevant content for use for a fixed period, in which case they are entitled to all the online traffic service fees and advertising fees, if applicable, from the media platforms during such a period.

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Below is an example that illustrates our S2P business model and the material terms of a typical agreement entered between our PRC subsidiaries and large Internet media platforms. “Xiguanuanxinshi” is a we-media account on Douyin, a large Internet media platform owned by Beijing ByteDance Network Technology Co., Ltd., the parent company of Douyin and Xigua Video. ByteDance has full right to use, operate, and profit from the account. In June 2019, ByteDance entered into an agreement with Jiangxi Ku’o Technology Co., Ltd. (“Jiangxi Ku’o”), one of our PRC subsidiaries, pursuant to which agreement, Jiangxi Ku’o was required to operate the “Xiguanuanxinshi” account on behalf of ByteDance. Specifically, Jiangxi Ku’o was required to edit and produce short videos using the content provided by ByteDance, which has the legal right to authorize derivative works of such content, and to post the short videos on the “Xiguanuanxinshi” account and conduct relevant marketing activities. ByteDance was obligated to pay Jiangxi Ku’o based on (i) the number of fans of “Xiguanuanxinshi” acquried during the period operated by Jiangxi Ku’o, and (ii) the popularity of the short video (primarily measured by the number of views) produced by Jiangxi Ku’o.

Our Marketers

Our PRC subsidiaries have built a diverse marketer base from a broad range of industries. Specifically, the customers of their new media integrated content marketing business consist of (i) marketers for our creative marketing under the S2B model, typically from a broad range of industry verticals, including e-commerce, commercial complex, retailing, catering, tourism, and leisure and entertainment; and (ii) media platforms for our PRC subsidiaries’ online traffic services under the S2P model, typically including both the short-form and long-form video platforms.

During the years ended December 31, 2020 and 2021 and the nine months ended September 30, 2022, our PRC subsidiaries served 607, 769, and 847 marketers for their new media integrated content marketing business, respectively.

For the year ended December 31, 2020, the top five customers of the PRC subsidiaries were Beijing ByteDance Network Technology Co., Ltd., Jiuyang Co., Ltd., Shanghai Flyco Electrical Appliance Co., Ltd., Tianjin Alibaba Culture and Entertainment Co., Ltd., and Hangzhou Jianren Network Technology Limited, which accounted for 3.45%, 2.97%, 1.75%, 1.69%, and 1.64% of our total revenue, respectively. For the year ended December 31, 2021, the top five customers of our PRC subsidiaries were Zhejiang Tmall Technology Co., Ltd., Taobao (China) Software Co., Ltd., Alibaba (China) Network Technology Co., Ltd., Wuhan Hezhong Yibao Technology Co., Ltd., and Beijing ByteDance Network Technology Co., Ltd., representing 6.50%, 6.30%, 4.29%, 2.22%, and 2.21% of our total revenue, respectively. For the nine months ended September 30, 2022, the top five customers of our PRC subsidiaries were Taobao (China) Software Co., Ltd., Alibaba (China) Network Technology Co., Ltd., Douyin Vision Co., Ltd., Zhejiang Tmall Technology Co., Ltd., and Nanjing Tianbao Network Technology Co., Ltd., representing 6.5%, 5.1%, 4.4%, 3.9%, and 2.9% of our total revenue, respectively.

Ad Distribution Channels

Our PRC subsidiaries provide new media integrated content marketing services through various distribution channels, including (i) we-media accounts, (ii) live streaming platforms, and (iii) to a lesser extent, offline ad inventories.

Distribution Through We-Media Publishers/Accounts

Our PRC subsidiaries’ new media accounts can be generally classified into two categories: (i) self-operated accounts and (ii) cooperative accounts. Self-operated accounts are those owned by our PRC subsidiaries or by MCN institutions thereunder, over which accounts our PRC subsidiaries have operational or management authority. Specifically, self-operated accounts are comprised of (a) accounts owned by our PRC subsidiaries, which have full right to use, operate, and benefit from these accounts, or (b) accounts managed, operated, promoted, and developed by our PRC subsidiaries as MCN institutions, where our PRC subsidiaries have signed agreements with the actual owners of these accounts to the extent that our PRC subsidiaries have full authority to

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negotiate and enter into contracts on behalf of the account owners and enjoy the income or benefits derived therefrom—namely, the rights and authority exercised by our PRC subsidiaries are no different from those of the account owners, except that income received by our PRC subsidiaries is calculated according to the agreed proportion and distributed to the account owners as remuneration. On the other hand, cooperative accounts are not owned by our PRC subsidiaries, or managed, operated, promoted, and developed by our PRC subsidiaries as MCN institutions. Rather, our PRC subsidiaries first acquire commercial income interests through cooperation agreements with account owners or MCNs that manage the accounts, and then utilize the accounts for advertising or other commercial purposes. See “—Our Business Partners.” As a result, our PRC subsidiaries have limited authority to manage the accounts granted by account owners or the MCNs that manage the accounts; our PRC subsidiaries are generally unable to manage the owners of those accounts. Self-operated accounts and cooperative accounts are both distribution channels our PRC subsidiaries utilize to deliver their marketing content, and there is no difference in terms of how our PRC subsidiaries record and recognize revenue derived from either type of accounts. However, our PRC subsidiaries treat and manage self-operated accounts the same way as fixed assets or intangible assets, whereas cooperative accounts are managed more like suppliers—in order to obtain the corresponding rights and interests in cooperative accounts, our PRC subsidiaries generally are required to pay a certain amount of fees in advance to establish cooperative partnerships.

Our PRC subsidiaries started operating a number of we-media accounts in 2017, which were mostly WeChat public accounts, such as Hangzhou Impressions and Favorite Hangzhou. Those we-media accounts have accumulated a large number of followers and have become efficient and effective platforms for the promotion of marketers’ products and services. For example, as of October 31, 2022, Hangzhou Impressions and Favorite Hangzhou have acquired approximately 1.0 million and 0.9 million followers, respectively. Over the years, our PRC subsidiaries have grown a wide-ranging portfolio of text-based or video-based we-media accounts, currently encompassing multiple WeChat public accounts, short video accounts, and other new media accounts on high-profile media platforms in China, such as Douyin, Weibo, Kuaishou, and Xiaohongshu.

Furthermore, our PRC subsidiaries conduct integrated marketing campaigns through their cooperative we-media accounts, which constitute we-media accounts (i) that are not owned by our PRC subsidiaries or by MCN institutions thereunder, but (ii) over which we have the operational or management authority under cooperative agreements with the accounts’ owners.

As of October 31, 2022, our PRC subsidiaries operated 1,015 we-media accounts at our disposal, including 524 self-operated accounts and 491 cooperative accounts, which collectively reached approximately 207 million Internet followers.

Distribution Through Live Streaming Platforms

Our PRC subsidiaries operate their new media integrated content marketing services by planning, organizing, and implementing live streaming events, including live KOL/KOC sales and live video broadcasts, on behalf of marketers for promoting their products or services on live streaming platforms such as Douyin and Kuaishou.

Distribution Through Offline Advertising Channels as Part of an Integrated Marketing Strategy

From time to time, our PRC subsidiaries cooperate with their offline media partners, such as advertising design, PR, and event organization firms and agencies, to organize offline marketing events, including purchasing offline advertisement inventories through outdoor electronic screens, elevators, and lightboxes at railway stations and bus stations. Such offline marketing events are usually conducted in conjunction with online marketing campaigns to meet customers’ needs for an integrated “online-offline-linkage” marketing strategy. For the years ended December 31, 2020 and 2021 and the nine months ended September 30, 2022, offline ad inventories only accounted for a very small portion of distribution channels for our PRC subsidiaries’ new media integrated content marketing services. Nonetheless, it remains an integral part of our PRC subsidiaries’ creative marketing services, as they aim to provide multi-channel integrated marketing services as needed.

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Our Business Partners

Our PRC subsidiaries’ new media accounts consist of both self-operated accounts and cooperative accounts. Our PRC subsidiaries rely on third-party business partners, including both (i) account owners and (ii) MCN institutions that manage those cooperative accounts, for the provision of cooperative accounts:

• Owners of Cooperative Accounts. The example below illustrates the nature of the relationship between our PRC subsidiaries and the actual owners of cooperative accounts. Specifically, “Impression Hangzhou” is a WeChat official account registered and certified by Hangzhou Find Fun Creative Cultural Co., Ltd. (the “Actual Owner”), which is entitled to use, operate, and benefit from the “Impression Hangzhou” account. In December 2017, Horgos Weizan Network Technology Co., Ltd. (“Weizan”), one of our PRC subsidiaries, entered into a standard cooperation agreement with the Actual Owner. According to the cooperation agreement, the Actual Owner is required to transfer the right to use, operate, and benefit from the “Impression Hangzhou” account for the next 10 years to Weizan, while Weizan is obligated to pay the Actual Owner RMB300,000 per year as a consideration. After acquiring the rights related to the “Impression Hangzhou” account, Weizan developed and operated the “Impression Hangzhou” account to seek commercial advertising opportunities on the account. As a result, “Impression Hangzhou” attracted many well-known brands and marketers, such as Starbucks and CoCo Milk Tea, to place ads and conduct marketing campaigns thereon. As shown above, the cooperative accounts are not owned by our PRC subsidiaries but are simply utilized as part of our PRC subsidiaries’ ad distribution channels for placing ads, advertorials, and/or promotional short videos in the new media integrated content marketing services provided by our PRC subsidiaries.

• MCN Institutions that Manage Cooperative Accounts. The example below illustrates the nature of the relationship between our PRC subsidiaries and the MCN institutions that manage cooperative accounts. In particular, “Qingcheshulu” is a we-media account on the Douyin platform that was registered and certified by Xidan Lian, an Internet influencer (the “Internet Influencer”). In October 2018, the Internet Influencer entered into an agreement with an MCN institution, Zhejiang Chengmi Film and Television Media Co., Ltd. (“Chengmi MCN”). Upon signing the MCN agreement, the Internet Influencer designated Chengmi MCN as his exclusive broker of business activities, responsible for cultivating, developing, and operating all online social media accounts associated with the Internet Influencer. According to the MCN agreement, Chengmi MCN has full authority to negotiate and enter into contracts on behalf of the Internet Influencer and to enjoy the income or benefits derived from those contracts, provided Chengmi MCN agrees to compensate the Internet Influencer with an agreed proportion of income. In December 2018, Weizan entered into a standard cooperation agreement with Chengmie MCN, under which Weizan became the exclusive commercial agency rights for the “Qingcheshulu” account—namely, Weizan recommends and negotiates with prospective marketers for the “Qingcheshulu” account to facilitate ad placement on the account. As a consideration, Chengmi MCN is required to share 30% of its revenue derived from the account with Weizan as business agency fees.

Our Content Production

Our PRC subsidiaries’ advertising idea creation and content production capability is one of their core competencies. Our PRC subsidiaries have an in-house new media content production team, which enables them to design and produce customized, high-quality, and eye-catching marketing ideas, content, and materials. Their content design and production team consisted of approximately 170 employees based in Hangzhou as of September 30, 2022, including (i) advertorial writers and proof-readers, (ii) staff for idea creation and content review, and (iii) scriptwriters, directors, editors, and post-production crew.

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Below illustrates the general workflow of our PRC subsidiaries’ production of promotional short videos and advertorials for new media integrated content marketing:

• Idea creation and scriptwriting. Pursuant to a marketer’s specific requirements, our PRC subsidiaries develop creative ideas for the marketing campaign as agreed by the marketer, which are then translated to scripts by in-house scriptwriters.

• Pre-production and filming/writing. Our PRC subsidiaries engage KOL and/or KOC or sometimes invite their employees to shoot their short videos. Pre-production preparation involves make-up, costumes, props, and sets. Our PRC subsidiaries’ in-house director coordinates with other production crew, including filming and lighting, to deliver alternative shots and scenarios to be selected for inclusion in the final video. As to the production of advertorials, our PRC subsidiaries engage their in-house experienced writers to draft articles pursuant to the marketer’s requirements and the creative ideas they brainstormed.

• Post-production. After completion of filming, the director works with our PRC subsidiaries’ in-house editors and post-production crew to select the scenes for assembling and polishing the final video, including video and sound editing, creating and recording music, adding special effects, and color grading. For advertorials, our PRC subsidiaries engage senior staff in their in-house content output teams, including professional writers and senior media practitioners and reporters to revise the draft for quality control.

Services and Operational Flow

Acquiring Marketers

Our PRC subsidiaries acquire marketers through various means, including (i) through referrals by local governments that cooperate with our PRC subsidiaries, (ii) approaching potential marketers based on market intelligence and their industry insights; (iii) exploiting their industry connections to identify potential marketers or through referrals by their marketers; and (iv) reaching out to their existing marketers to explore further business opportunities.

Our PRC subsidiaries provide potential marketers with an initial marketing plan. If the initial plan is approved, they will participate in the bidding, if any, for the potential marketer’s project with other competitors by submitting their revised plan and quotation for their marketing services. If our PRC subsidiaries win the bidding, they will enter into a service agreement with the marketer. Alternatively, if no bidding is required for the project, our PRC subsidiaries will provide potential marketers with their quotation for new media integrated content marketing services, which lays out the types of marketing services they will provide, payment information, and other terms and conditions. If the marketer accepts our PRC subsidiaries’ quotation, it becomes a legally binding contract with our PRC subsidiaries. In particular, the pricing model our PRC subsidiaries adopt for new media integrated content marketing services is subject to negotiation between our PRC subsidiaries and their marketers and is determined by taking into account various factors, including (i) our PRC subsidiaries’ service scope for the relevant marketing campaigns, (ii) types and nature of the marketing content, (iii) types of media partners to be engaged and media resources to be utilized, (iv) data and other information available for evaluation of the marketing effect, and (v) specific requirements and preferences of, and any historical pricing models adopted with respect to, the relevant customers.

Pre-Launch

Before launching an advertising campaign, our PRC subsidiaries usually discuss with marketer customers to understand their products or services to be marketed, marketing budget, and marketing objectives. For their new media integrated content marketing services, our PRC subsidiaries provide advice and services on advertising strategies and ad optimization, including choices of ad formats and content (such as short-video, image, and text descriptions), and appropriate social media accounts and suitable media channels for implementation and

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deployment of the advertising campaigns based on the themes and the desired effects of the campaigns. Our PRC subsidiaries provide such advice and services on advertising strategies and ad optimization to their customers to improve the effectiveness of the marketing campaigns to be launched, which we believe will serve to enhance their customers’ satisfaction and encourage their customers to retain their services.

Campaign Launch and Performance Review

For compliance purposes, our PRC subsidiaries’ legal and compliance departments review ad content to be launched, to ensure that our PRC subsidiaries comply with applicable laws and regulations, ethical standards, and the relevant media platform’s internal policies. If our PRC subsidiaries determine that the ad content may be in violation of applicable laws or regulations, they will provide suggested edits to the ad content and send it back to the content production teams for revision. After our PRC subsidiaries have determined that the ad content is in full compliance with applicable laws and regulations on information dissemination, they will confirm with the marketer customers on their opinion with respect to the compliance prior to the deployment of advertisements.

After our PRC subsidiaries and their customers agree upon the advertising strategies and materials, our PRC subsidiaries will be ready to launch the advertising campaigns. Upon receiving their customers’ orders, they proceed to place the prepared ads with the relevant new media platforms, including WeChat, Weibo, Douyin, Kuaishou, and Xiaohongshu, and, to a lesser extent, with offline advertising spaces, such as outdoor LED billboards, elevators, and lightboxes at railway stations and bus stations, if applicable.

After their marketing campaign is launched, our PRC subsidiaries monitor audiences’ feedback and behavioral data and assess the overall effectiveness of the marketing campaign in various dimensions, such as the exposure and visibility of advertisements as well as the degree of customer engagement of social media campaigns. Based on such assessment, our PRC subsidiaries may further advise their customers on advertising strategies and optimization to continually improve the effectiveness of the marketing campaigns. Review reports may be prepared to highlight our PRC subsidiaries’ suggested optimization strategies, and closing reports may be issued to their customers to summarize the key ad deliverables (such as screenshots of the relevant social media accounts) and to analyze the campaign’s effectiveness.

Representative New media integrated content marketing Projects

Our PRC subsidiaries offer a service package comprising a variety of integrated marketing solutions, including marketing strategy and creativity consulting, drafting advertorials, producing promotional short videos, managing and operating their customers’ social media accounts, planning and implementing live e-commerce events, and organizing offline marketing events or public relations activities. Customers may select one or more types of services based on their respective marketing targets, demand, budgets, and other factors. As different customers tend to have different goals and focuses in their marketing campaigns, our PRC subsidiaries provide customized services to meet their specific needs. The following summarizes our PRC subsidiaries’ representative marketing projects in the new media integrated content marketing business during the years ended December 31, 2020 and 2021 and the nine months ended September 30, 2022:

• Marketing Project for Nanhu Place (南湖天地). See “—Case Study for S2B Creative Marketing Services: Project for Nanhu Place” below.

• 3M Products Marketing Project. 3M is a world-renowned technology innovator and manufacturer that has developed over 60,000 products across multiple industries, including household goods, medical products, transportation, and electronics. Since 2020, our PRC subsidiaries have provided customized integrated marketing services for certain 3M products in China, such as Nexcare acne cover, waterproof bandages, and eye beauty tape, as well as ergo^® office suppliers. Specifically, our PRC subsidiaries provided services including (i) formulating marketing strategies, (ii) developing media plans such as target consumer habits analysis and marketing budget proposals, (iii) shooting and editing creative marketing videos, (iv) drafting and publishing KOL advertorials on Weibo and

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WeChat, and (v) implementing other marketing campaigns across multiple platforms such as Xiaohongshu, Douyin, and Zhihu, to increase the exposure of the 3M brand and products. Our PRC subsidiaries’ marketing campaigns boosted product sales and helped 3M enhance its brand influence in mainland China. For example, the Nexcare campaign achieved more than 50 million impressions and gained more than 110,000 user interactions during our PRC subsidiaries’ marketing campaigns from January 2021 to December 2021.

• Project for Operating Short Video Accounts for Construction Bank Hangzhou Branch. China Construction Bank Corporation (“CCB”) is one of the “big four” commercial banks in China with approximately 14,000 domestic branches. In 2020, our PRC subsidiaries won the bidding for the short video operation project for CCB Hangzhou Branch. Since then, our PRC subsidiaries have helped CCB Hangzhou Branch incubate and operate its official account on the Douyin platform by providing services including (i) original short video content production, (ii) quarterly online marketing strategy formulation, (iii) data detection and analysis report preparation, and (iv) account operation and maintenance, including message and fan interactive topics management. In addition, our PRC subsidiaries helped CCB Hangzhou Branch establish live video broadcasting rooms for its five operating centers and provided daily live video broadcasting services, including live video broadcasting training and content preparation, to grow CCB’s brand and promote bank products and services. As a result, from August 2020 to August 2021, our PRC subsidiaries helped CCB Hangzhou Branch obtained approximately 236,000 followers on Douyin through our marketing campaigns from 0 to 236,000, and our creative short videos and live broadcasts also helped increase CCB’s brand appeal among the younger generation.

• Shanghai Tower WeChat Public Account Operation Project. Shanghai Tower is a landmark skyscraper in Shanghai and is currently the tallest building in China. The Shanghai Tower is a “vertical city” that has a total floor area of approximately 6,243,068 square feet and can accommodate over 30,000 people. Since 2020, our PRC subsidiaries have assisted Shanghai Tower in operating its WeChat public accounts and provided services including (i) article writing and graphic/creative design for banners, articles, and posters, (ii) providing weekly creative reports and monthly data analysis reports, and (iii) data maintenance and technical support, as well as content and functions maintenance, such as message and keyword reply management. In addition, our PRC subsidiaries also assisted Shanghai Tower in operating and maintaining its official accounts on other media platforms, such as Xiaohongshu, Weibo, and Toutiao. From June 2020 to June 2021, through our PRC subsidiaries’ services, Shanghai Tower’s WeChat public account gained approximately 30,000 followers and published approximately 160 articles with a total of at least 2.4 million views.

• Project for Supporting Tmall Single’s Day Offline Gala. The Tmall Single’s Day Offline Theme Gala (the “Tmall Gala”) is an annual cultural event hosted by Tmall, a subsidiary of Alibaba Group, for purposes of marketing its Singles’ Day (November 11) e-commerce sale—a major shopping event in China. Our PRC subsidiaries provided offline services in support of the 2021 Tmall Gala, including (i) security services and other on-site services (including COVID testing services), (ii) travel, accommodation, transportation, and catering services for gala staff and performing artists, (iii) one-on-one medical service during the COVID-19 epidemic, (iv) logistics support, and (v) overall scheduling services for the project such as event planning and on-site coordination.

• Local Life Live Video Broadcast for Qiancaojun Catering. Currently, with over 60 chain restaurants, Qiancaojun Sushi Cuisine is a popular Japanese food chain brand in Jiangsu and Zhejiang provinces in China. From September to November 2021, our PRC subsidiaries performed a total of eight live video broadcasts on the Douyin platform for Qiancaojun, generating a cumulative GMV of RMB2,033,645 (approximately US$319,123). Particularly, the eight-hour live video broadcast for the fifth-anniversary special event created a record GMV of over RMB800,000 (approximately US$125,537) in the Hangzhou area, representing an approximately 16 times return on investment with an investment of less than RMB50,000 (approximately US$7,846).

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• Project for Promoting iQIYI’s TV Programs. See “—Case Study for S2P Online Traffic Services: Project for Promoting iQIYI’s TV Programs” below.

• Project for Promoting Xigua Video. Xigua Video is a Chinese online video-sharing platform owned by ByteDance. As the video content operation partners of ByteDance, our PRC subsidiaries have provided services to direct online traffic to Xigua Video since May 2019. Specifically, our PRC subsidiaries edited and recreated short videos based on the film and TV programs on Xigua Video and posted these short videos on the Toutiao platform, a news and information content platform in China also owned by ByteDance, to improve Xigua Video’s brand appeal and user traffic. During the period from May 2019 to July 2021, the promotional short video our PRC subsidiaries created for Xigua Video obtained 12 billion views on Toutiao, with over 600 videos that had at least one million views, among which, the most popular video reached approximately 15 million views. The five accounts our PRC subsidiaries helped operate accumulated more than 13.67 million followers in total during the same period.

Case Study for S2B Creative Marketing Services: Project for Nanhu Place

In April 2021, Jiaxing City Urban Infrastructure Investment Co., Ltd., a state-owned property developer, engaged our PRC subsidiaries to conduct marketing campaigns to promote the opening of Nanhu Place, a newly developed local commercial complex. Our PRC subsidiaries designed and provided an integrated marketing plan, consisting of comprehensive marketing campaigns across both online and offline channels to maximize the marketing effectiveness. After the customer agreed on the integrated marketing plan, our PRC subsidiaries consolidated their marketing resources and implemented marketing campaigns through various channels, including (i) their self-operated and cooperative we-media accounts on new media platforms such as WeChat, Douyin, Xiaohongshu, Meituan (美团), and Dianping (大众点评), (ii) traditional media such as TV and radio, and (iii) offline advertisements through outdoor LED billboards, elevators, and lightboxes at railway stations and bus stations. As a result, from November 2021 to December 2021, our integrated new media integrated content marketing for Nanhu Place achieved more than 500 million impressions, and the opening of the commercial complex achieved great success as measure by the number of visitors (approximately 420,000 visitors for the first two opening days) and GMV (approximately RMB1,800,000 GMV for the first two opening days). Attributable to the high-quality marketing performance, the customer decided to continually engage our PRC subsidiaries to operate their we-media account.

Below are screenshots of articles our PRC subsidiaries produced and posted on their self-operated WeChat public accounts for promoting the commercial complex:

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Below are screenshots of an information flow ad, an app-launch screen ad, and a KOL review post on Dianping, Douyin, and Xiaohongshu, respectively, for promoting the commercial complex:

Dianping	Douyin	Xiaohongshu

Below are examples of our PRC subsidiaries’ offline marketing campaigns at railway stations and bus stations, respectively:

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Case Study for S2B Live Streaming Services: Project for TW KIDS

TW KIDS, a well-known children’s apparel brand in China, engaged our PRC subsidiaries to promote its brand and sales from June 2021 to January 2022. Before the implementation of live streaming events, our PRC subsidiaries (i) closely communicated with the customer to understand its target market, features, and marketing demand; (ii) conducted market research to better understand the habits and interests of target audiences; and (iii) designed the marketing plans for the customer. To fulfill the customer’s requirements for expanding sales channels via Douyin, our PRC subsidiaries organized and implemented 450 live streaming sales events to promote its apparel products and attract user traffic simultaneously. As of December 31, 2021, a team was responsible for this project and operated two Douyin accounts on behalf of and authorized by TW KIDS. Our PRC subsidiaries designed and produced live streaming content and materials before conducting the live sales. Our PRC subsidiaries constantly monitored the sales data, optimized strategies to reach target audiences, and attracted user traffic during the live sales events. In addition, they advised the customer on the price ladder of products for the live sales to meet the different needs of target consumers and optimized the profit performance of the sales events. Our PRC subsidiaries were able to implement two to three live sales per account per day. Their live sales events helped the customer achieve GMV of approximately RMB26.3 million during the relevant periods.

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Below are screenshots of our live sales events for TW KIDS:

Case Study for S2P Online Traffic Services: Project for Promoting iQIYI’s TV Programs

In January 2020, our PRC subsidiaries entered into a framework agreement with a term of two years with iQIYI, a popular online video platform in China, and became its business partner to promote its content and brand on the Douyin platform. iQIYI licensed our PRC subsidiaries the copyright to edit and broadcast specified content and our PRC subsidiaries are responsible for producing and posting appealing and entertaining edited short videos via Douyin to increase the exposure of iQIYI’s content, generate user traffic, and increase the daily active users of its video platform. Our PRC subsidiaries’ professional content production team edited short videos with their creative and attractive scripts and background music. During the first six-month trial period of their cooperation, our PRC subsidiaries accumulated more than 7 billion impressions for the content of iQIYI. Approximately 400 of their short videos achieved more than 100 thousand likes and 16 of their short videos achieved more than 1 million likes during the same period.

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Below are screenshots of our PRC subsidiaries’ short video lists and the accounts used to promote a TV series for iQIYI:

Below are examples of our PRC subsidiaries’ short videos tagged with popular social topics to attract user traffic:

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Digital Advertising Services

Our PRC subsidiaries commenced their digital advertising business in China in September 2014. Our PRC subsidiaries’ digital advertising services enable advertisers—typically app developers and operators, and their advertising agents—to identify, engage, and activate target audiences across different digital advertising distribution channels for user acquisition. Specifically, our PRC subsidiaries first upload the advertisers’ applications, which are contracted to be promoted, to their deployment backend system. Our PRC subsidiaries advertise these applications through their digital advertising channels, which primarily consist of Xuhang SDK-embedded Apps. The Xuhang SDK-embedded Apps can access advertisements for the applications to be promoted from our PRC subsidiaries’ deployment backend system, and then display such advertisements when users run the Xuhang SDK-embedded Apps on mobile terminals. The advertisements will take turns being displayed at regular intervals. Upon clicking on an advertisement, the user is directed to download the promoted application. Subsequently, the user will be asked whether to install the promoted application after the download has been completed. In our PRC subsidiaries’ backend system, each user action on a user’s mobile terminal is assigned a representative number (such as 3 for display; 4 for click; 5 for download; 6 for install) in relation to any advertisement. Our PRC subsidiaries do not collect any personal information about users, including demographics, geographic location, gender, personal interest, or other online behavioral patterns, except for the International Mobile Equipment Identity (“IMEI”) number of a mobile device. The IMEI number is a 15-digit number unique to each device and does not contain any personal information about users.

In addition, for digital advertising services targeting overseas users, our PRC subsidiaries also manually purchase ad inventories on behalf of advertisers from media platforms, primarily through media buy from the designated resellers of overseas top media platforms, such as Google and Meta, based on advertisers’ specific ad campaign demand and their marketing budgets.

Our PRC subsidiaries receive digital advertising service fees from advertisers, which are typically charged on a CPA basis or CPM basis. For the years ended December 31, 2020 and 2021 and the nine months ended September 30, 2022, our revenue from digital advertising was RMB188.2 million, RMB106.3 million (US$14.9 million), and RMB42.5 million (US$6.0 million), respectively, accounting for 53.6%, 22.6%, and 12.5% of our total revenue for the respective years and period, respectively.

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Formats of Digital Advertising

We provide digital advertising services in various formats, such as banners, splash screens, pop-ups, search engine key words, information flow, and video advertisements. The following table sets forth our major types of digital advertising formats:

Banner ads	Pop-ups ads

Customers

The customers of our PRC subsidiaries’ digital advertising business include direct advertisers (such as app developers and operators) and their advertising agents. The customers utilize our PRC subsidiaries’ digital advertising services to promote their apps from a broad range of industry verticals, including games, tools and utilities, lifestyle, and e-commerce. For the years ended December 31, 2020 and 2021 and the nine months ended September 30, 2022, our PRC subsidiaries had contracted with a total of 26, 21, and six direct advertisers and 28, 20, and 15 advertising agents, respectively, for their digital advertising services.

For the year ended December 31, 2020, the top five customers of our PRC subsidiaries were Ten Thousand Hours Tech Limited, Lian Media Limited, Suzhou Lemi Information Technology Co., Ltd., Beijing Shenle Internet Technology Co., Ltd., and Jinhua Purun Culture Communication Co., Ltd., representing 16.02%, 9.86%, 2.85%, 2.84%, and 2.22% of our total revenue, respectively. For the year ended December 31, 2021, the top five customers of our PRC subsidiaries were Ten Thousand Hours Tech Limited, Suzhou Lemi Information Technology Co., Ltd., Lian Media Limited, Hangzhou Shengmai Communication Technology Co., Ltd., and Hangzhou Qubian Network Technology Co., Ltd., representing 3.92%, 2.87%, 2.84%, 2.77%, and 2.62% of our total revenue, respectively. For the nine months ended September 30, 2022, the top five customers of our PRC subsidiaries were Suzhou Lelin Wireless Information Technology Co., Ltd., Hangzhou Shengmai Communication Technology Co., Ltd., Hangzhou Aotian Technology Co., Ltd., Hangzhou Pengyu Technology Co., Ltd., and Hangzhou Qubian Network Technology Co., Ltd., representing 3.0%, 2.8%, 1.7%, 1.3%, and 1.3% of our total revenue, respectively.

Suppliers

The suppliers of our PRC subsidiaries’ digital advertising services are digital advertising distribution channels, mainly comprising (i) long-tail media platforms, such as small- to medium-sized apps with available ad inventories, (ii) ad networks aggregating the ad inventories of these long-tail media platforms, and (iii) high-

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profile top overseas media platforms, such as Google and Meta. Our PRC subsidiaries generally purchase ad inventories from media platforms through SDK integration. The suppliers charge our PRC subsidiaries traffic acquisition fees, the price of which is determined by the media platforms themselves and is based on the pricing of their specific ad inventories available at the time, which varies by traffic characteristics such as time slot, targeted geographic location, and distribution duration.

Pricing Model and Advertising Fees

An advertisement generates an “impression” when the advertisement page is displayed. A portion of the users who have seen the display will click through the advertisement, and a portion of the users who have clicked through the advertisement will complete actions valuable to the advertiser, for example, purchasing goods or downloading apps from the advertiser’s landing pages. Such actions are known as “conversions.”

Our PRC subsidiaries charge their advertisers for digital advertising services based on several pricing models, primarily including:

• CPA (cost per action), based on the number of desired actions performed by the user, typically, a unit price is charged for each action, such as download, installation, or registration;

• CPM (cost per mille), based on per one thousand impressions of the advertisement; and

• CPC (cost per click), based on the number of clicks on the advertisement, typically, a unit price is charged for each click;

Our PRC subsidiaries’ advertisers are charged with services fees based on the total number of agreed upon actions depending on the types of pricing models they elected. Our PRC subsidiaries issue invoices typically on a monthly basis to an advertiser after verifying the relevant performance data with the advertiser based on the agreed upon pricing model and calculation basis. Some advertisers will set key performance indicators (“KPIs”) for advertising campaigns, such as the app’s user retention rate, to define how to count an action as an effective action for billing purposes, based on which our PRC subsidiaries will calculate the fees that they charge such advertisers. As KPIs only affect how to count the number of effective actions for purposes of fee calculation, they are not threshold requirements for the payment of our PRC subsidiaries’ advertisers. The advertiser pays us service fees for digital advertising services within a time period after receipt of our PRC subsidiaries’ invoice depending on the agreed credit term(s). We generally require our PRC subsidiaries’ advertisers to settle payments within four to five months upon receipt of invoice/ revenue recognition.

The source of performance data for verifying the advertising fees typically comes from the media publishers through SDK or is otherwise provided by the media publishers or advertisers directly. Our PRC subsidiaries agree with the advertiser on which source of data to use in verifying performance data for purposes of billing once our PRC subsidiaries’ engagement is confirmed. According to Frost & Sullivan, it is not uncommon that digital advertising service providers generally do not adopt anti-click fraud mechanisms but are entitled to engage independent third-party data tracking service providers to independently verify ad performance data when digital advertising service providers, such as our PRC subsidiaries, notice any unusual traffic. As of the date of this prospectus, there have been no material disputes regarding data verification among our PRC subsidiaries and their advertisers and media publishers, and therefore our PRC subsidiaries have not engaged any independent third-party data tracking service providers to verify the ad performance data reported by media publishers.

Case Study for Digital Advertising Services—Project for Guanglian Interactive

Beijing Guanglian Interactive Media Co., Ltd. (“Guanglian Interactive”), an advertising agency for promoting mobile application products, has been our PRC subsidiaries’ long-term business partner since August 2017. Our PRC subsidiaries help Guanglian Interactive promote the products they work with—mostly apps on the Android system such as Qimao (七猫小说), Missfresh (每日优鲜), Xianyu (咸鱼), and Taobao (手机淘宝)—by purchasing

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ad inventories through their proprietary ad distribution SDK. Our PRC subsidiaries provide digital advertising solutions to help identify and engage target audiences through optimized ad distribution channels and generate revenue from services fees based on a CPA basis. Our PRC subsidiaries’ service features (i) a targeted advertising strategy based on their insight and experience in digital advertising and their understanding of customer needs and the characteristics of ad distribution channels, (ii) high conversion rates attributable to the optimized ad distribution channels, and (iii) an advertising solution that meets the customer’s needs for continuous and stable user traffic.

Below are screenshots of our PRC subsidiaries’ digital ads for Guanglian Interactive:

Technologies

The success of the PRC subsidiaries’ business depends on their self-developed technologies based on low-code, cloud-based platforms, and user-experience-driven development, where we apply well-designed user interface components and data processing techniques to improve development efficiency and platform stability. We have developed the following software to support different lines of business for our PRC subsidiaries, including the live streaming broadcast, conference hosting, and local life live broadcast.

• Xuhang Live Streaming E-commerce Cloud. The software is developed to facilitate the management of live streaming sales, and is currently being used by our PRC subsidiaries to support the business operations of multiple live streaming bases and centers, and to digitalize the management of their live streaming sales business. It improves the operational efficiency of live broadcasting businesses by enhancing the collaboration between upstream and downstream partners.

• Xuhang Conference Cloud. The software includes Xuhang Conference Cloud back-end and an application called Yihuitianxia. As a conference and event management platform, Xuhang Conference Cloud is developed to support the conference/event departments of our PRC subsidiaries. As a result, conferences and events are more efficiently organized, and guests and visitors have better participation experiences.

• Xuhang Local Life Applications (Tanshuo). Separate applications are available for merchants and broadcasters, which help KOLs explore local stores and help merchants with marketing management, thereby improving both store management and KOLs’ experiences.

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Data Protection and Privacy

We collect data solely to analyze consumer behaviors and advertising performance. Through the provision of our new media integrated content marketing and digital advertising services, we collect certain user data, from our customers and third-party media platforms, derived from (i) user devices, such as device ID, IP address, type of device, operating system, and types of apps installed on devices, and (ii) user real-time actions, such as click-throughs, downloads, installations, and subsequent sign-ups. Such data are not user-specific and do not contain personal information, such as users’ legal names or personal ID numbers. We treat all information we collect as confidential. We do not disclose any information we gather absent legal and appropriate approvals.

We have put in place appropriate physical, electronic, and managerial procedures to safeguard and secure our data assets, including to prevent unauthorized access, to preserve their integrity, and to ensure their appropriate use. On the software level, we encrypt important and sensitive data during their transmission from and to the user end, and only authorized personnel may access the backend of our systems based on their user assigned user groups and user levels. We have central controls to govern user roles and permissions. On the hardware level, only authorized information technology personnel have access to our servers through a virtual private network and data backup is kept inside our company safe box. In addition, we have established a hardware firewall where all traffic is inspected and filtered according to a comprehensive set of rules.

Competition

The new media integrated content marketing industry and the digital advertising industry in China are highly competitive and rapidly evolving, with many new companies joining the competition in recent years and few leading companies. Other providers of marketing services compete directly with our PRC subsidiaries for marketers and marketing revenue. In addition, our PRC subsidiaries compete with traditional forms of media, such as newspapers, magazines, and radio and television broadcasts, and other providers of offline advertising services. We believe that our PRC subsidiaries’ ability to compete effectively for marketers depends upon many factors, including brand recognition, quality of services, effectiveness of sales and marketing efforts, creativity in design and content of advertisements, pricing and discount policies, and hiring and retention of talented staff. We believe that our PRC subsidiaries are well-positioned to effectively compete in the new media integrated content marketing industry and the digital advertising industry based on the factors listed above.

Some of our PRC subsidiaries’ current or future competitors, however, may have longer operating histories, greater brand recognition, or greater financial, technical, or marketing resources than we do. For a discussion of risks relating to competition, see “Risk Factors—Risks Related to Our Business and Industry—Our PRC subsidiaries are in the highly competitive new media integrated content marketing industry and the digital advertising industry and may not be able to compete successfully against existing or new competitors, which could reduce their market share and adversely affect their competitive position and financial performance.”

Branding and Marketing

Our PRC subsidiaries have implemented various marketing and promotional measures to promote their services. As of September 30, 2022, our PRC subsidiaries had a team of 102 sales and marketing employees. For the years ended December 31, 2020 and 2021 and the nine months ended September 30, 2022, their sales and marketing expenses amounted to RMB4.6 million, RMB7.0 million (US$1.0 million), and RMB3.7 million (US$0.5 million), respectively, accounting for 1.3%, 1.5%, and 1.1% of their total revenue for the respective years and period, respectively. Their marketing and promotion efforts are focused on finding suitable new customers, deepening their relationships with existing ones, exploring and assessing business opportunities and associated risks, working towards collaboration with business partners, as well as enhancing their industry reputation. Our PRC subsidiaries engage with potential and existing customers through mobile and email communications as well as physical visits. Our PRC subsidiaries endeavor to provide effective services and diversify their service offerings to further enhance customers’ retention rates or introduce existing customers to other types of services they have

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not experienced. Our PRC subsidiaries actively conduct market research to keep themselves abreast with industry development. For their new media integrated content marketing services, our PRC subsidiaries consider a combination of factors in selecting marketers for collaboration, such as their industry position and reputation, as well as their potential demand both online and offline for user engagement targeting industry verticals, such as retailing, e-commerce, catering, tourism, and leisure & entertainment. For the digital advertising services, our PRC subsidiaries mainly target mobile apps with a large existing user traffic and engage with app developers and operators to promote our solutions and services. To increase their brand awareness and promote their services, our PRC subsidiaries conduct a variety of sales and marketing activities, such as attending industry conferences and business development activities, increasing their social media presence, as well as collaborating with local governmental partners for business referrals and market expansion opportunities. The management team of our PRC subsidiaries also work together with their sales and marketing team to determine their business development strategies and action plans. In addition, our PRC subsidiaries’ existing customers may also refer new customers to our PRC subsidiaries as a recognition for the high-quality services they provide.

Intellectual Property

Our PRC subsidiaries regard their trademarks, service marks, domain names, trade secrets, and similar intellectual property as critical to their success. Our PRC subsidiaries rely on a combination of copyright and trademark law, and confidentiality and non-disclosure agreements to protect their intellectual property rights. Our PRC subsidiaries also regularly monitor any infringement or misappropriation of their intellectual property rights.

As of the date of this prospectus, our PRC subsidiaries have registered:

• 32 trademarks in mainland China and two trademarks in Hong Kong;

• 10 domain names for which the filing-for-record procedures have been completed in China;

• 259 software copyrights in China, relating to our PRC subsidiaries’ service and management platforms and other self-developed products.

Our PRC subsidiaries implement comprehensive measures to protect their intellectual property in addition to making trademark and software copyright registration applications. Our PRC subsidiaries’ key measures to protect their intellectual property include: (i) timely registration and filing with relevant authorities and application of intellectual property rights for their significant technologies and self-developed software; and (ii) reviews of virtual marketing materials, including text, graphics, and videos, to avoid copyright infringement.

Employees

Our PRC subsidiaries had 389, 728, and 401 full-time employees as of December 31, 2020, 2021, and 2022, respectively. The following table sets forth the number of their full-time employees as of December 31, 2022:

Function:	Number
Content Production and Operation		159
Research and Development		14
Sales and Marketing		81
General and Administration		147
Total		401

Our PRC subsidiaries enter into employment contracts with a confidentiality clause with their full-time employees.

We believe that our PRC subsidiaries maintain a good working relationship with their employees, and they have not experienced material labor disputes in the past. None of their employees are represented by labor unions.

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Facilities

Our principal executive office is located at Building 2, Shangtanghe 198 Cultural and Creative Park, 198 Shenban Rd, Gongshu District, Hangzhou, Zhejiang Province, China, where Xuhang Network leases this property for free from an independent third party, Shangtang Neighborhood Work Office of Gongshu District People’s Government of Hangzhou Municipality, with an area of approximately 53,820 square feet, with a lease term from May 1, 2020 to December 31, 2024.

As of the date of this prospectus, our PRC subsidiaries do not own any property and they lease 18 offices or other premises in China with an aggregate gross floor area of approximately 191,035 square feet. The terms of such leases range from one to five years.

