As filed with the U.S. Securities and Exchange
Commission on September 13, 2023
Registration No. 333-273720
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM F-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
Baosheng Media Group Holdings Limited
(Exact name of registrant as specified in its
charter)
| Cayman
Islands |
|
Not
Applicable |
(State or other jurisdiction
of
incorporation or organization) |
|
(I.R.S. Employer
Identification Number) |
East Floor 5, Building No. 8, Xishanhui
Shijingshan District, Beijing 100041
People’s Republic of China
+86-010-82088021
(Address and telephone number of Registrant’s
principal executive offices)
Puglisi & Associates
850 Library Avenue, Suite 204
Newark, DE 19711
302-738-6680
(Name, address, and telephone number of agent
for service)
With a Copy to:
Ying Li, Esq.
Guillaume de Sampigny, Esq.
Hunter Taubman Fischer & Li LLC
950 Third Avenue, 19th Floor
New York, NY 10022
212-530-2206
Approximate date of commencement of proposed
sale to the public: From time to time after the effective date of the registration statement.
If only securities
being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following
box. ¨
If any of the securities
being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, check the following box. x
If this Form is
filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the earlier effective registration statement for the same
offering. ¨
If this Form is
a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this Form is
a registration statement pursuant to General Instruction I.C. or a post-effective amendment thereto that shall become effective upon
filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. ¨
If this Form is
a post-effective amendment to a registration statement filed pursuant to General Instruction I.C. filed to register additional securities
or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ¨
Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
Emerging growth company
x
If an emerging
growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected
not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant
to Section 7(a)(2)(B) of the Securities Act. ¨
†The term “new or revised financial
accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification
after April 5, 2012.
The Registrant hereby amends this registration
statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that
specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the
Securities Act, or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
| The
information in this prospectus is not complete and may be changed. Neither we nor the selling shareholders may sell the securities
until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting any offer to buy these securities in any jurisdiction where such offer or sale
is not permitted. |
SUBJECT TO COMPLETION, DATED SEPTEMBER
13, 2023
PRELIMINARY PROSPECTUS
Up to US$100,000,000 of
Ordinary Shares
Debt Securities
Warrants
Rights
Units
and
Up to 447,917 Ordinary Shares Offered by Selling
Shareholders Named Herein
Baosheng Media Group Holdings Limited
Baosheng Media Group Holdings Limited, a Cayman
Islands exempted company with limited liability (the “Company,” “we,” “our,” and “us”)
may, from time to time, in one or more offerings, offer and sell up to US$100,000,000 of any combination, together or separately, of
our ordinary shares, par value US$0.0096 per share (the “Ordinary Shares”), debt securities, warrants, rights, and units,
or any combination thereof as described in this prospectus. In this prospectus, references to the term “securities” refers
collectively to our Ordinary Shares, debt securities, warrants, rights, and units. The prospectus supplement for each offering of securities
will describe in detail the plan of distribution for that offering. For general information about the distribution of the securities
offered, please see “Plan of Distribution” in this prospectus.
This prospectus also relates to the resale by
certain selling shareholders described herein (the “Selling Shareholders”) of up to an aggregate of 447,917 Ordinary Shares.
The Selling Shareholders may, from time to time, sell, transfer, or otherwise dispose of any or all of their Ordinary Shares registered
herein on any stock exchange, market, or trading facility on which the Ordinary Shares are traded or in private transactions. These dispositions
may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying
prices determined at the time of sale, or at negotiated prices. We will not receive any of the proceeds from the sale or other disposition
of the Ordinary Shares by the Selling Shareholders, but we will bear all costs, fees and expenses in connection with the registration
of the Ordinary Shares offered by the Selling Shareholders. The Selling Shareholders will bear all commissions and discounts, if any,
attributable to the sale of the Ordinary Shares offered for resale through this prospectus. For information regarding the Selling Shareholders
and the times and manner in which they may offer or sell Ordinary Shares, see “Selling Shareholders” and “Plan of Distribution.”
Unless otherwise stated, as used in this prospectus,
the terms (i) “we,” “us,” “our,” or the “Company” refer to Baosheng Media Group
Holdings Limited, a Cayman Islands exempted company with limited liability, (ii) “our subsidiaries” or “the subsidiaries”
refer to the Company’s direct and indirect subsidiaries, and (iii) “operating entities” refer to the Company’s
subsidiaries with business activities, namely Beijing Baosheng Technology Company Limited (“Beijing Baosheng”), Horgos Baosheng
Advertising Company Limited (“Horgos Baosheng”), Baosheng Technology (Horgos) Company Limited (“Baosheng Technology”),
Kashi Baosheng Information Technology Company Limited (“Kashi Baosheng”), Beijing Baosheng Network Technology Co., Ltd.
(“Baosheng Network”) and Beijing Xunhuo E-commerce Co., Ltd. (“Beijing Xunhuo”); all are limited liability
companies established in the People’s Republic of China (the “PRC” or “China”) and our indirect wholly
owned subsidiaries.
We are a holding company incorporated in the
Cayman Islands and not a Chinese operating company. As a holding company with no operations of our own, we conduct our operations through
the operating entities in China, and this structure involves unique risks to investors. We have not adopted a variable interest entity
(the “VIE”) structure. Investors in our securities are not purchasing equity interests in our subsidiaries but instead are
purchasing equity interests in the Cayman Islands holding company. Therefore, investors will not directly hold any equity interests in
our operating companies. The Chinese regulatory authorities could disallow our corporate structure, which would likely result in a material
change in our operations and/or a material change in the value of our securities, including that it could cause the value of such securities
to significantly decline or become worthless. For risks facing our Company and this offering as a result of our organizational structure,
see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China” in our annual report on
Form 20-F for the fiscal year ended December 31, 2022.
We are subject to certain legal and operational
risks associated with being based in China, which could cause the value of our securities to become worthless. PRC laws and regulations
governing our current business operations are sometimes vague and uncertain, and as a result these risks may result in material changes
in the operations of the PRC subsidiaries, significant depreciation of the value of our Ordinary Shares, or a complete hindrance of our
ability to offer, or continue to offer, our securities to investors. Recently, the PRC government adopted a series of regulatory actions
and issued statements to regulate business operations in China with little advance notice, including cracking down on illegal activities
in the securities market, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly
enforcement. As of the date of this prospectus, neither we nor our subsidiaries have been involved in any investigations on cybersecurity
review initiated by any PRC regulatory authority, nor has any of them received any inquiry, notice, or sanction. In the opinion of our
PRC counsel, Beijing Dacheng Law Offices, LLP, we are not subject to cybersecurity review with the Cyberspace Administration of China,
or the CAC, under the Measures for Cybersecurity Censorship which became effective on February 15, 2022, since we currently do not
have over one million users’ personal information and do not anticipate that we will be collecting over one million users’
personal information in the foreseeable future, which we understand might otherwise subject us to the Measures for Cybersecurity Censorship;
we are also not subject to network data security review by the CAC if the draft Regulations on Network Data Security Administration are
enacted as proposed, since we currently do not have over one million users’ personal information and do not collect data that affects
or may affect national security and we do not anticipate that we will be collecting over one million users’ personal information
or data that affects or may affect national security in the foreseeable future, which we understand might otherwise subject us to the
draft Regulations on Network Data Security Administration. See “Risk Factors—Risks Related to Doing Business in China—Recent
greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact
our business and our offering.”
Furthermore, on February 17, 2023, the
China Securities Regulatory Commission (the “CSRC”) released the Trial Administrative Measures of Overseas Securities Offering
and Listing by Domestic Companies (the “Trial Measures”) and five supporting guidelines, which took effect on March 31,
2023. Pursuant to the Trial Measures, if a domestic company fails to complete required 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, such as an
order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly
liable persons may also be subject to administrative penalties, such as warnings and fines. On the same day, the CSRC also held a press
conference for the release of the Trial Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing
by Domestic Companies, or the CSRC Notice, which, among others, clarifies that PRC domestic companies that have already been listed overseas
before the effective date of the Trial Measures, which is March 31, 2023, shall be deemed as Existing Issuers, and Existing Issuers
are not required to complete the filing procedures with the CSRC immediately, and they shall be required to file with the CSRC for any
subsequent offerings. Based on the foregoing, we are an Existing Issuer, and is required to file with the CSRC for any subsequent offerings
within three (3) working days after the completion of each offering. Therefore, we are required to go through filing procedures
through our major operating entity incorporated in the PRC with the CSRC within three (3) working days after the completion of an offering
pursuant to any accompanying prospectus supplement, and prepare a summary report to the CSRC after the completion of all offerings under
this prospectus. We intend to comply with the Trial Measures for subsequent offerings under this registration statement on Form F-3.
Other than the CSRC filing procedures we are required to make within three working days after the
completion of an offering made pursuant to this prospectus or any accompanying prospectus supplement, we and our PRC subsidiaries, in
the opinion of our PRC legal counsel, Beijing Dacheng Law Offices, LLP, (1) are not required
to obtain permissions from the CSRC, and (2) have not been required to obtain or denied such and other permissions by the CSRC, CAC,
or any PRC government authority, under current PRC laws, regulations and rules in connection with a potential offering made pursuant
to this prospectus or any accompanying prospectus supplement as of the date of this prospectus. In the opinion of our PRC legal
counsel, Beijing Dacheng Law Offices, LLP, the Selling Shareholders’ resale of the Ordinary Sales as described hereunder does not
constitute a “subsequent offering” under the CSRC rules and hence we are not required to complete the filing procedures
with CSRC for the Selling Shareholders’ resale. See “Risk Factors—Risks Related to Doing Business in China—The
Chinese government exerts substantial influence over the manner in which we must conduct our business, and may intervene or influence
our operations at any time, or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers,
which could result in a material change in our operations, significantly limit or completely hinder our ability to offer or continue
to offer securities to investors and, and cause the value of our Ordinary Shares to significantly decline or be worthless.”
Since 2021, the Chinese government has strengthened
its anti-monopoly supervision, mainly in three aspects: (i) establishing the National Anti-Monopoly Bureau; (ii) revising and
promulgating anti-monopoly laws and regulations, including: the Anti-Monopoly Law of the PRC (amended on June 24, 2022 and effective
on August 1, 2008), the anti-monopoly guidelines for various industries, and the Detailed Rules for the Implementation of the
Fair Competition Review System; and (iii) expanding the anti-monopoly law enforcement targeting Internet companies and large enterprises.
As of the date of this prospectus, the Chinese government’s recent statements and regulatory actions related to anti-monopoly concerns
have not impacted our or our subsidiaries’ ability to conduct business, our ability to accept foreign investments or issue our securities
to foreign investors because neither we nor our subsidiaries engage in monopolistic behaviors that are subject to these statements or
regulatory actions.
As of the date of this prospectus, we and
our subsidiaries have received from PRC authorities all requisite licenses, permissions, and approvals needed to engage in the businesses
currently conducted in the PRC, and no permission or approval has been denied. However, we cannot assure you that we will be able to
receive clearance of any compliance requirements imposed on us in a timely manner, or at all. Any failure to fully comply with such compliance
requirements may cause our PRC subsidiaries to be unable to conduct their businesses or operations in the PRC, subject them to fines,
business suspension, or other sanctions. If we and/or our subsidiaries do not receive or maintain the approvals, or we inadvertently
conclude that such approvals are not required, or applicable laws, regulations, or interpretations change such that we and/or our subsidiaries
are required to obtain approval in the future, we may be subject to an investigation by competent regulators, fines or penalties, ordered
to suspend our relevant business and rectify, prohibited from engaging in relevant business, and these risks could result in a material
adverse change in our operations, significantly limit or completely hinder our ability to offer or continue to offer securities to investors,
or cause such securities to significantly decline in value or become worthless. See “Prospectus Summary—Permissions Required
from PRC Authorities” of this prospectus.
In addition, our Ordinary Shares may be prohibited
from trading on a national exchange or over-the-counter under the Holding Foreign Companies Accountable Act (the “HFCA Act”)
if the Public Company Accounting Oversight Board (United States) (the “PCAOB”) is unable to inspect our auditors for two
consecutive years beginning in 2021. Our auditor, YCM CPA INC., headquartered in Irvine, California,
has been inspected by the PCAOB on a regular basis and it is not subject to the determinations announced by the PCAOB on December 16,
2021. If trading in our Ordinary Shares is prohibited under the HFCA Act in the future because the PCAOB determines that it cannot inspect
or fully investigate our auditor at such future time, Nasdaq may determine to delist or prohibit the trading of our Ordinary Shares.
On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, and on December 29, 2022,
legislation entitled “Consolidated Appropriations Act, 2023” (the “Consolidated Appropriations Act”) was signed
into law by President Biden, which contained, among other things, an identical provision to the Accelerating Holding Foreign Companies
Accountable Act and amended the HFCA Act by requiring the U.S. Securities and Exchange Commission (the “SEC”) to prohibit
an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive
years instead of three, thus reducing the time period for triggering the delisting of our Company and the prohibition of trading in our
securities if the PCAOB is unable to inspect our accounting firm at such future time. If trading in the Ordinary Shares is prohibited
under the HFCA Act in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at such future
time, Nasdaq may determine to delist our Ordinary Shares and trading in our Ordinary Shares could be prohibited. See “Risk Factors—Risks
Related to Doing Business in China—The recent joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and the Holding
Foreign Companies Accountable Act and related regulations, all call for additional and more stringent criteria to be applied to emerging
market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB.
These developments could add uncertainties to our continued listing or future offerings of our securities in the U.S.”
Currently, we do not have a cash management
policy in place that dictate how funds are transferred between us and our subsidiaries, or investors. We are a holding company, and we
may rely on dividends and other distributions on equity paid by our PRC subsidiaries for our cash and financing requirements, including
the furnishing of funds necessary to pay dividends and other cash distributions to our shareholders or to service any debt we may incur.
If any of our PRC subsidiaries incurs debt on its own behalf in the future, the instruments governing such debt may restrict their ability
to pay dividends to us. There have not been any such dividends or other distributions from our PRC subsidiaries to our subsidiaries located
outside of China, as of the date of this prospectus. In addition, as of the date of this prospectus, none of our subsidiaries have ever
issued any dividends or distributions to us or their respective shareholders outside of China, and neither we nor any of our subsidiaries
have ever paid dividends or made distributions to U.S. investors. As of the date of this prospectus, neither we nor any of our subsidiaries
have ever paid dividends or made distributions to U.S. investors. Other than the following transactions, no cash transfers have occurred
among us and our subsidiaries: (i) our Hong Kong subsidiary, Baosheng Media Group (Hong Kong) Holdings Limited, or Baosheng Hong
Kong, received cash of $38.3 million from us, which represented proceeds raised in the initial public offering of our Ordinary Shares
in February 2021, and the private placement of our Ordinary Shares and warrants in March 2021, (ii) on March 16,
2021, Baosheng Hong Kong transferred cash of $6 million, in the form of shareholder loans, to its wholly owned subsidiary, Beijing Baosheng,
and (iii) in April 2021 and August 2021, Baosheng Hong Kong transferred cash in the aggregate of $30.79 million, in the
form of capital contributions, to its wholly owned subsidiary, Beijing Baosheng Network Technology Co., Ltd., or Baosheng Network.
In the future, cash proceeds raised from overseas financing activities may be transferred by us to our PRC subsidiaries by means of capital
contributions or shareholder loans, as the case may be. Notwithstanding the recent judgment against Beijing Baosheng, described more
particularly under “Item 4. Information on the Company—B. Business Overview—Legal Proceedings” in our annual
report on Form 20-F for the fiscal year ended December 31, 2022, we do not expect that the court’s ruling will impact
the cash transferring through the organization. See “Item 18. Financial Statements” starting on page F-1 in our annual report
on Form 20-F for the year ended December 31, 2022, incorporated herein by reference.
According to the Foreign Investment Law of the
People’s Republic of China and its implementing rules, which jointly established the legal framework for the administration of
foreign-invested companies, a foreign investor may, in accordance with other applicable laws, freely transfer into or out of China its
contributions, profits, capital earnings, income from asset disposal, intellectual property rights, royalties acquired, compensation
or indemnity legally obtained, and income from liquidation, made or derived within the territory of China in RMB or any foreign currency,
and any entity or individual shall not illegally restrict such transfer in terms of the currency, amount and frequency. According to
the Company Law of the People’s Republic of China and other Chinese laws and regulations, our PRC subsidiaries may pay dividends
only out of their respective accumulated profits as determined in accordance with Chinese accounting standards and regulations. In addition,
each of our PRC subsidiaries is required to set aside at least 10% of its accumulated after-tax profits, if any, each year to fund a
certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of its registered capital. Where the statutory reserve
fund is insufficient to cover any loss the PRC subsidiary incurred in the previous financial year, its current financial year’s
accumulated after-tax profits shall first be used to cover the loss before any statutory reserve fund is drawn therefrom. Such statutory
reserve funds and the accumulated after-tax profits that are used for covering the loss cannot be distributed to us as dividends. At
their discretion, our PRC subsidiaries may allocate a portion of their after-tax profits based on Chinese accounting standards to a discretionary
reserve fund. See “Risk Factors—Risks Related to Doing Business in China—We may rely on dividends paid by our
subsidiaries for our cash needs, and any limitation on the ability of our subsidiaries to make payments to us could have a material adverse
effect on our ability to conduct business.”
Renminbi is not freely convertible into other
currencies. As a result, any restriction on currency exchange may limit the ability of our PRC operating subsidiaries to use their potential
future Renminbi revenues to pay dividends to us. The Chinese government imposes controls on the convertibility of Renminbi into foreign
currencies and, in certain cases, the remittance of currency out of China. Shortages in availability of foreign currency may then restrict
the ability of our PRC subsidiaries to remit sufficient foreign currency to our offshore entities for our offshore entities to pay dividends
or make other payments or otherwise to satisfy our foreign-currency-denominated obligations. The 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 foreign currency debt, including loans we may secure for
our onshore subsidiaries. Currently, our PRC subsidiaries may purchase foreign currency for settlement of “current account transactions,”
including payment of dividends to us, without the approval of SAFE by complying with certain procedural requirements. However, the relevant
Chinese governmental authorities may limit or eliminate our ability to purchase foreign currencies in the future for current account
transactions. The Chinese government may continue to strengthen its capital controls, and additional restrictions and substantial vetting
processes may be instituted by SAFE for cross-border transactions falling under both the current account and the capital account. Any
existing and future restrictions on currency exchange may limit our ability to utilize revenue generated in Renminbi to pay dividends
in foreign currencies to holders of our securities. Foreign exchange transactions under the capital account remain subject to limitations
and require approvals from, or registration with, SAFE and other relevant Chinese governmental authorities. This could affect our ability
to obtain foreign currency through debt or equity financing for our subsidiaries. See “Risk Factors—Risks Related to Doing
Business in China—We may rely on dividends paid by our subsidiaries for our cash needs, and any limitation on the ability of our
subsidiaries to make payments to us could have a material adverse effect on our ability to conduct business” for a detailed discussion
of the Chinese legal restrictions on the payment of dividends and our ability to transfer cash within our group. In addition, holders
of our Ordinary Shares may potentially be subject to Chinese taxes on dividends paid by us in the event we are deemed a Chinese resident
enterprise for Chinese tax purposes. See “Risk Factors—Risks Related to Doing Business in China—You may be subject
to PRC income tax on dividends from us or on any gain realized on the transfer of our Ordinary Shares.” To the extent cash in the
business is in the PRC/Hong Kong or a PRC/Hong Kong entity, the funds may not be available to fund operations or for other use outside
of the PRC/Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of our Company or our subsidiaries
by the PRC government to transfer cash. For detailed discussions, see “Prospectus Summary—Dividends and Other Distributions”
and “Risk Factors — Risks Related to Doing Business in China — To the extent cash in the business is in the PRC/Hong
Kong or a PRC/Hong Kong entity, the funds may not be available to fund operations or for other use outside of the PRC/Hong Kong due to
interventions in or the imposition of restrictions and limitations on the ability of our Company or our subsidiaries by the PRC government
to transfer cash” on page 34 of this prospectus.
We are an “emerging growth company”
as that term is used in the Jumpstart Our Business Startups Act of 2012, as amended, or the “JOBS Act,” and, as such, we
have elected to comply with certain reduced public company reporting requirements. See “Prospectus Summary—Implications of
Being an Emerging Growth Company.”
This prospectus provides a general description
of the securities we or the Selling Shareholders may offer. We will provide the specific terms of the securities offered in one or more
supplements to this prospectus. We may also authorize one or more free writing prospectuses to be provided to you in connection with
these offerings. The prospectus supplement and any related free writing prospectus may add, update, or change information contained in
this prospectus. You should read carefully this prospectus, the applicable prospectus supplement, and any related free writing prospectus,
as well as the documents incorporated or deemed to be incorporated by reference, before you invest in any of our securities. The Company
may not use this prospectus to offer or sell any securities unless accompanied by the applicable prospectus supplement.
We may, from time to time, offer and sell these
securities and Selling Shareholders may, from time to time, offer the securities through public or private transactions, directly or
through one or more underwriters, dealers, brokers and agents, on or off the Nasdaq Capital Market, or Nasdaq, at prevailing market prices
or at privately negotiated prices. If any underwriters, dealers, brokers or agents are involved in the sale of any of these securities,
the applicable prospectus supplement will set forth the name of the underwriter, dealer, broker or agent and any applicable commissions
or discounts. The offering price of such securities and the net proceeds we expect to receive from such sale will also be set forth in
a prospectus supplement. See “Plan of Distribution” elsewhere in this prospectus for a more complete description of the ways
in which the securities may be sold.
Our Ordinary Shares are listed on the NASDAQ
Capital Market under the symbol “BAOS.” On September 12, 2023, the closing price for our Ordinary Shares was $6.17 per share.
Unless expressly indicated herein to the contrary, all references to share amounts in this prospectus give retroactive effect to our
share consolidations, the last of which was effective on March 21, 2023. See “Description of Share Capital—History of
Share Capital.”
Investing in our securities involves a high
degree of risk, including, but not limited to, various legal and operational risks as a result of having the majority of our operations
in China. Before making an investment decision, please read the information under the heading “Risk Factors” beginning on
page 25 of this prospectus and risk factors set forth in our annual report on Form 20-F for the fiscal year ended December 31,
2022, in other reports incorporated herein by reference, and in an applicable prospectus supplement.
Neither the U.S. Securities and Exchange Commission
nor any state securities commission nor any other regulatory body has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The
date of this prospectus is ,
2023.
TABLE OF CONTENTS
Neither we nor the Selling Shareholders have
authorized any other person to provide you with different or additional information other than that contained in this prospectus. We
and the Selling Shareholders take no responsibility for and can provide no assurance as to the reliability of, any other information
that others may provide. We and the Selling Shareholders are not making an offer to sell these securities in any jurisdiction where the
offer or sale is not permitted. The information contained in this prospectus is accurate only as of the date of this prospectus or such
other date stated in this prospectus, and our business, financial condition, results of operations, and/or prospects may have changed
since those dates. You should also read this prospectus together with the additional information described under “Where You Can
Find Additional Information” and “Incorporation of Documents by Reference.”
This prospectus may be supplemented from time
to time to add, update, or change information in this prospectus. Any statement contained in this prospectus will be deemed to be modified
or superseded for purposes of this prospectus to the extent that a statement contained in a prospectus supplement modifies or supersedes
such statement. Any statement so modified will be deemed to constitute a part of this prospectus only as so modified, and any statement
so superseded will be deemed not to constitute a part of this prospectus.
For investors outside the United States: we have
not, and the Selling Shareholders have not, taken any action that would permit this offering or possession or distribution of this prospectus
in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who
come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the securities
covered hereby and the distribution of this prospectus outside the United States.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement
that we filed with the U.S. Securities and Exchange Commission (the “SEC”) utilizing a “shelf” registration process.
Under this shelf registration process, we may, from time to time, sell the securities described in this prospectus in one or more offerings,
up to a total offering amount of US$100,000,000, and the Selling Shareholders referred to in this prospectus and identified in supplements
to this prospectus may sell up to an aggregate amount of 447,917 Ordinary Shares in one or more offerings.
This prospectus provides you with a general description
of the securities we and the Selling Shareholders may offer. This prospectus and any accompanying prospectus supplement do not contain
all of the information included in the registration statement. We have omitted parts of the registration statement in accordance with
the rules and regulations of the SEC. Statements contained in this prospectus and any accompanying prospectus supplement about the
provisions or contents of any agreement or other documents are not necessarily complete. If the SEC rules and regulations require
that an agreement or other document be filed as an exhibit to the registration statement, please see that agreement or document for a
complete description of these matters. This prospectus may be supplemented by a prospectus supplement that may add, update, or change
information contained or incorporated by reference in this prospectus. You should read both this prospectus and any prospectus supplement
or other offering materials together with additional information described under the headings “Where You Can Find Additional Information”
and “Incorporation of Documents by Reference.”
Each time we sell any securities offered by us
under this shelf registration, we will provide a prospectus supplement that will contain certain specific information about the terms
of that offering, including a description of any risks related to the offering. A prospectus supplement may also add, update, or change
information contained in this prospectus (including documents incorporated herein by reference). Notwithstanding the foregoing, the Selling
Shareholders may sell the Ordinary Shares offered by them registered hereby without being accompanied by a prospectus supplement. If
there is any inconsistency between the information in this prospectus and the applicable prospectus supplement, you should rely on the
information in the prospectus supplement. The registration statement we filed with the SEC includes exhibits that provide more details
on the matters discussed in this prospectus. You should read this prospectus and the related exhibits filed with the SEC and the accompanying
prospectus supplement together with additional information described under the headings “Incorporation of Documents by Reference”
before investing in any of the securities offered.
You should rely only on the information provided
or incorporated by reference in this prospectus or in the prospectus supplement. Neither we nor the Selling Shareholders have authorized
anyone to provide you with additional or different information. Neither we nor the Selling Shareholders take responsibility for, nor
can we provide assurance as to the reliability of, any other information that others may provide. Neither we nor the Selling Shareholders
are making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the
information in this prospectus, any applicable prospectus supplement or any related free writing prospectus is accurate only as of the
date on the front of the document and that any information incorporated by reference is accurate only as of the date of the document
incorporated by reference, regardless of the time of delivery of this prospectus, any applicable prospectus supplement or any related
free writing prospectus, or any sale of a security, unless we indicate otherwise. Our business, financial condition, results of operations
and/or prospects may have changed since those dates.
As permitted by SEC rules and regulations,
the registration statement of which this prospectus forms a part includes additional information not contained in this prospectus. You
may read the registration statement and the other reports we file with the SEC at its website or at its offices described below under
“Where You Can Find Additional Information.”
