What changed in this filing

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Item 1A. Risk Factors

2023-03-31 compared with 2022-04-12 · 105 added, 104 removed, 302 unchanged (41% of the section changed)

45 unchanged sentences

China-based internet giants.

Pursuant to Article 6 of the Measures for Cybersecurity Review (Draft for Comments), companies holding data

on more than 1 million users must now apply for cybersecurity approval when seeking listings in other nations due to the risk that such

data and personal information could be “affected, controlled, and maliciously exploited by foreign governments.”

On January 4, 2022, the Cyberspace Administration of China, or CAC, issued the revised Measures on Cyberspace

Security Review (the “Revised Measures”), which came into effect on February 15, 2022.

Under the Revised Measures, any “network

platform operator” controlling personal information of no less than one million users which seeks to list in a foreign stock exchange

should also be subject to cyber security review.

Pursuant to the Revised Measures, companies holding data on more than 1 million users

must now apply for cybersecurity approval when seeking listings in other nations due to the risk that such data and personal information

could be “affected, controlled, and maliciously exploited by foreign governments.”

Our business belongs to the

61 unchanged sentences

markets activities.

According to the Administration Provision and the Measures (Draft for Comments), only new initial public offerings

and refinancing by existent overseas listed Chinese companies will be required to go through the filing process with PRC administrations;

other existent overseas listed companies will be allowed sufficient transition period to complete their filing procedure.

is uncertain when the Administration Provision and the Measures will take effect or if they will take effect as currently drafted.

it is determined in the future that the approval of the CSRC, the CAC or any other regulatory authority is required for our listing on

exchange, we may face sanctions by the CSRC, the CAC or other PRC regulatory agencies.

These regulatory agencies may impose fines

and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operations in China or take other

actions that could have a material adverse effect on our business, financial condition, results of operations and prospects, as well as

the trading price of our securities.

Although the audit report included in this

annual report was issued by U.S.

auditors who are currently inspected by the PCAOB, if it is later determined that the PCAOB is unable

to inspect or investigate our auditor completely, investors would be deprived of the benefits of such inspection and our common stock

may be delisted or prohibited from trading.

The audit report included in

this annual report was issued by WWC, P.C.

Certified Public Accountants (“WWC”) a U.S.-based accounting firm that is registered

with the PCAOB and can be inspected by the PCAOB.

We have no intention of dismissing WWC in the future or of engaging any auditor not

based in the U.S.

and not subject to regular inspection by the PCAOB.

As an auditor of companies that are registered with the SEC and

publicly traded in the United States and a firm registered with the PCAOB, our auditor is required under the laws of the United States

to undergo regular inspections by the PCAOB to assess its compliance with the laws of the United States and professional standards.

we were to engage a different auditor in the future, we would engage an auditor that is U.S.-based and subject to full PCAOB inspection

with all materials related to the audit of our financial statements accessible to the PCAOB.

There is no guarantee, however, that any

future auditor engaged by the Company would remain subject to full PCAOB inspection during the entire term of our engagement.

case, we will engage a new qualified and fully inspected auditor, which may result in us delaying or restating our financial statements.

The PCAOB is currently unable

to conduct inspections in China without the approval of Chinese government authorities.

If it is later determined that the PCAOB is unable

to inspect or investigate our auditor completely, investors may be deprived of the benefits of such inspection.

Any audit reports not

issued by auditors that are completely inspected by the PCAOB, or a lack of PCAOB inspections of audit work undertaken in China that prevents

the PCAOB from regularly evaluating our auditors' audits and their quality control procedures, could result in a lack of assurance that

our financial statements and disclosures are adequate and accurate.

As part of a continued regulatory

focus in the United States on access to audit and other information currently protected by national law, in particular mainland China’s,

in June 2019, a bipartisan group of lawmakers introduced bills in both houses of the U.S.

Congress which, if passed, would require the

SEC to maintain a list of issuers for which PCAOB is not able to inspect or investigate the audit work performed by a foreign public accounting

firm completely.

The proposed Ensuring Quality Information and Transparency for Abroad-Based Listings on our Exchanges (“EQUITABLE”)

Act prescribes increased disclosure requirements for these issuers and, beginning in 2025, the delisting from U.S.

national securities

exchanges such as the Nasdaq of issuers included on the SEC’s list for three consecutive years.