The areas of leased premises are based on the figures specified in the certificates of land use or the corresponding lease agreements. The following table shows the information of the properties our PRC subsidiaries lease as of the date of this prospectus:

Location	Area (Square Feet)	Current Use	Term of Use
Gongshu District, Hangzhou, China	53,820	Principal Executive Office	May 1, 2020 to December 31, 2024
Binjiang District, Hangzhou, China	30,008	Office	June 11, 2018 to September 10, 2023
Gongshu District, Hangzhou, China	1,076	Storage	August 1, 2021 to July 31, 2024
Horgos City, Xinjiang Province, China	471	Office	December 17, 2022 to December 16, 2023
Horgos City, Xinjiang Province, China	380	Office	December 17, 2022 to December 16, 2023
Horgos City, Xinjiang Province, China	515	Office	June 20, 2022 to March 15, 2023
Zhengzhou City, Henan Province, China	3,981	Office	February 25, 2022 to February 24, 2025
Nanchang City, Jiangxi Province, China	56,749	Office	October 25, 2019 to May 25, 2023
Nanjing City, Jiangsu Province, China	2,976	Office	November 17, 2022 to October 1, 2023
Jiading District, Shanghai, China	14,553	Office	April 2, 2021 to April 1, 2026
Qingdao City, Shandong Province, China	1,184	Office	June 1, 2020 to May 31, 2023
Xiamen City, Fujian Province, China	7,742	Office	March 23, 2021 to March 22, 2024
Horgos City, Xinjiang Province, China	484	Office	December 17, 2022 to December 16, 2023
Chaoyang District, Beijing, China	Approximately 484 (12 Working Desks)	Office	November 1, 2022 to October 31, 2023
Yangpu District, Shanghai, China	1,184	Office	December 1, 2021 to November 30, 2023
Kunming City, Yunnan Province, China	5,823	Office	January 1, 2022 to June 30, 2023
Qingdao City, Shandong Province, China	6,752	Office	December 1, 2021 to November 31, 2024
Wuhan City, Hubei Province, China	2,906	Office	July 13, 2022 to July 12, 2023

We believe that the facilities that our PRC subsidiaries currently lease are generally adequate to meet their needs for the foreseeable future.

Insurance

As required by regulations in China, our PRC subsidiaries participate in various employee social security plans that are organized by municipal and provincial governments for their full-time employees, including pension, unemployment insurance, childbirth insurance, work-related injury insurance, medical insurance, and housing insurance. Our PRC subsidiaries are required under PRC law to make contributions from time to time to employee benefit plans for their full-time employees at specified percentages of the salaries, bonuses, and certain allowances of such employees, up to a maximum amount specified by the local governments in China. Our PRC subsidiaries have not made adequate social security and housing fund contributions for all employees, and they may be required to make up for the shortfall in the social security contributions as well as to pay late fees at the rate of 0.05% per day of the outstanding amount from the due date. Our PRC subsidiaries do not maintain

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directors and officers liability insurance, group comprehensive life insurance for employees, property insurance, business interruption insurance, or general third-party liability insurance. We believe the insurance coverage our PRC subsidiaries maintain is in line with the industry. See “Risk Factors—Risks Related to Our Business and Industry—Our PRC subsidiaries’ current insurance policies may not provide adequate levels of coverage against all claims and they may incur losses that are not covered by their insurance.”

Seasonality

Our PRC subsidiaries’ revenue, cash flow, operating results, and other key operating and performance metrics may vary from quarter to quarter, due to the seasonal nature of their marketers’ budgets and spending on advertising campaigns. For example, advertising spending tends to rise during holiday seasons with consumer holiday spending, or closer to the end-of-year in fulfillment of their annual advertising budgets, which may lead to an increase in our PRC subsidiaries’ revenue and cash flow during such periods. Moreover, advertising inventory during holiday seasons may be more expensive, due to increased demand for advertising inventory.

Legal Proceedings

Our PRC subsidiaries are not currently a party to any legal proceedings that in the opinion of their management would have a material adverse effect on their business. From time to time, our PRC subsidiaries may become a party to various legal or administrative proceedings arising in the ordinary course of their business, including actions with respect to intellectual property infringement, violation of third-party licenses or other rights, breach of contract, and labor and employment claims.

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REGULATIONS

Our business and operations are subject to laws and regulations in the PRC. This section summarizes the major PRC laws, rules, and regulations applicable to our current business and the key aspects of the industry in which we operate.

Regulations Relating to Company Establishment and Dividend Distribution

In accordance with the Company Law of the PRC (2018 Revision), which was released and came into force on October 26, 2018, where a company is to be established within the territory of the PRC, applications shall be submitted to the company registration authorities in accordance with the law for registration and establishment of companies.

Applications that satisfy the requirements for establishment shall be registered by the company registration authorities as limited liability companies or companies limited by shares respectively. Where laws and administrative regulations requires prior approval for company establishment, such approval shall be obtained in accordance with applicable law and regulations prior to the application for company registration.

Under the similar requirements of the Administrative Regulation of the PRC on the Registration of Market Entities, which took effect on March 1, 2022, upon review and approval of an application for enterprise legal person registration, an enterprise legal person business license shall be issued to the applicant who obtains legal person status, and the legitimate rights and interests of the enterprise shall be protected by State laws.

Our PRC subsidiaries have all completed the registration procedures under the requirements of the aforementioned laws in the SAMR or its local counterparts and now are legitimately operating under the supervision of authorities.

Regarding the dividend distribution, the Company Law of the PRC provides that a company shall contribute at least 10% of its after-tax profits of the current year into its statutory surplus reserve unless the aggregate sum of such reserve reaches 50% of its registered capital. Where the balance of the statutory surplus reserve of a company is insufficient to make good its losses in the previous year, the company shall make good such losses using its profits of the current year before making a contribution to the statutory surplus reserve in accordance with the aforementioned provisions.

Upon contribution to the statutory surplus reserve using its post-tax profits, a company may make a further contribution to the surplus reserve using its post-tax profits in accordance with a resolution of the shareholders’ meeting or the shareholders’ general meeting.

Shareholders of a limited liability company are entitled to dividends in accordance with the percentage of their respective paid-in capital contribution, unless all shareholders agree that they will not be distributed with the dividends based on the percentage of their capital contribution.

Regulations Relating to Advertising Business

The Advertising Law, which took effect on February 1, 1995 and was last amended on April 29, 2021, regulates the content of advertisements, codes of conduct for advertisers, and the supervision and administration of the advertising industry. It also stipulates that advertisers, advertising operators, and advertisement publishers shall abide by the Advertising Law and related laws and regulations, be honest and trustworthy, and compete fairly in the advertising business. Pursuant to the Advertising Law, if advertising operators or advertisement publishers know or should have known the content of the advertisements is false or deceptive but still provide advertising design, production, agency, or publishing services in connection with the advertisement, they might be subject to penalties, including fines and confiscation of advertising revenue, and in the case of serious violations, the competent PRC authority may suspend or revoke their business licenses.

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According to the Advertising Law, quoted as follows, advertisements shall not:

(i) use or covertly use the national flag, national anthem, national emblem, military flag, military anthem, and military emblem of the PRC;

(ii) use or covertly use the name or image of State agencies and their personnel;

(iii) use wordings such as “national level,” “highest level,” and “best”;

(iv) harm the dignity or interests of the State and divulge State secrets;

(v) hinder social stability and harm public interest;

(vi) endanger personal and property safety, and infringe upon personal privacy;

(vii) hinder public order or violate social morality;

(viii) contain obscenity, pornography, gambling, superstition, terror, or violent content;

(ix) contain ethnic, racial, religious, or sexual discrimination content;

(x) hinder the protection of the environment, natural resources, or cultural heritage; and

(xi) fall under any other circumstances stipulated by laws and administrative regulations.

The Interim Measures for the Administration of Internet Advertising (the “Interim Measures for Internet Advertising”), which entered into force on September 1, 2016, regulate advertising activities conducted via the Internet. As stipulated in the Interim Measures for Internet Advertising, advertisements published or distributed via the Internet shall not interfere with users’ normal use of the Internet. For example, advertisements published on web page pop-up windows or in other forms shall be conspicuously marked with a “close” sign to ensure the closing of such advertisements by one click. Entities or individuals are prohibited from inducing users to click on the content of an advertisement by deception. An Internet advertisement publisher or advertising operator shall, in accordance with the relevant provisions of the state, establish and maintain a system for acceptance registration, examination, and file management; and examine, verify, and record the identity information of each advertiser. The Interim Measures for Internet Advertising also require Internet advertisement publishers and advertising operators to examine related supporting documents, verify the content of the advertisements, and shall not design, produce, act as agents, or publish those advertisements with content inconsistent with the supporting documents or the supporting documents thereof are incomplete.

One of our PRC subsidiaries, Hangzhou Dedao Culture Creative Co., Ltd. (a subsidiary of Horgos Weizan Network Technology Co., Ltd.), before being acquired by our Company, was fined RMB3,448.8 for publishing medical advertisements without proper inspection and examination on March 16, 2020. Other than the aforementioned penalty, none of our PRC subsidiaries received any administrative penalties for illegal or unlawful operations in the advertising business during the years ended December 31, 2020 and 2021 and the nine months ended September 30, 2022.

Regulations Relating to Live streaming Commerce

On November 5, 2020, the SAMR implemented the Guiding Opinions on Strengthening the Supervision of Livestreaming Marketing Activities. According to these Guidance Opinions, governmental supervision of live streaming marketing activities will be focused on standardizing the scope of commodity or service marketing, standardizing the examination and release of advertisements, protecting consumers’ right of information and right to choose, investigating and dealing with unlawful conduct in e-commerce, infringement of consumers’ legitimate rights and interests, unfair competition, product quality, intellectual property, food safety, advertising, and pricing.

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The CAC promulgated the Administrative Provisions on the Information Services Provided Through Official Accounts of Internet Users (Revised in 2021) on January 22, 2021, or the Administrative Provisions, which came into force on February 22, 2021. In these Administrative Provisions, the CAC has specified that producers and operators of official accounts shall not commit illegalities and irregularities, including:

(i) failing to register with their real identity information or register the name, avatar, or brief introduction of any official account that is inconsistent with their real identity information;

(ii) maliciously counterfeiting, imitating, or misappropriating the public accounts of organizations or other persons to produce and publish information content;

(iii) providing such services as collecting, editing, and releasing Internet news information without permission or beyond the scope of permission;

(iv) manipulating and making use of multiple platform accounts to release similar and low-quality information content in batches, generating false flow data and creating false public opinions and hot spots;

(v) inciting extreme emotions by virtue of emergencies, or damaging the reputation of others and organizations by means of cyber-violence, disturbing the normal operation of organizations, and affecting social harmony and stability;

(vi) fabricating false information, falsifying the nature of originality, marking false information sources, distorting the truth, or misleading the public;

(vii) conducting illegal network supervision, marketing fraud, extortion, and seeking illegal interests by means of paid release or deletion of information, etc.;

(viii) registering, hoarding, or illegally trading official accounts in bulk in violation of regulations;

(ix) producing, reproducing, or releasing illegal information, or failing to take measures to prevent or boycott the production, reproduction, or release of harmful information; and

(x) committing any other acts prohibited by laws and administrative regulations.

Article 19 of the Administrative Provisions further promulgates that for any official account in violation of these Administrative Provisions and relevant laws and regulations, the information service platform for official accounts shall take disposal measures in accordance with applicable laws or as agreed, such as warning, restricting functions of such official account, suspending the updating of information, ceasing the release of advertisements, closing or deregistering such official account, blacklisting such official account, and prohibiting re-registration, and maintaining relevant records and timely report the case to the CAC and other competent authorities.

During the years ended December 31, 2020 and 2021 and the nine months ended September 30, 2022, we did not receive any administrative penalties for illegal or unlawful operations in the field of live streaming commerce. In addition, we have established what we believe to be adequate and effective internal control policies over our advertising business to ensure that our live streaming accounts and content are regularly monitored and inspected.

Regulations Relating to Information Security and Privacy Protection

The PRC government authorities have enacted laws and regulations with respect to internet information security and protection of personal information from any abuse or unauthorized disclosure, including (i) the Decision on Preserving Computer Network Security, enacted by the SCNPC on December 28, 2000 and amended on

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August 27, 2009, (ii) the Provisions on the Technical Measures for the Protection of the Security of the Internet, issued by the Ministry of Public Security (the “MPS”) on December 13, 2005 and effective on March 1, 2006, (iii) the Decision on Strengthening Information Protection on Network, promulgated by the SCNPC on December 28, 2012, (iv) the Several Provisions on Regulating the Market Order of Internet Information Services, issued by the Ministry of Industry and Information Technology of the PRC (the “MIIT”) on December 29, 2011 and effective on March 15, 2012, and (v) the Provisions on Protecting the Personal Information of Telecommunications and Internet Users, issued by MIIT on July 16, 2013 and implemented on September 1, 2013. The Provisions on Protection of Personal Information of Telecommunications and Internet Users regulate the use and collection of personal information in the process of the provision of telecommunications services and internet information services in the PRC. Telecommunications business operators and internet information service providers must specify the purposes, manners, scopes of collection and use of information, the channels for inquiry and correction of information, the consequences of refusal to provide information, and other relevant matters. Telecommunications business operators or internet information service providers (i) may not use and collect users’ personal information without prior consent; (ii) shall strictly keep the collected personal information confidential and are prohibited from disclosing, tampering with, destroying, selling, or illegally providing others with such information; and (iii) are required to take technical and other measures to prevent the collected personal information from any unauthorized disclosure, destruction, alteration, or loss.

On November 7, 2016, the SCNPC promulgated the Cybersecurity Law of the PRC (the “Cybersecurity Law”), which became effective on June 1, 2017. The Cybersecurity Law requires network operators to perform certain functions related to cybersecurity protection and strengthen network information management. For instance, no network operators may disclose, tamper with, or destroy personal information that it has collected, or disclose such information to others without the prior consent of the person whose personal information has been collected unless such information has been processed to prevent a specific person from being identified and such information from being restored.

The Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues concerning the Application of Law in the Handling of Criminal Cases of Infringing on Citizens’ Personal Information (the “Interpretation”), which was issued on May 8, 2017 and took effect on June 1, 2017, clarifies several concepts regarding the crime of infringing upon a citizen’ personal information, stipulated by Article 253A of the Criminal Law of the PRC, including (i) citizens’ personal information, (ii) violation of relevant national provisions, (iii) provision of citizens’ personal information, and (iv) illegally obtaining any citizen’s personal information by other methods. Also, the Interpretations specify the standards for determining serious circumstances and particularly serious circumstances of this crime.

In addition, the Civil Code of the PRC, which was implemented on January 1, 2021, has further strengthened the protection of personal information by stipulating, among others, that the processing of personal information shall be subject to the principles of legitimacy, rightfulness, and necessity, with no excessive processing pursuant to Article 1035.

In the same field, Amendment (IX) to the Criminal Law of the PRC, which was issued on August 29, 2015 and came into effect on November 1, 2015, similarly stipulates that those who sell or provide any citizen’s personal information or sells or provides to any other person any citizen’s personal information obtained in the course of performing functions or providing services in violation of the relevant provisions of the state, shall, if the circumstances are serious, be sentenced to imprisonment or subject to a fine.

On August 20, 2021, the SCNPC promulgated the Personal Information Protection Law of the PRC (the “Personal Information Protection Law”), which took effect on November 1, 2021. The Personal Information Protection Law imposes special personal information protection obligations on large Internet platforms, including establishing and improving a personal information protection compliance system in accordance with state regulations and establishing an independent agency mainly composed of external members to supervise the protection of personal information. The platform is required to formulate its own operating rules under the

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principles of openness, fairness, and impartiality. In addition, the platform is required to regularly publish social responsibility reports on personal information protection and accept social supervision.

On December 28, 2021, 13 governmental departments of the PRC, including the CAC, jointly promulgated the Cybersecurity Review Measures, which became effective on February 15, 2022. According to the Cybersecurity Review Measures, the purchase of network products and services by a critical information infrastructure operator and the data processing activities of an online platform operator that affect or may affect national security shall be subject to the cybersecurity review. Particularly, an online platform operator that possesses personal information of at least one million users must apply for a cybersecurity review by the CAC if it seeks to be listed in foreign countries.

On November 14, 2021, the CAC published the Security Administration Draft, which provides that data processors shall apply for a cybersecurity review under certain circumstances, such as mergers, restructurings, and divisions of Internet platform operators that hold large amount of data relating to national security, economic development, or public interest which affects or may affect the national security, overseas listings of data processors that process personal data for more than one million individuals, Hong Kong listings of data processors that affect or may affect national security, and other data processing activities that affect or may affect the national security. With regard to personal information protection, data processors shall develop rules for processing personal information and strictly abide by these rules. Rules for processing personal information should be displayed in an accessible, centralized place with clear, concise, and clear content in a concise and plain style.

During the years ended December 31, 2020 and 2021 and the nine months ended September 30, 2022, we took strict confidentiality measures to protect the personal information we obtained, and we did not receive any administrative penalties for illegal or unlawful operations in the field of information security. Furthermore, as confirmed by our PRC counsel, AllBright, we are not subject to cybersecurity review or network data security review by the CAC under the Cybersecurity Review Measures, or if the Security Administration Draft is enacted as proposed, since our PRC subsidiaries are not CIIOs or online platform operators with personal information of more than one million users. See “Risk Factors—Risks Relating to Doing Business in the PRC—Recent greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our PRC subsidiaries’ business and our offering.”

Regulations Relating to Foreign Investment

According to the Provisions on Guiding the Direction of Foreign Investment, which took effect on April 1, 2002, industries in the PRC are classified into four categories: (i) permitted foreign investment industries, (ii) encouraged foreign investment industries, (iii) restricted foreign investment industries, and (iv) prohibited foreign investment industries. Encouraged foreign investment industries, restricted foreign investment industries, and prohibited foreign investment industries are specified in the aforementioned Provisions. Industries that do not fall in any of these three categories are regarded as permitted foreign investment industries. The categories were promulgated and amended from time to time by the NDRC and the MOFCOM. The Negative List, which was last amended on December 27, 2021 and subsequently enforced on January 1, 2022 by the NDRC and the MOFCOM, replaced the categories stipulated in the said Provisions, sets forth management measures for the market entry of foreign investors, such as equity requirements and senior management requirements. Pursuant to the Negative List, any internet cultural operations (except for music) and production and operation of radio and television programs (including the introduction of businesses) are prohibited from foreign investment industries, and foreign-invested shares of value-added telecommunications services must not exceed 50% (excluding e-commerce, domestic multi-party communications services, store, and forward services and call center services) of the business. According to the above-mentioned laws and regulations, our business does not fall within the prohibited list.

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On 15 March 2019, the NPC promulgated the Foreign Investment Law of the PRC, which became effective on January 1, 2020, and superseded the Law of the PRC on Chinese-Foreign Equity Joint Ventures, the Law of the PRC on Chinese-Foreign Contractual Joint Ventures, and the Law of the PRC on Wholly Foreign-Owned Enterprises. On December 26, 2019, the State Council issued the Regulations on Implementing the Foreign Investment Law of the PRC, which came into effect on January 1, 2020, and replaced the Regulations on the Implementation of the Law of the PRC on Chinese-Foreign Equity Joint Ventures, Interim Provisions on the Contract Term of Chinese-foreign Equity Joint Ventures, the Detailed Rules for the Implementation of the Law of the PRC on Wholly Foreign-owned Enterprises, and the Detailed Rules for the Implementation of the Law of the PRC on Chinese-Foreign Contractual Joint Ventures.

The aforementioned laws can be generally concluded that the Chinese government encourages foreign investors to invest within the territory of China. It can be embodied that the government and its relevant departments are required to accord equal treatment to foreign investment enterprises and Chinese-funded enterprises in terms of, among others, government funding, land supply, tax reduction and exemption, qualification licensing, formulation of standards, project declaration, and human resource policies. Furthermore, foreign investors and foreign investment enterprises may, pursuant to laws, administrative regulations, or the provisions of the State Council, enjoy preferential financial, tax, land use, and other incentives. Foreign investors using investment gains derived in China to carry out further investments in China shall enjoy the corresponding preferential incentives pursuant to the applicable laws.

On December 30, 2019, the MOFCOM and the SAMR issued the Measures for the Reporting of Foreign Investment Information, which came into effect on January 1, 2020, and replaced the Interim Measures for the Recordation Administration of the Formation and Modification of Foreign-Funded Enterprises. Since January 1, 2020, for foreign investors carrying out investment activities directly or indirectly in China, the foreign investors or foreign-invested enterprises shall submit investment information to the market regulation authorities under these measures.

Regulations Relating to Intellectual Property Rights

Copyright

The Copyright Law of the PRC (the “Copyright Law”), implemented on June 1, 1991 and amended on October 27, 2001, February 26, 2010, and November 11, 2020, the latest revision of which came into effect on June 1, 2021, provides that Chinese citizens, legal persons, or other organizations will, whether published or not, enjoy copyright in their copyrightable works, which include, among others, works of literature, art, natural science, social science, engineering technology, and computer software. Copyright owners enjoy certain legal rights, including but not limited to right of publication, right of authorship, and right of reproduction. The Copyright Law extends copyright protection to Internet activities, products disseminated over the Internet, and software products. In addition, the Copyright Law provides for a voluntary registration system administered by the China Copyright Protection Center, or the “CPCC.”

Pursuant to the Regulation on Computers Software Protection, which became effective on October 1, 1991, was last amended on January 30, 2013, and was subsequently enforced on March 1, 2013, Chinese citizens, legal persons, and other organizations shall enjoy copyright on software they develop, regardless of whether the software is released publicly. The software copyright exists from the date on which the development of the software is completed, and software copyright owner may register with the software registration institution recognized by the State Council’s copyright administration department. On February 20, 2002, the National Copyright Administration of the PRC issued the Measures for the Registration of Computer Software Copyright, which outline the operational procedures for registration of software copyright, as well as registration of the license contracts for the software copyright and software copyright transfer contracts. The CPCC is mandated as the software registration body under such measures.

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As of the date of this prospectus, our PRC subsidiaries have registered 259 copyrights in the PRC. No copyright infringement claim has been filed, or, to the best of our knowledge, threatened, against our PRC subsidiaries as of the date of this prospectus.

Patent

Under the Patent Law of the PRC, promulgated on March 12, 1984, effective on April 1, 1985, and amended on September 4, 1992, August 25, 2000, December 27, 2008, and October 17, 2020, the latest revision of which came into effect on June 1, 2021, and the Detailed Rules for the Implementation of the Patent Law of the PRC, promulgated on June 15, 2001, effective on July 1, 2001, and amended on December 28, 2002 and January 9, 2010, the patent administrative authorities shall be responsible for the administration of patent matters nationwide. Where two or more applicants have made their respective applications for a patent for the same invention, the patent rights shall be granted to the applicant who has made the first application. Inventions and utility models in which patent rights are granted shall possess novelty, creativity, and practicality. The validity period of patent rights is 20 years for an invention patent, 10 years for a utility model patent, and 15 years for a design patent, commencing from their respective date of application. Implementing a patent without obtaining consent or a proper license from the patentee constitutes an infringement of patent rights.

Trademark

Under the Trademark Law of the PRC, promulgated by the SCNPC on August 23, 1982, effective on March 1, 1983, and amended on February 22, 1993, October 27, 2001, August 30, 2013, and April 23, 2019, and the Implementation Regulations for the Trademark Law of the PRC, promulgated by the State Council on August 3, 2002, effective on September 15, 2002, and amended on April 29, 2014, the Trademark Office of National Intellectual Property Administration (the “Trademark Office”), under the SAIC shall be in charge of trademark registration and administration nationwide. A trademark to be registered shall possess distinctive characteristics to facilitate identification, and shall not conflict with prior legitimate rights obtained by others. The Trademark Law has adopted a first-to-file principle with respect to trademark registration. Where two or more trademark registration applicants apply for registration of identical or similar trademarks to be used on identical or similar commodities, the trademark with the earliest application, or with the earliest date of use (provided that the applications are filed on the same day), shall be preliminarily approved and published. A trademark to be registered that does not comply with the relevant provisions of the Trademark Law of the PRC or is identical or similar to a trademark registered by others for use on the same type of commodities or similar commodities or a trademark preliminarily approved shall be rejected by the Trademark Office. Any person applying for the registration of a trademark may not injure existing trademark rights first obtained by others, nor may any person register in advance a trademark that has already been used by another party and has already gained a “sufficient degree of reputation” through such party’s use. A registered trademark shall be valid for 10 years. A trademark registrant intending to continue to use the registered trademark upon expiry of the period of validity shall complete renewal procedures within 12 months before its expiration date. The validity period of each renewal shall be 10 years from the day after the expiration date of the last period of validity. A trademark registrant may license its registered trademark to another party by entering into trademark licensing contracts, which must be filed with the Trademark Office for its record.

As of the date of this prospectus, our PRC subsidiaries have registered 32 trademarks in mainland China. No trademark infringement claim has been filed, or, to the best of our knowledge, threatened, against our PRC subsidiaries as of the date of this prospectus.

Domain Name

Pursuant to the Measures for the Administration of Internet Domain Names, promulgated by the MIIT on August 24, 2017, and effective on November 1, 2017, the MIIT shall implement supervision and administration over domain name services nationwide. The registration of domain names adopts a first-to-file principle. The

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domain name registration service institutions, which provide domain name registration services, shall require applicants for domain name registration to provide true, accurate, and complete domain name registration information of the domain name such as the identity information of the holder of the domain name.

According to Administrative Measures on Internet-based Information Services, promulgated by the State Council on September 25, 2000, and revised on January 8, 2011, non-commercial internet-based domain names shall apply for filing-for-record to the administrative organ in charge of telecommunications.

As of the date of this prospectus, our PRC subsidiaries are the registered holder of 10 domain names for which the filing-for-record procedures have been completed in the PRC. No infringement claim has been filed, or, to the best of our knowledge, threatened, against the domain names of our PRC subsidiaries as of the date of this prospectus.

Regulations Relating to Labor and Social Insurance

Labor Law

Pursuant to the Labor Law of the PRC, promulgated by the SCNPC on July 5, 1994, effective on January 1, 1995 and amended on August 27, 2009 and December 29, 2018, labor contracts shall be concluded if labor relationships are to be established between employers and employees. The conclusion and alternation of such labor contracts shall follow the principle of fairness, voluntariness, and mutual consensus, and shall not violate the laws and regulations. The employer must establish and perfect a system for labor safety and sanitary, strictly execute the national labor safety and sanitary rules and standards, provide labor safety and sanitary education to its workers or employees, prevent accidents arising from labor courses, and reduce occupational harms. In addition, the employer and its workers or employees must participate in social insurance schemes in accordance with the law and pay insurance premiums.

Labor/Employment Contract

Pursuant to the Labor Contract Law of the PRC, promulgated by the SCNPC on June 29, 2007, effective on January 1, 2008 and revised on December 29, 2012, the employment relationship is formed between the employer and its workers or employees when the employer puts the employee to work; and the employer shall sign written labor or employment contracts with its workers or employees. The employer shall not force a worker or employee to work overtime or do so in a disguised form. An employer that requires a worker or employee to work overtime shall pay overtime wages pursuant to the relevant provisions of the PRC. In addition, the wage of a worker or employee shall not be lower than the local minimum wage standards, and the employer shall promptly pay labor remuneration to workers in full amount.

Social Security

Pursuant to the Social Insurance Law of the PRC, promulgated on October 28, 2010 by the SCNPC, effective on July 1, 2011 and amended on December 29, 2018, the Provisional Regulations for the Collection and Payment of Social Insurance Premiums, promulgated by the State Council, effective on January 22, 1999 and amended on March 24, 2019, the Regulations on Work Injury Insurance, promulgated on April 27, 2003 by the State Council, effective on January 1, 2004 and amended on December 20, 2010, the Regulations on Unemployment Insurance, promulgated by the State Council on January 22, 1999 and effective on the same day, the Trial Measures for Enterprise Employee Maternity Insurance, promulgated on December 14, 1994 and effective on January 1, 1995, employers shall make contributions to basic endowment insurance, unemployment insurance, maternity insurance, work injury insurance, and basic medical insurance for employees in accordance with relevant laws. Employers should apply for registration of social insurance with the local social insurance agency and pay the social insurance fees for employees. If the employer fails to file the registration for social insurance, the social insurance administration authority shall order it to make rectification within a prescribed time limit. Otherwise, the employer will be imposed a fine. If the employer does not pay the social insurance in full amount as

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scheduled, the social insurance collection institution shall order it to pay within a prescribed time limit together with a late fee. If the payment including the late fee is not settled by the prescribed time limit, the employer will be imposed a fine.

Under the Regulations on the Management of Housing Fund, promulgated by the State Council and effective on April 3, 1994, and amended on March 24, 2002 and March 24, 2019, a newly formed entity in the PRC must register with the competent housing fund managing center. When employing new employees, the employer shall undertake housing fund payment and deposit registration at the housing provident fund management center. Where an employer is overdue in the payment and deposit of, or underpays, the housing fund, the housing fund management center shall order such employer to make the payment and deposit within a prescribed time limit; otherwise, an application may be made to a people’s court by the housing provident fund management center for compulsory enforcement.

According to the Reform Scheme of Tax Collection and Management System of State Tax and Local Tax, which took effect on July 20, 2018, the social insurance collection and management authority was to be transferred to the tax authorities from January 1, 2019. On September 18, 2018, the general meeting of the State Council announced that the policies for social insurance shall remain unchanged until the transfer of the authority for social insurance has been completed. On September 21, 2018, according to the Urgent Notice of the General Office of the Ministry of Human Resources and Social Security on Enforcing the Spirit of the General Meeting of the State Council in Stabilizing the Levy of Social Insurance Contributions, policies for both the rate and basis of social insurance contributions shall remain unchanged until the reform on the transfer of the authority for social insurance has been completed. On November 16, 2018, the SAT released the Notice of the State Administration of Taxation on Certain Measures on Further Supporting and Serving the Development of Private Economy, which provided that the policy for social insurance shall remain stable and the SAT will pursue to lower the social insurance contribution rates with the relevant authorities, and ensure the overall burden of social insurance contributions on enterprises will be lowered. Furthermore, the Notice of the General Office of the State Administration of Taxation on Conducting the Relevant Work Concerning the Administration of Collection of Social Insurance Premiums in a Steady, Orderly and Effective Manner, which entered into force on September 13, 2018, holds the same attitude and endeavors to ensure the collection of social insurance premiums would be orderly.

During the years ended December 31, 2020 and 2021 and the nine months ended September 30, 2022, we did not receive any administrative penalties for illegal or unlawful operations in the field of social security.

Regulations Relating to Tax

Enterprise Income Tax

In accordance with the EIT Law, which took effect on January 1, 2008, and was last amended on December 29, 2018, and the Regulations for the Implementation of the Enterprise Income Tax Law of the PRC, which took effect on January 1, 2008 and was last amended on April 23, 2019, enterprises are classified as resident enterprises and non-resident enterprises. Resident enterprises are defined as enterprises that are established in China, or that are established in accordance with the laws of foreign countries (regions) but whose actual or de facto control entity is within the PRC. Non-resident enterprises are defined as enterprises that are organized in accordance with the laws of foreign countries (regions) and whose actual management is conducted outside the PRC, but (i) have established entities or premises in China, or (ii) have no such entities or premises in China but have income generated from China. Under the EIT Law and relevant implementing regulations, foreign-invested enterprises in the PRC are subject to corporate income tax at a uniform rate of 25%. For a non-resident enterprise having no office or establishment inside China, or for a non-resident enterprise whose incomes have no actual connection to its institution or establishment inside China, a withholding tax of 10% will be levied for the income derived from China.

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The Notice of the State Administration of Taxation on Issues about the Determination of Chinese-controlled Enterprises Registered Abroad as Resident Enterprises based on Their Body of Actual Management, promulgated by the SAT and last amended on December 29, 2017, sets out the standards and procedures for determining whether an enterprise registered outside of the PRC and controlled by PRC enterprises or PRC enterprise groups will be classified as a resident enterprise with its de facto control entity located within the PRC.

On December 10, 2009, the SAT issued the Notice on Strengthening the Administration of Enterprise Income Tax on Equity Transfers of Non-resident Enterprises (the “Circular 698”). By promulgating and implementing the Circular 698, the PRC tax authorities have enhanced their scrutiny over the indirect transfer of equity interests in a PRC resident enterprise by a non-resident enterprise. The SAT further issued the Public Announcement on Several Issues Concerning Enterprise Income Tax for Indirect Transfer of Assets by Non-Resident Enterprises (the “Circular 7”) on February 3, 2015, which replaces certain provisions in the Circular 698. The Circular 7 introduces a new tax regime that is significantly different from that under the Circular 698. The Circular 7 extends its tax jurisdiction to capture not only indirect transfer as set forth under the Circular 698 but also transactions involving the transfer of immovable property in China and assets held under the establishment in China. The Circular 7 also provides clearer criteria than the Circular 698 on how to assess reasonable commercial purposes and introduces safe harbor scenarios applicable to internal group restructurings. Where a non-resident enterprise indirectly transfers equity interests or other assets of a PRC resident enterprise by implementing arrangements that are not for reasonable commercial purposes to avoid its obligation to pay enterprise income tax, such an indirect transfer shall, in accordance with the EIT Law, be recognized by the competent PRC tax authorities as a direct transfer of equity interests or other assets of the PRC resident enterprise.

On October 17, 2017, the SAT promulgated the Announcement on Matters Concerning Withholding and Payment of Income Tax of Non-resident Enterprises from Source (the “SAT Circular 37”), which came into force and replace the Circular 698 and certain provisions in the Circular 7 on December 1, 2017 and was partly amended on June 15, 2018. The SAT Circular 37, among other things, simplifies the procedures of withholding and payment of income tax levied on non-resident enterprises. Pursuant to SAT Circular 37, where the party responsible for withholding such income tax did not, or was unable to, withhold the taxes that should have been withheld to the relevant tax authority, the party may be subject to penalties. Where the non-resident enterprise receiving such income failed to declare and pay taxes that should have been withheld to the relevant tax authority, the party may be ordered to rectify within a specific time limit.

In accordance with the EIT Law and relevant implementing rules, a high-tech enterprise that has independent intellectual property rights and complies with the rules of corporate income tax and other relevant laws and regulations enjoys a reduced corporate income tax rate of 15%. The specific standards and procedures for the management of identification of high-tech enterprises are stipulated in the Measures for the Administration of the Accreditation of High-Tech Enterprises, which was jointly issued by the Ministry of Science and Technology, the Ministry of Finance of the PRC (the “MOF”), and the SAT on April 14, 2008 and amended on January 29, 2016, which took retroactive effect on January 1, 2016.

On April 25, 2018, the Revised Measures for the Handling of Matters concerning Preferential Enterprise Income Tax Policies (2018) was issued by the SAT, affixed with the Catalogue of Preferential Items of Enterprise Income Tax. Under the aforesaid Catalogue, enterprises that fall within a particular scope and meet the specified standards would enjoy a certain amount of tax reduction.

Dividend Tax

Pursuant to the EIT Law and relevant implementing rules, income from equity investment between qualified PRC resident enterprises such as dividends and bonuses, which refers to investment income derived by a resident enterprise from direct investment in another resident enterprise, is tax-exempt. Dividends paid by foreign-invested companies to their foreign investors that are non-resident enterprises as defined under the law are

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subject to withholding tax at a rate of 10%, unless otherwise provided in the relevant tax agreements entered into with the central government of the PRC.

Besides, pursuant to the Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion Concerning Taxes on Income, which was signed on August 21, 2006, a PRC resident enterprise that distributes dividends to its Hong Kong shareholders shall pay income tax under the said laws and regulations. However, if the beneficiary of the dividends is a Hong Kong resident enterprise, which directly holds no less than 25% equity interests of the dividend distributor, the tax levied shall be 5% of the distributed dividends.

Pursuant to the Notice of the State Administration of Taxation on the Issues Concerning the Application of the Dividend Clauses of Tax Treaties, which took effect on February 20, 2009, a tax resident of the counterparty to the tax treaty shall meet all of the following requirements in order to enjoy the preferential tax rates provided under the tax treaty: (i) the tax resident that receives dividends should be limited to a company as provided in the tax agreement; (ii) the equity interests and voting shares of the PRC resident company directly owned by the tax resident reach the percentages specified in the tax agreement; and (iii) the equity interests of the Chinese resident company directly owned by such tax resident at any time during the twelve consecutive months prior to receiving the dividends reach a percentage specified in the tax agreement. On February 3, 2018, the SAT issued the Announcement of the State Administration of Taxation on Issues Concerning “Beneficial Owners” in Tax Treaties which took effect on April 1, 2018, provides clearer guidelines and adopts comprehensive assessment approaches when determining whether a company can be qualified as a beneficial owner, so as to enjoy the preferential tax rate on dividends.

On October 14, 2019, the SAT released the Administrative Measures for Non-Resident Taxpayers Enjoying Treaty Benefits, which came into effect on January 1, 2020. Under such measures, non-resident taxpayers claiming treaty benefits shall be handled in accordance with the principles of “self-assessment, claiming benefits, and retention of the relevant materials for future inspection.” Where a non-resident taxpayer self-assesses and concludes that it satisfies the criteria for claiming treaty benefits, it may enjoy treaty benefits at the time of tax declaration or at the time of withholding through the withholding agent, simultaneously gather and retain the relevant materials for future inspection, and accept follow-up administration by the tax authorities.

Value-added Tax

Pursuant to the Provisional Regulations of the PRC on Value-added Tax, promulgated by the State Council on December 13, 1993, effective on January 1, 1994 and amended on November 10, 2008, February 6, 2016, and November 19, 2017, and the Implementation Rules for the Provisional Regulations the PRC on Value-added Tax, promulgated by the MOF on December 25, 1993 and amended on December 15, 2008 and October 28, 2011, organizations and individuals engaging in the sale of goods, the provision of processing, repair, and assembly services, sale of services, intangible assets, real property, and the importation of goods in the PRC shall be taxpayers of Value-added Tax (the “VAT”). The VAT rates generally applicable are simplified as 13%, 9%, 6%, and 0%, and the VAT rate applicable to the small-scale taxpayers is 3%.

Regulations Relating to Foreign Exchange

Pursuant to Regulation of the PRC on Foreign Exchange Administration, promulgated by the State Council on January 29, 1996, effective on April 1, 1996, and most recently amended on August 5, 2008, the foreign exchange income of domestic organizations and domestic individuals may be remitted into China or deposited overseas; and the specific conditions and term requirements for remittance into China or overseas deposits shall be stipulated by the foreign exchange control department of the State Council according to the status of international balance of payments and foreign exchange control requirements. Domestic organizations and domestic individuals making direct investments overseas or engaging in issuance and trading of negotiable securities or derivatives overseas shall process registration formalities pursuant to the provisions of the foreign

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exchange control department of the State Council. Where the State Council stipulates that prior approval by or filing with the relevant authorities in charge is required, the approval or filing formalities shall be processed prior to foreign exchange registration formalities.

Pursuant to the Provisions on the Foreign Exchange Administration of Domestic Direct Investment of Foreign Investors and the Supporting Documents, promulgated by the SAFE on May 10, 2013 and effective on May 13, 2013, direct investments in China by foreign investors shall be subject to registration. Organizations and individuals involved in direct investment activities in China shall be registered with the SAFE and its branches. Banks shall process the relevant transactions through the business systems designated by the foreign exchange bureau pursuant to the foreign exchange control provisions.

Pursuant to the SAFE Circular 37, promulgated by the SAFE and effective on July 4, 2014, the SAFE shall implement registration and administration of special-purpose vehicles established by Chinese residents. “Special purpose vehicles” refer to overseas enterprises established or controlled, directly or indirectly, by PRC residents or entities, using legitimate domestic or offshore assets or interests of, for the purpose of overseas investment and financing. “Round-trip investments” refer to direct investment activities in China by PRC residents or entities directly or indirectly through special purpose vehicles, namely, through the establishment of foreign-invested enterprises in China by way of a new establishment or merger and acquisition and obtaining ownership, control, business management rights. Prior to making a capital contribution in a special purpose vehicle by a Chinese resident using its legitimate assets or interests in China or overseas, a Chinese resident shall apply to the foreign exchange bureau for completion of foreign exchange registration formalities for overseas investments. For an overseas special purpose vehicle that has completed registration formalities, where there is any change in the basic information such as its Chinese resident individual shareholder, name, term of business, or occurrence of a significant change event such as increase or reduction of capital contribution, equity transfer or exchange by Chinese resident individual, merger or division, foreign exchange registration change formalities shall be promptly completed with the foreign exchange bureau.

On February, 2015, the SAFE further promulgated the SAFE Circular 13, effective on June 1, 2015, which allows PRC residents or entities to register with qualified banks in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing. The qualified banks, under the supervision of SAFE, directly examine the applications and conduct the registration.

On March 30, 2015, the SAFE released the Notice on Reforming the Administrative Approach Regarding the Settlement of the Foreign Exchange Capital of Foreign-invested Enterprises, which came into effect on June 1, 2015 and adopted the system of willingness-based foreign exchange settlement for the foreign exchange capital of foreign-invested enterprises. Under this system, the foreign exchange capital, for which the monetary contribution has been confirmed by the foreign exchange authorities (or for which the monetary contribution has been registered for account entry) in the capital account of a foreign-invested enterprise, may be settled at a bank as required by the enterprise’s actual management needs.

On January 26, 2017, the SAFE promulgated the Notice on Improving the Check of Authenticity and Compliance to further Promote Foreign Exchange Control, which expands the scope of settlement of exchange for domestic loans in foreign currencies and allows overseas loans under domestic guarantee to transfer inward. Furthermore, it also allows foreign institutions to make settlements of exchange through domestic foreign exchange accounts in pilot free trade zones.

Besides, the SAFE released the Notice on Further Promoting the Facilitation of Cross-border Trade and Investment on October 23, 2019, which came into force on the same day, which expands the regions to fulfill the support in carrying out such businesses as optimizing examination and verification of foreign exchange receipts and payments documents for trade in goods, canceling the special foreign exchange return registration, and simplifying verification of foreign exchange payments for imports.

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As of September 30, 2022, we had not received any administrative penalties for illegal or unlawful operations in the field of foreign exchange.