COMMONLY USED DEFINED
TERMS
Unless otherwise indicated or the context requires
otherwise, references in this prospectus to:
| · | “An
Rui Tai BVI” are to AnRuiTai Investment Limited, a BVI business company incorporated
in the BVI with limited liability in November 2018, owned as to 90% by Ms. Wenxiu
Zhong and 10% by Mr. Sheng Gong; |
| · | “Baosheng
BVI” are to Baosheng Media Group Limited, a BVI business company incorporated with
limited liability under the laws of the BVI; |
| · | “Baosheng
Group” are to Baosheng Media Group Holdings Limited, an exempted company with limited
liability incorporated under the laws of the Cayman Islands; |
| · | “Baosheng
Hong Kong” are to Baosheng Group’s wholly owned subsidiary, Baosheng Media Group
(Hong Kong) Holdings Limited, a Hong Kong company with limited liability; |
| · | “Baosheng
Network” are to Beijing Baosheng Network Technology Co., Ltd., a limited liability
company established in the PRC and a direct wholly-owned subsidiary of Baosheng Hong Kong; |
| · | “Baosheng
Technology” are to Baosheng Technology (Horgos) Company Limited, a limited liability
company established in the PRC and a direct wholly-owned subsidiary of Beijing Baosheng; |
| · | “Beijing
Baosheng” are to Beijing Baosheng Technology Company Limited, a limited liability company
established in the PRC and a direct wholly-owned subsidiary of Baosheng Hong Kong; |
| · | “Beijing
Xunhuo” are to Beijing Xunhuo E-commerce Co., Ltd., a limited liability company
established in the PRC and a direct wholly-owned subsidiary of Baosheng Network; |
| · | “BVI”
are to the British Virgin Islands; |
| · | “China”
or the “PRC” are to the People’s Republic of China, including the special
administrative regions of Hong Kong and Macau and excluding Taiwan for the purposes of this
prospectus only; |
| · | “Deng
Guan BVI” are to Deng Guan Investment Limited, a BVI business company incorporated
in the BVI with limited liability in November 2019 and is wholly owned by Mr. Hui
Yu; |
| · | “EJAM
BVI” are to EJAM New Media Holdings Limited, a BVI business company incorporated in
the BVI with limited liability in November 2019 and is a direct wholly owned subsidiary
of EJAM International; |
| · | “EJAM
Group” are to EJAM Group Co., Ltd., a joint stock company established in the PRC
with limited liability on November 23, 2010, whose shares are quoted on the National
Equities Exchange and Quotations (全国中小企业股份转让系统)
(stock code: 834498), and is a financial investor of our Company and one of our pre-IPO investors; |
| · | “EJAM
International” are EJAM International Limited, a company formed in Hong Kong with limited
liability in November 2015 and is a direct wholly owned subsidiary of EJAM Group; |
| · | “Etone
Investment” are to Etone Investment Development Limited, a BVI business company incorporated
in the BVI with limited liability in May 2016 and is wholly owned by Mr. Baotian
Guo; |
| · | “Everlasting
Innovation” are to Everlasting Innovation Development Limited, a business company incorporated
in the BVI with limited liability in July 2018 and is wholly owned by Mr. Kei Ming
Wang; |
| · | “Horgos
Baosheng” are to Horgos Baosheng Advertising Company Limited, a limited liability company
established in the PRC and a direct wholly-owned subsidiary of Beijing Baosheng; |
| · | “Kashi
Baosheng” are to Kashi Baosheng Information Technology Company Limited, a limited liability
company established in the PRC and a direct wholly-owned subsidiary of Beijing Baosheng; |
| · | “our
subsidiaries” or “the subsidiaries” are to the Company’s direct and
indirect subsidiaries; |
| · | “operating
entities” are to the Company’s subsidiaries with business activities, namely
Beijing Baosheng, Horgos Baosheng, Baosheng Technology, Kashi Baosheng, Baosheng Network
and Beijing Xunhuo; |
| · | “PBCY
Investment” are to PBCY Investment Limited, a business company incorporated in the
BVI with limited liability in November 2018, and is owned as to 86.35% by Pubang Landscape
through Pubang Hong Kong and 13.65% by Mr. Chan through CYY Holdings; |
| · | “Pubang
Hong Kong” are to Pubang Landscape Architecture (HK) Co., Ltd., a company formed
in Hong Kong with limited liability in September 2013 and is a direct wholly owned subsidiary
of Pubang Landscape; |
| · | “Pubang
Landscape” are to Pubang Landscape Architecture Co., Ltd., a joint stock company
established in the PRC with limited liability on July 19, 1995, whose shares are listed
on the Shenzhen Stock Exchange (stock code: 002663.SZ), and is a financial investor of our
Company and one of our pre-IPO investors; |
| · | “shares,”
“Shares,” or “Ordinary Shares” are to the ordinary shares of the
Company, par value US$0.0096 per share; |
| · | “Warrants”
are to the warrants we issued to the Selling shareholders in a private placement closed on
March 18, 2021. One Warrant includes the right to purchase 5/192 Ordinary Share at an
exercise price of $107.712 per Ordinary Share. However, no fractional shares will be issued
upon the exercise of the Warrants; and |
| · | “we,”
“us,” or the “Company” are to Baosheng Group and when describing
the Company’s consolidated financial information, also include the Company’s
subsidiaries. |
There are certain technical terms used in this
prospectus, references to:
| · | “ad
inventory” are to the space available to advertisers on digital platforms in the online
marketing industry; |
| · | “ad”
are to an advertisement; |
| · | “CPA”
are to cost per acquisition, an online advertising pricing model where the advertiser pays
for a specified acquisition; |
| · | “CPC”
are to cost per click, an online advertising pricing model where an advertiser pays a media
(typically a search engine, website owner, or a network of websites) when the ad is clicked; |
| · | “CPM”
are to cost per mille, an online advertising pricing model where an advertiser pays for one
thousand views or clicks of an advertisement; |
| · | “CPT”
are to cost per time, an online advertising pricing model where an advertiser pays for an
advertisement to be placed for a set amount of time; |
| · | “feed”
are to an internet service in which updates from electronic information sources are presented
in a continuous stream; |
| · | “gross
billing” are to the actual dollar amount of advertising spend of advertisers, net of
any rebates and discounts given to those advertisers; |
| · | “in-feed
ad” are to a form of ads that are typically placed in article and content feeds and
mimic the surrounding site design and aesthetics so that the articles or content feeds are
mixed with the in-feed ads providing the audience an uninterrupted content flow; |
| · | “key
opinion leaders” or “KOL” are to individuals deemed to have the potential
to create engagement, drive conversation or sell products or services with the intended target
audience. These individuals can range from being celebrities to more micro-targeted professional
or nonprofessional “peers”; |
| · | “media
costs” are to the costs for acquisition of ad inventory or other advertising services
from media and other advertising service providers as offset by rebates we receive from the
relevant media and advertising service providers (if any); |
| · | “mobile
app ad” are to a form of ads which are served on apps in various formats such as display
ads and video ads, and for the purpose of this prospectus excluding in-feed ads; |
| · | “mobile
app” are to a computer program or software application designed to run on a mobile
device such as phone, tablet, or watch; |
| · | “SEM”
are to search engine marketing, a form of online marketing that involves the promotion of
websites by increasing their visibility in search engine results pages and search-related
products and services; and |
| · | “social
media marketing” are to the use of social media platforms and websites to promote a
product or service, including the distribution of KOL content which may be framed as testimonial
advertising where they play the role of a potential buyer themselves, or they may be third
parties. |
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
This prospectus and our SEC filings that are
incorporated by reference into this prospectus contain or incorporate by reference forward-looking statements within the meaning of Section 27A
of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements
other than statements of historical fact are “forward-looking statements,” including any projections of earnings, revenue
or other financial items, any statements of the plans, strategies, and objectives of management for future operations, any statements
concerning proposed new projects or other developments, any statements regarding future economic conditions or performance, any statements
of management’s beliefs, goals, strategies, intentions, and objectives, and any statements of assumptions underlying any of the
foregoing. The words “believe,” “anticipate,” “estimate,” “plan,” “expect,”
“intend,” “may,” “could,” “should,” “potential,” “likely,” “projects,”
“continue,” “will,” and “would” and similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain these identifying words. Forward-looking statements reflect our current
views with respect to future events, are based on assumptions, and are subject to risks and uncertainties. We cannot guarantee that we
actually will achieve the plans, intentions, or expectations expressed in our forward-looking statements and you should not place undue
reliance on these statements. There are a number of important factors that could cause our actual results to differ materially from those
indicated or implied by forward-looking statements. These important factors include those discussed under the heading “Risk Factors”
contained or incorporated by reference in this prospectus and in the applicable prospectus supplement and any free writing prospectus
we may authorize for use in connection with a specific offering. These factors and the other cautionary statements made in this prospectus
should be read as being applicable to all related forward-looking statements whenever they appear in this prospectus. Except as required
by law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future
events, or otherwise.
Prospectus
Summary
Our Corporate Structure
We are an offshore holding company incorporated
in the Cayman Islands and we are not a Chinese operating company. As a holding company with no operations of our own, our operations
are conducted in China through the operating entities, and this structure involves unique risks to investors. Holders of our Ordinary
Shares will not directly hold any equity interests in the operating entities. The Chinese regulatory authorities could disallow
our corporate structure, which could result in a material change in our operations and the value of our Ordinary Shares could decline
or become worthless.
We have not adopted a VIE structure. The following
diagram illustrates our current corporate structure, which includes our significant subsidiaries as of the date of this prospectus:
Notes:
| 1. | “EJAM
Group” represents EJAM Group Co., Ltd., a joint stock company established in the
PRC with limited liability on November 23, 2010, whose shares are quoted on the National
Equities Exchange and Quotations (全国中小企业股份转让系统)
(stock code: 834498), and is a financial investor of our Company and one of our pre-IPO investors. |
| 2. | “EJAM International” represents
EJAM International Limited, a company formed in Hong Kong with limited liability in November 2015
and is a direct wholly owned subsidiary of EJAM Group. |
| 3. | “Pubang Landscape” represents
Pubang Landscape Architecture Co., Ltd., a joint stock company established in the PRC
with limited liability on July 19, 1995, whose shares are listed on the Shenzhen Stock
Exchange (stock code: 002663.SZ), and is a financial investor of our Company and one of our
pre-IPO investors. |
| 4. | “Pubang Hong Kong” represents
Pubang Landscape Architecture (HK) Co., Ltd., a company formed in Hong Kong with limited
liability in September 2013 and is a direct wholly owned subsidiary of Pubang Landscape. |
| 5. | “CYY Holdings” represents
CYY Holdings Limited, a business company formed in the BVI with limited liability in November 2013
and is wholly owned by Mr. Yick Yan Chan. |
For details of each shareholder’s ownership,
please refer to the beneficial ownership table in “Item 6. Directors, Senior Management and Employees—6.E. Share Ownership”
in our annual report on Form 20-F for the fiscal year ended December 31, 2022.
Permissions Required from PRC Authorities
We are subject to certain legal and operational
risks associated with being based in China, which could cause the value of our securities to become worthless. PRC laws and regulations
governing our current business operations are sometimes vague and uncertain, and as a result these risks may result in material changes
in the operations of the PRC subsidiaries, significant depreciation of the value of our Ordinary Shares, or a complete hindrance of our
ability to offer, or continue to offer, our securities to investors. Recently, the PRC government adopted a series of regulatory actions
and issued statements to regulate business operations in China with little advance notice, including cracking down on illegal activities
in the securities market, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly
enforcement. As of the date of this prospectus, neither we nor our subsidiaries have been involved in any investigations on cybersecurity
review initiated by any PRC regulatory authority, nor has any of them received any inquiry, notice, or sanction. In the opinion of our
PRC counsel, Beijing Dacheng Law Offices, LLP, we are not subject to cybersecurity review with the CAC, under the Measures for Cybersecurity
Censorship which became effective on February 15, 2022, since we currently do not have over one million users’ personal information
and do not anticipate that we will be collecting over one million users’ personal information in the foreseeable future, which
we understand might otherwise subject us to the Measures for Cybersecurity Censorship; we are also not subject to network data security
review by the CAC if the draft Regulations on Network Data Security Administration are enacted as proposed, since we currently do not
have over one million users’ personal information and do not collect data that affects or may affect national security and we do
not anticipate that we will be collecting over one million users’ personal information or data that affects or may affect national
security in the foreseeable future, which we understand might otherwise subject us to the draft Regulations on Network Data Security
Administration. See “Risk Factors—Risks Related to Doing Business in China—Recent greater oversight by the CAC over
data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business and our offering.”
The
PRC government also exerts more control over offerings conducted overseas and foreign investment in China-based issuers. Furthermore,
on February 17, 2023, the CSRC released the Trial Measures and five supporting guidelines, which took effect on March 31, 2023.
Pursuant to the Trial Measures, if a domestic company fails to complete required 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, such as an order to rectify,
warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons
may also be subject to administrative penalties, such as warnings and fines. On the same day, the CSRC also held a press conference for
the release of the Trial Measures and issued the CSRC Notice, which, among others, clarifies that PRC domestic companies that have already
been listed overseas before the effective date of the Trial Measures, which is March 31, 2023, shall be deemed as Existing Issuers,
and Existing Issuers are not required to complete the filing procedures with the CSRC immediately, and they shall be required to file
with the CSRC for any subsequent offerings. Based on the foregoing, we are an Existing Issuer, and is required to file with the CSRC
for any subsequent offerings within three (3) working days after the completion of each offering. Therefore, we are required to
go through filing procedures through our major operating entity incorporated in the PRC with the CSRC within three (3) working days after
the completion of an offering pursuant to any accompanying prospectus supplement, and prepare a summary report to the CSRC after the
completion of all offerings under this prospectus. We intend to comply with the Trial Measures for subsequent offerings under this registration
statement on Form F-3. Other than the CSRC filing procedures we are required to make within three
working days after the completion of an offering made pursuant to this prospectus or any accompanying prospectus supplement, we and our
PRC subsidiaries, in the opinion of our PRC legal counsel, Beijing Dacheng Law Offices, LLP,
(1) are not required to obtain permissions from the CSRC, and (2) have not been required to obtain or denied such and other permissions
by the CSRC, CAC, or any PRC government authority, under current PRC laws, regulations and rules in connection with a potential offering
made pursuant to this prospectus or any accompanying prospectus supplement as of the date of this prospectus. In the opinion of
our PRC legal counsel, Beijing Dacheng Law Offices, LLP, the Selling Shareholders’ resale of the Ordinary Sales as described hereunder
does not constitute a “subsequent offering” under the CSRC rules and hence we are not required to complete the filing
procedures with CSRC for the Selling Shareholders’ resale. See “Risk Factors—Risks Related to Doing Business in China—The
Chinese government exerts substantial influence over the manner in which we must conduct our business, and may intervene or influence
our operations at any time, or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers,
which could result in a material change in our operations, significantly limit or completely hinder our ability to offer or continue
to offer securities to investors and, and cause the value of our Ordinary Shares to significantly decline or be worthless.”
Since 2021, the Chinese government has strengthened
its anti-monopoly supervision, mainly in three aspects: (i) establishing the National Anti-Monopoly Bureau; (ii) revising and
promulgating anti-monopoly laws and regulations, including: the Anti-Monopoly Law of the PRC (amended on June 24, 2022 and effective
on August 1, 2008), the anti-monopoly guidelines for various industries, and the Detailed Rules for the Implementation of the
Fair Competition Review System; and (iii) expanding the anti-monopoly law enforcement targeting Internet companies and large enterprises.
As of the date of this prospectus, the Chinese government’s recent statements and regulatory actions related to anti-monopoly concerns
have not impacted our or our subsidiaries’ ability to conduct business, our ability to accept foreign investments or issue our
securities to foreign investors because neither we nor our subsidiaries engage in monopolistic behaviors that are subject to these statements
or regulatory actions.
As of the date of this prospectus, we and
our subsidiaries have received from the PRC authorities all requisite licenses, permissions, and approvals needed to engage in the businesses
currently conducted in the PRC, which solely include the business licenses that authorize the scope of business operations, and no permission
or approval has been denied. As of the date of this prospectus, each of our PRC subsidiaries has obtained its business license to engage
in the respective business currently being conducted by it in the PRC. For us to offer the securities being registered hereunder to foreign
investors, we are required to submit filings with the CSRC within three (3) working days after completion of an offering by the Company.
For details regarding this approval requirement, see the above discussion under —Permissions Required from PRC Authorities.”
However, we are not required to obtain any permissions or approvals to operate our business or to offer securities being registered hereunder
to foreign investors, and no permission or approval has been denied. However, we cannot assure you that we will be able to receive clearance
of any compliance requirements imposed on us in a timely manner, or at all. Any failure to fully comply with such compliance requirements
may cause our PRC subsidiaries to be unable to conduct their businesses or operations in the PRC, subject them to fines, business suspension,
or other sanctions. If we and/or our subsidiaries do not receive or maintain the approvals, or we inadvertently conclude that such
approvals are not required, or applicable laws, regulations, or interpretations change such that we and/or our subsidiaries are required
to obtain approval in the future, we may be subject to an investigation by competent regulators, fines or penalties, ordered to suspend
our relevant business and rectify, and/or prohibited from engaging in the relevant business, and these risks could result in a material
adverse change in our operations, significantly limit or completely hinder our ability to offer or continue to offer securities to investors,
or cause such securities to significantly decline in value or become worthless. See “Risk Factors—Risks Related to Doing
Business in China” of this prospectus.
In addition, our Ordinary Shares may be prohibited
from trading on a national exchange or over-the-counter under the HFCA Act if the PCAOB is unable to inspect our auditors for three consecutive
years beginning in 2021. Our auditor, YCM CPA INC., headquartered in Irvine, California,
has been inspected by the PCAOB on a regular basis and it is not subject to the determinations announced by the PCAOB on December 16,
2021. If trading in our Ordinary Shares is prohibited under the HFCA Act in the future because the PCAOB determines that it cannot inspect
or fully investigate our auditor at such future time, Nasdaq may determine to delist or prohibit the trading of our Ordinary Shares.
On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, and on December 29, 2022,
legislation entitled the Consolidated Appropriations Act was signed into law by President Biden, which contained, among other things,
an identical provision to the Accelerating Holding Foreign Companies Accountable Act and amended the HFCA Act by requiring the SEC to
prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for
two consecutive years instead of three, thus reducing the time period for triggering the delisting of our Company and the prohibition
of trading in our securities if the PCAOB is unable to inspect our accounting firm at such future time. If trading in the Ordinary Shares
is prohibited under the HFCA Act in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at
such future time, Nasdaq may determine to delist our Ordinary Shares and trading in our Ordinary Shares could be prohibited. See “Risk
Factors—Risks Related to Doing Business in China—The recent joint statement by the SEC and the PCAOB, rule changes by
Nasdaq, and the Holding Foreign Companies Accountable Act and related regulations, all call for additional and more stringent criteria
to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are
not inspected by the PCAOB. These developments could add uncertainties to our continued listing or future offerings of our securities
in the U.S.”
Dividends and other Distributions
Currently, we do not have a cash management
policy in place that dictate how funds are transferred between us and our subsidiaries, or investors. We are a holding company, and we
may rely on dividends and other distributions on equity paid by our PRC subsidiaries for our cash and financing requirements, including
the furnishing of funds necessary to pay dividends and other cash distributions to our shareholders or to service any debt we may incur.
If any of our PRC subsidiaries incurs debt on its own behalf in the future, the instruments governing such debt may restrict their ability
to pay dividends to us. There have not been any such dividends or other distributions from our PRC subsidiaries to our subsidiaries located
outside of China, as of the date of this prospectus. In addition, as of the date of this prospectus, none of our subsidiaries have ever
issued any dividends or distributions to us or their respective shareholders outside of China, and neither we nor any of our subsidiaries
have ever paid dividends or made distributions to U.S. investors. As of the date of this prospectus, neither we nor any of our subsidiaries
have ever paid dividends or made distributions to U.S. investors. Other than the following transactions, no cash transfers have occurred
among us and our subsidiaries: (i) our Hong Kong subsidiary, Baosheng Hong Kong, received cash of $38.3 million from us, which represented
proceeds raised in the initial public offering of our Ordinary Shares in February 2021, and the private placement of our Ordinary
Shares and warrants in March 2021, (ii) on March 16, 2021, Baosheng Hong Kong transferred cash of $6 million, in the form
of shareholder loans, to its wholly owned subsidiary, Beijing Baosheng, and (iii) in April 2021 and August 2021, Baosheng
Hong Kong transferred cash in the aggregate of $30.79 million, in the form of capital contributions, to its wholly owned subsidiary,
Baosheng Network. In the future, cash proceeds raised from overseas financing activities may be transferred by us to our PRC subsidiaries
by means of capital contributions or shareholder loans, as the case may be. Notwithstanding the recent judgment against Beijing Baosheng,
described more particularly under “Item 4. Information on the Company—B. Business Overview—Legal Proceedings”
in our annual report on Form 20-F for the fiscal year ended December 31, 2022, we do not expect that the court’s ruling
will impact the cash transferring through the organization. See “Item 18. Financial Statements” starting on page F-1 in our
annual report on Form 20-F for the year ended December 31, 2022, incorporated herein by reference.
According to the Foreign Investment Law of
the People’s Republic of China and its implementing rules, which jointly established the legal framework for the administration
of foreign-invested companies, a foreign investor may, in accordance with other applicable laws, freely transfer into or out of China
its contributions, profits, capital earnings, income from asset disposal, intellectual property rights, royalties acquired, compensation
or indemnity legally obtained, and income from liquidation, made or derived within the territory of China in RMB or any foreign currency,
and any entity or individual shall not illegally restrict such transfer in terms of the currency, amount and frequency. According to
the Company Law of the People’s Republic of China and other Chinese laws and regulations, our PRC subsidiaries may pay dividends
only out of their respective accumulated profits as determined in accordance with Chinese accounting standards and regulations. In addition,
each of our PRC subsidiaries is required to set aside at least 10% of its accumulated after-tax profits, if any, each year to fund a
certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of its registered capital. Where the statutory reserve
fund is insufficient to cover any loss the PRC subsidiary incurred in the previous financial year, its current financial year’s
accumulated after-tax profits shall first be used to cover the loss before any statutory reserve fund is drawn therefrom. Such statutory
reserve funds and the accumulated after-tax profits that are used for covering the loss cannot be distributed to us as dividends. At
their discretion, our PRC subsidiaries may allocate a portion of their after-tax profits based on Chinese accounting standards to a discretionary
reserve fund. See “Risk Factors—Risks Related to Doing Business in China—We may rely on dividends paid by our subsidiaries
for our cash needs, and any limitation on the ability of our subsidiaries to make payments to us could have a material adverse effect
on our ability to conduct business.”
Renminbi is not freely convertible into other
currencies. As result, any restriction on currency exchange may limit the ability of our PRC operating subsidiaries to use their potential
future Renminbi revenues to pay dividends to us. The Chinese government imposes controls on the convertibility of Renminbi into foreign
currencies and, in certain cases, the remittance of currency out of China. Shortages in availability of foreign currency may then restrict
the ability of our PRC subsidiaries to remit sufficient foreign currency to our offshore entities for our offshore entities to pay dividends
or make other payments or otherwise to satisfy our foreign-currency-denominated obligations. The 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 foreign currency debt, including loans we may secure for
our onshore subsidiaries. Currently, our PRC subsidiaries may purchase foreign currency for settlement of “current account transactions,”
including payment of dividends to us, without the approval of SAFE by complying with certain procedural requirements. However, the relevant
Chinese governmental authorities may limit or eliminate our ability to purchase foreign currencies in the future for current account
transactions. The Chinese government may continue to strengthen its capital controls, and additional restrictions and substantial vetting
processes may be instituted by SAFE for cross-border transactions falling under both the current account and the capital account. Any
existing and future restrictions on currency exchange may limit our ability to utilize revenue generated in Renminbi to pay dividends
in foreign currencies to holders of our securities. Foreign exchange transactions under the capital account remain subject to limitations
and require approvals from, or registration with, SAFE and other relevant Chinese governmental authorities. This could affect our ability
to obtain foreign currency through debt or equity financing for our subsidiaries. See “Risk Factors—Risks Related to Doing
Business in China—We may rely on dividends paid by our subsidiaries for our cash needs, and any limitation on the ability of our
subsidiaries to make payments to us could have a material adverse effect on our ability to conduct business” for a detailed discussion
of the Chinese legal restrictions on the payment of dividends and our ability to transfer cash within our group. In addition, holders
of our Ordinary Shares may potentially be subject to Chinese taxes on dividends paid by us in the event we are deemed a Chinese resident
enterprise for Chinese tax purposes. See “Risk Factors—Risks Related to Doing Business in China—You may be subject
to PRC income tax on dividends from us or on any gain realized on the transfer of our Ordinary Shares.”
To the extent cash in the business is in the
PRC/Hong Kong or a PRC/Hong Kong entity, the funds may not be available to fund operations or for other use outside of the PRC/Hong Kong
due to interventions in or the imposition of restrictions and limitations on the ability of our Company or our subsidiaries by the PRC
government to transfer cash. See “Risk Factors—Risks Related to Doing Business in China— To the extent cash in the
business is in the PRC/Hong Kong or a PRC/Hong Kong entity, the funds may not be available to fund operations or for other use outside
of the PRC/Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of our Company or our subsidiaries
by the PRC government to transfer cash” on page 34 of this prospectus.
Business Overview
Through the operating entities, we are an online
marketing solution provider based in China. The operating entities are dedicated to helping their advertiser clients manage online marketing
activities with a view to achieving the clients’ business goals. The operating entities advise advertisers on online marketing strategies,
offer value-added advertising optimization services and facilitate the deployment of online ads of various forms such as search ads, in-feed
ads, mobile app ads and social media marketing ads. At the same time, as the authorized agency of some popular online media, such as sm.cn
(神马), UC browsers (UC浏览器),
and Today’s Headline (今日头条), the operating
entities help online media procure advertisers to buy their ad inventory and facilitate ad deployment on their advertising channels.
Relying on our management’s extensive industry
experience, deep industry insights and well-established network of media resources and through the operating entities, we have grown
rapidly from a start-up online marketing agency founded in 2014 to a multi-channel online marketing solution provider.
The operating entities help advertisers formulate
online advertising strategies, optimize ads and run ads on suitable online advertising channels with a view to achieving the clients’
business goals. The operating entities have built a broad and diverse advertiser base across various industries, including ecommerce
and online service platforms, online travel agencies, financial services, online gaming, car services and other advertising agencies.
We believe the operating entities’ ability to attract and retain these advertisers reflects the high level of their services, which
is essential to our business growth.
Business
value chain. As an online advertising service provider, we regard our business values as revolving around the operating entities’
ability to serve the needs of two major business stakeholders: (i) advertisers; and (ii) media (or their authorized agencies).
| · | Value
to advertisers: As an online marketing service provider, through the operating entities,
we connect advertisers and online media, helping advertisers to manage their online marketing
activities in many ways, including, but not limited to, (i) advising on advertising
strategies, budget and choice of advertising channels; (ii) procuring ad inventory;
(iii) offering ad optimization services; and (iv) administrating and fine-tuning
the ad placement process. |
| · | Value
to media: As an authorized agency of media, through the operating entities, we create
value to media businesses in several ways, including, but not limited to, (i) identifying
advertisers to buy their ad inventory, (ii) facilitating payment arrangements with advertisers,
(iii) assisting advertisers in handling ad deployment logistics with media, and (iv) engaging
in other marketing and promotion activities aimed at educating and inducing advertisers to
use online advertising. |
Advertising
services. Through the operating entities, we offer two types of advertising services, SEM services, and Non-SEM services.
SEM services include the deployment of ranked search ads and other display search ads offered by search engine operators. Non-SEM services,
on the other hand, include social media marketing, in-feed advertising, and mobile app advertising through deploying ads on media such
as social media platforms, short-video platforms, news portals and mobile apps. The display forms of Non-SEM ads include in-feed ads,
banner ads, button ads, interstitial ads, and posts on selected social media accounts.
Set forth below is a summary of the relevant
ad formats, the corresponding pricing models generally adopted by media and our revenue model:
| Type |
|
Description |
|
Media’s
principal pricing
model |
|
Our
principal revenue
model |
| SEM
Services |
| Search
ads |
|
Search
ads are normally located at the top, or on the side of the search results page, or the related products of the search engine operators. |
|
Auction-based
ads: mainly CPC
Non-auction-based
ads: mainly CPT |
|
Rebates
and incentives |
| Non-SEM
services |
| In-feed
ads |
|
In-feed
ads are advertisements that match the format, appearance and function of the platform upon which they appear, typically placed on
short video sharing, social media and newsfeed platforms. |
|
Mainly
CPM, CPC |
|
Rebates
and incentives |
| Mobile
app ads |
|
Mobile
app ads are displayed in apps with various formats such as banner ads, button ads, open screen ads, and interstitial ads. |
|
Mainly
CPT, CPA |
|
Net
fees; rebates and incentives |
| Social
media ads |
|
Social
media ads take the form of contents appearing in the designated blogs or social media accounts with suitable target audience. |
|
Mainly
CPT |
|
Net
fees |
Our business experienced substantial growth from
our inception to December 31, 2020, before we experienced negative growth since 2021. Our gross billing decreased from $134.9 million
in 2020 to $54.7 million in 2021, representing a decrease of 59.4%, and decreased to $54.6 million in 2022, representing a decrease of
0.3%. In the meantime, the media costs decreased from $123.0 million in 2020 to $50.8 million in 2021, while increased to $52.2 million
in 2022, representing a decrease of 58.7% and an increase of 2.7%, respectively. Our revenue on a net basis (i.e. difference between
gross billing and media costs) has decreased, in tandem with advertiser base and their advertising spend, from $11.9 million in 2020
to $3.9 million in 2021, and decreased further to $2.4 million in 2022, representing a decrease of 67.2% and a decrease of 38.3%, respectively.
Please see the financial statements and related notes and other information that we incorporate by reference herein, including, but not
limited to, our annual report on Form 20-F for the fiscal year ended December 31, 2022 and our other SEC reports.
Summary of Risk Factors
Investing in our Ordinary Shares involves significant
risks. You should carefully consider all of the information in this prospectus before making an investment in our Ordinary Shares. Below
please find a summary of the principal risks we face, organized under relevant headings. These risks are discussed more fully under “Item
3. Key Information—D. Risk Factors” in our annual report on Form 20-F for the fiscal year ended December 31, 2022
and in the “Risk Factors” section below.
Risks Related to Business and Industry
(for a more detailed discussion, see “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry”
in our annual report on Form 20-F for the fiscal year ended December 31, 2022)
Risks and uncertainties related to business and
industry include, but are not limited to, the following:
| · | Cutbacks
on advertising budgets by advertisers, changes in rebate and incentive policies by the media,
failure to maintain and grow our advertiser base and secure emerging media resources could
all materially and adversely affect our business and financial condition. See page 10
of our annual report on Form 20-F for the fiscal year ended December 31, 2022; |
| · | If
we fail to maintain our relationships with our business stakeholders, mainly advertisers
and media, our business, results of operations, financial condition and business prospects
could be materially and adversely affected. See page 11 of our annual report on Form 20-F
for the fiscal year ended December 31, 2022; |
| · | Failure
to appropriately evaluate the credit profile of our advertisers or effectively manage our
credit risk associated with credit terms granted to our advertisers and/or delay in settlement
of accounts receivable from our advertisers could materially and adversely impact our operating
cash flow and may result in significant provisions and impairments on our accounts receivable
which in turn would have a material adverse impact on our business operations, results of
operation, financial condition and our business pursuits and prospects. See page 13
of our annual report on Form 20-F for the fiscal year ended December 31, 2022; |
| · | As
we continue to strive for business growth, we may continue to experience net cash outflow
from operating activities, and we cannot assure you that we can maintain sufficient net cash
inflows from operating activities. See page 13 of our annual report on Form 20-F
for the fiscal year ended December 31, 2022; |
| · | Our
limited operating history in a rapidly evolving industry makes it difficult to accurately
forecast our future operating results and evaluate our business prospects. See page 14
of our annual report on Form 20-F for the fiscal year ended December 31, 2022; |
| · | Certain
customers contributed to a significant percentage of our total revenue during the fiscal
years 2022, 2021, and 2020, and losing one or more of them could result in a material adverse
impact on our financial performance and business prospects. See page 14 of our annual
report on Form 20-F for the fiscal year ended December 31, 2022; |
| · | We
are in the highly competitive online advertising service industry and we may not be able
to compete successfully against existing or new competitors, which could reduce our market
share and adversely affect our competitive position and financial performance. See page 15
of our annual report on Form 20-F for the fiscal year ended December 31, 2022; |
| · | If
we fail to improve our services to keep up with the rapidly changing demands, preferences,
advertising trends or technologies in the online advertising industry, our revenues and growth
could be adversely affected. See page 16 of our annual report on Form 20-F for
the fiscal year ended December 31, 2022; |
| · | Limitations
on the availability of data and our ability to analyze such data could significantly restrict
our optimization capability and cause us to lose advertisers, which may harm our business
and results of operations. See page 16 of our annual report on Form 20-F for the
fiscal year ended December 31, 2022; |
| · | The
regulatory environment of the online advertising industry is rapidly evolving. If we fail
to obtain and maintain the requisite licenses and approvals as applicable to our businesses
in China from time to time, our business, financial condition and results of operations may
be materially and adversely affected. See page 17 of our annual report on Form 20-F
for the fiscal year ended December 31, 2022; and |
| · | The
ongoing effects of COVID-19 in China may have a material adverse effect on our business.
See page 23 of our annual report on Form 20-F for the fiscal year ended December 31,
2022. |
Risks Related to Doing Business in China
(for a more detailed discussion, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China”
in our annual report on Form 20-F for the fiscal year ended December 31, 2022 and the section titled “Risk Factors”
below)
We face risks and uncertainties related to doing
business in the PRC in general, including, but not limited to, the following:
| |
· |
Adverse changes in political and economic policies
of the PRC government could have a material adverse effect on the overall economic growth of the PRC, which could reduce the demand
for our products and materially and adversely affect our competitive position. See “Risk Factors—Risks Related to Doing
Business in China—Adverse changes in political and economic policies of the PRC government could have a material adverse effect
on the overall economic growth of the PRC, which could reduce the demand for our products and materially and adversely affect our
competitive position” on page 25 of this prospectus and page 23 of our annual report on Form 20-F for the
fiscal year ended December 31, 2022; |
| |
· |
Uncertainties regarding interpretation and enforcement
of the laws, rules and regulations in China may impose adverse impact on our business, operations and profitability. See “Risk
Factors—Risks Related to Doing Business in China—Uncertainties regarding interpretation and enforcement of the laws,
rules and regulations in China may impose adverse impact on our business, operations and profitability” on page 25
of this prospectus and page 23 of our annual report on Form 20-F for the fiscal year ended December 31, 2022; |
| |
· |
We may be adversely affected by the complexity,
uncertainties and changes in the regulation of internet-related businesses and companies in China. See “Risk Factors—Risks
Related to Doing Business in China—We may be adversely affected by the complexity, uncertainties and changes in the regulation
of internet-related businesses and companies in China” on page 26 of this prospectus and page 24 of our annual
report on Form 20-F for the fiscal year ended December 31, 2022; |
| |
· |
Regulation and censorship of information disseminated
through the Internet in China may adversely affect our business in China, and we may be liable for content disseminated by us through
the Internet. See “Risk Factors—Risks Related to Doing Business in China—Regulation and censorship of information
disseminated through the Internet in China may adversely affect our business in China, and we may be liable for content disseminated
by us through the Internet” on page 27 of this prospectus and page 25 of our annual report on Form 20-F for
the fiscal year ended December 31, 2022; |
| |
· |
Changes in the policies, regulations, rules, and
the enforcement of laws of the PRC government may be quick with little advance notice and could have a significant impact upon our
ability to operate profitably in the PRC. See “Risk Factors—Risks Related to Doing Business in China—Changes in
the policies, regulations, rules, and the enforcement of laws of the PRC government may be quick with little advance notice and could
have a significant impact upon our ability to operate profitably in the PRC” on page 27 of this prospectus and page 25
of our annual report on Form 20-F for the fiscal year ended December 31, 2022; |
| |
· |
The Chinese government exerts substantial influence
over the manner in which we must conduct our business, and may intervene or influence our operations at any time, or may exert more
control over offerings conducted overseas and/or foreign investment in China-based issuers, which could result in a material change
in our operations, significantly limit or completely hinder our ability to offer or continue to offer securities to investors and,
and cause the value of our Ordinary Shares to significantly decline or be worthless. See “Risk Factors—Risks Related
to Doing Business in China—The Chinese government exerts substantial influence over the manner in which we must conduct our
business, and may intervene or influence our operations at any time, or may exert more control over offerings conducted overseas
and/or foreign investment in China-based issuers, which could result in a material change in our operations, significantly limit
or completely hinder our ability to offer or continue to offer securities to investors and, and cause the value of our Ordinary Shares
to significantly decline or be worthless” on pages 27 through 29 of this prospectus and page 25 of our annual
report on Form 20-F for the fiscal year ended December 31, 2022; |
| |
· |
Recent greater oversight by the Cyberspace Administration
of China, or the CAC, over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact
our business and our offering. See “Risk Factors—Risks Related to Doing Business in China—Recent greater oversight
by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business
and our offering” on pages 29 and 30 of this prospectus and page 27 of our annual report on Form 20-F for
the fiscal year ended December 31, 2022; |
| |
· |
The Opinions on Severely Cracking Down on Illegal
Securities Activities According to Law recently issued by the General Office of the Central Committee of the Communist Party of China
and the General Office of the State Council may subject us to additional compliance requirement in the future. See “Risk Factors—Risks
Related to Doing Business in China—The Opinions on Severely Cracking Down on Illegal Securities Activities According to Law
recently issued by the General Office of the Central Committee of the Communist Party of China and the General Office of the State
Council may subject us to additional compliance requirement in the future” on page 30 of this prospectus and page 28
of our annual report on Form 20-F for the fiscal year ended December 31, 2022; |
| |
· |
Labor Contract Law and other labor-related laws
in the PRC may adversely affect our business and our results of operations. See “Risk Factors—Risks Related to Doing
Business in China—Labor Contract Law and other labor-related laws in the PRC may adversely affect our business and our results
of operations” on page 31 of this prospectus and page 28 of our annual report on Form 20-F for the fiscal
year ended December 31, 2022; |
| |
· |
Failure to obtain or maintain any preferential
tax treatments, or the discontinuation, reduction or delay of any preferential tax treatments available to us in China could adversely
affect our results of operations and financial condition. See “Risk Factors—Risks Related to Doing Business in China—Failure
to obtain or maintain any preferential tax treatments, or the discontinuation, reduction or delay of any preferential tax treatments
available to us in China could adversely affect our results of operations and financial condition” on pages 31 and 32 of
this prospectus and page 29 of our annual report on Form 20-F for the fiscal year ended December 31, 2022; |
| |
· |
Under the Enterprise Income Tax Law, we may be
classified as a “Resident Enterprise” of China. Such classification will likely result in unfavorable tax consequences
to us and our non-PRC shareholders. See “Risk Factors—Risks Related to Doing Business in China—Under the Enterprise
Income Tax Law, we may be classified as a ‘Resident Enterprise’ of China. Such classification will likely result in unfavorable
tax consequences to us and our non-PRC shareholders” on pages 32 and 33 of this prospectus and page 30 of our
annual report on Form 20-F for the fiscal year ended December 31, 2022; |
| |
· |
PRC regulation of loans to PRC entities by offshore
holding companies and governmental control of currency conversion may delay or prevent us from using proceeds from our future financing
activities to make loans to our PRC operating subsidiaries, which might adversely affect our liquidity and our ability to fund and
expand our business. See “Risk Factors—Risks Related to Doing Business in China—PRC regulation of loans to PRC
entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using proceeds
from our future financing activities to make loans to our PRC operating subsidiaries, which might adversely affect our liquidity
and our ability to fund and expand our business” on pages 33 and 34 of this prospectus and page 31 of our annual
report on Form 20-F for the fiscal year ended December 31, 2022; |
| |
|
|
| |
· |
To the extent cash in the business is in the PRC/Hong
Kong or a PRC/Hong Kong entity, the funds may not be available to fund operations or for other use outside of the PRC/Hong Kong due
to interventions in or the imposition of restrictions and limitations on the ability of our Company or our subsidiaries by the PRC
government to transfer cash. See “Risk Factors—Risks Related to Doing Business in China— To the extent cash in
the business is in the PRC/Hong Kong or a PRC/Hong Kong entity, the funds may not be available to fund operations or for other use
outside of the PRC/Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of our Company
or our subsidiaries by the PRC government to transfer cash” on page 34 of this prospectus; |
| |
· |
We may rely on dividends paid by our subsidiaries
for our cash needs, and any limitation on the ability of our subsidiaries to make payments to us could have a material adverse effect
on our ability to conduct business. See “Risk Factors—Risks Related to Doing Business in China—We may rely on dividends
paid by our subsidiaries for our cash needs, and any limitation on the ability of our subsidiaries to make payments to us could have
a material adverse effect on our ability to conduct business” on pages 34 and 35 of this prospectus and page 31
of our annual report on Form 20-F for the fiscal year ended December 31, 2022; |
| |
· |
Failure to comply with PRC regulations relating
to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident Shareholders to personal
liability, may limit our ability to acquire PRC companies or to inject capital into our PRC subsidiaries, may limit the ability of
our PRC subsidiaries to distribute profits to us or may otherwise materially and adversely affect us. See “Risk Factors—Risks
Related to Doing Business in China—Failure to comply with PRC regulations relating to the establishment of offshore special
purpose companies by PRC residents may subject our PRC resident Shareholders to personal liability, may limit our ability to acquire
PRC companies or to inject capital into our PRC subsidiaries, may limit the ability of our PRC subsidiaries to distribute profits
to us or may otherwise materially and adversely affect us” on pages 35 and 36 of this prospectus and page 32
of our annual report on Form 20-F for the fiscal year ended December 31, 2022; |
| |
· |
You may be subject to PRC income tax on dividends
from us or on any gain realized on the transfer of our Ordinary Shares. See “Risk Factors—Risks Related to Doing Business
in China—You may be subject to PRC income tax on dividends from us or on any gain realized on the transfer of our Ordinary
Shares” on page 36 of this prospectus and page 33 of our annual report on Form 20-F for the fiscal year ended
December 31, 2022; |
| |
· |
We may be unable to complete a business combination
transaction efficiently or on favorable terms due to complicated merger and acquisition regulations and certain other PRC regulations.
See “Risk Factors—Risks Related to Doing Business in China—We may be unable to complete a business combination
transaction efficiently or on favorable terms due to complicated merger and acquisition regulations and certain other PRC regulations”
on pages 36 and 37 of this prospectus and page 33 of our annual report on Form 20-F for the fiscal year ended
December 31, 2022; |
| |
· |
We face uncertainties with respect to indirect
transfers of equity interests in PRC resident enterprises by their non-PRC holding companies. See “Risk Factors—Risks
Related to Doing Business in China—We face uncertainties with respect to indirect transfers of equity interests in PRC resident
enterprises by their non-PRC holding companies” on pages 37 and 38 of this prospectus and page 34 of our annual
report on Form 20-F for the fiscal year ended December 31, 2022; |
| |
· |
You may have difficulty effecting service of legal
process, enforcing judgments or bringing actions against us and our management. See “Risk Factors—Risks Related to Doing
Business in China—You may have difficulty effecting service of legal process, enforcing judgments or bringing actions against
us and our management” on page 38 of this prospectus and page 35 of our annual report on Form 20-F for the
fiscal year ended December 31, 2022; |
| |
· |
U.S. regulatory bodies may be limited in their
ability to conduct investigations or inspections of our operations in China. See “Risk Factors—Risks Related to Doing
Business in China—U.S. regulatory bodies may be limited in their ability to conduct investigations or inspections of our operations
in China” on page 39 of this prospectus and page 35 of our annual report on Form 20-F for the fiscal year
ended December 31, 2022; |
| |
· |
The recent joint statement by the SEC and the PCAOB,
rule changes by Nasdaq, and the Holding Foreign Companies Accountable Act and related regulations, all call for additional and
more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially
the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our continued listing or
future offerings of our securities in the U.S. See “Risk Factors—Risks Related to Doing Business in China—The recent
joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and the Holding Foreign Companies Accountable Act and related
regulations, all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification
of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties
to our continued listing or future offerings of our securities in the U.S.” on pages 39 and 40 of this prospectus
and page 36 of our annual report on Form 20-F for the fiscal year ended December 31, 2022; |
| |
· |
We may be exposed to liabilities under the Foreign
Corrupt Practices Act and Chinese anti-corruption law. See “Risk Factors—Risks Related to Doing Business in China—We
may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption law” on page 41 of
this prospectus and page 37 of our annual report on Form 20-F for the fiscal year ended December 31, 2022; and |
| |
· |
Because our business is conducted in RMB and the
price of our Ordinary Shares is quoted in the U.S. dollar, changes in the exchange rate between RMB and the U.S. dollar may affect
the value of your investments. See “Risk Factors—Risks Related to Doing Business in China—Because our business
is conducted in RMB and the price of our Ordinary Shares is quoted in the U.S. dollar, changes in the exchange rate between RMB and
the U.S. dollar may affect the value of your investments” on page 41 of this prospectus and page 37 of our annual
report on Form 20-F for the fiscal year ended December 31, 2022. |
Risks Related to Our Ordinary Shares (for
a more detailed discussion, see “Item 3. Key Information—D. Risk Factors—Risks Related to Our Ordinary Shares”
in our annual report on Form 20-F for the fiscal year ended December 31, 2022)
In addition to the risks described above, we
are subject to general risks and uncertainties related to our Ordinary Shares and the trading market, including, but not limited to,
the following:
| · | Our
share price has recently declined substantially, and our Ordinary Shares could be delisted
from the Nasdaq or trading could be suspended. See page 38 of our annual report on Form 20-F
for the fiscal year ended December 31, 2022; |
| · | We
cannot assure you that we will declare and distribute any dividends in the future. See page 39
of our annual report on Form 20-F for the fiscal year ended December 31, 2022; |
| · | For
as long as we are an emerging growth company, we will not be required to comply with certain
reporting requirements, including those relating to accounting standards and disclosure about
our executive compensation, that apply to other public companies. See page 39 of our
annual report on Form 20-F for the fiscal year ended December 31, 2022; |
| · | If
we fail to establish and maintain proper internal financial reporting controls, our ability
to produce accurate financial statements or comply with applicable regulations could be impaired.
See page 40 of our annual report on Form 20-F for the fiscal year ended December 31,
2022; |
| · | As
a foreign private issuer, we are not subject to certain U.S. securities law disclosure requirements
that apply to a domestic U.S. issuer, which may limit the information publicly available
to our shareholders. See page 40 of our annual report on Form 20-F for the fiscal
year ended December 31, 2022; |
| · | As
a foreign private issuer, we are permitted to adopt certain home country practices in relation
to corporate governance matters that differ significantly from the Nasdaq Stock Market corporate
governance listing standards. These practices may afford less protection to shareholders
than they would enjoy if we complied fully with corporate governance listing standards. See
page 41 of our annual report on Form 20-F for the fiscal year ended December 31,
2022; and |
| · | If
we cannot satisfy, or continue to satisfy, the continued listing requirements and other rules of
the Nasdaq Capital Market, our securities may be delisted, which could negatively impact
the price of our securities and your ability to sell them. See page 42 of our annual
report on Form 20-F for the fiscal year ended December 31, 2022. |
Foreign Private Issuer Status
We are a foreign private issuer within the meaning
of the rules under the Exchange Act. As such, we are exempt from certain provisions applicable to United States domestic public
companies. For example:
| · | we
are not required to provide as many Exchange Act reports, or as frequently, as a domestic
public company; |
| · | for
interim reporting, we are permitted to comply solely with our home country requirements,
which are less rigorous than the rules that apply to domestic public companies; |
| · | we
are not required to provide the same level of disclosure on certain issues, such as executive
compensation; |
| · | we
are exempt from provisions of Regulation FD aimed at preventing issuers from making selective
disclosures of material information; |
| · | we
are not required to comply with the sections of the Exchange Act regulating the solicitation
of proxies, consents or authorizations in respect of a security registered under the Exchange
Act; and |
| · | we
are not required to comply with Section 16 of the Exchange Act requiring insiders to
file public reports of their share ownership and trading activities and establishing insider
liability for profits realized from any “short-swing” trading transaction. |
Implications of Being an Emerging Growth Company
As a company with less than US$1.235 billion
in revenue for the last fiscal year, we qualify as an “emerging growth company” pursuant to the JOBS Act. An emerging growth
company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies.
These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002,
or Section 404, in the assessment of the emerging growth company’s internal control over financial reporting. The JOBS Act
also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such
date that a private company is otherwise required to comply with such new or revised accounting standards.
We will remain an emerging growth company until
the earliest of (i) the last day of our fiscal year during which we have total annual gross revenues of at least US$1.235 billion;
(ii) the last day of our fiscal year following the fifth anniversary of the completion of our initial public offering; (iii) the
date on which we have, during the previous three year period, issued more than US$1.0 billion in non-convertible debt; or (iv) the
date on which we are deemed to be a “large accelerated filer” under the Exchange Act, which would occur if the market value
of our Ordinary Shares that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed
second fiscal quarter and we have been publicly reporting for at least 12 months. Once we cease to be an emerging growth company, we
will not be entitled to the exemptions provided in the JOBS Act discussed above.
Corporate Information
Our principal executive office is located at
East Floor 5, Building No. 8, Xishanhui, Shijingshan District Beijing, People’s Republic of China. Our telephone number at
this address is +86 010-82088021. Our registered office in the Cayman Islands is located at Harneys Fiduciary (Cayman) Limited, 4th Floor,
Harbour Place, 103 South Church Street, P.O. Box 10240, Grand Cayman KY1-1002, Cayman Islands. We maintain a corporate website at
http://ir.bsacme.com. The information contained in, or accessible from, our website or any other website does not constitute a part of
this prospectus. Our agent for service of process in the United States is Puglisi & Associates located at 850 Library Avenue,
Suite 204, Newark, DE 19711.
RISK FACTORS
Investing in our securities involves risks.
Before making an investment decision, you should carefully consider the risks described under “Risk Factors” in the applicable
prospectus supplement and under the heading “Item 3. Key Information—D. Risk Factors” in our annual report on Form 20-F
for the fiscal year ended December 31, 2022, which is incorporated in this prospectus by reference, as updated by our subsequent
filings under the Exchange Act, together with all of the other information appearing in this prospectus or incorporated by reference into
this prospectus and any applicable prospectus supplement, in light of your particular investment objectives and financial circumstances.
In addition to those risk factors, there may be additional risks and uncertainties of which management is not aware or focused on or that
management deems immaterial. Our business, financial condition, or results of operations could be materially adversely affected by any
of these risks. The trading price of our securities could decline due to any of these risks, and you may lose all or part of your investment.
We are an offshore holding company incorporated
in the Cayman Islands and we are not a Chinese operating company. As a holding company with no operations of our own, our operations
are conducted in China through our wholly owned PRC subsidiary, Beijing Baosheng, and its subsidiaries. This structure involves unique
risks to investors. Holders of our Ordinary Shares will not directly hold any equity interests in our operating subsidiaries. The Chinese
regulatory authorities could disallow our corporate structure, which could result in a material change in our operations and the value
of our Ordinary Shares could decline or become worthless.
Risks Related to Doing Business in China
Adverse changes in political and economic
policies of the PRC government could have a material adverse effect on the overall economic growth of the PRC, which could reduce the
demand for our products and materially and adversely affect our competitive position.
All of our business operations are conducted
in China through the operating entities. Accordingly, our business, results of operations, financial condition and prospects are subject
to economic, political and legal developments in China. Although the Chinese economy is no longer a planned economy, the PRC government
continues to exercise significant control over China’s economic growth through direct allocation of resources, monetary and tax
policies, and a host of other government policies such as those that encourage or restrict investment in certain industries by foreign
investors, control the exchange between RMB and foreign currencies, and regulate the growth of the general or specific market. These
government involvements have been instrumental in China’s significant growth in the past 40 years. If the PRC government’s
current or future policies fail to help the Chinese economy achieve further growth or if any aspect of the PRC government’s policies
limits the growth of our industry or otherwise negatively affects our business, our growth rate or strategy, our results of operations
could be adversely affected as a result.
Uncertainties regarding interpretation
and enforcement of the laws, rules and regulations in China may impose adverse impact on our business, operations and profitability.
We conduct all of our business through the operating
entities in China. Their operations in China are governed by PRC laws and regulations. Our PRC subsidiaries are generally subject to
laws and regulations applicable to foreign investments in China and, in particular, laws and regulations applicable to wholly foreign-owned
enterprises. The PRC legal system is based on statutes. Prior court decisions may be cited for reference but have limited precedential
value.
Since 1979, PRC legislation and regulations have
significantly enhanced the protections afforded to various forms of foreign investments in China. However, China has not developed a
fully integrated legal system and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities
in China. In particular, because these laws and regulations are relatively new, and because of the limited volume of published decisions
and their nonbinding nature, the interpretation and enforcement of these laws and regulations involve uncertainties. In addition, the
PRC legal system is based in part on government policies and internal rules (some of which are not published on a timely basis or
at all) that may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules until
sometime after the violation. In addition, any litigation in China may be protracted and result in substantial costs and diversion of
resources and management attention.
PRC regulation of loans and direct investment
by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of our future offerings to make loans or
additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to
fund and expand our business.
We may be adversely affected by the complexity,
uncertainties and changes in the regulation of internet-related businesses and companies in China.
The PRC government extensively regulates the
internet industry, including foreign ownership of, and the licensing and permit requirements pertaining to, companies in the internet
industry. These internet-related laws and regulations are relatively new and evolving, and their interpretation and enforcement involve
significant uncertainty. As a result, in certain circumstances some actions or omissions may be deemed to be violations of applicable
laws and regulations. Risks and uncertainties relating to regulation in China of the internet-related business include, but are not limited
to, the following:
| · | There
are uncertainties relating to the regulation of the internet-related business in China, including
evolving licensing practices. This means that some of our permits, licenses or operations
in China may be subject to challenge, or we may fail to obtain permits or licenses that may
be deemed necessary for our operations or we may not be able to obtain or renew certain permits
or licenses. If we fail to maintain any of these required licenses or permits, we may be
subject to various penalties, including fines and discontinuation of or restriction on our
operations in China. Any such disruption in our business operations in China may have a material
and adverse effect on our results of operations in China. |
| · | New
laws and regulations may be promulgated in China to regulate internet activities, including
digital marketing. If these new laws and regulations are promulgated, additional licenses
and/or cost of compliance may be required for our operations. If our operations are not in
compliance with these new laws and regulations after they become effective, or if we fail
to obtain any licenses required under these new laws and regulations, we could be subject
to penalties or restrictions on our operations in China. |
According to our PRC Counsel, Beijing Dacheng
Law Offices, LLP, the operating entities are not required to obtain any other industry-specific qualification, license or permit, including
an Internet Content Provider license, or ICP license, for carrying out their online advertising service business in China. Given that
the interpretation and application of existing PRC laws, regulations and policies and possible new laws, regulations or policies relating
to the internet industry have created substantial uncertainties regarding the legality of existing and future foreign investments in,
and the businesses and activities of, internet-related businesses in China, including the operating entities’ business in China,
there is no assurance that we and the operating entities have obtained all the permits or licenses required for conducting business in
China or will be able to maintain these existing licenses or obtain any new licenses required under any new laws or regulations. There
is also no assurance that the PRC government will not classify the operating entities’ business as one requiring an ICP license
or other licenses in the future. If new regulations in China classify the operating entities’ business as one requiring an ICP
license or other licenses, the operating entities may be prevented from operating in China if they are unable to obtain the required
licenses. If the change in classification of their business were to be retroactively applied, the operating entities might be subject
to sanctions, including payment of taxes and fines. Any change in the PRC laws and regulations may therefore significantly disrupt the
operating entities’ operations in China and materially and adversely affect our business, results of operations and financial conditions
in China.
Regulation and censorship of information
disseminated through the Internet in China may adversely affect our business in China, and we may be liable for content disseminated
by us through the Internet.
The PRC government has enacted laws and regulations
governing internet access and the distribution of products, services, news, information, audio-video programs and other content through
the Internet. The PRC government has prohibited the dissemination of information through the Internet that it deems to be in violation
of PRC laws and regulations. If any internet content disseminated by the operating entities is deemed by the PRC government to violate
any content restrictions, the operating entities would not be able to continue to disseminate such content and could become subject to
penalties, including confiscation of income, fines, suspension of business and revocation of licenses, which could materially and adversely
affect our business, financial conditions and results of operations in China. The operating entities may also be subject to potential
liability for any unlawful actions of their clients or for content they disseminate that is regarded as inappropriate.
The operating entities have implemented measures
to ensure that their ad content does not violate these laws and regulations. After the operating entities receive the ad content from
their advertisers, it will be subject to a compliance review by the operating entities’ experienced employees. If they determine
that the ad content does not violate any applicable laws and regulations, the operating entities will share such ad content with the
relevant media for their internal review. If the operating entities determine that the ad content may be in violation of applicable laws
or regulations, they will provide suggested edits to the ad content and send it back to the advertiser for revision. After both the operating
entities and the media have determined that the ad content is in full compliance with applicable laws and regulations on information
dissemination, the operating entities will confirm with the advertiser on its opinion with respect to the compliance prior to the deployment
of the ad. Despite these efforts, we cannot assure you that the operating entities will be in full compliance with all applicable regulations
on information dissemination. In addition, the operating entities have no control over and are not informed of the specific review standards
applied by the advertisers or the media, and it may be difficult to determine the type of content that may result in liability to
the operating entities. If the operating entities are found to be liable, they may be subject to penalties, fines, suspension of licenses,
or revocation of licenses, which could materially and adversely affect our business, financial conditions and results of operations.
Changes in the policies, regulations, rules,
and the enforcement of laws of the PRC government may be quick with little advance notice and could have a significant impact upon our
ability to operate profitably in the PRC.
We currently conduct all operations through the
operating entities in the PRC and all of our revenue is generated in the PRC. Accordingly, economic, political, and legal developments
in the PRC will significantly affect our business, financial condition, results of operations, and prospects. Policies, regulations,
rules, and the enforcement of laws of the PRC government can have significant effects on economic conditions in the PRC and the ability
of businesses to operate profitably. The operating entities’ ability to operate profitably in the PRC may be adversely affected
by changes in policies, regulations, rules, and the enforcement of laws by the PRC government, which changes may be quick with little
advance notice.
The Chinese government exerts substantial
influence over the manner in which we must conduct our business, and may intervene or influence our operations at any time, or may exert
more control over offerings conducted overseas and/or foreign investment in China-based issuers, which could result in a material change
in our operations, significantly limit or completely hinder our ability to offer or continue to offer securities to investors and, and
cause the value of our Ordinary Shares to significantly decline or be worthless.
The Chinese government has exercised and
continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership
and may intervene with or control our operations as the government deems appropriate to further regulatory, political and societal
goals. The PRC government has recently published new policies that significantly affected certain industries, such as the
cryptocurrency industry and the education industry. Even though as of the date of this prospectus, we have not been affected by any
newly published policies concerning our industry or our business operations that have limited or may limit our business operations
to a significant degree, to the extent that the PRC government publishes any policies in the future that concern and affect the
advertising industry that our subsidiaries operate in, the ability of our PRC subsidiaries to continue operating their business or
serving their customers in China may be severely restricted. We cannot assure you that government authorities in China will not
introduce any enhanced regulation over the industry our PRC subsidiaries operate in that may lead to our inability to operate in
China at all. Additionally, the operating entities’ ability to operate in China may also be harmed by changes in its laws and
regulations, including those relating to taxation, environmental regulations, land use rights, property and other matters. The
central or local governments of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations
that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or
interpretations. Accordingly, government actions in the future, including any decision not to continue to support economic reforms
and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could
have a significant effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves of
any interest we then hold in Chinese properties. In any of these events, our PRC subsidiaries’ ability to continue their
operations may be significantly impacted, and the value of our Ordinary Shares may significantly decline or become
worthless.
Furthermore, the PRC government has recently
indicated an intent to exert more oversight and control over overseas securities offerings and other capital markets activities and foreign
investment in China-based companies like us. Recent statements made by the Chinese government have indicated an intent to increase the
government’s oversight and control over offerings of companies with significant operations in the PRC that are to be conducted
in foreign markets, as well as foreign investment in China-based issuers. On February 17, 2023, the CSRC released the Trial Administrative
Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”), (《境内企业境外发行证券和上市管理试行办法》)
and five supporting guidelines (collectively, the “Overseas Listings Rules”), which took effect on March 31, 2023. On
the same date of the issuance of the Overseas Listings Rules, the CSRC circulated No.1 to No.5 Supporting Guidance Rules, the Notes on
the Overseas Listings Rules, the Notice on Administration Arrangements for the Filing of Overseas Listings by Domestic Enterprises and
the relevant CSRC Answers to Reporter Questions on the official website of CSRC, or collectively, the Guidance Rules and Notice.
The Overseas Listing Rules aim to lay out
the filing regulation arrangement for both direct and indirect overseas listing and clarify the determination criteria for indirect overseas
listing in overseas markers. Where an enterprise whose principal business activities are conducted in the PRC seeks to issue and list
its shares in the name of an overseas enterprise based on equity, assets, income, or other similar rights and interests of the relevant
domestic enterprise in the PRC, such activities are deemed an indirect overseas issuance and listing. According to the Overseas Listings
Rules, after the submission of relevant application for initial public offerings or listings in overseas markets, or after the completion
of subsequent securities offerings of an issuer in the same overseas market where it has previously offered and listed, or after the
submission of relevant application for subsequent securities offerings and listings of an issuer in other overseas markets than where
it has offered and listed, all China-based companies shall file the required filing materials with the CSRC within three working days.
In addition, overseas offerings and listings will be prohibited for such China-based companies when any of the following applies: (i) where
such securities offerings and listings are explicitly prohibited by the PRC laws and regulations; (ii) where the intended securities
offerings and listings may endanger national security as reviewed and determined by competent authorities under the State Council in
accordance with laws; (iii) where the domestic company intending to make the securities offering and listing, or its controlling
shareholders and the actual controller, have committed crimes such as corruption, bribery, embezzlement, misappropriation of property
or undermining the order of the socialist market economy during the latest three years; (iv) where the domestic company intending
to make the securities offering and listing is suspected of committing crimes or major violations of laws and regulations, and is under
investigation according to law, and no conclusion has yet been made thereof; (v) where there are material ownership disputes over
equity held by the domestic company’s controlling shareholder or by other shareholders that are controlled by the controlling shareholder
and/or actual controller. The Administrative Provisions further stipulate that a fine between RMB1 million (approximately $157,255) and
RMB10 million (approximately $1,572,550) may be imposed if an applicant fails to fulfill the filing requirements with the CSRC or conducts
an overseas offering or listing in violation of the Overseas Listings Rules.
Under the Overseas Listings Rules and the
Guidance Rules and Notice, domestic companies conducting overseas securities offering and listing activities, either in direct or
indirect form, shall complete filing procedures with the CSRC pursuant to the requirements of the Trial Measures within three working
days following their submissions of initial public offerings or listing applications. The companies that have already been listed on
overseas stock exchanges or have obtained the approval from overseas supervision administrations or stock exchanges for their offerings
and listings and will complete their overseas offering and listing prior to September 30, 2023 are not required to make immediate
filings for its listing yet but need to make filings for subsequent offerings in accordance with the Overseas Listings Rules. The companies
that have already submitted an application for an initial public offering to overseas supervision administrations prior to the effective
date of the Overseas Listings Rules but have not yet obtained the approval from overseas supervision administrations or stock exchanges
for the offering and listing may arrange for the filing within a reasonable time period and should complete the filing procedure before
such companies’ overseas issuance and listing.
As of the date of this prospectus, we have
not received any formal inquiry, notice, warning, sanction, or any regulatory objection from the CSRC with respect to our listing or
subsequent offerings. In the opinion of our PRC legal counsel, Beijing Dacheng Law Offices, LLP, the Selling Shareholders’ resale
of the Ordinary Sales as described hereunder does not constitute a “subsequent offering” under the CSRC rules and hence
we are not required to complete the filing procedures with CSRC for the Selling Shareholders’ resale. However, if we decide to
conduct offerings in the future, we will be required to complete filings under the Overseas Listings Rules with the CSRC. As the
Overseas Listings Rules were newly published and there exists uncertainty with respect to the filing requirements and its implementation,
if we are required to submit to the CRSC and complete the filing procedure of our subsequent overseas public offerings, we cannot be
sure that we will be able to complete such filings in a timely manner. Any failure or perceived failure by us to comply with such filing
requirements under the Overseas Listings Rules may result in forced corrections, warnings and fines against us and could materially
hinder our ability to offer or continue to offer our securities.
Notwithstanding the above, our PRC counsel has
further advised us that uncertainties still exist as to whether we or any of our subsidiaries are required to obtain permissions from
the CSRC, or any other governmental agency that is required to approve our operations and/or offering. We have been closely monitoring
the development in the regulatory landscape in the PRC, particularly regarding the requirement of approvals, including on a retrospective
basis, from the CSRC, or other PRC authorities with respect to this offering, as well as other procedures that may be imposed on us.
In the event that we, our subsidiaries, or any of its subsidiaries are subject to the compliance requirements, we cannot assure you that
any of these entities will be able to receive clearance of such compliance requirements in a timely manner, or at all. Any failure of
our Company or any of our subsidiaries to fully comply with new regulatory requirements may subject us to regulatory actions, such as
fines, relevant businesses or operations suspension for rectification, revocation of relevant business permits or operational license,
or other sanctions, which may significantly limit or completely hinder our ability to offer or continue to offer our securities, cause
significant disruption to our business operations, severely damage our reputation, materially and adversely affect our financial condition
and results of operations and cause our securities to significantly decline in value or become worthless.
Recent greater oversight by the CAC over
data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business and our offering.
On
July 7, 2022, the CAC published the Measures for the Security Assessment of Outbound Data Transfer (《数据出境安全评估办法》),
effective on September 1, 2022. The measures apply to the security assessment of important data and personal information collected
and generated during operation within the territory of the People’s Republic of China and transferred abroad by a data handler.
According to the Measures, if a data processor transfers data abroad under any of the following circumstances, it shall file to the State
Cyberspace Administration for security assessment via the Province Cyberspace Administration: (i) a data handler who transfers important
data to abroad; (ii) a critical information infrastructure operator, or a data handler processing the personal information of more
than 1 million individuals transfers personal information to abroad; (iii) since January 1 of the previous year, a data handler
cumulatively transferred abroad the personal information of more than 100,000 individuals, or the sensitive personal information of more
than 10,000 individuals, or; (iv) other circumstances where the security assessment for the outbound data transfer is required by
the State Cyberspace Administration.
On
December 28, 2021, the CAC and other relevant PRC governmental authorities jointly promulgated the Cybersecurity Review Measures
Transfer (《网络安全审查办法》),
which took effect on February 15, 2022. The Cybersecurity Review Measures provide that, in addition to “critical information
infrastructure operators” (CIIOs) that intend to purchase Internet products and services, online platform operators engaging in
data processing activities that affect or may affect national security must be subject to cybersecurity review by the Cybersecurity Review
Office of the PRC. According to the Cybersecurity Review Measures, a cybersecurity review assesses potential national security risks
that may be brought about by any procurement, data processing, or overseas listing. The Cybersecurity Review Measures require that an
online platform operator which possesses the personal information of at least one million users must apply for a cybersecurity review
by the CAC if it intends to be listed in foreign countries.
On
November 14, 2021, the CAC published the Network Internet Data Protection Draft Regulations (draft for comments), (《网络数据安全管理条例（征求意见稿）》),
and accepted public comments until December 13, 2021. The Network Internet Data Protection Draft Regulations provides that data
processors refer to individuals or organizations that autonomously determine the purpose and the manner of processing data. If a data
processor that processes the personal data of more than one million users intends to list overseas, it shall apply for a cybersecurity
review. In addition, data processors that process important data or are listed overseas shall carry out an annual data security assessment
on their own or by engaging a data security services institution, and the data security assessment report for the prior year should be
submitted to the local cyberspace affairs administration department before January 31 of each year.
As advised by our PRC counsel, based on our aforementioned
business operation, we are not a CIIO nor an internet platform operator as mentioned above. However, it remains unclear on how the aforementioned
rule will be interpreted, amended and implemented by the relevant PRC governmental authorities. If the implementation of the Cybersecurity
Review Measures (2021 version), the Measures for the Security Assessment of Outbound Data Transfer, and/or the Network Internet Data
Protection Draft Regulations (draft for comments) mandates clearance of cybersecurity review and other specific actions to be completed
by companies like us, we will face uncertainties as to whether such clearance can be timely obtained, or at all.
As of the date of this prospectus, we do not
expect that the current PRC laws on cybersecurity or data security would have a material adverse impact on the operating entities’
business operations. However, as uncertainties remain regarding the interpretation and implementation of these laws and regulations,
we cannot assure you that the operating entities will comply with such regulations in all respects, and they may be ordered to rectify
or terminate any actions that are deemed illegal by regulatory authorities. The operating entities may also become subject to fines and/or
other sanctions and the costs of compliance with, and other burdens imposed by such laws and regulations may limit the use and adoption
of their services, which may have material adverse effects on our business, operations, and financial condition.
The Opinions on Severely Cracking Down
on Illegal Securities Activities According to Law recently issued by the General Office of the Central Committee of the Communist Party
of China and the General Office of the State Council may subject us to additional compliance requirement in the future.
Recently,
the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued
the Opinions on Severely Cracking Down on Illegal Securities Activities According to Law (《关于依法从严打击证券违法活动的意见》),
or the Opinions, which were made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration
over illegal securities activities and the supervision on overseas listings by China-based companies. These opinions proposed to take
effective measures, such as promoting the construction of relevant regulatory systems, to deal with the risks and incidents facing China-based
overseas-listed companies and the demand for cybersecurity and data privacy protection. The aforementioned policies and any related implementation
rules to be enacted may subject the operating entities to additional compliance requirements in the future that may be onerous.
Official guidance and interpretation of the Opinions remain unclear in several respects at this time. Therefore, we cannot assure you
that the operating entities will remain fully compliant with all new regulatory requirements of the Opinions or any future implementation
rules on a timely basis, or at all.
Labor Contract Law and other labor-related
laws in the PRC may adversely affect our business and our results of operations.
On
December 28, 2012, the PRC government released the revision of the Labor Contract Law of the PRC (《中华人民共和国劳动合同法》),
which became effective on July 1, 2013. Pursuant to the Labor Contract Law of the PRC, employers are subject to stricter requirements
in terms of signing labor contracts, minimum wages, paying remuneration, determining the term of employees’ probation and unilaterally
terminating labor contracts. In the event that the operating entities decide to terminate some of their employees or otherwise change
their employment or labor practices, the Labor Contract Law of the PRC and its implementation rules may limit the operating entities’
ability to effect those changes in a desirable or cost-effective manner, which could adversely affect our business and results of operations.
According to the PRC Social Insurance Law (《中华人民共和国社会保险法》),
employees must participate in pension insurance, work-related injury insurance, medical insurance, unemployment insurance and maternity
insurance and the employers must, together with their employees or separately, pay the social insurance premiums for such employees.
As of the date of this prospectus, the operating
entities comply with labor-related laws and regulations in China in material aspects, including those relating to obligations to make
social insurance payments and contribute to the housing provident fund. From July 2018 to March 2019, the operating entities
had not made adequate contributions to social insurance and other employee benefits for their employees. We have recorded accruals for
the estimated amount of underpayment in our financial statements. Pursuant to the PRC Social Insurance Law, if an employer fails to make
full and timely contributions to social insurance, the relevant enforcement agency shall order the employer to make all outstanding contributions
within five days of such order and impose penalties equal to 0.05% of the total outstanding amount for each additional day such contributions
are overdue. If the employer fails to make all outstanding contributions within five days of such order, the relevant enforcement agency
may impose penalties equal to one to three times the amount overdue. We estimate the amount of outstanding contributions from July 2018
to December 2018 to be approximately $0.1 million, and the amount of outstanding contributions from January 2019 to March 2019
to be approximately $0.09 million. As of the date of this prospectus, the operating entities have not received any employee complaint
or any government audit request, or penalty orders for these outstanding contributions.
Ms. Wenxiu Zhong, our founder, through a
guarantee letter dated April 29, 2020 (the “Guarantee Letter”), promised to unconditionally, irrevocably and personally
bear any and all the economic losses and expenses actually incurred by our Company and the operating entities if the operating entities
are subject to any payment or penalty in relation to the outstanding social insurance contributions from July 2018 to April 2019.
As of the date of this prospectus, the operating
entities have not received any notice from relevant government authorities or any claim or request from their employees in this regard.
However, we cannot assure you that the relevant government authorities will not require the operating entities to pay the outstanding
amount and impose late fees or fines on them. If the operating entities are otherwise subject to investigations related to non-compliance
with labor laws and are imposed severe penalties or incur significant legal fees in connection with labor disputes or investigations,
our business, financial condition and results of operations may be adversely affected.
As the interpretation and implementation of labor-related
laws and regulations are still evolving, we cannot assure you that the operating entities’ employment practices will not violate
PRC labor-related laws and regulations in the future, which may subject them to labor disputes or government investigations. We cannot
assure you that the operating entities will be able to comply with all labor-related law and regulations regarding including those relating
to obligations to make social insurance payments and contribute to the housing provident fund. If the operating entities are deemed to
violate relevant labor laws and regulations, they could be required to provide additional compensation to their employees and our business,
financial condition and results of operations will be adversely affected.
Failure to obtain or maintain any preferential
tax treatments, or the discontinuation, reduction or delay of any preferential tax treatments available to us in China could adversely
affect our results of operations and financial condition.
Under
the Enterprise Income Tax Law (《中华人民共和国企业所得税法》)
(the “EIT Law”), foreign-invested companies, such as wholly foreign-owned enterprises, and domestic companies, such as our
PRC subsidiaries, are subject to a unified income tax rate of 25%. Various favorable income tax rates are, however, available to qualified
enterprises in certain encouraged sectors of the economy.
Pursuant
to the Notice on Preferential EIT Policies for Two Special Economic Development Zones of Kashi and Horgos in Xinjiang Uygur Autonomous
Region (《关于新疆喀什霍尔果斯两个特殊经济开发区企业所得税优惠政策的通知》),
and the Implementation Opinions on Accelerating the Construction of Kashi and Horgos Economic Development Zones (《关于加快喀什、霍尔果斯经济开发区建设的实施意见》)
(together the “Xinjiang EIT Exemption Policies”), an enterprise established in Horgos or Kashi between January 1, 2010
and December 31, 2020 and falling within the scope of the Catalogue of EIT Incentives for Industries Particularly Encouraged for
Development by Poverty Areas of Xinjiang (《新疆困难地区重点鼓励发展产业企业所得税优惠目录》)
are exempted from enterprise income tax, or EIT, for five years beginning from the first year in which the manufacturing or business
operational revenue is earned. After the initial EIT exemption period, the enterprise is entitled to another five-year exemption on the
local portion of its EIT.
Historically, several of our PRC subsidiaries
benefited from preferential tax treatments from the PRC government. Horgos Baosheng enjoyed EIT exemption from 2016 to 2020, Kashi Baosheng
enjoyed EIT exemption from 2018 to 2022, and Baosheng Technology has enjoyed EIT exemption since 2020 and is expected to continue enjoying
the exemption until 2024.
Although several of our PRC subsidiaries had
been or are now eligible for the foregoing preferential tax treatments, these preferential tax treatments are subject to uncertainties
as to their interpretation, administrative implementation, changes and amendments from time to time, or even suspension and termination
by relevant authorities. In particular, we cannot assure you that the Xinjiang EIT Exemption Policies will continue to be applied in
such a way that will entitle Baosheng Technology to continue to enjoy full EIT exemption in accordance with the existing applicable provisions,
or that Baosheng Technology will continue to be able to satisfy the qualifications provided for in the Xinjiang EIT Exemption Policies,
the failure of which may render us no longer entitled to such EIT exemption. In the fiscal year 2020, Horgos Baosheng, Kashi Baosheng
and Baosheng Technology all enjoyed the effective tax rate under the Xinjiang EIT Exemption Policies at 0%. In the fiscal years 2021
and 2022, Kashi Baosheng and Baosheng Technology enjoyed the effective tax rate under the Xinjiang EIT Exemption Policies at 0%, while
Horgos Baosheng enjoyed the standard tax rate at 25%. Had a standard EIT rate of 25% been applied to us in these fiscal years, we would
have reported net profit (loss) of $(23.7) million, $(6.7) million and $4.4 million in the fiscal years 2022, 2021 and 2020, respectively,
representing a reduction of $nil (or 0%), $nil (or 0)%, and $2.7 million (or 38.2)% in our net profit, respectively.
Any changes in tax laws, regulations, rules,
policies, administrative measures or their interpretation or administrative implementation which are applicable to our PRC subsidiaries,
or any change in our EIT exemption or any other preferential tax treatment status our PRC subsidiaries may enjoy, could result in a significant
increase in their tax obligations and tax payments, which in turn will have a material and adverse impact on our financial results and
financial condition.
Under the Enterprise Income Tax Law, we
may be classified as a “Resident Enterprise” of China. Such classification will likely result in unfavorable tax consequences
to us and our non-PRC shareholders.
Under the EIT Law, an enterprise established
outside of China with “de facto management bodies” within China is considered a “resident enterprise”, meaning
that it can be subject to an EIT rate of 25.0% on its global income. In April 2009, the State Administration of Taxation (“SAT”)
promulgated a circular, known as Circular 82, and partially amended by Circular 9 promulgated in January 2014, to clarify the certain
criteria for the determination of the “de facto management bodies” for foreign enterprises controlled by PRC enterprises
or PRC enterprise groups. Under Circular 82, a foreign enterprise is considered a PRC resident enterprise if all of the following apply:
(1) the senior management and core management departments in charge of daily operations are located mainly within China; (2) decisions
relating to the enterprise’s financial and human resource matters are made or subject to approval by organizations or personnel
in China; (3) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholders’
meeting minutes are located or maintained in China; and (4) 50.0% or more of voting board members or senior executives of the enterprise
habitually reside in China. Further to Circular 82, SAT issued a bulletin, known as Bulletin 45, effective in September 2011 and
amended on June 1, 2015 and October 1, 2016 to provide more guidance on the implementation of Circular 82 and clarify the reporting
and filing obligations of such “Chinese controlled offshore incorporated resident enterprises.” Bulletin 45 provides for,
among other matters, procedures for the determination of resident status and administration of post-determination matters. Although Circular
82 and Bulletin 45 explicitly provide that the above standards apply to enterprises that are registered outside China and controlled
by PRC enterprises or PRC enterprise groups, Circular 82 may reflect SAT’s criteria for determining the tax residence of foreign
enterprises in general.
If the PRC tax authorities determine that we
are a “resident enterprise” for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow.
First, we may be subject to the enterprise income tax at a rate of 25% on our worldwide taxable income as well as PRC enterprise income
tax reporting obligations. In our case, this would mean that income such as non-China source income would be subject to PRC enterprise
income tax at a rate of 25%. Currently, we do not have any non-China source income, as we conduct our operations in China through the
operating entities. Second, under the EIT Law and its implementing rules, dividends paid to us from our PRC subsidiaries would be deemed
as “qualified investment income between resident enterprises” and therefore qualify as “tax-exempt income” pursuant
to the clause 26 of the EIT Law. Finally, it is possible that future guidance issued with respect to the new “resident enterprise”
classification could result in a situation in which the dividends we pay with respect to our Ordinary Shares, or the gain our non-PRC
shareholders may realize from the transfer of our Ordinary Shares, may be treated as PRC-sourced income and may therefore be subject
to a 10% PRC withholding tax. The EIT Law and its implementing regulations are, however, relatively new and ambiguities exist with respect
to the interpretation and identification of PRC-sourced income, and the application and assessment of withholding taxes. If we are required
under the EIT Law and its implementing regulations to withhold PRC income tax on dividends payable to our non-PRC shareholders, or if
non-PRC shareholders are required to pay PRC income tax on gains on the transfer of their Ordinary Shares, our business could be negatively
impacted and the value of your investment may be materially reduced. Further, if we were treated as a “resident enterprise”
by PRC tax authorities, we would be subject to taxation in both China and such countries in which we have taxable income, and our PRC
tax may not be creditable against such other taxes.
PRC
regulation of loans to PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent
us from using proceeds from our future financing activities to make loans to our PRC subsidiaries, which might adversely affect our liquidity
and our ability to fund and expand our business.
Any foreign loan provided by us to our PRC operating
subsidiaries is required to be registered or filed with the State Administration of Foreign Exchange, or SAFE, or the authorized local
banks, and our PRC subsidiaries may not procure foreign loans which exceed the difference between its total investment amount and registered
capital (the “Current Foreign Debt Mechanism”) or, as an alternative, only procure loans subject to the calculation approach
and limitations as provided in the People’s Bank of China (“PBOC”) Circular on Matters concerning the Macro-Prudential
Management of Full-Covered Cross-Border Financing (银发〔2017〕9号《中国人民银行关于全口径跨境融资宏观审慎管理有关事宜的通知》),
or “PBOC Notice No. 9” (the “PBOC Notice No. 9 Mechanism”), which shall not exceed 200% of the net
asset of the relevant PRC subsidiary. According to PBOC Notice No. 9, after a transition period of one year since its promulgation,
PBOC and SAFE will determine the cross-border financing administration mechanism for the foreign-invested enterprises after evaluating
the overall implementation of PBOC Notice No. 9. On March 11, 2020, Notice of PBOC and SAFE on the Adjustment of Macro-Prudential
Adjustment Parameters for Full-Covered Cross-border Financing was issued, according to which, the Macro-Prudential Adjustment Parameters
provided in the PBOC Notice No. 9 was adjusted from 1 to 1.25. On January 7, 2021, Notice of People’s Bank of China and
State Administration of Foreign Exchange on the Adjustment of Macro-Prudential Adjustment Parameters for Cross-border Financing of Enterprises
(《中国人民银行、国家外汇管理局关于调整企业跨境融资宏观审慎调节参数的通知》)
was issued, according to which, the Macro-Prudential Adjustment Parameters provided in the PBOC Notice No. 9 was adjusted from 1.25
to 1. On October 25, 2022, the PBOC and SAFE further adjusted the Macro-Prudential Adjustment Parameters from 1 to 1.25. As of the
date hereof, neither PBOC nor SAFE has promulgated and made public any further rules, regulations, notices, or circulars in this regard.
It is uncertain which mechanism will be adopted by PBOC and SAFE in the future and what statutory limits will be imposed on us when providing
loans to our PRC operating subsidiaries. Currently, our PRC subsidiaries have the flexibility to choose between the Current Foreign Debt
Mechanism and the PBOC Notice No. 9 Mechanism. However, if a more stringent foreign debt mechanism becomes mandatory, our ability
to provide loans to our PRC subsidiaries may be significantly limited, which may adversely affect our business, financial condition,
and results of operations.
If we seek to provide any loans to our PRC subsidiaries
in the future, we may not be able to obtain the required government approvals or complete the required registrations on a timely basis,
if at all. If we fail to receive such approvals or complete such registrations, our ability to capitalize our PRC operations may be negatively
affected, which could adversely affect our liquidity and our ability to fund and expand our business.
To the extent cash in the business is
in the PRC/Hong Kong or a PRC/Hong Kong entity, the funds may not be available to fund operations or for other use outside of the PRC/Hong
Kong due to interventions in or the imposition of restrictions and limitations on the ability of our Company or our subsidiaries by the
PRC government to transfer cash.
Relevant mainland PRC laws and regulations
permit the companies in mainland China to pay dividends only out of their respective retained earnings, if any, as determined in accordance
with mainland China accounting standards and regulations. Additionally, each of the companies in mainland China are required to set aside
at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered
capital. The companies in mainland China are also required to further set aside a portion of their after-tax profits to fund the
employee welfare fund, although the amount to be set aside, if any, is determined at their discretion. These reserves are not distributable
as cash dividends. Furthermore, in order for us to pay dividends to our shareholders, we may rely on payments made from our mainland
PRC subsidiaries to their respective shareholders and then to our Company. If our these entities incur debt on their own behalf in the
future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us.
Our cash dividends, if any, will be paid in
U.S. dollars. If we are considered a tax resident enterprise of mainland China for tax purposes, any dividends we pay to our overseas
shareholders may be regarded as mainland China-sourced income and as a result may be subject to mainland PRC withholding tax. See
“Risk Factors — Risks Related to Doing Business in China — Under the Enterprise Income Tax Law, we may
be classified as a ‘Resident Enterprise’ of China. Such classification will likely result in unfavorable tax consequences
to us and our non-PRC shareholders.” The PRC government also imposes controls on the convertibility of Renminbi into foreign currencies
and, in certain cases, the remittance of currency out of mainland China. Shortages in foreign currencies may restrict our ability to
pay dividends or other payments, or otherwise satisfy our foreign currency denominated obligations, if any. Under existing PRC foreign
exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade-related transactions,
can be made in foreign currencies without prior approval from the State Administration of Foreign Exchange as long as certain procedural
requirements are met. Approval from appropriate government authorities is required if Renminbi is converted into foreign currency and
remitted out of mainland China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government
may, at its discretion, impose restrictions on access to foreign currencies for current account transactions and if this occurs in the
future, we may not be able to pay dividends in foreign currencies to our shareholders.
As of the date of this prospectus, there are
no restrictions or limitations imposed by the Hong Kong government on the transfer of capital within, into, and out of Hong Kong
(including funds from Hong Kong to mainland China), except for the transfer of funds involving money laundering and criminal activities.
However, there is no guarantee that the Hong Kong government will not promulgate new laws or regulations that may impose such restrictions
in the future. If there is a significant change to current political arrangements between mainland China and Hong Kong, or the applicable
laws, regulations, or interpretations change, our Hong Kong subsidiary may become subject to PRC laws or authorities. As a result,
our Hong Kong subsidiary could be subject to similar government controls on the convertibility of foreign currency and the remittance
of currency out of Hong Kong as described above.
As a result of the above, to the extent cash
in the business is in the PRC/Hong Kong or a PRC/Hong Kong entity, such funds or assets may not be available to fund operations
or for other use outside of the PRC/Hong Kong, due to interventions in or the imposition of restrictions and limitations on the
ability of us or our subsidiaries by the competent government to the transfer of cash.
We may rely on dividends paid by our subsidiaries
for our cash needs, and any limitation on the ability of our subsidiaries to make payments to us could have a material adverse effect
on our ability to conduct business.
As a holding company, we conduct substantially
all of our business through the operating entities incorporated in China, and this structure involves unique risks to investors. We may
rely on dividends paid by our PRC subsidiaries for our cash needs, including the funds necessary to pay any dividends and other cash
distributions to our shareholders, to service any debt we may incur and to pay our operating expenses.
According to the Foreign Investment Law of the
PRC and its implementing rules, which jointly established the legal framework for the administration of foreign-invested companies, a
foreign investor may, in accordance with other applicable laws, freely transfer into or out of China its contributions, profits, capital
earnings, income from asset disposal, intellectual property rights, royalties acquired, compensation or indemnity legally obtained, and
income from liquidation, made or derived within the territory of China in RMB or any foreign currency, and any entity or individual shall
not illegally restrict such transfer in terms of the currency, amount and frequency. According to the Company Law of the PRC and other
Chinese laws and regulations, our PRC subsidiaries may pay dividends only out of their respective accumulated profits as determined in
accordance with Chinese accounting standards and regulations. In addition, each of our PRC subsidiaries is required to set aside at least
10% of its accumulated after-tax profits, if any, each year to fund a certain statutory reserve fund, until the aggregate amount of such
fund reaches 50% of its registered capital. Where the statutory reserve fund is insufficient to cover any loss the PRC subsidiary incurred
in the previous financial year, its current financial year’s accumulated after-tax profits shall first be used to cover the loss
before any statutory reserve fund is drawn therefrom. Such statutory reserve funds and the accumulated after-tax profits that are used
for covering the loss cannot be distributed to us as dividends. At their discretion, our PRC subsidiaries may allocate a portion of their
after-tax profits based on Chinese accounting standards to a discretionary reserve fund.
Renminbi is not freely convertible into other
currencies. As result, any restriction on currency exchange may limit the ability of our PRC subsidiaries to use any future Renminbi
revenues to pay dividends to us. The Chinese government imposes controls on the convertibility of Renminbi into foreign currencies and,
in certain cases, the remittance of currency out of China. Shortages in availability of foreign currency may then restrict the ability
of our PRC subsidiaries to remit sufficient foreign currency to our offshore entities for our offshore entities to pay dividends or make
other payments or otherwise to satisfy our foreign-currency-denominated obligations. The Renminbi is currently convertible under the
“current account transactions,” which includes dividends, trade and service-related foreign exchange transactions, but not
under the “capital account,” which includes foreign direct investment and foreign currency debt, including loans we may secure
for our onshore subsidiaries. Currently, our PRC subsidiaries may purchase foreign currency for settlement of “current account
transactions,” including payment of dividends to us, without the approval of SAFE by complying with certain procedural requirements.
However, the relevant Chinese governmental authorities may limit or eliminate our ability to purchase foreign currencies in the future
for current account transactions. 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 China or pay dividends in foreign currencies to holders of our Ordinary
Shares. Foreign exchange transactions under the capital account remain subject to limitations and require approvals from, or registration
with, SAFE and other relevant Chinese governmental authorities. This could affect our ability to obtain foreign currency through debt
or equity financing for our subsidiaries.
In response to the persistent capital outflow
in China and Renminbi’s depreciation against the U.S. dollar in the fourth quarter of 2016, PBOC and SAFE have promulgated a series
of capital controls in early 2017, including stricter vetting procedures for domestic companies to remit foreign currency for overseas
investments, dividends payments and shareholder loan repayments.
The Chinese government may continue to strengthen
its capital controls, and more restrictions and substantial vetting processes may be put forward by SAFE for cross-border transactions
falling under both the current account and the capital account. Any limitation on the ability of our PRC subsidiaries to pay dividends
or make other kinds of payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that
could be beneficial to our business, pay dividends or otherwise fund and conduct our business.
Failure to comply with PRC regulations
relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident Shareholders to personal
liability, may limit our ability to acquire PRC companies or to inject capital into our PRC subsidiaries, may limit the ability of our
PRC subsidiaries to distribute profits to us or may otherwise materially and adversely affect us.
Pursuant
to the Circular on relevant issues concerning Foreign Exchange Administration of Overseas Investment and Financing and Return Investments
Conducted by Domestic Residents through Overseas Special Purpose Vehicle (《关于境内居民通过特殊目的公司境外投融资及返程投资外汇管理有关问题的通知》)
(“Circular 37”), which was promulgated by SAFE, and became effective on July 4, 2014, (1) a PRC resident must register
with the local SAFE branch before he or she contributes assets or equity interests in an overseas special purpose vehicle, or an Overseas
SPV, that is directly established or indirectly controlled by the PRC resident for the purpose of conducting investment or financing;
and (2) following the initial registration, the PRC resident is also required to register with the local SAFE branch for any major
change, in respect of the Overseas SPV, including, among other things, a change in the Overseas SPV’s PRC resident shareholder,
name of the Overseas SPV, term of operation, or any increase or reduction of the contributions by the PRC resident, share transfer or
swap, and merger or division. Additionally, pursuant to the Circular of SAFE on Further Simplifying and Improving the Direct Investment-related
Foreign Exchange Administration Policies (《关于进一步简化和改进直接投资外汇管理政策的通知》)
(“Circular 13”), which was promulgated on February 13, 2015 and became effective on June 1, 2015, the aforesaid
registration shall be directly reviewed and handled by qualified banks in accordance with the Circular 13, and SAFE and its branches
shall perform indirect regulation over the foreign exchange registration via qualified banks.
Ms. Wenxiu Zhong, Mr. Sheng Gong and
Mr. Hui Yu completed the initial foreign exchange registration on January 9, 2019. As it remains unclear how Circular 37 and
Circular 13 will be interpreted and implemented, and how or whether SAFE will apply them to us. Therefore, we cannot predict how they
will affect our business operations or future strategies. For example, the ability of our present and prospective PRC subsidiaries to
conduct foreign exchange activities, such as the remittance of dividends and foreign currency-denominated borrowings, may be subject
to compliance with Circular 37 and Circular 13 by our PRC resident beneficial holders. In addition, as we have little control over either
our present or prospective, direct or indirect shareholders or the outcome of such registration procedures, we cannot assure you that
these shareholders who are PRC residents will amend or update their registration as required under Circular 37 and Circular 13 in a timely
manner or at all. Failure of our present or future shareholders who are PRC residents to comply with Circular 37 and Circular 13 could
subject these shareholders to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit the ability
of our PRC subsidiaries to make distributions or pay dividends or affect our ownership structure, which could adversely affect our business
and prospects.
You may be subject to PRC income tax on
dividends from us or on any gain realized on the transfer of our Ordinary Shares.
Under
the EIT Law and its implementation rules, subject to any applicable tax treaty or similar arrangement between the PRC and your jurisdiction
of residence that provides for a different income tax arrangement, PRC withholding tax at the rate of 10.0% is normally applicable to
dividends from PRC sources payable to investors that are non-PRC resident enterprises, which do not have an establishment or place of
business in China, or which have such establishment or place of business if the relevant income is not effectively connected with the
establishment or place of business. Any gain realized on the transfer of shares by such investors is subject to 10.0% PRC income tax
if such gain is regarded as income derived from sources within China unless a treaty or similar arrangement otherwise provides. Under
the Individual Income Tax Law of the PRC (《中华人民共和国个人所得税法》)
and its implementation rules, dividends from sources within China paid to foreign individual investors who are not PRC residents are
generally subject to a PRC withholding tax at a rate of 20% and gains from PRC sources realized by such investors on the transfer of
shares are generally subject to 20% PRC income tax, in each case, subject to any reduction or exemption set forth in applicable tax treaties
and PRC laws.
There is a risk that we will be treated by the
PRC tax authorities as a PRC tax resident enterprise. In that case, any dividends we pay to our shareholders may be regarded as income
derived from sources within China and we may be required to withhold a 10.0% PRC withholding tax for the dividends we pay to our investors
who are non-PRC corporate shareholders, or a 20.0% withholding tax for the dividends we pay to our investors who are non-PRC individual
shareholders, including the holders of our Ordinary Shares. In addition, our non-PRC shareholders may be subject to PRC tax on gains
realized on the sale or other disposition of our Ordinary Shares, if such income is treated as sourced from within China. It is unclear
whether our non-PRC shareholders would be able to claim the benefits of any tax treaties between their tax residence and China in the
event that we are considered as a PRC resident enterprise. If PRC income tax is imposed on gains realized through the transfer of our
Ordinary Shares or on dividends paid to our non-resident investors, the value of your investment in our Ordinary Shares may be materially
and adversely affected. Furthermore, our shareholders whose jurisdictions of residence have tax treaties or arrangements with China may
not qualify for benefits under such tax treaties or arrangements.
We may be unable to complete a business
combination transaction efficiently or on favorable terms due to complicated merger and acquisition regulations and certain other PRC
regulations.
On
August 8, 2006, six PRC regulatory authorities, including the Ministry of Commerce of the PRC (“MOFCOM”), the State
Assets Supervision and Administration Commission, SAT, the Administration for Industry and Commerce (“SAIC”), the China Securities
Regulatory Commission (“CSRC”) and SAFE, jointly issued the Regulations on Mergers and Acquisitions of Domestic Enterprises
by Foreign Investors (《关于外国投资者并购境内企业的规定》)
(the “M&A Rules”), which became effective on September 8, 2006 and was amended in June 2009. The M&A Rules,
governing the approval process by which a PRC company may participate in an acquisition of assets or equity interests by foreign investors,
require the PRC parties to make a series of applications and supplemental applications to the government agencies, depending on the structure
of the transaction. The M&A Rules also prohibit a transaction at an acquisition price obviously lower than the appraised value
of the business or assets in China and in certain transaction structures, require that consideration must be paid within defined periods,
generally not in excess of a year. In addition, the M&A Rules also limit our ability to negotiate various terms of the acquisition,
including aspects of the initial consideration, contingent consideration, holdback provisions, indemnification provisions and provisions
relating to the assumption and allocation of assets and liabilities.
Following the promulgation of the Foreign Investment
Law, the Measures on Reporting of Foreign Investment Information (effective from January 1, 2020) and other relevant regulations
recently in China, certain provisions of the M&A Rules, which are in conflict with the new foreign investment rules, are no longer
enforceable. For example, mergers and acquisitions by foreign investor of a PRC entity which is not an affiliate to the foreign investor
and does not engage in any business on the special administrative measures for access of foreign investment (the “Negative List”)
for foreign investment, will not be subject to the approval process as prescribed by the M&A Rules. However, given the M&A Rules are
not officially abolished and due to lack of official interpretation and guidance, the M&A Rules might still be enforceable against
the transaction parties in terms of price evaluation, payment terms, and certain other aspects that the new foreign investment rules are
silent on. Therefore, the M&A Rules may impede our ability to negotiate and complete a business combination transaction on legal
and/or financial terms that satisfy our investors and protect our shareholders’ economic interests.
We face uncertainties with respect to indirect
transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.
SAT released a circular on December 15,
2009 that addresses the transfer of shares by nonresident companies, generally referred to as Circular 698. Circular 698, which became
effective retroactively to January 1, 2008, may have a significant impact on many companies that use offshore holding companies
to invest in China. Circular 698 has the effect of taxing foreign companies on gains derived from the indirect sale of a PRC company.
Where a foreign investor indirectly transfers equity interests in a PRC resident enterprise by selling the shares in an offshore holding
company, and the latter is located in a country or jurisdiction that has an effective tax rate less than 12.5% or does not tax foreign
income of its residents, the foreign investor must report this indirect transfer to the tax authority in charge of that PRC resident
enterprise. Using a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding
company if it lacks a reasonable commercial purpose and was established for the purpose of avoiding PRC tax. As a result, gains derived
from such indirect transfer may be subject to PRC withholding tax at a rate of up to 10.0%.
SAT
subsequently released public notices to clarify issues relating to Circular 698, including the Announcement on Several Issues concerning
the EIT on the Indirect Transfers of Properties by Nonresident Enterprises (《关于非居民企业间接转让财产企业所得税若干问题的公告》)
(the “SAT Notice 7”), which became effective on February 3, 2015. SAT Notice 7 abolished the compulsive reporting obligations
originally set out in Circular 698. Under SAT Notice 7, if a non-resident enterprise transfers its shares in an overseas holding company,
which directly or indirectly owns PRC taxable properties, including shares in a PRC company, via an arrangement without reasonable commercial
purpose, such transfer shall be deemed as indirect transfer of the underlying PRC taxable properties. Accordingly, the transferee shall
be deemed as a withholding agent with the obligation to withhold and remit the EIT to the competent PRC tax authorities. Factors that
may be taken into consideration when determining whether there is a “reasonable commercial purpose” include, among other
factors, the economic essence of the transferred shares, the economic essence of the assets held by the overseas holding company, the
taxability of the transaction in offshore jurisdictions, and economic essence and duration of the offshore structure. SAT Notice 7 also
sets out safe harbors for the “reasonable commercial purpose” test.
On
October 17, 2017, SAT released the Notice on Several Issues concerning the Withholding and Collection of Income Tax of Non-resident
Enterprises from the Source (《关于非居民企业所得税源泉扣缴有关问题的公告》)
(“SAT Notice 37”). SAT Notice 37 clarifies: (1) matters concerning the withholding and collection of corporate income
tax, and property transfer of non-resident enterprises based on the EIT Law; (2) the currencies required to be used by the withholding
agents (when the payments is made in a currency rather than RMB), as well as the time, venue and business for the performance of the
withholding and collection obligations; and (3) the abolishment of Circular 698.
There is little guidance and practical experience
regarding the application of SAT Notice 7 and SAT Notice 37 and the related SAT notices. Moreover, the relevant authority has not yet
promulgated any formal provisions or formally declared or stated how to calculate the effective tax rates in foreign tax jurisdictions.
As a result, due to our complex offshore restructuring, we may become at risk of being taxed under SAT Notice 7 and SAT Notice 37 and
we may be required to expend valuable resources to comply with SAT Notice 7 and SAT Notice 37 or to establish that we should not be taxed
under SAT Notice 7 and SAT Notice 37, which could have a material adverse effect on our financial condition and results of operations.
You may have difficulty effecting service
of legal process, enforcing judgments or bringing actions against us and our management.
We are an exempted Cayman Islands holding company.
In addition, substantially all of our assets and substantially all of the assets of our directors and executive officers are located
in the PRC. As a result, investors may not be able to effect service of process upon us or our directors and executive officers.
Further, China has not entered into treaties
or arrangements providing for the recognition and enforcement of judgments made by courts of most other jurisdictions. Any final judgment
obtained against us in any court other than the courts of the PRC in connection with any legal suit or proceeding arising out of or relating
to our Ordinary Shares will be enforced by the courts of the PRC without further review of the merits only if the court of the PRC in
which enforcement is sought is satisfied that:
| · | the
court rendering the judgment has jurisdiction over the subject matter according to the laws
of the PRC; |
| · | the
judgment and the court procedure resulting in the judgment are not contrary to the public
order or good morals of the PRC; |
| · | if
the judgment was rendered by default by the court rendering the judgment, we, or the above-mentioned
persons, were duly served within a reasonable period of time in accordance with the laws
and regulations of the jurisdiction of the court or process was served on us with judicial
assistance of the PRC; and |
| · | judgments
at the courts of the PRC are recognized and enforceable in the court rendering the judgment
on a reciprocal basis. |
If you fail to establish the foregoing to the
satisfaction of the courts in the PRC, you may not be able to enforce a judgment against us rendered by a court in the United States.
Further, pursuant to the Civil Procedures Law
of the PRC, any matter, including matters arising under U.S. federal securities laws, in relation to assets or personal relationships
may be brought as an original action in China, only if the institution of such action satisfies the conditions specified in the Civil
Procedures Law of the PRC. As a result of the conditions set forth in the Civil Procedures Law and the discretion of the PRC courts to
determine whether the conditions are satisfied and whether to accept action for adjudication, there remains uncertainty as to whether
an investor will be able to bring an original action in a PRC court based on U.S. federal securities laws.
U.S. regulatory bodies may be limited in
their ability to conduct investigations or inspections of our operations in China.
We are incorporated in the Cayman Islands and
conduct our operations in China through the operating entities. Substantially all of our assets are located outside of the United States.
In addition, all of our directors and officers reside in China, including our chief executive officer and chairperson of the board, Shasha
Mi, our chief financial officer, Yue Jin, and our directors, Sheng Gong, Kun Zhang, Guangyao Zhu, and Changhong Jiang. As a result, it
may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that
you believe we have violated your rights, either under United States federal or state securities laws or otherwise, or if you have a
claim against us. Even if you are successful in bringing an action of this kind, the laws of the Cayman Island and of China may render
you unable to enforce a judgment against our assets or the assets of our directors and officers.
The SEC, the U.S. Department of Justice and other
U.S. authorities may also have difficulties in bringing and enforcing actions against us or our directors or executive officers in the
PRC. The SEC has stated that there are significant legal and other obstacles to obtaining information needed for investigations or litigation
in China. China has adopted a revised securities law that became effective on March 1, 2020, Article 177 of which provides,
among other things, that no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities
within the territory of the PRC. Accordingly, without governmental approval in China, no entity or individual in China may provide documents
and information relating to securities business activities to overseas regulators when it is under direct investigation or evidence discovery
conducted by overseas regulators, which could present significant legal and other obstacles to obtaining information needed for investigations
and litigation conducted in China.
The recent joint statement by the SEC and
the PCAOB, rule changes by Nasdaq, and the Holding Foreign Companies Accountable Act and related regulations, all call for additional
and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially
the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our continued listing or future
offerings of our securities in the U.S.
On April 21, 2020, SEC Chairman Jay Clayton
and PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a joint statement highlighting the risks associated
with investing in companies based in or have substantial operations in emerging markets including China. The joint statement emphasized
the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers in China and higher risks of fraud in
emerging markets.
On May 18, 2020, Nasdaq filed three proposals
with the SEC to (i) apply a minimum offering size requirement for companies primarily operating in a “Restrictive Market,”
(ii) adopt a new requirement relating to the qualification of management or the board of directors for Restrictive Market companies,
and (iii) apply additional and more stringent criteria to an applicant or listed company based on the qualifications of the company’s
auditor. On October 4, 2021, the SEC approved Nasdaq’s revised proposal for the rule changes.
On May 20, 2020, the U.S. Senate passed
the Holding Foreign Companies Accountable Act requiring a foreign company to certify it is not owned or controlled by a foreign government
if the PCAOB is unable to audit specified reports because the company uses a foreign auditor not subject to PCAOB inspection. If the
PCAOB is unable to inspect the company’s auditors for three consecutive years, the issuer’s securities are prohibited to
trade on a national exchange. On December 2, 2020, the U.S. House of Representatives approved the Holding Foreign Companies Accountable
Act. On December 18, 2020, the Holding Foreign Companies Accountable Act was signed into law.
On March 24, 2021, the SEC adopted interim
final rules relating to the implementation of certain disclosure and documentation requirements of the Holding Foreign Companies
Accountable Act.
On September 22, 2021, the PCAOB adopted
a final rule implementing the Holding Foreign Companies Accountable Act, which provides a framework for the PCAOB to use when determining,
as contemplated under the Holding Foreign Companies Accountable Act, whether the board of directors of a company is unable to inspect
or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or
more authorities in that jurisdiction.
On December 2, 2021, the SEC adopted amendments
to finalize rules implementing the submission and disclosure requirements in the Holding Foreign Companies Accountable Act.
On December 16, 2021, the PCAOB issued a
Determination Report on December 16, 2021 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. In addition, the PCAOB’s report identified the specific registered public
accounting firms which are subject to these determinations.
On August 26, 2022, the China Securities
Regulatory Commission (the “CSRC”), the Ministry of Finance of the PRC (the “MOF”), and the PCAOB signed a Statement
of Protocol (the “Protocol”) governing inspections and investigations of audit firms based in mainland China and Hong Kong,
taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered
in mainland China and Hong Kong. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent
discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the
SEC.
On December 15, 2022, the PCAOB determined
that it was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China
and Hong Kong and vacated its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to
facilitate the PCAOB’s access in the future, the PCAOB may consider the need to issue a new determination.
On June 22, 2021, the U.S. Senate passed
the Accelerating Holding Foreign Companies Accountable Act, and on December 29, 2022, the Consolidated Appropriations Act 2023 was
signed into law, which contained, among other things, an identical provision to the Accelerating Holding Foreign Companies Accountable
Act, which reduces the number of consecutive non-inspection years required for triggering the prohibitions under the Holding Foreign
Companies Accountable Act from three years to two years.
Our auditor, YCM CPA INC., the independent registered
public accounting firm that issues the audit report included elsewhere in this prospectus, as an auditor of companies that are traded
publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB
conducts regular inspections to assess its compliance with the applicable professional standards and was not identified in the Determination
Report as a firm subject to the PCAOB’s determination. YCM CPA INC. is headquartered in Irvine, California, and has been inspected
by the PCAOB on a regular basis.
However, we cannot assure you whether the national
securities exchange we are listed on 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 our audit. In addition, our Ordinary Shares may be delisted in the future
if the PCAOB is unable to inspect our accounting firm within two years.
We may be exposed to liabilities under
the Foreign Corrupt Practices Act and Chinese anti-corruption law.
We are subject to the U.S. Foreign Corrupt Practices
Act (the “FCPA”), and other laws that prohibit improper payments or offers of payments to foreign governments and their officials
and political parties by U.S. persons and issuers as defined by the statute for the purpose of obtaining or retaining business. We are
also subject to Chinese anti-corruption laws, which strictly prohibit the payment of bribes to government officials. Through the operating
entities, we have operations, agreements with third parties, and provide services in China, which may experience corruption. Our activities
in China create the risk of unauthorized payments or offers of payments by one of the employees, consultants or distributors of our Company,
because these parties are not always subject to our control.
Although we believe to date we have complied
in all material respects with the provisions of the FCPA and Chinese anti-corruption law, our existing safeguards and any future improvements
may prove to be less than effective, and the employees, consultants or distributors of our Company may engage in conduct for which we
might be held responsible. Violations of the FCPA or Chinese anti-corruption law may result in severe criminal or civil sanctions, and
we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition. In addition,
the government may seek to hold our Company liable for successor liability FCPA violations committed by companies in which we invest
or that we acquire.
Because our business is conducted in RMB
and the price of our Ordinary Shares is quoted in the U.S. dollar, changes in the exchange rate between RMB and the U.S. dollar may affect
the value of your investments.
Our business is conducted in the PRC through
the operating entities with books and records maintained in RMB. However, the financial statements that we file with the SEC and provide
to our shareholders are presented in the U.S. dollar. Changes in the exchange rate between RMB and the U.S. dollar affect the value of
our assets and the results of our operations in the U.S. dollar. The exchange rate between RMB and the U.S. dollar is affected by, among
other things, changes in the PRC’s political and economic conditions and perceived changes in the economy of the PRC and the United
States. Any significant revaluation of the RMB may materially and adversely affect our cash flows, revenue and financial condition.
OFFER STATISTICS AND EXPECTED
TIMETABLE
We may from time to time, offer and sell any
combination of the securities described in this prospectus (as may be detailed in a prospectus supplement) up to a total dollar amount
of US$100,000,000 in one or more offerings. The Selling Shareholders may, from time to time, offer and sell any or all of their Ordinary
Shares in one or more offerings. The Ordinary Shares offered under this prospectus may be offered in amounts, at prices, and on terms
to be determined at the time of sale. See “Plan of Distribution.” We will keep the registration statement of which this prospectus
is a part effective until such time as all of the securities covered by this prospectus have been disposed of pursuant to and in accordance
with such registration statement.
CAPITALIZATION AND INDEBTEDNESS
Our capitalization will be set forth in the applicable
prospectus supplement or in a report on Form 6-K subsequently furnished to the SEC and specifically incorporated by reference into
this prospectus.
DILUTION
Because the Selling Shareholders who offer and
sell Ordinary Shares covered by this prospectus may do so at various times, at prices and at terms then prevailing or at prices related
to the then current market price, or in negotiated transactions, we have not included in this prospectus information about the dilution
(if any) to the public arising from these sales.
If required, we will set forth in a prospectus
supplement the following information regarding any material dilution of the equity interests of investors purchasing securities in an
offering under this prospectus:
| |
¨ |
the
net tangible book value per share of our equity securities before and after the offering; |
| |
|
|
| |
¨ |
the
amount of the increase in such net tangible book value per share attributable to the cash payments made by purchasers in the offering;
and |
| |
|
|
| |
¨ |
the
amount of the immediate dilution from the public offering price which will be absorbed by such purchasers. |
USE
OF PROCEEDS
We will retain broad discretion over the use
of the net proceeds from the sale of the securities we offer hereby. Unless otherwise specified in any prospectus supplement, we currently
intend to use the net proceeds from the sale of securities offered by us under this prospectus for general corporate purposes, which
may include capital expenditures, working capital, and other business opportunities.
We will not receive any proceeds from the sale
of any of Ordinary Shares by the Selling Shareholders. The Selling Shareholders will pay any brokerage commissions and/or similar charges
incurred in connection with the sale of the Ordinary Shares covered hereby.
We will bear all other costs, fees and expenses
incurred in effecting the registration of the securities covered by this prospectus.
DESCRIPTION OF SHARE CAPITAL
The following description of our share capital
and provisions of our amended and restated memorandum and articles of association are summaries and do not purport to be complete. References
are made to our amended and restated memorandum and articles of association, which are filed as an exhibit to the registration statement
of which this prospectus is a part.
We are an exempted company with limited liability
incorporated under the laws of the Cayman Islands and our affairs are governed by our Amended and Restated Memorandum and Articles of
Association, as amended and restated from time to time, and Companies Act (As Revised) of the Cayman Islands, which we refer to as the
Companies Act or the Cayman Companies Act below, and the common law of the Cayman Islands. Our shareholders adopted our Amended and Restated
Memorandum and Articles of Association by a special resolution on July 20, 2020 and effective on February 10, 2021.
The following are summaries of material provisions
of our Amended and Restated Memorandum and Articles of Association and the Companies Act insofar as they relate to the material terms
of our Ordinary Shares.
Ordinary Shares
Our authorized share capital is US$60,000 divided
into 6,250,000 Ordinary Shares, par value $0.0096 per share. All of our issued and outstanding Ordinary Shares are fully paid and non-assessable. Certificates
representing the Ordinary Shares are issued in registered form. Our shareholders who are non-residents of the Cayman Islands may freely
hold and vote their Ordinary Shares.
Dividends
Subject to the provisions of the Cayman Companies
Act and any rights attaching to any class or classes of shares under and in accordance with the articles:
| (a) | the directors may declare dividends or distributions
out of our funds which are lawfully available for that purpose; and |
| (b) | the Company’s shareholders may, by
ordinary resolution, declare dividends but no such dividend shall exceed the amount recommended
by the directors. |
Subject to the requirements of the Cayman Companies
Act regarding the application of a company’s share premium account and with the sanction of an ordinary resolution, dividends may
also be declared and paid out of the funds of our Company lawfully available therefor. The directors when paying dividends to shareholders
may make such payment either in cash or in specie.
Unless provided by the rights attached to a share,
no dividend shall bear interest.
Voting Rights
Subject to any rights or restrictions as to voting
attached to any shares, unless any share carries special voting rights, on a show of hands every shareholder who is present in person
and every person representing a shareholder by proxy shall have one vote per Ordinary Share. On a poll, every shareholder who is present
in person and every person representing a shareholder by proxy shall have one vote for each share of which he or the person represented
by proxy is the holder. In addition, all shareholders holding shares of a particular class are entitled to vote at a meeting of the holders
of that class of shares. Votes may be given either personally or by proxy.
Variation of Rights of Shares
Whenever our capital is divided into different
classes of shares, the rights attaching to any class of share (unless otherwise provided by the terms of issue of the shares of that
class) may be varied with the consent in writing of all of the holders of the issued shares of that class or with the sanction of a special
resolution passed at a separate meeting of the holders of the shares of that class. The necessary quorum shall be one or more persons
holding or representing by proxy at least one-third in nominal or par value amount of the issued shares of the relevant class (but so
that if at any adjourned meeting of such holders a quorum as above defined is not present, those shareholders who are present shall form
a quorum).
Unless the terms on which a class of shares was
issued state otherwise, the rights conferred on the shareholder holding shares of any class shall not be deemed to be varied by the creation
or issue of further shares ranking pari passu with the existing shares of that class or subsequent to them or the redemption or
purchase of any shares of any class by our company. The rights conferred upon the holders of the shares of any class issued shall not
be deemed to be varied by the creation or issue of shares with preferred or other rights including, without limitation, the creation
of shares with enhanced or weighted voting rights.
Alteration of Share Capital
Subject to the Cayman Companies Act, our shareholders
may, by ordinary resolution:
| (a) | increase our share capital by new shares
of the amount fixed by that ordinary resolution and with the attached rights, priorities
and privileges set out in that ordinary resolution; |
| (b) | consolidate and divide all or any of
our share capital into shares of larger amount than our existing shares; |
| (c) | convert all or any of our paid-up shares
into stock, and reconvert that stock into paid up shares of any denomination; |
| (d) | sub-divide our shares or any of them
into shares of an amount smaller than that fixed, so, however, that in the sub-division,
the proportion between the amount paid and the amount, if any, unpaid on each reduced share
shall be the same as it was in case of the share from which the reduced share is derived;
and |
| (e) | cancel shares which, at the date of
the passing of that ordinary resolution, have not been taken or agreed to be taken by any
person and diminish the amount of our share capital by the amount of the shares so cancelled
or, in the case of shares without nominal par value, diminish the number of shares into which
our capital is divided. |
Subject to the Cayman Companies Act and to any
rights for the time being conferred on the shareholders holding a particular class of shares, our shareholders may, by special resolution,
reduce its share capital in any way.
Liquidation
If we are wound up, the shareholders may, subject
to the articles and any other sanction required by the Cayman Companies Act, pass a special resolution allowing the liquidator to do
either or both of the following:
| (a) | to divide in specie among the shareholders
the whole or any part of our assets and, for that purpose, to value any assets and to determine
how the division shall be carried out as between the shareholders or different classes of
shareholders; and |
| (b) | to vest the whole or any part of the assets
in trustees for the benefit of shareholders and those liable to contribute to the winding
up. |
The directors have the authority to present a
petition for our winding up to the Grand Court of the Cayman Islands on our behalf without the sanction of a resolution passed at a general
meeting.
Calls on Shares and Forfeiture
Subject to the terms of allotment, the directors
may make calls on the shareholders in respect of any monies unpaid on their shares including any premium and each shareholder shall (subject
to receiving at least 14 calendar days’ notice specifying when and where payment is to be made), pay to us the amount called on
his shares. Shareholders registered as the joint holders of a share shall be jointly and severally liable to pay all calls in respect
of the share. If a sum called in respect of a share is not paid before or on the day appointed for payment thereof, the person from whom
the sum is due shall pay interest upon the sum at the rate of eight percent per annum from the day appointed for the payment thereof
to the time of the actual payment The directors may, at their discretion, waive payment of the interest wholly or in part.
The shares that have been called upon and remain
unpaid are subject to forfeiture.
