What changed in this filing

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Item 1A. Risk Factors

2023-03-31 compared with 2022-03-31 · 530 added, 255 removed, 1056 unchanged (43% of the section changed)

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should be read in conjunction with Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results

of Operations” and the consolidated financial statements and related notes in Part II, Item 8, “Financial Statements and Supplementary

Data” of this Form 10-K.

of Operations” and the consolidated financial statements and related notes in Part II, Item 8, “Financial Statements and

Supplementary Data” of this Form 10-K.

The business, financial condition and operating

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whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock

Because of the following factors, as well as

other factors affecting the Company’s financial condition and operating results, past financial performance should not be considered

to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future

In particular, our risks include, but are not limited to, the following:

Related to Our Business

are an early stage company with a limited operating history.

Our limited operating history may not provide an adequate basis to judge

our future prospects and results of operations.

face intense competition and could lose market share to our competitors, which could adversely affect our business, financial condition

and results of operations.

could be subject to claims from riders, drivers or third parties that are harmed whether or not our service or platform is in use, which

could adversely affect our business, brand, financial condition and results of operations.

rely on other third-party service providers and if such third parties do not perform adequately or terminate their relationships with

us, our costs may increase and our business, financial condition and results of operations could be adversely affected.

we are not able to successfully develop new offerings and enhance our existing offerings, our business, financial condition and results

of operations could be adversely affected.

failure to offer high-quality user support may harm our relationships with users and could adversely affect our reputation, brand, business,

financial condition and results of operations.

business could be adversely impacted by changes in the Internet and mobile device accessibility of users and unfavorable changes in or

our failure to comply with existing or future laws governing the Internet and mobile devices.

impact of any kind of epidemic, such as the coronavirus, on our operations, and the operations of the car fleet companies, may harm our

rely on mobile operating systems and application marketplaces to make our apps available to the drivers and riders on our platform, and

if we do not effectively operate with or receive favorable placements within such application marketplaces and maintain high rider reviews,

our usage or brand recognition could decline and our business, financial results and results of operations could be adversely affected.

depend on the interoperability of our platform across third-party applications and services that we do not control.

to protect or enforce our intellectual property rights could harm our business, financial condition and results of operations.

platform contains third-party open source software components, and failure to comply with the terms of the underlying open source software

licenses could restrict our ability to provide our offerings.

to maintain our reputation and brand image could negatively impact our business.

success is dependent on retaining key personnel who would be difficult to replace.

legal requirements associated with being a public company, including those contained in and issued under the Sarbanes-Oxley Act, may

make it difficult for us to retain or attract qualified officers and directors, which could adversely affect the management of our business

and our ability to obtain listing of our common stock

we fail to establish and maintain an effective system of internal controls, we may not be able to report our financial results accurately

or prevent fraud.

Any inability to report and file our financial results accurately and timely could harm our business and adversely

impact the trading price of our common stock.

as a public company requires us to incur substantial costs and requires substantial management attention.

In addition, key members of

our management team have limited experience managing a public company.

an “emerging growth company” under applicable law, we will be subject to lessened disclosure requirements, which could leave

our shareholders without information or rights available to shareholders of more mature companies.

we have elected to use the extended transition period for complying with new or revised accounting standards for an “emerging growth

company,” our financial statements may not be comparable to companies that comply with public company effective dates.

Risks Related to Doing Business in China

in the political and economic policies of the PRC government may materially and adversely affect our business, financial condition and

results of operations and may result in our inability to sustain our growth and expansion strategies.

are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations.

PRC government exerts substantial influence over the manner in which we conduct our business activities.

The PRC government may also

intervene or influence our operations and this offering at any time, which could result in a material change in our operations and our

common stock could decline in value or become worthless.

The CSRC has enacted the draft rules for China-based companies seeking to conduct initial public offerings in foreign markets.

While such rules have not yet gone into effect and we have determined we are not subject to the measures, the CSRC may exert more oversight and control over offerings that are conducted overseas and foreign investment in China-based issuers, which could significantly limit or completely hinder our ability to offer or continue to offer our common stock to investors and could cause the value of our common stock to significantly decline or become worthless.

to make adequate contributions to various employee benefit plans and withhold individual income tax on employees’ salaries as required

by PRC regulations may subject us to penalties.

must remit the offering proceeds to China before they may be used to benefit our business in China, and we cannot assure that we can

finish all necessary governmental registration processes in a timely manner.

relations between the United States and China worsen, investors may be unwilling to hold or buy our stock and our stock price may decrease.

fluctuation of the Renminbi may have a material adverse effect on your investment.

● Restrictions

on currency exchange may limit our ability to receive and use our revenue effectively.

PRC’s legal and judicial system may not adequately protect our business and operations and the rights of foreign investors.

our principal assets are located outside of the United States, it may be difficult for you to enforce your rights based on U.S.

securities laws against us or to enforce a U.S.

court judgment against us or our operating subsidiaries in the PRC and in Hong Kong

operations could be adversely affected, directly or indirectly, by future PRC laws and regulations relating to our business or industry,

if we inadvertently conclude that such approvals or permissions, including business licenses, are not required when they are, or applicable laws, regulations, or interpretations

change and we are required to obtain approvals or permissions in the future.

may face difficulties in protecting your interests and exercising your rights as our stockholder since we conduct the bulk of our operations

and our shareholders face uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises or other assets

attributed to a Chinese establishment of a non-Chinese company, or immovable properties located in China owned by non-Chinese companies.

future development of national security laws and regulations in Hong Kong could materially impact our business by possibly triggering

sanctions and other measures which can cause economic harm to our business.

political and economic instability in Hong Kong may adversely impact our results of operations.

We may also face the risk that changes

in the policies of the PRC government could have a significant impact upon the business we conduct in Hong Kong and the profitability

of such business.

Hong Kong and Shenzhen subsidiaries may be subject to restrictions on paying dividends or making other payments to us, which may restrict

its ability to satisfy liquidity requirements, conduct business and pay dividends to holders of our common stock.

Dividends payable to

our foreign investors and gains on the sale of our shares of common stock by our foreign investors may become subject to tax by the PRC.

Holding Foreign Companies Accountable Act, or the HFCAA, and the related regulations are evolving quickly.

Further implementations and interpretations of our amendments to the HFCAA or the related regulations, or a PCAOB’s determination of its lack of sufficient access to inspect our auditor, might pose regulatory risks to and impose restrictions on us because of our operations in mainland China that PCAOB may not be able to inspect or investigate completely such audit documentation and, as such, you may be deprived of the benefits of such inspection and our ordinary share could be delisted from the stock exchange pursuant to the HFCAA.

Related to Our Common Stock

majority stockholders will control our company for the foreseeable future, including the outcome of matters requiring shareholder approval.

public market for our common stock currently exists, and an active trading market may not develop or be sustained following this offering.

we believe our revenues and cash on hand are adequate to meet our immediate needs, we may require additional funding in order to progress

our business in the future.

If we are unable to raise additional capital, we could be forced to delay, reduce or eliminate portions of

our business.

There is substantial doubt about our ability to continue as a going concern.

additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies

or product candidates.

if our common stock becomes publicly-traded and an active trading market develops, the market price for our common stock may be volatile.

common stock may be thinly traded and you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise

money or otherwise desire to liquidate your shares.

common stock may be considered a “penny stock,” and thereby be subject to additional sale and trading regulations that may

make it more difficult to sell.

sales practice requirements may also limit your ability to buy and sell shares of our common stock, which could depress the price of

shares of our common stock.

may face significant restrictions on the resale of your shares of our common stock due to state “blue sky” laws.

future sales under Rule 144 may depress the market price for the common stock.

in our common stock price may subject us to securities litigation.

are not likely to pay cash dividends in the foreseeable future.

investors may experience difficulties in attempting to effect a service of process and enforce judgments based upon U.S.

Federal Securities

Laws against the company and its non U.S.

resident officer and director.

Company is selling shares without an underwriter and may not be able to sell all or any of the shares offered herein.

exclusive forum provision in our subscription agreement may have the effect of limiting a purchaser’s ability to bring legal action

against the company and could limit a purchaser’s ability to obtain a favorable judicial forum for disputes.

in this offering may not be entitled to a jury trial with respect to claims arising under the subscription agreement, which could result

in less favorable outcomes to the plaintiff(s) in any such action.

of the following factors, as well as other factors affecting the Company’s financial condition and operating results, past financial

performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends

to anticipate results or trends in future periods.

Risks Related to Our Business

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depends upon many factors both within and beyond our control, including:

the popularity, utility, ease of use, performance and reliability of our offerings compared to those of our competitors;

our reputation and brand strength relative to our competitors;

● the popularity, utility, ease

of use, performance and reliability of our offerings compared to those of our competitors;

● our reputation and brand strength

relative to our competitors;

the prices of our offerings and the fees we charge drivers on our platform;

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of PRC laws, rules and regulations.

Substantially all of our operations are conducted

in the PRC, and are governed by PRC laws, rules and regulations.

Our PRC subsidiaries are subject to laws, rules and regulations applicable

to foreign investment in China.

Most of our operations are conducted in the

PRC, and are governed by PRC laws, rules and regulations.

Our PRC subsidiary are subject to laws, rules and regulations applicable to

foreign investment in China.

The PRC legal system is a civil law system based on written statutes.

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be interpreted, amended and implemented by the relevant PRC governmental authorities.

There remains uncertainties as to when the final

measures will be issued and take effect, how they will be enacted, interpreted or implemented, and whether they will affect us.

inadvertently conclude that the Measures for Cybersecurity Review (2021 version) do not apply to us, or applicable laws, regulations,

or interpretations change and it is determined in the future that the Measures for Cybersecurity Review (2021 version) become applicable

to us, we may be subject to review when conducting data processing activities, and may face challenges in addressing its requirements

and make necessary changes to our internal policies and practices.

We may incur substantial costs in complying with the Measures for Cybersecurity

Review (2021 version), which could result in material adverse changes in our business operations and financial position.

If we are not

able to fully comply with the Measures for Cybersecurity Review (2021 version), our ability to offer or continue to offer securities to

investors may be significantly limited or completely hindered, and our securities may significantly decline in value or become worthless.

On February 24, 2023, the CSRC, the Ministry of

Finance, the National Administration of State Secrets Protection and the National Archives Administration jointly issued the Provisions

on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies, or the

Confidentiality and Archives Provisions (the “CAP”), which will take effective from March 31, 2023.

The Confidentiality and

Archives Provisions specify that during the overseas issuance of securities and listing activities of domestic enterprises, domestic enterprises

and securities companies and securities service institutions that provide relevant securities services shall, by strictly abiding by the

relevant laws and regulations of the PRC and the requirements therein, establish sound confidentiality and archives management systems,

take necessary measures to implement confidentiality and archives management responsibilities, and shall not leak national secrets, work

secrets of governmental agencies and undermine national and public interests.

Work manuscripts generated in the PRC by securities companies

and securities service institutions that provide relevant securities services for overseas issuance and listing of securities by domestic

enterprises shall be kept in the PRC.

Without the approval of relevant competent authorities, it shall not be transferred overseas.

archives or copies need to be transferred outside of the PRC, it shall be subject to the approval procedures in accordance with relevant

PRC regulations.

Based on the Company’s understanding of the

current PRC laws, as of the date of this report, we are of the view as a result of:

(i) we do not hold personal information on more than

one million users in our business operations and (ii) data processed in our business does not have a bearing on national security and

thus may not be classified as core or important data by the authorities, we are not required to apply for a cybersecurity review under

the Measures for Cybersecurity Review (2021 version).

Further, the business of our Hong Kong subsidiary, Pony HK is not subject to cybersecurity

review with the CAC, given that PRC laws on data protection and cybersecurity do not currently apply to Hong Kong.

In addition, the CSRC

currently has not issued any definitive rule or interpretation concerning whether we are subject to the CAP.

On December 24, 2021, the CSRC released the Administrative

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and the Measures for the Overseas Issuance of Securities and Listing Record-Filings by Domestic Enterprises (Draft for Comments) (both,

of which had a comment period that expired on January 23, 2022, and if enacted, may subject us to additional compliance requirement in

Thus, it is still uncertain how PRC governmental

authorities will regulate overseas listing in general and whether we are required to obtain any specific regulatory approvals.

if the CSRC or other regulatory agencies later promulgate new rules or explanations requiring that we obtain their approvals for this

offering and any follow-on offering, we may be unable to obtain such approvals which could significantly limit or completely hinder our

ability to offer or continue to offer securities to our investors.

the “Draft Rules”), both of which had a comment period that expired on January 23, 2022, and if enacted, may subject us to

additional compliance requirement in the future.

On February 17, 2023, the CSRC promulgated the

Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”), which

will take effect on March 31, 2023.

The Trial Measures supersede the Draft Rules and clarified and emphasized several aspects, which include

but are not limited to:

(1) comprehensive determination of the “indirect overseas offering and listing by PRC domestic companies”

in compliance with the principle of “substance over form” and particularly, an issuer will be required to go through the filing

procedures under the Trial Measures if the following criteria are met at the same time:

a) 50% or more of the issuer’s operating

revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting

year is accounted for by PRC domestic companies, and b) the main parts of the issuer’s business activities are conducted in mainland

China, or its main places of business are located in mainland China, or the senior managers in charge of its business operation and management

are mostly Chinese citizens or domiciled in mainland China;

(2) exemptions from immediate filing requirements for issuers that a) have

already been listed or registered but not yet listed in foreign securities markets, including U.S.

markets, prior to the effective date

of the Trial Measures, and b) are not required to re-perform the regulatory procedures with the relevant overseas regulatory authority

or the overseas stock exchange, and c) whose such overseas securities offering or listing shall be completed before September 30, 2023,

provided however that such issuers shall carry out filing procedures as required if they conduct refinancing or are involved in other

circumstances that require filing with the CSRC;

(3) a negative list of types of issuers banned from listing or offering overseas, such

as (a) issuers whose listing or offering overseas have been recognized by the State Council of the PRC as possible threats to national

security, (b) issuers whose affiliates have been recently convicted of bribery and corruption, (c) issuers under ongoing criminal investigations,

and (d) issuers under major disputes regarding equity ownership;

(4) issuers’ compliance with web security, data security, and other

national security laws and regulations;

(5) issuers’ filing and reporting obligations, such as obligation to file with the CSRC

after it submits an application for initial public offering to overseas regulators, and obligation after offering or listing overseas

to report to the CSRC material events including change of control or voluntary or forced delisting of the issuer;

and (6) the CSRC’s

authority to fine both issuers and their shareholders between 1 and 10 million RMB for failure to comply with the Trial Measures, including

failure to comply with filing obligations or committing fraud and misrepresentation.

As a China-based issuer, we have determined that

we and our subsidiaries will not be required to comply with the filing requirements or procedures set forth in Trial Measures given that

we are already listed on an overseas exchange before the effective date of the Trial Measures of March 31, 2023.

Nevertheless, if the CSRC or other regulatory agencies

later promulgate new rules or explanations requiring that we obtain their approvals for this offering and any follow-on offering, we may

be unable to obtain such approvals which could significantly limit or completely hinder our ability to offer or continue to offer securities

to our investors.

Furthermore, the PRC government authorities may

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We are currently not required to obtain approval

from Chinese authorities to list on U.S exchanges, however, if our holding company or any of our PRC subsidiaries were required to obtain

from Chinese authorities to list on U.S exchanges, however, if our holding company or any of our PRC subsidiary were required to obtain

approval in the future and were denied permission from Chinese authorities to list on U.S.

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laws and regulations or penalties for any failure to comply.

Furthermore, it is uncertain when and whether we

will be required to obtain permission from the PRC government to list on U.S.

exchanges in the future, and even when such permission is

obtained, whether it will be denied or rescinded.

Although we are currently not required to obtain permission from any of the PRC federal

or local government to obtain such permission and has not received any denial to list on the U.S.

exchange, our operations could be adversely

affected, directly or indirectly, by existing or future laws and regulations relating to our business or industry.

Recent statements by

the Chinese government indicating an intent, and the PRC government may take actions to exert more oversight and control over offerings

that are conducted overseas and/or foreign investment in China-based issuers, which could significantly limit or completely hinder our

ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or become

The CSRC has released for public consultation the draft rules

for China-based companies seeking to conduct initial public offerings in foreign markets.

While such rules have not yet gone into effect,

the Chinese government may exert more oversight and control over offerings that are conducted overseas and foreign investment in China-based

issuers, which could significantly limit or completely hinder our ability to offer or continue to offer our common stock to investors

and could cause the value of our common stock to significantly decline or become worthless.

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 denied or rescinded.

Although we and our subsidiaries are currently not required to

obtain permission or approvals from any of the PRC or Hong Kong government or regulatory agencies, we have not received any

denial to list on the U.S.

exchange, our operations could be adversely affected, directly or indirectly, by existing or future laws

and regulations relating to our business or industry.

Recent statements by the Chinese government indicating an intent, and the PRC

government may take actions to exert more oversight and control over offerings that are conducted overseas and/or foreign investment

in China-based issuers, which could significantly limit or completely hinder our ability to offer or continue to offer securities to

investors and cause the value of our securities to significantly decline or become worthless.

The CSRC has enacted the draft rules for China-based companies

seeking to conduct initial public offerings in foreign markets.

While such rules have not yet gone into effect and we have determined

we are not subject to the measures, the CSRC may exert more oversight and control over offerings that are conducted overseas and foreign

investment in China-based issuers, which could significantly limit or completely hinder our ability to offer or continue to offer our

common stock to investors and could cause the value of our common stock to significantly decline or become worthless.

On December 24, 2021, the CSRC released the Draft

Rules Regarding Overseas Listing, which had a comment period that expired on January 23, 2022.

The Draft Rules Regarding Overseas Listing

lay out the filing regulation arrangement for both direct and indirect overseas listing, and clarify the determination criteria for indirect

overseas listing in overseas markets.

The Draft Rules Regarding Overseas Listing stipulate

that the Chinese-based companies, or the issuer, shall fulfill the filing procedures within three working days after the issuer makes

an application for initial public offering and listing in an overseas market.

The required filing materials for an initial public offering

and listing should include at least the following:

record-filing report and related undertakings;

regulatory opinions, record-filing,

approval and other documents issued by competent regulatory authorities of relevant industries (if applicable);

and security assessment

opinion issued by relevant regulatory authorities (if applicable);

PRC legal opinion;

and prospectus.

In addition, an overseas offering and listing is

prohibited under any of the following circumstances:

(1) if the intended securities offering and listing is specifically prohibited by

national laws and regulations and relevant provisions;

(2) if the intended securities offering and listing may constitute a threat to

or endangers national security as reviewed and determined by competent authorities under the State Council in accordance with law;

if there are material ownership disputes over the equity, major assets, and core technology, etc.

of the issuer;

(4) if, in the past three

years, the domestic enterprise or its controlling shareholders or actual controllers have committed corruption, bribery, embezzlement,

misappropriation of property, or other criminal offenses disruptive to the order of the socialist market economy, or are currently under

judicial investigation for suspicion of criminal offenses, or are under investigation for suspicion of major violations;

(5) if, in past

three years, directors, supervisors, or senior executives have been subject to administrative punishments for severe violations, or are

currently under judicial investigation for suspicion of criminal offenses, or are under investigation for suspicion of major violations;

(6) other circumstances as prescribed by the State Council.

The Draft Administration Provisions defines the legal liabilities of breaches

such as failure in fulfilling filing obligations or fraudulent filing conducts, imposing a fine between RMB 1 million and RMB 10 million,

and in cases of severe violations, a parallel order to suspend relevant business or halt operation for rectification, revoke relevant

business permits or operational license.

The Draft Rules Regarding Overseas Listing, if

enacted, may subject us to additional compliance requirement in the future, and we cannot assure you that we will be able to get the clearance

of filing procedures under the Draft Rules Regarding Overseas List on a timely basis, or at all.

Any failure of us to fully comply with

new regulatory requirements may significantly limit or completely hinder our ability to offer or continue to offer our common stock, cause

significant disruption to our business operations, and severely damage our reputation, which would materially and adversely affect our

financial condition and results of operations and cause our common stock to significantly decline in value or become worthless.

Rules Regarding Overseas Listing (the “Draft Rules”), which had a comment period that expired on January 23, 2022.

Rules Regarding Overseas Listing lay out the filing regulation arrangement for both direct and indirect overseas listing, and clarify

the determination criteria for indirect overseas listing in overseas markets.

On February 17, 2023, the CSRC promulgated the

Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”), which

will take effect on March 31, 2023.

The Trial Measures supersede the Draft Rules and clarified and emphasized several aspects, which include

but are not limited to:

(1) comprehensive determination of the “indirect overseas offering and listing by PRC domestic companies”

in compliance with the principle of “substance over form” and particularly, an issuer will be required to go through the filing

procedures under the Trial Measures if the following criteria are met at the same time:

a) 50% or more of the issuer’s operating

revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting

year is accounted for by PRC domestic companies, and b) the main parts of the issuer’s business activities are conducted in mainland

China, or its main places of business are located in mainland China, or the senior managers in charge of its business operation and management

are mostly Chinese citizens or domiciled in mainland China;

(2) exemptions from immediate filing requirements for issuers that a) have

already been listed or registered but not yet listed in foreign securities markets, including U.S.

markets, prior to the effective date

of the Trial Measures, and b) are not required to re-perform the regulatory procedures with the relevant overseas regulatory authority

or the overseas stock exchange, and c) whose such overseas securities offering or listing shall be completed before September 30, 2023,

provided however that such issuers shall carry out filing procedures as required if they conduct refinancing or are involved in other

circumstances that require filing with the CSRC;

(3) a negative list of types of issuers banned from listing or offering overseas, such

as (a) issuers whose listing or offering overseas have been recognized by the State Council of the PRC as possible threats to national

security, (b) issuers whose affiliates have been recently convicted of bribery and corruption, (c) issuers under ongoing criminal investigations,

and (d) issuers under major disputes regarding equity ownership;

(4) issuers’ compliance with web security, data security, and other

national security laws and regulations;

(5) issuers’ filing and reporting obligations, such as obligation to file with the CSRC

after it submits an application for initial public offering to overseas regulators, and obligation after offering or listing overseas

to report to the CSRC material events including change of control or voluntary or forced delisting of the issuer;

and (6) the CSRC’s

authority to fine both issuers and their shareholders between 1 and 10 million RMB for failure to comply with the Trial Measures, including

failure to comply with filing obligations or committing fraud and misrepresentation.

As a China-based issuer, we have determined that

we and our subsidiaries will not be required to comply with the filing requirements or procedures set forth in Trial Measures given that

we are already listed on an overseas exchange before the effective date of the Trial Measures of March 31, 2023.

Nevertheless, if the CSRC or other regulatory agencies

later promulgate new rules or explanations requiring that we obtain their approvals for this offering and any follow-on offering, we may

be unable to obtain such approvals which could significantly limit or completely hinder our ability to offer or continue to offer securities

to our investors.

Furthermore, the PRC government authorities

may strengthen oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers

Such actions taken by the PRC government authorities may intervene or influence our operations at any time, which are

beyond our control.

Any failure of us to fully comply with new regulatory requirements may significantly limit or completely hinder

our ability to offer or continue to offer our common stock, cause significant disruption to our business operations, and severely

damage our reputation, which would materially and adversely affect our financial condition and results of operations and cause our

common stock to significantly decline in value or become worthless.

Failure to make adequate contributions to various employee benefit

72 unchanged sentences

currency policy, which could result in a further and more significant appreciation of the Renminbi against the U.S.

As we rely on dividends and other fees

paid to us by our subsidiary and affiliated consolidated entities in China, any significant revaluation of the Renminbi could adversely

affect our cash flows, revenues, earnings and financial position, and the value of, and any dividends payable on, shares of our common

stock in foreign currency terms.

As we rely on fees paid to us by

our subsidiary and affiliated consolidated entities in China, any significant revaluation of the Renminbi could adversely affect our

cash flows, revenues, earnings and financial position, and the value of, and any dividends payable on, shares of our common stock in

foreign currency terms.

To the extent that we need to convert U.S.

dollars we received from our offering into Renminbi for our

operations, appreciation of the Renminbi against the U.S.

dollar would have an adverse effect on the Renminbi amount we would receive

from the conversion.

dollars we received from our offering into Renminbi for our operations,

appreciation of the Renminbi against the U.S.

dollar would have an adverse effect on the Renminbi amount we would receive from the conversion.

Conversely, if we decide to convert our Renminbi into U.S.

dollars for the purpose of making payments for dividends

on our common stock or for other business purposes, appreciation of the U.S.

dollar against the Renminbi would have a negative effect

dollar amount available to us.

dollars for the purpose of making payments for dividends on our common stock

or for other business purposes, appreciation of the U.S.

dollar against the Renminbi would have a negative effect on the U.S.

amount available to us.

In addition, since our functional and reporting currency is the U.S.

dollar while the functional

currency of our subsidiary and consolidated affiliated entities in China is Renminbi, appreciation or depreciation in the value of the

Renminbi relative to the U.S.

dollar would have a positive or negative effect on our reported financial results, which might not reflect

any underlying change in our business, financial condition or results of operations.

dollar while the functional currency of

our subsidiary and consolidated affiliated entities in China is Renminbi, appreciation or depreciation in the value of the Renminbi relative

dollar would have a positive or negative effect on our reported financial results, which might not reflect any underlying

change in our business, financial condition or results of operations.

Restrictions on currency exchange may limit our ability to receive

and use our revenue effectively.

Substantially all of our revenue is

denominated in Renminbi.

Renminbi is currently convertible under the “current account,” which includes dividends, trade and

service-related foreign exchange transactions, but not under the “capital account,” which includes foreign direct investment

and loans, including loans we may secure from our onshore subsidiaries.

Currently, Universe Travel, may purchase foreign currency for

settlement of “current account transactions,” including payment of dividends to us, without the approval of the State Administration

of Foreign Exchange (“SAFE”) by complying with certain procedural requirements.

However, the relevant PRC governmental authorities

may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions.

Since a significant

amount of our future revenue will be denominated in Renminbi, any existing and future restrictions on currency exchange may limit our

ability to utilize revenue generated in Renminbi to fund our business activities outside of the PRC or pay dividends in foreign currencies

to our shareholders, including holders of our common stock.

Foreign exchange transactions under the capital account remain subject to

limitations and require approvals from, or registration with, SAFE and other relevant PRC governmental authorities.

This could affect

our ability to obtain foreign currency through debt or equity financing for our subsidiaries.

Substantially all of our revenue is denominated

Renminbi is currently convertible under the “current account,” which includes dividends, trade and service-related

foreign exchange transactions, but not under the “capital account,” which includes foreign direct investment and loans, including

loans we may secure from our onshore subsidiaries.

Currently, Universe Travel may purchase foreign currency for settlement of “current

account transactions,” including payment of dividends to us, without the approval of the State Administration of Foreign Exchange

(“SAFE”) by complying with certain procedural requirements.

However, the relevant PRC governmental authorities may limit or

eliminate our ability to purchase foreign currencies in the future for current account transactions.

Since a significant amount of our

future revenue will be denominated in Renminbi, any existing and future restrictions on currency exchange may limit our ability to utilize

revenue generated in Renminbi to fund our business activities outside of the PRC or pay dividends in foreign currencies to our shareholders,

including holders of our common stock.

Foreign exchange transactions under the capital account remain subject to limitations and require

approvals from, or registration with, SAFE and other relevant PRC governmental authorities.

This could affect our ability to obtain foreign

currency through debt or equity financing for our subsidiaries.

Our subsidiaries and affiliated entities in China are subject

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federal securities laws against us or to enforce a U.S.

judgment against us or our operating subsidiaries in the PRC.

judgment against us or our operating subsidiaries in the PRC and in Hong Kong

A substantial portion of our operations

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courts, it may be difficult to enforce such judgments in PRC courts.

Our operations could be adversely affected, directly or indirectly,

by future PRC laws and regulations relating to our business or industry, if we inadvertently conclude that such approvals or permissions, including business licsnes,

are not required when they are, or applicable laws, regulations, or interpretations change and we are required to obtain approvals or

permissions in the future.

We have determined that we and our

subsidiaries are not currently required to obtain any permission or approval from the CSRC, the CAC or any other regulatory

authority in the PRC or in Hong Kong for our operations, the trading of our securities on the OTCQB and the offering of our

securities to foreign investors.

The business of our Hong Kong subsidiary, Pony HK is not subject to cybersecurity review with the

CAC, given that PRC laws on data protection and cybersecurity do not currently apply to Hong Kong.

Further, for our Shenzhen

subsidiary, Universe Travel, and to the extent that if we become subject to such PRC laws in the future, we do not believe we are

required to conduct a cybersecurity review because (i) we do not possess a large amount of personal information on more than one

million users in our business operations;

and (ii) data processed in our business does not have a bearing on national security and

thus may not be classified as core or important data by the authorities.

However, our operations could be adversely affected,

directly or indirectly, by future laws and regulations relating to our business or industry, if we inadvertently conclude that such

approvals or permissions, including business licenses, are not required when they are, or applicable laws, regulations, or

interpretations change and we are required to obtain approvals or permissions in the future.

We may be subject to penalties and

sanctions imposed by the PRC and Hong Kong regulatory agencies, including the CSRC, if we fail to comply with such rules and

regulations or applicable laws, or if we inadvertently conclude future approvals

or permissions from the such regulatory agencies, including business licenses, are not required when they are.

As a result, such non-compliance could adversely affect the ability of the Company’s securities to continue to trade on the OTCQB, which may

cause the value of our securities to significantly decline or become worthless.

You may face difficulties in protecting your interests and exercising

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We conduct the bulk of our operations

in China through Pony HK.

Because of this factor, it may be difficult for you to conduct due diligence on the Company, our executive

officers or director and attend stockholders meetings if the meetings are held in China.

As a result, our public stockholders may have

more difficulty in protecting their interests through actions against our management, our director or major stockholders than would stockholders

of a corporation doing business entirely or predominantly within the United States.

in China through our PRC-subsidiary Universe Travel.

Because of this factor, it may be difficult for you to conduct due diligence on

the Company, our executive officers or director and attend stockholders meetings if the meetings are held in China.

As a result, our

public stockholders may have more difficulty in protecting their interests through actions against our management, our director or major

stockholders than would stockholders of a corporation doing business entirely or predominantly within the United States.

We and our shareholders face uncertainties with respect to indirect

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have a material adverse effect on our results of operations, financial condition and cash flow.

Our common stock may be delisted under the Holding Foreign Companies

Accountable Act if the PCAOB is unable to inspect our auditors.

The delisting of our common stock, or the threat of their being delisted,

may materially and adversely affect the value of your investment.

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

Senate passed the Accelerating

Holding Foreign Companies Accountable Act, which, if enacted, would amend the HFCA Act 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

Potential political and economic instability

in Hong Kong may adversely impact our results of operations.

We may also face the risk that changes in the policies of the PRC government

could have a significant impact upon the business we conduct in Hong Kong and the profitability of such business.

Our operational activities are conducted in Hong

Kong and through our wholly owned subsidiary Universe Travel in Shenzhen in Guangdong Province.

Accordingly, political and economic conditions

in Hong Kong and the surrounding region, including Guangdong Province, may directly affect our business.

Since early 2019, a number of

political protests and conflicts have occurred in Hong Kong in connection with proposed legislation that would allow local authorities

to detain and extradite people who are wanted in territories that Hong Kong does not have extradition agreements with, including mainland

China and Taiwan.

The economy of Hong Kong has been negatively impacted, including our retail market, property market, stock market, and

tourism, from such protests.

Under the Basic Law, Hong

Kong is exclusively in charge of its internal affairs and external relations, while the government of the PRC is responsible for its foreign

affairs and defense.

As a separate customs territory, Hong Kong maintains and develops relations with foreign states and regions.

assure you that the Hong Kong protests will not affect Hong Kong’s status as a Special Administrative Region of the People’s

Republic of China and thereby affecting its current relations with foreign states and regions.

It is unclear whether there

will be other political or social unrest in the near future or that there will not be other events that could lead to the disruption of

the economic, political and social conditions in Hong Kong.

If such events persist for a prolonged period of time or that the economic,

political and social conditions in Hong Kong are to be disrupted, our overall business and results of operations may be adversely affected.

In addition, economic, political

and legal developments and social conditions in the PRC may significantly affect our business, financial condition, results of operations

and prospects.

The PRC economy is in transition from a planned economy to a market-oriented economy subject to plans adopted by the government

that set national economic development goals.

Policies of the PRC government can have significant effects on economic conditions in the

PRC and Hong Kong.

While we believe that the PRC will continue to strengthen its economic and trading relationships with foreign countries

and that business development in the PRC will continue to follow market forces, we cannot assure you that this will be the case.

operations and prospects, financial condition, and results of operations may be adversely affected by changes in policies by the PRC government,

changes in laws, regulations or their interpretation;

confiscatory taxation;

restrictions on currency conversion, imports or sources of supplies, or ability to continue as a for-profit enterprise;

expropriation or nationalization of private enterprises;

the allocation of resources.

Our Hong Kong and Shenzhen subsidiaries

may be subject to restrictions on paying dividends or making other payments to us, which may restrict its ability to satisfy liquidity

requirements, conduct business and pay dividends to holders of our common stock.

Dividends payable to our foreign investors and gains

on the sale of our shares of common stock by our foreign investors may become subject to tax by the PRC.

Pony Group Inc is a holding company incorporated

in Delaware with its operating subsidiaries located in Hong Kong and Shenzhen.

Most of our cash is maintained in Chinese Yuan.

no other business and, as a result, we depend entirely upon our Hong Kong and Shenzhen operating subsidiaries’ earnings and cash

If we decide in the future to pay dividends, as a holding company, our ability to pay dividends and meet other obligations depends

upon the receipt of dividends or other payments from our operating subsidiary.

There are currently no restrictions of transferring funds

between our Delaware holding company and our operating subsidiaries in Hong Kong and Shenzhen or limitations on the ability of our Hong

Kong and Shenzhen subsidiary to issue dividends or other distributions to its overseas shareholders.

However, we cannot assure you that

the oversight of the PRC government will not be extended to companies operating in Hong Kong and Shenzhen like our Hong Kong and Shenzhen

subsidiaries.

There is a possibility that the PRC government could prevent our cash maintained in Hong Kong or Shenzhen from leaving

or the PRC could restrict the deployment of the cash into our business or for the payment of dividends.

However, we do not expect that

a restriction into the deployment of cash into our business to affect the use of our assets in our ordinary course of business.

Nevertheless,

any such controls or restrictions in the future could adversely affect our ability to finance our cash requirements, service debt or

make dividend or other distributions to our stockholders and could result in a material adverse change to our business operations, our

prospects, financial condition, and results of operations, and could cause our common stock to significantly decline in value or become

Holding Foreign Companies Accountable Act, or the HFCAA, and

the related regulations are evolving quickly.

Further implementations and interpretations of our amendments to the HFCAA or the related

regulations, or a PCAOB’s determination of its lack of sufficient access to inspect our auditor, might pose regulatory risks to

and impose restrictions on us because of our operations in mainland China that PCAOB may not be able to inspect or investigate completely

such audit documentation and, as such, you may be deprived of the benefits of such inspection and our ordinary share could be delisted

from the stock exchange pursuant to the HFCAA

The Holding Foreign Companies Accountable Act,

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described above.

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

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

if enacted, would amend the HFCA Act 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 HFCA Act, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCA

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

On June 22, 2021, the U.S.

Senate passed the Accelerating

Holding Foreign Companies Accountable Act, or AHFCAA, which proposes to reduce the period of time for foreign companies to comply with

PCAOB audits from three to two consecutive years, thus reducing the time period before the securities of such foreign companies may be

prohibited from trading or delisted.

On December 29, 2022, the AHFCAA was signed into law.

On September 22, 2021, the PCAOB adopted a final

rule implementing the HFCA Act, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCA Act,

whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction

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

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and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions.

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:

(i) China, and (ii) Hong Kong.

Our auditor is not headquartered in China or Hong Kong and was

not identified in this report as a firm subject to the PCAOB’s determination.

Furthermore, various equity-based research organizations

have recently published reports on China-based companies after examining their corporate governance practices, related party transactions,

sales practices and financial statements, and these reports have led to special investigations and listing suspensions on U.S.

Any similar scrutiny on us, regardless of its lack of merit, could cause the market price of our common stock to fall, divert

management resources and energy, cause us to incur expenses in defending ourselves against rumors, and increase the premiums we pay for

director and officer insurance.

final amendments are effective on January 10, 2022.

The SEC will begin to identify and list Commission-Identified Issuers on its website

shortly after registrants begin filing their annual reports for 2021.

On December 16, 2021, PCAOB announced the PCAOB

Holding Foreign Companies Accountable Act determinations (the “2021 PCAOB Determinations”) relating to the PCAOB’s inability

to inspect or investigate completely registered public accounting firms headquartered in mainland China of the PRC or Hong Kong, a Special

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

Ben Borges CPA PC, is not headquartered in China or Hong Kong and was not identified in this report as a firm subject to the PCAOB’s

determination.

The lack of access to the PCAOB inspection

in China prevents the PCAOB from fully evaluating audits and quality control procedures of the auditors based in China.

As a result, the

investors may be deprived of the benefits of such PCAOB inspections.

The inability of the PCAOB to conduct inspections of auditors in

China makes it more difficult to evaluate the effectiveness of these accounting firms’ audit procedures or quality control procedures

as compared to auditors outside of China that are subject to the PCAOB inspections, which could cause existing and potential investors

in our stock to lose confidence in our audit procedures and reported financial information and the quality of our financial statements.

Our auditor, the independent registered public

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as it relates to the audit of our financial statements.

The SEC may propose additional rules or guidance

that could impact us if our auditor is not subject to PCAOB inspection.

For example, on August 6, 2020, the President’s Working

Group on Financial Markets, or the PWG, issued the Report on Protecting United States Investors from Significant Risks from Chinese Companies

to the then President of the United States.

This report recommended the SEC implement five recommendations to address companies from jurisdictions

that do not provide the PCAOB with sufficient access to fulfil its statutory mandate.

Some of the concepts of these recommendations were

implemented with the enactment of the HFCA Act.

However, some of the recommendations were more stringent than the HFCA Act.

if a company’s auditor was not subject to PCAOB inspection, the report recommended that the transition period before a company would

be delisted would end on January 1, 2022.

The SEC has announced that the SEC staff is preparing

a consolidated proposal for the rules regarding the implementation of the HFCA Act and to address the recommendations in the PWG report.

It is unclear when the SEC will complete its rulemaking and when such rules will become effective and what, if any, of the PWG recommendations

will be adopted.

The implications of this possible regulation in addition to the requirements of the HFCA Act are uncertain.

understand that there has been dialogue among the CSRC, the SEC and the PCAOB regarding the inspection of PCAOB-registered accounting

firms in China, there can be no assurance that we will be able to comply with requirements imposed by U.S.

Such uncertainty

could cause the market price of our common stock to be materially and adversely affected, and our securities could be delisted and prohibited

from being traded on the national securities exchange earlier than would be required by the HFCA Act.

If our securities are unable to

be listed on another securities exchange by then, such a delisting would substantially impair your ability to sell or purchase our common

stock when you wish to do so, and the risk and uncertainty associated with a potential delisting would have a negative impact on the price

of our common stock.

Further, new laws and regulations or changes in

laws and regulations in both the United States and China could affect our ability to list our common stock, which could materially impair

the market for and market price of our common stock.

On August 26, 2022, the PCAOB announced and signed

a Statement of Protocol (the “Protocol”) with the China Securities Regulatory Commission and the Ministry of Finance of the

People’s Republic of China.

The Protocol provides the PCAOB with:

(1) sole discretion to select the firms, audit engagements and

potential violations it inspects and investigates, without any involvement of Chinese authorities;

(2) procedures for PCAOB inspectors

and investigators to view complete audit work papers with all information included and for the PCAOB to retain information as needed;

(3) direct access to interview and take testimony from all personnel associated with the audits the PCAOB inspects or investigates.

The PCAOB reassessed the 2021 PCAOB Determinations

that the positions taken by PRC authorities prevented the PCAOB from inspecting and investigating in mainland China and Hong Kong completely.

The PCAOB sent its inspectors to conduct on-site inspections and investigations of firms headquartered in mainland China and Hong Kong

from September to November 2022.

On December 15, 2022, the PCAOB announced its determination

(the “2022 Determination”) that the PCAOB was able to secure complete access to inspect and investigate accounting firms headquartered

in mainland China and Hong Kong, and the PCAOB Board voted to vacate previous determinations to the contrary.

Should the PCAOB again encounter

impediments to inspections and investigations in mainland China or Hong Kong as a result of positions taken by any authority in either

jurisdiction, including by the CSRC or the Ministry of Finance, the PCAOB will make determinations under the HFCAA as and when appropriate.

We cannot assure you whether OTC or regulatory authorities would apply additional and more stringent criteria to us after considering

the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency

of resources, geographic reach, or experience as it relates to the audit of our financial statements.

There is a risk that the PCAOB is

unable to inspect or investigate completely the Company’s auditor because of a position taken by an authority in a foreign jurisdiction

or any other reasons, and that the PCAOB may re-evaluate its determinations as a result of any obstruction with the implementation of

the Protocol.

Such lack of inspection or re-evaluation could cause trading in the Company’s securities to be prohibited under the

HFCAA ultimately result in a determination by a securities exchange to delist the Company’s securities.

In addition, under the HFCAA

as amended by the AHFCAA, our securities may be prohibited from trading on the OTC or other U.S.

stock exchanges if our auditor is not

inspected by the PCAOB for two consecutive years, and this ultimately could result in our ordinary shares being delisted by and exchange.

Such recent developments would add uncertainties

to our offering and we cannot assure you whether the SEC, the PCAOB, OTC, or other regulatory authorities would apply additional and more

stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy

of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements.

It remains unclear what further actions the SEC, the PCAOB or OTC will take to address these issues and what impact those actions will

companies that have significant operations in the PRC and have securities listed on a U.S.

stock exchange (including a national

securities exchange or over-the-counter stock market).

In addition, any additional actions, proceedings, or new rules resulting from these

efforts to increase U.S.

regulatory access to audit information could create some uncertainty for investors, the market price of our common

stock could be adversely affected, and we could be delisted if we and our auditor are unable to meet the PCAOB inspection requirement

or being required to engage a new audit firm, which would require significant expense and management time.

If trading in our common stock

is prohibited under the HFCAA in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at such

future time, OTC may determine to delist our common stock.

If shares of our common stock are unable to be listed on another securities

exchange by then, such a delisting would substantially impair your ability to sell or purchase our ordinary shares when you wish to do

so, and the risk and uncertainty associated with a potential delisting would have a negative impact on the price of our common stock.

Risks Related to Our Common Stock

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capital to grow our business on terms acceptable to us or at all.

There is substantial doubt about our ability

to continue as a going concern.

Our audited financial statements

for the year ended December 31, 2022 were prepared assuming that we will continue as a going concern.

In addition, as discussed in Note

2 of the financial statements for the year ended December 31, 2022, the Company has suffered recurring losses from operations.

These conditions

raise substantial doubt on our ability to continue as a going concern.

The report of our independent registered public accounting firm

on our financial statements for the year ended December 31, 2022 included an explanatory paragraph on the doubt of our ability to continue

as a going concern in order to draw prospective investors’ attention to the relevant note in the financial statements for the year

ended December 31, 2022.

In order to continue

as a going concern, the Company will need, among other things, additional capital resources.

Management’s plans to obtain such resources

for the Company include (1) obtaining capital from the sale of its equity securities, (2) sales of the Company’s services, (3) short-term

and long-term borrowings from banks, and (4) short-term borrowings from stockholders or other related party(ies) when needed.

management cannot provide any assurance that the Company will be successful in accomplishing any of its plans.

The ability of the Company

to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph

and eventually to secure other sources of financing and attain profitable operations.

If we are unable to raise additional capital in

debt or equity financing on terms favorable to us, then we may be unable to achieve our objectives.

Raising additional capital may cause

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to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares.

Assuming our common stock begins trading

over-the-counter, our common stock may be “thinly-traded,” meaning that the number of persons interested in purchasing our

common stock at or near bid prices at any given time may be relatively small or non-existent.

This situation may be attributable

to a number of factors, including the fact that we are relatively unknown to stock analysts, stock brokers, institutional investors and

others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons,

they tend to be risk-averse and might be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of

our shares until such time as we became more seasoned.

As a consequence, there may be periods of several days or more when trading

activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity

that will generally support continuous sales without an adverse effect on share price.

Broad or active public trading market for

our common stock may not develop or be sustained.

Assuming our common stock trades over-the-counter,

our common stock will be “thinly-traded,” meaning that the number of persons interested in purchasing our common stock at

or near bid prices at any given time may be relatively small or non-existent.

This situation may be attributable to a number of factors,

including the fact that we are relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment

community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse

and might be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time

as we became more seasoned.

As a consequence, there may be periods of several days or more when trading activity in our shares is

minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally

support continuous sales without an adverse effect on share price.

Broad or active public trading market for our common stock may

not develop or be sustained.

Our common stock may be considered a “penny stock,”

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Bring an original action in foreign courts to enforce liabilities based upon the U.S.

federal securities

laws against the above foreign persons.

Shareholder claims that are common in

the United States, including securities law class actions and fraud claims, generally are difficult to pursue as a matter of law or practicality

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 local authorities in China may establish a regulatory

cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and

administration, such regulatory cooperation with the securities regulatory authorities in the Unities States have not been efficient

in the absence of mutual and practical cooperation mechanism.

According to Article 177 of the PRC Securities Law, which became effective

in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within

the territory of the PRC.

Accordingly, without the consent of the competent PRC securities regulators and relevant authorities, no organization

or individual may provide the documents and materials relating to securities business activities to overseas parties.

federal securities laws against the above foreign persons.

Shareholder claims that are common

in the United States, including securities law class actions and fraud claims, generally are difficult to pursue as a matter of law or

practicality in 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 local authorities in China may

establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border

supervision and administration, such regulatory cooperation with the securities regulatory authorities in the Unities States have not

been efficient in the absence of mutual and practical cooperation mechanism.

According to Article 177 of the PRC Securities Law, which

became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection

activities within the territory of the PRC.

Accordingly, without the consent of the competent PRC securities regulators and relevant

authorities, no organization or individual may provide the documents and materials relating to securities business activities to overseas

Further, there is uncertainty as to whether PRC courts would (i) recognize or enforce judgments of United States courts obtained

against us or our director and officer 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 each respective jurisdiction against us or our director

and officer predicated upon the securities laws of the United States or any state in the United States.

The Company is selling shares without an underwriter and

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additional capital in the near future to finance our intended growth.

The exclusive forum provision in our subscription agreement

may have the effect of limiting a purchaser’s ability to bring legal action against the company and could limit a purchaser’s

ability to obtain a favorable judicial forum for disputes.

Section 6.5 of our subscription agreement,

a copy of which is filed as Exhibit 10.3 to the registration statement of which this prospectus is a part, provides that, to the extent

permitted by law, the Federal District Court, Southern District of New York (or, if such court does not have proper jurisdiction, the

State Courts of New York County, New York) is the exclusive forum for all actions or proceedings relating to the subscription agreement,

including any claim under federal securities laws.

However, it is uncertain whether a court would enforce such a provision as to

claims arising under federal securities laws (see “ Description of Capital Stock – Forum Selection Provision ”).

Such provision may have the effect of limiting the ability of purchasers to bring a legal claim against us due to geographic limitations.

There is also the possibility that the exclusive forum provision may discourage stockholder lawsuits, or limit stockholders’ ability

to bring a claim in a judicial forum that it finds favorable for disputes with us.

Alternatively, if a court were to find this exclusive

forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may

incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect its business and financial

Purchasers in this offering may not

be entitled to a jury trial with respect to claims arising under the subscription agreement, which could result in less favorable outcomes

to the plaintiff(s) in any such action.

Purchasers in this offering will be

bound by the subscription agreement, which provides that purchasers waive the right to a jury trial of any claim they may have against

us arising out of or relating to the subscription agreement, including any claim under federal securities laws to the extent permitted

by law (see “ Description of Capital Stock – Jury Trial Wavier ”).

If we or the subscriber opposed a jury

trial demand based on the waiver, the court would determine whether the waiver was enforceable based on the facts and circumstances of

that case in accordance with the applicable state and federal law.

It is uncertain whether or not a court would enforce the waiver.

any purchasers bring a claim against us in connection with matters arising under the subscription agreement, including claims under federal

securities laws, such purchasers may not be entitled to a jury trial with respect to such claims, which may have the effect of limiting

and discouraging lawsuits against us.

If a lawsuit is brought against us under the subscription agreement, it may be heard only by a

judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result in different

outcomes than a trial by jury would have had, including results that could be less favorable to the plaintiff(s) in any such action.

Nevertheless, if this jury trial waiver

provision is not permitted by applicable law, an action could proceed under the terms of the subscription agreement with a jury trial.

No condition, stipulation or provision of the subscription agreement serves as a waiver by any purchasers in this offering or by us of

compliance with any substantive provision of the U.S.

federal securities laws and the rules and regulations promulgated thereunder.

Unresolved Staff Comments

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