It is unclear if this proposed legislation

will be enacted.

Furthermore, there have been recent deliberations within the U.S.

government regarding potentially limiting or restricting

China-based companies from accessing U.S.

capital markets.

On May 20, 2020, the U.S.

Senate passed the Holding Foreign Companies Accountable

Act (the “HFCAA”), which includes requirements for the SEC to identify issuers whose audit work is performed by auditors that

the PCAOB is unable to inspect or investigate completely because of a restriction imposed by a non-U.S.

authority in the auditor’s

local jurisdiction.

House of Representatives passed the HFCAA on December 2, 2020, and the HFCAA was signed into law on December

Additionally, in July 2020, the U.S.

President’s Working Group on Financial Markets issued recommendations for actions

that can be taken by the executive branch, the SEC, the PCAOB or other federal agencies and department with respect to Chinese companies

listed on U.S.

stock exchanges and their audit firms, in an effort to protect investors in the United States.

In response, on November

23, 2020, the SEC issued guidance highlighting certain risks (and their implications to U.S.

investors) associated with investments in

China-based issuers and summarizing enhanced disclosures the SEC recommends China-based issuers make regarding such risks.

2, 2021, the SEC adopted final rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA.

We will be required to comply with these rules if the SEC identifies us as having a “non-inspection” year (as defined in the

interim final rules) under a process to be subsequently established by the SEC.

The SEC is assessing how to implement other requirements

of the HFCAA, including the listing and trading prohibition requirements described above.

Under the HFCAA, our securities may be prohibited

from trading on the Nasdaq or other U.S.

stock exchanges if our auditor is not inspected by the PCAOB for three consecutive years, and

this ultimately could result in our Common Stock being delisted.

On February 17, 2023, the

CSRC released the Trial Administrative Measures for Administration of Overseas Securities Offerings and Listings by Domestic Companies

(the “Trial Measures”) and five supporting guidelines, which will come into effect on March 31, 2023.

Pursuant to the Trial

Measures, domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedures

and report relevant information to the CSRC.

If a domestic company fails to complete the filing procedures or conceals any material fact

or falsifies any major content in its filing documents, such domestic company may be subject to administrative penalties by the CSRC,

such as order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other

directly liable persons may also be subject to administrative penalties, such as warnings and fines.

As a listed company, we believe that

we and all of our PRC subsidiaries are not required to fulfill filing procedures and obtain approvals from the CSRC to continue to offer

our securities or operate our business as of the date of this annual report.

In addition, to date, none of us and our PRC subsidiaries

has received any filing or compliance requirements from CSRC for the listing of the Company at Nasdaq and all of its overseas offerings.

Furthermore, based on our understanding of the current PRC laws, we believe that the CSRC’s approval is not required to be obtained

for the Company’s listing on Nasdaq;

however, there are substantial uncertainties regarding the interpretation and application of

the Regulation on Mergers and Acquisitions of Domestic Companies by Foreign Investors (“M&A Rules”), other PRC Laws and

future PRC laws and regulations, and there can be no assurance that any governmental agency will not take a view that is contrary to or

otherwise different from our belief stated herein.

If it is determined in the

future that the approval of the CSRC, the CAC or any other regulatory authority is required for our listing on U.S.

exchange, we may face

sanctions by the CSRC, the CAC or other PRC regulatory agencies.

These regulatory agencies may impose fines and penalties on our operations

in China, limit our ability to pay dividends outside of China, limit our operations in China or take other actions that could have a material

adverse effect on our business, financial condition, results of operations and prospects, as well as the trading price of our securities.

Our common stock may be delisted from the Nasdaq under the Holding

Foreign Companies Accountable Act if the PCAOB is unable to adequately inspect audit documentation located in China.

The delisting of

our common stock, or the threat of their being delisted, may materially and adversely affect the value of your investment.

The HFCAA, was enacted on December 18, 2020.

The HFCAA states if the

SEC determines that a company has filed audit reports issued by a registered public accounting firm that has not been subject to inspection

by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit such ordinary shares from being traded on a national

securities exchange or in the over the counter trading market in the U.S.

On March 24, 2021, the SEC adopted interim final rules relating to

the implementation of certain disclosure and documentation requirements of the HFCAA.

A company will be required to comply with these

rules if the SEC identifies it as having a “non-inspection” year under a process to be subsequently established by the SEC.