Unclaimed Dividend
A dividend that remains unclaimed for a period
of six years after it became due for payment shall be forfeited to, and shall cease to remain owing by, the company.
Forfeiture or Surrender of Shares
If a shareholder fails to pay any capital call,
the directors may give to such shareholder not less than 14 clear days’ notice requiring payment and specifying the amount unpaid
including any interest which may have accrued, any expenses which have been incurred by us due to that person’s default and the
place where payment is to be made. The notice shall also contain a warning that if the notice is not complied with, the shares in respect
of which the call is made will be liable to be forfeited.
If such notice is not complied with, the directors
may, before the payment required by the notice has been received, resolve that any share the subject of that notice be forfeited (which
forfeiture shall include all dividends or other monies payable in respect of the forfeited share and not paid before such forfeiture).
A forfeited share may be sold, re-allotted or
otherwise disposed of on such terms and in such manner as the directors determine and at any time before a sale, re-allotment or disposition
the forfeiture may be cancelled on such terms as the directors think fit.
A person whose shares have been forfeited shall
cease to be a shareholder in respect of the forfeited shares, but shall, notwithstanding such forfeiture, remain liable to pay to us
all monies which at the date of forfeiture were payable by him to us in respect of the shares, together with all expenses and interest
from the date of forfeiture or surrender until payment, but his liability shall cease if and when we receive payment in full of the unpaid
amount.
A declaration, whether statutory or under oath,
made by a director or the secretary shall be conclusive evidence that the person making the declaration is our director or secretary
and that the particular shares have been forfeited or surrendered on a particular date.
Subject to the execution of an instrument of
transfer, if necessary, the declaration shall constitute good title to the shares.
Share Premium Account
The directors shall establish a share premium
account and shall carry the credit of such account from time to time to a sum equal to the amount or value of the premium paid on the
issue of any share or capital contributed or such other amounts required by the Cayman Companies Act.
Redemption and Purchase of Own Shares
Subject to the Cayman Companies Act and any rights
for the time being conferred on the shareholders holding a particular class of shares, we may by action of our directors:
| (a) | issue shares that are to be redeemed or liable
to be redeemed, at our option or the shareholder holding those redeemable shares, on the
terms and in the manner our directors determine before the issue of those shares; |
| (b) | with the consent by special resolution of
the shareholders holding shares of a particular class, vary the rights attaching to that
class of shares so as to provide that those shares are to be redeemed or are liable to be
redeemed at our option on the terms and in the manner which the directors determine at the
time of such variation; and |
| (c) | purchase all or any of our own shares of
any class including any redeemable shares on the terms and in the manner which the directors
determine at the time of such purchase. |
We may make a payment in respect of the redemption
or purchase of its own shares in any manner authorized by the Cayman Companies Act, including out of any combination of capital, our
profits and the proceeds of a fresh issue of shares.
When making a payment in respect of the redemption
or purchase of shares, the directors may make the payment in cash or in specie (or partly in one and partly in the other) if so authorized
by the terms of the allotment of those shares or by the terms applying to those shares, or otherwise by agreement with the shareholder
holding those shares.
Transfer of Shares
Provided that a transfer of Ordinary Shares complies
with applicable rules of Nasdaq, a shareholder may transfer Ordinary Shares to another person by completing an instrument of transfer
in a common form or in a form prescribed by Nasdaq or in any other form approved by the directors, executed:
| (a) | where the Ordinary Shares are fully paid,
by or on behalf of that shareholder; and |
| (b) | where the Ordinary Shares are partly paid,
by or on behalf of that shareholder and the transferee. |
The transferor shall be deemed to remain the
holder of an Ordinary Share until the name of the transferee is entered into the register of members of the Company.
Where the Ordinary Shares in question are not
listed on or subject to the rules of Nasdaq, our board of directors may, in its absolute discretion, decline to register any transfer
of any Ordinary Share that has not been fully paid up or is subject to a company lien. Our board of directors may also decline to register
any transfer of such Ordinary Share unless:
| (a) | the instrument of transfer is lodged with
us, accompanied by the certificate for the Ordinary Shares to which it relates and such other
evidence as our board of directors may reasonably require to show the right of the transferor
to make the transfer; |
| (b) | the instrument of transfer is in respect
of only one class of Ordinary Shares; |
| (c) | the instrument of transfer is properly stamped,
if required; |
| (d) | in the case of a transfer to joint holders,
the number of joint holders to whom the Ordinary Shares are to be transferred does not exceed
four; and |
If our directors refuse to register a transfer,
they are required, within one month after the date on which the instrument of transfer was lodged, to send to each of the transferor
and the transferee notice of such refusal.
The registration of transfers may, on prior notice
being given by advertisement in such one or more newspapers or by electronic means, be suspended and our register of members closed at
such times and for such periods as our board of directors may from time to time determine. The registration of transfers, however, may
not be suspended, and the register of members may not be closed, for more than 30 calendar days in any year.
Inspection of Books and Records
Holders of our Ordinary Shares will have no general
right under the Cayman Companies Act to inspect or obtain copies of our register of members or our corporate records (other than the
memorandum and articles of association, any special resolutions passed by such companies, the registers of mortgages and charges of such
companies and a list of current directors of such companies). Under Cayman Islands law, the names of our current directors can be obtained
from a search conducted at the Registrar of Companies.
General Meetings
As a Cayman Islands exempted company, we are
not obligated by the Cayman Companies Act to call annual general meetings; accordingly, we may, but shall not be obliged to, in each
year hold a general meeting as an annual general meeting. Any annual general meeting held shall be held at such time and place as may
be determined by our board of directors. All general meetings other than annual general meetings shall be called extraordinary general
meetings.
The directors may convene general meetings whenever
they think fit. General meetings shall also be convened on the written requisition of one or more of the shareholders entitled to attend
and vote at our general meetings who (together) hold not less than one-third (1/3) of the rights to vote at such general meeting in accordance
with the notice provisions in the articles, specifying the purpose of the meeting and signed by each of the shareholders making the requisition.
If the directors do not convene such meeting for a date not later than 21 clear days’ after the date of receipt of the written
requisition, those shareholders who requested the meeting may convene the general meeting themselves within three months after the end
of such period of 21 clear days in which case reasonable expenses incurred by them as a result of the directors failing to convene a
meeting shall be reimbursed by us.
At least 7 calendar days’ notice of general
meetings shall be given to shareholders entitled to attend and vote at such meeting. The notice shall specify the place, the day and
the hour of the meeting and the general nature of that business. In addition, if a resolution is proposed as a special resolution, the
text of that resolution shall be given to all shareholders. Notice of every general meeting shall also be given to the directors and
our auditors.
Subject to the Cayman Companies Act and with
the consent of the shareholders who, individually or collectively, hold at least two-thirds (2/3rd) of the voting rights of all those
who have a right to vote in the case of an extraordinary general meeting, and by all the shareholders in the case of an annual general
meeting, a general meeting may be convened on shorter notice.
A quorum shall consist of the presence (whether
in person or represented by proxy) of one or more shareholders holding shares that represent not less than one-third of the outstanding
shares carrying the right to vote at such general meeting.
If, within 15 minutes from the time appointed
for the general meeting, or at any time during the meeting, a quorum is not present, the meeting, if convened upon the requisition of
shareholders, shall be cancelled. In any other case it shall stand adjourned to the same time and place seven days or to such other time
or place as is determined by the directors.
The chairman may, with the consent of a meeting
at which a quorum is present, adjourn the meeting. When a meeting is adjourned for seven days or more, notice of the adjourned meeting
shall be given in accordance with the articles.
At any general meeting a resolution put to the
vote of the meeting shall be decided on a show of hands, unless a poll is (before, or on, the declaration of the result of the show of
hands) demanded by the chairman of the meeting or by at least two shareholders having the right to vote on the resolutions or one or
more shareholders present who together hold not less than ten percent of the voting rights of all those who are entitled to vote on the
resolution. Unless a poll is so demanded, a declaration by the chairman as to the result of a resolution and an entry to that effect
in the minutes of the meeting, shall be conclusive evidence of the outcome of a show of hands, without proof of the number or proportion
of the votes recorded in favor of, or against, that resolution.
If a poll is duly demanded it shall be taken
in such manner as the chairman directs and the result of the poll shall be deemed to be the resolution of the meeting at which the poll
was demanded.
In the case of an equality of votes, whether
on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place or at which the poll is demanded,
shall not be entitled to a second or casting vote.
Anti-Takeover Provisions
Some provisions of our Amended and Restated Memorandum
and Articles of Association may discourage, delay or prevent a change of control of our company or management that shareholders may consider
favorable, including provisions that authorize our board of directors to issue preference shares in one or more series and to designate
the price, rights, preferences, privileges and restrictions of such preference shares without any further vote or action by our shareholders.
However, under Cayman Islands law, our directors
may only exercise the rights and powers granted to them under our Amended and Restated Memorandum and Articles of Association for a proper
purpose and for what they believe in good faith to be in the best interests of our company.
Exempted Company
We are an exempted company with limited liability
incorporated under the Companies Act. The Companies Act distinguishes between ordinary resident companies and exempted companies. Any
company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered
as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary company except that an exempted
company:
| · | does
not have to file an annual return of its shareholders with the Registrar of Companies; |
| · | is
not required to open its register of members for inspection; |
| · | does
not have to hold an annual general meeting; |
| · | may
issue shares with no par value; |
| · | may
obtain an undertaking against the imposition of any future taxation (such undertakings are
usually given for 20 years in the first instance); |
| · | may
register by way of continuation in another jurisdiction and be deregistered in the Cayman
Islands; |
| · | may
register as a limited duration company; and |
| · | may
register as a segregated portfolio company. |
“Limited liability” means that the
liability of each shareholder is limited to the amount unpaid by the shareholder on the shares of the company (except in exceptional
circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other circumstances
in which a court may be prepared to pierce or lift the corporate veil).
Transfer Agent and Registrar
The transfer agent and registrar for the Ordinary
Shares is Transhare Corporation.
Listing
Our Ordinary Shares are listed on Nasdaq under
the symbol “BAOS”.
Directors
We may by ordinary resolution, from time to time,
fix the maximum and minimum number of directors to be appointed. Under the Articles, we are required to have a minimum of one director
and the maximum number of Directors shall be unlimited.
A director may be appointed by ordinary resolution
or by the directors. Any appointment may be to fill a vacancy or as an additional director.
Unless the remuneration of the directors is determined
by the shareholders by ordinary resolution, the directors shall be entitled to such remuneration as the directors may determine.
The shareholding qualification for directors
may be fixed by our shareholders by ordinary resolution and unless and until so fixed no share qualification shall be required.
Unless removed or re-appointed, each director
shall be appointed for a term expiring at the next-following annual general meeting, if one is held. At any annual general meeting held,
our directors will be elected by an ordinary resolution of our shareholders. At each annual general meeting, each director so elected
shall hold office until the expiration of his or her term or until the election of their respective successors in office or removed.
A director may be removed by ordinary resolution.
A director may at any time resign or retire from
office by giving us notice in writing. Unless the notice specifies a different date, the director shall be deemed to have resigned on
the date that the notice is delivered to us.
Subject to the provisions of the articles, the
office of a director may be terminated forthwith if:
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(a) |
he/she is prohibited by the laws of the Cayman Islands
from acting as a director; |
| |
(b) |
he/she is made bankrupt or makes an arrangement or
composition with his/her creditors generally; |
| |
(c) |
he/she resigns his/her office by notice to us; |
| |
(d) |
He/she only held office as a director for a fixed term
and such term expires; |
| |
(e) |
in the opinion of a registered medical practitioner
by whom he/she is being treated he becomes physically or mentally incapable of acting as a director; |
| |
(f) |
He/she is removed from
office pursuant to the articles; |
| |
(g) |
He/she is made subject to any law relating to mental
health or incompetence, whether by court order or otherwise; or |
| |
(h) |
without the consent of the other directors, he/she
is absent from meetings of directors for three consecutive meetings. |
Powers and Duties of Directors
Subject to the provisions of the Cayman Companies
Act and our Amended and Restated Memorandum and Articles of Association, our business shall be managed by the directors, who may exercise
all our powers. No prior act of the directors shall be invalidated by any subsequent alteration of our memorandum or articles of association.
To the extent allowed by the Cayman Companies Act, however, shareholders may by special resolution validate any prior or future act of
the directors which would otherwise be in breach of their duties.
The directors may delegate any of their powers
to any committee consisting of one or more persons who need not be shareholders and may include non-directors so long as the majority
of those persons are directors; any committee so formed shall in the exercise of the powers so delegated conform to any regulations that
may be imposed on it by the directors. Our board of directors has established an audit committee, compensation committee, and nomination
and corporate governance committee.
The board of directors may establish any local
or divisional board of directors or agency and delegate to it its powers and authorities (with power to sub-delegate) for managing any
of our affairs whether in the Cayman Islands or elsewhere and may appoint any persons to be members of a local or divisional board of
directors, or to be managers or agents, and may fix their remuneration.
The directors may from time to time and at any
time by power of attorney or in any other manner they determine appoint any person, either generally or in respect of any specific matter,
to be our agent with or without authority for that person to delegate all or any of that person’s powers.
The directors may from time to time and at any
time by power of attorney or in any other manner they determine appoint any person, whether nominated directly or indirectly by the directors,
to be our attorney or our authorized signatory and for such period and subject to such conditions as they may think fit. The powers,
authorities and discretions, however, must not exceed those vested in, or exercisable, by the directors under the articles.
The board of directors may remove any person
so appointed and may revoke or vary the delegation.
The directors may exercise all of our powers
to borrow money and to mortgage or charge its undertaking, property and assets both present and future and uncalled capital or any part
thereof, to issue debentures and other securities whether outright or as collateral security for any debt, liability or obligation of
ours or our parent undertaking (if any) or any subsidiary undertaking of us or of any third party.
A director shall not, as a director, vote in
respect of any contract, transaction, arrangement or proposal in which he has an interest which (together with any interest of any person
connected with him) is a material interest (otherwise than by virtue of his interests, direct or indirect, in shares or debentures or
other securities of, or otherwise in or through, us) and if he shall do so his vote shall not be counted, nor in relation thereto shall
he be counted in the quorum present at the meeting, but (in the absence of some other material interest than is mentioned below) none
of these prohibitions shall apply to:
| |
(a) |
the giving of any security,
guarantee or indemnity in respect of: |
| |
(i) |
money lent or obligations
incurred by him or by any other person for our benefit or any of our subsidiaries; or |
| |
(ii) |
a debt or obligation of
ours or any of our subsidiaries for which the director himself has assumed responsibility in whole or in part and whether alone or
jointly with others under a guarantee or indemnity or by the giving of security; |
| |
(b) |
where we or any of our
subsidiaries is offering securities in which offer the director is or may be entitled to participate as a holder of securities or
in the underwriting or sub-underwriting of which the director is to or may participate; |
| |
(c) |
any contract, transaction,
arrangement or proposal affecting any other body corporate in which he is interested, directly or indirectly and whether as an officer,
shareholder, creditor or otherwise howsoever, provided that he (together with persons connected with him) does not to his knowledge
hold an interest representing one percent or more of any class of the equity share capital of such body corporate (or of any third
body corporate through which his interest is derived) or of the voting rights available to shareholders of the relevant body corporate; |
| |
(d) |
any act or thing done or
to be done in respect of any arrangement for the benefit of the employees of us or any of our subsidiaries under which he is not
accorded as a director any privilege or advantage not generally accorded to the employees to whom such arrangement relates; or |
| |
(e) |
any matter connected with
the purchase or maintenance for any director of insurance against any liability or (to the extent permitted by the Cayman Companies
Act) indemnities in favor of directors, the funding of expenditure by one or more directors in defending proceedings against him
or them or the doing of anything to enable such director or directors to avoid incurring such expenditure. |
A director may, as a director, vote (and be counted
in the quorum) in respect of any contract, transaction, arrangement or proposal in which he has an interest which is not a material interest
or as described above.
Capitalization of Profits
The directors may resolve to capitalize:
| |
(a) |
any part of our profits not required for paying any
preferential dividend (whether or not those profits are available for distribution); or |
| |
(b) |
any sum standing to the credit of our share premium
account or capital redemption reserve, if any. |
The amount resolved to be capitalized must be
appropriated to the shareholders who would have been entitled to it had it been distributed by way of dividend and in the same proportions.
Register of Members
Under the Cayman Companies Act, we must keep
a register of members and there should be entered therein:
| |
● |
the names and
addresses of our shareholders, together with a statement of the shares held by each shareholder, and such statement shall confirm
(i) the amount paid or agreed to be considered as paid, on the shares of each shareholder; (ii) the number and category
of shares held by each member, and (iii) whether each relevant category of shares held by a member carries voting rights under
the articles of association of the company, and if so, whether such voting rights are conditional; |
| |
|
|
| |
● |
the date on which the name
of any person was entered on the register as a shareholder; and |
| |
|
|
| |
● |
the date on which any person
ceased to be a shareholder. |
Under the Cayman Companies Act, the register
of members of our company is prima facie evidence of the matters set out therein (that is, the register of members will raise a presumption
of fact on the matters referred to above unless rebutted) and a shareholder registered in the register of members is deemed as a matter
of the Cayman Companies Act to have legal title to the shares as set against its name in the register of members.
If the name of any person is incorrectly entered
in or omitted from our register of members, or if there is any default or unnecessary delay in entering on the register the fact of any
person having ceased to be a shareholder of our company, the person or shareholder aggrieved (or any shareholder of our company or our
company itself) may apply to the Grand Court of the Cayman Islands for an order that the register be rectified, and the Court may either
refuse such application or it may, if satisfied of the justice of the case, make an order for the rectification of the register.
Differences in Corporate Law
The Cayman Companies Act is derived, to a large
extent, from the older Companies Acts of England and Wales but does not follow recent United Kingdom statutory enactments, and accordingly
there are significant differences between the Cayman Companies Act and the current Companies Act of England. In addition, the Cayman
Companies Act differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of certain
significant differences between the provisions of the Cayman Companies Act applicable to us and the comparable laws applicable to companies
incorporated in the State of Delaware in the United States.
| |
|
Delaware
|
|
Cayman
Islands |
| Title of Organizational Documents |
|
Certificate of Incorporation
and Bylaws |
|
Certificate of Incorporation
and Memorandum and Articles of Association |
| Duties of Directors |
|
Under Delaware
law, the business and affairs of a corporation are managed by or under the direction of its board of directors. In exercising their
powers, directors are charged with a fiduciary duty of care to protect the interests of the corporation and a fiduciary duty of loyalty
to act in the best interests of its shareholders. The duty of care requires that directors act in an informed and deliberative manner
and inform themselves, prior to making a business decision, of all material information reasonably available to them. The duty of
care also requires that directors exercise care in overseeing and investigating the conduct of the corporation’s employees.
The duty of loyalty may be summarized as the duty to act in good faith, not out of self-interest, and in a manner which the director
reasonably believes to be in the best interests of the shareholders. |
|
As a matter
of Cayman Islands law, a director owes three types of duties to the company: (i) statutory duties, (ii) fiduciary duties,
and (iii) common law duties. The Cayman Companies Act imposes a number of statutory duties on a director. A Cayman Islands director’s
fiduciary duties are not codified, however the courts of the Cayman Islands have held that a director owes the following fiduciary
duties (a) a duty to act in what the director bona fide considers to be in the best interests of the company, (b) a duty
to exercise their powers for the purposes they were conferred, (c) a duty to avoid fettering his or her discretion in the future
and (d) a duty to avoid conflicts of interest and of duty. The common law duties owed by a director are those to act with skill,
care and diligence that may reasonably be expected of a person carrying out the same functions as are carried out by that director
in relation to the company and, also, to act with the skill, care and diligence in keeping with a standard of care commensurate with
any particular skill they have which enables them to meet a higher standard than a director without those skills. In fulfilling their
duty of care to us, our directors must ensure compliance with our amended articles of association, as amended and restated from time
to time. We have the right to seek damages if a duty owed by any of our directors is breached.’ |
| Limitations on Personal Liability
of Directors |
|
Subject to
the limitations described below, a certificate of incorporation may provide for the elimination or limitation of the personal liability
of a director to the corporation or its shareholders for monetary damages for a breach of fiduciary duty as a director. Such provision
cannot limit liability for breach of loyalty, bad faith, intentional misconduct, unlawful payment of dividends or unlawful share
purchase or redemption. In addition, the certificate of incorporation cannot limit liability for any act or omission occurring prior
to the date when such provision becomes effective. |
|
The Cayman
Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of Officers
and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy,
such as to provide indemnification against civil fraud or the consequences of committing a crime. |
| Indemnification of Directors,
Officers, Agents, and Others |
|
A corporation
has the power to indemnify any director, officer, employee, or agent of corporation who was, is, or is threatened to be made a party
who acted in good faith and in a manner he believed to be in the best interests of the corporation, and if with respect to a criminal
proceeding, had no reasonable cause to believe his conduct would be unlawful, against amounts actually and reasonably incurred. |
|
Cayman Islands law does not limit the extent
to which a company’s memorandum and articles of association may provide for indemnification of directors and officers, except
to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification
against the consequences of committing a crime, or against the indemnified person’s own fraud or dishonesty.
Our amended and restated articles of association
provide to the extent permitted by law, we shall indemnify each existing or former secretary, director (including alternate director),
and any of our other officers (including an investment adviser or an administrator or liquidator) and their personal representatives
against: (a) all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by the
existing or former director (including alternate director), secretary or officer in or about the conduct of our business or affairs
or in the execution or discharge of the existing or former director (including alternate director), secretary’s or officer’s
duties, powers, authorities or discretions; and (b) without limitation to paragraph (a) above, all costs, expenses, losses
or liabilities incurred by the existing or former director (including alternate director), secretary or officer in defending (whether
successfully or otherwise) any civil, criminal, administrative or investigative proceedings (whether threatened, pending or completed)
concerning us or our affairs in any court or tribunal, whether in the Cayman Islands or elsewhere.
|
|
|
|
|
No such existing or former director
(including alternate director), secretary or officer, however, shall be indemnified in respect of any matter arising out of his own
dishonesty.
To the extent permitted by law, we may make
a payment, or agree to make a payment, whether by way of advance, loan or otherwise, for any legal costs incurred by an existing
or former director (including alternate director), secretary or any of our officers in respect of any matter identified in above
on condition that the director (including alternate director), secretary or officer must repay the amount paid by us to the extent
that it is ultimately found not liable to indemnify the director (including alternate director), the secretary or that officer for
those legal costs. |
| Interested Directors |
|
Under Delaware
law, a transaction in which a director who has an interest in such transaction would not be voidable if (i) the material facts
as to such interested director’s relationship or interests are disclosed or are known to the board of directors and the board
in good faith authorizes the transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested
directors are less than a quorum, (ii) such material facts are disclosed or are known to the shareholders entitled to vote on
such transaction and the transaction is specifically approved in good faith by vote of the shareholders, or (iii) the transaction
is fair as to the corporation as of the time it is authorized, approved or ratified. Under Delaware law, a director could be held
liable for any transaction in which such director derived an improper personal benefit. |
|
Interested
director transactions are governed by the terms of a company’s memorandum and articles of association. |
| Voting Requirements |
|
The certificate of incorporation may include
a provision requiring supermajority approval by the directors or shareholders for any corporate action.
In addition, under Delaware law, certain
business combinations involving interested shareholders require approval by a supermajority of the non-interested shareholders. |
|
For the protection of shareholders, certain
matters must be approved by special resolution of the shareholders as a matter of Cayman Islands law, including alteration of the
memorandum or articles of association, appointment of inspectors to examine company affairs, reduction of share capital (subject,
in relevant circumstances, to court approval), change of name, authorization of a plan of merger or transfer by way of continuation
to another jurisdiction or consolidation or voluntary winding up of the company.
Cayman Companies Act requires that a special
resolution be passed by a majority of at least two-thirds or such higher percentage as set forth in the memorandum and articles of
association, of shareholders being entitled to vote and do vote in person or by proxy at a general meeting, or by unanimous written
consent of shareholders entitled to vote at a general meeting. |
| Voting for Directors |
|
Under Delaware
law, unless otherwise specified in the certificate of incorporation or bylaws of the corporation, directors shall be elected by a
plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election
of directors. |
|
Cayman Companies
Act defines “special resolutions” only. A company’s memorandum and articles of association can therefore tailor
the definition of “ordinary resolutions” as a whole, or with respect to specific provisions. |
| |
|
|
|
|
| Cumulative Voting |
|
No cumulative voting for
the election of directors unless so provided in the certificate of incorporation. |
|
No cumulative voting for
the election of directors unless so provided in the memorandum and articles of association. |
| |
|
|
|
|
| Directors’ Powers Regarding Bylaws |
|
The certificate of incorporation
may grant the directors the power to adopt, amend or repeal bylaws. |
|
The memorandum and articles
of association may only be amended by a special resolution of the shareholders. |
| |
|
|
|
|
| Nomination and Removal of Directors and Filling
Vacancies on Board |
|
Shareholders may generally
nominate directors if they comply with advance notice provisions and other procedural requirements in company bylaws. Holders of
a majority of the shares may remove a director with or without cause, except in certain cases involving a classified board or if
the company uses cumulative voting. Unless otherwise provided for in the certificate of incorporation, directorship vacancies are
filled by a majority of the directors elected or then in office. |
|
Nomination and removal
of directors and filling of board vacancies are governed by the terms of the memorandum and articles of association. |
| Mergers and Similar Arrangements |
|
Under Delaware law, with certain exceptions,
a merger, consolidation, exchange or sale of all or substantially all the assets of a corporation must be approved by the board of
directors and a majority of the outstanding shares entitled to vote thereon. Under Delaware law, a shareholder of a corporation participating
in certain major corporate transactions may, under certain circumstances, be entitled to appraisal rights pursuant to which such
shareholder may receive cash in the amount of the fair value of the shares held by such shareholder (as determined by a court) in
lieu of the consideration such shareholder would otherwise receive in the transaction.
Delaware law also provides that a parent
corporation, by resolution of its board of directors, may merge with any subsidiary, of which it owns at least 90% of each class
of capital stock without a vote by shareholders of such subsidiary. Upon any such merger, dissenting shareholders of the subsidiary
would have appraisal rights. |
|
Cayman Companies Act permits mergers
and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies. For these
purposes, (a) “merger” means the merging of two or more constituent companies and the vesting of their undertaking,
property and liabilities in one of such companies as the surviving company, and (b) a “consolidation” means the
combination of two or more constituent companies into a consolidated company and the vesting of the undertaking, property and liabilities
of such companies to the consolidated company. In order to effect such a merger or consolidation, the directors of each constituent
company must approve a written plan of merger or consolidation, which must then be authorized by (a) a special resolution of
the shareholders of each constituent company, and (b) such other authorization, if any, as may be specified in such constituent
company’s articles of association. The plan must be filed with the Registrar of Companies together with a declaration as to
the solvency of the consolidated or surviving company, a list of the assets and liabilities of each constituent company and an undertaking
that a copy of the certificate of merger or consolidation will be given to the shareholders and creditors of each constituent company
and that notification of the merger or consolidation will be published in the Cayman Islands Gazette. Court approval is not required
for a merger or consolidation which is effected in compliance with these statutory procedures.
|
|
|
|
|
A merger between a Cayman Islands
parent company and its Cayman Islands subsidiary or subsidiaries does not require authorization by a resolution of shareholders.
For this purpose a subsidiary is a company of which at least 90% of the issued shares entitled to vote are owned by the parent company.
The consent of each holder of a fixed or
floating security interest of a constituent company is required unless this requirement is waived by a court in the Cayman Islands.
Except in certain limited circumstances,
a dissenting shareholder of a Cayman Islands constituent company is entitled to payment of the fair value of his or her shares upon
dissenting from a merger or consolidation. The exercise of such dissenter rights will preclude the exercise by the dissenting shareholder
of any other rights to which he or she might otherwise be entitled by virtue of holding shares, except for the right to seek relief
on the grounds that the merger or consolidation is void or unlawful. |
| |
|
|
|
In addition, there are statutory provisions
that facilitate the reconstruction and amalgamation of companies, provided that the arrangement is approved by (a) 75% in value
of the shareholders or class of shareholders, as the case may be, or (b) a majority in number representing 75% in value of the
creditors or each class of creditors, as the case may be, with whom the arrangement is to be made, that are, in each case, present
and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently
the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express
to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines
that: (a) the statutory provisions as to the required majority vote have been met; (b) the shareholders have been fairly
represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote
interests adverse to those of the class; (c) the arrangement is such that may be reasonably approved by an intelligent and honest
man of that class acting in respect of his interest; and (d) the arrangement is not one that would more properly be sanctioned
under some other provision of the Cayman Companies Act.
|
| |
|
|
|
When a takeover offer is made and accepted by holders of 90% of the shares
affected within four months the offeror may, within a two-month period commencing on the expiration of such four month period, require
the holders of the remaining shares to transfer such shares on the terms of the offer. An objection can be made to the Grand Court
of the Cayman Islands but this is unlikely to succeed in the case of an offer which has been so approved unless there is evidence
of fraud, bad faith or collusion.
If an arrangement and reconstruction
is thus approved, or if a takeover offer is made and accepted, a dissenting shareholder would
have no rights comparable to appraisal rights, which would otherwise ordinarily be available
to dissenting shareholders of Delaware corporations, providing rights to receive payment
in cash for the judicially determined value of the shares. |
| |
|
|
|
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| Shareholder Suits |
|
Class actions
and derivative actions generally are available to shareholders under Delaware law for, among other things, breach of fiduciary duty,
corporate waste and actions not taken in accordance with applicable law. In such actions, the court generally has discretion to permit
the winning party to recover attorneys’ fees incurred in connection with such action. |
|
In
principle, we will normally be the proper plaintiff and as a general rule a derivative action may not be brought by a minority
shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority in the Cayman Islands,
the Cayman Islands courts can be expected to follow and apply the common law principles (namely the rule in Foss v. Harbottle
and the exceptions thereto) so that a non-controlling shareholder may be permitted to commence a class action against or derivative
actions in the name of the company to challenge: (a) an act which is illegal or ultra vires with respect to the company and
is therefore incapable of ratification by the shareholders; (b) an act which, although not ultra vires, requires authorization
by a qualified (or special) majority (that is, more than a simple majority) which has not been obtained; and (c) an act which
constitutes a “fraud on the minority” where the wrongdoers are themselves in control of the company. |
| Inspection of Corporate Records |
|
Under Delaware
law, shareholders of a Delaware corporation have the right during normal business hours to inspect for any proper purpose, and to
obtain copies of list(s) of shareholders and other books and records of the corporation and its subsidiaries, if any, to the
extent the books and records of such subsidiaries are available to the corporation. |
|
Shareholders
of a Cayman Islands exempted company have no general right under Cayman Islands law to inspect or obtain copies of a list of shareholders
or other corporate records (other than the memorandum and articles of association and any special resolutions passed by such companies,
and the registers of mortgages and charges of such companies and a list of current directors of such companies) of the company. However,
these rights may be provided in the company’s memorandum and articles of association. |
| Shareholder Proposals |
|
Unless provided in the
corporation’s certificate of incorporation or bylaws, Delaware law does not include a provision restricting the manner in which
shareholders may bring business before a meeting. |
|
The
Cayman Companies Act provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders
with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles
of association. Our articles provide that general meetings shall be convened on the written requisition of one or more of the shareholders
entitled to attend and vote at our general meetings who (together) hold not less than 10 percent of the rights to vote at such general
meeting in accordance with the notice provisions in the articles, specifying the purpose of the meeting and signed by each of the
shareholders making the requisition. If the directors do not convene such meeting for a date not later than twenty-one clear days’
after the date of receipt of the written requisition, those shareholders who requested the meeting may convene the general meeting
themselves within three months after the end of such period of twenty-one clear days in which case reasonable expenses incurred by
them as a result of the directors failing to convene a meeting shall be reimbursed by us. Our articles provide no other right to
put any proposals before annual general meetings or extraordinary general meetings. As a Cayman Islands exempted company, we are
not obligated by law to call shareholders’ annual general meetings. However, our corporate governance guidelines require us
to call such meetings every year. |
| Approval of Corporate Matters
by Written Consent |
|
Delaware law
permits shareholders to take action by written consent signed by the holders of outstanding shares having not less than the minimum
number of votes that would be necessary to authorize or take such action at a meeting of shareholders. |
|
Cayman
Companies Act allows a special resolution to be passed in writing if signed by all the voting shareholders (if authorized by the
memorandum and articles of association). |
| Calling of Special Shareholders
Meetings |
|
Delaware law
permits the board of directors or any person who is authorized under a corporation’s certificate of incorporation or bylaws
to call a special meeting of shareholders. |
|
Cayman
Companies Act does not have provisions governing the proceedings of shareholders meetings which are usually provided in the memorandum
and articles of association. Please see above. |
| |
|
|
|
|
| Restructuring |
|
|
|
A company may present a petition to the Grand
Court of the Cayman Islands for the appointment of a restructuring officer on the grounds that the company:
(a) is or is likely to become unable
to pay its debts; and
(b) intends to present a compromise
or arrangement to its creditors (or classes thereof) either pursuant to the Companies Act, the law of a foreign country or by way
of a consensual restructuring.
The Grand Court may, among other things,
make an order appointing a restructuring officer upon hearing of such petition, with such powers and to carry out such functions
as the court may order. At any time (i) after the presentation of a petition for the appointment of a restructuring officer
but before an order for the appointment of a restructuring officer has been made, and (ii) when an order for the appointment
of a restructuring officer is made, until such order has been discharged, no suit, action or other proceedings (other than criminal
proceedings) shall be proceeded with or commenced against the company, no resolution to wind up the company shall be passed, and
no winding up petition may be presented against the company, except with the leave of the court. However, notwithstanding the presentation
of a petition for the appointment of a restructuring officer or the appointment of a restructuring officer, a creditor who has security
over the whole or part of the assets of the company is entitled to enforce the security without the leave of the court and without
reference to the restructuring officer appointed
|
| Dissolution; Winding Up |
|
Under the Delaware General
Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding
100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved
by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation to include in its
certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board of directors. |
|
Under
the Cayman Companies Act and our articles, the Company may be wound up by a special resolution of our shareholders, or if the winding
up is initiated by our board of directors, by either a special resolution of our members or, if our company is unable to pay its
debts as they fall due, by an ordinary resolution of our members. In addition, a company may be wound up by an order of the courts
of the Cayman Islands. The court has authority to order winding up in a number of specified circumstances including where it is,
in the opinion of the court, just and equitable to do so. |
Anti-money Laundering—Cayman Islands
In order to comply with legislation or regulations
aimed at the prevention of money laundering, we may be required to adopt and maintain anti-money laundering procedures, and may require
subscribers to provide evidence to verify their identity. Where permitted, and subject to certain conditions, we may also delegate the
maintenance of our anti-money laundering procedures (including the acquisition of due diligence information) to a suitable person.
We reserve the right to request such information
as is necessary to verify the identity of a subscriber. In the event of delay or failure on the part of the subscriber in producing any
information required for verification purposes, we may refuse to accept the application, in which case any funds received will be returned
without interest to the account from which they were originally debited.
We also reserve the right to refuse to make any
redemption payment to a shareholder if our directors or officers suspect or are advised that the payment of redemption proceeds to such
shareholder might result in a breach of applicable anti-money laundering or other laws or regulations by any person in any relevant jurisdiction,
or if such refusal is considered necessary or appropriate to ensure our compliance with any such laws or regulations in any applicable
jurisdiction.
If any person resident in the Cayman Islands
knows or suspects or has reason for knowing or suspecting that another person is engaged in criminal conduct or is involved with terrorism
or terrorist property and the information for that knowledge or suspicion came to their attention in the course of their business in
the regulated sector, or other trade, profession, business or employment, the person will be required to report such knowledge or suspicion
to (i) a nominated officer (appointed in accordance with the Proceeds of Crime Law (Revised) of the Cayman Islands) or the Financial
Reporting Authority of the Cayman Islands, pursuant to the Proceeds of Crime Act (As Revised), if the disclosure relates to criminal
conduct or money laundering or (ii) to a police constable or a nominated officer (pursuant to the Terrorism Act (As Revised) of
the Cayman Islands) or the Financial Reporting Authority, pursuant to the Terrorism Act (As Revised), if the disclosure relates to involvement
with terrorism or terrorist financing and terrorist property. Such a report shall not be treated as a breach of confidence or of any
restriction upon the disclosure of information imposed by any enactment or otherwise.
History of Share Capital
Unless expressly indicated herein to the contrary,
the share and pricing information under “History of Share Capital” reflects the actual share and pricing information at the
time of the events in chronological order, without taking retroactive effect of subsequent share consolidations.
We were incorporated in the Cayman Islands as
an exempted company with limited liability on December 4, 2018. We have issued the following Ordinary Shares to certain founding
shareholders.
| Purchaser |
|
Date
of Issuance |
|
Securities |
|
Consideration |
| An
Rui Tai BVI |
|
December 4, 2018 |
|
660 Ordinary Shares |
|
US$0.33 |
| Deng
Guan BVI |
|
December 4, 2018 |
|
460 Ordinary Shares |
|
US$0.23 |
| PBCY
Investment |
|
December 4, 2018 |
|
600 Ordinary Shares |
|
US$0.30 |
| EJAM
BVI |
|
December 4, 2018 |
|
200 Ordinary Shares |
|
US$0.10 |
| Everlasting
Innovation |
|
December 4, 2018 |
|
80 Ordinary Shares |
|
US$0.04 |
| Etone
Investment |
|
May 13, 2019 |
|
40 Ordinary Shares |
|
HK$14 million (US$1,797,731) |
| An
Rui Tai BVI |
|
July 6, 2020 |
|
6,599,340 Ordinary Shares |
|
US$3,299.67 |
| Deng
Guan BVI |
|
July 6, 2020 |
|
4,599,540 Ordinary Shares |
|
US$2,299.77 |
| PBCY
Investment |
|
July 6, 2020 |
|
5,999,400 Ordinary Shares |
|
US$2,999.70 |
| EJAM
BVI |
|
July 6, 2020 |
|
1,999,800 Ordinary Shares |
|
US$999.90 |
| Everlasting
Innovation |
|
July 6, 2020 |
|
799,920 Ordinary Shares |
|
US$399.96 |
| Etone
Investment |
|
July 6, 2020 |
|
399,960 Ordinary Shares |
|
US$199.98 |
| Orient
Plus International Limited |
|
March 18, 2021 |
|
784,314 Ordinary Shares
and 784,314 Warrants |
|
US$4,000,000 |
| Union
Hi-Tech Development Limited |
|
March 18, 2021 |
|
1,176,470 Ordinary Shares
and 1,176,470 Warrants |
|
US$6,000,000 |
On July 6, 2020, our shareholders and board
of directors approved (i) a forward split of our outstanding Ordinary Shares at a ratio of 20-for-1 share, and (ii) an increase
in our authorized shares to 100 million Ordinary Shares. Unless otherwise indicated, all references to Ordinary Shares, options to purchase
Ordinary Shares, share data, per share data, and related information have been retroactively adjusted, where applicable, in this prospectus
to reflect the forward split of our Ordinary Shares as if it had occurred at the beginning of the earlier period presented.
On July 6, 2020, we issued 6,599,340 Ordinary
Shares to An Rui Tai BVI for a consideration of $3,299.67, 4,599,540 Ordinary Shares to Deng Guan BVI for a consideration of $2,299.77,
5,999,400 Ordinary Shares to PBCY Investment for a consideration of $2,999.70, 1,999,800 Ordinary Shares to EJAM BVI for a consideration
of $999.90, 799,920 Ordinary Shares to Everlasting Innovation for a consideration of $399.96, and 399.960 Ordinary Shares to Etone Investment
for a consideration of $199.98.
On March 18, 2021, pursuant to a Securities
Purchase Agreement dated March 17, 2021, we issued 784,314 Ordinary Shares and 784,314 Warrants for a consideration of $4,000,000
to Orient Plus International Limited, and 1,176,470 Ordinary Shares and 1,176,470 Warrants for a consideration of $6,000,000 to Union
Hi-Tech Development Limited. One Warrant included the right to purchase one half of one Ordinary Share at an exercise price of $5.61
per Ordinary Share. A Warrant may be exercised at any time on or after March 18, 2021 and on or prior to 5:00 p.m. (New York
City time) on September 18, 2026 but not thereafter. Giving effect to a share consolidation at a ratio of one-for-three and one
fifth (3.2) ordinary shares effective on May 24, 2022 and a share consolidation at a ratio of one-for-six (6) ordinary shares
effective on March 21, 2023, the 1,960,784 Warrants were consolidated to 112,610 Warrants with each to purchase one half of one
ordinary share at an exercise price of $107.71 per ordinary share. The holders of Warrants are granted with registration rights. If at
any time after the six-month anniversary of March 18, 2021, there is no effective registration statement registering, or no current
prospectus available for the issuance of the warrant shares to the holder and the resale of the warrant shares, then the Warrants may
also be exercised, in whole or in part, at such time by means of “cashless exercise”. The Warrants are subject to adjustments
in the event of 1) stock dividends and splits, 2) subsequent right offerings, 3) pro rata dilutions and 4) fundamental transactions.
No fractional shares or scrip representing fractional shares shall be issued upon the exercise of the Warrants. As of the date of this
prospectus, no Warrants have been exercised.
As of the March 18, 2021, our authorized
share capital consisted of $50,000 divided into 100,000,000 Ordinary Shares, par value $0.0005 per share.
On April 28, 2022, we held an annual general
meeting of shareholders, during which the shareholders approved a proposal to effect a share consolidation of the Company’s 100,000,000
ordinary shares, par value US$0.0005 per share, in the Company’s issued and unissued share capital at a ratio of one-for-three
and one fifth such that each 3.2 ordinary shares were combined into one ordinary share of the Company with a par value of US$0.0016.
As a result of such share consolidation effective on May 24, 2022, our authorized share capital was US$50,000 divided into 31,250,000
ordinary shares of par value of US$0.0016 each.
On March 6, 2023, we held an annual general
meeting of shareholders, during which the shareholders approved the proposals: (i) to approve an increase of authorized share capital
of the Company from US$50,000 divided into 31,250,000 ordinary shares of a par value US$0.0016 each to US$60,000 divided into 37,500,000
ordinary shares of a par value US$0.0016 each; and (ii) to effect a share consolidation of each six ordinary shares with par value
of US$0.0016 each in our issued and unissued share capital into one ordinary share with par value of US$0.0096 each. Such share consolidation
became effective on March 21, 2023, and the ordinary shares began trading on a post-share consolidation basis on the Nasdaq Capital
Market when the market opened on March 22, 2023 under the same symbol “BAOS” but under a new CUSIP number of G08908
124. Immediately following the share consolidation, the authorized share capital of the Company became US$60,000.00 divided into 6,250,000
ordinary shares of par value of US$0.0096 each.
We are not aware of any arrangement that may,
at a subsequent date, result in a change of control of the Company.
DESCRIPTION OF ORDINARY
SHARES
We may issue our Ordinary Shares either alone
or underlying other securities convertible into or exercisable or exchangeable for our Ordinary Shares.
Holders of our Ordinary Shares are entitled to
certain rights and subject to certain conditions as set forth in our amended and restated memorandum and articles of association and
the Companies Act. See “Description of Share Capital.”
DESCRIPTION OF DEBT SECURITIES
General
We may issue debt securities which may or may
not be converted into our Ordinary Shares. We may issue the debt securities independently or together with any underlying securities,
and debt securities may be attached or separate from the underlying securities. In connection with the issuance of any debt securities,
we do not intend to issue them pursuant to a trust indenture upon reliance of Section 304(a)(8) of the Trust Indenture Act
and Rule 4a-1 promulgated thereunder.
The following description is a summary of selected
provisions relating to the debt securities that we may issue. The summary is not complete. When debt securities are offered in the future,
a prospectus supplement, information incorporated by reference, or a free writing prospectus, as applicable, will explain the particular
terms of those securities and the extent to which these general provisions may apply. The specific terms of the debt securities as described
in a prospectus supplement, information incorporated by reference, or free writing prospectus will supplement and, if applicable, may
modify or replace the general terms described in this section.
This summary and any description of debt securities
in the applicable prospectus supplement, information incorporated by reference, or free writing prospectus is subject to and is qualified
in its entirety by reference to all the provisions of any specific debt securities document or agreement. We will file each of these
documents, as applicable, with the SEC and incorporate them by reference as an exhibit to the registration statement of which this prospectus
is a part on or before the time we issue a series of warrants. See “Where You Can Find Additional Information” and “Incorporation
of Documents by Reference” below for information on how to obtain a copy of a debt securities document when it is filed.
When we refer to a series of debt securities,
we mean all debt securities issued as part of the same series under the applicable indenture.
Terms
The applicable prospectus supplement, information
incorporated by reference, or free writing prospectus, may describe the terms of any debt securities that we may offer, including, but
not limited to, the following:
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the title of the debt securities; |
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the total amount of the
debt securities; |
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the amount or amounts of
the debt securities will be issued and interest rate; |
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the conversion price at
which the debt securities may be converted; |
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the date on which the right
to convert the debt securities will commence and the date on which the right will expire; |
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if applicable, the minimum
or maximum amount of debt securities that may be converted at any one time; |
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if applicable, a discussion
of material federal income tax consideration; |
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if applicable, the terms
of the payoff of the debt securities; |
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the identity of the indenture
agent, if any; |
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the procedures and conditions
relating to the conversion of the debt securities; and |
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any other terms of the
debt securities, including terms, procedure and limitation relating to the exchange or conversion of the debt securities. |
Form, Exchange, and Transfer
We may issue the debt securities in registered
form or bearer form. Debt securities issued in registered form, i.e., book-entry form, will be represented by a global security registered
in the name of a depository, which will be the holder of all the debt securities represented by the global security. Those investors
who own beneficial interests in global debt securities will do so through participants in the depository’s system, and the rights
of these indirect owners will be governed solely by the applicable procedures of the depository and its participants. In addition, we
may issue debt securities in non-global form, i.e., bearer form. If any debt securities are issued in non-global form, debt securities
certificates may be exchanged for new debt securities certificates of different denominations, and holders may exchange, transfer, or
convert their debt securities at the debt securities agent’s office or any other office indicated in the applicable prospectus
supplement, information incorporated by reference or free writing prospectus.
Prior to the conversion of their debt securities,
holders of debt securities convertible for Ordinary Shares will not have any rights of holders of Ordinary Shares, and will not be entitled
to dividend payments, if any, or voting rights of the Ordinary Shares.
Conversion of Debt Securities
A debt security may entitle the holder to purchase,
in exchange for the extinguishment of debt, an amount of securities at a conversion price that will be stated in the debt security. Debt
securities may be converted at any time up to the close of business on the expiration date set forth in the terms of such debt security.
After the close of business on the expiration date, debt securities not exercised will be paid in accordance with their terms.
Debt securities may be converted as set forth
in the applicable offering material. Upon receipt of a notice of conversion properly completed and duly executed at the corporate trust
office of the indenture agent, if any, or to us, we will forward, as soon as practicable, the securities purchasable upon such exercise.
If less than all of the debt security represented by such security is converted, a new debt security will be issued for the remaining
debt security.
DESCRIPTION OF WARRANTS
General
We may issue warrants to purchase our securities.
We may issue the warrants independently or together with any underlying securities, and the warrants may be attached or separate from
the underlying securities. We may also issue a series of warrants under a separate warrant agreement to be entered into between us and
a warrant agent. The warrant agent will act solely as our agent in connection with the warrants of such series and will not assume any
obligation or relationship of agency for or with holders or beneficial owners of warrants.
The following description is a summary of selected
provisions relating to the warrants that we may issue. The summary is not complete. When warrants are offered in the future, a prospectus
supplement, information incorporated by reference, or a free writing prospectus, as applicable, will explain the particular terms of
those securities and the extent to which these general provisions may apply. The specific terms of the warrants as described in a prospectus
supplement, information incorporated by reference, or free writing prospectus will supplement and, if applicable, may modify or replace
the general terms described in this section.
This summary and any description of warrants
in the applicable prospectus supplement, information incorporated by reference, or free writing prospectus is subject to and is qualified
in its entirety by reference to all the provisions of any specific warrant document or agreement, if applicable. We will file each of
these documents, as applicable, with the SEC and incorporate them by reference as an exhibit to the registration statement of which this
prospectus is a part on or before the time we issue a series of warrants. See “Where You Can Find Additional Information”
and “Incorporation of Documents by Reference” below for information on how to obtain a copy of a warrant document when it
is filed.
When we refer to a series of warrants, we mean
all warrants issued as part of the same series under the applicable warrant agreement.
Terms
The applicable prospectus supplement, information
incorporated by reference, or free writing prospectus, may describe the terms of any warrants that we may offer, including, but not limited
to, the following:
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the
title of the warrants; |
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the
total number of warrants; |
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the
price or prices at which the warrants will be issued; |
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the
price or prices at which the warrants may be exercised; |
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the
currency or currencies that investors may use to pay for the warrants; |
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the
date on which the right to exercise the warrants will commence and the date on which the right will expire; |
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whether
the warrants will be issued in registered form or bearer form; |
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information
with respect to book-entry procedures, if any; |
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if
applicable, the minimum or maximum amount of warrants that may be exercised at any one time; |
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if
applicable, the designation and terms of the underlying securities with which the warrants are issued and the number of warrants
issued with each underlying security; |
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if
applicable, the date on and after which the warrants and the related underlying securities will be separately transferable; |
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if
applicable, a discussion of material federal income tax considerations; |
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if
applicable, the terms of redemption of the warrants; |
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the
identity of the warrant agent, if any; |
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the
procedures and conditions relating to the exercise of the warrants; and |
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any
other terms of the warrants, including terms, procedures, and limitations relating to the exchange and exercise of the warrants. |
Warrant Agreement
We may issue the warrants in one or more series
under one or more warrant agreements, each to be entered into between us and a bank, trust company, or other financial institution as
warrant agent. We may add, replace, or terminate warrant agents from time to time. We may also choose to act as our own warrant agent
or may choose one of our subsidiaries to do so.
The warrant agent under a warrant agreement will
act solely as our agent in connection with the warrants issued under that agreement. Any holder of warrants may, without the consent
of any other person, enforce by appropriate legal action, on its own behalf, its right to exercise those warrants in accordance with
their terms.
Form, Exchange, and Transfer
We may issue the warrants in registered form
or bearer form. Warrants issued in registered form, i.e., book-entry form, will be represented by a global security registered in the
name of a depository, which will be the holder of all the warrants represented by the global security. Those investors who own beneficial
interests in a global warrant will do so through participants in the depository’s system, and the rights of these indirect owners
will be governed solely by the applicable procedures of the depository and its participants. In addition, we may issue warrants in non-global
form, i.e., bearer form. If any warrants are issued in non-global form, warrant certificates may be exchanged for new warrant certificates
of different denominations, and holders may exchange, transfer, or exercise their warrants at the warrant agent’s office or any
other office indicated in the applicable prospectus supplement, information incorporated by reference, or free writing prospectus.
Prior to the exercise of their warrants, holders
of warrants exercisable for Ordinary Shares will not have any rights of holders of Ordinary Shares and will not be entitled to dividend
payments, if any, or voting rights of the Ordinary Shares.
Exercise of Warrants
A warrant will entitle the holder to purchase
for cash an amount of securities at an exercise price that will be stated in, or that will be determinable as described in, the applicable
prospectus supplement, information incorporated by reference, or free writing prospectus. Warrants may be exercised at any time up to
the close of business on the expiration date set forth in the applicable offering material. After the close of business on the expiration
date, unexercised warrants will become void. Warrants may be redeemed as set forth in the applicable offering material.
Warrants may be exercised as set forth in the
applicable offering material. Upon receipt of payment and the warrant certificate properly completed and duly executed at the corporate
trust office of the warrant agent or any other office indicated in the applicable offering material, we will forward, as soon as practicable,
the securities purchasable upon such exercise. If less than all of the warrants represented by such warrant certificate are exercised,
a new warrant certificate will be issued for the remaining warrants.
DESCRIPTION OF RIGHTS
We may issue rights to purchase our securities.
The rights may or may not be transferable by the persons purchasing or receiving the rights. In connection with any rights offering,
we may enter into a standby underwriting or other arrangement with one or more underwriters or other persons pursuant to which such underwriters
or other persons would purchase any offered securities remaining unsubscribed for after such rights offering. Each series of rights will
be issued under a separate rights agent agreement to be entered into between us and one or more banks, trust companies, or other financial
institutions, as rights agent, which we will name in the applicable prospectus supplement. The rights agent will act solely as our agent
in connection with the rights and will not assume any obligation or relationship of agency or trust for or with any holders of rights
certificates or beneficial owners of rights.
The prospectus supplement relating to any rights
that we offer will include specific terms relating to the offering, including, among other matters:
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the
date of determining the security holders entitled to the rights distribution; |
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the
aggregate number of rights issued and the aggregate amount of securities purchasable upon exercise of the rights; |
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the
exercise price; |
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the
conditions to completion of the rights offering; |
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the
date on which the right to exercise the rights will commence and the date on which the rights will expire; and |
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any
applicable federal income tax considerations. |
Each right would entitle the holder of the rights
to purchase for cash the principal amount of securities at the exercise price set forth in the applicable prospectus supplement. Rights
may be exercised at any time up to the close of business on the expiration date for the rights provided in the applicable prospectus
supplement. After the close of business on the expiration date, all unexercised rights will become void.
If less than all of the rights issued in any
rights offering are exercised, we may offer any unsubscribed securities directly to persons other than our security holders, to or through
agents, underwriters, or dealers, or through a combination of such methods, including pursuant to standby arrangements, as described
in the applicable prospectus supplement.
DESCRIPTION OF UNITS
We may issue units composed of any combination
of our securities. We will issue each unit so that the holder of the unit is also the holder of each security included in the unit. As
a result, the holder of a unit will have the rights and obligations of a holder of each included security. The unit agreement under which
a unit is issued may provide that the securities included in the unit may not be held or transferred separately, at any time or at any
time before a specified date.
The following description is a summary of selected
provisions relating to units that we may offer. The summary is not complete. When units are offered in the future, a prospectus supplement,
information incorporated by reference, or a free writing prospectus, as applicable, will explain the particular terms of those securities
and the extent to which these general provisions may apply. The specific terms of the units as described in a prospectus supplement,
information incorporated by reference, or free writing prospectus will supplement and, if applicable, may modify or replace the general
terms described in this section.
This summary and any description of units in
the applicable prospectus supplement, information incorporated by reference, or free writing prospectus is subject to and is qualified
in its entirety by reference to the unit agreement, collateral arrangements, and depositary arrangements, if applicable. We will file
each of these documents, as applicable, with the SEC and incorporate them by reference as an exhibit to the registration statement of
which this prospectus is a part on or before the time we issue a series of units. See “Where You Can Find Additional Information”
and “Incorporation of Documents by Reference” below for information on how to obtain a copy of a document when it is filed.
The applicable prospectus supplement, information
incorporated by reference, or free writing prospectus may describe:
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the
designation and terms of the units and of the securities comprising the units, including whether and under what circumstances those
securities may be held or transferred separately; |
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any
provisions for the issuance, payment, settlement, transfer, or exchange of the units or of the securities composing the units; |
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whether
the units will be issued in fully registered or global form; and |
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any
other terms of the units. |
The applicable provisions described in this section,
as well as those described under “Description of Share Capital,” “Description of Ordinary Shares,” “Description
of Debt Securities,” “Description of Warrants,” and “Description of Rights” above, will apply to each unit
and to each security included in each unit, respectively.
SELLING
SHAREHOLDERS
This prospectus in part covers the resale of
up to an aggregate of 447,917 Ordinary Shares. We will not receive any of the proceeds from the sale of Ordinary Shares by the Selling
Shareholders. Except as disclosed herein, the Selling Shareholder have not had any material relationship with us within the past three
years.
The following table sets forth (a) the name
and position or positions with the Company of each Selling Shareholder; (b) the aggregate of (i) the number of Ordinary Shares
held by each Selling Shareholder as of the date of this prospectus, and (ii) the number of shares issuable upon the exercise of
the warrants held by such Selling Shareholder that are being registered pursuant to this Registration Statement for resale by each Selling
Shareholder as of the date of this prospectus; (c) the number of Ordinary Shares that each Selling Shareholder may offer for sale
from time to time pursuant to this prospectus, whether or not such Selling Shareholder has a present intention to do so; and (d) the
number of Ordinary Shares to be beneficially owned by each Selling Shareholder following the sale of all shares that may be so offered
pursuant to this prospectus, assuming no other change in ownership of Ordinary Shares by such Selling Shareholder after the date of this
prospectus. Unless otherwise indicated, beneficial ownership is direct and the person indicated has sole voting and investment power.
Inclusion of an individual’s name in the
table below does not constitute an admission that such individual is an “affiliate” of the Company.
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Shares
Owned Prior to
Resale(1) | | |
Number of
Shares Offered
for | | |
Shares
Beneficially Owned After Resale(1) | |
| Selling Shareholders | |
Number | | |
Percent | | |
Resale | | |
Number | | |
Percent | |
| An
Rui Tai BVI(2) | |
| 343,750 | | |
| 22.40 | % | |
| 171,875 | | |
| 171,875 | | |
| 11.20 | % |
| Deng
Guan BVI(3) | |
| 217,189 | | |
| 14.15 | % | |
| 119,792 | | |
| 97,397 | | |
| 6.35 | % |
| PBCY
Investment(4) | |
| 312,500 | | |
| 20.37 | % | |
| 156,250 | | |
| 156,250 | | |
| 10.18 | % |
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(1) |
Percentage is computed with reference to 1,534,487
Ordinary Shares issued as of September 13, 2023 and assumes for each Selling Shareholder the sale of all shares offered by that particular
Selling Shareholder under this prospectus. In computing the percentage ownership of each Selling Shareholder, shares that such Selling
Shareholder has the right to acquire within 60 days, including through the exercise of any option, warrant, or other right or the
conversion of any other security, after the date of this prospectus, are included. |
| (2) | Represents the number of Ordinary Shares
beneficially owned by An Rui Tai BVI, a business company incorporated under the laws of the
BVI, which is owned as to 90% by Ms. Wenxiu Zhong and 10% by Mr. Sheng Gong. The
registered address of An Rui Tai BVI is Craigmuir Chambers, Road Town, Tortola, VG 1110,
British Virgin Islands. |
| (3) | Represents the number of Ordinary Shares
beneficially owned by Deng Guan BVI, a business company incorporated under the laws of the
BVI and is wholly owned by Mr. Hui Yu. The registered address of Deng Guan BVI is Craigmuir
Chambers, Road Town, Tortola VG 1110, British Virgin Islands. |
| (4) | Represents the number of Ordinary Shares
beneficially owned by PBCY Investment, a business company incorporated under the laws of
the BVI and is owned as to 86.35% by Pubang Landscape through Pubang Hong Kong and 13.65%
by CYY Holdings. The registered address of PBCY Investment is Craigmuir Chambers, Road Town,
Tortola VG 1110, British Virgin Islands. |
The Company may supplement this prospectus from
time to time as required by the rules of the SEC to include certain information concerning the security ownership of the Selling
Shareholders or any new Selling Shareholders, the number of securities offered for resale and the position, office, or other material
relationship which a Selling Shareholder has had within the past three years with the Company or any of its predecessors or affiliates.
PLAN OF DISTRIBUTION
In this section of the prospectus, the term “Selling
Shareholders” means and includes:
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the persons identified
in the table above as the Selling Shareholders; and |
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any of the donees, pledgees,
distributees, transferees, or other successors in interest of those persons referenced above who may: (a) receive any of the
Ordinary Shares offered hereby after the date of this prospectus and (b) offer or sell those shares hereunder. |
We and the Selling Shareholders may sell the
securities offered by this prospectus from time to time in one or more transactions, including, without limitation:
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through
agents; |
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to
or through underwriters; |
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through
broker-dealers (acting as agent or principal); |
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directly
to purchasers (including our affiliates and shareholders), through a specific bidding or auction process, a rights offering, or other
method; |
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through
a combination of any such methods of sale; or |
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through
any other methods described in a prospectus supplement. |
The distribution of securities may be effected,
from time to time, in one or more transactions, including:
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block
transactions (which may involve crosses) and transactions on Nasdaq or any other organized market where the securities may be traded; |
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purchases
by a broker-dealer as principal and resale by the broker-dealer for its own account pursuant to a prospectus supplement; |
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ordinary
brokerage transactions and transactions in which a broker-dealer solicits purchasers; |
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sales
“at the market” to or through a market maker or into an existing trading market, on an exchange or otherwise; and |
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sales
in other ways not involving market makers or established trading markets, including direct sales to purchasers. |
The securities may be sold at a fixed price or
prices, which may be changed, or at market prices prevailing at the time of sale, at prices relating to the prevailing market prices
or at negotiated prices. The consideration may be cash, extinguishment of debt, or another form negotiated by the parties. Agents, underwriters,
or broker-dealers may be paid compensation for offering and selling the securities. That compensation may be in the form of discounts,
concessions, or commissions to be received from us or from the purchasers of the securities. Dealers and agents participating in the
distribution of the securities may be deemed to be underwriters, and compensation received by them on resale of the securities may be
deemed to be underwriting discounts and commissions under the Securities Act. If such dealers or agents were deemed to be underwriters,
they may be subject to statutory liabilities under the Securities Act.
We may also make direct sales through subscription
rights distributed to our existing shareholders on a pro rata basis, which may or may not be transferable. In any distribution of subscription
rights to our shareholders, if all of the underlying securities are not subscribed for, we may then sell the unsubscribed securities
directly to third parties or may engage the services of one or more underwriters, dealers, or agents, including standby underwriters,
to sell the unsubscribed securities to third parties.
Some or all of the securities that we offer through
this prospectus may be new issues of securities with no established trading market. Any underwriters to whom we sell our securities for
public offering and sale may make a market in those securities, but they will not be obligated to do so and they may discontinue any
market making at any time without notice. Accordingly, we cannot assure you of the liquidity of, or continued trading markets for, any
securities that we offer.
Agents may, from time to time, solicit offers
to purchase the securities. If required, we will name in the applicable prospectus supplement, document incorporated by reference, or
free writing prospectus, as applicable, any agent involved in the offer or sale of the securities and set forth any compensation payable
to the agent. Unless otherwise indicated, any agent will be acting on a best efforts basis for the period of its appointment. Any agent
selling the securities covered by this prospectus may be deemed to be an underwriter of the securities.
If underwriters are used in an offering, securities
will be acquired by the underwriters for their own account and may be resold, from time to time, in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale, or under delayed delivery
contracts or other contractual commitments. Securities may be offered to the public either through underwriting syndicates represented
by one or more managing underwriters or directly by one or more firms acting as underwriters. If an underwriter or underwriters are used
in the sale of securities, an underwriting agreement will be executed with the underwriter or underwriters at the time an agreement for
the sale is reached. The applicable prospectus supplement will set forth the managing underwriter or underwriters, as well as any other
underwriter or underwriters, with respect to a particular underwritten offering of securities, and will set forth the terms of the transactions,
including compensation of the underwriters and dealers and the public offering price, if applicable. This prospectus, the applicable
prospectus supplement and any applicable free writing prospectus will be used by the underwriters to resell the securities.
If a dealer is used in the sale of the securities,
we, or an underwriter, will sell the securities to the dealer, as principal. The dealer may then resell the securities to the public
at varying prices to be determined by the dealer at the time of resale. To the extent required, we will set forth in the prospectus supplement,
document incorporated by reference, or free writing prospectus, as applicable, the name of the dealer and the terms of the transactions.
We may directly solicit offers to purchase the
securities and may make sales of securities directly to institutional investors or others. These persons may be deemed to be underwriters
with respect to any resale of the securities. To the extent required, the prospectus supplement, document incorporated by reference,
or free writing prospectus, as applicable, will describe the terms of any such sales, including the terms of any bidding or auction process,
if used.
Agents, underwriters, and dealers may be entitled
under agreements which may be entered into with us to indemnification by us against specified liabilities, including liabilities incurred
under the Securities Act, or to contribution by us to payments they may be required to make in respect of such liabilities. If required,
the prospectus supplement, document incorporated by reference, or free writing prospectus, as applicable, will describe the terms and
conditions of such indemnification or contribution. Some of the agents, underwriters, or dealers, or their affiliates may be customers
of, engage in transactions with or perform services for us or our subsidiaries or affiliates in the ordinary course of business.
Under the securities laws of some states, the
securities offered by this prospectus may be sold in those states only through registered or licensed brokers or dealers.
Any person participating in the distribution
of securities registered under the registration statement that includes this prospectus will be subject to applicable provisions of the
Exchange Act, and the applicable SEC rules and regulations, including, among others, Regulation M, which may limit the timing of
purchases and sales of any of our securities by any such person. Furthermore, Regulation M may restrict the ability of any person engaged
in the distribution of our securities to engage in market-making activities with respect to our securities.
These restrictions may affect the marketability
of our securities and the ability of any person or entity to engage in market-making activities with respect to our securities.
Certain persons participating in an offering
may engage in over-allotment, stabilizing transactions, short-covering transactions, and penalty bids in accordance with Regulation M
under the Exchange Act that stabilize, maintain, or otherwise affect the price of the offered securities. If any such activities will
occur, they will be described in the applicable prospectus supplement.
In order to comply with certain state securities
or blue sky laws and regulations, if applicable, the securities offered hereby will be sold in such jurisdictions only through registered
or licensed brokers or dealers. In certain states, the securities may not be sold unless they are registered or qualified for sale in
such state, or unless an exemption from registration or qualification is available and is obtained.
The Selling Shareholders have advised us that
they have not entered into any agreements, understandings, or arrangements with any underwriters or broker-dealers regarding the sale
of their securities. There is no underwriter or coordinating broker acting in connection with the proposed sale of Ordinary Shares by
the Selling Shareholders.
We will bear all costs, expenses, and fees in
connection with the registration of the Ordinary Shares offered hereby. The Selling Shareholders, however, will bear any brokerage or
underwriting commissions and similar selling expenses, if any, attributable to the sale of the Ordinary Shares offered pursuant to this
prospectus. We have agreed to indemnify the Selling Shareholders against certain liabilities, including liabilities under the Securities
Act, or to contribute to payments to which any of those security holders may be required to make in respect thereof.
There can be no assurance that the Selling Shareholders
will sell any or all of the securities offered by them hereby.
To the extent required, this prospectus may be
amended or supplemented from time to time to describe a specific plan of distribution.
TAXATION
Material income tax consequences relating to
the purchase, ownership, and disposition of the securities offered by this prospectus are set forth in “Item 10. Additional Information—E.
Taxation” in our annual report on Form 20-F for the year ended December 31, 2022, which is incorporated herein by reference,
as updated by our subsequent filings under the Exchange Act that are incorporated by reference and, if applicable, in any accompanying
prospectus supplement or relevant free writing prospectus.
EXPENSES
The following table sets forth the aggregate
expenses in connection with this offering, all of which will be paid by us. All amounts shown are estimates, except for the SEC registration
fee.
| SEC registration fee | |
$ | 11,415.13 | |
| Financial Industry Regulatory Authority fees | |
$ | 16,037.84 | |
| Legal fees and expenses | |
| $* | |
| Accounting fees and expenses | |
| $* | |
| Printing expenses | |
| $* | |
| Miscellaneous expenses | |
| $* | |
| Total | |
| $* | |
| * |
To be provided by a prospectus
supplement or as an exhibit to a report of foreign private issuer on Form 6-K that is incorporated by reference into this registration
statement. Estimated solely for this item. Actual expenses may vary. |
MATERIAL CONTRACTS
Our material contracts are described in the documents
incorporated by reference into this prospectus. See “Incorporation of Documents by Reference” below.
MATERIAL CHANGES
Except as otherwise described in our annual report
on Form 20-F for the fiscal year ended December 31, 2022, in our reports of foreign issuer on Form 6-K filed or submitted
under the Exchange Act and incorporated by reference herein, and as disclosed in this prospectus or the applicable prospectus supplement,
no reportable material changes have occurred since December 31, 2022.
LEGAL MATTERS
We are being represented by Hunter Taubman Fischer&
Li LLC with respect to certain legal matters as to United States federal securities and New York State law. The validity of the securities
offered in this offering and certain other legal matters as to Cayman Islands law are passed upon for us by Maples and Calder (Hong Kong)
LLP, our counsel as to Cayman Islands law. Legal matters as to PRC law are passed upon for us by Beijing Dacheng Law Offices, LLP. If
legal matters in connection with offerings made pursuant to this prospectus are passed upon by counsel to underwriters, dealers, or agents,
such counsel will be named in the applicable prospectus supplement relating to any such offering.
EXPERTS
The financial statements incorporated by reference
in this prospectus for the fiscal year ended December 31, 2022 have been audited by YCM CPA INC., an independent registered public
accounting firm, as set forth in their report thereon included therein, and incorporated herein by reference, and are included in reliance
upon such report given on the authority of such firm as experts in accounting and auditing. The office of YCM CPA INC. is located at
2400 Barranca Pkwy, Suite 300, Irvine, California.
The financial statements incorporated by reference
in this prospectus for the fiscal years ended December 31, 2020 and 2021 have been audited by Friedman LLP, an independent registered
public accounting firm, as set forth in their report thereon included therein, and incorporated herein by reference, and are included
in reliance upon such report given on the authority of such firm as experts in accounting and auditing. Friedman LLP was merged with
Marcum LLP on September 1, 2022 and filed its application to withdraw the PCAOB registration on December 30, 2022. The office
of Friedman LLP was located at One Liberty Plaza, 165 Broadway 21st Floor, New York, NY 10006.
INCORPORATION OF DOCUMENTS
BY REFERENCE
The SEC allows us to “incorporate by reference”
into this prospectus certain information we file with the SEC. This means that we can disclose important information to you by referring
you to those documents. Any statement contained in a document incorporated by reference in this prospectus shall be deemed to be modified
or superseded for purposes of this prospectus to the extent that a statement contained herein, or in any subsequently filed document,
which also is incorporated by reference herein, modifies or supersedes such earlier statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus.
We hereby incorporate by reference into this
prospectus the following documents:
| (4) | any future annual reports on Form 20-F
filed with the SEC after the date of this prospectus and prior to the termination of the
offering of the securities offered by this prospectus; and |
| (5) | any future reports of foreign private
issuer on Form 6-K that we furnish to the SEC after the date of this prospectus that
are identified in such reports as being incorporated by reference into the registration statement
of which this prospectus forms a part. |
Our annual report on Form 20-F for the fiscal
year ended December 31, 2022 filed with the SEC on May 8, 2023 contains a description of our business and audited consolidated
financial statements with a report by our independent auditors. These statements were prepared in accordance with U.S. GAAP.
Unless expressly incorporated by reference, nothing
in this prospectus shall be deemed to incorporate by reference information furnished to, but not filed with, the SEC. Copies of all documents
incorporated by reference in this prospectus, other than exhibits to those document unless such exhibits are specially incorporated by
reference in this prospectus, will be provided at no cost to each person, including any beneficial owner, who receives a copy of this
prospectus on the written or oral request of that person made to:
Baosheng Media Group Holdings Limited
East Floor 5, Building No. 8, Xishanhui
Shijingshan District, Beijing 100041
People’s Republic of China
+86-010-82088021
You should rely only on the information that
we incorporate by reference or provide in this prospectus. We have not authorized anyone to provide you with different information. We
are not making any offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should not assume
that the information contained or incorporated in this prospectus by reference is accurate as of any date other than the date of the
document containing the information.
Where
You Can Find ADDITIONAL Information
As permitted by SEC rules, this prospectus omits
certain information and exhibits that are included in the registration statement of which this prospectus forms a part. Since this prospectus
may not contain all of the information that you may find important, you should review the full text of these documents. If we have filed
a contract, agreement, or other document as an exhibit to the registration statement of which this prospectus forms a part, you should
read the exhibit for a more complete understanding of the document or matter involved. Each statement in this prospectus, including statements
incorporated by reference as discussed above, regarding a contract, agreement, or other document is qualified in its entirety by reference
to the actual document.
We are subject to periodic reporting and other
informational requirements of the Exchange Act as applicable to foreign private issuers. Accordingly, we are required to file reports,
including annual reports on Form 20-F, and other information with the SEC. All information electronically filed with the SEC can
be inspected over the Internet at the SEC’s website at www.sec.gov.
As a foreign private issuer, we are exempt under
the Exchange Act from, among other things, the rules prescribing the furnishing and content of proxy statements, and our executive
officers, directors, and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in
Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file periodic or current reports
and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange
Act.
ENFORCEABILITY OF CIVIL
LIABILITIES
We were incorporated under the laws of the Cayman
Islands as an exempted company with limited liability. We incorporated under the laws of the Cayman Islands because of certain benefits
associated with being a Cayman Islands company, such as political and economic stability, an effective judicial system, a favorable tax
system, the absence of foreign exchange control or currency restrictions and the availability of professional and support services. The
Cayman Islands, however, has a less developed body of securities laws as compared to the United States and provides significantly less
protection for investors than the United States. Additionally, Cayman Islands companies may not have standing to sue in the Federal courts
of the United States.
Substantially all of our assets are located in
the PRC. In addition, all of our directors and officers reside in China, including our chief executive officer and chairperson of the
board, Shasha Mi, our chief financial officer, Yue Jin, and our directors, Sheng Gong, Kun Zhang, Guangyao Zhu, and Changhong Jiang,
and all or a substantial portion of their assets are located outside the United States. As a result, it may be difficult for investors
to effect service of process within the United States upon us or these persons, or to enforce against us or them judgments obtained in
United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States
or any state in the United States.
We have appointed Puglisi & Associates
as our agent to receive service of process with respect to any action brought against us in the United States District Court for the
Southern District of New York under the federal securities laws of the United States or of any state in the United States or any action
brought against us in the Supreme Court of the State of New York in the County of New York under the securities laws of the State of
New York.
Maples and Calder (Hong Kong) LLP, our counsel
with respect to the laws of the Cayman Islands, and Beijing Dacheng Law Offices, LLP, our counsel with respect to PRC law, have advised
us that there is uncertainty as to whether the courts of the Cayman Islands or the PRC would (i) recognize or enforce judgments
of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities
laws of the United States or any state in the United States or (ii) entertain original actions brought in the Cayman Islands or
the PRC against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.
Maples and Calder (Hong Kong) LLP has further
advised us that there is currently no statutory enforcement or treaty between the United States and the Cayman Islands providing for
enforcement of judgments. A judgment obtained in the United States, however, may be recognized and enforced in the courts of the Cayman
Islands at common law, without any re-examination on the merits of the underlying dispute, by an action commenced on the foreign judgment
debt in the Grand Court of the Cayman Islands, provided such judgment: (i) is given by a foreign court of competent jurisdiction;
(ii) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given; (iii) is final;
(iv) is not in respect of taxes, a fine or a penalty; and (v) was not obtained in a manner and is not of a kind the enforcement
of which is contrary to natural justice or the public policy of the Cayman Islands. Furthermore, it is uncertain that Cayman Islands
courts would enforce: (1) judgments of U.S. courts obtained in actions against us or other persons that are predicated upon the
civil liability provisions of the U.S. federal securities laws; or (2) original actions brought against us or other persons predicated
upon the Securities Act. Maples and Calder (Hong Kong) LLP has informed us that there is uncertainty with regard to Cayman Islands law
relating to whether a judgment obtained from the U.S. courts under civil liability provisions of the securities laws will be determined
by the courts of the Cayman Islands as penal or punitive in nature.
Beijing Dacheng Law Offices, LLP, our counsel
with respect to PRC laws, has further advised us that the recognition and enforcement of foreign judgments are provided for under the
PRC Civil Procedure Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil
Procedure Law based either on treaties between China and the country where the judgment is made or on reciprocity between jurisdictions.
There are no treaties or other forms of reciprocity between China and the United States for the mutual recognition and enforcement of
court judgments. Beijing Dacheng Law Offices, LLP has further advised us that under PRC law, PRC courts will not enforce a foreign judgment
against us or our officers and directors if the court decides that such judgment violates the basic principles of PRC law or national
sovereignty, security or public interest, thus making the recognition and enforcement of a U.S. court judgment in China difficult.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 8. Indemnification of Directors and Officers
Cayman Islands law does not limit the extent
to which a company’s articles of association may provide for indemnification of officers and directors, except to the extent any
such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil
fraud or the consequences of committing a crime. Our amended and restated memorandum and articles of association provide that, to the
extent permitted by law, we shall indemnify every director (including any alternate director), secretary, assistant secretary, or other
officer for the time being and from time to time (but not including our auditors) and the personal representatives of the same against:
| (a) | all
actions, proceedings, costs, charges, expenses, losses, damages, or liabilities incurred
or sustained by every director (including any alternate director), secretary, assistant secretary,
or other officer for the time being and from time to time (but not including our auditors)
or the personal representatives of the same in or about the conduct of our business
or affairs (including as a result of any mistake of judgment) or in the execution or discharge
of his/her duties, powers, authorities or discretions; and |
| (b) | without limitation to paragraph (a) above,
all costs, expenses, losses, or liabilities incurred by every director (including any alternate
director), secretary, assistant secretary, or other officer for the time being and from time
to time (but not including our auditors) or the personal representatives of the same in defending
(whether successfully or otherwise) any civil proceedings concerning us or our affairs in
any court whether in the Cayman Islands or elsewhere. |
No such director (including any alternate director),
secretary, assistant secretary, or other officer for the time being and from time to time (but not including our auditors) or the personal
representatives of the same, however, shall be indemnified in respect of any matter arising out of his own dishonesty, willful default
or fraud.
To the extent permitted by law, we may make a
payment, or agree to make a payment, whether by way of advance, loan or otherwise, for any legal costs incurred by an existing secretary,
or any of our officers in respect of any matter identified in above on condition that the secretary, or officer must repay the amount
paid by us to the extent that it is ultimately found not liable to indemnify the secretary or that officer for those legal costs.
Pursuant to the indemnification agreements, the
form of which is filed as Exhibit 10.2 to the Registrant’s Registration Statement on Form F-1 (file No. 333-239800),
initially filed with the Commission on July 10, 2020, we have agreed to indemnify our directors and executive officers against certain
liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our
company.
Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have
been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is
therefore unenforceable.
Item 9. Exhibits
| Exhibit No. |
|
Description |
| 1.1* |
|
Form of Underwriting
Agreement |
| 3.1 |
|
Amended and Restated Memorandum
and Articles of Association (incorporated herein by reference to Exhibit 1.1 to our 2022 Annual Report on Form 20-F, filed
with the SEC on May 8, 2023) |
| 4.1 |
|
Registrant’s Specimen
Ordinary Share Certificate (incorporated herein by reference to Exhibit 2.1 to our 2022 Annual Report on Form 20-F, filed
with the SEC on May 8, 2023) |
| 4.2* |
|
Form of Debt Security |
| 4.3* |
|
Form of Warrant Agreement
and Warrant Certificate |
| 4.4* |
|
Form of Right Agreement
and Right Certificate |
| 4.5* |
|
Form of Unit Agreement
and Unit Certificate |
| 4.6† |
|
Form of indenture
with respect to senior debt securities, to be entered into between registrant and a trustee acceptable to the registrant, if any |
| 4.7† |
|
Form of indenture
with respect to subordinated debt securities, to be entered into between registrant and a trustee acceptable to the registrant, if
any |
| 5.1† |
|
Opinion of Maples and
Calder (Hong Kong) LLP |
| 23.1 |
|
Consent
of YCM CPA INC. |
| 23.2 |
|
Consent
of Friedman LLP |
| 23.3† |
|
Consent of Maples and
Calder (Hong Kong) LLP (included in Exhibit 5.1) |
| 23.4 |
|
Consent
of Beijing Dacheng Law Offices, LLP (included in Exhibit 99.1) |
| 24.1† |
|
Power of Attorney (included
on signature page) |
| 25.1** |
|
Form T-1 Statement
of Eligibility under the Trust Indenture Act of 1939 of the Trustee under the Subordinated Debt Securities Indenture |
| 99.1 |
|
Opinion
of Beijing Dacheng Law Offices, LLP regarding certain PRC law matters |
| 107† |
|
Filing Fee Table |
| * |
To be filed, if applicable,
by amendment or as an exhibit to a report filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934, as amended, and incorporated herein by reference. |
| |
|
| ** |
To be filed, if necessary,
on electronic Form 305b2 pursuant to Section 305(b)(2) of the Trust Indenture Act of 1939. |
Item 10 Undertakings
| |
(a) |
The undersigned registrant
hereby undertakes: |
| |
(1) |
To file, during any period
in which offers or sales are being made, a post-effective amendment to this registration statement: |
| |
(i) |
To include any prospectus
required by Section 10(a)(3) of the Securities Act of 1933; |
| |
(ii) |
To reflect in the prospectus
any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price
set forth in the “Calculation of Registration Fee” table in the effective registration statement. |
| |
(iii) |
To include any material
information with respect to the plan of distribution not previously disclosed in the registration statement or any material change
to such information in the registration statement. |
provided,
however, that paragraphs (a)(1)(i), (a)(1)(ii), and (a)(1)(iii) of this section do not apply if the information required
to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Securities and
Exchange Commission by the registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b).
| |
(2) |
That, for the purpose of
determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof. |
| |
(3) |
To remove from registration
by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
| |
(4) |
To file a post-effective
amendment to the registration statement to include any financial statements required by Item 8.A. of Form 20-F at the start
of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of
the Securities Act of 1933 need not be furnished, provided, that the registrant includes in the prospectus, by means of a post-effective
amendment, financial statements required pursuant to this paragraph (4) and other information necessary to ensure that all other
information in the prospectus is at least as current as the date of those financial statements. Notwithstanding the foregoing, a
post-effective amendment need not be filed to include financial statements and information required by Section 10(a)(3) of
the Securities Act of 1933 or Rule 3-19 of Regulation S-K if such financial statements and information are contained in periodic
reports filed with or furnished to the SEC by the registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this registration statement. |
| |
|
|
| |
(5) |
That, for the purpose of
determining liability under the Securities Act of 1933 to any purchaser: |
| |
(i) |
Each prospectus filed by
the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed
prospectus was deemed part of and included in the registration statement; and |
| |
(ii) |
Each prospectus required
to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B
relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information
required by Section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration
statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract
of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer
and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement
relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in
a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated
by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with
a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement
or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date. |
| |
(6) |
That, for the purpose of
determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:
The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold
to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and
will be considered to offer or sell such securities to such purchaser: |
| |
(i) |
Any preliminary prospectus
or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
| |
(ii) |
Any free writing prospectus
relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
| |
(iii) |
The portion of any other
free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities
provided by or on behalf of the undersigned registrant; and |
| |
(iv) |
Any other communication
that is an offer in the offering made by the undersigned registrant to the purchaser. |
| |
(b) |
That, for purposes of determining
any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s
annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering thereof. |
| |
(c) |
Insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication
of such issue. |
SIGNATURES
Pursuant to the requirements of the Securities
Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-3
and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Beijing, China, on September 13, 2023.
| |
Baosheng Media Group Holdings Limited |
| |
|
| |
By: |
/s/
Shasha Mi |
| |
|
Name: |
Shasha Mi |
| |
|
Title: |
Chief Executive Officer and Chairperson of the Board
of Directors |
POWERS OF ATTORNEY
Pursuant to the requirements of the Securities
Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
| Name |
|
Title |
|
Date |
| |
|
|
|
|
| /s/
Shasha Mi |
|
Chief Executive Officer,
Chairman of the Board of Directors |
|
September
13, 2023 |
| Shasha Mi |
|
(Principal Executive Officer) |
|
|
| |
|
|
|
|
| /s/
Yue Jin |
|
Chief Financial Officer |
|
September
13, 2023 |
| Yue Jin |
|
(Principal Accounting and Financial Officer) |
|
|
| |
|
|
|
|
| /s/
Sheng Gong |
|
Director |
|
September
13, 2023 |
| Sheng Gong |
|
|
|
|
| |
|
|
|
|
| /s/
Kun Zhang |
|
Independent Director |
|
September
13, 2023 |
| Kun Zhang |
|
|
|
|
| |
|
|
|
|
| /s/
Guangyao Zhu |
|
Independent Director
|
|
September
13, 2023 |
| Guangyao Zhu |
|
|
|
|
| |
|
|
|
|
| /s/
Changhong Jiang |
|
Independent Director |
|
September
13, 2023 |
| Changhong Jiang |
|
|
|
|
| |
|
|
|
|
SIGNATURE OF AUTHORIZED REPRESENTATIVE IN THE
UNITED STATES
Pursuant to the Securities Act of 1933, as
amended, the undersigned, the duly authorized representative in the United States of America of Baosheng Media Group Holdings Limited,
has signed this registration statement thereto in New York, NY on September 13, 2023.
| |
Puglisi & Associates |
| |
|
|
| |
By: |
/s/
Donald J. Puglisi |
| |
|
Name: |
Donald J. Puglisi |
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Title: |
Managing Director |
Exhibit
23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
We consent to the inclusion in this Registration
Statement on Form F-3 of Baosheng Media Group Holdings Limited of our report dated
May 8, 2023, with respect to the consolidated balance sheet of Baosheng Media Group Holdings
and its subsidiaries as of December 31, 2022, and related consolidated statements of operations
and comprehensive income (loss), change in shareholders’ equity, and cash flows for the year ended December 31, 2022. We
also consent to the reference to our firm under the heading “Experts” in the Registration Statement.
/s/ YCM CPA, Inc.
PCAOB ID
6781
Irvine, California
September 13, 2023
Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
We hereby consent to the incorporation by reference
in the amendment No. 1 to this Registration Statement on Form F-3 of Baosheng Media Group Holdings Limited of our report dated
May 16, 2022, which contains an explanatory paragraph regarding the effects of the retrospective adjustments related to the 2022
Share Consolidation, Increase in Share Capital and 2023 Share Consolidation as discussed in Note 1 and Note 15, which were audited
by other auditors, relating to the consolidated balance sheets as of December 31, 2021, and the related consolidated statements of
operations and comprehensive income (loss), shareholders’ equity, and cash flows of Baosheng Media Group Holdings Limited and its
subsidiaries for each of the years in the two-year period ended December 31, 2021. We also consent to the reference to our firm under
the heading “Experts” in such Registration Statement. We were dismissed as auditors of Baosheng Media Group Holdings Limited
in July 2022 and, accordingly, we have not performed any audit procedures with respect to any financial statements of Baosheng Media
Group Holdings Limited and its subsidiaries appearing in such Registration Statement for the periods after December 31, 2021.
/s/ Friedman LLP
New York, New York
September 13, 2023
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