Regulations Relating to Overseas Direct Investment

The Measures for the Administration of Overseas Investment were promulgated by the MOFCOM on September 6, 2014, and came into effect on October 6, 2014. As defined by the Measures for the Administration of Overseas Investment, overseas investment means the acts of enterprises legally established in the PRC to own the non-financial enterprises or obtain the ownership, control, or operation management rights of the existing non-financial enterprises in foreign countries through incorporation, merger and acquisition, or other means. If the overseas investments involve sensitive countries and regions or sensitive industries, they shall be subject to the approval of relevant competent authorities in the PRC. For other overseas investments, they shall be subject to record-filing administration. Local enterprises shall undergo record filings with the provincial commercial administration authorities where they are located. The qualified local enterprises will be put into the record and granted with an Overseas Investment Certificate for Enterprise by the relevant provincial commercial administration authorities.

On December 26, 2017, NDRC issued the Measures for the Administration of Overseas Investment of Enterprises (the “Enterprise Overseas Investment Measures”), which took effect on March 1, 2018. Under the Enterprise Overseas Investment Measures, sensitive overseas investment projects carried out by PRC enterprises either directly or through overseas enterprises under their control shall be approved by NDRC, and non-sensitive overseas investment projects directly carried out by PRC enterprises shall be filed with NDRC or its local branches at the provincial level. In the case of the large-amount non-sensitive overseas investment projects with the investment amount of US$300 million or above carried out by PRC enterprises through the overseas enterprises under their control, such PRC enterprises shall, before the implementation of the projects, submit a report describing the details about such large-amount non-sensitive projects to NDRC. Where the PRC resident natural persons make overseas investments through overseas enterprises under their control, the Measures shall apply mutatis mutandis. Subsequently, on January 31, 2018, NDRC issued the List of Sensitive Sectors for Outbound Investment (2018 Version), which became effective on March 1, 2018, under which enterprises shall be restricted from making overseas investments in certain industries.

Regulations Relating to M&A

On August 8, 2006, six PRC governmental and regulatory agencies, including the CSRC and MOFCOM, promulgated the M&A Rules, which came into effect on September 8, 2006 and were amended on June 22, 2009. The M&A Rules, which governs the mergers and acquisitions of domestic enterprises by foreign investors, require offshore special purpose vehicle, formed for overseas listing and controlled directly or indirectly by PRC companies or individuals through acquisitions of shares or equity interests in PRC domestic companies, to be approved by the CSRC prior to the listing and trading of such purpose vehicle’s securities on an overseas stock exchange. According to the Manual of Guidance on Administration for Foreign Investment Access, promulgated by the MOFCOM on December 18, 2008, the M&A Rules are not applicable under the circumstance that PRC shareholders transfer their equity in foreign-invested enterprises to foreign parties. The M&A Rules, and other 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. See “Risk Factors—Risks Relating to Doing Business in the PRC—The M&A Rules and certain other PRC regulations establish complex procedures for certain acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.”

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Our PRC legal counsel, AllBright, has advised us that, based on their understanding of the current PRC law, rules, and regulations, the CSRC’s approval is not required for the listing and trading of our Ordinary Shares on the Nasdaq Capital Market in the context of this offering, because our PRC subsidiaries had been foreign-invested enterprises before they were acquired by Xuhang HK. As of September 30, 2022, we had not received any administrative penalties for illegal or unlawful operations in the field of foreign investment.

Regulations Relating to Overseas Listings

On July 6, 2021, the General Office of Central Committee of the Communist Party of China and the General Office of the State Council issued 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. Measures, including promoting the construction of relevant regulatory systems, will be taken to control the risks and handle the incidents from China-concept overseas listed companies.

On December 24, 2021, the CSRC and relevant departments of the State Council promulgated the Draft Overseas Listing Regulations and the Draft Overseas Listing Record-filing Measures (collectively, the “New Overseas Listing Rules”) for public comments until January 23, 2022.

According to the Draft Overseas Listing Regulations, domestic enterprises shall not get listed abroad if any of the following circumstances occurs:

(i) if the intended listing and financing are explicitly prohibited by laws, regulations, and relevant provisions of the PRC;

(ii) if the intended overseas offering and listing may threaten or endanger national security as examined and determined by relevant competent authorities under the State Council in accordance with applicable laws;

(iii) if there are material ownership disputes in terms of applicants’ equity, main assets, and core technology;

(iv) if applicants’ domestic enterprises, controlling shareholders, or de facto controllers have committed corruption, bribery, embezzlement, misappropriation of property, or other criminal offenses disruptive to the order of the socialist market economy in the past three years, or are currently under judicial investigation for suspected crimes or are under investigation for suspected material violations of laws and regulations;

(v) if, in the past three years, any directors, supervisors, or senior management of applicants have been subject to administrative punishments for severe violations, or are currently under judicial investigation for suspected crimes or suspected material violations of laws and regulations; or

(vi) other circumstances as prescribed by the State Council.

The Draft Overseas Listing Regulations comprehensively improved and reformed the existing regulatory system for overseas offering and listing of domestic enterprises, and brought all overseas listing activities, including both direct and indirect overseas offering and listing, under regulation by adopting a record-filing-based administration system.

Meanwhile, the Draft Overseas Listing Record-filing Measures aim to specify the record-filing procedures and regulatory requirements for overseas offering and listing activities by domestic enterprises and standardize their record-filing activities to ensure the smooth and effective implementation of the record-filing requirements. For direct overseas offering and listing, the issuer shall fulfill the record-filing and reporting obligations; for indirect overseas offering and listing, the issuer shall designate a major domestic operating entity to fulfill the record-filing and reporting obligations. Where an issuer makes an application for an initial public offering in an overseas market, the record-filing entity shall submit to the CSRC record-filing documents within three working days after

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such application is submitted. Considering the convenience of refinancing in overseas markets, record-filings shall be made within three working days after the securities offering is completed if an issuer makes refinancing after having been listed in an overseas market. Arrangements are also made to accommodate certain practices commonly seen in overseas markets, such as offering in installments (or shelf offering) and confidential applications. The Draft Overseas Listing Record-filing Measures also require a report to the CSRC on material events, which include the material change in the main business, licenses or qualifications, material change in equity structure or change of control, material change in the offering and listing program, investigations or sanctions imposed by overseas securities regulatory authorities, voluntary or forced delisting, to strengthen interim and ex-post regulation.

As of the date of this prospectus, the New Overseas Listing Rules have been released for public comment only and have not been formally adopted, uncertainties remain as to its enactment or future interpretations and implementations, which may subject us to additional compliance requirements in this offering and future financial activities. See “Risk Factors—Risks Relating to Doing Business in the PRC—The Opinions recently issued by the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council and the New Overseas Listing Rules promulgated by the CSRC may subject us to additional compliance requirements in the future.”

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MANAGEMENT

Set forth below is information concerning our directors, director appointees, and executive officers.

The following individuals are our executive management and members of the board of directors.

Name	Age	Position(s)
Tianhang Xiao	36	Chief Executive Officer, Director, and Chairman of the Board of Directors
[●]	[●]	Chief Financial Officer
[●]	[●]	Director
[●]	[●]	Independent Director
[●]	[●]	Independent Director
[●]	[●]	Independent Director

The following is a brief biography of each of our executive officers and directors:

Mr. Tianhang Xiao has served as our Chairman of the Board of Directors and Chief Executive Officer since September 2022 and our director since June 2020. As the founder of Xuhang Network, Mr. Xiao has served as the chairman of the board of directors and general manager since September 2014, responsible for the management of day-to-day operations and high-level strategizing and business planning. Mr. Xiao has extensive experience in mobile Internet marketing, particularly in product development and technical analysis. From June 2010 to December 2011, Mr. Xiao served as a senior product manager at Hangzhou Sky Network Technologies Co., Ltd., which is a mobile application store operator and was the first Chinese Internet marketing company listed on Nasdaq (Nasdaq: MOBI). From January 2012 to August 2014, Mr. Xiao co-founded and served as the chief operating officer at Hangzhou Zhenqu Network Technology Co., Ltd., a company specializing in mobile advertisement placement and game services, which was subsequently acquired in 2015 by Meisheng Cultural and Creative Co., Ltd, a company listed on China’s Shenzhen Stock Exchange (SZ: 002699). Mr. Xiao received his bachelor’s degree in Weapon Systems and Engineering from Nanjing University of Science and Technology in 2010.

For additional information, see “Description of Share Capital—Directors.”

Family Relationships

None of our directors or executive officers has a family relationship as defined in Item 401 of Regulation S-K.

Board of Directors

Our board of directors will consist of five directors upon closing of this offering, three of whom will be “independent” within the meaning of the corporate governance standards of the Nasdaq listing rules and will meet the criteria for independence set forth in Rule 10A-3 of the Exchange Act.

Duties of Directors

Under Cayman Islands law, all of our directors owe three types of duties to us: (i) statutory duties, (ii) fiduciary duties, and (iii) common law duties. The Companies Act (As Revised) of the Cayman Islands imposes a number of statutory duties on a director. A Cayman Islands director’s fiduciary duties are not codified, however, the courts of the Cayman Islands have held that a director owes the following fiduciary duties: (a) a duty to act in what the director bona fide considers to be in the best interests of the company, (b) a duty to exercise their powers for the purposes they were conferred, (c) a duty to avoid fettering his or her discretion in the future and (d) a duty to avoid conflicts of interest and of duty. The common law duties owed by a director are those to act with skill, care and diligence that may reasonably be expected of a person carrying out the same functions as are

149

carried out by that director in relation to the company and, also, to act with the skill, care and diligence in keeping with a standard of care commensurate with any particular skill they have which enables them to meet a higher standard than a director without those skills. In fulfilling their duty of care to us, our directors must ensure compliance with our articles of association to be amended and effective on or before the completion of this offering. We have the right to seek damages if a duty owed by any of our directors is breached.

The functions and powers of our board of directors include, among others:

• appointing officers and determining the term of office of the officers;

• exercising the borrowing powers of the company and mortgaging the property of the company; and

• maintaining or registering a register of mortgages, charges, or other encumbrances of the company.

Terms of Directors and Executive Officers

Each of our directors holds office until a successor has been duly elected and qualified unless the director was appointed by the board of directors, in which case such director holds office until the next following annual meeting of shareholders at which time such director is eligible for re-election. All of our executive officers are appointed by and serve at the discretion of our board of directors.

Qualification

There is currently no shareholding qualification for directors, although a shareholding qualification for directors may be fixed by our shareholders by ordinary resolution.

Employment Agreements and Indemnification Agreements

We will enter into employment agreements with each of our executive officers. Pursuant to employment agreements, the form of which is filed as Exhibit 10.1 to the registration statement of which this prospectus forms a part, we agree to employ each of our executive officers for a specified time period, which may be renewed upon both parties’ agreement 30 days before the end of the current employment term. We may terminate the employment for cause, at any time, without notice or remuneration, for certain acts of the executive officer, including but not limited to the commitments of any serious or persistent breach or non-observance of the terms and conditions of the employment, conviction of a criminal offense, willful disobedience of a lawful and reasonable order, fraud or dishonesty, receipt of bribery, or severe neglect of his or her duties. An executive officer may terminate his or her employment at any time with a one-month prior written notice. Each executive officer has agreed to hold, both during and after the employment agreement expires, in strict confidence and not to use or disclose to any person, corporation or other entity without written consent, any confidential information.

We will also enter into indemnification agreements with each of our directors and executive officers. Under these agreements, we agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our company.

Compensation of Directors and Executive Officers

For the year ended December 31, 2022, we paid an aggregate of RMB462,327.60 as compensation to our executive officers and 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 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.

150

Insider Participation Concerning Executive Compensation

Our Chairman of the Board of Directors and director, Mr. Tianhang Xiao has been making all determinations regarding executive officer compensation from the inception of our Company. When our Compensation Committee is set up, it will be making all determination regarding executive officer compensation (please see below).

Committees of the Board of Directors

We will establish three committees under the board of directors prior to the closing of this offering: an audit committee, a compensation committee, and a nominating and corporate governance committee. The appointment to the committees will be effective immediately upon the effective date of the registration statement of which this prospectus forms a part. We will adopt a charter for each of the three committees. Each committee’s members and functions are described below.

Audit Committee. Our audit committee will consist of [●], [●], and [●]. [●] will be the chairperson of our audit committee. We have determined that [●], [●], and [●] will satisfy the “independence” requirements of the Nasdaq listing rules under and Rule 10A-3 under the Securities Exchange Act. Our board also has determined that [●] qualifies as an audit committee financial expert within the meaning of the SEC rules or possesses financial sophistication within the meaning of the Nasdaq listing rules. The audit committee will oversee our accounting and financial reporting processes and the audits of the financial statements of our Company. The audit committee will be responsible for, among other things:

• appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors;

• reviewing with the independent auditors any audit problems or difficulties and management’s response;

• discussing the annual audited financial statements with management and the independent auditors;

• reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures;

• reviewing and approving all proposed related party transactions;

• meeting separately and periodically with management and the independent auditors; and

• monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.

Compensation Committee. Our compensation committee will consist of [●], [●], and [●]. [●] will be the chairperson of our compensation committee. We have determined that [●], [●], and [●] will satisfy the “independence” requirements of the Nasdaq listing rules and Rule 10C-1 under the Securities Exchange Act. The compensation committee will assist the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated. The compensation committee will be responsible for, among other things:

• reviewing and approving the total compensation package for our most senior executive officers;

• approving and overseeing the total compensation package for our executives other than the most senior executive officers;

• reviewing and recommending to the board with respect to the compensation of our directors;

• reviewing periodically and approving any long-term incentive compensation or equity plans;

• selecting compensation consultants, legal counsel or other advisors after taking into consideration all factors relevant to that person’s independence from management; and

151

• reviewing programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans.

Nominating and Corporate Governance Committee. Our nominating and corporate governance committee will consist of [●], [●], and [●]. [●] will be the chairperson of our nominating and corporate governance committee. We have determined that [●], [●], and [●] will satisfy the “independence” requirements of the Nasdaq listing rules. The nominating and corporate governance committee will assist the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board and its committees. The nominating and corporate governance committee will be responsible for, among other things:

• identifying and recommending nominees for election or re-election to our board of directors or for appointment to fill any vacancy;

• reviewing annually with our board of directors its current composition in light of the characteristics of independence, age, skills, experience and availability of service to us;

• identifying and recommending to our board the directors to serve as members of committees;

• advising the board periodically with respect to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to our board of directors on all matters of corporate governance and on any corrective action to be taken; and

• monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.

Code of Business Conduct and Ethics

Our board of directors will adopt a code of business conduct and ethics, which is to be filed as Exhibit 99.1 of the registration statement of which this prospectus forms a part and applicable to all of our directors, officers and employees. We will make our code of business conduct and ethics publicly available on our website prior to the initial closing of this offering.

152

PRINCIPAL SHAREHOLDERS

The following table sets forth information with respect to the beneficial ownership, within the meaning of Rule 13d-3 under the Exchange Act, of our Ordinary Shares as of the date of this prospectus, and as adjusted to reflect the sale of the Ordinary Shares offered in this offering for:

• each of our directors and executive officers who beneficially own our Ordinary Shares; and

• each person known to us to own beneficially more than 5% of our Ordinary Shares.

Beneficial ownership includes voting or investment power with respect to the securities. Except as indicated below, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all Ordinary Shares shown as beneficially owned by them. Percentage of beneficial ownership of each listed person prior to this offering is based on 58,804,977 Ordinary Shares outstanding (reflecting the effect of the Subdivision) as of the date of this prospectus immediately prior to the effectiveness of the registration statement of which this prospectus is a part. Percentage of beneficial ownership of each listed person after this offering includes Ordinary Shares outstanding immediately after the completion of this offering.

Information with respect to beneficial ownership has been furnished by each director, officer, or beneficial owner of 5% or more of our Ordinary Shares. Beneficial ownership is determined in accordance with the rules of the SEC and generally requires that such person have voting or investment power with respect to securities. In computing the number of Ordinary Shares beneficially owned by a person listed below and the percentage ownership of such person, Ordinary Shares underlying options, warrants, or convertible securities held by each such person that are exercisable or convertible within 60 days of the date of this prospectus are deemed outstanding, but are not deemed outstanding for computing the percentage ownership of any other person. Except as otherwise indicated in the footnotes to this table, or as required by applicable community property laws, all persons listed have sole voting and investment power for all Ordinary Shares shown as beneficially owned by them. As of the date of the prospectus, we have 35 shareholders of record, none of whom are located in the United States. We will be required to have at least 300 unrestricted round lot shareholders at closing in order to satisfy the Nasdaq listing rules.

Ordinary Shares Beneficially Owned Prior to this Offering

Ordinary Shares Beneficially Owned After this Offering (Over-allotment option not exercised)

Ordinary Shares Beneficially Owned After this Offering (Over-allotment option fully exercised)

Number

Percent

Number

Percent

Number

Percent

Directors and Executive Officers(1):

Tianhang Xiao(2)

26,365,153

44.83

%

26,365,153

[●

]%

26,365,153

[●

]%

[●]

[●

]

[●

]%

[●

]

[●

]%

[●

]

[●

]%

[●]

[●

]

[●

]%

[●

]

[●

]%

[●

]

[●

]%

[●]

—

—

—

—

—

—

[●]

—

—

—

—

—

—

[●]

—

—

—

—

—

—

All directors and executive officers as a group ([six] individuals):

[●

]

[●

]%

[●

]

[●

]%

[●

]

[●

]%

5% Shareholders(3):

TIAN HANG GROUP LIMITED(2)

21,012,915

35.73

%

21,012,915

[●

]%

21,012,915

[●

]%

MIGHTY HUGE INVESTMENT LIMITED(4)

3,403,616

5.79

%

3,403,616

[●

]%

3,403,616

[●

]%

WCC CAPITAL LIMITED(5)

3,078,562

5.24

%

3,078,562

[●

]%

3,078,562

[●

]%

Notes:

(1) Unless otherwise indicated, the business address of each of the individuals is Building 2, Shangtanghe 198 Cultural and Creative Park, 198 Shenban Rd, Gongshu District, Hangzhou City, Zhejiang Province, China.

153

(2) Represents (i) 21,012,915 Ordinary Shares held by TIAN HANG GROUP LIMITED, a British Virgin Islands company, which is 100% owned by XUHANG (BVI) LTD, which is in turn 100% owned by Tianhang Xiao, (ii) 3,403,616 Ordinary Shares held by MIGHTY HUGE INVESTMENT LIMITED, which is 100% owned by XH Fortune Success Trust, a trust established under the laws of the Island of Jersey by Mr. Tianhang Xiao, managed by Trident Trust Company (HK) Limited, as trustee, with Mr. Tianhang Xiao being the trust’s beneficiary, and (iii) 1,948,622 Ordinary Shares held by Shanghai Qishu Enterprise Management Consulting L.P., a PRC limited partnership that is 99% owned by Hangzhou Xuli Network Technology Co., Ltd., which is in turn 99% owned by Tianhang Xiao.

(3) Unless otherwise indicated, the business address of the following shareholders is OMC Chambers, Wickhams Cay 1, Road Town, Tortola, British Virgin Islands.

(4) The number of Ordinary Shares beneficially owned prior to this offering represents 3,403,616 Ordinary Shares held by MIGHTY HUGE INVESTMENT LIMITED, a British Virgin Islands company, which is 100% owned by XH Fortune Success Trust, a trust established under the laws of the Island of Jersey by Mr. Tianhang Xiao, managed by TRIDENT Trust Company (HK) Limited, as trustee, with Mr. Tianhang Xiao being the trust’s beneficiary as of the date of this prospectus.

(5) The number of Ordinary Shares beneficially owned prior to this offering represents 3,078,562 Ordinary Shares held by WCC CAPITAL LIMITED, a British Virgin Islands company, which is 100% owned by Mr. Congcong Wei.

As of the date of this prospectus, 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.

154

RELATED PARTY TRANSACTIONS

Material Transactions with Related Parties

a) Related parties

Name of related parties	Relationship with Our Company
Tianhang Xiao	Our chairman and CEO
Lilian Liu	Our shareholder
Yu Jiang	Our shareholder
Shanghai Qishu Business Management Partnership LP. (“Shanghai Qishu”)	Our shareholder
Genshui Bao	Our shareholder
Congcong Wei	Our shareholder
Shanghai Huiji Network Technology Co., LTD. (“Shanghai Huiji”)	Non-controlling shareholder of our subsidiary
Zhejiang Lingshang Cultural Creative Co., LTD. (“Zhejiang Lingshang”)	A company controlled by a director of our subsidiary
Shanghai Huihui Hanghang Management Consulting Co., LTD. (“Shanghai Huihui”)	Non-controlling shareholder of our subsidiary
Shanghai Er’shang Culture Communication Co., LTD. (“Shanghai Er’shang”)	Equity investee of our Company
Beijing Pinte Visual Culture Media Co. LTD. (“Beijing Pinte ”)	Equity investee of our Company
Longtian Zhou	A director of our subsidiary
Shenzhen Zhuoya Network Media Co. LTD. (“Shenzhen Zhuoya”)	Equity investee of our Company
Zhoushan Youtai Investment Partnership LP. (“Zhoushan Youtai”)	Our original shareholder *
Xi’an Saixinghang Enterprise Management Partnership LP. (“Xi’an Saixinghang”)	A company controlled by our principal shareholder
Zhejiang Weilai Advertising Co. LTD. (“Zhejiang Weilai”)	A company controlled by our principal shareholder
Zhejiang Weicheng Information Technology Co. LTD. (“Zhejiang Weicheng”)	A company controlled by our principal shareholder
Sewing Time Trading (Shenzhen) Co. LTD. (“Sewing Time”)	Non-controlling shareholder of our subsidiary
Hangzhou Find Fun Creative Culture Co. LTD. (“Hangzhou Find Fun”)	A company controlled by our principal shareholder
Hangzhou Tianyi Electronic Commerce Co. LTD. (“Hangzhou Tianyi”)	A company controlled by our principal shareholder
Hangzhou Netwide Network Technology Co. LTD. (“Hangzhou Netwide”)	A company controlled by our principal shareholder
Tonghua Lvjian Agricultural Technology Development Co. LTD. (“Tonghua Lvjian”)	A company controlled by a non-controlling shareholder of our subsidiary
Hangzhou Youxing Technology Co., LTD. (“Hangzhou Youxing”)	A non-controlling shareholder of our subsidiary**

155

Name of related parties	Relationship with Our Company
Tailong Zheng	A non-controlling shareholder of our subsidiary
Qingdao Songshe Network Technology Co., LTD. (“Qingdao Songshe”）	A company controlled by a director of our subsidiary
Xinzu Gong	A director of our subsidiary
Lei Xu	A director of our subsidiary
Lei Xin	A director of our subsidiary
Hangzhou Meihangxiujue Technology Co., LTD. (“Hangzhou Meihangxiujue”)	A company invested by our Company
Feng Luo	A director of our subsidiary
Xiaoyan Tong	A director of our subsidiary
Pingxiang Youxu Business Management Partnership (Limited Partnership) (“Pingxiang Youxu”)	A company controlled by our principal shareholder
Wenying Cong	A director of our subsidiary
Tang Weiguo	A director of our subsidiary
Huangshan Huizhou Romantic Red Culture Tourism Group Co., LTD. (“Huangshan Huizhou”)	A non-controlling shareholder of our subsidiary
Hangzhou Nerdy Bear Technology Co. LTD. (“Hangzhou Nerdy Bear”)	A non-controlling shareholder of our subsidiary
Zhongguang International Advertising Creative Industry Base Development Co., LTD. (“Zhongguang Advertising”)	A company controlled by a non-controlling shareholder of our subsidiary
Mengyong Song	A director of our subsidiary
Hangzhou Saixinghang Technology Co., LTD. (“Hangzhou Saixinghang”)	Equity investee of our Company***
Zhejiang Jupei Culture and Travel Technology Co., LTD. (“Zhejiang Jupei”)	Equity investee of our Company
Xi’an Xuhang Digital Technology Co., LTD. (“Xi’an Xuhang”)	Equity investee of our Company
Putian Shoe Brand Operation Service Co., LTD. (“Putian Shoe”)	Equity investee of our Company

* Zhoushan Youtai ceased to be a related party, as it sold its shares in January 2021.

** Hangzhou Youxing ceased to be a related party, as it sold its shares in November 2021.

*** Hangzhou Saixinghang ceased to be a related party, as we sold our shares in December 2022.

156

b) Amount due from related parties

		As of December 31,
	Nature	2020		2021				2022
		RMB		RMB		US$		RMB		US$
Account receivables
Zhejiang Lingshang	Marketing planning and implementation services		—		904		127		553		80
Shanghai Er’shang	New media integrated content marketing services		3,049		351		49		1,843		267
Zhejiang Weicheng	New media integrated content marketing services		796		300		42		—		—
Tonghua Lvjian	Providing supplies associated with the Internet e-commerce business		—		270		38		270		39
Sewing Time	New media live broadcast operation services		—		190		27		123		18
Zhejiang Weilai	New media integrated content marketing services		9,251		119		17		620		90
Hangzhou Nerdy Bear	Digital advertising and marketing		—		—		—		45		7
Huangshan Huizhou	New media integrated content marketing services		—		—		—		50		7
Zhongguang Advertising	New media integrated content marketing services		—		—		—		35		5
Putian Shoe	New media integrated content marketing services		—		—		—		300		43
			13,096		2,134		300		3,839		556
Other receivables
Yu Jiang(2)	Loan		—		3,390		477		—		—
Tianhang Xiao(3)	Loan		34,895		5,403		760		1,114		162
Xi’an Saixinghang	Loan		—		750		105		750		109
Tailong Zheng	Staff petty cash		—		629		88		617		89
Congcong Wei(4)	Loan		1,200		550		77		—		—
Genshui Bao	Staff petty cash		—		420		59		420		61
Shenzhen Zhuoya	Loan		450		315		44		—		—
Shanghai Huiji	Loan		—		303		43		368		53
Shanghai Er’shang(1)	Loan		—		300		42		—		—
Qingdao Songshe	Loan		—		270		38		—		—
Zhejiang Lingshang	Loan		—		250		35		250		36
Shanghai Qishu	Loan		—		139		20		139		20
Xinzu Gong	Staff petty cash		—		110		15		—		—
Lei Xu	Staff petty cash		—		101		14		—		—
Beijing Pinte	Loan		100		100		14		100		14
Shanghai Huihui	Loan		—		27		4		27		4
Lei Xin	Staff petty cash		—		20		3		—		—
Hangzhou Meihangxiujue	Loan		—		19		3		—		—
Feng Luo	Staff petty cash		—		4		1		—		—
Xiaoyan Tong	Staff petty cash		—		3		—		26		4
Zhoushan Youtai(5)	Loan		14,162		—		—		—		—
Pingxiang Youxu(6)	Loan		2,250		—		—		—		—
Longtian Zhou(7)	Loan		1,000		—		—		—		—
Lilian Liu	Staff petty cash		25		—		—		250		36

157

		As of December 31,
	Nature	2020		2021				2022
		RMB		RMB		US$		RMB		US$
Zhongguang Advertising	Rental deposits		—		—		—		218		32
Hangzhou Saixinghang	Loan		—		—		—		1,330		193
			54,082		13,103		1,842		5,609		813
Amounts due from related parties			67,178		15,237		2,142		9,448		1,369

(1) In 2021, we provided an interest-free loan to Shanghai Er’shang, an equity investee of our Company, with an aggregate principal amount of approximately RMB0.3 million. The maturity date of the loan was January 14, 2022. As of December 31, 2021, the aggregate outstanding amount due from Shanghai Er’shang was RMB0.3 million (US$0.042 million). As of the date of this prospectus, the aggregate outstanding amount due from Shanghai Er’shang is nil.

(2) In 2021, we provided an interest-free loan to Yu Jiang with an aggregate principal amount of approximately RMB3.4 million (US$0.477 million). Yu Jiang is a shareholder of our Company. The maturity date of the loan was July 1, 2022. As of December 31, 2021, the aggregate outstanding amount due from Yu Jiang was RMB3.4 million (US$0.477 million). As of the date of this prospectus, the aggregate outstanding amount due from Yu Jiang is nil.

(3) In 2020, we provided interest-free loans to Tianhang Xiao, with a total amount of RMB34.5 million. The maturity date of these loans is December 31, 2022. As of December 31, 2020, the aggregate outstanding amount due from Tianhang Xiao was RMB34.9 million. In 2021, we obtained interest-free loans from Tianhang Xiao (and the companies controlled by him), with a total amount of RMB96.6 million. The maturity date of these loans is December 31, 2022. In 2021, we provided interest-free loans to Tianhang Xiao with a total amount of RMB64.9 million. The maturity date of these loans is December 31, 2022. Meanwhile, due to a debt transfer from Pingxiang Youxu to Tianhang Xiao, the amount due from Tianhang Xiao was RMB2.25 million. After offsetting the claims and debts, as of December 31, 2021, the aggregate outstanding amount due from Tianhang Xiao was RMB5.4 million (US$0.76 million). In 2022, we obtained interest-free loans from Tianhang Xiao with a total amount of RMB10.3 million. In 2022, we provided interest-free loans to Tianhang Xiao with a total amount of RMB6.0 million. After offsetting the claims and debts, as of December 31, 2022, the aggregate outstanding amount due from Tianhang Xiao was RMB1.1 million.

(4) In 2020, we provided an interest-free loan to Congcong Wei, one of our shareholders, with an aggregate principal amount of approximately RMB1.2 million. The maturity date of the loan was April 26, 2022. As of December 31, 2020, the aggregate outstanding amount due from Congcong Wei was RMB1.2 million. In 2021, we provided an interest-free loan to Congcong Wei with an aggregate principal amount of approximately RMB0.35 million. The maturity date of the loan was September 7, 2022. As of December 31, 2021, the aggregate outstanding amount due from Congcong Wei was RMB0.55 million (US$0.077 million). In 2022, we provided an interest-free loan to Congcong Wei with an aggregate principal amount of approximately RMB1 million. The maturity date of the loan is August 2024. As of September 30, 2022, the aggregate outstanding amount due from Congcong Wei was RMB1 million (US$0.141 million). As of November 4, 2022, the aggregate outstanding amount due from Congcong Wei was nil.

(5) In 2018, we provided an interest-free loan to Zhoushan Youtai with an aggregate principal amount of approximately RMB14.2 million. Zhoushan Youtai is a former shareholder of our Company that ceased to be a relate party as it sold its shares in January 2021. The maturity date of the loan was July 31, 2021. As of December 31, 2021, the aggregate outstanding amount due from Zhoushan Youtai was nil.

(6) In 2020, we made an interest-free loan of RMB2.25 million to Pingxiang Youxu, a company controlled by our principal shareholder. As of December 31, 2021, the aggregate outstanding amount due from Pingxiang Youxu was nil.

(7) In 2019, we provided an interest-free loan to Longtian Zhou with an aggregate principal amount of approximately RMB1 million. Longtian Zhou is a director of one of our subsidiaries. The maturity date of the loan was May 5, 2021. As of December 31, 2020, the balance of the loan was RMB1 million. As of December 31, 2021, the aggregate outstanding amount due from Longtian Zhou was nil.

158

c) Amounts due to related parties

		As of December 31,
	Nature	2020		2021				2022
		RMB		RMB		US$		RMB		US$
Account payables
Hangzhou Find Fun	Payment due for provision of cooperative accounts		—		300		42		600		87
Hangzhou Netwide	Payment due for provision of cooperative accounts		450		—		—		—		—
Hangzhou Tianyi	Payment due for provision of cooperative accounts		200		—		—		—		—
			650		300		42		600		87
Other payables
Wenying Cong	Staff reimbursement payable		—		297		42		464		67
Genshui Bao(1)	Interest-free loan/Equity acquisition consideration		26,250		—		—		—		—
Weiguo Tang	Staff reimbursement payable		—		57		8		—		—
Lilian Liu(2)	Equity acquisition consideration		7,000		—		—		—		—
Yu Jiang	Equity acquisition consideration		868		—		—		—		—
Xinzu Gong	Loan		—		—		—		88		13
Mengyong Song	Staff reimbursement payable		—		—		—		22		3
Zhejiang Jupei	Loan		—		—		—		1,071		155
			34,118		354		50		1,645		238
Amounts due to related parties			34,768		654		92		2,245		325

(1) In 2020, we obtained an interest-free loan from Genshui Bao with an aggregate principal amount of approximately RMB3.7 million. Genshui Bao is a shareholder of our Company. The maturity date of the loan was October 31, 2021. As of December 31, 2021, the aggregate outstanding amount due to Genshui Bao was nil. On November 13, 2020, we acquired 100% of the equity interests in Hangzhou Xingkong for a total cash consideration of RMB23.4 million and equity consideration of RMB48.0 million. As of December 31, 2020, the cash consideration payable to Genshui Bao, which was the original shareholder of Hangzhou Xingkong, was RMB22.5 million. As of December 31, 2021, the aggregate outstanding amount due to Genshui Bao was nil.

(2) On November 13, 2020, we also acquired 100% of the equity interests in Hangzhou Jinting for a total cash consideration of RMB7.0 million and equity consideration of RMB14.0 million. As of December 31, 2020, the cash consideration payables to Lilian Liu, who is one of our shareholders and was the original shareholder of Hangzhou Jinting, was RMB7.0 million. As of December 31, 2021, the aggregate outstanding amount due to Lilian Liu was nil.

159

d) Other related party transactions

		For the year ended December 31,
	Nature	2020		2021				2022
		RMB		RMB		US$		RMB		US$
Service provided to
Shanghai Er’shang(1)	New media integrated content marketing services		2,751		6,882		967		2,821		409
Zhejiang Weilai(2)	New media integrated content marketing services		3,964		1,180		166		487		71
Zhejiang Lingshang	Marketing planning and implementation services		—		974		137		236		34
Sewing Time	New media live broadcast operation services		—		453		64		—		—
Tonghua Lvjian	Providing supplies associated with Internet e-commerce business		—		247		35		—		—
Shanghai Huiji	E-commerce operation services		—		51		7		2		—
Putian Shoe	New media integrated content marketing services		—		—		—		1,132		164
Hangzhou Nerdy Bear	Digital advertising and marketing		—		—		—		214		31
Huangshan Huizhou	New media integrated content marketing services		—		—		—		94		14
Xi’an Xuhang	New media integrated content marketing services		—		—		—		68		10
Hangzhou Saixinghang	Technology research and development		—		—		—		31		5
			6,715		9,787		1,376		5,085		738

		For the year ended December 31,
	Nature	2020		2021			2022
			RMB		RMB	US$		RMB	US$
Service provided by
Hangzhou Youxing	Advertising traffic provision services		—		766	108		—	—
Shenzhen Zhuoya	Advertising traffic provision services		—		472	66		—	—
Qingdao Songshe	Promotional video production services		—		377	53		—	—
Hangzhou Find Fun	Cooperative accounts provision services		297		297	42		297	43
Hangzhou Netwide	Cooperative accounts provision services		149		149	21		—	—
Hangzhou Tianyi	Cooperative accounts provision services		189		—	—		—	—
Zhongguang Advertising	Rent and utilities		—		—	—		695	101
			635		2,061	290		992	144

(1) For the years ended December 31, 2020, 2021, and 2022, we provided new media integrated content marketing services to Shanghai Er’shang, in the amount of RMB2.8 million, RMB6.9 million (US$1.0 million), and RMB2.8 million, respectively. We also had current receivables due from Shanghai Er’shang in

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the amount of RMB3.0 million, RMB0.4 million (US$0.06 million), and RMB1.8 million as of December 31, 2020, 2021, and 2022, respectively.

(2) For the years ended December 31, 2020, 2021 and 2022, we provided new media integrated content marketing services to Zhejiang Weilai Advertising Co., Ltd., a company controlled by our principal shareholder, in the amount of RMB4.0 million and RMB1.2 million (US$0.2 million), and RMB0.49 million, respectively. We also had current receivables due from Zhejiang Weilai in the amount of RMB9.3 million, RMB0.1 million (US$0.017 million), and RMB0.62 million as of December 31, 2020, 2021, and 2022, respectively.

Employment Agreements

See “Management—Employment Agreements and Indemnification Agreements.”

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DESCRIPTION OF SHARE CAPITAL

We are a Cayman Islands company and our affairs are governed by our memorandum and articles of association, as amended from time to time, and the Companies Act (As Revised) of the Cayman Islands (the “Companies Act”), and the common law of Cayman Islands.

As of the date of this prospectus, our authorized share capital is US$1,000,000 divided into 500,000,000 Ordinary Shares, par value US$0.002 per share.

Immediately prior to the completion of this offering, we will have 58,804,977 Ordinary Shares issued and outstanding. All of our Ordinary Shares issued and outstanding prior to the completion of the offering are and will be fully paid, and all of our Ordinary Shares to be issued in the offering will be issued as fully paid.

Our Post-Offering Memorandum and Articles of Association

We will adopt the fourth amended and restated memorandum and articles of association, which will become effective and replace our current third amended and restated memorandum and articles of association in its entirety immediately prior to the completion of this offering. The following are summaries of material provisions of our post-offering memorandum and articles of association and of the Companies Act, insofar as they relate to the material terms of our Ordinary Shares.

Objects of Our Company. Under our post-offering memorandum and articles of association, the objects of our Company are unrestricted, and we are capable of exercising all the functions of a natural person of full capacity irrespective of any question of corporate benefit, as provided by section 27(2) of the Companies Act.

Ordinary Shares. Our Ordinary Shares are issued in registered form and are issued when registered in our register of members. We may not issue shares to bearer. Our shareholders who are non-residents of the Cayman Islands may freely hold and vote for their shares.

Dividends. The holders of our Ordinary Shares are entitled to such dividends as may be declared by our board of directors. Our post-offering memorandum and articles of association provide that dividends may be declared and paid out of the funds of our Company lawfully available therefor. Under the laws of the Cayman Islands, our Company may pay a dividend out of either profit or share premium account, provided that in no circumstances may a dividend be paid out of the above premium if this would result in our Company being unable to pay its debts as they fall due in the ordinary course of business.

Voting Rights. Voting at any meeting of shareholders is by show of hands unless a poll is demanded. A poll may be demanded by:

• the chairperson of such meeting;

• by at least three shareholders present in person or by proxy for the time being entitled to vote at the meeting;

• by shareholder(s) present in person or by proxy representing not less than one-tenth of the total voting rights of all shareholders having the right to vote at the meeting; and

• by shareholder(s) present in person or by proxy and holding shares in us conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right.

An ordinary resolution to be passed at a meeting by the shareholders requires the affirmative vote of a simple majority of the votes attaching to the Ordinary Shares cast at a meeting, while a special resolution requires the affirmative vote of no less than two-thirds of the votes cast attaching to the issued and outstanding Ordinary

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Shares at a meeting. A special resolution will be required for important matters such as a change of name or making changes to our post-offering memorandum and articles of association, a reduction of our share capital, and the winding up of our Company. Our shareholders may, among other things, divide or combine their shares by ordinary resolution.

General Meetings of Shareholders. As a Cayman Islands exempted company, we are not obliged by the Companies Act to call shareholders’ annual general meetings. Our post-offering memorandum and articles of association provide that we shall, if required by the Companies Act, in each year hold a general meeting as its annual general meeting, and shall specify the meeting as such in the notices calling it, and the annual general meeting shall be held at such time and place as may be determined by our directors. General meetings, including annual general meetings, may be held at such times and in any location in the world as may be determined by the Board. A general meeting or any class meeting may also be held by means of such telephone, electronic, or other communication facilities as to permit all persons participating in the meeting to communicate with each other, and participation in such a meeting constitutes presence at such meeting.

Shareholders’ general meetings may be convened by the chairperson of our board of directors or by a majority of our board of directors. Advance notice of at least ten clear days is required for the convening of our annual general shareholders’ meeting (if any) and any other general meeting of our shareholders. A quorum required for any general meeting of shareholders consists of, at the time when the meeting proceeds to business, one or more shareholders holding shares which carry in aggregate (or representing by proxy) not less than one-third of all votes attaching to issued and outstanding shares in our Company entitled to vote at such general meeting.

The Companies Act does not provide shareholders with any right to requisition a general meeting or to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Our post-offering memorandum and articles of association provide that upon the requisition of any one or more of our shareholders holding shares which carry in aggregate not less than one-third of all votes attaching to the issued and outstanding shares of our Company entitled to vote at general meetings, our board will convene an extraordinary general meeting and put the resolutions so requisitioned to a vote at such meeting. However, our post-offering memorandum and articles of association do not provide our shareholders with any right to put any proposals before annual general meetings or extraordinary general meetings not called by such shareholders.

Transfer of Ordinary Shares. Subject to the restrictions set out below, any of our shareholders may transfer all or any of his or her Ordinary Shares by an instrument of transfer in the usual or common form or in a form prescribed by Nasdaq Capital Market or any other form approved by our board of directors. Notwithstanding the foregoing, Ordinary Shares may also be transferred in accordance with the applicable rules and regulations of Nasdaq Capital Market.

Our board of directors may, in its absolute discretion, decline to register any transfer of any Ordinary Share which is not fully paid up or on which we have a lien. Our board of directors may also decline to register any transfer of any Ordinary Share unless:

• the instrument of transfer is lodged with us, accompanied by the certificate for the Ordinary Shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer;

• the instrument of transfer is in respect of only one class of Ordinary Shares;

• the instrument of transfer is properly stamped, if required; in the case of a transfer to joint holders, the number of joint holders to whom the Ordinary Share is to be transferred does not exceed four; and

• a fee of such maximum sum as the Nasdaq Capital Market may determine to be payable or such lesser sum as our directors may from time to time require is paid to us in respect thereof.

If our directors refuse to register a transfer they shall, within two months after the date on which the instrument of transfer was lodged, send to each of the transferor and the transferee notice of such refusal.

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The registration of transfers may, after compliance with any notice required in accordance with the rules of the Nasdaq Capital Market, be suspended and the register closed at such times and for such periods as our board of directors may from time to time determine; provided, however, that the registration of transfers shall not be suspended nor the register closed for more than 30 days in any year as our board may determine. The period of 30 days may be extended for a further period or periods not exceeding 30 days in respect of any year if approved by the shareholders by ordinary resolution.

Liquidation. On the winding up of our Company, if the assets available for distribution amongst our shareholders shall be more than sufficient to repay the whole of the share capital at the commencement of the winding up, the surplus shall be distributed amongst our shareholders in proportion to the par value of the shares held by them at the commencement of the winding up, subject to a deduction from those shares in respect of which there are monies due, of all monies payable to our Company for unpaid calls or otherwise. If our assets available for distribution are insufficient to repay all of the paid-up capital, such the assets will be distributed so that, as nearly as may be, the losses are borne by our shareholders in proportion to the par value of the shares held by them.

Calls on Shares and Forfeiture of Shares. Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their shares in a notice served to such shareholders at least 14 days prior to the specified time and place of payment. The shares that have been called upon and remain unpaid are subject to forfeiture.

Redemption, Repurchase, and Surrender of Shares. We may issue shares on terms that such shares are subject to redemption, at our option or at the option of the holders of these shares, on such terms and in such manner, including out of capital, as may be determined by our board of directors. Our Company may also repurchase any of our shares on such terms and in such manner as have been approved by our board of directors. Under the Companies Act, the redemption or repurchase of any share may be paid out of our Company’s profits, share premium, or out of the proceeds of a new issue of shares made for the purpose of such redemption or repurchase, or out of capital if our Company can, immediately following such payment, pay its debts as they fall due in the ordinary course of business. In addition, under the Companies Act no such share may be redeemed or repurchased (a) unless it is fully paid up, (b) if such redemption or repurchase would result in there being no shares outstanding, or (c) if the company has commenced liquidation. In addition, our Company may accept the surrender of any fully paid share for no consideration.

Variations of Rights of Shares. Whenever the capital of our Company is divided into different classes the rights attached to any such class may, subject to any rights or restrictions for the time being attached to any class, only be varied with the sanction of a resolution passed by a majority of 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, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation, allotment, or issue of further shares ranking pari passu with such existing class of shares.

Issuance of Additional Shares. Our post-offering memorandum and articles of association authorize our board of directors to issue additional Ordinary Shares from time to time as our board of directors shall determine, to the extent of available authorized but unissued shares.

Our post-offering memorandum and articles of association also authorize our board of directors to establish from time to time one or more series of preference shares and to determine, with respect to any series of preference shares, the terms and rights of that series, including, among other things:

• the designation of the series;

• the number of shares of the series;

• the dividend rights, dividend rates, conversion rights, voting rights; and

• the rights and terms of redemption and liquidation preferences.

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Our board of directors may issue preference shares without action by our shareholders to the extent authorized but unissued. Issuance of these shares may dilute the voting power of holders of Ordinary Shares.

Inspection of Books and Records. Holders of our Ordinary Shares will have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our corporate records. However, our post-offering memorandum and articles of association have provisions that give our shareholders the right to inspect our register of shareholders without charge, and to receive our annual audited financial statements. See “Where You Can Find Additional Information.”

Anti-Takeover Provisions. Some provisions of our post-offering memorandum and articles of association may discourage, delay or prevent a change of control of our Company or management that shareholders may consider favorable, including provisions that:

• authorize our board of directors to issue preference shares in one or more series and to designate the price, rights, preferences, privileges, and restrictions of such preference shares without any further vote or action by our shareholders; and

• limit the ability of shareholders to requisition and convene general meetings of shareholders.

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 our Company.

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 that an exempted company:

• does not have to file an annual return of its shareholders with the Registrar of Companies;

• is not required to open its register of members for inspection;

• does not have to hold an annual general meeting;

• may issue negotiable or bearer shares or shares with no par value;

• may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance);

• may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;

• may register as a limited duration company; and

• 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 that shareholder’s 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

The Cayman Companies Act is derived, to a large extent, from the older Companies Acts of England and Wales but does not follow recent United Kingdom statutory enactments, and accordingly there are significant differences between the Cayman Companies Act and the current Companies Act of the UK. In addition, the Cayman Companies Act differs from laws applicable to United States corporations and their shareholders. Set

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forth below is a summary of certain significant differences between the provisions of the Cayman Companies Act applicable to us and the comparable laws applicable to companies incorporated in the State of Delaware in the United States.

	Delaware	Cayman Islands
Title of Organizational Documents	Certificate of Incorporation and Bylaws	Certificate of Incorporation and Memorandum and Articles of Association
Duties of Directors	Under Delaware law, the business and affairs of a corporation are managed by or under the direction of its board of directors. In exercising their powers, directors are charged with a fiduciary duty of care to protect the interests of the corporation and a fiduciary duty of loyalty to act in the best interests of its shareholders. The duty of care requires that directors act in an informed and deliberative manner and inform themselves, prior to making a business decision, of all material information reasonably available to them. The duty of care also requires that directors exercise care in overseeing and investigating the conduct of the corporation’s employees. The duty of loyalty may be summarized as the duty to act in good faith, not out of self-interest, and in a manner which the director reasonably believes to be in the best interests of the shareholders.	As a matter of Cayman Islands law, a director owes three types of duties to the company: (i) statutory duties, (ii) fiduciary duties, and (iii) common law duties. The Cayman Companies Act imposes a number of statutory duties on a director. A Cayman Islands director’s fiduciary duties are not codified, however the courts of the Cayman Islands have held that a director owes the following fiduciary duties (a) a duty to act in what the director bona fide considers to be in the best interests of the company, (b) a duty to exercise their powers for the purposes they were conferred, (c) a duty to avoid fettering his or her discretion in the future and (d) a duty to avoid conflicts of interest and of duty. The common law duties owed by a director are those to act with skill, care and diligence 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, also, to act with the skill, care and diligence in keeping with a standard of care commensurate with any particular skill they have which enables them to meet a higher standard than a director without those skills. In fulfilling their duty of care to us, our directors must ensure compliance with our amended articles of association, as amended and restated from time to time. We have the right to seek damages where certain duties owed by any of our directors are breached.
Limitations on Personal Liability of Directors	Subject to the limitations described below, a certificate of incorporation may provide for the elimination or limitation of the personal liability of a director to the corporation or its shareholders for monetary damages for a breach of fiduciary duty as a director. Such provision cannot limit liability for breach of loyalty, bad faith, intentional misconduct, unlawful payment of dividends or unlawful share purchase or redemption. In addition,	The Cayman Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of Officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime.

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	Delaware	Cayman Islands
	the certificate of incorporation cannot limit liability for any act or omission occurring prior to the date when such provision becomes effective.
Indemnification of Directors, Officers, Agents, and Others	A corporation has the power to indemnify any director, officer, employee, or agent of corporation who was, is, or is threatened to be made a party who acted in good faith and in a manner he believed to be in the best interests of the corporation, and if with respect to a criminal proceeding, had no reasonable cause to believe his conduct would be unlawful, against amounts actually and reasonably incurred.	Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of directors and officers, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against the consequences of committing a crime, or against the indemnified person’s own fraud or dishonesty. Our post-offering memorandum and articles of association provide that that we shall indemnify our directors and officers, and their personal representatives, against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by such persons, other than by reason of such person’s dishonesty, willful default or fraud, in or about the conduct of our Company’s business or affairs (including as a result of any mistake of judgment) or in the execution or discharge of his duties, powers, authorities or discretions, including without prejudice to the generality of the foregoing, any costs, expenses, losses, or liabilities incurred by such director or officer in defending (whether successfully or otherwise) any civil proceedings concerning our Company or its affairs in any court whether in the Cayman Islands or elsewhere. To the extent permitted by law, we may make a payment, or agree to make a payment, whether by way of advance, loan or otherwise, for any legal costs incurred by an existing or former director (including alternate director), secretary or any of our officers in respect of any matter identified in above on condition that the director (including alternate director), secretary or officer must repay the amount paid by us to the extent that it is ultimately found not liable to indemnify the director (including

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	Delaware	Cayman Islands
		alternate director), the secretary or that officer for those legal costs.
Interested Directors	Under Delaware law, a transaction in which a director who has an interest in such transaction would not be voidable if (i) the material facts as to such interested director’s relationship or interests are disclosed or are known to the board of directors and the board in good faith authorizes the transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors are less than a quorum, (ii) such material facts are disclosed or are known to the shareholders entitled to vote on such transaction and the transaction is specifically approved in good faith by vote of the shareholders, or (iii) the transaction is fair as to the corporation as of the time it is authorized, approved or ratified. Under Delaware law, a director could be held liable for any transaction in which such director derived an improper personal benefit.	Interested director transactions are governed by the terms of a company’s memorandum and articles of association.
Voting Requirements	The certificate of incorporation may include a provision requiring supermajority approval by the directors or shareholders for any corporate action. In addition, under Delaware law, certain business combinations involving interested shareholders require approval by a supermajority of the non-interested shareholders.	For the protection of shareholders, certain matters must be approved by special resolution of the shareholders as a matter of Cayman Islands law, including alteration of the memorandum or articles of association, appointment of inspectors to examine company affairs, reduction of share capital (subject, in relevant circumstances, to court approval), change of name, authorization of a plan of merger or transfer by way of continuation to another jurisdiction or consolidation or voluntary winding up of the company. The Cayman Companies Act requires that a special resolution be passed by a majority of at least two-thirds or such higher percentage as set forth in the memorandum and articles of association, of shareholders being entitled to vote and do vote in person or by proxy at a general meeting, or by unanimous written consent of shareholders entitled to vote at a general meeting.
Voting for Directors	Under Delaware law, unless otherwise specified in the certificate of incorporation or bylaws of the corporation, directors shall	The Cayman Companies Act defines a “special resolution” only. A company’s memorandum and articles of association can

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	Delaware	Cayman Islands
	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.	therefore tailor the definition of an “ordinary resolution” as a whole, or with respect to specific provisions.
Cumulative Voting	No cumulative voting for the election of directors unless so provided in the certificate of incorporation.	There are no prohibitions in relation to cumulative voting under the Cayman Companies Act but our post-offering articles of association do not provide for cumulative voting.
Directors’ Powers Regarding Bylaws	The certificate of incorporation may grant the directors the power to adopt, amend or repeal bylaws.	The memorandum and articles of association may only be amended by a special resolution of the shareholders.
Nomination and Removal of Directors and Filling Vacancies on Board	Shareholders may generally nominate directors if they comply with advance notice provisions and other procedural requirements in company bylaws. Holders of a majority of the shares may remove a director with or without cause, except in certain cases involving a classified board or if the company uses cumulative voting. Unless otherwise provided for in the certificate of incorporation, directorship vacancies are filled by a majority of the directors elected or then in office.	Nomination and removal of directors and filling of board vacancies are governed by the terms of the memorandum and articles of association.

Anti-money Laundering—Cayman Islands

In order to comply with legislation or regulations aimed at the prevention of money laundering, we are required to adopt and maintain anti-money laundering procedures and may require subscribers to provide evidence to verify their identity and source of funds. Where permitted, and subject to certain conditions, we may also delegate the maintenance of our anti-money laundering procedures (including the acquisition of due diligence information) to a suitable person.

We reserve the right to request such information as is necessary to verify the identity of a subscriber. In some cases, the directors may be satisfied that no further information is required since an exemption applies under the Anti-Money Laundering Regulations (Revised) of the Cayman Islands, as amended and revised from time to time (the “Regulations”). Depending on the circumstances of each application, a detailed verification of identity might not be required where:

(a) the subscriber makes the payment for their investment from an account held in the subscriber’s name at a recognized financial institution; or

(b) the subscriber is regulated by a recognized regulatory authority and is based or incorporated in, or formed under the law of, a recognized jurisdiction; or

(c) the application is made through an intermediary which is regulated by a recognized regulatory authority and is based in or incorporated in, or formed under the law of a recognized jurisdiction and an assurance is provided in relation to the procedures undertaken on the underlying investors.

For the purposes of these exceptions, recognition of a financial institution, regulatory authority, or jurisdiction will be determined in accordance with the Regulations by reference to those jurisdictions recognized by the Cayman Islands Monetary Authority as having equivalent anti-money laundering regulations.

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In the event of delay or failure on the part of the subscriber in producing any information required for verification purposes, we may refuse to accept the application, in which case any funds received will be returned without interest to the account from which they were originally debited.

We also reserve the right to refuse to make any redemption payment to a shareholder if our directors or officers suspect or are advised that the payment of redemption proceeds to such shareholder might result in a breach of applicable anti-money laundering or other laws or regulations by any person in any relevant jurisdiction, or if such refusal is considered necessary or appropriate to ensure our compliance with any such laws or regulations in any applicable jurisdiction.

If any person resident in the Cayman Islands knows or suspects or has reason for knowing or suspecting that another person is engaged in criminal conduct or is involved with terrorism or terrorist property and the information for that knowledge or suspicion came to their attention in the course of their 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) a nominated officer (appointed in accordance with the Proceeds of Crime Act (Revised) of the Cayman Islands) or the Financial Reporting Authority of the Cayman Islands, pursuant to the Proceeds of Crime Act (Revised), if the disclosure relates to criminal conduct or money laundering or (ii) to a police constable or a nominated officer (pursuant to the Terrorism Act (Revised) of the Cayman Islands) or the Financial Reporting Authority, pursuant to the Terrorism Act (Revised), if the disclosure relates to involvement with terrorism or terrorist financing and terrorist 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 in the Cayman Islands—Privacy Notice

This privacy notice explains the manner in which we collect, process, and maintain personal data about our investors pursuant to the Data Protection Act, 2017 of the Cayman Islands, as amended from time to time and any regulations, codes of practice, or orders promulgated pursuant thereto (the “DPA”).

We are committed to processing personal data in accordance with the DPA. In our use of personal data, we will be characterized under the DPA as a “data controller,” whilst certain of our service providers, affiliates, and delegates may act as “data processors” under the DPA. These service providers may process personal information for their own lawful purposes in connection with services provided to us.

By virtue of your investment in our Company, we and certain of our service providers may collect, record, store, transfer, and otherwise process personal data by which individuals may be directly or indirectly identified.

Your personal data will be processed fairly and for lawful purposes, including (a) where the processing is necessary for us to perform a contract to which you are a party or for taking pre-contractual steps at your request, (b) where the processing is necessary for compliance with any legal, tax, or regulatory obligation to which we are subject, or (c) where the processing is for the purposes of legitimate interests pursued by us or by a service provider to whom the data are disclosed. As a data controller, we will only use your personal data for the purposes for which we collected it. If we need to use your personal data for an unrelated purpose, we will contact you.

We anticipate that we will share your personal data with our service providers for the purposes set out in this privacy notice. We may also share relevant personal data where it is lawful to do so and necessary to comply with our contractual obligations or your instructions or where it is necessary or desirable to do so in connection with any regulatory reporting obligations. In exceptional circumstances, we will share your personal data with regulatory, prosecuting, and other governmental agencies or departments, and parties to litigation (whether pending or threatened), in any country or territory including to any other person where we have a public or legal duty to do so (e.g. to assist with detecting and preventing fraud, tax evasion, and financial crime or compliance with a court order).

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Your personal data shall not be held by our Company for longer than necessary with regard to the purposes of the data processing.

We will not sell your personal data. Any transfer of personal data outside of the Cayman Islands shall be in accordance with the requirements of the DPA. Where necessary, we will ensure that separate and appropriate legal agreements are put in place with the recipient of that data.

We will only transfer personal data in accordance with the requirements of the DPA, 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.

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 to your investment into our Company, this will be relevant for those individuals and you should inform such individuals of the content.

You have certain rights under the DPA, including (a) the right to be informed as to how we collect and use your personal data (and this privacy notice fulfils our obligation in this respect), (b) the right to obtain a copy of your personal data, (c) the right to require us to stop direct marketing, (d) the right to have inaccurate or incomplete personal data corrected, (e) the right to withdraw your consent and require us to stop processing or restrict the processing, or not begin the processing of your personal data, (f) the right to be notified of a data breach (unless the breach is unlikely to be prejudicial), (g) the right to obtain information as to any countries or territories outside the Cayman Islands to which we, whether directly or indirectly, transfer, intend to transfer, or wish to transfer your personal data, general measures we take to ensure the security of personal data, and any information available to us as to the source of your personal data, (h) the right to complain to the Office of the Ombudsman of the Cayman Islands, and (i) the right to require us to delete your personal data in some limited circumstances.

If you consider that your personal data has not been handled correctly, or you are not satisfied with our responses to any requests you have made regarding the use of your personal data, you have the right to complain to the Cayman Islands’ Ombudsman. The Ombudsman can be contacted by calling +1 (345) 946-6283 or by email at info@ombudsman.ky.

Legislation of the Cayman Islands

The Cayman Islands, together with several other non-European Union jurisdictions, have introduced legislation aimed at addressing concerns raised by the Council of the European Union as to offshore structures engaged in certain activities which attract profits without real economic activity. The International Tax Co-operation (Economic Substance) Act (Revised) (the “Substance Act”) came into force in the Cayman Islands in January 2019 introducing certain economic substance requirements for in-scope Cayman Islands entities which are engaged in certain “relevant activities.” An exempted company incorporated in the Cayman Islands as is the Company is an in-scope Cayman Islands entity; however, it does not include an entity that is tax resident outside the Cayman Islands. Our Company being a holding company with no material operations will likely be subject to limited substance requirements.

History of Share Capital

The following is a summary of our share capital since incorporation.

On June 16, 2020, 50,000 ordinary shares, par value US$1.00 per share, were held by XUHANG (BVI) LTD.

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As part of the Reorganization, we undertook the following corporate actions:

Increase of Authorized Share Capital, Share Issuances, and Share Transfers in April 2021

On April 23, 2021, our authorized share capital increased from US$50,000 divided into 50,000 shares of US$1.00 each to US$91,972.2302 divided into 91,972.2302 shares of US$1.00 each. We issued the following ordinary shares of US$1.00 each:

Purchaser	Number of Ordinary Shares of US$1.00 each		Consideration
SHENXUE CAPITAL LIMITED		3,844.7729	US$	3,844.7729
CWM CAPITAL LIMITED		928.4962	US$	928.4962
JDM CAPITAL LIMITED		241.4090	US$	241.4090
FAN CHAO CAPITAL LIMITED		7,161.7815	US$	7,161.7815
WCC CAPITAL LIMITED		6,445.6033	US$	6,445.6033
CZJ CAPITAL LIMITED		716.1781	US$	716.1781
YANGYANG CAPITAL LIMITED		670.5785	US$	670.5785
WUWEI CAPITAL LIMITED		2,011.7356	US$	2,011.7356
ZHUANNA CAPITAL LIMITED		2,321.2480	US$	2,321.2480
WZC CAPITAL LIMITED		2,218.0772	US$	2,218.0772
SUNYANLIN CAPITAL LIMITED		405.8343	US$	405.8343
LCB CAPITAL LIMITED		698.1920	US$	698.1920
SYG CAPITAL LIMITED		696.7993	US$	696.7993
YHH CAPITAL LIMITED		2,020.7049	US$	2,020.7049
BAOGENSHUI CAPITAL LIMITED		1,980.3580	US$	1,980.3580
JIANGYU CAPITAL LIMITED		806.8131	US$	806.8131
LLL CAPITAL LIMITED		812.9244	US$	812.9244
Oriental Financial Holding Corporation		1,081.1893	US$	1,081.1893
Cybernaut Global Education Group Corp.		3,543.8844	US$	3,543.8844
TOP SMART CAPITAL INVESTMENT LIMITED 領駿創富有限公司		3,365.6502	US$	3,365.6502

On April 26, 2021, our board of directors approved the following transfers of ordinary shares of US$1.00 each:

Transferor	Transferee	Number of Ordinary Shares of US$1.00 each
XUHANG (BVI) LTD.	TIAN HANG GROUP LIMITED 天航集團有限公司		44,481.6662
XUHANG (BVI) LTD.	MIGHTY HUGE INVESTMENT LIMITED 浩瀚投資有限公司		5,518.3338

Increase of Authorized Share Capital in June 2021

On June 22, 2021, our authorized share capital increased from US$91,972.2302 divided into 91,972.2302 shares of US$1.00 each to US$113,453.8396 divided into 113,453.8396 shares of US$1.00 each.

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Share Transfer in July 2021

On July 6, 2021, our board of directors approved the following transfers of ordinary shares of US$1.00 each:

Transferor	Transferee	Number of Ordinary Shares of US$1.00 each
FAN CHAO CAPITAL LIMITED	WUWEI CAPITAL LIMITED		99.2644
FAN CHAO CAPITAL LIMITED	ZHUANNA CAPITAL LIMITED		28.4101
FAN CHAO CAPITAL LIMITED	TOP SMART CAPITAL INVESTMENT LIMITED 領駿創富有限公司		166.0701
FAN CHAO CAPITAL LIMITED	Cybernaut Global Education Group Corp.		26.7899
TIAN HANG GROUP LIMITED 天航集團有限公司	CWM CAPITAL LIMITED		45.8145
TIAN HANG GROUP LIMITED 天航集團有限公司	WZC CAPITAL LIMITED		109.4458
TIAN HANG GROUP LIMITED 天航集團有限公司	YANGYANG CAPITAL LIMITED		33.0882
TIAN HANG GROUP LIMITED 天航集團有限公司	ZHUANNA CAPITAL LIMITED		86.1264
TIAN HANG GROUP LIMITED 天航集團有限公司	LCB CAPITAL LIMITED		34.4507
TIAN HANG GROUP LIMITED 天航集團有限公司	JDM CAPITAL LIMITED		11.9118
TIAN HANG GROUP LIMITED 天航集團有限公司	SYG CAPITAL LIMITED		34.3819
TIAN HANG GROUP LIMITED 天航集團有限公司	YHH CAPITAL LIMITED		99.7069
TIAN HANG GROUP LIMITED 天航集團有限公司	BAOGENSHUI CAPITAL LIMITED		97.7161
TIAN HANG GROUP LIMITED 天航集團有限公司	JIANGYU CAPITAL LIMITED		39.8103
TIAN HANG GROUP LIMITED 天航集團有限公司	LLL CAPITAL LIMITED		40.1119
TIAN HANG GROUP LIMITED 天航集團有限公司	Oriental Financial Holding Corporation		53.3487
CZJ CAPITAL LIMITED	SHENXUE CAPITAL LIMITED		32.0534
SUNYANLIN CAPITAL LIMITED	SHENXUE CAPITAL LIMITED		17.2515
WCC CAPITAL LIMITED	SHENXUE CAPITAL LIMITED		140.4063
WCC CAPITAL LIMITED	Cybernaut Global Education Group Corp.		148.0747

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On July 8, 2021, our board of directors approved the following transfers of ordinary shares of US$1.00 each:

Transferor	Transferee	Number of Ordinary Shares of US$1.00 each
TIAN HANG GROUP LIMITED 天航集團有限公司	VENTURE SMART HOLDINGS LIMITED		907.6307
TIAN HANG GROUP LIMITED 天航集團有限公司	MIGHTY HUGE INVESTMENT LIMITED 浩瀚投資有限公司		1,288.8966
FAN CHAO CAPITAL LIMITED	TIAN HANG GROUP LIMITED 天航集團有限公司		6,841.2470
TIAN HANG GROUP LIMITED 天航集團有限公司	TAI, Sun Kwong		1,418.1730

Share Allotment in September 2021

On September 26, 2021, our board of directors approved the following allotment of ordinary shares of US$1.00 each:

Allottee	Number of Ordinary Shares of US$1.00 each		Consideration
Shanghai Qishu Enterprise Management Consulting L.P. 上海祁树企业管理咨询合伙企业（有限合伙）		3,897.2426	US$	31,746
Shanghai Zhuju Investment Center (Limited Partnership) 上海筑居投资中心（有限合伙）		1,299.7694	US$	10,588
Henan Saiqi High-tech Service Venture Capital Fund (Limited Partnership) 河南赛淇高技术服务创业投资基金（有限合伙）		3,889.2144	US$	31,681
Wenzhou Elite Equity Investment Partnership (Limited Partnership) 温州精英股权投资合伙企业（有限合伙）		777.8507	US$	6,336
Qingdao Xida Kaiyue Investment Management Partnership (Limited Partnership) 青岛喜大开悦投 资管理合伙企业（有限合伙）		476.8471	US$	3,884
Chengzhu Investment Management (Shanghai) Co., Ltd. 诚筑投资管理（上海）有限公司		458.4911	US$	3,735
Ningbo Xinrui Equity Investment Partnership (Limited Partnership) 宁波莘睿股权投资合伙企业（有限合伙）		1,164.6715	US$	9,487
Sai Pu No. 1 (Putian) Venture Capital Partnership (Limited Partnership) 赛莆一号（莆田）创业投资合伙企业（有限合伙）		3,088.4674	US$	25,158
Qingdao Lumin Investment Qinghe Equity Investment Partnership (Limited Partnership) 青岛鲁民投青合股权投资合伙企业（有限合伙）		1,890.9032	US$	15,403
Yancheng Guozhi Industry Fund Co., Ltd. 盐城国智产业基金有限公司		2,269.0760	US$	18,483
Xingchan Saize (Huzhou) Venture Capital Partnership (Limited Partnership) 兴产赛泽（湖州）创业投资合伙企业（有限合伙）		2,269.0760	US$	18,483

Increase of Authorized Share Capital in November 2021

In November 2021, our authorized share capital increased from US$113,453.8396 divided into 113,453.8396 shares of US$1.00 each to US$117,609.9539 divided into 117,609.9539 shares of US$1.00 each.

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Share Allotment in December 2021

On December 1, 2021, our board of directors approved the following allotment of ordinary shares of US$1.00 each:

Allottee	Number of Ordinary Shares of US$1.00 each		Consideration
Hexagon Special Opportunities SPC (acting for the account of segregated portfolio I)		2,523.0616	US$	2,523.0616
Hexagon Special Opportunities SPC (acting for the account of segregated portfolio VII)		1,633.0527	US$	1,633.0527

Share Transfer in January 2022

On January 17, 2022, our board of directors approved the following transfers of ordinary shares of US$1.00 each:

Transferor	Transferee	Number of Ordinary Shares of US$1.00 each
CZJ CAPITAL LIMITED	TIAN HANG GROUP LIMITED 天航集團有限公司		684.1247

Share Subdivision, Increase of Authorized Share Capital, Share Issuance, and Share Transfers in December 2022

On December 2, 2022, our shareholders and board of directors approved the Subdivision, such that (i) our authorized share capital was changed from US$117,609.9539 divided into 117,609.9539 shares of par value of US$1.00 each to US$117,609.9539 dived into 58,804,976.95 shares of par value of US$0.002 each, and (ii) our issued share capital was changed from US$117,609.9539 divided into 117,609.9539 shares of par value of US$1.00 each to US$117,609.9539 divided into 58,804,976.95 shares of par value of US$0.002 each.

With the Subdivision, our shareholders and board of directors also approved (i) an increase in our authorized share capital from US$117,609.9539 divided into 58,804,976.95 shares of par value of US$0.002 each to US$1,000,000 divided into 500,000,000 Ordinary Shares of par value of US$0.002 each, and (ii) the following issuance of Ordinary Shares to adjust the total number of issued Ordinary Shares from 58,804,976.95 to 58,804,977:

Purchaser	Number of Ordinary Shares	Consideration
TIAN HANG GROUP LIMITED 天航集團有限公司	0.05	US$	0.0001

On December 2, 2022, our shareholders and board of directors approved the transfers of an aggregate of 17.25 Ordinary Shares by TIAN HANG GROUP LIMITED to the following 30 minority shareholders:

Transferor	Transferee	Number of Ordinary Shares
TIAN HANG GROUP LIMITED 天航集團有限公司	MIGHTY HUGE INVESTMENT LIMITED 浩瀚投資有限公司		0.80
TIAN HANG GROUP LIMITED 天航集團有限公司	Shanghai Qishu Enterprise Management Consulting L.P. 上海祁树企业管理咨询合伙企业（有限合伙）		0.70
TIAN HANG GROUP LIMITED 天航集團有限公司	WCC CAPITAL LIMITED		0.85
TIAN HANG GROUP LIMITED 天航集團有限公司	SHENXUE CAPITAL LIMITED		0.95
TIAN HANG GROUP LIMITED 天航集團有限公司	CWM CAPITAL LIMITED		0.65

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Transferor	Transferee	Number of Ordinary Shares
TIAN HANG GROUP LIMITED 天航集團有限公司	JDM CAPITAL LIMITED		0.60
TIAN HANG GROUP LIMITED 天航集團有限公司	YANGYANG CAPITAL LIMITED		0.65
TIAN HANG GROUP LIMITED 天航集團有限公司	ZHUANNA CAPITAL LIMITED		0.75
TIAN HANG GROUP LIMITED 天航集團有限公司	WZC CAPITAL LIMITED		0.50
TIAN HANG GROUP LIMITED 天航集團有限公司	SUNYANLIN CAPITAL LIMITED		0.60
TIAN HANG GROUP LIMITED 天航集團有限公司	LCB CAPITAL LIMITED		0.65
TIAN HANG GROUP LIMITED 天航集團有限公司	SYG CAPITAL LIMITED		0.40
TIAN HANG GROUP LIMITED 天航集團有限公司	YHH CAPITAL LIMITED		0.10
TIAN HANG GROUP LIMITED 天航集團有限公司	BAOGENSHUI CAPITAL LIMITED		0.95
TIAN HANG GROUP LIMITED 天航集團有限公司	JIANGYU CAPITAL LIMITED		0.30
TIAN HANG GROUP LIMITED 天航集團有限公司	LLL CAPITAL LIMITED		0.85
TIAN HANG GROUP LIMITED 天航集團有限公司	Cybernaut Global Education Group Corp.		0.50
TIAN HANG GROUP LIMITED 天航集團有限公司	TOP SMART CAPITAL INVESTMENT LIMITED		0.85
TIAN HANG GROUP LIMITED 天航集團有限公司	VENTURE SMART HOLDINGS LIMITED		0.65
TIAN HANG GROUP LIMITED 天航集團有限公司	TAI, Sun Kwong		0.50
TIAN HANG GROUP LIMITED 天航集團有限公司	Shanghai Zhuju Investment Center (Limited Partnership) 上海筑居投资中心（有限合伙）		0.30
TIAN HANG GROUP LIMITED 天航集團有限公司	Henan Saiqi High-tech Service Venture Capital Fund (Limited Partnership) 河南赛淇高技术服务创业投资基金（有限合伙）		0.80
TIAN HANG GROUP LIMITED 天航集團有限公司	Wenzhou Elite Equity Investment Partnership (Limited Partnership) 温州精英股权投资合伙企业（有限合伙）		0.65
TIAN HANG GROUP LIMITED 天航集團有限公司	Qingdao Xida Kaiyue Investment Management Partnership (Limited Partnership) 青岛喜大开悦投 资管理合伙企业（有限合伙）		0.45
TIAN HANG GROUP LIMITED 天航集團有限公司	Chengzhu Investment Management (Shanghai) Co., Ltd. 诚筑投资管理（上海）有限公司		0.45
TIAN HANG GROUP LIMITED 天航集團有限公司	Ningbo Xinrui Equity Investment Partnership (Limited Partnership) 宁波莘睿股权投资合伙企业（有限合伙）		0.25
TIAN HANG GROUP LIMITED 天航集團有限公司	Sai Pu No.1 (Putian) Venture Capital Partnership (Limited Partnership) 赛莆一号（莆田）创业投资合伙企业（有限合伙）		0.30
TIAN HANG GROUP LIMITED 天航集團有限公司	Qingdao Lumin Investment Qinghe Equity Investment Partnership (Limited Partnership) 青岛鲁民投青合股权投资合伙企业（有限合伙）		0.40
TIAN HANG GROUP LIMITED 天航集團有限公司	Hexagon Special Opportunities SPC (acting for the account of segregated portfolio I)		0.20
TIAN HANG GROUP LIMITED 天航集團有限公司	Hexagon Special Opportunities SPC (acting for the account of segregated portfolio VII)		0.65

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Share Transfer in December 2022

On December 26, 2022, our shareholders and board of directors approved the following transfers of Ordinary Shares of US$0.002 each:

Transferor	Transferee	Number of Ordinary Shares
TIAN HANG GROUP LIMITED 天航集團有限公司	香港昇汛贸易有限公司HK SHENGXUN TRADING LIMITED		194,056
TIAN HANG GROUP LIMITED 天航集團有限公司	Preipo youjing Limited		2,646,224

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SHARES ELIGIBLE FOR FUTURE SALE

Before our initial public offering, there has not been a public market for our Ordinary Shares, and although we plan to apply to list our Ordinary Shares on the Nasdaq Capital Market, a regular trading market for our Ordinary Shares may not develop. Future sales of substantial amounts of shares of our Ordinary Shares in the public market after our initial public offering, or the possibility of these sales occurring, could cause the prevailing market price for our Ordinary Shares to fall or impair our ability to raise equity capital in the future. Upon completion of this offering, we will have outstanding Ordinary Shares held by public shareholders representing approximately [●]% of our Ordinary Shares in issue if the Representative does not exercise its over-allotment option, and approximately [●]% of our Ordinary Shares in issue if the Representative exercises its over-allotment option in full. All of the Ordinary Shares sold in this offering will be freely transferable by persons other than our “affiliates” without restriction or further registration under the Securities Act.

Lock-Up Agreements

Each of our officers, directors, and shareholders owning 5% or more of our Ordinary Shares have agreed not to offer, issue, sell, contract to sell, encumber, grant any option for the sale of, or otherwise dispose of any Ordinary Shares or other securities convertible into or exercisable or exchangeable for Ordinary Shares for a period of six months from the date of this prospectus without the prior written consent of the Representative, which consent may be given or withheld in the Representative’s sole discretion.

We are not aware of any plans by any significant shareholders to dispose of significant numbers of our Ordinary Shares. However, one or more existing shareholders or owners of securities convertible or exchangeable into or exercisable for our Ordinary Shares may dispose of significant numbers of our Ordinary Shares in the future. We cannot predict what effect, if any, future sales of our Ordinary Shares, or the availability of Ordinary Shares for future sale, will have on the trading price of our Ordinary Shares from time to time. Sales of substantial amounts of our Ordinary Shares in the public market, or the perception that these sales could occur, could adversely affect the trading price of our Ordinary Shares.

Rule 144

All of our Ordinary Shares outstanding prior to the closing of this offering are “restricted securities” as that term is defined in Rule 144 under the Securities Act and may be sold publicly in the United States only if they are subject to an effective registration statement under the Securities Act or pursuant to an exemption from the registration requirement such as those provided by Rule 144 and Rule 701 promulgated under the Securities Act.

In general, under Rule 144 as currently in effect, beginning 90 days after the date of this prospectus, a person who is not deemed to have been our affiliate at any time during the three months preceding a sale and who has beneficially owned restricted securities within the meaning of Rule 144 for more than six months would be entitled to sell an unlimited number of those shares, subject only to the availability of current public information about us. A non-affiliate who has beneficially owned restricted securities for at least one year from the later of the date these shares were acquired from us or from our affiliate would be entitled to freely sell those shares.

A person who is deemed to be an affiliate of ours and who has beneficially owned “restricted securities” for at least six months would be entitled to sell, within any three-month period, a number of shares that is not more than the greater of:

• 1% of the number of Ordinary Shares then outstanding, in the form of Ordinary Shares or otherwise, which will equal approximately [●] shares immediately after this offering; or

• the average weekly trading volume of the Ordinary Shares on the Nasdaq Capital Market during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.

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Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us.

Rule 701

In general, under Rule 701 of the Securities Act as currently in effect, each of our employees, consultants, or advisors who purchases our Ordinary Shares from us in connection with a compensatory stock plan or other written agreement executed prior to the completion of this offering is eligible to resell those Ordinary Shares in reliance on Rule 144, but without compliance with some of the restrictions, including the holding period, contained in Rule 144. However, the Rule 701 shares would remain subject to lock-up arrangements and would only become eligible for sale when the lock-up period expires.

Regulation S

Regulation S provides generally that sales made in offshore transactions are not subject to the registration or prospectus-delivery requirements of the Securities Act.

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MATERIAL INCOME TAX CONSIDERATION

Enterprise Taxation in Mainland China

The following brief description of Chinese enterprise income taxation is designed to highlight the enterprise-level taxation on our earnings, which will affect the amount of dividends, if any, we are ultimately able to pay to our shareholders. See “Dividend Policy.”

According to the EIT Law, which was promulgated by the SCNPC on March 16, 2007, became effective on January 1, 2008, and was then last amended on December 29, 2018, and the Implementation Rules of the EIT Law, which were promulgated by the State Council on December 6, 2007, and became effective on January 1, 2008, and last amended on April 23, 2018, enterprises are divided into resident enterprises and non-resident enterprises. Resident enterprises pay enterprise income tax on their incomes obtained in and outside the PRC at the rate of 25%. Non-resident enterprises setting up institutions in the PRC pay enterprise income tax on the incomes obtained by such institutions in and outside the PRC at the rate of 25%. Non-resident enterprises with no institutions in the PRC, and non-resident enterprises with income having no substantial connection with their institutions in the PRC, pay enterprise income tax on their income obtained in the PRC at a reduced rate of 10%.

We are a holding company incorporated in the Cayman Islands and we gain substantial income by way of dividends paid to us from our PRC subsidiaries. The EIT Law and its implementation rules provide that China-sourced income of foreign enterprises, such as dividends paid by a PRC subsidiary to its equity holders that are non-resident enterprises, will normally be subject to PRC withholding tax at a rate of 10%, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with China that provides for a preferential tax rate or a tax exemption.

Under the EIT Law, an enterprise established outside of China with a “de facto management body” within China is considered a “resident enterprise,” which means that it is treated in a manner similar to a Chinese enterprise for enterprise income tax purposes. Although the implementation rules of the EIT Law define “de facto management body” as a managing body that actually, comprehensively manage and control the production and operation, staff, accounting, property, and other aspects of an enterprise, the only official guidance for this definition currently available is set forth in SAT Notice 82, which provides guidance on the determination of the tax residence status of a Chinese-controlled offshore incorporated enterprise, defined as an enterprise that is incorporated under the laws of a foreign country or territory and that has a PRC enterprise or enterprise group as its primary controlling shareholder. Although Xuhang Cayman does not have a PRC enterprise or enterprise group as our primary controlling shareholder and is therefore not a Chinese-controlled offshore incorporated enterprise within the meaning of SAT Notice 82, in the absence of guidance specifically applicable to us, we have applied the guidance set forth in SAT Notice 82 to evaluate the tax residence status of Xuhang Cayman and its subsidiaries organized outside the PRC.

According to SAT Notice 82, a Chinese-controlled offshore incorporated enterprise will be regarded as a PRC tax resident by virtue of having a “de facto management body” in China and will be subject to PRC enterprise income tax on its worldwide income only if all of the following criteria are met: (i) the places where senior management and senior management departments that are responsible for daily production, operation and management of the enterprise perform their duties are mainly located within the territory of China; (ii) financial decisions (such as money borrowing, lending, financing and financial risk management) and personnel decisions (such as appointment, dismissal and salary and wages) are decided or need to be decided by organizations or persons located within the territory of China; (iii) main property, accounting books, corporate seal, the board of directors and files of the minutes of shareholders’ meetings of the enterprise are located or preserved within the territory of China; and (iv) one half (or more) of the directors or senior management staff having the right to vote habitually reside within the territory of China.

We believe that we do not meet some of the conditions outlined in the immediately preceding paragraph. For example, as a holding company, the key assets and records of Xuhang Cayman, including the resolutions and

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meeting minutes of our board of directors and the resolutions and meeting minutes of our shareholders, are located and maintained outside the PRC. In addition, we are not aware of any offshore holding companies with a corporate structure similar to ours that has been deemed a PRC “resident enterprise” by the PRC tax authorities. Accordingly, we believe that Xuhang Cayman and its offshore subsidiaries should not be treated as a “resident enterprise” for PRC tax purposes if the criteria for “de facto management body” as set forth in SAT Notice 82 were deemed applicable to us. However, as the tax residency status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body” as applicable to our offshore entities, we will continue to monitor our tax status.

The implementation rules of the EIT Law provide that, (i) if the enterprise that distributes dividends is domiciled in the PRC or (ii) if gains are realized from transferring equity interests of enterprises domiciled in the PRC, then such dividends or gains are treated as China-sourced income. It is not clear how “domicile” may be interpreted under the EIT Law, and it may be interpreted as the jurisdiction where the enterprise is a tax resident. Therefore, if we are considered as a PRC tax resident enterprise for PRC tax purposes, any dividends we pay to our overseas shareholders which are non-resident enterprises as well as gains realized by such shareholders from the transfer of our shares may be regarded as China-sourced income and as a result become subject to PRC withholding tax at a rate of up to 10%. AllBright, our PRC counsel, is unable to provide a “will” opinion because it believes that it is more likely than not that we and our offshore subsidiaries would be treated as non-resident enterprises for PRC tax purposes because we do not meet some of the conditions outlined in SAT Notice 82. In addition, AllBright is not aware of any offshore holding companies with a corporate structure similar to ours that has been deemed a PRC “resident enterprise” by the PRC tax authorities as of the date of the prospectus. Therefore, AllBright believes that it is possible but highly unlikely that the income received by our overseas shareholders will be regarded as China-sourced income. An opinion on PRC tax matters by AllBright, our PRC counsel, is filed as Exhibit 8.1 to the registration statement of which this prospectus forms a part.

See “Risk Factors—Risks Relating to Doing Business in the PRC—Under the PRC Enterprise Income Tax Law, we may be classified as a PRC ‘resident enterprise’ for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment.”

Currently, as resident enterprises in the PRC, Huzhou Yinzhiya, Wuhan Yinzhiya, as well as Xuhang Network and its subsidiaries in PRC are subject to the enterprise income tax at the rate of 25%. Under particular circumstances, such as an enterprise being identified as a small-scale minimal profit enterprise or as a new high-tech enterprise, or its domicile authority having a preferential tax policy, the EIT rate is reduced by various degrees. Pursuant to such regulations and policies, some of our PRC subsidiaries are eligible for the preferential tax rates. The EIT is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards. If the PRC tax authorities determine that Xuhang Cayman 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. In addition, non-resident enterprise shareholders may be subject to a 10% PRC withholding tax on gains realized on the sale or other disposition of our 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 dividends or gains realized by non-PRC individuals, it would generally apply at a rate of 20% unless a reduced rate is available under an applicable tax treaty. However, it is also unclear whether our non-PRC shareholders 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. There is no guidance from the PRC government to indicate whether or not any tax treaties between the PRC and other countries would apply in circumstances where a non-PRC company was deemed to be a PRC tax resident, and thus there is no basis for expecting how tax treaty between the PRC and other countries may impact non-resident enterprises.

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Hong Kong Taxation

Entities incorporated in Hong Kong are subject to profits tax in Hong Kong at the rate of 16.5%.

Cayman Islands Taxation

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

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). There are no exchange control regulations or currency restrictions in the Cayman Islands.

Payments of dividends and capital in respect of our Ordinary Shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of our Ordinary Shares, as the case may be, nor will gains derived from the disposal of our Ordinary Shares be subject to Cayman Islands income or corporation tax.

United States Federal Income Taxation

The following does not address the tax consequences to any particular investor or to persons in special tax situations such as:

• banks;

• financial institutions;

• insurance companies;

• regulated investment companies;

• real estate investment trusts;

• broker-dealers;

• persons that elect to mark their securities to market;

• U.S. expatriates or former long-term residents of the U.S.;

• governments or agencies or instrumentalities thereof;

• tax-exempt entities;

• persons liable for alternative minimum tax;

• persons holding our Ordinary Shares as part of a straddle, hedging, conversion, or integrated transaction;

• persons that actually or constructively own 10% or more of our voting power or value (including by reason of owning our Ordinary Shares);

• persons who acquired our Ordinary Shares pursuant to the exercise of any employee share option or otherwise as compensation;

• persons holding our Ordinary Shares through partnerships or other pass-through entities;

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• beneficiaries of a Trust holding our Ordinary Shares; or

• persons holding our Ordinary Shares through a trust.

The discussion set forth below is addressed only to U.S. Holders that purchase Ordinary Shares in this offering. Prospective purchasers are urged to consult their own tax advisors about the application of the U.S. federal income tax rules to their particular circumstances as well as the state, local, foreign and other tax consequences to them of the purchase, ownership and disposition of our Ordinary Shares.

Material Tax Consequences Applicable to U.S. Holders of Our Ordinary Shares

The following sets forth the material U.S. federal income tax consequences related to the ownership and disposition of our Ordinary Shares. It is directed to U.S. Holders (as defined below) of our Ordinary Shares and is based upon laws and relevant interpretations thereof in effect as of the date of this prospectus, all of which are subject to change. This description does not deal with all possible tax consequences relating to ownership and disposition of our Ordinary Shares or U.S. tax laws, other than the U.S. federal income tax laws, such as the tax consequences under non-U.S. tax laws, state, local and other tax laws.

The following brief description applies only to U.S. Holders who hold Ordinary Shares as capital assets and that have the U.S. dollar as their functional currency. This brief description is based on the federal income tax laws of the United States in effect as of the date of this prospectus and on U.S. Treasury regulations in effect or, in some cases, proposed, as of the date of this prospectus, as well as judicial and administrative interpretations thereof available on or before such date. All of the foregoing authorities are subject to change, which change could apply retroactively and could affect the tax consequences described below.

The brief description below of the U.S. federal income tax consequences to “U.S. Holders” will apply to you if you are a beneficial owner of Ordinary Shares and you are, for U.S. federal income tax purposes,

• an individual who is a citizen or resident of the United States;

• a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized under the laws of the United States, any state thereof or the District of Columbia;

• an estate whose income is subject to U.S. federal income taxation regardless of its source; or

• a trust that (1) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons for all substantial decisions or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

If a partnership (or other entities treated as a partnership for United States federal income tax purposes) is a beneficial owner of our Ordinary Shares, the tax treatment of a partner in the partnership will depend upon the status of the partner and the activities of the partnership. Partnerships and partners of a partnership holding our Ordinary Shares are urged to consult their tax advisors regarding an investment in our Ordinary Shares.

Taxation of Dividends and Other Distributions on Our Ordinary Shares

Subject to the PFIC rules discussed below, the gross amount of distributions made by us to you with respect to the Ordinary Shares (including the amount of any taxes withheld therefrom) will generally be includable in your gross income as dividend income on the date of receipt by you, but only to the extent that the distribution is paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). With respect to corporate U.S. Holders, the dividends will not be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from other U.S. corporations.

With respect to non-corporate U.S. Holders, including individual U.S. Holders, dividends will be taxed at the lower capital gains rate applicable to qualified dividend income, provided that (1) the Ordinary Shares are readily

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tradable on an established securities market in the United States, or we are eligible for the benefits of an approved qualifying income tax treaty with the United States that includes an exchange of information program, (2) we are not a PFIC for either our taxable year in which the dividend is paid or the preceding taxable year, and (3) certain holding period requirements are met. Because there is no income tax treaty between the United States and the Cayman Islands, clause (1) above can be satisfied only if the Ordinary Shares are readily tradable on an established securities market in the United States. Under U.S. Internal Revenue Service authority, Ordinary Shares are considered for purpose of clause (1) above to be readily tradable on an established securities market in the United States if they are listed on certain exchanges, which presently include the NYSE and the Nasdaq Stock Market. You are urged to consult your tax advisors regarding the availability of the lower rate for dividends paid with respect to our Ordinary Shares, including the effects of any change in law after the date of this prospectus.

Dividends will constitute foreign source income for foreign tax credit limitation purposes. If the dividends are taxed as qualified dividend income (as discussed above), the amount of the dividend taken into account for purposes of calculating the foreign tax credit limitation will be limited to the gross amount of the dividend, multiplied by the reduced rate divided by the highest rate of tax normally applicable to dividends. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends distributed by us with respect to our Ordinary Shares will constitute “passive category income” but could, in the case of certain U.S. Holders, constitute “general category income.”

To the extent that the amount of the distribution exceeds our current and accumulated earnings and profits (as determined under U.S. federal income tax principles), it will be treated first as a tax-free return of your tax basis in your Ordinary Shares, and to the extent the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain. We do not intend to calculate our earnings and profits under U.S. federal income tax principles. Therefore, a U.S. Holder should expect that a distribution will be treated as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above.

Taxation of Dispositions of Ordinary Shares

Subject to the PFIC rules discussed below, you will recognize taxable gain or loss on any sale, exchange or other taxable disposition of a share equal to the difference between the amount realized (in U.S. dollars) for the share and your tax basis (in U.S. dollars) in the Ordinary Shares. The gain or loss will be capital gain or loss. If you are a non-corporate U.S. Holder, including an individual U.S. Holder, who has held the Ordinary Shares for more than one year, you will generally be eligible for reduced tax rates. The deductibility of capital losses is subject to limitations. Any such gain or loss that you recognize will generally be treated as United States source income or loss for foreign tax credit limitation purposes which will generally limit the availability of foreign tax credits.

PFIC

A non-U.S. corporation is considered a PFIC, as defined in Section 1297(a) of the US Internal Revenue Code, for any taxable year if either:

• at least 75% of its gross income for such taxable year is passive income; or

• at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income (the “asset test”).

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. We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, at least 25% (by value) of the stock. In determining the

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value and composition of our assets for purposes of the PFIC asset test, (1) the cash we raise in this offering will generally be considered to be held for the production of passive income and (2) the value of our assets must be determined based on the market value of our Ordinary Shares from time to time, which could cause the value of our non-passive assets to be less than 50% of the value of all of our assets (including the cash raised in this offering) on any particular quarterly testing date for purposes of the asset test.

Based on our operations and the composition of our assets we do not expect to be treated as a PFIC under the current PFIC rules. We must make a separate determination each year as to whether we are a PFIC, however, and there can be no assurance with respect to our status as a PFIC for our current taxable year or any future taxable year. Depending on the amount of cash we raise in this offering, together with any other assets held for the production of passive income, it is possible that, for our current taxable year or for any subsequent taxable year, more than 50% of our assets may be assets held for the production of passive income. We will make this determination following the end of any particular tax year. In addition, because the value of our assets for purposes of the asset test will generally be determined based on the market price of our Ordinary Shares and because cash is generally considered to be an asset held for the production of passive income, our PFIC status will depend in large part on the market price of our Ordinary Shares and the amount of cash we raise in this offering. Accordingly, fluctuations in the market price of the Ordinary Shares may cause us to become a PFIC. In addition, the application of the PFIC rules is subject to uncertainty in several respects and the composition of our income and assets will be affected by how, and how quickly, we spend the cash we raise in this offering. We are under no obligation to take steps to reduce the risk of our being classified as a PFIC, and as stated above, the determination of the value of our assets will depend upon material facts (including the market price of our Ordinary Shares from time to time and the amount of cash we raise in this offering) that may not be within our control. If we are a PFIC for any year during which you hold Ordinary Shares, we will continue to be treated as a PFIC for all succeeding years during which you hold Ordinary Shares. If we cease to be a PFIC and you did not previously make a timely “mark-to-market” election as described below, however, you may avoid some of the adverse effects of the PFIC regime by making a “purging election” (as described below) with respect to the Ordinary Shares.

If we are a PFIC for your taxable year(s) during which you hold Ordinary Shares, you will be subject to special tax rules with respect to any “excess distribution” that you receive and any gain you realize from a sale or other disposition (including a pledge) of the Ordinary Shares, unless you make a “mark-to-market” election as discussed below. Distributions you receive in a taxable year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years or your holding period for the Ordinary Shares will be treated as an excess distribution. Under these special tax rules:

• the excess distribution or gain will be allocated ratably over your holding period for the Ordinary Shares;

• the amount allocated to your current taxable year, and any amount allocated to any of your taxable year(s) prior to the first taxable year in which we were a PFIC, will be treated as ordinary income, and

• the amount allocated to each of your other taxable year(s) will be subject to the highest tax rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.

The tax liability for amounts allocated to years prior to the year of disposition or “excess distribution” cannot be offset by any net operating losses for such years, and gains (but not losses) realized on the sale of the Ordinary Shares cannot be treated as capital, even if you hold the Ordinary Shares as capital assets.

A U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election under Section 1296 of the US Internal Revenue Code for such stock to elect out of the tax treatment discussed above. If you make a mark-to-market election for first taxable year which you hold (or are deemed to hold) Ordinary Shares and for which we are determined to be a PFIC, you will include in your income each year an amount

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equal to the excess, if any, of the fair market value of the Ordinary Shares as of the close of such taxable year over your adjusted basis in such Ordinary Shares, which excess will be treated as ordinary income and not capital gain. You are allowed an ordinary loss for the excess, if any, of the adjusted basis of the Ordinary Shares over their fair market value as of the close of the taxable year. Such ordinary loss, however, is allowable only to the extent of any net mark-to-market gains on the Ordinary Shares included in your income for prior taxable years. Amounts included in your income under a mark-to-market election, as well as gain on the actual sale or other disposition of the Ordinary Shares, are treated as ordinary income. Ordinary loss treatment also applies to any loss realized on the actual sale or disposition of the Ordinary Shares, to the extent that the amount of such loss does not exceed the net mark-to-market gains previously included for such Ordinary Shares. Your basis in the Ordinary Shares will be adjusted to reflect any such income or loss amounts. If you make a valid mark-to-market election, the tax rules that apply to distributions by corporations which are not PFICs would apply to distributions by us, except that the lower applicable capital gains rate for qualified dividend income discussed above under “—Taxation of Dividends and Other Distributions on our Ordinary Shares” generally would not apply.

The mark-to-market election is available only for “marketable stock,” which is stock that is traded in other than de minimis quantities on at least 15 days during each calendar quarter (“regularly traded”) on a qualified exchange or other market (as defined in applicable U.S. Treasury regulations), including the Nasdaq Capital Market. If the Ordinary Shares are regularly traded on the Nasdaq Capital Market and if you are a holder of Ordinary Shares, the mark-to-market election would be available to you were we to be or become a PFIC.

Alternatively, a U.S. Holder of stock in a PFIC may make a “qualified electing fund” election under Section 1295(b) of the US Internal Revenue Code with respect to such PFIC to elect out of the tax treatment discussed above. A U.S. Holder who makes a valid qualified electing fund election with respect to a PFIC will generally include in gross income for a taxable year such holder’s pro rata share of the corporation’s earnings and profits for the taxable year. The qualified electing fund election, however, is available only if such PFIC provides such U.S. Holder with certain information regarding its earnings and profits as required under applicable U.S. Treasury regulations. We do not currently intend to prepare or provide the information that would enable you to make a qualified electing fund election. If you hold Ordinary Shares in any taxable year in which we are a PFIC, you will be required to file U.S. Internal Revenue Service Form 8621 in each such year and provide certain annual information regarding such Ordinary Shares, including regarding distributions received on the Ordinary Shares and any gain realized on the disposition of the Ordinary Shares.

If you do not make a timely “mark-to-market” election (as described above), and if we were a PFIC at any time during the period you hold our Ordinary Shares, then such Ordinary Shares will continue to be treated as stock of a PFIC with respect to you even if we cease to be a PFIC in a future year, unless you make a “purging election” for the year we cease to be a PFIC. A “purging election” creates a deemed sale of such Ordinary Shares at their fair market value on the last day of the last year in which we are treated as a PFIC. The gain recognized by the purging election will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging election, you will have a new basis (equal to the fair market value of the Ordinary Shares on the last day of the last year in which we are treated as a PFIC) and holding period (which new holding period will begin the day after such last day) in your Ordinary Shares for tax purposes.

IRC Section 1014(a) provides for a step-up in basis to the fair market value for our Ordinary Shares when inherited from a decedent that was previously a holder of our Ordinary Shares. However, if we are determined to be a PFIC and a decedent that was a U.S. Holder did not make either a timely qualified electing fund election for our first taxable year as a PFIC in which the U.S. Holder held (or was deemed to hold) our Ordinary Shares, or a mark-to-market election and ownership of those Ordinary Shares are inherited, a special provision in IRC Section 1291(e) provides that the new U.S. Holder’s basis should be reduced by an amount equal to the Section 1014 basis minus the decedent’s adjusted basis just before death. As such if we are determined to be a PFIC at any time prior to a decedent’s passing, the PFIC rules will cause any new U.S. Holder that inherits our Ordinary Shares from a U.S. Holder to not get a step-up in basis under Section 1014 and instead will receive a carryover basis in those Ordinary Shares.

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You are urged to consult your tax advisors regarding the application of the PFIC rules to your investment in our Ordinary Shares and the elections discussed above.

Information Reporting and Backup Withholding

Dividend payments with respect to our Ordinary Shares and proceeds from the sale, exchange or redemption of our Ordinary Shares may be subject to information reporting to the U.S. Internal Revenue Service and possible U.S. backup withholding under Section 3406 of the US Internal Revenue Code with at a current flat rate of 24%. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification on U.S. Internal Revenue Service Form W-9 or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status generally must provide such certification on U.S. Internal Revenue Service Form W-9. U.S. Holders are urged to consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.

Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the U.S. Internal Revenue Service and furnishing any required information. We do not intend to withhold taxes for individual shareholders. Transactions effected through certain brokers or other intermediaries, however, may be subject to withholding taxes (including backup withholding), and such brokers or intermediaries may be required by law to withhold such taxes.

Under the Hiring Incentives to Restore Employment Act of 2010, certain U.S. Holders are required to report information relating to our Ordinary Shares, subject to certain exceptions (including an exception for Ordinary Shares held in accounts maintained by certain financial institutions), by attaching a complete Internal Revenue Service Form 8938, Statement of Specified Foreign Financial Assets, with their tax return for each year in which they hold Ordinary Shares.

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UNDERWRITING

We will enter into an underwriting agreement with Univest Securities, LLC, as the Representative, with respect to the Ordinary Shares in this offering. Subject to certain conditions, we will agree to sell to the underwriters, and the underwriters have severally agreed to purchase, the number of Ordinary Shares provided below opposite their respective names.

Underwriters	Number of Ordinary Shares
Univest Securities, LLC		[●	]
Total		[●	]

A copy of the form of underwriting agreement will be filed as an exhibit to the registration statement of which this prospectus is part. The underwriters are offering the Ordinary Shares subject to their acceptance of the Ordinary Shares from us and subject to prior sale. The underwriting agreement will provide that the obligations of the several underwriters to pay for and accept delivery of the Ordinary Shares offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the Ordinary Shares offered by this prospectus if any such Ordinary Shares are taken. However, the underwriters are not required to take or pay for the Ordinary Shares covered by the Representative’ over-allotment option described below.

Over-Allotment Option

We have granted the Representative an over-allotment option, which is exercisable for up to 30 days from the date of this prospectus, to purchase up to [●] additional Ordinary Shares (15% of the number of Ordinary Shares sold in this offering), solely to cover over-allotments, if any. If the Representative exercises all or part of this option, it will purchase Ordinary Shares covered by the option at the initial public offering price per Ordinary Share that appears on the cover page of this prospectus, less the underwriting discount. If this option is exercised in full, the total additional gross proceeds to us will be $[●] and the total net proceeds received from this offering of Ordinary Shares to us will be $[●], after deducting the underwriting discounts and estimated offering expenses payable by us.

Underwriting Discounts and Expenses

The following table shows the initial public offering price, underwriting discount, and proceeds, before expenses, to us. The information assumes either no exercise or full exercise by the Representative of the over-allotment option.

	Per Share		Total Without Over- Allotment Option		Total With Full Over- Allotment Option
Initial public offering price		US$		US$		US$
Underwriting discounts(1)		US$		US$		US$
Proceeds, before expenses, to us		US$		US$		US$

(1) Represents an underwriting discount equal to 4.82% per Ordinary Share. The fees do not include the Representative’s Warrants or expense reimbursement provisions described below.

The underwriters have advised us that they propose to offer the Ordinary Shares to the public at the initial public offering price set forth on the cover page of this prospectus and to certain dealers at that price less a concession

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not in excess of $[●] per Ordinary Share. The underwriters may allow, and certain dealers may reallow, a discount from the concession not in excess of $[●] per Ordinary Share to certain brokers and dealers. After this offering, the initial public offering price, concession, and reallowance to dealers may be changed by the Representative. No such change shall change the amount of proceeds to be received by us as set forth on the cover page of this prospectus. The Ordinary Shares are offered by the underwriters as stated herein, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in part. The underwriters have informed us that they do not intend to confirm sales to any accounts over which they exercise discretionary authority.

We have agreed to reimburse the Representative up to an aggregate of $180,000 for certain out-of-pocket accountable expenses, including but not limited to travel, due diligence, reasonable fees and expenses of its legal counsel, background check expenses, and reasonable cost for roadshows, provided that any expense over $5,000 requires prior written or email approval of our Company.

We have agreed to pay expenses relating to the offering, including: (i) all filing fees and communication expenses relating to the registration of the Ordinary Shares to be sold in this offering with the SEC and the filing of the offering materials with FINRA; (ii) all reasonable travel and lodging expenses incurred by the Representative or its counsel in connection with visits to, and examinations of, our Company; (iii) translation costs for due diligence purpose; (iv) all fees, expenses, and disbursements relating to the registration or qualification of such Ordinary Shares under the “blue sky” securities laws of such states and other jurisdictions as the Representative may reasonably designate (including, without limitation, all filing and registration fees, and the reasonable fees and disbursements of Representative’s counsel); (v) the costs of all mailing and printing of the placement documents, registration statements, prospectuses, and all amendments, supplements, and exhibits thereto, and as many preliminary and final prospectuses as the Representative may reasonably deem necessary; (vi) the costs of preparing, printing, and delivering certificates representing the Ordinary Shares and the fees and expenses of the transfer agent for such Ordinary Shares; and (vii) the reasonable cost for road show meetings and preparation of a power point presentation.

We estimate that the total expenses of the offering payable by us, excluding the underwriting discounts, will be approximately $[    ], including a maximum aggregate reimbursement of $180,000 of Representative’s accountable expenses.

Representative’s Warrants

We have also agreed to issue to the Representative, or its designees, warrants to purchase up to [    ] Ordinary Shares, which equal to 5% of the total number of Ordinary Shares sold in this offering, including any shares issued upon exercise of Representative’ over-allotment option.

The Representative’s Warrants will have an exercise price per share equal to $[    ] per Ordinary Share, 130% of the initial public offering price per Ordinary Shares in this offering and may be exercised on a cashless basis. The Representative’s Warrants are exercisable commencing on the date of commencement of sales of the public offering, and will be exercisable until such warrants expire three years after the date of commencement of sales of the public offering. The Representative’s Warrants and the Ordinary Shares underlying the warrants have been deemed compensation by FINRA and are being registered on the registrration statement of which this prospectus forms a part. The Representative and its affiliates or employees will be entitled to one demand registration of the sale of the shares underlying the Representative’s Warrants at our expense, one additional demand registration at the Representative’s Warrants’ holders’ expense, and unlimited “piggyback” registration rights for a period of three years. The Representative’s Warrants will provide for adjustment in the number and price of such warrants and the shares underlying such warrants in the event of recapitalization, merger, or other structural transaction to prevent mechanical dilution. The piggyback registration right provided will not be greater than seven years from the date of commencement of sales of the offering in compliance with FINRA Rule 5110(g)(8)(D).

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Right of First Refusal

We have agreed that, until 18 months from the closing date of our initial public offering, the Representative will have a right of first refusal to provide investment banking services to us on an exclusive basis in all matters for which investment banking services are sought by the Company, including, without limitation, (a) acting as lead or joint-lead manager for any underwritten public offering; (b) acting as lead or joint book-runner and/or lead or joint placement agent, initial purchaser in connection with any private offering of securities of our Company; and (c) acting as financial advisor in connection with any sale or other transfer by our Company, directly or indirectly, of a majority or controlling portion of our capital stock or assets to another entity, any purchase or other transfer by another entity, directly or indirectly, of a majority or controlling portion of the capital stock or assets of our Company, and any merger or consolidation of our Company with another entity, provided, however, that such right shall be subject to FINRA Rule 5110(g).

Listing

We plan to apply to list our Ordinary Shares on the Nasdaq Capital Market under the symbol “[●].” At this time, Nasdaq has not yet approved our application to list our Ordinary Shares. The closing of this offering is conditioned upon Nasdaq’s final approval of our listing application, and there is no guarantee or assurance that our Ordinary Shares will be approved for listing on Nasdaq.

Indemnification; Indemnification Escrow

We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act and liabilities arising from breaches of representations and warranties contained in the underwriting agreement, or to contribute to payments that the underwriters may be required to make in respect of those liabilities.

Lock-Up Agreements

Each of our officers, directors, shareholders owning 5% or more of our Ordinary Shares (including warrants, options, convertible securities of ours, if any), and substantially all of our pre-IPO shareholders have agreed not to offer, issue, sell, contract to sell, encumber, grant any option for the sale of, or otherwise dispose of any Ordinary Shares or other securities convertible into or exercisable or exchangeable for Ordinary Shares for a period of six months from the date of this prospectus without the prior written consent of the Representative, which consent may be given or withheld in the Representative’s sole discretion.

Determination of Initial Offering Price

Prior to this offering, there has been no public market for our Ordinary Shares. The initial public offering price of the Ordinary Shares will be negotiated between us and the Representative. Among the factors to be considered in determining the initial public offering price of the Ordinary Shares, in addition to the prevailing market conditions, are our historical performance, estimates of our business potential and earnings prospects, an assessment of our management, and the consideration of the above factors in relation to market valuation of companies in related businesses.

Electronic Offer, Sale, and Distribution of Ordinary Shares

A prospectus in electronic format may be made available on the websites maintained by the underwriters or selling group members, if any, participating in this offering and the underwriters may distribute prospectuses electronically. The underwriters may agree to allocate a number of Ordinary Shares to selling group members for sale to their online brokerage account holders. The Ordinary Shares to be sold pursuant to internet distributions will be allocated on the same basis as other allocations. Other than the prospectus in electronic format, the

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information on these websites is not part of, nor incorporated by reference into, this prospectus or the registration statement of which this prospectus forms a part, has not been approved or endorsed by us or the underwriters, and should not be relied upon by investors.

Price Stabilization, Short Positions, and Penalty Bids

In connection with this offering, the underwriters may engage in transactions that stabilize, maintain, or otherwise affect the price of our Ordinary Shares. Specifically, the underwriters may sell more Ordinary Shares than they are obligated to purchase under the underwriting agreement, creating a short position. A short sale is covered if the short position is no greater than the number of Ordinary Shares available for purchase by the underwriters under option to purchase additional Ordinary Shares. The underwriters can close out a covered short sale by exercising the option to purchase additional Ordinary Shares or purchasing Ordinary Shares in the open market. In determining the source of Ordinary Shares to close out a covered short sale, the underwriters will consider, among other things, the open market price of Ordinary Shares compared to the price available under the option to purchase additional Ordinary Shares. The underwriters may also sell Ordinary Shares in excess of the option to purchase additional Ordinary Shares, creating a naked short position. The underwriters must close out any naked short position by purchasing Ordinary Shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the Ordinary Shares in the open market after pricing that could adversely affect investors who purchase in the offering.

The underwriters may also impose a penalty bid. This occurs when a particular underwriter or dealer repays selling concessions allowed to it for distributing our Ordinary Shares in this offering because such underwriter repurchases those Ordinary Shares in stabilizing or short covering transactions.

Finally, the underwriters may bid for, and purchase, our Ordinary Shares in market making transactions, including “passive” market making transactions as described below.

These activities may stabilize or maintain the market price of our Ordinary Shares at a price that is higher than the price that might otherwise exist in the absence of these activities. The underwriters are not required to engage in these activities, and may discontinue any of these activities at any time without notice. These transactions may be effected on the Nasdaq Capital Market, in the over-the-counter market, or otherwise.

Passive Market Making

In connection with this offering, the underwriters may engage in passive market making transactions in our Ordinary Shares on the Nasdaq Capital Market in accordance with Rule 103 of Regulation M under the Exchange Act, during a period before the commencement of offers or sales of the Ordinary Shares and extending through the completion of the distribution. A passive market maker must display its bid at a price not in excess of the highest independent bid of that security. However, if all independent bids are lowered below the passive market maker’s bid, then that bid must then be lowered when specified purchase limits are exceeded.

Potential Conflicts of Interest

The underwriters and their affiliates may, from time to time, engage in transactions with and perform services for us in the ordinary course of their business for which they may receive customary fees and reimbursement of expenses. In the ordinary course of their various business activities, the underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own accounts and for the accounts of their customers and such investment and securities activities may involve securities and/or instruments of our Company. The underwriters and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

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Other Relationships

The underwriters and certain of their affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing, and brokerage activities. Some of the underwriters and certain of their affiliates may in the future engage in investment banking and other commercial dealings in the ordinary course of business with us and our affiliates, for which they may in the future receive customary fees, commissions, and expenses.

In addition, in the ordinary course of their business activities, the underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of ours or our affiliates. The underwriters and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long, and/or short positions in such securities and instruments.

Stamp Taxes

If you purchase Ordinary Shares offered in this prospectus, you may be required to pay stamp taxes and other charges under the laws and practices of the country of purchase, in addition to the offering price listed on the cover page of this prospectus.

Selling Restrictions

No action has been taken in any jurisdiction (except in the United States) that would permit a public offering of the Ordinary Shares, or the possession, circulation or distribution of this prospectus or any other material relating to us or the Ordinary Shares, where action for that purpose is required. Accordingly, the Ordinary Shares may not be offered or sold, directly or indirectly, and neither this prospectus nor any other offering material or advertisements in connection with the Ordinary Shares may be distributed or published, in or from any country or jurisdiction except in compliance with any applicable rules and regulations of any such country or jurisdiction.

Notice to Prospective Investors in Hong Kong

The Ordinary Shares may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong) and no advertisement, invitation or document relating to the Ordinary Shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to Ordinary Shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

Notice to Prospective Investors in Canada

The Ordinary Shares may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration

192

Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the Ordinary Shares must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.

Pursuant to section 3A.3 (or, in the case of securities issued or guaranteed by the government of a non-Canadian jurisdiction, section 3A.4) of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

Notice to Prospective Investors in the PRC

This prospectus has not been and will not be circulated or distributed in the PRC, and our Ordinary Shares may not be offered or sold, and will not be offered or sold to any person for re-offering or resale, directly or indirectly, to any residents of the PRC except pursuant to applicable laws and regulations of the PRC. For the purposes of this paragraph, the PRC does not include Taiwan, Hong Kong or Macau.

Notice to Prospective Investors in Taiwan

The Ordinary Shares have not been and will not be registered or filed with, or approved by, the Financial Supervisory Commission of Taiwan pursuant to relevant securities laws and regulations and may not be offered or sold in Taiwan through a public offering or in circumstances which constitute an offer within the meaning of the Securities and Exchange Act of Taiwan or relevant laws and regulations that require a registration, filing or approval of the Financial Supervisory Commission of Taiwan. No person or entity in Taiwan has been authorized to offer or sell the Ordinary Shares in Taiwan.

193

EXPENSES RELATING TO THIS OFFERING

Set forth below is an itemization of the total expenses, excluding underwriting discounts. With the exception of the SEC registration fee, the FINRA filing fee and the Nasdaq Capital Market listing fee, all amounts are estimates.

Securities and Exchange Commission Registration Fee	US$	[●]
Nasdaq Capital Market Listing Fee	US$	[●]
FINRA Filing Fee	US$	[●]
Legal Fees and Other Expenses	US$	[●]
Accounting Fees and Expenses	US$	[●]
Printing and Engraving Expenses	US$	[●]
Transfer Agent Expenses	US$	[●]
Miscellaneous Expenses	US$	[●]
Total Expenses	US$	[●]

These expenses will be borne by us. Underwriting discounts will be borne by us in proportion to the numbers of Ordinary Shares sold in the offering.

194

LEGAL MATTERS

We are being represented by Hunter Taubman Fischer & Li LLC with respect to certain legal matters as to United States federal securities and New York State law. The validity of the Ordinary Shares offered in this offering and certain other legal matters as to Cayman Islands law will be passed upon for us by Conyers Dill & Pearman, our counsel as to Cayman Islands law. Legal matters as to PRC law will be passed upon for us by AllBright Law Offices Hangzhou Office to the Company. The underwriters are being represented by Sullivan & Worcester LLP with respect to certain legal matters as to United States federal securities and New York State law. Sullivan & Worcester LLP may rely upon Dentons Law Offices with respect to matters governed by PRC law.

EXPERTS

The consolidated financial statements for the years ended December 31, 2021 and 2020, and for each of the fiscal years in the period then ended, included in this prospectus have been so included in reliance on the report of WWC, P.C., an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting. The office of WWC, P.C. is located at 2010 Pioneer Court, San Mateo, CA 94403.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the SEC a registration statement on Form F-1, including relevant exhibits and schedules under the Securities Act, covering the Ordinary Shares offered by this prospectus. You should refer to our registration statements and their exhibits and schedules if you would like to find out more about us and about the Ordinary Shares. This prospectus summarizes material provisions of contracts and other documents that we refer you to. Since the prospectus may not contain all the information that you may find important, you should review the full text of these documents.

Immediately upon the completion of this offering, we will be subject to periodic reporting and other informational requirements of the Exchange Act, as applicable to foreign private issuers. Accordingly, we will be required to file reports, including annual reports on Form 20-F, and other information with the SEC. As a foreign private issuer, we are exempt from the rules of the Exchange Act prescribing the furnishing and content of proxy statements to shareholders under the federal proxy rules contained in Sections 14(a), (b) and (c) of the Exchange Act, and our executive officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.

The registration statements, reports and other information so filed can be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You can request copies of these documents upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. The SEC also maintains a website that contains reports, proxy statements, and other information about issuers, such as us, who file electronically with the SEC. The address of that website is http://www.sec.gov. The information on that website is not a part of this prospectus.

No dealers, salesperson, or other person is authorized to give any information or to represent anything not contained in this prospectus. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

195

XUHANG HOLDINGS LIMITED

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets as of December 31, 2020 and 2021		F-3
Consolidated Statements of Income and Comprehensive Income for the Years Ended December 31, 2020 and 2021		F-4
Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2020 and 2021		F-5
Consolidated Statements of Cash Flows for the Years Ended December  31, 2020 and 2021		F-6
Notes to Consolidated Financial Statements		F-7
Report of Independent Registered Public Accounting Firm		F-34
Condensed Consolidated Balance Sheets as of December  31, 2021 and September 30, 2022 (unaudited)		F-35
Unaudited Condensed Consolidated Statements of Income and Comprehensive Income for the Nine Months Ended September 30, 2021 and 2022		F-36
Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Nine Months Ended September 30, 2021 and 2022		F-37
Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2022		F-38
Notes to the Unaudited Condensed Consolidated Financial Statements		F-39

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To: The Board of Directors and Shareholders

Xuhang Holdings Limited

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Xuhang Holdings Limited and its subsidiaries (collectively the “Company”) as of December 31, 2020 and 2021, and the related consolidated statements of income and comprehensive income, changes in shareholders’ equity, and cash flows in each of the years for the two-year period ended December 31, 2021, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2021, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. 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 audits 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 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 audits included performing procedures to assess the risks of material misstatement of the 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 financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ WWC, P.C.

WWC, P.C.

Certified Public Accountants

PCAOB ID No.1171

We have served as the Company’s auditor since 2021.

San Mateo, California

September 27, 2022

F-2

XUHANG HOLDINGS LIMITED

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands of RMB and US$, except for number of shares and per share data)

	As of December 31,
	2020		2021
	RMB		RMB		US$
ASSETS
Current assets:
Cash and cash equivalents		57,087		113,400		15,942
Short term investment		—		8,010		1,126
Accounts receivable, net		124,407		167,965		23,612
Amounts due from related parties		67,178		15,237		2,142
Advance to suppliers		7,411		13,332		1,874
Other receivable, net		76,799		90,512		12,724
Inventories, net		—		1,825		257
Prepaid expenses		221		1,470		206
Total current assets		333,103		411,751		57,883
Non-current assets
Long-term investments		2,183		7,296		1,026
Property and equipment, net		8,348		26,638		3,745
Operating lease right-of-use assets		8,538		17,705		2,489
Goodwill		286,882		286,965		40,341
Other non-current assets		23,866		11,538		1,621
Total non-current assets		329,817		350,142		49,222
Total assets		662,920		761,893		107,105
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payables		67,072		51,971		7,306
Advance from customers		596		2,655		373
Loans—current		13,500		17,000		2,390
Amounts due to related parties		34,768		654		92
Accrued expenses and other liabilities		66,580		60,780		8,544
Interest payables		3,431		—		—
Dividend payables		267		267		38
Income tax payables		7,914		16,307		2,292
Operating lease liabilities—current		3,048		7,872		1,107
Total Current Liabilities		197,176		157,506		22,142
Non-current liabilities:
Convertible promissory notes		40,707		—		—
Operating lease liabilities—non-current		5,491		9,833		1,382
Deferred revenue—non-current		3,284		2,140		301
Total non-current liabilities		49,482		11,973		1,683
Total liabilities		246,658		169,479		23,825
Shareholders’ equity
Ordinary shares (US$0.002 par value; 500,000.000 shares authorized, 56,726,920 and 58,804,977 issued and outstanding as of December 31, 2020 and 2021, respectively*)		—		—		—
Additional paid-in-capital		233,651		283,826		39,899
Statutory reserve		2,286		5,048		710
Retained earnings		175,663		250,204		35,173
Accumulated other comprehensive income		1,698		1,544		217
Total XUHANG HOLDINGS LIMITED shareholders’ equity		413,298		540,622		75,999
Non-controlling interest		2,964		51,792		7,281
Total shareholders’ equity		416,262		592,414		83,280
Total liabilities and shareholders’ equity		662,920		761,893		107,105

* Retrospectively restated for the 500-for-1 forward split on December 2, 2022.

The accompanying notes are an integral part of these consolidated financial statements.

F-3

XUHANG HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Amounts in thousands of RMB and US$, except for number of shares and per share data)

	For the year ended December 31,
	2020			2021
	RMB			RMB			US$
Net revenue:
Digital advertising services		188,192			106,316			14,946
New media integrated content marketing services		162,712			365,130			51,329
Total net revenue		350,904			471,446			66,275
Cost of revenue		(243,546	)		(329,888	)		(46,374	)
Gross profit		107,358			141,558			19,900
Sales and marketing expenses		(4,649	)		(6,984	)		(982	)
General and administrative expenses		(35,071	)		(59,827	)		(8,410	)
Research and development expenses		(7,448	)		(2,926	)		(411	)
Allowance/(reversal) for doubtful debt and inventories		(318	)		5,073			713
Total operating expenses		(47,486	)		(64,664	)		(9,090	)
Operating income		59,872			76,894			10,810
Other income		1,657			4,420			621
Other expenses		(280	)		(993	)		(140	)
Interest income		274			264			37
Interest expense		(11,707	)		(7,562	)		(1,063	)
Government subsidy		962			4,204			591
Investment income		(115	)		135			19
Income before income taxes		50,663			77,362			10,875
Income tax expense		(5,944	)		(8,116	)		(1,141	)
Net income		44,719			69,246			9,734
Less: net loss attributable to non-controlling interest		206			8,057			1,133
Net income attributable to XUHANG HOLDINGS LIMITED’s ordinary shareholders		44,925			77,303			10,867
Comprehensive income
Net income		44,719			69,246			9,734
Other comprehensive income
Foreign currency translation adjustment		365			(154	)		(22	)
Total comprehensive income		45,084			69,092			9,712
Less: comprehensive loss attributable to non-controlling interest		—			—			—
Comprehensive income attributable to XUHANG HOLDINGS LIMITED’s ordinary shareholders		45,084			69,092			9,712
Income per share
Ordinary shares—basic and diluted		0.844			1.20			0.17
Weighted average shares outstanding used in calculating basic and diluted loss per share*:
Ordinary shares—basic and diluted		53,192,027			57,765,949			57,765,949

* Retrospectively restated for the 500-for-1 forward split on December 2, 2022.

The accompanying notes are an integral part of these consolidated financial statements.

F-4

XUHANG HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Amounts in thousands of RMB and US$, except for number of shares and per share data)

	Ordinary shares*				Additional paid-in capital		Statutory reserve		Retained earnings			Accumulated other comprehensive income (loss)			Total XUHANG HOLDINGS LIMITED shareholders’ equity			Non- controlling interests			Total shareholders’ equity
	Share*		Amount
Balance, December 31, 2019 (RMB)		49,657,134		—		28,000		—		133,024			1,333			162,357			24,601			186,958
Issuance of common shares for the acquisitions		5,677,854		—		167,000		—		—			—			167,000			—			167,000
Issuance of common shares for the acquisitions shares from non-controlling shareholders		1,391,932		—		34,000		—		—			—			34,000			(34,000	)		—
Contribution by non-controlling shareholders		—		—		—		—		—			—			—			12,569			12,569
Net income/(loss)		—		—		—		—		44,925			—			44,925			(206	)		44,719
Equity portion of convertible promissory notes		—		—		4,651		—		—			—			4,651			—			4,651
Transfer to statutory reserve		—		—		—		2,286		(2,286	)		—			—			—			—
Foreign currency translation adjustment		—		—		—		—		—			365			365			—			365
Balance, December 31, 2020 (RMB)		56,726,920		—		233,651		2,286		175,663			1,698			413,298			2,964			416,262
Contribution by non-controlling interest		—		—		—		—		—			—			—			56,885			56,885
Net income/(loss)		—		—		—		—		77,303			—			77,303			(8,057	)		69,246
Conversion of convertible promissory notes		2,078,057		—		50,175		—		—			—			50,175			—			50,175
Transfer to statutory reserve		—		—		—		2,762		(2,762	)		—			—			—			—
Foreign currency translation adjustment		—		—		—		—		—			(154	)		(154	)		—			(154	)
Balance, December 31, 2021 (RMB)		58,804,977		—		283,826		5,048		250,204			1,544			540,622			51,792			592,414
Balance, December 31, 2021 (US$)		58,804,977		—		39,899		710		35,173			217			75,999			7,281			83,280

* Retrospectively restated for the 500-for-1 forward split on December 2, 2022.

The accompanying notes are an integral part of these consolidated financial statements.

F-5

XUHANG HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousand of RMB and US$, except for number of shares and per share date)

	For the year ended December 31,
	2020			2021
	RMB			RMB			US$
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		44,719			69,246			9,734
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		2,993			2,347			330
Allowance (reversal) of doubtful account and inventories		318			(5,073	)		(713	)
Non-cash interest expense for convertible promissory notes		10,841			6,730			946
Changes in operating assets and liabilities:
Accounts receivable		(28,802	)		(38,305	)		(5,385	)
Amount due from related parties		(193	)		9,700			1,363
Advance to suppliers		23,845			(5,822	)		(818	)
Other receivable		(48,934	)		(13,709	)		(1,927	)
Inventories		—			(1,825	)		(257	)
Prepaid expenses		(221	)		(1,250	)		(176	)
Other non-current assets		(23,505	)		12,087			1,699
Accounts payables		32,357			(15,091	)		(2,121	)
Advance from customers		(334	)		2,060			290
Amount due to related parties		150			4			1
Accrued expenses and other payables		(28,113	)		10,309			1,449
Dividend payables		267			—			—
Income tax payables		5,899			8,393			1,180
Deferred revenue — non-current		3,285			(1,145	)		(161	)
Net cash provided by operating activities		(5,042	)		38,656			5,434
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(5,544	)		(21,172	)		(2,976	)
Proceeds from/(payments for) short-term investments		10,049			(8,010	)		(1,126	)
Payments for long-term investments		(2,183	)		(6,963	)		(979	)
Payments for the acquisitions		(30,000	)		(46,900	)		(6,593	)
Cash and cash equivalents from acquired companies		6,266			33			5
Proceeds from disposal of equity method investment		—			950			133
Net cash used in investing activities		(21,412	)		(82,062	)		(11,536	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans		17,226			3,500			492
(Repayment)/proceeds to related parties		(34,781	)		38,522			5,415
Cash contribution from minority shareholder		12,500			56,885			7,997
Net cash (used in) provided by financing activities		(5,055	)		98,907			13,904
Effect of exchange rate changes		(230	)		812			114
Net (decrease)/increase in cash and cash equivalents		(31,739	)		56,313			7,916
Cash and cash equivalents, at beginning of year		88,826			57,087			8,026
Cash and cash equivalents, at end of year		57,087			113,400			15,942
Supplemental disclosure of cash flow information
Cash paid for
Interest		834			823			116
Income taxes		2,789			2,666			375
Non-cash investing and financing activities:
Liabilities assumed in connection with purchase of property and equipment		—			567			80
Issuance of common shares for the acquisitions		167,000			—			—
Issuance of common shares for the acquisition shares from non-controlling shareholders		34,000			—			—

* Retrospectively restated for the 500-for-1 forward split on December 2, 2022.

The accompanying notes are an integral part of these consolidated financial statements.

F-6

XUHANG HOLDINGS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$, except for number of shares and per share data)

Note 1 – Nature of business and organization

XUHANG HOLDINGS LIMITED (“Xuhang Holdings”) was incorporated on June 16, 2020 as an exempted company with limited liability in the Cayman Islands. Xuhang Holdings principally engages in new media integrated content marketing services and digital advertising services through its subsidiaries in the People’s Republic of China (the “PRC”). In September 2014, Mr. Tiahang Xiao (“Mr. Xiao”), chairman of board of directors, founded Hangzhou Xuhang Network Technology Co., Ltd. (“Xuhang Network”). Xuhang Holdings underwent a series of onshore and offshore reorganizations, which were completed on October 27, 2021 (the “Reorganization”).

Immediately before and after the reorganization, the controlling shareholder of Xuhang Network controlled Xuhang Network and Xuhang Holdings; therefore, for accounting purposes, the reorganization is accounted for as a transaction of entities under common control. Accordingly, the accompanying consolidated financial statements have been prepared as if the current corporate structure had been in existence throughout the periods presented.

Xuhang Holdings and its consolidated subsidiaries are collectively referred to herein as the “Company,” unless specific reference is made to an entity.

Corporate Structure

Xuhang Holdings is a holding company incorporated in Cayman Islands that does not have substantive operations. Xuhang Holdings conducts its businesses through its subsidiaries. The principal subsidiaries of Xuhang Holdings consist of the following entities:

• Xuhang Network, a wholly-owned subsidiary and an onshore holding company established in the PRC on September 16, 2014, principally for holding businesses in new media integrated content marketing services and digital advertising services;

• Horgos Xumi Network Technology Co., Ltd., or Horgos Xumi, a wholly-owned subsidiary and an operating entity established in the PRC on February 8, 2017, principally for providing advertising design and production; technical services;

• Horgos Weizan Network Technology Co., Ltd., or Horgos Weizan, a wholly-owned subsidiary and an operating entity established in the PRC on November 13, 2017, principally for providing marketing planning and advertising production;

• Hongkong Lehui Network Technology Co., Limited, or HK Lehui, a wholly-owned subsidiary and an operating entity established in Hong Kong on November 10, 2017, principally for providing digital advertising services;

• Hangzhou Xingkong Internet Culture Communication Co., Ltd., or Hangzhou Xingkong, a wholly-owned PRC subsidiary and an operating entity acquired on November 13, 2020, principally for providing advertising design and production;

• Hangzhou Jinting Conference Co., Ltd., or Hangzhou Jinting, a wholly-owned PRC subsidiary and an operating entity acquired on November 13, 2020, principally for providing conference services; cultural and artistic exchange activities planning;

• Jiangxi Ku’o Technology Co., Ltd., or Jiangxi Ku’o, a wholly-owned PRC subsidiary and an operating entity acquired on March 16, 2020, principally for providing advertising production; graphic design and production;

F-7

• Hangzhou Xingxiu Network Technology Co., Ltd., a majority-owned subsidiary and an operating entity established in the PRC on June 16, 2021, principally for providing advertising production and technical services;

• Jiangsu Xuhang New Economy Technology Co., Ltd., a majority-owned subsidiary and an operating entity established in the PRC on September 29, 2020, principally for providing advertising production and technical services;

• Qingdao Xuhang Digital New Economy Technology Co., Ltd., a majority-owned subsidiary and an operating entity established in the PRC on October 29, 2020 principally for providing advertising production and technical services; and

• Qingdao Pinzhang Network Technology Co., Ltd., a majority-owned subsidiary and an operating entity established in the PRC on April 15, 2021 principally for providing advertising production and technical services.

The accompanying consolidated financial statements reflect the activities of Xuhang Holdings and each of the following entities:

Name	Place of incorporation	Date of incorporation or acquisition		Percentage of direct or indirect			Principal activities
XUHANG LTD BVI	British Virgin Islands (“BVI”)		July 31, 2020		100	%	Holding company
XUHANG (HK) LIMITED	Hong Kong		November 2, 2020		100	%	Holding company
Horgos Pinyue Network Technology Co., Ltd.	PRC		November 10, 2017		100	%	Advertising design and production; technical services; digital advertising services
Shanghai Xumi Digital Technology Co., Ltd.	PRC		March 19, 2021		90	%	Advertising production and technical services
Xiamen Xuhang Digital Technology Co., Ltd.	PRC		April 1, 2021		75	%	Marketing planning and advertising production
Shanghai Pinzhang Network Technology Co., Ltd.	PRC		March 24, 2021		51	%	Advertising production and technical services
Hangzhou Pusheng Network Technology Co., Ltd.	PRC		August 25, 2020		51	%	Advertising production and technical services
Hangzhou Ruirong Network Technology Co., Ltd.	PRC		February 7, 2021		51	%	Advertising production and technical services
Henan New Circle Network Technology Co., Ltd.	PRC		January 17, 2020		100	%	Advertising production and technical services
Xuhang Shuzhiyun Technology (Hangzhou) Co., Ltd.	PRC		June 2, 2021		100	%	Technical services and consultation; advertisement production
Xuhang Digital (Henan) Technology Co., Ltd.	PRC		January 22, 2021		51	%	Technical services and consultation
Hangzhou Xiqi Cultural Tourism Technology Co., Ltd.	PRC		May 12, 2021		100	%	Technical services and consultation

F-8

Name	Place of incorporation	Date of incorporation or acquisition	Percentage of direct or indirect			Principal activities
Yunnan Xumi Digital Technology Co., Ltd.	PRC	July 2, 2021		51	%	Marketing planning and advertising production
Jiangxi Xuzhixing Technology Co., Ltd.	PRC	July 19, 2021		51	%	Marketing planning and advertising production
Shanghai Huihang Network Technology Co., Ltd.	PRC	May 25, 2021		51	%	Marketing planning and advertising production
Hangzhou Youyou Culture and Tourism Technology Co., Ltd.	PRC	July 14, 2021		51	%	Marketing planning and advertising production
Anhui Jiayuan Information Technology Co., Ltd.	PRC	April 14, 2016		100	%	Advertising production and technical services
Henan Xuhang Network Technology Co., Ltd.	PRC	November 29, 2019		99	%	Internet advertising services
Wenzhou Xumi Network Technology Co., Ltd.	PRC	March 4, 2020		100	%	Marketing planning and advertising production
Xumi (Fujian) Digital Technology Co., Ltd. (“Xumi Fujian”)	PRC	February 8, 2021		85	%	Advertising production and technical services
Wuhan Xuhang Digital Technology Co., Ltd.	PRC	October 27, 2021		65	%	Digital cultural creative content services; technical consultation
Huangshan Xumi Digital Technology Co., Ltd.	PRC	September 16, 2021		90	%	Advertising design and production
Wuxi Xumi Creative Technology Co., Ltd.	PRC	September 10, 2021		75	%	Marketing planning and advertising production
Yangzhou Xumi Digital Technology Co., Ltd.	PRC	November 2, 2021		56.7	%	Marketing planning and branding management
Linyi Xumi Network Technology Co., Ltd.	PRC	August 26, 2021		60	%	Marketing planning and advertising production
Suzhou New Circle Network Technology Co., Ltd.	PRC	July 29, 2020		100	%	Technical services and consultation
Shanghai Xumi Digital Advertising Co., Ltd.	PRC	November 9, 2021		100	%	Advertising design and production
Shanghai Suhang Digital Technology Co., Ltd.	PRC	July 27, 2021		51	%	Marketing planning and advertising production
Hangzhou Xupai Technology Co., Ltd.	PRC	December 21, 2021		51	%	Technical services and consultation
Shanghai Hexian Lianhai Technology Group Co., Ltd.	PRC	January 18, 2022		51	%	Marketing planning and advertising production

F-9

Name	Place of incorporation	Date of incorporation or acquisition	Percentage of direct or indirect			Principal activities
Chengdu Xumi Digital Technology Co., Ltd.	PRC	February 28, 2022		80	%	Technical services and consultation
Hubei Xuhang Shuzhi Culture Co., Ltd.	PRC	February 28, 2022		90	%	Marketing planning and advertising production
Beijing Hexian Lianjing Technology Co., Ltd.	PRC	March 31, 2022		100	%	Advertising design and production
Beijing Xuhangyi Visual Technology Co., Ltd.	PRC	April 25, 2022		51	%	Advertising design and production

Note 2 – 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 (“U.S. GAAP”) for information pursuant to the rules and regulations of the U.S. Securities and Exchange Commission.

Principles of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of estimates and assumptions

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the balance sheet date and revenue and expenses during the reporting periods. Significant accounting estimates reflected in the Company’s consolidated financial statements include estimates for useful lives and impairment of property and equipment, impairment of goodwill, valuation allowance for deferred tax assets, allowance for doubtful accounts and inventory valuation for excess and obsolete inventories, lower of cost and net realizable value of inventories. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates, and as such, differences may be material to the consolidated financial statements.

Foreign currency translation and transaction

The accompanying consolidated financial statements are presented in the Renminbi (“RMB”), which is the reporting currency of the Company. The functional currency of Xuhang Holdings and Xuhang BVI is United State dollar, and the functional currency of HK Lehui, and Xuhang HK is Hong Kong dollar (“HKD”). The functional currency of the PRC subsidiaries is Renminbi (“RMB”). The functional currencies of the other subsidiaries are their respective local currencies. The determination of the respective functional currency is based on the criteria set out by ASC 830, Foreign Currency Matters (“ASC 830”).

Transactions denominated in currencies other than in the functional currency are translated into the functional currency using the exchange rates prevailing at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated into functional currency using the applicable exchange rates at the balance sheet date. Non-monetary items that are measured in terms of historical cost in foreign currency are re-measured using the exchange rates at the dates of the initial transactions. Exchange gains or losses arising from foreign currency transactions are included in the consolidated statements of comprehensive income.

F-10

The financial statements of the Company’s entities of which the functional currency is not RMB are translated from their respective functional currency into RMB. Assets and liabilities denominated in foreign currencies are translated into RMB at the exchange rates at the balance sheet date. Equity accounts other than earnings generated in current period are translated into RMB at the appropriate historical rates. Income and expense items are translated into RMB using the periodic average exchange rates. The resulting foreign currency translation adjustments are recorded in other comprehensive income or loss in the consolidated statements of comprehensive loss, and the accumulated foreign currency translation adjustments are presented as a component of accumulated other comprehensive loss in the consolidated statements of shareholders’ equity.

Convenience translation

Translations of balances in the consolidated balance sheets, consolidated statements of comprehensive loss and consolidated statements of cash flows from RMB into US$ as of and for the year ended December 31, 2021 are solely for the convenience of the reader and were calculated at the rate of US$1.00 to RMB7.11350, representing the noon buying rate in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York on September 30, 2022. No representation is made that the RMB amounts represent or could have been, or could be, converted, realized or settled into US$ at that rate on December 31, 2021, or at any other rate.

Business combinations and asset acquisitions

Business combinations are recorded using the acquisition method of accounting. The purchase price of the acquisition is allocated to the tangible assets, liabilities, identifiable intangible assets acquired, and non-controlling interest, if any, based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill. Acquisition-related expenses are expensed as incurred. Consideration transferred in a business acquisition is measured at the fair value as of the date of acquisition. Transaction costs directly attributable to the acquisition are expensed as incurred.

If an investment involves the acquisition of an asset or group of assets that does not meet the definition of a business, the transaction is accounted for as an asset acquisition. An asset acquisition is recorded at cost, which includes capitalized transaction costs, and does not result in the recognition of goodwill. The cost of the acquisition is allocated to the assets acquired on the basis of their relative fair values.

Fair value is determined based upon the guidance of ASC Topic 820, Fair Value Measurements and Disclosures, and is generally determined using Level 2 inputs and Level 3 inputs. The determination of fair value involves the use of significant judgment and estimates. The Company utilizes the assistance of a third-party appraiser to determine the fair value as of the date of acquisition.

Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, demand deposits, and time deposits placed with banks or other financial institutions and have original maturities of less than three months.

Short-term investment

Short-term investment consists of investment in a wealth management product issued by a bank that is redeemable by the Company at any time. The wealth management product is unsecured with variable interest rates. The Company measures the short-term investment at fair value and fair value is estimated based on the quoted price of similar products provided by banks at the end of each period.

F-11

Accounts receivable and allowance for doubtful accounts

Accounts receivable are stated at the historical carrying amount net of allowance for doubtful accounts.

The Company maintains an allowance for doubtful accounts which reflects its best estimate of amounts that potentially will not be collected. The Company determines the allowance for doubtful accounts taking into consideration various factors including but not limited to historical collection experience and credit-worthiness of the debtors as well as the age of the individual receivables balance. Additionally, the Company makes specific bad debt provisions based on any specific knowledge the Company has acquired that might indicate that an account is uncollectible. The facts and circumstances of each account may require the Company to use substantial judgment in assessing its collectability.

Inventories, net

Inventories, net consist of finished goods. Inventories are stated at the lower of cost and net realizable value. Cost of inventory is determined using the weighted average cost method. Adjustments are recorded to write down the cost of inventory to the estimated net realizable value due to slow-moving and obsolete inventory, which is dependent upon factors such as historical and forecasted consumer demand, and promotional environment. The Company takes ownership, risks, and rewards of the products purchased.

Property and equipment, net

Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows:

Office equipment	3-5 years
Furniture	3-5 years
Motor vehicles	5 years
Leasehold improvements	Over the shorter of the lease term or expected useful lives

The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the consolidated statements of operations and comprehensive loss. Expenditures for maintenance and repairs are charged to earnings as incurred, while additions, renewals, and betterments, which are expected to extend the useful life of assets, are capitalized.

Goodwill

Goodwill represents the excess of the purchase price over the amounts assigned to the fair value of the assets acquired and the liabilities assumed of an acquired business. In accordance with ASC Topic 350, Goodwill and Other Intangible Assets (“ASC 350”), recorded goodwill amounts are not amortized, but rather are tested for impairment annually or more frequently if there are indicators of impairment present.

In accordance with ASC 350, the Company assigned and assessed goodwill for impairment at the reporting unit level. A reporting unit is an operating segment or one level below the operating segment. As of December 31, 2020 and 2021, the Company as a whole was one reporting unit.

Pursuant to ASC 350, in 2020 and 2021, the Company evaluated all relevant factors including macroeconomic conditions, industry and market conditions, and financial performance. The Company weighed all factors in their entirety and concluded that it was not more-likely-than-not the fair value was less than the carrying amount of the reporting unit, and further impairment testing on goodwill was unnecessary. No impairment loss of goodwill was recognized for the years ended December 31, 2020 and 2021.

F-12

Long-term investments

The Company’s long-term investments include equity investments in entities and equity securities without readily determinable fair values. Investments 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, Investments — Equity Method and Joint Ventures (“ASC 323”). Under the equity method, the Company initially records its investments at fair value. 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 investments for impairment under ASC 323. An impairment loss on the equity method investments is recognized in earnings when the decline in value is determined to be other-than-temporary. Equity securities without readily determinable fair values and over which the Company has neither significant influence nor control through investments in common stock or in-substance common stock are measured and recorded using a measurement alternative that measures the securities at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes.

Related party transactions

A related party is generally defined as (i) any person and or their immediate family hold 10% or more of the Company’s securities (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. Related parties may be individuals or corporate entities.

Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated. It is not, however, practical to determine the fair value of amounts due from/to related parties due to their related party nature.

Fair value of financial instruments

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be either recorded or disclosed at fair value, the Company considers the principal or most advantageous market in which it would transact, and it also considers assumptions that market participants would use when pricing the asset or liability.

Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Accounting guidance establishes three levels of inputs that may be used to measure fair value:

Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2—Other inputs that are directly or indirectly observable in the marketplace.

Level 3—Unobservable inputs which are supported by little or no market activity.

F-13

Financial assets and liabilities of the Company primarily consist of cash and cash equivalents, available-for-sale investments, accounts receivable, amounts due from related parties, deposits and other receivables, accounts payable, amounts due to related parties, other payables, short-term bank and other borrowings and loan payables. As of December 31, 2020 and 2021, the carrying values of these financial instruments are approximated to their fair values.

Revenue recognition

The Company has adopted the new revenue standard, ASC 606, Revenue from Contracts with Customers (Topic 606) (“ASC 606”) for all periods presented. Consistent with the criteria of Topic 606, the Company recognizes revenue to depict the transfer of promised services to customers in an amount that reflects the consideration to which the entity expects to receive in exchange for those services. Value-added tax that the Company collects concurrent with revenue-producing activities is excluded from revenue.

The Company recognizes revenue as it satisfies a performance obligation when its customer obtains control of promised services, in an amount that reflects the consideration that the entity expects to receive in exchange for those services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration to which it is entitled in exchange for the services it transfers to the customer.

Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations it must deliver and which of these performance obligations are distinct. The Company recognizes revenue based on the amount of the transaction price that is allocated to each performance obligation when that performance obligation is satisfied or as it is satisfied.

The Company is a principal and records revenue on a gross basis when the Company is primarily responsible for fulfilling the service, has discretion in establishing pricing and controls the promised service before transferring that service to customers. Otherwise, the Company records revenue at the net amounts as commissions.

The following is a description of the accounting policy for the principal revenue streams of the Company:

Digital advertising services

Digital advertising services revenue primarily includes revenue from the provision of digital advertising services by the Company. The revenue is recognized when the related services are delivered based on the specific terms of the contract, which are commonly based on specified actions, such as cost per action (“CPA”), cost per mille (“CPM”), cost per click (“CPC”) or other preferences agreed upon with advertisers.

Revenue is recognized on a CPA, CPM or CPC basis at a point in time when agreed actions (such as download, installation, one thousand impressions of the advertisement, and click) are performed. The settlement of our digital advertising services is monthly when the monthly statement of our services is accepted by clients, and we recognize the relevant revenue monthly based on the monthly statements. While none of the factors individually are considered presumptive or determinative, because the Company is the primary obligor and is responsible for (i) identifying and contracting with third-party advertisers that the Company views as customers; (ii) identifying media publishers to provide ad inventory (media space) where the Company views the media publishers as suppliers; (iii) establishing the selling prices of CPA, CPM, or CPC pricing model; (iv) performing all billing and collection activities, including retaining credit risk; and (v) bearing sole responsibility for fulfillment of the advertising, the Company acts as the principal of these arrangements and therefore recognized revenue earned and costs incurred related to these transactions on a gross basis.

F-14

New media integrated content marketing services

New media integrated content marketing services target social networks and applications to spread brand awareness or promote particular products. The Company offers a service package comprising a variety of integrated marketing solutions, including marketing strategy and creativity consulting, writing advertorials, shooting and producing promotional videos/short videos, managing and operating customers’ social media accounts or online stores, planning and implementing live e-commerce events, and organizing offline marketing events or public relations activities. Customers may select one or more types of the integrated marketing services for the Company to implement based on their respective marketing targets, demand, budgets, and other factors.

The process of the new media integrated content marketing services refers to followings:

(vi) The Company signs contracts with customers. The contracts normally are framework contracts with terms typically within one year. According to the framework agreement, the Company is required to carry out marketing activities on a regular or irregular basis according to customers’ specific requirements.

(vii) After signing the contract, the Company provides a new media integrated content marketing campaign plan that is expected to be implemented in a certain period of time (normally a month). The plan is a new media integrated marketing service product package, which includes a variety of services. The Company provides the services included in the service package for a certain period of time specified in the plan (normally a month).

(viii) If the customers accept the plan, the Company provides related services to the customers including: training of the customers’ employees who participate in the new media integrated content marketing campaign, marketing content production, setting up new media accounts, marketing channel procurement, release of new media marketing content, and monitoring and evaluating the result and effectiveness of the marketing campaigns.

(ix) After provision of all the related services in the period of time specified in the contracts, the Company sends customers working reports or other acceptable references to confirm whether new media integrated content marketing campaign fulfilled the requirements of the signed contracts.

(x) Revenue derived from the provision of new media integrated content marketing services is recognized at the point in time when the new media integrated content marketing campaigns are implemented and accepted by customers (all the new media marketing services included in a particular service package have been implemented), according to the terms of the contracts, and the satisfaction of the performance obligation is measured based on the implementation of new media integrated content marketing services.

The Company generally asks customers to pay for the services after all the services have been completed and accepted by the customers. Occasionally, the Company receives the advance payment from customers (no more than 30%). The advance payment is generally paid after a contract is signed. The remaining balance will be paid after all the services have been completed and accepted by the customers.

The Company is a principal and records revenue on a gross basis when the Company is primarily responsible for fulfilling the new media integrated content marketing services. When the Company purchases ancillary services related to new media integrated content marketing campaigns on behalf of customers, such as purchasing air tickets and hotels for customers, the Company recognizes revenue at the net amount deducted from the purchasing amount as commissions.

The Company does not provide warranties, refunds, discounts, or rebates. The services provided by the Company are fully delivered when they have been completed and accepted by the customer (namely, the quality of the services has been approved by the customer). The Company does not have any after-sales guarantee obligations.

Segment reporting

ASC 280, Segment Reporting, (“ASC 280”), establishes standards for companies to report in their financialstatements information about operating segments, products, services, geographic areas, and major customers.

F-15

Based on the criteria established by ASC 280, our chief operating decision maker (“CODM”) has been identifiedas our Chief Executive Officer, who reviews consolidated results when making decisions about allocating resourcesand assessing performance of the company. As a whole and hence, we have only one reportable segment. We do notdistinguish between markets or segments for the purpose of internal reporting. As our long-lived assets are substantially located in the PRC, no geographical segments are presented.

Cost of revenue

Cost of revenue consists primarily of (i) staff and welfare costs; (ii) costs of new media integrated content marketing services procured from suppliers; (iii) traffic intermediary costs procured from suppliers; (iv) amortization of official accounts; (v) lease expenses for office space; and (vi) taxes and surcharges. Cost of digital advertising services consists primarily of items (i), (iii), (iv), (v), and (vi). Cost of new media integrated content marketing services consists primarily of items (i), (ii), (iv), (v), and (vi). For the traffic intermediary costs procured from suppliers, we recognize such costs when we agree on the payment amount based on monthly specified actions or other preferences with suppliers. For other costs, we recognize the costs as incurred.

Sales and marketing expenses

Sales and marketing expenses include (i) salaries and benefits of our sales and marketing staff; (ii) advertising fees; and (iii) other expenses, such as transportation expenses and entertainment expenses for our sales office.

Advertising expenses

Advertising costs are expensed as incurred and included in selling and marketing expenses in the statements of income and comprehensive income. Advertising expenses amounted to RMB50 and RMB994 (US$156) for the years ended December 31, 2020 and 2021, respectively.

Research and development expenses

Research and development costs are expensed as incurred. Research and development expenses include (i) salaries and benefits of our research and development staff; (ii) outsourced development expenses; and (iii) others expenses such as transportation expenses for our research and development office.

Operating leases

The Company adopted ASC Topic 842, Lease (“ASC 842”) on January 1, 2020, using the modified retrospective method. The Company determines if an arrangement is a lease at inception. Leases are classified as operating or finance leases in accordance with the recognition criteria in ASC 842-20-25. The Company’s leases do not contain any material residual value guarantees or material restrictive covenants.

The Company has elected the package of practical expedients, which allows the Company not to reassess (i) whether any expired or existing contracts as of the adoption date are or contain a lease, (ii) lease classification for any expired or existing leases as of the adoption date, and (iii) initial direct costs for any expired or existing leases as of the adoption date. Lastly, the Company elected the short-term lease exemption for all contracts with a lease term of 12 months or less.

At the commencement date of a lease, the Company determines the classification of the lease based on the relevant factors present and records a right-of-use (“ROU”) asset and lease liability for any operating lease. ROU assets acquired through a lease represent the right to use an underlying asset for the lease term, and operating lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are calculated as the present value of the lease payments not yet paid. If the rate implicit in the Company’s leases is not readily available, the Company uses an incremental borrowing rate based on the

F-16

information available at the lease commencement date in determining the present value of lease payments. This incremental borrowing rate reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. ROU assets include any lease prepayments and are reduced by lease incentives. Operating lease expense for lease payments is recognized on a straight-line basis over the lease term. Lease terms are based on the non-cancellable term of the lease.

Leases with an initial lease term of 12 months or less are not recorded on the consolidated balance sheets. Lease expense for these leases is recognized on a straight-line basis over the lease term.

Government subsidy

Government grants represent cash subsidies received from the PRC government. Cash subsidies that have no defined rules and regulations to govern the criteria necessary for companies to enjoy the benefits are recognized when received. Such subsidies are generally provided as incentives from the local government to encourage the expansion of local business. Total government grants received amounted to RMB962 and RMB4,204 (US$660) for the years ended December 31, 2020 and 2021, respectively.

Income taxes

Current income taxes are recorded in accordance with the regulations of the relevant tax jurisdiction. The Company accounts for income taxes under the asset and liability method in accordance with ASC 740, Income Tax, (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the tax consequences attributable to differences between carrying amounts of existing assets and liabilities in the financial statements and their respective tax basis, and operating loss carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in the consolidated statements of comprehensive loss in the period of change. Valuation allowances are established when necessary to reduce the amount of deferred tax assets if it is considered more likely than not that amount of the deferred tax assets will not be realized.

The Company records liabilities related to uncertain tax positions when, despite the Company’s belief that the Company’s tax return positions are supportable, the Company believes that it is more likely than not that those positions may not be fully sustained upon review by tax authorities. Accrued interest and penalties related to unrecognized tax benefits are classified as income tax expense. The Company did not recognize uncertain tax positions as of December 31, 2020 and 2021.

Comprehensive income (loss)

Comprehensive income (loss) consists of two components, net income and other comprehensive income (loss). Other comprehensive income (loss) refers to revenue, expenses, gains and losses that under U.S. GAAP are recorded as an element of shareholders’ equity but are excluded from net income. Other comprehensive income (loss) consists of a foreign currency translation adjustment resulting from the Company not using the United States dollar as its functional currencies.

Earnings per share

The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share.” ASC 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net income (loss) attributable to Xuhang Holdings divided by the weighted average ordinary share outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of the potential ordinary shares (such as convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or at the issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (namely those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.

F-17

Statutory reserves

Pursuant to the laws applicable to the PRC, PRC entities must make appropriations from their after-tax profit to the non-distributable “statutory surplus reserve fund.” Subject to certain cumulative limits, the “statutory surplus reserve fund” requires annual appropriations of 10% of after-tax profit until the aggregated appropriations reach 50% of the registered capital (as determined under accounting principles generally accepted in the PRC (“PRC GAAP”) at each year-end). For foreign invested enterprises and joint ventures in the PRC, annual appropriations should be made to the “reserve fund.” For foreign invested enterprises, the annual appropriation for the “reserve fund” cannot be less than 10% of after-tax profits until the aggregated appropriations reach 50% of the registered capital (as determined under PRC GAAP at each year-end). If the Company has accumulated loss from prior periods, the Company is able to use the current period net income after tax to offset against the accumulate loss.

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, such as government investigations and tax 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 performance and the specific facts and circumstances of each matter.

Concentration of credit risk

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company places its cash and cash equivalents with financial institutions with high credit ratings and quality.

The Company conducts credit evaluations of customers, and generally does not require collateral or other security from its customers. The Company establishes an allowance for doubtful accounts primarily based upon the factors surrounding the credit risk of specific customers.

Concentration of clients

As of December 31, 2020, one client accounted for 17.1% of the Company’s total accounts receivable. As of December 31, 2021, no clients accounted over 10% of the Company’s total accounts receivable.

Recently accounting pronouncements

The Company is an emerging growth company (“EGC”) as defined by the Jumpstart Our Business Startups Act (“JOBS Act”). The JOBS Act provides that an EGC can take advantage of extended transition periods for complying with new or revised accounting standards. This allows an EGC to delay adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company elected to take advantage of the extended transition periods. However, this election will not apply should the Company cease to be classified as an EGC.

On December 18, 2019, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2019-12, Income taxes (Topic 740), Simplifying the Accounting for Income Taxes. This guidance amends ASC Topic 740 and addresses several aspects including 1) evaluation of step-up tax basis of goodwill when there is not a business combination, 2) policy election to not allocate taxes on a separate entity basis to entities not subject to income tax, 3) accounting for tax law changes or rates during interim periods, 4) ownership changes from equity method investment to subsidiary or vice versa, 5) elimination of exception to intrapetrous allocation when there is gain in discontinued operations and a loss from continuing operations, and 6) treatment of franchise taxes that are partially based on income. The amendments in this Update are effective for the Company for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company is evaluating the impact of this guidance on its financial statements and related disclosures.

F-18

The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s balance sheets, statements of income and statements of cash flows.

Note 3 – Acquisition and disposal of subsidiaries

Acquisitions in 2020

Jiangxi Ku’o

On March 16, 2020, as part of its business strategy to expand the new media integrated content marketing service, the Company, through its subsidiary, Xuhang Network, acquired 100% of the equity interests in Jiangxi Ku’o for a total cash consideration of RMB90,000 and equity consideration of RMB105,000.

As Jiangxi Ku’o is in operation and possesses all the elements that are necessary to conduct normal operations as a business, such acquisition is accounted for as business combination.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the date of acquisition:

	RMB
Property and equipment, net		383
Customer contract		3,559
Other current assets		2,580
Total assets acquired		6,522
Other current liabilities		(6,500	)
Total liabilities assumed		(6,500	)
Net assets acquired		22
Purchase consideration		195,000
Goodwill		194,978

The revenue and net profit since the acquisition date included in the consolidated statements of operations for the period ended December 31, 2020 were RMB40,650 and RMB12,152, respectively. The goodwill, which is not tax deductible, is primarily attributable to synergies expected to be achieved from the acquisition.

Supplemental pro forma information:

The revenue and net profit for the year ended December 31, 2020 were RMB45,984 and RMB13,149, respectively.

Hangzhou Xingkong

On November 13, 2020, as part of its business strategy to expand the new media integrated content marketing services, the Company, through its subsidiary, Xuhang Network, acquired 100% of the equity interests in Hangzhou Xingkong for a total cash consideration of RMB23,400 and equity consideration of RMB48,000.

As Hangzhou Xingkong is in operation and possesses all the elements that are necessary to conduct normal operations as a business, such acquisition is accounted for as business combination.

F-19

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the date of acquisition:

	RMB
Property and equipment, net		29
Customer contract		3,264
Other non-current assets		37
Other current assets		2,390
Total assets acquired		5,720
Other current liabilities		(4,307	)
Total liabilities assumed		(4,307	)
Net assets acquired		1,413
Purchase consideration		71,400
Goodwill		69,987

The revenue and net profit since the acquisition date included in the consolidated statement of operations for the period ended December 31, 2020 were RMB10,683 and RMB363. The goodwill, which is not tax deductible, is primarily attributable to synergies expected to be achieved from the acquisition.

Supplemental pro forma information:

The revenue and net profit for the year ended December 31, 2020 were RMB91,076 and RMB1,078, respectively.

Hangzhou Jinting

On November 13, 2020, as part of its business strategy to expand the new media integrated content marketing services, the Company, through its subsidiary, Xuhang Network, acquired 100% of the equity interests in Hangzhou Jinting for a total cash consideration of RMB7,000 and equity consideration of RMB14,000.

As Hangzhou Jinting is in operation and possesses all the elements that are necessary to conduct normal operations as a business, such acquisition is accounted for as business combination.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the date of acquisition:

	RMB
Property and equipment, net		370
Customer contract		5,468
Other non-current assets		177
Other current assets		3,346
Total assets acquired		9,361
Other current liabilities		(10,278	)
Total liabilities assumed		(10,278	)
Net liabilities assumed		(917	)
Purchase consideration		21,000
Goodwill		21,917

F-20

The revenue since the acquisition date included in the consolidated statement of operations for the period ended December 31, 2020 were RMB514 and RMB74, respectively. The goodwill, which is not tax deductible, is primarily attributable to synergies expected to be achieved from the acquisition.

Changes in the carrying amount of goodwill for the years ended December 31, 2020 and 2021 were as follows:

	RMB
Goodwill
Balance, December 31, 2019		—
Additions		286,882
Impairment		—
Balance, December 31, 2020		286,882
Additions		83
Impairment		—
Balance, December 31, 2021		286,965
	USD
Balance, December 31, 2021		40,341

Note 4 – Cash and cash equivalents

Cash and cash equivalents consisted of the following:

	As of December 31,
	2020		2021
	RMB		RMB		US$
Cash on hand		121		146		21
Cash at bank		56,678		112,821		15,860
Other cash and cash equivalents		288		433		61
Cash and cash equivalents		57,087		113,400		15,942

Note 5 – Accounts receivable, net

Accounts receivable, net consisted of the following:

	As of December 31,
	2020			2021
	RMB			RMB		US$
Accounts receivable		129,540			167,965		23,612
Less: Allowance for doubtful accounts		(5,133	)		—		—
Accounts receivable, net		124,407			167,965		23,612

F-21

Movements of allowance for doubtful accounts were as follows:

	As of December 31,
	2020			2021
	RMB			RMB			US$
Allowance for doubtful accounts, beginning balance		(5,133	)		(5,133	)		(722	)
Add: Provision for doubtful accounts		—			—			—
Reversal of doubtful accounts		—			5,133			722
Uncollectible receivables written-off		—			—			—
Allowance for doubtful accounts, ending balance		(5,133	)		—			—

Note 6 – Inventories, net

Inventories, net consisted of the following:

	As of December 31,
	2020		2021
	RMB		RMB			US$
Finished goods		—		1,884			264
Work in process		—		—			—
Raw materials		—		—			—
		—		1,884			265
Less: provision for impairment of inventories		—		(59	)		(8	)
Inventories, net		—		1,825			257

During the years ended December 31, 2020 and 2021, the Company recorded provision for impairment of inventories of RMB59 (US$9) and nil for the obsolete inventories in cost of revenue, respectively.

Note 7 – Property and equipment, net

Property and equipment, net consisted of the following:

	As of December 31,
	2020			2021
	RMB			RMB			US$
At cost:
Office equipment		3,502			5,219			734
Furniture		636			3,062			430
Motor vehicles		2,466			2,218			312
Leasehold improvement		6,299			22,805			3,206
		12,903			33,304			4,682
Accumulated depreciation		(4,555	)		(6,666	)		(937	)
Property and equipment, net		8,348			26,638			3,745

Depreciation expenses for the years ended December 31, 2020 and 2021 amounted to RMB2,993 and RMB2,347 (US$330), respectively.

F-22

Note 8 – Long term investments

	As of December 31,
	2020		2021
	RMB		RMB		US$
Equity securities without readily determinable fair values investments
Shenzhen Zhuoya Network Media Co., LTD. (“Shenzhen Zhuoya”)		100		100		14
Hengyang Yixin Culture Media Co., LTD. (“Hengyang Yixin”)		50		100		14
Xi’an Xuhang Digital Technology Co., LTD. (“Xi’an Xuhang”)		—		2,250		316
Beijing Pinte Visual Culture Media Co., LTD. (“Beijing Pinte”)		700		700		98
Shanghai Er’shang Culture Communication Co., LTD. (“Shanghai Er’shang”)		1,333		1,333		187
Putian Shoe Brand Operation Service Co., LTD. (“Putian Shoe”)		—		2,813		397
Cost of equity investments without readily determinable fair value		2,183		7,296		1,026
Impairment on equity investments without readily determinable fair value		—		—		—
Carrying amount of Equity investments without readily determinable fair value		2,183		7,296		1,026

In May 2020, the Company through its subsidiary, Xuhang Network, jointly set up Shenzhen Zhuoya with capital injection of RMB100 and held 20% of the investee as of December 31, 2020 and 2021. Based on the article of association, the Company cannot exercise significant influence over Shenzhen Zhuoya’s operation and financial decisions.

In August 2020, the Company through its subsidiary, Xuhang Network, entered into an agreement to invest in Hengyang Yixin. The Company injected capital of RMB50 and RMB50 (US$7) in 2020 and 2021, respectively. The Company held 40% and 40% of equity interest as of December 31, 2020 and 2021, respectively. Based on the investment agreement, the Company cannot exercise significant influence over Hengyang Yixin’s operation and financial decisions.

In December 2020, the Company through its subsidiary, Xuhang Network, jointly set up Xi’an Xuhang with capital injection of RMB2,250 and held 45% of the investee as of December 31, 2020 and 2021. Based on the article of association, the Company cannot exercise significant influence over Xi’an Xuhang’s operation and financial decisions.

In July 2020, the Company through its subsidiary, Horgos Weizan, entered into an agreement to invest in Beijing Pinte. The Company injected capital of RMB700 and held 28.75% of equity interest as of December 31, 2020 and 2021. Based on the investment agreement, the Company cannot exercise significant influence over Beijing Pinte’s operation and financial decisions.

In September 2020, the Company through its subsidiary, Horgos Weizan, entered into an agreement to invest in Shanghai Er’shang. The Company injected capital of RMB1,333 and held 40% of equity interest as of December 31, 2020 and 2021. Based on the investment agreement, the Company cannot exercise significant influence over Shanghai Er’shang’s operation and financial decisions.

In April 2021, the Company through its subsidiary, Xumi Fujian, jointly set up Putian Shoe with capital injection of RMB2,813 and held 37.5% of the investee as of December 31, 2020 and 2021. Based on the investment agreement, the Company cannot exercise significant influence over Putian Shoe’s operation and financial decision.

F-23

Note 9 – Accrued expenses and other payables

The components of accrued expenses and other payables were as follows:

	As of December 31,
	2020		2021
	RMB		RMB		US$
Cash payables for the acquisition		60,750		43,500		6,115
Customers deposit		2,334		13,115		1,844
Other payables for daily operation		626		1,930		271
Others		2,870		2,235		314
		66,580		60,780		8,544

Other payables mainly consisted of cash payables for the acquisition, customer deposit, and other payables for daily operation.

Note 10 – Loans

Outstanding balances of loans consisted of the following:

As of December 31, 2020	Balance			Maturity date		Effective interest rate			Guarantee
China Merchants Bank Co., LTD. Hangzhou Fengqi Sub-branch (“CMB”)		7,000			2021/3/9		5.10	%	N/A
Hangzhou United Rural Commercial Bank Co., LTD. Shangtang Sub-branch (“HURC”)		5,000			2021/1/12		6.66	%	N/A
HURC		1,500			2021/8/17		4.80	%	N/A
Total loans		13,500
Less: loan - current		(13,500	)
Loan - non-current		—

As of December 31, 2021	Balance			Maturity date		Effective interest rate			Guarantee
CMB		7,000			2022/8/22		5.10	%		Credit guarantee: Mr. Xiao
HURC		5,000			2022/8/31		5.80	%
HURC		5,000			2022/8/31		5.80	%
Total loans		17,000
Less: loan - current		(17,000	)
Loan - non-current (RMB)		—
Loan - non-current (US$)		—

Interest expenses for the years ended December 31, 2020 and 2021 amounted to RMB866 and RMB833 (US$117), respectively.

F-24

As of December 31, 2021, the Company’s future loan obligations according to the terms of the loan agreement were as follows:

2022	17,000
2023 and thereafter	—
Total	17,000

Note 11 – Convertible promissory notes

On December 13, 2019, HK Lehui entered into a loan agreement (“Loan 2019”) with Hexagon Credit Limited (“HC”), stipulating that HC would provide HK Lehui a loan amounting to HKD20,000,000 with the interest of 15.0% per annum. HK Lehui received the loan from HC in full on December 17, 2019.

On March 20, 2020, Xuhang Network, HK Lehui and Mr. Xiao entered into a convertible promissory notes agreement with Hexagon Special Opportunities SPC (“HSO”), stipulating that SPC would grant HK Lehui a convertible promissory note with a facility from HKD50,000,000 to HKD150,000,000.

On April 8, 2020, HSO purchased and paid cash consideration of HKD30,000,000 for the convertible promissory notes (Notes I”), with the interest of 15.0% per annum and maturity date of December 31, 2021.

On September 30, 2020, HC, HSO and HK Lehui jointly signed a supplementary agreement for Loan 2019, stipulating that HC would transfer the rights under Loan 2019 to HSO. HSO converted such loan of HKD20,000,000 including the accrued interest of HKD2,367,123 into the convertible promissory notes (“Notes II”) amounting to HKD22,367,123, with the interest rate of 15.0% per annum and maturity date of December 31, 2021.

Conversion

On August 10, 2021, HSO and the Company signed a conversion agreement, which HSO converted all portion of Notes I and Notes II with the principal of HKD52,367,123 and interest of HKD9,061,643 into the Company’s newly issued 4,156.1143 shares, with the conversion price of HKD14,780.34 per share. Such conversion was completed on December 1, 2021.

Note 12 – Income taxes

Cayman Islands

Under the current laws of the Cayman Islands, Xuhang Holdings is not subject to tax on income or capital gains. Additionally, upon payments of dividends to the shareholders, no Cayman Islands withholding tax will be imposed. 

British Virgin Islands

The Company’s subsidiary, Xuhang BVI, is incorporated in the BVI and under the current laws of the BVI, Xuhang BVI is not subject to tax on income or capital gain. In addition, payments of dividends by such subsidiary to its shareholders are not subject to withholding tax in the BVI.

Hong Kong

Xuhang HK and HK Lehui are incorporated in Hong Kong and are subject to Hong Kong Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Hong Kong tax laws. The applicable tax rate is 8.25% on assessable profits arising in or derived from Hong Kong up to HKD2,000,000 and 16.5% on any part of assessable profits over HKD2,000,000.

F-25

PRC

The Company’s PRC subsidiaries are governed by the income tax laws of the PRC and the income tax provision in respect to operations in the PRC is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under the Enterprise Income Tax Laws of the PRC (the “EIT Laws”), domestic enterprises and Foreign Investment Enterprises (the “FIE”) are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays and even tax exemption may be granted on case-by-case basis. EIT grants preferential tax treatment to certain High and New Technology Enterprises (“HNTEs”). Under this preferential tax treatment, HNTEs are entitled to an income tax rate of 15%, subject to a requirement that they re-apply for the HNTE status every three years. Xuhang Network obtained the HNTE tax status in December 2021, which reduced its statutory income tax rate to 15% from 2021 to 2024. In addition, Anhui Jiayuan and Xuhang Network was qualified as a software enterprise in 2016, and thus was entitled to a five-year tax holiday (full exemption for the first two years and a 50% reduction in the statutory income tax rate for the following three years) until its software enterprise qualification expired in 2020. Horgos Xumi, Horgos Weizan, Horgos Pinyue, and Horgos Jinting were registered in Kashi Special Economic Zone, which allows them to utilize a five-year 100% exemption. Horgos Xumi’s exemption period was from 2017 to 2021. Horgos Weizan’s and Horgos Pinyue’s exemption period were from 2018 to 2022. Khorgos Jinting’s exemption period was from 2020 to 2024.

Reconciliation of the differences between statutory income tax rate and the effective tax rate

The reconciliation of tax computed by applying the statutory income tax rate of 25% for the years ended December 31, 2020 and 2021 applicable to the PRC operations to income tax expenses is as follows:

	For the year ended December 31,
	2020			2021
Statutory income tax rate		25.0	%		25.0	%
Income tax exemptions and reliefs		(18.5	)%		(21.3	)%
Non-deductible expenses		1.0	%		0.4	%
Research and development expenses		(1.1	)%		(0.4	)%
Prior year loss carry forward		(0.9	)%		(1.0	)%
Valuation allowance		6.2	%		7.8	%
		11.7	%		10.5	%

Significant components of the provision for income taxes were as follows:

	For the year ended December 31,
	2020		2021
	RMB		RMB		US$
Current income tax expenses		5,944		8,116		1,141
Deferred tax expenses		—		—		—
		5,944		8,116		1,141

F-26

For the purpose of presentation in the consolidated balance sheets, deferred income tax assets and liabilities have been offset and included in other assets on the accompanying consolidated balance sheets. Significant component of deferred tax assets were as follows:

	As of December 31,
	2020			2021
	RMB			RMB			US$
Deferred tax assets
Tax losses		3,145			9,140			1,285
Valuation allowance		(3,145	)		(9,140	)		(1,285	)
Total deferred tax assets		—			—			—

The Company operates through several subsidiaries. Valuation allowance is considered for each of the entities. Realization of the net deferred tax assets is dependent on factors including future reversals of existing taxable temporary differences and adequate future taxable income, exclusive of reversing deductible temporary differences and tax loss or credit carry forwards. The Company evaluates the potential realization of deferred tax assets on an entity-by-entity basis. As of December 31, 2020 and 2021, the Company and all of its subsidiaries were in cumulative loss position, valuation allowances were provided against deferred tax assets in entities where it was determined it was more likely than not that the benefits of the deferred tax assets will not be realized.

Uncertain tax positions

The tax authority of the PRC Government conducts periodic and ad hoc tax filing reviews on business enterprises operating in the PRC after those enterprises complete their relevant tax filings. In general, the PRC tax authority has up to five years to conduct examinations of the tax filings of the Company’s PRC entities. Accordingly, the PRC subsidiaries’ tax years of 2014 through 2020 remain open to examination by the respective tax authorities. It is therefore uncertain as to whether the PRC tax authority may take different views about the Company’s PRC subsidiaries’ tax filings, which may lead to additional tax liabilities.

The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of December 31, 2020 and 2021, the Company did not have any significant unrecognized uncertain tax positions.

Note 13 – Shareholders’ equity

Xuhang Holdings was established under the laws of the Cayman Islands on June 16, 2020. The issued number of ordinary shares is 50,000.0000 shares with a par value of US$1.0 per ordinary share.

The Company completed new issuance of 41,972.2302, 21,481.6094 and 4,156.1143 shares with a par value of US$1.0 per ordinary share on April 23, 2021, September 26, 2021 and December 1, 2021, respectively.

Note 14 – Operating leases

The Company entered into operating lease agreements for office spaces and employee dormitories. None of the amounts disclosed below for these leases contains variable payments, residual value guarantees or options that were recognized as part of the ROU assets and lease liabilities. As the Company’s leases did not provide an implicit discount rate, the Company used an incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments.

As of December 31, 2021, the Company recognized operating lease liabilities, including current and noncurrent, in the amount of RMB17,705 (US$2,489) and the corresponding operating lease ROU assets of RMB17,705 (US$2,489).

F-27

Rental expenses for the years ended December 31, 2020 and 2021 were RMB4,226 and RMB7,492 (US$1,053), respectively.

Lease commitments

The Company’s maturity analysis of operating lease liabilities as of December 31, 2021 was as follows:

	Operating Leases
2022		8,415
2023		7,056
2024		2,305
2025		740
Total lease payments		18,516
Less: imputed interest		(811	)
Present value of operating lease liabilities		17,705
Less: current obligation		(7,872	)
Long-term obligation at December 31, 2021		9,833

Supplemental disclosure related to operating leases were as follows:

Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases	6,469
Weighted average remaining lease term of operating leases	2.53
Weighted average discount rate of operating leases	4.45	%

Note 15 – Statutory reserves and restricted net assets

As a result of the PRC laws and regulations and the requirement that distributions by PRC entities can only be paid out of distributable profits computed in accordance with PRC GAAP, the PRC entities are restricted from transferring a portion of their net assets to the Company. Amounts restricted include paid-in capital, additional paid-in capital, and the statutory reserves of the Company’s PRC subsidiaries.

	As of December 31,
	2020		2021
	RMB		RMB		US$
Additional paid-in-capital		233,651		283,826		39,899
Statutory reserve		2,286		5,048		710
Total restricted net assets		235,937		288,874		40,609

As of December 31, 2020 and 2021, total restricted net assets were RMB235,937 and RMB288,874 (US$40,609), respectively.

Note 16 – Related party transactions

a) Related parties

Name of related parties	Relationship with the Company
Mr. Xiao	Chairman and CEO
Lilian Liu	Shareholder of the Company
Yu Jiang	Shareholder of the Company
Shanghai Qishu Business Management Partnership LP. (“Shanghai Qishu”)	Shareholder of the Company

F-28

Name of related parties	Relationship with the Company
Genshui Bao	Shareholder of the Company
Congcong Wei	Shareholder of the Company
Shanghai Huiji Network Technology Co., LTD (“Shanghai Huiji”)	Non-controlling shareholder of the Company’s subsidiary
Zhejiang Lingshang Cultural Creative Co., LTD (“Zhejiang Lingshang”)	A company controlled by a director of our subsidiary
Shanghai Huihui Hanghang Management Consulting Co., LTD (“Shanghai Huihui”)	Non-controlling shareholder of the Company’s subsidiary
Shanghai Er’shang	Equity investee of the Company
Beijing Pinte	Equity investee of the Company
Longtian Zhou	A director of the Company’s subsidiary
Shenzhen Zhuoya	Equity investee of the Company
Zhoushan Youtai Investment Partnership LP. (“Zhoushan Youtai”)	Original shareholder of the Company*
Xi’an Saixinghang Enterprise Management Partnership LP. (“Xi’an Saixinghang”)	A company controlled by principal shareholder of the Company
Zhejiang Weilai Advertising Co. LTD (“Zhejiang Weilai”)	A company controlled by principal shareholder of the Company
Zhejiang Weicheng Information Technology Co. LTD (“Zhejiang Weicheng”)	A company controlled by principal shareholder of the Company
Sewing Time Trading (Shenzhen) Co. LTD (“Sewing Time”)	Non-controlling shareholder of the Company’s subsidiary
Hangzhou Find Fun Creative Culture Co. LTD (“Hangzhou Find Fun”)	A company controlled by principal shareholder of the Company
Hangzhou Tianyi Electronic Commerce Co. LTD (“Hangzhou Tianyi”)	A company controlled by principal shareholder of the Company
Hangzhou Netwide Network Technology Co. LTD (“Hangzhou Netwide”)	A company controlled by principal shareholder of the Company
Tonghua Lvjian Agricultural Technology Development Co. LTD (“Tonghua Lvjian”)	A company controlled by a non-controlling shareholder of the Company’s subsidiary
Hangzhou Youxing Technology Co., LTD (“Hangzhou Youxing”)	A non-controlling shareholder of the Company’s subsidiary
Tailong Zheng	A non-controlling shareholder of the Company’s subsidiary
Qingdao Songshe Network Technology Co., LTD. (“Qingdao Songshe”)	A company controlled by a director of the Company’s subsidiary
Xinzu Gong	A director of the Company’s subsidiary
Lei Xu	A director of the Company’s subsidiary
Lei Xin	A director of the Company’s subsidiary

F-29

Name of related parties	Relationship with the Company
Hangzhou Meihangxiujue Technology Co., LTD. (“Hangzhou Meihangxiujue”)	A company invested by the Company
Feng Luo	A director of the Company’s subsidiary
Xiaoyan Tong	A director of the Company’s subsidiary
Pingxiang Youxu Business Management Partnership (Limited Partnership) (“Pingxiang Youxu”)	A company controlled by principal shareholder of the Company
Wenying Cong	A director of the Company’s subsidiary
Weiguo Tang	A director of the Company’s subsidiary

*Zhoushan Youtai ceased to be a related party, as it sold its shares in January 2021.

F-30

b) Amounts due from related parties

	Nature	As of December 31,
		2020		2021
		RMB		RMB		US$
Accounts receivable, net
Zhejiang Lingshang	Business operation		—		904		127
Shanghai Er’shang	Business operation		3,049		351		49
Zhejiang Weicheng	Business operation		796		300		42
Tonghua Lvjian	Business operation		—		270		38
Sewing Time	Business operation		—		190		27
Zhejiang Weilai	Business operation		9,251		119		17
			13,096		2,134		300
Other receivable, net
Yu Jiang	Loan		—		3,390		477
Mr. Xiao	Loan		34,895		5,403		760
Xi’an Saixinghang	Loan		—		750		105
Tailong Zheng	Staff petty cash		—		629		88
Congcong Wei	Loan		1,200		550		77
Genshui Bao	Staff petty cash		—		420		59
Shenzhen Zhuoya	Loan		450		315		44
Shanghai Huiji	Loan		—		303		43
Shanghai Er’shang	Loan		—		300		42
Qingdao Songshe	Loan		—		270		38
Zhejiang Lingshang	Loan		—		250		35
Shanghai Qishu	Loan		—		139		20
Xinzu Gong	Staff petty cash		—		110		15
Lei Xu	Staff petty cash		—		101		14
Beijing Pinte	Loan		100		100		14
Shanghai Huihui	Loan		—		27		4
Lei Xin	Staff petty cash		—		20		3
Hangzhou Meihangxiujue	Loan		—		19		3
Feng Luo	Staff petty cash		—		4		1
Xiaoyan Tong	Staff petty cash		—		3		—
Zhoushan Youtai	Loan		14,162		—		—
Pingxiang Youxu	Loan		2,250		—		—
Longtian Zhou	Loan		1,000		—		—
Lilian Liu	Staff petty cash		25		—		—
			54,082		13,103		1,842
Amounts due from related parties			67,178		15,237		2,142

F-31

c) Amounts due to related parties

	Nature		As of December 31,
			2020		2021
			RMB		RMB		US$
Accounts payables
Hangzhou Find Fun		Business operation		—		300		42
Hangzhou Netwide		Business operation		450		—		—
Hangzhou Tianyi		Business operation		200		—		—
				650		300		42
Accrued expenses and other liabilities
Wenying Cong		Staff reimbursement payables		—		297		42
Genshui Bao		Loan and cash payables for the acquisitions		26,250		—		—
Weiguo Tang		Staff reimbursement payables		—		57		8
Lilian Liu		Cash payables for the acquisitions		7,000		—		—
Yu Jiang		Cash payables for the acquisitions		868		—		—
				34,118		354		50
Amounts due to related parties				34,768		654		92

d) Other related party transactions

	For the year ended December 31,
	2020		2021
	RMB		RMB		US$
Services provided to:
Shanghai Er’shang		2,751		6,882		967
Zhejiang Weilai		3,964		1,180		166
Zhejiang Lingshang		—		974		137
Sewing Time		—		453		64
Tonghua Lvjian		—		247		35
Shanghai Huiji		—		51		7
		6,715		9,787		1,376
	For the year ended December 31,
	2020		2021
	RMB		RMB		US$
Services provided by:
Hangzhou Youxing		—		766		108
Shenzhen Zhuoya		—		472		66
Qingdao Songshe		—		377		53
Hangzhou Find Fun		297		297		42
Hangzhou Netwide		149		149		21
Hangzhou Tianyi		189		—		—
		635		2,061		290

F-32

Note 17 – Commitments and contingencies

Contingencies

From time to time, the Company is subject to certain legal proceedings, claims and disputes that arise in the ordinary course of business. Although the outcomes of these legal proceedings cannot be predicted, the Company does not believe these actions, in the aggregate, will have a material adverse impact on its financial position, results of operations or liquidity. As of December 31, 2021, the Company has no outstanding litigation.

Operating lease commitments

The Company signed several lease agreements to rent offices and facilities for its operations.

As of December 31, 2021, the Company was obligated under operating leases for minimum rentals as follows:

	Minimum lease payment
	RMB
2022		8,415
2023		7,056
2024		2,305
2025		740
Thereafter		—
Total		18,516

Loan commitments

The Company signed several loan agreements for its operations.

As of December 31, 2021, the Company’s future loan obligations according to the terms of the loan agreement were as follows:

	Loan payment
	RMB
2022		17,000
2023 and thereafter		—
Total		17,000

Note 18 – Subsequent events

On July 19, 2022, the Company entered into revolving lines of credit in the form of overdraft agreements with Huaxia Bank Beijing Shangdi branch to obtain aggregate maximum loans of RMB15,000,000 (US$2,108,667) The interest rate of loans is 4.785%. The maturity date of the loans is July 8, 2023. As of the date of the prospectus, the outstanding loan amount is RMB15,000,000 (US$2,108,667).

On September 5, 2022, the Company entered into revolving lines of credit in the form of overdraft agreements with HURC to obtain aggregate maximum loans of RMB10,000,000 (US$1,405,778). The interest rate ranges from 4.70% to 5.20% per annum. The maturity date of the loans is September 1, 2023. As of the date of the prospectus, the outstanding loan amount is RMB RMB10,000,000 (US$1,405,778).

The Company has assessed all events from December 31, 2021 up through September 27, 2022, which is the date that these consolidated financial statements are available to be issued, unless as disclosed below, there are not any material subsequent events that require disclosure in these consolidated financial statements.

F-33

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To: The Board of Directors and Shareholders of

Xuhang Holdings Limited

Results of Review Interim Financial Information

We have reviewed the accompanying condensed consolidated balance sheets of Xuhang Holdings Limited (the “Company”) as of September 30, 2022, and the related condensed consolidated statements of income and comprehensive income, changes in shareholders’ equity, and cash flows for the nine-month periods ended September 30, 2021 and 2022, and the related notes (collectively referred to as the interim financial statements). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2021, and the related statements of income and comprehensive income, changes in equity and cash flows in each of the years for the two-year period ended December 31, 2021; and in our report dated September 27, 2022, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2021, is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived.

Basis for Review Results

These interim financial statements are the responsibility of the Company’s management. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. 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.

/s/ WWC, P.C.

WWC, P.C.

Certified Public Accountants

PCAOB ID No.1171

We have served as the Company’s auditor since 2022.

San Mateo, California

December 23, 2022

F-34

XUHANG HOLDINGS LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands of RMB and US$, except for number of shares and per share data)

	As of
	December 31,		September 30,
	2021		2022
	RMB		RMB		US$
			(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		113,400		85,769		12,057
Short term investment		8,010		36,324		5,106
Accounts receivable, net		167,965		232,624		32,702
Amounts due from related parties		15,237		12,457		1,751
Advance to suppliers		13,332		36,660		5,154
Other receivable, net		90,512		98,602		13,861
Inventories, net		1,825		1,627		229
Prepaid expenses		1,470		655		93
Total current assets		411,751		504,718		70,953
Non-current assets
Long-term investments		7,296		6,168		867
Property and equipment, net		26,638		20,431		2,872
Operating lease right-of-use assets		17,705		11,933		1,678
Goodwill		286,965		286,965		40,341
Other non-current assets		11,538		2,506		352
Total non-current assets		350,142		328,003		46,110
Total assets		761,893		832,721		117,063
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payables		51,971		63,829		8,973
Advance from customers		2,655		6,889		968
Loans—current		17,000		25,000		3,514
Amounts due to related parties		654		1,314		185
Accrued expenses and other liabilities		60,780		40,190		5,650
Interest payables		—
Dividend payables		267		—		—
Income tax payables		16,307		25,471		3,581
Operating lease liabilities—current		7,872		7,612		1,070
Total Current Liabilities		157,506		170,305		23,941
Non-current liabilities:
Operating lease liabilities—non-current		9,833		4,321		607
Deferred revenue—non-current		2,140		1,473		207
Total non-current liabilities		11,973		5,794		814
Total liabilities		169,479		176,099		24,755
Shareholders’ equity
Ordinary shares (US$0.002 par value; 500,000.000 shares authorized, 58,804,977 and 58,804,977 issued and outstanding as of December 31, 2021 and September 30, 2022, respectively*)		—		—		—
Additional paid-in-capital		283,826		283,826		39,900
Statutory reserve		5,048		5,048		710
Retained earnings		250,204		307,820		43,273
Accumulated other comprehensive income		1,544		6,814		958
Total XUHANG HOLDINGS LIMITED shareholders’ equity		540,622		603,508		84,841
Non-controlling interest		51,792		53,114		7,467
Total shareholders’ equity		592,414		656,622		92,308
Total liabilities and shareholders’ equity		761,893		832,721		117,063

* Retrospectively restated for 500-for-1 forward split on December 2, 2022.

The accompanying notes are an integral part of these consolidated financial statements.

F-35

XUHANG HOLDINGS LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Amounts in thousands of RMB and US$, except for number of shares and per share data)

	For the nine months ended September 30,
	2021			2022
	RMB			RMB			US$
Net revenue:
Digital advertising services		90,191			42,466			5,970
New media integrated content marketing services		222,824			296,864			41,732
Total net revenue		313,015			339,330			47,702
Cost of revenue		(215,919	)		(221,772	)		(31,176	)
Gross profit		97,096			117,558			16,526
Sales and marketing expenses		(4,906	)		(3,721	)		(523	)
General and administrative expenses		(42,624	)		(53,674	)		(7,545	)
Research and development expenses		(2,190	)		(1,938	)		(272	)
Allowance for doubtful debt and inventory		—			(935	)		(132	)
Total operating expenses		(49,720	)		(60,268	)		(8,472	)
Operating income		47,376			57,290			8,054
Other Income		4,939			3,781			532
Other Expenses		(974	)		(1,088	)		(153	)
Interest Income		241			160			22
Interest Expense		(7,309	)		(128	)		(18	)
Government subsidy		1,083			1,023			144
Impairment of long-term investment		—			(1,628	)		(229	)
Investment income		64			1,619			228
Income before income taxes		45,420			61,029			8,580
Income tax expense		(4,003	)		(8,607	)		(1,210	)
Net Income		41,417			52,422			7,370
Less: net loss attributable to non-controlling interest		4,492			5,194			731
Net income attributable to XUHANG HOLDINGS LIMITED’s ordinary shareholders		45,909			57,616			8,101
Comprehensive income
Net income		41,417			52,422			7,370
Other comprehensive income
Foreign currency translation adjustment		(1,822	)		5,270			741
Total comprehensive income		39,595			57,692			8,111
Less: comprehensive loss attributable to non-controlling interest		—			—			—
Comprehensive income attributable to the Company’s ordinary shareholders		39,595			57,692			8,111
Income per share
Ordinary shares—basic and diluted		0.73			0.89			0.13
Weighted average shares outstanding used in calculating basic and diluted loss per share*:
Ordinary shares—basic and diluted		56,725,920			58,804,977			58,804,977

* Retrospectively restated for 500-for-1 forward split on December 2, 2022.

The accompanying notes are an integral part of these consolidated financial statements.

F-36

XUHANG HOLDINGS LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Amounts in thousands of RMB and US$, except for number of shares and per share data)

	Ordinary shares*				Additional paid-in capital		Statutory reserve		Retained earnings		Accumulated other comprehensive Income (Loss)			Total XUHANG HOLDINGS LIMITED. Shareholder’s equity			Non- controlling interests			Total shareholder’s Equity
	Share*		Amount
Balance, December 31, 2020 (RMB)		56,726,920		—		233,651		2,286		175,663		1,698			413,298			2,964			416,262
Contribution by non- controlling shareholders															—			54,086			54,086
Net income		—		—		—		—		45,909		—			45,909			(4,492	)		41,417
Transfer to statutory reserve		—		—		—		—		—		—			—			—			—
Foreign currency translation adjustment		—		—		—		—		—		(1,822	)		(1,822	)		—			(1,822	)
Balance, September 30, 2021 (RMB)		56,726,920		—		233,651		2,286		221,572		(124	)		457,385			52,558			509,943
Balance, December 31, 2021 (RMB)		58,804,977		—		283,826		5,048		250,204		1,544			540,622			51,792			592,414
Issuance of common shares for cash		—		—		—		—				—			—			—			—
Contribution by noncontrolling interest		—		—		—		—				—			—			6,516			6,516
Net income		—		—		—		—		57,616		—			57,616			(5,194	)		52,422
Conversion of long-term loan		—		—		—		—				—			—			—			—
Transfer to statutory reserve		—		—		—		—		—		—			—			—			—
Foreign currency translation adjustment		—		—		—		—				5,270			5,270			—			5,270
Balance, September 30, 2022 (RMB)		58,804,977		—		283,826		5,048		307,820		6,814			603,508			53,114			656,622
Balance, September 30, 2022 (US$)		58,804,977		—		39,900		710		43,273		958			84,841			7,467			92,308

* Retrospectively restated for 500-for-1 forward split on December 2, 2022.

The accompanying notes are an integral part of these consolidated financial statements.

F-37

XUHANG HOLDINGS LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousand of RMB and US$, except for number of shares and per share data)

	For the nine months ended September 30,
	2021			2022
	RMB			RMB			US$
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		41,417			52,422			7,370
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		692			6,602			928
Allowance for doubtful debt and inventories		—			935			131
Non-cash interest expense for convertible promissory notes		6,714			(669	)		(94	)
Impairment of long term investment		—			1,628			229
Changes in operating assets and liabilities:
Accounts receivable		(32,193	)		(65,381	)		(9,191	)
Amount due from related parties		1,081			(476	)		(67	)
Advance to suppliers		(8,940	)		(23,328	)		(3,279	)
Other receivables		(39,251	)		(8,090	)		(1,137	)
Inventories		(391	)		198			28
Prepaid expenses		(1,127	)		817			115
Other non-current assets		12,626			9,033			1,270
Accounts payables		(13,349	)		11,859			1,667
Advance from customers		4,715			4,233			595
Amount due to related parties		1,367			356			50
Accrued expenses and other payables		4,595			(591	)		(83	)
Dividend payables		—			(267	)		(38	)
Income tax payables		3,536			9,164			1,288
Deferred revenue — non-current		(639	)		(667	)		(94	)
Net cash provided by (used in) operating activities		(19,147	)		(2,222	)		(312	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(19,552	)		(1,489	)		(209	)
Payments for short-term investments		(14,300	)		(28,300	)		(3,978	)
Payments for long-term investments		(7,213	)		(745	)		(105	)
Payments for the acquisition		(46,900	)		(20,000	)		(2,812	)
Cash and cash equivalents from acquired companies		33			—			—
Proceeds from disposal of equity method investment		—			119			17
Net cash used in investing activities		(87,932	)		(50,415	)		(7,087	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank loans, net		3,500			8,000			1,125
Proceeds from related parties, net		48,006			3,559			500
Cash contribution from minority shareholders		54,085			6,159			866
Net cash provided by financing activities		105,591			17,718			2,491
Effect of exchange rate changes		(632	)		7,288			1,023
Net increase in cash and cash equivalents		(2,120	)		(27,631	)		(3,885	)
Cash and cash equivalents, at beginning of year		57,087			113,400			15,942
Cash and cash equivalents, at end of year		54,967			85,769			12,057
Supplemental disclosure of cash flow information:
Cash paid for
Interest		585			797			112
Income taxes		2,409			2,454			345
Non-cash investing and financing activities:
Liabilities assumed in connection with purchase of property, plant and equipment		470			—			—

* Retrospectively restated for 500-for-1 forward split on December 2, 2022.

The accompanying notes are an integral part of these consolidated financial statements.

F-38

XUHANG HOLDINGS LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$, except for number of shares and per share data)

Note 1 – Nature of business and organization

XUHANG HOLDINGS LIMITED (“Xuhang Holdings”) was incorporated on June 16, 2020 as an exempted company with limited liability in the Cayman Islands. Xuhang Holdings principally engages in new media integrated content marketing services and digital advertising services through its subsidiaries in the People’s Republic of China (the “PRC”). In September 2014, Mr. Tiahang Xiao (“Mr. Xiao”), chairman of board of directors, founded Hangzhou Xuhang Network Technology Co., Ltd. (“Xuhang Network”). Xuhang Holdings underwent a series of onshore and offshore reorganizations, which were completed on October 27, 2021 (the “Reorganization”).

Immediately before and after the reorganization, the controlling shareholder of Xuhang Network controlled Xuhang Network and Xuhang Holdings; therefore, for accounting purposes, the reorganization is accounted for as a transaction of entities under common control. Accordingly, the accompanying unaudited condensed consolidated financial statements have been prepared as if the current corporate structure had been in existence throughout the periods presented.

Xuhang Holdings and its consolidated subsidiaries are collectively referred to herein as the “Company,” unless specific reference is made to an entity.

Corporate Structure

Xuhang Holdings is a holding company incorporated in Cayman Islands that does not have substantive operations. Xuhang Holdings conducts its businesses through its subsidiaries. The principal subsidiaries of Xuhang Holdings consist of the following entities:

• Xuhang Network, a wholly-owned subsidiary and an onshore holding company established in the PRC on September 16, 2014, principally for holding businesses in new media integrated content marketing services and digital advertising services;

• Horgos Xumi Network Technology Co., Ltd., or Horgos Xumi, a wholly-owned subsidiary and an operating entity established in the PRC on February 8, 2017, principally for providing advertising design and production; technical services;

• Horgos Weizan Network Technology Co., Ltd., or Horgos Weizan, a wholly-owned subsidiary and an operating entity established in the PRC on November 13, 2017, principally for providing marketing planning and advertising production;

• Hongkong Lehui Network Technology Co., Limited, or HK Lehui, a wholly-owned subsidiary and an operating entity established in Hong Kong on November 10, 2017, principally for providing digital advertising services;

• Hangzhou Xingkong Internet Culture Communication Co., Ltd., or Hangzhou Xingkong, a wholly- owned PRC subsidiary and an operating entity acquired on November 13, 2020, principally for providing advertising design and production;

• Hangzhou Jinting Conference Co., Ltd., or Hangzhou Jinting, a wholly-owned PRC subsidiary and an operating entity acquired on November 13, 2020, principally for providing conference services; cultural and artistic exchange activities planning;

• Jiangxi Ku’o Technology Co., Ltd., or Jiangxi Ku’o, a wholly-owned PRC subsidiary and an operating entity acquired on March 16, 2020, principally for providing advertising production; graphic design and production;

F-39

• Hangzhou Xingxiu Network Technology Co., Ltd., a majority-owned subsidiary and an operating entity established in the PRC on June 16, 2021, principally for providing advertising production and technical services;

• Jiangsu Xuhang New Economy Technology Co., Ltd., a majority-owned subsidiary and an operating entity established in the PRC on September 29, 2020, principally for providing advertising production and technical services;

• Qingdao Xuhang Digital New Economy Technology Co., Ltd., a majority-owned subsidiary and an operating entity established in the PRC on October 29, 2020 principally for providing advertising production and technical services; and

• Qingdao Pinzhang Network Technology Co., Ltd., a majority-owned subsidiary and an operating entity established in the PRC on April 15, 2021 principally for providing advertising production and technical services.

The accompanying unaudited condensed consolidated financial statements reflect the activities of Xuhang Holdings and each of the following entities:

Name	Place of incorporation	Date of incorporation or acquisition	Percentage of direct or indirect			Principal activities
XUHANG LTD BVI	British Virgin Islands (“BVI”)	July 31, 2020		100	%	Holding company
XUHANG (HK) LIMITED	Hong Kong	November 2, 2020		100	%	Holding company
Horgos Pinyue Network Technology Co., Ltd.	PRC	November 10, 2017		100	%	Advertising design and production; technical services; digital advertising services
Shanghai Xumi Digital Technology Co., Ltd.	PRC	March 19, 2021		90	%	Advertising production and technical services
Xiamen Xuhang Digital Technology Co., Ltd.	PRC	April 1, 2021		75	%	Marketing planning and advertising production
Shanghai Pinzhang Network Technology Co., Ltd.	PRC	March 24, 2021		51	%	Advertising production and technical services
Hangzhou Pusheng Network Technology Co., Ltd.	PRC	August 25, 2020		51	%	Advertising production and technical services
Hangzhou Ruirong Network Technology Co., Ltd.	PRC	February 7, 2021		51	%	Advertising production and technical services
Henan New Circle Network Technology Co., Ltd.	PRC	January 17, 2020		100	%	Advertising production and technical services
Xuhang Shuzhiyun Technology (Hangzhou) Co., Ltd.	PRC	June 2, 2021		100	%	Technical services and consultation; advertisement production
Xuhang Digital (Henan) Technology Co., Ltd.	PRC	January 22, 2021		51	%	Technical services and consultation

F-40

Name	Place of incorporation	Date of incorporation or acquisition	Percentage of direct or indirect			Principal activities
Hangzhou Xiqi Cultural Tourism Technology Co., Ltd.	PRC	May 12, 2021		100	%	Technical services and consultation
Yunnan Xumi Digital Technology Co., Ltd.	PRC	July 2, 2021		51	%	Marketing planning and advertising production
Jiangxi Xuzhixing Technology Co., Ltd.	PRC	July 19, 2021		51	%	Marketing planning and advertising production
Shanghai Huihang Network Technology Co., Ltd.	PRC	May 25, 2021		51	%	Marketing planning and advertising production
Hangzhou Youyou Culture and Tourism Technology Co., Ltd.	PRC	July 14, 2021		51	%	Marketing planning and advertising production
Anhui Jiayuan Information Technology Co., Ltd.	PRC	April 14, 2016		100	%	Advertising production and technical services
Henan Xuhang Network Technology Co., Ltd.	PRC	November 29, 2019		99	%	Internet advertising services
Wenzhou Xumi Network Technology Co., Ltd.	PRC	March 4, 2020		100	%	Marketing planning and advertising production
Xumi (Fujian) Digital Technology Co., Ltd. (“Xumi Fujian”)	PRC	February 8, 2021		85	%	Advertising production and technical services
Wuhan Xuhang Digital Technology Co., Ltd.	PRC	October 27, 2021		65	%	Digital cultural creative content services; technical consultation
Huangshan Xumi Digital Technology Co., Ltd.	PRC	September 16, 2021		90	%	Advertising design and production
Wuxi Xumi Creative Technology Co., Ltd.	PRC	September 10, 2021		75	%	Marketing planning and advertising production
Yangzhou Xumi Digital Technology Co., Ltd.	PRC	November 2, 2021		56.7	%	Marketing planning and branding management
Linyi Xumi Network Technology Co., Ltd.	PRC	August 26, 2021		60	%	Marketing planning and advertising production
Suzhou New Circle Network Technology Co., Ltd.	PRC	July 29, 2020		100	%	Technical services and consultation
Shanghai Xumi Digital Advertising Co., Ltd.	PRC	November 9, 2021		100	%	Advertising design and production
Shanghai Suhang Digital Technology Co., Ltd.	PRC	July 27, 2021		51	%	Marketing planning and advertising production

F-41

Name	Place of incorporation	Date of incorporation or acquisition	Percentage of direct or indirect			Principal activities
Hangzhou Xupai Technology Co., Ltd.	PRC	December 21, 2021		51	%	Technical services and consultation
Shanghai Hexian Lianhai Technology Group Co., Ltd.	PRC	January 18, 2022		51	%	Marketing planning and advertising production
Chengdu Xumi Digital Technology Co., Ltd.	PRC	February 28, 2022		80	%	Technical services and consultation
Hubei Xuhang Shuzhi Culture Co., Ltd.	PRC	February 28, 2022		90	%	Marketing planning and advertising production
Beijing Hexian Lianjing Technology Co., Ltd.	PRC	March 31, 2022		100	%	Advertising design and production
Beijing Xuhangyi Visual Technology Co., Ltd.	PRC	April 25, 2022		51	%	Advertising design and production

Note 2 – Summary of significant accounting policies

Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission regarding financial reporting that are consistent with those used in the preparation of the Company’s audited consolidated financial statements for the years ended December 31, 2020 and 2021. Accordingly, these unaudited condensed consolidated financial statements do not include all of the information and footnotes required by U.S. GAAP for annual financial statements.

In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all normal recurring adjustments necessary to present fairly the financial position, operating results and cash flows of the Company for each of the periods presented. The results of operations for the nine months ended September 30, 2022 are not necessarily indicative of results to be expected for any other interim period or for the year ending December 31, 2022. The condensed consolidated balance sheet as of December 31, 2021 was derived from the audited consolidated financial statements at that date but does not include all of the disclosures required by U.S. GAAP for annual financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the years ended December 31, 2020 and 2021.

Principles of consolidation

The unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of estimates and assumptions

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the balance sheet date and revenue and expenses during the reporting periods. Significant accounting estimates reflected in the Company’s unaudited condensed consolidated financial statements include estimates for useful lives and impairment of property and equipment, impairment of goodwill, valuation allowance for deferred tax assets, allowance for

F-42

doubtful accounts and inventory valuation for excess and obsolete inventories, lower of cost and net realizable value of inventories. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates, and as such, differences may be material to the unaudited condensed consolidated financial statements.

Foreign currency translation and transaction

The accompanying unaudited condensed consolidated financial statements are presented in the Renminbi(“RMB”), which is the reporting currency of the Company. The functional currency of Xuhang Holdings and Xuhang BVI is United State dollar, and the functional currency of HK Lehui, and Xuhang HK is Hong Kong dollar (“HKD”). The functional currency of the PRC subsidiaries is Renminbi (“RMB”). The functional currencies of the other subsidiaries are their respective local currencies. The determination of the respective functional currency is based on the criteria set out by ASC 830, Foreign Currency Matters, (“ASC 830”).

Transactions denominated in currencies other than in the functional currency are translated into the functional currency using the exchange rates prevailing at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated into functional currency using the applicable exchange rates at the balance sheet date. Non-monetary items that are measured in terms of historical cost in foreign currency are re-measured using the exchange rates at the dates of the initial transactions. Exchange gains or losses arising from foreign currency transactions are included in the consolidated statements of comprehensive income.

The financial statements of the Company’s entities of which the functional currency is not RMB are translated from their respective functional currency into RMB. Assets and liabilities denominated in foreign currencies are translated into RMB at the exchange rates at the balance sheet date. Equity accounts other than earnings generated in current period are translated into RMB at the appropriate historical rates. Income and expense items are translated into RMB using the periodic average exchange rates. The resulting foreign currency translation adjustments are recorded in other comprehensive income or loss in the consolidated statements of comprehensive loss, and the accumulated foreign currency translation adjustments are presented as a component of accumulated other comprehensive loss in the consolidated statements of shareholders’ equity.

Convenience translation

Translations of balances in the consolidated balance sheets, consolidated statements of comprehensive loss and consolidated statements of cash flows from RMB into US$ as of and for the nine months ended September 30, 2022 are solely for the convenience of the reader and were calculated at the rate of US$1.00 to RMB7.1135, representing the noon buying rate in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York on September 30, 2022. No representation is made that the RMB amounts represent or could have been, or could be, converted, realized or settled into US$ at that rate on September 30, 2022, or at any other rate.

Business combinations and asset acquisitions

Business combinations are recorded using the acquisition method of accounting. The purchase price of the acquisition is allocated to the tangible assets, liabilities, identifiable intangible assets acquired, and non-controlling interest, if any, based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill. Acquisition-related expenses are expensed as incurred. Consideration transferred in a business acquisition is measured at the fair value as of the date of acquisition. Transaction costs directly attributable to the acquisition are expensed as incurred.

If an investment involves the acquisition of an asset or group of assets that does not meet the definition of a business, the transaction is accounted for as an asset acquisition. An asset acquisition is recorded at cost, which includes capitalized transaction costs, and does not result in the recognition of goodwill. The cost of the acquisition is allocated to the assets acquired on the basis of their relative fair values.

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Fair value is determined based upon the guidance of ASC Topic 820, Fair Value Measurements and Disclosures, and is generally determined using Level 2 inputs and Level 3 inputs. The determination of fair value involves the use of significant judgment and estimates. The Company utilizes the assistance of a third-party appraiser to determine the fair value as of the date of acquisition.

Accounts receivable and allowance for doubtful accounts

Accounts receivable are stated at the historical carrying amount net of allowance for doubtful accounts.

The Company maintains an allowance for doubtful accounts which reflects its best estimate of amounts that potentially will not be collected. The Company determines the allowance for doubtful accounts taking into consideration various factors including but not limited to historical collection experience and credit-worthiness of the debtors as well as the age of the individual receivables balance. Additionally, the Company makes specific bad debt provisions based on any specific knowledge the Company has acquired that might indicate that an account is uncollectible. The facts and circumstances of each account may require the Company to use substantial judgment in assessing its collectability.

Goodwill

Goodwill represents the excess of the purchase price over the amounts assigned to the fair value of the assets acquired and the liabilities assumed of an acquired business. In accordance with ASC Topic 350, Goodwill and Other Intangible Assets (“ASC 350”), recorded goodwill amounts are not amortized, but rather are tested for impairment annually or more frequently if there are indicators of impairment present.

In accordance with ASC 350, the Company assigned and assessed goodwill for impairment at the reporting unit level. A reporting unit is an operating segment or one level below the operating segment. As of December 31, 2021 and September 30, 2022, the Company as a whole was one reporting unit.

Pursuant to ASC 350, in 2021 and 2022, the Company evaluated all relevant factors including macroeconomic conditions, industry and market conditions, and financial performance. The Company weighed all factors in their entirety and concluded that it was not more-likely-than-not the fair value was less than the carrying amount of the reporting unit, and further impairment testing on goodwill was unnecessary. No impairment loss of goodwill was recognized for the year ended December 31, 2021 and the nine months ended September 30, 2022.

Long-term investments

The Company’s long-term investments include equity investments in entities and equity securities without readily determinable fair values. Investments 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, Investments — Equity Method and Joint Ventures (“ASC 323”). Under the equity method, the Company initially records its investments at fair value. 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 investments for impairment under ASC 323. An impairment loss on the equity method investments is recognized in earnings when the decline in value is determined to be other-than-temporary. Equity securities without readily determinable fair values and over which the Company has neither significant influence nor control through investments in common stock or in-substance common stock are measured and recorded using a measurement alternative that measures the securities at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes.

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Revenue recognition

The Company has adopted the new revenue standard, ASC 606, Revenue from Contracts with Customers (Topic 606) (“ASC 606”) for all periods presented. Consistent with the criteria of Topic 606, the Company recognizes revenue to depict the transfer of promised services to customers in an amount that reflects the consideration to which the entity expects to receive in exchange for those services. Value-added tax that the Company collects concurrent with revenue-producing activities is excluded from revenue.

The Company recognizes revenue as it satisfies a performance obligation when its customer obtains control of promised services, in an amount that reflects the consideration that the entity expects to receive in exchange for those services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration to which it is entitled in exchange for the services it transfers to the customer.

Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations it must deliver and which of these performance obligations are distinct. The Company recognizes revenue based on the amount of the transaction price that is allocated to each performance obligation when that performance obligation is satisfied or as it is satisfied.

The Company is a principal and records revenue on a gross basis when the Company is primarily responsible for fulfilling the service, has discretion in establishing pricing and controls the promised service before transferring that service to customers. Otherwise, the Company records revenue at the net amounts as commissions.

The following is a description of the accounting policy for the principal revenue streams of the Company:

Digital advertising services

Digital advertising services revenue primarily includes revenue from the provision of digital advertising services by the Company. The revenue is recognized when the related services are delivered based on the specific terms of the contract, which are commonly based on specified actions, such as cost per action (“CPA”), cost per mille (“CPM”), cost per click (“CPC”) or other preferences agreed upon with advertisers.

Revenue is recognized on a CPA, CPM or CPC basis at a point in time when agreed actions (such as download, installation, one thousand impressions of the advertisement, and click) are performed. The settlement of our digital advertising services is monthly when the monthly statement of our services is accepted by clients, and we recognize the relevant revenue monthly based on the monthly statements. While none of the factors individually are considered presumptive or determinative, because the Company is the primary obligor and is responsible for (i) identifying and contracting with third-party advertisers that the Company views as customers; (ii) identifying media publishers to provide ad inventory (media space) where the Company views the media publishers as suppliers; (iii) establishing the selling prices of CPA, CPM, or CPC pricing model; (iv) performing all billing and collection activities, including retaining credit risk; and (v) bearing sole responsibility for fulfillment of the advertising, the Company acts as the principal of these arrangements and therefore recognized revenue earned and costs incurred related to these transactions on a gross basis.

New media integrated content marketing services

New media integrated content marketing services target social networks and applications to spread brand awareness or promote particular products. The Company offers a service package comprising a variety of

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integrated marketing solutions, including marketing strategy and creativity consulting, writing advertorials, shooting and producing promotional videos/short videos, managing and operating customers’ social media accounts or online stores, planning and implementing live e-commerce events, and organizing offline marketing events or public relations activities. Customers may select one or more types of the integrated marketing services for the Company to implement based on their respective marketing targets, demand, budgets, and other factors.

The process of the new media integrated content marketing services refers to followings:

(i) The Company signs contracts with customers. The contracts normally are framework contracts with terms typically within one year. According to the framework agreement, the Company is required to carry out marketing activities on a regular or irregular basis according to customers’ specific requirements.

(ii) After signing the contract, the Company provides a new media integrated content marketing campaign plan that is expected to be implemented in a certain period of time (normally a month). The plan is a new media integrated marketing service product package, which includes a variety of services. The Company provides the services included in the service package for a certain period of time specified in the plan (normally a month).

(iii) If the customers accept the plan, the Company provides related services to the customers including: training of the customers’ employees who participate in the new media integrated content marketing campaign, marketing content production, setting up new media accounts, marketing channel procurement, release of new media marketing content, and monitoring and evaluating the result and effectiveness of the marketing campaigns.

(iv) After provision of all the related services in the period of time specified in the contracts, the Company sends customers working reports or other acceptable references to confirm whether new media integrated content marketing campaign fulfilled the requirements of the signed contracts.

(v) Revenue derived from the provision of new media integrated content marketing services is recognized at the point in time when the new media integrated content marketing campaigns are implemented and accepted by customers (all the new media marketing services included in a particular service package have been implemented), according to the terms of the contracts, and the satisfaction of the performance obligation is measured based on the implementation of new media integrated content marketing services.

The Company generally asks customers to pay for the services after all the services have been completed and accepted by the customers. Occasionally, the Company receives the advance payment from customers (no more than 30%). The advance payment is generally paid after a contract is signed. The remaining balance will be paid after all the services have been completed and accepted by the customers.

The Company is a principal and records revenue on a gross basis when the Company is primarily responsible for fulfilling the new media integrated content marketing services. When the Company purchases ancillary services related to new media integrated content marketing campaigns on behalf of customers, such as purchasing air tickets and hotels for customers, the Company recognizes revenue at the net amount deducted from the purchasing amount as commissions.

The Company does not provide warranties, refunds, discounts, or rebates. The services provided by the Company are fully delivered when they have been completed and accepted by the customer (namely, the quality of the services has been approved by the customer). The Company does not have any after-sales guarantee obligations.

Segment reporting

ASC 280, Segment Reporting, (“ASC 280”), establishes standards for companies to report in their financial statements information about operating segments, products, services, geographic areas, and major customers. Based on the criteria established by ASC 280, our chief operating decision maker (“CODM”) has been identified

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as our Chief Executive Officer, who reviews consolidated results when making decisions about allocating resources and assessing performance of the company. As a whole and hence, we have only one reportable segment. We do not distinguish between markets or segments for the purpose of internal reporting. As our long- lived assets are substantially located in the PRC, no geographical segments are presented.

Operating leases

The Company adopted ASC Topic 842, Lease (“ASC 842”) on January 1, 2020, using the modified retrospective method. The Company determines if an arrangement is a lease at inception. Leases are classified as operating or finance leases in accordance with the recognition criteria in ASC 842-20-25. The Company’s leases do not contain any material residual value guarantees or material restrictive covenants.

The Company has elected the package of practical expedients, which allows the Company not to reassess (i) whether any expired or existing contracts as of the adoption date are or contain a lease, (ii) lease classification for any expired or existing leases as of the adoption date, and (iii) initial direct costs for any expired or existing leases as of the adoption date. Lastly, the Company elected the short-term lease exemption for all contracts with a lease term of 12 months or less.

At the commencement date of a lease, the Company determines the classification of the lease based on the relevant factors present and records a right-of-use (“ROU”) asset and lease liability for any operating lease. ROU assets acquired through a lease represent the right to use an underlying asset for the lease term, and operating lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are calculated as the present value of the lease payments not yet paid. If the rate implicit in the Company’s leases is not readily available, the Company uses an incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. This incremental borrowing rate reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. ROU assets include any lease prepayments and are reduced by lease incentives. Operating lease expense for lease payments is recognized on a straight-line basis over the lease term. Lease terms are based on the non-cancellable term of the lease.

Leases with an initial lease term of 12 months or less are not recorded on the consolidated balance sheets. Lease expense for these leases is recognized on a straight-line basis over the lease term.

Comprehensive income (loss)

Comprehensive income (loss) consists of two components, net income and other comprehensive income (loss). Other comprehensive income (loss) refers to revenue, expenses, gains and losses that under U.S. GAAP are recorded as an element of shareholders’ equity but are excluded from net income. Other comprehensive income (loss) consists of a foreign currency translation adjustment resulting from the Company not using the United States dollar as its functional currencies.

Earnings per share

The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share.” ASC 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net income (loss) attributable to Xuhang Holdings divided by the weighted average ordinary share outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of the potential ordinary shares (such as convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or at the issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (namely those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.

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Recently accounting pronouncements

The Company is an emerging growth company (“EGC”) as defined by the Jumpstart Our Business Startups Act (“JOBS Act”). The JOBS Act provides that an EGC can take advantage of extended transition periods for complying with new or revised accounting standards. This allows an EGC to delay adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company elected to take advantage of the extended transition periods. However, this election will not apply should the Company cease to be classified as an EGC.

On December 18, 2019, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2019-12, Income taxes (Topic 740), Simplifying the Accounting for Income Taxes. This guidance amends ASC Topic 740 and addresses several aspects including 1) evaluation of step-up tax basis of goodwill when there is not a business combination, 2) policy election to not allocate taxes on a separate entity basis to entities not subject to income tax, 3) accounting for tax law changes or rates during interim periods, 4) ownership changes from equity method investment to subsidiary or vice versa, 5) elimination of exception to intrapetrous allocation when there is gain in discontinued operations and a loss from continuing operations, and 6) treatment of franchise taxes that are partially based on income. The amendments in this Update are effective for the Company for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company is evaluating the impact of this guidance on its financial statements and related disclosures.

The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s balance sheets, statements of income and statements of cash flows.

Note 3 – Accounts receivable, net

Accounts receivable, net consisted of the following:

	As of
	December 31, 2021		September 30, 2022
	RMB		RMB			US$
Accounts receivable		167,965		233,345			32,803
Less: Allowance for doubtful accounts		—		(721	)		(101	)
Accounts receivable, net		167,965		232,624			32,702

Movements of allowance for doubtful accounts were as follows:

	As of December 31,			As of September 30
	2021			2022
	RMB			RMB			US$
Allowance for doubtful accounts, beginning balance		(5,133	)		—			—
Add: Provision for doubtful accounts		—			(721	)		(101	)
Reversal of doubtful accounts		5,133			—			—
Uncollectible receivables written-off		—			—			—
Allowance for doubtful accounts, ending balance		—			(721	)		(101	)

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Note 4 – Inventories, net

Inventories, net consisted of the following:

	As of December 31,			As of September 30
	2021			2022
	RMB			RMB			US$
Finished goods		1,884			1,683			237
Work in process		—			—			—
Raw materials		—			—			—
		1,884			1,683			237
Less: provision for impairment of inventories		(59	)		(56	)		(8	)
		1,825			1,627			229

During the nine months ended September 30, 2021 and 2022, the Company recorded provision for impairment of inventories of nil and RMB56 (US$8) for the obsolete inventories in cost of revenue, respectively.

Note 5 – Property and equipment, net

Property and equipment, net consisted of the following:

	As of December 31,			As of September 30
	2021			2022
	RMB			RMB			US$
At cost:
Office equipment		5,219			5,527			777
Furniture		3,062			2,580			363
Motor vehicles		2,218			2,319			326
Leasehold improvement		22,805			23,273			3,271
		33,304			33,699			4,737
Accumulated depreciation		(6,666	)		(13,268	)		(1,865	)
Property, plant and equipment, net		26,638			20,431			2,872

Depreciation expenses for the nine months ended September 30, 2021 and 2022 amounted to RMB692 and RMB6,602 (US$928), respectively.

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Note 6 – Long term investments

	As of December 31,		As of September 30
	2021		2022
	RMB		RMB			US$
Equity securities without readily determinable fair values investments
Shenzhen Zhuoya Network Media Co., LTD. (“Shenzhen Zhuoya”)		100		100			14
Hengyang Yixin Culture Media Co., LTD. (“Hengyang Yixin”)		100		100			14
Xi’an Xuhang Digital Technology Co., LTD. (“Xi’an Xuhang”)		2,250		2,250			316
Beijing Pinte Visual Culture Media Co., LTD. (“Beijing Pinte”)		700		700			98
Shanghai Er’shang Culture Communication Co., LTD. (“Shanghai Er’shang”)		1,333		1,333			187
Putian Shoe Brand Operation Service Co., LTD. (“Putian Shoe”)		2,813		2,813			395
Zhejiang Jupei Culture and Travel Technology Co., LTD. (“Zhejiang Jupei”)		—		500			70
Cost of equity investments without readily determinable fair value		7,296		7,796			1,094
Impairment on equity investments without readily determinable fair value		—		(1,628	)		(227	)
Carrying amount of Equity investments without readily determinable fair value		7,296		6,168			867

In May 2020, the Company through its subsidiary, Xuhang Network, jointly set up Shenzhen Zhuoya with capital injection of RMB100 and held 20% of the investee as of December 31, 2020 and 2021. Based on the article of association, the Company cannot exercise significant influence over Shenzhen Zhuoya’s operation and financial decisions.

In August 2020, the Company through its subsidiary, Xuhang Network, entered into an agreement to invest in Hengyang Yixin. The Company injected capital of RMB50 and RMB50 (US$8) in 2020 and 2021, respectively. The Company held 40% and 40% of equity interest as of December 31, 2020 and 2021, respectively. Based on the investment agreement, the Company cannot exercise significant influence over Hengyang Yixin’s operation and financial decisions.

In December 2020, the Company through its subsidiary, Xuhang Network, jointly set up Xi’an Xuhang with capital injection of RMB2,250 and held 45% of the investee as of December 31, 2020 and 2021. Based on the article of association, the Company cannot exercise significant influence over Xi’an Xuhang’s operation and financial decisions.

In July 2020, the Company through its subsidiary, Horgos Weizan, entered into an agreement to invest in Beijing Pinte. The Company injected capital of RMB700 and held 28.75% of equity interest as of December 31, 2020 and 2021. Based on the investment agreement, the Company cannot exercise significant influence over Beijing Pinte’s operation and financial decisions.

In September 2020, the Company through its subsidiary, Horgos Weizan, entered into an agreement to invest in Shanghai Er’shang. The Company injected capital of RMB1,333 and held 40% of equity interest as of December 31, 2020 and 2021. Based on the investment agreement, the Company cannot exercise significant influence over Shanghai Er’shang’s operation and financial decisions.

In April 2021, the Company through its subsidiary, Xumi Fujian, jointly set up Putian Shoe with capital injection of RMB2,813 and held 37.5% of the investee as of December 31, 2020 and 2021. Based on the investment agreement, the Company cannot exercise significant influence over Putian Shoe’s operation and financial decision.

In July 2022, the Company through its subsidiary, Xuhang Network, disposed 16% shares of Zhejiang Jupei (originally held 51%) and held 35% of the investee as of September 30, 2022. Based on the investment

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agreement, the Company cannot exercise significant influence over Zhejiang Jupei’s operation and financial decision.

Note 7 – Accrued expenses and other payables

The components of accrued expenses and other payables were as follows:

	As of December 31,		As of September 30
	2021		2022
	RMB		RMB		US$
Cash payables for the acquisition		43,500		23,500		3,304
Customers deposit		13,115		13,012		1,829
Other payables for daily operation		1,930		1,684		237
Others		2,235		1,994		280
		60,780		40,190		5,650

Other payables mainly consisted of cash payables for the acquisition, customer deposit, and other payables for daily operation.

Note 8 – Loans

Outstanding balances of loans consisted of the following:

As of December 31, 2021	Balance			Maturity date		Effective interest rate			Guarantee
China Merchants Bank Co., LTD. Hangzhou Fengqi Sub-branch (“CMB”)		7,000			8/22/2022		5.10	%	Credit guarantee: Xiao Tianhang, Chairman and CEO
Hangzhou United Rural Commercial Bank Co., LTD. Shangtang Sub-branch (“HURC”)		5,000			8/31/2022		5.80	%
HURC		5,000			8/31/2022		5.80	%
Total loans		17,000
Less: loan - current		(17,000	)
Loan - non-current		—

As of September 30, 2022	Balance			Maturity date		Effective interest rate			Guarantee
Huaxia Bank Beijing Shangdi branch (“HXB”)		10,000			7/8/2023		4.79	%	Secured by subsidiary‘s copyright
HXB		5,000			7/8/2023		4.79	%	Secured by subsidiary‘s copyright
HURC		2,500			9/1/2023		5.20	%	Credit guarantee: Xiao Tianhang, Chairman and CEO
HURC		2,500			9/1/2023		5.20	%	Credit guarantee: Xiao Tianhang, Chairman and CEO
HURC		5,000			9/1/2023		4.70	%	Credit guarantee: Xiao Tianhang, Chairman and CEO
Total loans		25,000
Less: loan - current		(25,000	)
Loan - non-current (RMB)		—
Loan - non-current (US$)		—

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Interest expenses for the nine months ended September 30, 2021 and 2022 amounted to RMB585 and RMB797 (US$112), respectively.

As of September 30, 2022, the Company’s future loan obligations according to the terms of the loan agreement were as follows:

Remaining of 2022	25,000
2023 and thereafter	—
Total	25,000

Note 9 – Convertible promissory notes

On December 13, 2019, HK Lehui entered into a loan agreement (“Loan 2019”) with Hexagon Credit Limited (“HC”), stipulating that HC would provide HK Lehui a loan amounting to HKD20,000,000 with the interest of 15.0% per annum. HK Lehui received the loan from HC in full on December 17, 2019.

On March 20, 2020, Xuhang Network, HK Lehui and Mr. Xiao entered into a convertible promissory notes agreement with Hexagon Special Opportunities SPC (“HSO”), stipulating that SPC would grant HK Lehui a convertible promissory note with a facility from HKD50,000,000 to HKD150,000,000.

On April 8, 2020, HSO purchased and paid cash consideration of HKD30,000,000 for the convertible promissory notes (Notes I”), with the interest of 15.0% per annum and maturity date of December 31, 2021.

On September 30, 2020, HC, HSO and HK Lehui jointly signed a supplementary agreement for Loan 2019, stipulating that HC would transfer the rights under Loan 2019 to HSO. HSO converted such loan of HKD20,000,000 including the accrued interest of HKD2,367,123 into the convertible promissory notes (“Notes II”) amounting to HKD22,367,123, with the interest rate of 15.0% per annum and maturity date of December 31, 2021.

Conversion

On August 10, 2021, HSO and the Company signed a conversion agreement, which HSO converted all portion of Notes I and Notes II with the principal of HKD52,367,123 and interest of HKD9,061,643 into the Company’s newly issued 4,156.1143 shares, with the conversion price of HKD14,780.34 per share. Such conversion was completed on December 1, 2021.

Note 10 – Income taxes

Cayman Islands

Under the current laws of the Cayman Islands, Xuhang Holdings is not subject to tax on income or capital gains. Additionally, upon payments of dividends to the shareholders, no Cayman Islands withholding tax will be imposed.

British Virgin Islands

The Company’s subsidiary, Xuhang BVI, is incorporated in the BVI and under the current laws of the BVI, Xuhang BVI is not subject to tax on income or capital gain. In addition, payments of dividends by such subsidiary to its shareholders are not subject to withholding tax in the BVI.

Hong Kong

Xuhang HK and HK Lehui are incorporated in Hong Kong and are subject to Hong Kong Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Hong Kong

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tax laws. The applicable tax rate is 8.25% on assessable profits arising in or derived from Hong Kong up to HKD2,000,000 and 16.5% on any part of assessable profits over HKD2,000,000.

PRC

The Company’s PRC subsidiaries are governed by the income tax laws of the PRC and the income tax provision in respect to operations in the PRC is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under the Enterprise Income Tax Laws of the PRC (the “EIT Laws”), domestic enterprises and Foreign Investment Enterprises (the “FIE”) are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays and even tax exemption may be granted on case-by-case basis. EIT grants preferential tax treatment to certain High and New Technology Enterprises (“HNTEs”). Under this preferential tax treatment, HNTEs are entitled to an income tax rate of 15%, subject to a requirement that they re-apply for the HNTE status every three years. Xuhang Network obtained the HNTE tax status in December 2021, which reduced its statutory income tax rate to 15% from 2021 to 2024. In addition, Anhui Jiayuan and Xuhang Network was qualified as a software enterprise in 2016, and thus was entitled to a five-year tax holiday (full exemption for the first two years and a 50% reduction in the statutory income tax rate for the following three years) until its software enterprise qualification expired in 2020. Horgos Xumi, Horgos Weizan, Horgos Pinyue, and Horgos Jinting were registered in Kashi Special Economic Zone, which allows them to utilize a five-year 100% exemption. Horgos Xumi’s exemption period was from 2017 to 2021. Horgos Weizan’s and Horgos Pinyue’s exemption period were from 2018 to 2022. Khorgos Jinting’s exemption period was from 2020 to 2024.

Reconciliation of the differences between statutory income tax rate and the effective tax rate

The reconciliation of tax computed by applying the statutory income tax rate of 25% for the nine months ended September 30, 2021 and 2022 applicable to the PRC operations to income tax expenses was as follows:

	For the nine months ended September 30,
	2021			2022
Statutory income tax rate		25.0	%		25.0	%
Income tax exemptions and reliefs		(25.0	)%		(30.9	)%
Non-deductible expenses		—			14.4	%
Research and development expenses		(0.5	)%		(0.5	)%
Prior year loss carry forward		(1.6	)%		(0.5	)%
Valuation allowance		10.9	%		6.6	%
		8.8	%		14.1	%

Significant components of the provision for income taxes were as follows:

	For the nine months ended September 30,
	2021		2022
	RMB		RMB		US$
Current income tax expenses		4,003		8,607		1,210
Deferred tax expenses		—		—		—
		4,003		8,607		1,210

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For the purpose of presentation in the consolidated balance sheets, deferred income tax assets and liabilities have been offset and included in other assets on the accompanying consolidated balance sheets. Significant component of deferred tax assets were as follows:

	As of
	December 31, 2021			September 30, 2022
	RMB			RMB			US$
Deferred tax assets
Tax losses		9,140			13,174			1,852
Valuation allowance		(9,140	)		(13,174	)		(1,852	)
Total deferred tax assets		—			—			—

The Company operates through several subsidiaries. Valuation allowance is considered for each of the entities. Realization of the net deferred tax assets is dependent on factors including future reversals of existing taxable temporary differences and adequate future taxable income, exclusive of reversing deductible temporary differences and tax loss or credit carry forwards. The Company evaluates the potential realization of deferred tax assets on an entity-by-entity basis. As of December 31, 2021 and September 30, 2022, the Company and all of its subsidiaries were in cumulative loss position, valuation allowances were provided against deferred tax assets in entities where it was determined it was more likely than not that the benefits of the deferred tax assets will not be realized.

Uncertain tax positions

The tax authority of the PRC Government conducts periodic and ad hoc tax filing reviews on business enterprises operating in the PRC after those enterprises complete their relevant tax filings. In general, the PRC tax authority has up to five years to conduct examinations of the tax filings of the Company’s PRC entities. Accordingly, the PRC subsidiaries’ tax years of 2014 through 2020 remain open to examination by the respective tax authorities. It is therefore uncertain as to whether the PRC tax authority may take different views about the Company’s PRC subsidiaries’ tax filings, which may lead to additional tax liabilities.

The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of December 31, 2021 and September 30, 2022, the Company did not have any significant unrecognized uncertain tax positions.

Note 11 – Shareholders’ equity

Xuhang Holdings was established under the laws of the Cayman Islands on June 16, 2020. The issued number of ordinary shares is 50,000.0000 shares with a par value of US$1.0 per ordinary share.

The Company completed new issuance of 41,972.2302, 21,481.6094 and 4,156.1143 shares with a par value of US$1.0 per ordinary share on April 23, 2021, September 26, 2021 and December 1, 2021, respectively.

On December 2, 2022, the shareholders of the Company approved an increase in the number of the Company’s authorized ordinary shares from 117,609.9539 to 500,000,000 and the Company’s board of directors approved a forward split of the Company’s outstanding ordinary shares at a ratio of 500-for-1 share.

Note 12 – Operating leases

The Company entered into operating lease agreements for office spaces and employee dormitories. None of the amounts disclosed below for these leases contains variable payments, residual value guarantees or options that

F-54

were recognized as part of the ROU assets and lease liabilities. As the Company’s leases did not provide an implicit discount rate, the Company used an incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments.

As of September 30, 2022, the Company recognized operating lease liabilities, including current and noncurrent, in the amount of RMB11,933 (US$1,678) and the corresponding operating lease ROU assets of RMB11,933 (US$1,678).

As of December 31, 2021, the Company recognized operating lease liabilities, including current and noncurrent, in the amount of RMB17,705 and the corresponding operating lease ROU assets of RMB17,705.

Rental expenses for the nine months ended September 30, 2021 and 2022 were RMB5,396 and RMB6,345 (US$892), respectively.

Lease commitments

The Company’s maturity analysis of operating lease liabilities as of September 30, 2022 was as follows:

	Operating Leases
2022		2,242
2023		7,056
2024		2,305
2025		740
Total lease payments		12,343
Less: imputed interest		(410	)
Present value of operating lease liabilities		11,933
Less: current obligation		(7,612	)
Long-term obligation at September 30, 2022		4,321

Supplemental disclosure related to operating leases were as follows:

Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases	4,943
Weighted average remaining lease term of operating leases	1.87
Weighted average discount rate of operating leases	4.45	%

Note 13 – Related party transactions

a) Related parties

Name of related parties	Relationship with the Company
Mr. Xiao	Chairman and CEO
Lilian Liu	Shareholder of the Company
Yu Jiang	Shareholder of the Company
Shanghai Qishu Business Management Partnership LP. (“Shanghai Qishu”)	Shareholder of the Company
Genshui Bao	Shareholder of the Company
Congcong Wei	Shareholder of the Company
Shanghai Huiji Network Technology Co., LTD (“Shanghai Huiji”)	Non-controlling shareholder of the Company’s subsidiary
Zhejiang Lingshang Cultural Creative Co., LTD (“Zhejiang Lingshang”)	A company controlled by a director of our subsidiary

F-55

Name of related parties	Relationship with the Company
Shanghai Huihui Hanghang Management Consulting Co., LTD (“Shanghai Huihui”)	Non-controlling shareholder of the Company’s subsidiary
Shanghai Er’shang	Equity investee of the Company
Beijing Pinte	Equity investee of the Company
Longtian Zhou	A director of the Company’s subsidiary
Shenzhen Zhuoya	Equity investee of the Company
Zhoushan Youtai Investment Partnership LP. (“Zhoushan Youtai”)	Original shareholder of the Company*
Xi’an Saixinghang Enterprise Management Partnership LP. (“Xi’an Saixinghang”)	A company controlled by principal shareholder of the Company
Zhejiang Weilai Advertising Co. LTD (“Zhejiang Weilai”)	A company controlled by principal shareholder of the Company
Zhejiang Weicheng Information Technology Co. LTD (“Zhejiang Weicheng”)	A company controlled by principal shareholder of the Company
Sewing Time Trading (Shenzhen) Co. LTD (“Sewing Time”)	Non-controlling shareholder of the Company’s subsidiary
Hangzhou Find Fun Creative Culture Co. LTD (“Hangzhou Find Fun”)	A company controlled by principal shareholder of the Company
Hangzhou Tianyi Electronic Commerce Co. LTD (“Hangzhou Tianyi”)	A company controlled by principal shareholder of the Company
Hangzhou Netwide Network Technology Co. LTD (“Hangzhou Netwide”)	A company controlled by principal shareholder of the Company
Tonghua Lvjian Agricultural Technology Development Co. LTD (“Tonghua Lvjian”)	A company controlled by a non-controlling shareholder of the Company’s subsidiary
Hangzhou Youxing Technology Co., LTD (“Hangzhou Youxing”)	A non-controlling shareholder of the Company’s subsidiary
Tailong Zheng	A non-controlling shareholder
	of the Company’s subsidiary
Qingdao Songshe Network Technology Co., LTD. (“Qingdao Songshe”)	A company controlled by a director of the Company’s subsidiary
Xinzu Gong	A director of the Company’s subsidiary
Lei Xu	A director of the Company’s subsidiary
Lei Xin	A director of the Company’s subsidiary
Hangzhou Meihangxiujue Technology Co., LTD. (“Hangzhou Meihangxiujue”)	A company invested by the Company

F-56

Name of related parties	Relationship with the Company
Feng Luo	A director of the Company’s subsidiary
Xiaoyan Tong	A director of the Company’s subsidiary
Pingxiang Youxu Business Management Partnership (Limited Partnership) (“Pingxiang Youxu”)	A company controlled by principal shareholder of the Company
Wenying Cong	A director of the Company’s subsidiary
Weiguo Tang	A director of the Company’s subsidiary
Huangshan Huizhou Romantic Red Culture Tourism Group Co., LTD. (“Huangshan Huizhou”)	A non-controlling shareholder of the Company’s subsidiary
Hangzhou Nerdy Bear Technology Co. LTD (“Hangzhou Nerdy Bear”)	A non-controlling shareholder of the Company’s subsidiary
Hangzhou SaixinghangTechnology Co., LTD (“Hangzhou Saixinghang”)	Equity investee of the Company
Zhejiang Jupei	Equity investee of the Company
Zhongguang International Advertising Creative Industry Base Development Co., LTD (“Zhongguang Advertising”)	A company controlled by a non-controlling shareholder of the Company’s subsidiary
Shanghai Jiading Industrial Zone Industrial Housing Development Co., LTD (“Jiading Zone”)	A company controlled by a non-controlling shareholder of the Company’s subsidiary
Mengyong Song	A director of the Company’s subsidiary
Putian shoe	Equity investee of the Company Subsidiary
Xi’an Xuhang	Equity investee of the Company

* Zhoushan Youtai ceased to be a related party, as it sold its shares in January 2021.

F-57

b) Amounts due from related parties

	Nature		As of December 31,		As of September 30,
			2021		2022
			RMB		RMB		US$
Account receivables
Shanghai Er’shang		Business operation		351		814		114
Zhejiang Weilai		Business operation		119		598		84
Zhejiang Lingshang		Business operation		904		513		72
Tonghua Lvjian		Business operation		270		270		38
Sewing Time		Business operation		190		123		17
Hangzhou Nerdy Bear		Business operation		—		110		15
Huangshan Huizhou		Business operation		—		50		7
Zhongguang Advertising		Business operation		—		35		5
Zhejiang Weicheng		Business operation		300		—		—
				2,134		2,513		352
Other receivables
Zhejiang Jupei		Loan		—		2,289		322
Mr. Xiao		Loan		5,403		2,527		355
Hangzhou Saixinghang		Loan		—		1,110		156
Congcong Wei		Loan		550		1,000		141
Xi’an Saixinghang		Loan		750		750		105
Tailong Zheng		Staff petty cash		629		617		87
Genshui Bao		Staff petty cash		420		420		59
Shanghai Huiji		Loan		303		368		52
Zhejiang Lingshang		Loan		250		250		35
Zhongguang Advertising		Deposit		—		218		31
Shanghai Qishu		Loan		139		139		20
Beijing Pinte		Loan		100		100		14
Jiading Zone		Deposit		—		81		11
Xiaoyan Tong		Staff petty cash		3		48		7
Shanghai Huihui		Loan		27		27		4
Yu Jiang		Loan		3,390		—		—
Shenzhen Zhuoya		Loan		315		—		—
Shanghai Er’shang		Loan		300		—		—
Qingdao Songshe		Loan		270		—		—
Xinzu Gong		Staff petty cash		110		—		—
Lei Xu		Staff petty cash		101		—		—
Lei Xin		Staff petty cash		20		—		—
Hangzhou Meihangxiujue		Loan		19		—		—
Feng Luo		Staff petty cash		4		—		—
				13,103		9,944		1,399
Amount due from related parties				15,237		12,457		1,751

F-58

c) Amounts due to related parties

	Nature		As of December 31,		As of September 30,
			2021		2022
			RMB		RMB		US$
Account payables
Hangzhou Find Fun Creative Culture Co. LTD		Business operation		300		525		74
				300		525		74
Other payables
Cong Wenying		Staff reimbursement payables		297		464		65
Xinzu Gong		Loan		—		303		43
Mengyong Song		Staff reimbursement payables		—		22		3
Tang Weiguo		Staff reimbursement payables		57		—		—
				354		789		111
Amount due to related parties				654		1,314		185

d) Other related party transactions

	For the nine months ended September 30,
	2021		2022
	RMB		RMB		US$
Service provided to
Shanghai Er’shang		3,602		1,691		238
Putian Shoe		—		566		80
Zhejiang Weilai		750		467		66
Hangzhou Nerdy Bear		—		213		30
Zhejiang Lingshang		203		198		28
Huangshan Huizhou		—		94		13
Xi’an Xuhang		—		68		10
Hangzhou Saixinghang		—		31		4
Shanghai Huiji		27		2		—
Tonghua Lvjian		247		—		—
Sewing Time		390		—		—
		5,219		3,330		469

	For the nine months ended September 30,
	2021		2022
	RMB		RMB		US$
Service provided by
Zhongguang Advertising		—		525		74
Hangzhou Find Fun		223		223		31
Hangzhou Youxing		552		—		—
Hangzhou Netwide		111		—		—
Qingdao Songshe		377		—		—
		1,263		748		105

F-59

Note 14 – Commitments and contingencies

Operating lease commitments

The Company signed several lease agreements to rent offices and facilities for its operations.

As of September 30, 2022, the Company was obligated under operating leases for minimum rentals as follows:

	Minimum lease payment
	RMB
2022		2,242
2023		7,056
2024		2,305
2025		740
Thereafter		—
Total		12,343

Loan commitments

The Company signed several loan agreements for its operations.

As of September 30, 2022, the Company’s future loan obligations according to the terms of the loan agreement were as follows:

	Loan payment
	RMB
2022		25,000
2023 and thereafter		—
Total		25,000

Note 15 – Subsequent events

The Company has assessed all events from September 30, 2022 up through December 23, 2022, which is the date that these unaudited condensed consolidated financial statements are available to be issued, unless as disclosed below, there are not any material subsequent events that require disclosure in these unaudited condensed consolidated financial statements.

F-60

[●] Ordinary Shares

XUHANG HOLDINGS LIMITED

Prospectus dated [●], 2023

Until [●], 2023 (the 25th day after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Cayman Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our fourth amended and restated articles of association provide that we shall indemnify our directors and officers, and their personal representatives, against all actions, proceedings, costs, charges, expenses, losses, damages, or liabilities incurred or sustained by such persons, other than by reason of such person’s dishonesty, willful default or fraud, in or about the conduct of our Company’s business or affairs (including as a result of any mistake of judgment), or in the execution or discharge of his duties, powers, authorities, or discretions, including without prejudice to the generality of the foregoing, any costs, expenses, losses, or liabilities incurred by such director or officer in defending (whether successfully or otherwise) any civil proceedings concerning our Company or its affairs in any court whether in the Cayman Islands or elsewhere.

To the extent permitted by law, we may make a payment, or agree to make a payment, whether by way of advance, loan or otherwise, for any legal costs incurred by an existing secretary, or any of our officers in respect of any matter identified in above on condition that the secretary, or officer must repay the amount paid by us to the extent that it is ultimately found not liable to indemnify the secretary or that officer for those legal costs.

Pursuant to indemnification agreements, the form of which will be filed as Exhibit 10.2 to this registration statement, we will agree to indemnify our directors and officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being such a director or officer.

The Underwriting Agreement, the form of which will be filed as Exhibit 1.1 to this registration statement, will also provide for indemnification of us and our officers and directors.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

ITEM 7. RECENT SALES OF UNREGISTERED SECURITIES.

During the past three years, we have issued the following securities which were not registered under the Securities Act. We believe that each of the following issuance was exempt from registration under the Securities Act in reliance on Regulation D under the Securities Act or pursuant to Section 4(2) of the Securities Act regarding transactions not involving a public offering or in reliance on Regulation S under the Securities Act regarding sales by an issuer in offshore transactions. No underwriters were involved in these issuances of securities.

Securities/Purchaser	Date of Issuance		Number of Securities*			Consideration
Ordinary Shares
XUHANG (BVI) LTD.		June 16, 2020		25,000,000	(1)		US$       50,000
SHENXUE CAPITAL LIMITED		April 23, 2021		1,922,386.45			US$3,844.7729
CWM CAPITAL LIMITED		April 23, 2021		464,248.31			US$ 928.49662
JDM CAPITAL LIMITED		April 23, 2021		120,704.5			US$   241.4090

II-1

Securities/Purchaser	Date of Issuance	Number of Securities*			Consideration
FAN CHAO CAPITAL LIMITED	April 23, 2021		3,580,890.75	(2)		US$7,161.7815
WCC CAPITAL LIMITED	April 23, 2021		3,222,801.65	(3)		US$6,445.6033
CZJ CAPITAL LIMITED	April 23, 2021		358,089.05	(4)		US$   716.1781
YANGYANG CAPITAL LIMITED	April 23, 2021		335,289.25			US$   670.5785
WUWEI CAPITAL LIMITED	April 23, 2021		1,005,867.8			US$2,011.7356
ZHUANNA CAPITAL LIMITED	April 23, 2021		1,160,624			US$2,321.2480
WZC CAPITAL LIMITED	April 23, 2021		1,109,038.6			US$2,218.0772
SUNYANLIN CAPITAL LIMITED	April 23, 2021		202,917.15	(5)		US$   405.8343
LCB CAPITAL LIMITED	April 23, 2021		349,096			US$   698.1920
SYG CAPITAL LIMITED	April 23, 2021		348,399.65			US$   696.7993
YHH CAPITAL LIMITED	April 23, 2021		1,010,352.45			US$2,020.7049
BAOGENSHUI CAPITAL LIMITED	April 23, 2021		990,179			US$1,980.3580
JIANGYU CAPITAL LIMITED	April 23, 2021		403,406.55			US$   806.8131
LLL CAPITAL LIMITED	April 23, 2021		406,462.2			US$   812.9244
Oriental Financial Holding Corporation	April 23, 2021		540,594.65			US$1,081.1893
Cybernaut Global Education Group Corp.	April 23, 2021		1,771,942.2			US$3,543.8844
TOP SMART CAPITAL INVESTMENT LIMITED領駿創富有限公司	April 23, 2021		1,682,825.1			US$3,365.6502
Shanghai Qishu Enterprise Management Consulting L.P. 上海祁树企业管理咨询合伙企业（有限合伙）	September 26, 2021		1,948,621.3			US$3,897.2426
Shanghai Zhuju Investment Center (Limited Partnership) 上海筑居投资中心（有限合伙）	September 26, 2021		649,884.7			US$1,299.7694
Henan Saiqi High-tech Service Venture Capital Fund (Limited Partnership) 河南赛淇高技术服务创业投资基金（有限合伙）	September 26, 2021		1,944,607.2			US$3,889.2144
Wenzhou Elite Equity Investment Partnership (Limited Partnership) 温州精英股权投资合伙企业（有限合伙）	September 26, 2021		388,925.35			US$   777.8507
Qingdao Xida Kaiyue Investment Management Partnership (Limited Partnership) 青岛喜大开悦投 资管理合伙企业（有限合伙）	September 26, 2021		238,423.55			US$   476.8471
Chengzhu Investment Management (Shanghai) Co., Ltd. 诚筑投资管理（上海）有限公司	September 26, 2021		229,245.55			US$   458.4911
Ningbo Xinrui Equity Investment Partnership (Limited Partnership) 宁波莘睿股权投资合伙企业（有限合伙）	September 26, 2021		582,335.75			US$1,164.6715
Sai Pu No. 1 (Putian) Venture Capital Partnership (Limited Partnership) 赛莆一号（莆田）创业投资合伙企业（有限合伙）	September 26, 2021		1,544,233.7			US$3,088.4674
Qingdao Lumin Investment Qinghe Equity Investment Partnership (Limited Partnership) 青岛鲁民投青合股权投资合伙企业（有限合伙）	September 26, 2021		945,451.6			US$1,890.9032
Yancheng Guozhi Industry Fund Co., Ltd. 盐城国智产业基金有限公司	September 26, 2021		1,134,538			US$2,269.0760
Xingchan Saize (Huzhou) Venture Capital Partnership (Limited Partnership) 兴产赛泽（湖州）创业投资合伙企业（有限合伙）	September 26, 2021		1,134,538			US$2,269.0760
Hexagon Special Opportunities SPC (acting for the account of segregated portfolio I)	December 1, 2021		1,261,530.8			US$2,523.0616
Hexagon Special Opportunities SPC (acting for the account for segregated portfolio VII)	December 1, 2021		816,526.35			US$1,633.0527
TIAN HANG GROUP LIMITED	December 2, 2022		0.05			US$       0.0001

II-2

* The number of securities reflects a 500-for-1 forward split of our Ordinary Shares approved by our shareholders and board of directors on December 2, 2022.

(1) On April 26, 2021, XUHANG (BVI) LTD. transferred all of the Ordinary Shares it was holding to two investors (TIAN HANG GROUP LIMITED and MIGHTY HUGE INVESTMENT LIMITED) as part of the reorganization of our corporate structure.

(2) FAN CHAO CAPITAL LIMITED transferred 160,267.25 Ordinary Shares it was holding to four investors (WUWEI CAPITAL LIMITED, ZHUANNA CAPITAL LIMITED, TOP SMART CAPITAL INVESTMENT LIMITED, and Cybernaut Global Education Group Corp.) on July 6, 2021, and transferred 3,420,623.5 Ordinary Shares it was holding to TIAN HANG GROUP LIMITED on July 8, 2021, respectively, as part of the reorganization of our corporate structure.

(3) On July 6, 2021, WCC CAPITAL LIMITED transferred 144,240.5 Ordinary Shares it was holding to two investors (SHENXUE CAPITAL LIMITED and Cybernaut Global Education Group Corp.) as part of the reorganization of our corporate structure.

(4) CZJ CAPITAL LIMITED transferred 16,026.7 Ordinary Shares it was holding to SHENXUE CAPITAL LIMITED on July 6, 2021, and transferred 342,062.35 Ordinary Shares it was holding to TIAN HANG GROUP LIMITED on January 17, 2022, respectively, as part of the reorganization of our corporate structure.

(5) On July 6, 2021, SUNYANLIN CAPITAL LIMITED transferred 8,625.75 Ordinary Shares it was holding to SHENXUE CAPITAL LIMITED as part of the reorganization of our corporate structure.

ITEM 8. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

See Exhibit Index beginning on page II-5 of this registration statement.

(b) Financial Statement Schedules

Schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the Consolidated Financial Statements or the Notes thereto.

ITEM 9. UNDERTAKINGS.

The undersigned registrant hereby undertakes to provide to the Underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the Underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described in Item 6, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant under Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

II-3

(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) For the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(4) For the purpose of determining any liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

II-4

EXHIBIT INDEX

Description
1.1**	Form of Underwriting Agreement
3.1**	Third Amended and Restated Memorandum and Articles of Association of the Registrant, as currently in effect
3.2**	Form of Fourth Amended and Restated Memorandum and Articles of Association of the Registrant, effective immediately prior to the completion of this offering
4.1**	Specimen Certificate for Ordinary Shares
4.2**	Form of the Representative’s Warrants (included in Exhibit 1.1)
5.1**	Opinion of Conyers Dill & Pearman regarding the validity of the Ordinary Shares being registered
5.2**	Opinion of Hunter Taubman Fischer & Li LLC regarding the enforceability of Representative’s Warrants
8.1**	Opinion of AllBright Law Offices Hangzhou Office with respect to certain PRC tax matters (included in Exhibit 99.3)
10.1**	Form of Employment Agreement by and between executive officers and the Registrant
10.2**	Form of Indemnification Agreement with the Registrant’s directors and officers
10.3**	Form of Director Offer Letter between the Registrant and its directors
10.4**	Form of Cooperation Agreement by and between local governments and the Registrant
10.5**	Form of Cooperation Agreement with respect to cooperative accounts by and between the Registrant and its business partners
21.1**	Subsidiaries
23.1**	Consent of WWC P.C.
23.2**	Consent of Conyers Dill & Pearman (included in Exhibit 5.1)
23.3**	Consent of AllBright Law Offices Hangzhou Office (included in Exhibit 99.3)
23.4**	Consent of Hunter Taubman Fischer & Li LLC (included in Exhibit 5.2)
23.5**	Consent of Ince & Co
24.1**	Powers of Attorney (included on signature page)
99.1**	Code of Business Conduct and Ethics of the Registrant
99.2**	Consent of Frost & Sullivan Limited
99.3**	Opinion of AllBright Law Offices Hangzhou Office regarding certain PRC law matters
99.4*	Request for Waiver and Representation under Item 8.A.4 of Form 20-F
107**	Filing Fee Table

* Previously filed

** To be filed by amendment

II-5

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Hangzhou, People’s Republic of China, on [●], 2023.

XUHANG HOLDINGS LIMITED
By:
	Tianhang Xiao
	Chief Executive Officer, Director, and Chairman of the Board of Directors
	(Principal Executive Officer)

Power of Attorney

Each person whose signature appears below constitutes and appoints each of [●] and [●] as attorneys-in-fact with full power of substitution, for him or her in any and all capacities, to do any and all acts and all things and to execute any and all instruments which said attorney and agent may deem necessary or desirable to enable the registrant to comply with the Securities Act, and any rules, regulations, and requirements of the Securities and Exchange Commission thereunder, in connection with the registration under the Securities Act of ordinary shares of the registrant, including, without limitation, the power and authority to sign the name of each of the undersigned in the capacities indicated below to the Registration Statement on Form F-1 (the “Registration Statement”) to be filed with the Securities and Exchange Commission with respect to such Shares, to any and all amendments or supplements to such Registration Statement, whether such amendments or supplements are filed before or after the effective date of such Registration Statement, to any related Registration Statement filed pursuant to Rule 462(b) under the Securities Act, and to any and all instruments or documents filed as part of or in connection with such Registration Statement or any and all amendments thereto, whether such amendments are filed before or after the effective date of such Registration Statement; and each of the undersigned hereby ratifies and confirms all that such attorney and agent shall do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
	Chief Executive Officer, Director, and Chairman of the Board of Directors	[●], 2023
Name: Tianhang Xiao	(Principal Executive Officer)
	Chief Financial Officer	[●], 2023
Name: [●]	(Principal Accounting and Financial Officer)
	Director	[●], 2023
Name: [●]
	Director	[●], 2023
Name: [●]
	Director	[●], 2023
Name: [●]

II-6

SIGNATURE OF AUTHORIZED REPRESENTATIVE IN THE UNITED STATES

Pursuant to the Securities Act of 1933 as amended, the undersigned, the duly authorized representative in the United States of America of XUHANG HOLDINGS LIMITED, has signed this registration statement or amendment thereto in New York, NY on [●], 2023.

[●]
Authorized U.S. Representative
By:
	Name:[●]
	Title:[●]

II-7