The SEC is assessing how to implement other requirements of the HFCAA, including the listing and trading prohibition requirements described

Furthermore, on June 22, 2021, the U.S.

Senate passed the Accelerating

Holding Foreign Companies Accountable Act (“AHFCAA”), which, if enacted, would amend the HFCAA and require the SEC to prohibit

an issuer’s securities from trading on any U.S.

stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive

years instead of three.

On September 22, 2021, the PCAOB adopted a final rule implementing the HFCAA, which provides a framework for the

PCAOB to use when determining, as contemplated under the HFCAA, whether the Board 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 16, 2021, the PCAOB

issued a Determination Report which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms

headquartered in:

(1) mainland China of the People’s Republic of China, because of a position taken by one or more authorities in

mainland China;

and (2) Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more

authorities in Hong Kong.

WWC is not headquartered in mainland China or Hong Kong and was not identified in the Determination

Report on December 16, 2021 as a firm subject to the PCAOB’s determination.

Should the PCAOB be unable

to fully conduct inspection of our auditor’s work papers in China, it will make it difficult to evaluate the effectiveness of our

auditor’s audit procedures or equity control procedures.

Investors may consequently lose confidence in our reported financial information

and procedures or quality of the financial statements, which would adversely affect us and out securities.

Senate passed the Accelerating Holding Foreign Companies Accountable Act, which was signed

into law on December 29, 2022, amends the HFCAA and requires the SEC to prohibit an issuer’s securities from trading on any U.S.

stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three.

On September 22, 2021,

the PCAOB adopted a final rule implementing the HFCAA, which provides a framework for the PCAOB to use when determining, as contemplated

under the HFCAA Act, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a

foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.

On December 2, 2021, the SEC issued

amendments to finalize the interim final rules previously adopted in March 2021 to implement the submission and disclosure requirements

in the HFCAA.

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 a foreign jurisdiction.

On December 16, 2021, the PCAOB issued a Determination

Report which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in:

(1) mainland China of the PRC, because of a position taken by one or more authorities in mainland China;

and (2) Hong Kong, a Special

Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in Hong Kong.

The PCAOB has made

such designations as mandated under the HFCAA.

Pursuant to each annual determination by the PCAOB, the SEC will, on an annual basis,

identify issuers that have used non-inspected audit firms and thus are at risk of such suspensions in the future.

On August 26, 2022,

the PCAOB signed the Protocol with the CSRC and the MOF of the People’s Republic of China, governing inspections and investigations

of audit firms based in mainland China and Hong Kong.

The Protocol remains unpublished and is subject to further explanation and implementation.

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 the unfettered ability to transfer information to the SEC.

On December 15, 2022, the

PCAOB announced that it was able to secure complete access to inspect and investigate PCAOB-registered public accounting firms headquartered

in China mainland and Hong Kong completely in 2022.

The PCAOB Board vacated its previous 2021 determinations that the PCAOB was unable

to inspect or investigate completely registered public accounting firms headquartered in China mainland and Hong Kong.

However, whether

the PCAOB will continue to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered in

China mainland and Hong Kong is subject to uncertainty and depends on a number of factors out of our, and our auditor’s, control.

The PCAOB is continuing to demand complete access in China mainland and Hong Kong moving forward and is already making plans to resume

regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations

The PCAOB has indicated that it will act immediately to consider the need to issue new determinations with the HFCAA if needed.

Therefore, the PCAOB may in the future determine that it is unable to inspect or investigate completely registered public accounting

firms in mainland China and Hong Kong.

Our auditor, WWC, P.C., Certified Public Accountants, the independent

registered public accounting firm that issued the audit report included in our annual report, an auditor of companies that are traded

publicly in the United States and an U.S.-based accounting 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 based

in the United States and is subject to inspection by the PCAOB on a regular basis with the last inspection in November 2021.

However, our auditor’s working papers related to us and our subsidiaries

are located in China.

If our auditor is not permitted to provide requested audit work papers located in China to the PCAOB, investors

would be deprived of the benefits of PCAOB’s oversight of our auditor through such inspections which could result in limitation

or restriction to our access to the U.S.

capital markets, and trading of our securities may be prohibited under the HFCAA, which would

result in the delisting of our securities from the Nasdaq.

Changes in China’s economic, political

190 unchanged sentences

Unresolved Staff Comments.

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors