# EDGAR Filing Document

**Accession Number:** 0001937692
**File Stem:** 0001929980-23-000027
**Filing Date:** 2023-3
**Character Count:** 1253299
**Document Hash:** 586462496d35238b98f0506fac0c0265
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001929980-23-000027.hdr.sgml**: 20230331

**ACCESSION NUMBER**: 0001929980-23-000027

**CONFORMED SUBMISSION TYPE**: F-1

**PUBLIC DOCUMENT COUNT**: 40

**FILED AS OF DATE**: 20230330

**DATE AS OF CHANGE**: 20230331

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** GoodFaith Technology Inc.
- **CENTRAL INDEX KEY:** 0001937692
- **STANDARD INDUSTRIAL CLASSIFICATION:** FINANCE SERVICES [6199]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** E9
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** F-1
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 333-271016
- **FILM NUMBER:** 23783041

**BUSINESS ADDRESS:**
- **STREET 1:** 1ST FLOOR, BUILDING 5, LANE 55
- **STREET 2:** CHUANHE ROAD,PUDONG NEW DISTRICT
- **CITY:** SHANGHAI
- **STATE:** F4
- **ZIP:** 200135
- **BUSINESS PHONE:** 86-021-68882880

**MAIL ADDRESS:**
- **STREET 1:** 1ST FLOOR, BUILDING 5, LANE 55
- **STREET 2:** CHUANHE ROAD,PUDONG NEW DISTRICT
- **CITY:** SHANGHAI
- **STATE:** F4
- **ZIP:** 200135

**As filed with the U.S. Securities and Exchange Commission on March 30, 2023**

**Registration No. 333-[●]**

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION** 

**Washington, D.C. 20549**

**FORM F-1**

**REGISTRATION STATEMENT**

**UNDER**

**THE SECURITIES ACT OF 1933**

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| **GoodFaith Technology Inc.** |
| (Exact name of registrant as specified in its charter) |

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| **Cayman Islands** | **6199** | **Not Applicable** |
| (State or other jurisdiction of<br> incorporation or organization) | (Primary Standard Industrial<br> Classification Code Number) | (I.R.S. Employer<br> Identification Number) |

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**1st Floor, Building 5, Lane 55, Chuanhe Road,** 

**Pudong New District, Shanghai, The People's Republic of China, 200135**

**+86-021-68882880**

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

**Cogency Global Inc.**

**122 East 42nd Street, 18th Floor**

**New York, NY 10168**

**(212) 947-7200**

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

***With a Copy to:***

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| **Ying Li, Esq.**<br> **Lisa Forcht, Esq.**<br> **Hunter Taubman Fischer & Li LLC**<br> **950 Third Avenue, 19th Floor** <br> **New York, NY 10022**<br> **(212) 530-2206** | **Lawrence S. Venick, Esq.**<br> **Loeb & Loeb LLP**<br> **2206-19 Jardine House**<br> **1 Connaught Place**<br> **Central**<br> **Hong Kong SAR**<br> **Tel: (852) 3923-1111** |

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

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| If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. | ☒ |
| If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. | ☐ |
| If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering | ☐ |
| If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering | ☐ |
| Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 |  |
| Emerging growth company  | ☒ |
| If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act | ☐ |
| † The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |  |

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**The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine.**

The information in this prospectus is not complete and may be changed. We may not sell the securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting any offer to buy these securities in any jurisdiction where such offer or sale is not permitted.<br>**SUBJECT TO COMPLETION**<br>**PRELIMINARY PROSPECTUS DATED MARCH 30, 2023** <br>***3,000,000 Ordinary Shares***<br>![](goodfaith_f1img22.jpg)<br>**GoodFaith Technology Inc.** <br>This is an initial public offering of our ordinary shares, par value $0.0001 per share (the "Ordinary Shares"). Prior to this offering, there has been no public market for our Ordinary Shares. We expect the initial public offering price to be in the range of $4.00 to $6.00 per Ordinary Share. The offering is being made on a "firm commitment" basis by A.G.P./Alliance Global Partners (the "Underwriter"). See "*Underwriting*." We have reserved the symbol GFCX for purposes of listing our Ordinary Shares on the Nasdaq Capital Market and applied to list our Ordinary Shares on the Nasdaq Capital Market ("Nasdaq"). At this time, Nasdaq has not yet approved our application to list our Ordinary Shares. The closing of this offering is conditioned upon Nasdaq's final approval of our listing application, and there is no guarantee or assurance that our Ordinary Shares will be approved for listing by Nasdaq.<br>**Investing in our Ordinary Shares involves a high degree of risk, including the risk of losing your entire investment. See** ***"Risk Factors"*** **beginning on page 13 to read about factors you should consider before buying our Ordinary Shares.**<br>Unless otherwise stated, as used in this prospectus, the terms "we," "us," "our," "GoodFaith Cayman," "our Company," and the "Company" refer to GoodFaith Technology Inc., a Cayman Islands exempted company; "Suzhou GoodFaith" refers to Suzhou GoodFaith Information Technology Co., Ltd., a limited liability company organized under the laws of the People's Republic of China (the "PRC"); and the terms "Beiming Technology," "Shanghai Yuyi," and "Shenzhen Xindesheng" refer to Shanghai Beiming Information Technology Co., Ltd., Shanghai Yuyi Information Technology Co., Ltd., and Shenzhen Xindesheng Financial Services Co., Ltd., respectively, all limited liability companies organized under the laws of the PRC that are directly or indirectly wholly owned by Suzhou GoodFaith.<br>We are a holding company incorporated in the Cayman Islands and not a Chinese operating company. As a holding company with no material operations of our own, we conduct all of our operations through the PRC operating entities, Suzhou GoodFaith and its subsidiaries, including Beiming Technology, Shanghai Yuyi, and Shenzhen Xindesheng. Our corporate structure as a Cayman Islands holding company with operations conducted by our PRC subsidiaries, including Suzhou Chuangzhixin Information Technology Co., Ltd. ("GoodFaith WFOE") and its subsidiaries, involves unique risks to investors. Chinese regulatory authorities could change the rules and regulations regarding foreign ownership in the industry in which the PRC operating entities operate, which would likely result in a material change in our operations and/or a material change in the value of the securities we are offering for sale, including that it could cause the value of such securities to significantly decline or become worthless. Investors in our Ordinary Shares should be aware that they do not directly hold equity interests in the Chinese operating entities, but rather are purchasing equity solely in GoodFaith Technology Inc., our Cayman Islands holding company, which indirectly owns 100% equity interests in the Chinese subsidiaries through its wholly owned British Virgin Islands holding company (GoodFaith Technology Holdings Limited, or "GoodFaith BVI") and its Hong Kong holding company (GoodFaith Technology Limited, or "GoodFaith HK"). Our Ordinary Shares offered in this offering are shares of our Cayman Islands holding company instead of shares of our subsidiaries in China. This is an offering of Ordinary Shares of the Cayman Islands holding company. You may never hold equity interests in the operating PRC subsidiaries. We do not use a variable interest entity ("VIE") structure.<br>Under Cayman Islands law, a Cayman Islands exempted company may pay a dividend on its shares out of either profit or share premium amount, provided that in no circumstances may a dividend be paid if this would result in the company being unable to pay its debts due in the ordinary course of business. If we determine to pay dividends on any of our Ordinary Shares in the future, as a holding company, we will depend on receipt of funds from our PRC subsidiaries in the PRC.<br>

ii<br>

Current PRC regulations permit GoodFaith WFOE, one of our PRC subsidiaries, to pay dividends to GoodFaith HK, our Hong Kong subsidiary, only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of our PRC subsidiaries is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each of such entities in China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. Although the statutory reserves can be used, among other things, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation. The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. For instance, the Circular on Promoting the Reform of Foreign Exchange Management and Improving Authenticity and Compliance Review, or "SAFE Circular 3," issued on January 26, 2017, provides that banks shall, when dealing with dividend remittance transactions from a domestic enterprise to its offshore shareholders of more than $50,000, review the relevant board resolutions, original tax filing form, and audited financial statements of such domestic enterprise based on the principal of genuine transaction. Furthermore, if our PRC subsidiaries incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments. In addition, there can be no assurance that the PRC government will not intervene or impose other restrictions on our ability to transfer or distribute cash within our organization or to foreign investors, which could result in an inability or prohibition on making transfers or distributions outside of mainland China or Hong Kong and adversely affect our business. If we or our PRC subsidiaries are unable to receive all of the revenue from our operations, we may be unable to pay dividends on our Ordinary Shares, should we desire to do so in the future.<br>Cash dividends, if any, on our Ordinary Shares would be paid in U.S. dollars. GoodFaith HK may be considered a non-resident enterprise for tax purposes, so that any dividends GoodFaith WFOE pays to GoodFaith HK may be regarded as China-sourced income and, as a result, may be subject to PRC withholding tax at a rate of up to 10%. See "*Material Income Tax Considerations—Enterprise Taxation in Mainland China*."<br>In order for us to pay dividends to our shareholders, we will rely on payments made from Suzhou GoodFaith to GoodFaith WFOE and the distribution of such payments to GoodFaith HK as dividends from GoodFaith WFOE. Certain payments from Suzhou GoodFaith to GoodFaith WFOE are subject to PRC taxes, including business taxes and value-added tax. If Suzhou GoodFaith or its subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict any such party's ability to pay dividends or make other distributions to us.<br>We are subject to certain legal and operational risks associated with our PRC operating entities' operations in China, including changes in the legal, political, and economic policies of the Chinese government, the relations between China and the United States, and the Chinese or United States regulations, which could cause the value of our securities to significantly decline or become worthless. PRC laws and regulations governing our current business operations are sometimes vague and uncertain, and therefore, these risks may result in a material change in our PRC operating entities' operations, significant depreciation of the value of our Ordinary Shares, or a significantly limit or complete hindrance of our ability to offer or continue to offer our securities to investors. Recently, the PRC government initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using the VIE structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. As confirmed by our PRC counsel, AllBright Law Offices ("AllBright"), neither we nor any of our PRC operating entities are subject to cybersecurity review by the Cyberspace Administration of China ("CAC"), pursuant to the Cybersecurity Review Measures, which were jointly promulgated on December 28, 2021 by the CAC, the National Development and Reform Commission ("NDRC"), the Ministry of Industry and Information Technology ("MIIT"), the Ministry of Public Security, Ministry of Stated Security, the Ministry of Finance of the PRC ("MOF"), the Ministry of Commerce of the PRC ("MOFCOM"), People's Bank of China ("PBOC"), the State Administration for Market Regulation ("SAMR"), the National Radio and Television Administration, the China Securities Regulation Commission ("CSRC"), the National Administration of State Secrets Protection, and the State Cryptography Administration and took effect on February 15, 2022, because neither we nor any of our PRC operating entities (i) actually purchase any internet products or services and our products and services are not offered directly to individual users, but rather are offered to our institutional clients; (ii) conduct our business based on the encrypted data provided by our institutional clients, which we do not own or have any access to; (iii) utilize data processed in our business that has a bearing on national security; and (iv) are an online platform operator. However, since these statements and regulatory actions are new, it is highly uncertain how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on our daily business operation, the ability to accept foreign investments and list on a U.S. exchange or other foreign exchange. <br>On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Enterprises (the "Trial Measures"), which will become effective on March 31, 2023. On the same date, the CSRC circulated Supporting Guidance Rules No. 1 through No. 5, Notes on the Trial Measures, Notice on Administration Arrangements for the Filing of Overseas Listings by Domestic Enterprises and relevant CSRC Answers to Reporter Questions (collectively, the "Guidance Rules and Notice") on the CSRC's official website. If our registration statement on Form F-1 cannot be declared effective on or before March 31, 2023, or if our registration statement on Form F-1 is declared effective on or before March 31, 2023 but we fail to complete this offering and listing on or before September 30, 2023, we will be required to complete necessary filing procedures pursuant to the Trial Measures. See "Risk Factors—Risks Relating to Doing Business in the PRC—The Chinese government exerts substantial influence over the manner in which we must conduct our business activities. We are currently not required to obtain approval from Chinese authorities to list on U.S exchanges, however, if our PRC subsidiaries or the holding company were required to obtain approval in the future and were denied permission from Chinese authorities to list on U.S. exchanges, we will not be able to continue listing on U.S. exchange and the value of our Ordinary Shares may significantly decline or become worthless, which would materially affect the interest of the investors." Notwithstanding the foregoing, as of the date of this prospectus, according to our PRC counsel, AllBright, no relevant PRC laws or regulations in effect require that we obtain permission from any PRC authorities to issue securities to foreign investors, and we have not received any inquiry, notice, warning, sanction, or any regulatory objection to this offering from the CSRC, the CAC, or any other PRC authorities that have jurisdiction over our operations. However, based on the advice of our PRC counsel, AllBright, as our PRC Subsidiaries accounted for more than 50% of our consolidated revenues, profit, total assets or net assets for the fiscal year ended December 31, 2022, and the key components of our operations are carried out in the PRC, this offering is considered an indirect offering by domestic companies and we are therefore subject to the filing requirements for this offering under the Trial Measures and Guidance Rules and Notice. However, since these statements and regulatory actions are newly published, it is highly uncertain what the potential impact such modified or new laws and regulations will have on the daily business operations of our subsidiaries, our ability to accept foreign investments, and our listing on a U.S. exchange. If we do not receive or maintain such approval, or inadvertently conclude that such approval is not required, or applicable laws, regulations, or interpretations change such that we are required to obtain approval in the future, we may be subject to an investigation by competent regulators, fines or penalties, or an order prohibiting us from conducting an offering, and these risks could result in a material adverse change in our operations and the value of our Ordinary Shares, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause such securities to significantly decline in value or become worthless. See "*Risk Factors - Risks Relating to Doing Business in the PRC*," and "*Risk Factors - Risks Relating to This Offering and the Trading Market*" for more information.<br>

iii<br>

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| Furthermore, our Ordinary Shares may be prohibited to trade on a national exchange or in the over-the-counter trading market in the United States under the Holding Foreign Companies Accountable Act (the "HFCA" Act), if the Public Company Accounting Oversight Board (United States) (the "PCAOB") determines that it cannot inspect or fully investigate our auditors for three consecutive years beginning in 2021. As a result, an exchange may determine to delist our securities. Additionally, our securities may be prohibited from trading if our auditor cannot be fully inspected as more stringent criteria have been imposed by the SEC and the PCAOB recently. For example, on December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act, which became effective on January 10, 2022. On December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, a Special Administrative Region of the PRC, because of positions taken by PRC authorities in those jurisdictions. As of the date of the prospectus, our auditor, UHY LLP, which is headquartered in the United States, has been inspected by the PCAOB on a regular basis, with the last inspection in 2019, and is not subject to the determinations announced by the PCAOB on December 16, 2021. On August 26, 2022, the PCAOB signed the Statement of Protocol (the "SOP") Agreements with the CSRC and the Ministry of Finance of the PRC (the "MOF"). The SOP, together with two protocol agreements (collectively, the "SOP Agreements") 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 SOP disclosed by the U.S. Securities and Exchange Commission (the "SEC"), the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB's access in the future, the PCAOB Board will consider the need to issue a new determination. The PCAOB's December 15, 2022 determination resets the three-year clock for compliance with the HFCA Act. The PCAOB continues to demand complete access in mainland China and Hong Kong moving forward and is making plans to resume regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as needed. The PCAOB has also indicated that it will act immediately to consider the need to issue new determinations with the HFCA Act, if needed. Even though the PCAOB's December 15, 2022 determination significantly reduces the risk of an involuntary delisting under the HFCA Act, it does not eliminate other requirements for companies with PRC operating entities' operations in China like us under both the HFCA Act and SEC guidance. 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 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. A termination in the trading of our securities due to an involuntary delisting or any restriction on the trading in our securities would be expected to have a negative impact on the Company as well as on the value of our securities, should we face heightened operational and legal risks in relation to HFCA compliance. See "*Risk Factors - Risks Relating to Doing Business in the PRC – A recent joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and an act passed by the U.S. Senate all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our offering*."<br>As of the date of this prospectus, none of our subsidiaries have made any dividends or distributions to our Company and our Company has not made any dividends or distributions to our shareholders. Nonetheless, one of our PRC subsidiaries, Shenzhen Xindesheng, made dividends to its former shareholders for fiscal years from 2019 to 2021 before it was indirectly acquired by our Company on December 31, 2021. Specifically, the revised profit distribution in 2019, 2020, and 2021 were $149,366, $593,648, and nil, respectively. See *"Note 10-Shareholders' Equity-Dividends."* We intend to keep any future earnings to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future. If we determine to pay dividends on any of our Ordinary Shares in the future, as a holding company, we will be dependent on receipt of funds from our Hong Kong subsidiary, GoodFaith HK. GoodFaith HK will rely on payments made from Suzhou GoodFaith to GoodFaith WFOE and the distribution of such payments to GoodFaith HK as dividends from GoodFaith WFOE. Our finance department is supervising cash management, following the instructions of our management. Our finance department is responsible for establishing our cash operation plan and coordinating cash management matters among our subsidiaries and departments. Each subsidiary and department initiates a cash request by putting forward a cash demand plan, which explains the specific amount and timing of cash requested, and submitting it to our finance department. The finance department reviews the cash demand plan and prepares a summary for the management of our Company. Management examines and approves the allocation of cash based on the sources of cash and the priorities of the needs. Other than the above, we currently do not have other cash management policies or procedures that dictate how funds are transferred. As of the date of this prospectus, no cash transfer or transfer of other assets has occurred between our Company and our subsidiaries. See "*Prospectus Summary-Dividend Distributions*" and our unaudited condensed consolidated interim financial statements for the six months ended June 30, 2022 and our audited consolidated financial statements for the fiscal years ended December 31, 2021 and 2020.<br>We are an "emerging growth company" as defined under the federal securities laws and will be subject to reduced public company reporting requirements. Please read the disclosures beginning on page 11 of this prospectus for more information.<br>Our Company is controlled by Qearl's Holdings Limited, which owns 47.3% of the equity interests in GoodFaith Cayman. Qearl's Holding Limited, a British Virgin Islands company, is ultimately held by Xiaofeng Fei, as to 10% and by Wonder Phoenix Family Trust (the "Trust"), a trust established under the laws of the Cayman Islands by Xiaofeng Fei, where TMF (Cayman) Ltd. is appointed as the trustee and Kai Zhou as the primary beneficiary, as to 90%. As the First Protectors and the First Members of the Investment Committee of the Trust, Xiaofeng Fei and Kai Zhou are invested with the authority to make investment decisions for the Trust. On November 2, 2021, Xiaofeng Fei and Kai Zhou executed an acting-in-concert agreement, which provides that (i) they shall inform and discuss with each other and reach a consensus before exercising voting rights in making decisions for the Trust, and (ii) if no consensus can be reached, the decision made by Kai Zhou prevails. By virtue of the acting-in-concert agreement, Kai Zhou has the ultimate control of the Trust, and consequently, of Qearl's Holdings Limited and our Company. | Furthermore, our Ordinary Shares may be prohibited to trade on a national exchange or in the over-the-counter trading market in the United States under the Holding Foreign Companies Accountable Act (the "HFCA" Act), if the Public Company Accounting Oversight Board (United States) (the "PCAOB") determines that it cannot inspect or fully investigate our auditors for three consecutive years beginning in 2021. As a result, an exchange may determine to delist our securities. Additionally, our securities may be prohibited from trading if our auditor cannot be fully inspected as more stringent criteria have been imposed by the SEC and the PCAOB recently. For example, on December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act, which became effective on January 10, 2022. On December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, a Special Administrative Region of the PRC, because of positions taken by PRC authorities in those jurisdictions. As of the date of the prospectus, our auditor, UHY LLP, which is headquartered in the United States, has been inspected by the PCAOB on a regular basis, with the last inspection in 2019, and is not subject to the determinations announced by the PCAOB on December 16, 2021. On August 26, 2022, the PCAOB signed the Statement of Protocol (the "SOP") Agreements with the CSRC and the Ministry of Finance of the PRC (the "MOF"). The SOP, together with two protocol agreements (collectively, the "SOP Agreements") 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 SOP disclosed by the U.S. Securities and Exchange Commission (the "SEC"), the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB's access in the future, the PCAOB Board will consider the need to issue a new determination. The PCAOB's December 15, 2022 determination resets the three-year clock for compliance with the HFCA Act. The PCAOB continues to demand complete access in mainland China and Hong Kong moving forward and is making plans to resume regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as needed. The PCAOB has also indicated that it will act immediately to consider the need to issue new determinations with the HFCA Act, if needed. Even though the PCAOB's December 15, 2022 determination significantly reduces the risk of an involuntary delisting under the HFCA Act, it does not eliminate other requirements for companies with PRC operating entities' operations in China like us under both the HFCA Act and SEC guidance. 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 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. A termination in the trading of our securities due to an involuntary delisting or any restriction on the trading in our securities would be expected to have a negative impact on the Company as well as on the value of our securities, should we face heightened operational and legal risks in relation to HFCA compliance. See "*Risk Factors - Risks Relating to Doing Business in the PRC – A recent joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and an act passed by the U.S. Senate all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our offering*."<br>As of the date of this prospectus, none of our subsidiaries have made any dividends or distributions to our Company and our Company has not made any dividends or distributions to our shareholders. Nonetheless, one of our PRC subsidiaries, Shenzhen Xindesheng, made dividends to its former shareholders for fiscal years from 2019 to 2021 before it was indirectly acquired by our Company on December 31, 2021. Specifically, the revised profit distribution in 2019, 2020, and 2021 were $149,366, $593,648, and nil, respectively. See *"Note 10-Shareholders' Equity-Dividends."* We intend to keep any future earnings to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future. If we determine to pay dividends on any of our Ordinary Shares in the future, as a holding company, we will be dependent on receipt of funds from our Hong Kong subsidiary, GoodFaith HK. GoodFaith HK will rely on payments made from Suzhou GoodFaith to GoodFaith WFOE and the distribution of such payments to GoodFaith HK as dividends from GoodFaith WFOE. Our finance department is supervising cash management, following the instructions of our management. Our finance department is responsible for establishing our cash operation plan and coordinating cash management matters among our subsidiaries and departments. Each subsidiary and department initiates a cash request by putting forward a cash demand plan, which explains the specific amount and timing of cash requested, and submitting it to our finance department. The finance department reviews the cash demand plan and prepares a summary for the management of our Company. Management examines and approves the allocation of cash based on the sources of cash and the priorities of the needs. Other than the above, we currently do not have other cash management policies or procedures that dictate how funds are transferred. As of the date of this prospectus, no cash transfer or transfer of other assets has occurred between our Company and our subsidiaries. See "*Prospectus Summary-Dividend Distributions*" and our unaudited condensed consolidated interim financial statements for the six months ended June 30, 2022 and our audited consolidated financial statements for the fiscal years ended December 31, 2021 and 2020.<br>We are an "emerging growth company" as defined under the federal securities laws and will be subject to reduced public company reporting requirements. Please read the disclosures beginning on page 11 of this prospectus for more information.<br>Our Company is controlled by Qearl's Holdings Limited, which owns 47.3% of the equity interests in GoodFaith Cayman. Qearl's Holding Limited, a British Virgin Islands company, is ultimately held by Xiaofeng Fei, as to 10% and by Wonder Phoenix Family Trust (the "Trust"), a trust established under the laws of the Cayman Islands by Xiaofeng Fei, where TMF (Cayman) Ltd. is appointed as the trustee and Kai Zhou as the primary beneficiary, as to 90%. As the First Protectors and the First Members of the Investment Committee of the Trust, Xiaofeng Fei and Kai Zhou are invested with the authority to make investment decisions for the Trust. On November 2, 2021, Xiaofeng Fei and Kai Zhou executed an acting-in-concert agreement, which provides that (i) they shall inform and discuss with each other and reach a consensus before exercising voting rights in making decisions for the Trust, and (ii) if no consensus can be reached, the decision made by Kai Zhou prevails. By virtue of the acting-in-concert agreement, Kai Zhou has the ultimate control of the Trust, and consequently, of Qearl's Holdings Limited and our Company. | Furthermore, our Ordinary Shares may be prohibited to trade on a national exchange or in the over-the-counter trading market in the United States under the Holding Foreign Companies Accountable Act (the "HFCA" Act), if the Public Company Accounting Oversight Board (United States) (the "PCAOB") determines that it cannot inspect or fully investigate our auditors for three consecutive years beginning in 2021. As a result, an exchange may determine to delist our securities. Additionally, our securities may be prohibited from trading if our auditor cannot be fully inspected as more stringent criteria have been imposed by the SEC and the PCAOB recently. For example, on December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act, which became effective on January 10, 2022. On December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, a Special Administrative Region of the PRC, because of positions taken by PRC authorities in those jurisdictions. As of the date of the prospectus, our auditor, UHY LLP, which is headquartered in the United States, has been inspected by the PCAOB on a regular basis, with the last inspection in 2019, and is not subject to the determinations announced by the PCAOB on December 16, 2021. On August 26, 2022, the PCAOB signed the Statement of Protocol (the "SOP") Agreements with the CSRC and the Ministry of Finance of the PRC (the "MOF"). The SOP, together with two protocol agreements (collectively, the "SOP Agreements") 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 SOP disclosed by the U.S. Securities and Exchange Commission (the "SEC"), the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB's access in the future, the PCAOB Board will consider the need to issue a new determination. The PCAOB's December 15, 2022 determination resets the three-year clock for compliance with the HFCA Act. The PCAOB continues to demand complete access in mainland China and Hong Kong moving forward and is making plans to resume regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as needed. The PCAOB has also indicated that it will act immediately to consider the need to issue new determinations with the HFCA Act, if needed. Even though the PCAOB's December 15, 2022 determination significantly reduces the risk of an involuntary delisting under the HFCA Act, it does not eliminate other requirements for companies with PRC operating entities' operations in China like us under both the HFCA Act and SEC guidance. 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 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. A termination in the trading of our securities due to an involuntary delisting or any restriction on the trading in our securities would be expected to have a negative impact on the Company as well as on the value of our securities, should we face heightened operational and legal risks in relation to HFCA compliance. See "*Risk Factors - Risks Relating to Doing Business in the PRC – A recent joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and an act passed by the U.S. Senate all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our offering*."<br>As of the date of this prospectus, none of our subsidiaries have made any dividends or distributions to our Company and our Company has not made any dividends or distributions to our shareholders. Nonetheless, one of our PRC subsidiaries, Shenzhen Xindesheng, made dividends to its former shareholders for fiscal years from 2019 to 2021 before it was indirectly acquired by our Company on December 31, 2021. Specifically, the revised profit distribution in 2019, 2020, and 2021 were $149,366, $593,648, and nil, respectively. See *"Note 10-Shareholders' Equity-Dividends."* We intend to keep any future earnings to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future. If we determine to pay dividends on any of our Ordinary Shares in the future, as a holding company, we will be dependent on receipt of funds from our Hong Kong subsidiary, GoodFaith HK. GoodFaith HK will rely on payments made from Suzhou GoodFaith to GoodFaith WFOE and the distribution of such payments to GoodFaith HK as dividends from GoodFaith WFOE. Our finance department is supervising cash management, following the instructions of our management. Our finance department is responsible for establishing our cash operation plan and coordinating cash management matters among our subsidiaries and departments. Each subsidiary and department initiates a cash request by putting forward a cash demand plan, which explains the specific amount and timing of cash requested, and submitting it to our finance department. The finance department reviews the cash demand plan and prepares a summary for the management of our Company. Management examines and approves the allocation of cash based on the sources of cash and the priorities of the needs. Other than the above, we currently do not have other cash management policies or procedures that dictate how funds are transferred. As of the date of this prospectus, no cash transfer or transfer of other assets has occurred between our Company and our subsidiaries. See "*Prospectus Summary-Dividend Distributions*" and our unaudited condensed consolidated interim financial statements for the six months ended June 30, 2022 and our audited consolidated financial statements for the fiscal years ended December 31, 2021 and 2020.<br>We are an "emerging growth company" as defined under the federal securities laws and will be subject to reduced public company reporting requirements. Please read the disclosures beginning on page 11 of this prospectus for more information.<br>Our Company is controlled by Qearl's Holdings Limited, which owns 47.3% of the equity interests in GoodFaith Cayman. Qearl's Holding Limited, a British Virgin Islands company, is ultimately held by Xiaofeng Fei, as to 10% and by Wonder Phoenix Family Trust (the "Trust"), a trust established under the laws of the Cayman Islands by Xiaofeng Fei, where TMF (Cayman) Ltd. is appointed as the trustee and Kai Zhou as the primary beneficiary, as to 90%. As the First Protectors and the First Members of the Investment Committee of the Trust, Xiaofeng Fei and Kai Zhou are invested with the authority to make investment decisions for the Trust. On November 2, 2021, Xiaofeng Fei and Kai Zhou executed an acting-in-concert agreement, which provides that (i) they shall inform and discuss with each other and reach a consensus before exercising voting rights in making decisions for the Trust, and (ii) if no consensus can be reached, the decision made by Kai Zhou prevails. By virtue of the acting-in-concert agreement, Kai Zhou has the ultimate control of the Trust, and consequently, of Qearl's Holdings Limited and our Company. | Furthermore, our Ordinary Shares may be prohibited to trade on a national exchange or in the over-the-counter trading market in the United States under the Holding Foreign Companies Accountable Act (the "HFCA" Act), if the Public Company Accounting Oversight Board (United States) (the "PCAOB") determines that it cannot inspect or fully investigate our auditors for three consecutive years beginning in 2021. As a result, an exchange may determine to delist our securities. Additionally, our securities may be prohibited from trading if our auditor cannot be fully inspected as more stringent criteria have been imposed by the SEC and the PCAOB recently. For example, on December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act, which became effective on January 10, 2022. On December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, a Special Administrative Region of the PRC, because of positions taken by PRC authorities in those jurisdictions. As of the date of the prospectus, our auditor, UHY LLP, which is headquartered in the United States, has been inspected by the PCAOB on a regular basis, with the last inspection in 2019, and is not subject to the determinations announced by the PCAOB on December 16, 2021. On August 26, 2022, the PCAOB signed the Statement of Protocol (the "SOP") Agreements with the CSRC and the Ministry of Finance of the PRC (the "MOF"). The SOP, together with two protocol agreements (collectively, the "SOP Agreements") 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 SOP disclosed by the U.S. Securities and Exchange Commission (the "SEC"), the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB's access in the future, the PCAOB Board will consider the need to issue a new determination. The PCAOB's December 15, 2022 determination resets the three-year clock for compliance with the HFCA Act. The PCAOB continues to demand complete access in mainland China and Hong Kong moving forward and is making plans to resume regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as needed. The PCAOB has also indicated that it will act immediately to consider the need to issue new determinations with the HFCA Act, if needed. Even though the PCAOB's December 15, 2022 determination significantly reduces the risk of an involuntary delisting under the HFCA Act, it does not eliminate other requirements for companies with PRC operating entities' operations in China like us under both the HFCA Act and SEC guidance. 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 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. A termination in the trading of our securities due to an involuntary delisting or any restriction on the trading in our securities would be expected to have a negative impact on the Company as well as on the value of our securities, should we face heightened operational and legal risks in relation to HFCA compliance. See "*Risk Factors - Risks Relating to Doing Business in the PRC – A recent joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and an act passed by the U.S. Senate all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our offering*."<br>As of the date of this prospectus, none of our subsidiaries have made any dividends or distributions to our Company and our Company has not made any dividends or distributions to our shareholders. Nonetheless, one of our PRC subsidiaries, Shenzhen Xindesheng, made dividends to its former shareholders for fiscal years from 2019 to 2021 before it was indirectly acquired by our Company on December 31, 2021. Specifically, the revised profit distribution in 2019, 2020, and 2021 were $149,366, $593,648, and nil, respectively. See *"Note 10-Shareholders' Equity-Dividends."* We intend to keep any future earnings to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future. If we determine to pay dividends on any of our Ordinary Shares in the future, as a holding company, we will be dependent on receipt of funds from our Hong Kong subsidiary, GoodFaith HK. GoodFaith HK will rely on payments made from Suzhou GoodFaith to GoodFaith WFOE and the distribution of such payments to GoodFaith HK as dividends from GoodFaith WFOE. Our finance department is supervising cash management, following the instructions of our management. Our finance department is responsible for establishing our cash operation plan and coordinating cash management matters among our subsidiaries and departments. Each subsidiary and department initiates a cash request by putting forward a cash demand plan, which explains the specific amount and timing of cash requested, and submitting it to our finance department. The finance department reviews the cash demand plan and prepares a summary for the management of our Company. Management examines and approves the allocation of cash based on the sources of cash and the priorities of the needs. Other than the above, we currently do not have other cash management policies or procedures that dictate how funds are transferred. As of the date of this prospectus, no cash transfer or transfer of other assets has occurred between our Company and our subsidiaries. See "*Prospectus Summary-Dividend Distributions*" and our unaudited condensed consolidated interim financial statements for the six months ended June 30, 2022 and our audited consolidated financial statements for the fiscal years ended December 31, 2021 and 2020.<br>We are an "emerging growth company" as defined under the federal securities laws and will be subject to reduced public company reporting requirements. Please read the disclosures beginning on page 11 of this prospectus for more information.<br>Our Company is controlled by Qearl's Holdings Limited, which owns 47.3% of the equity interests in GoodFaith Cayman. Qearl's Holding Limited, a British Virgin Islands company, is ultimately held by Xiaofeng Fei, as to 10% and by Wonder Phoenix Family Trust (the "Trust"), a trust established under the laws of the Cayman Islands by Xiaofeng Fei, where TMF (Cayman) Ltd. is appointed as the trustee and Kai Zhou as the primary beneficiary, as to 90%. As the First Protectors and the First Members of the Investment Committee of the Trust, Xiaofeng Fei and Kai Zhou are invested with the authority to make investment decisions for the Trust. On November 2, 2021, Xiaofeng Fei and Kai Zhou executed an acting-in-concert agreement, which provides that (i) they shall inform and discuss with each other and reach a consensus before exercising voting rights in making decisions for the Trust, and (ii) if no consensus can be reached, the decision made by Kai Zhou prevails. By virtue of the acting-in-concert agreement, Kai Zhou has the ultimate control of the Trust, and consequently, of Qearl's Holdings Limited and our Company. |
|  | **Per Share** | **Total**<br> **Without** <br> **Over-**<br> **Allotment** <br> **Option** | **Total**<br> **With** <br> **Over-**<br> **Allotment** <br> **Option** |
| **Initial public offering price** | $| $| $|
| Underwriting discounts<br><sup>(1)</sup> | $| $| $|
| **Proceeds to our Company before expenses<sup>(2)</sup>** | $| $| $|

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|:---|:---|
| (1) | Represents underwriting discounts equal to 7.5% per Ordinary Share. |
| (2) | We expect our total cash expenses for this offering, including the non-accountable expense allowance and accountable out-of-pocket expenses payable to A.G.P./Alliance Global Partners, the representative of several underwriters (the "Representative"), to be approximately $175,000, exclusive of the above discounts. In addition, we will pay additional items of value in connection with this offering that are viewed by the Financial Industry Regulatory Authority, or FINRA, as underwriting compensation. These payments will further reduce proceeds available to us before expenses. See "*Underwriting*." |
| This offering is being conducted on a firm commitment basis. The Representative is obligated to take and pay for all of the Ordinary Shares if any such Ordinary Shares are taken. In addition to the underwriting discounts listed above, we have agreed to issue to the Representative or its designated affiliates and to register herein warrants, exercisable for a period of five years after the closing of this offering, to purchase up to 8% of the total number of the Ordinary Shares to be offered by us pursuant to this offering (including the over-allotment shares), solely for the purpose of covering over-allotments shares, at the public offering price less the underwriting discounts (the "Representative's Warrants"). If the underwriters exercise the over-allotment option in full, the total underwing discounts payable will be $1,293,750 based on an assumed midpoint offering price of $5.00 per Ordinary Share, and the total gross proceeds to us, before underwriting discounts and expenses, will be $17,250,000**.** See "Underwriting" for additional information regarding total underwriter compensation.<br>The underwriters expects to deliver the Ordinary Shares against payment as set forth under "*Underwriting*," on or about [●], 2023.<br>**Neither the Securities and Exchange Commission nor any state securities commission nor any other regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.**<br>**A.G.P** <br>Prospectus dated [●], 2023 | This offering is being conducted on a firm commitment basis. The Representative is obligated to take and pay for all of the Ordinary Shares if any such Ordinary Shares are taken. In addition to the underwriting discounts listed above, we have agreed to issue to the Representative or its designated affiliates and to register herein warrants, exercisable for a period of five years after the closing of this offering, to purchase up to 8% of the total number of the Ordinary Shares to be offered by us pursuant to this offering (including the over-allotment shares), solely for the purpose of covering over-allotments shares, at the public offering price less the underwriting discounts (the "Representative's Warrants"). If the underwriters exercise the over-allotment option in full, the total underwing discounts payable will be $1,293,750 based on an assumed midpoint offering price of $5.00 per Ordinary Share, and the total gross proceeds to us, before underwriting discounts and expenses, will be $17,250,000**.** See "Underwriting" for additional information regarding total underwriter compensation.<br>The underwriters expects to deliver the Ordinary Shares against payment as set forth under "*Underwriting*," on or about [●], 2023.<br>**Neither the Securities and Exchange Commission nor any state securities commission nor any other regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.**<br>**A.G.P** <br>Prospectus dated [●], 2023 |

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iv<br>

**TABLE OF CONTENTS**

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|  | **Page** |
| **[PROSPECTUS SUMMARY](#pro)** | 1 |
| **[RISK FACTORS](#risk)** | 13 |
| **[DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS](#disco)** | 46 |
| **[ENFORCEABILITY OF CIVIL LIABILITIES](#enforc)** | 47 |
| **[USE OF PROCEEDS](#use)** | 48 |
| **[DIVIDEND POLICY](#dividend)** | 49 |
| **[CAPITALIZATION](#cap)** | 50 |
| **[DILUTION](#dilution)** | 51 |
| **[CORPORATE HISTORY AND STRUCTURE](#corpp)** | 52 |
| **[MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](#mda)** | 54 |
| **[INDUSTRY](#industry)** | 77 |
| **[BUSINESS](#business)** | 85 |
| **[REGULATIONS](#regulations)** | 114 |
| **[MANAGEMENT](#management)** | 122 |
| **[PRINCIPAL SHAREHOLDERS](#principal)** | 127 |
| **[RELATED PARTY TRANSACTIONS](#related)** | 128 |
| **[DESCRIPTION OF SHARE CAPITAL](#desc)** | 134 |
| **[SHARES ELIGIBLE FOR FUTURE SALE](#shareel)** | 148 |
| **[MATERIAL INCOME TAX CONSIDERATIONS](#material)** | 150 |
| **[UNDERWRITING](#underwriting)** | 157 |
| **[EXPENSES RELATING TO THIS OFFERING](#expemses)** | 160 |
| **[LEGAL MATTERS](#legel)** | 161 |
| **[EXPERTS](#exp)** | 161 |
| **[WHERE YOU CAN FIND ADDITIONAL INFORMATION](#where)** | 161 |
| **[INDEX TO FINANCIAL STATEMENTS](#toc1)** | F-1 |

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| *[**Table of Contents**](#toc)* |

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**ABOUT THIS PROSPECTUS**

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

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

**Conventions that Apply to this Prospectus**

*This prospectus contains information from an industry report commissioned by us and prepared by Frost & Sullivan (Beijing) Inc., Shanghai Branch Co., or "Frost & Sullivan," an independent research firm, titled "The Intelligent Risk Management Market Study in China," to provide information regarding our industry and our market position in China. We refer to this report as the "Frost & Sullivan Report."*

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

● "Beihai Beiming" are to Beihai Beiming Investment Co., Ltd., a limited liability company organized pursuant to the laws of the PRC, which is wholly owned by Suzhou GoodFaith (defined below);

● "China" or the "PRC" are to the People's Republic of China, including the special administrative regions of Hong Kong and Macau, unless referencing specific laws and regulations adopted by the PRC; and "mainland China" are to the People's Republic of China, excluding Taiwan and the special administrative regions of Hong Kong and Macau for the purposes of this prospectus only. The same legal and operational risks associated with operations in China also apply to operations in Hong Kong;

● "elastic computer service" are to a type of cloud computing service provided by third parties, such as Amazon and Alibaba, that enables users to deploy virtual servers within their cloud computing platforms, and elastic computer services allow users to adjust their computing power according to their needs in a flexible and cost-effective manner;

● "GoodFaith BVI" are to GoodFaith Technology Holdings Limited, a company incorporated under the laws of the British Virgin Islands, which is wholly owned by GoodFaith Cayman (defined below);

● "GoodFaith Cayman," "we," "us," "our Company," or the "Company" are to GoodFaith Technology Inc., an exempted company with limited liability incorporated under the laws of the Cayman Islands;

● "GoodFaith HK" or "our Hong Kong subsidiary" are to GoodFaith Technology Limited, a Hong Kong corporation, which is wholly owned by GoodFaith BVI;

● "GoodFaith WFOE" are to Suzhou Chuangzhixin Information Technology Co., Ltd., a limited liability company organized under the laws of the PRC, which is wholly owned by GoodFaith HK;

● "our digital technology," or "the digital technology" are to the Company's data analytics related technology that processes and analyzes client-provided real-time data based on its algorithmic logic and risk models;

● "Renminbi" or "RMB" are to the legal currency of China;

● "shares," "Shares," or "Ordinary Shares" are to the ordinary shares of GoodFaith Cayman, par value $0.0001 per share;

● "Shenzhen Xindesheng" are to Shenzhen Xindesheng Financial Services Co., Ltd., a limited liability company organized pursuant to the laws of the PRC, which is wholly owned by Suzhou GoodFaith (defined below);

● "Suzhou GoodFaith" are to Suzhou GoodFaith Information Technology Co., Ltd., a limited liability company organized under the laws of the PRC, which is wholly owned by GoodFaith WFOE;

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| vi |
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● "the PRC operating entities," or "our PRC operating entities" are to Suzhou GoodFaith and its subsidiaries;

● "the PRC subsidiaries," or "our PRC subsidiaries" are to GoodFaith WFOE and its subsidiaries;

● "U.S. dollars," "$," and "dollars" are to the legal currency of the United States; and

● "WFOE" are to wholly foreign-owned enterprise.

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

Our business is conducted by the PRC operating entities using RMB. Our consolidated financial statements are presented in U.S. dollars. In this prospectus, we refer to assets, obligations, commitments, and liabilities in our consolidated financial statements in U.S. dollars. These dollar references are based on the exchange rate of RMB to U.S. dollars, determined as of a specific date or for a specific period. Changes in the exchange rate will affect the amount of our obligations and the value of our assets in terms of U.S. dollars which may result in an increase or decrease in the amount of our obligations (expressed in dollars) and the value of our assets, including accounts receivable (expressed in dollars).

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| vii |
| *[**Table of Contents**](#toc)* |

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**PROSPECTUS SUMMARY**

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

We are a holding company incorporated in the Cayman Islands and not a Chinese operating company. As a holding company with no material operations of our own, we conduct all of our operations through the PRC operating entities, Suzhou GoodFaith and its subsidiaries, including Beiming Technology, Shanghai Yuyi, and Shenzhen Xindesheng. Because of our corporate structure as a Cayman Islands holding company with operations conducted by our PRC subsidiaries, it involves unique risks to investors. Furthermore, Chinese regulatory authorities could change the rules and regulations regarding foreign ownership in the industry in which the company operates, which would likely result in a material change in our operations and/or a material change in the value of the securities we are registering for sale, including that it could cause the value of such securities to significantly decline or become worthless. Investors in our Ordinary Shares should be aware that they do not directly hold equity interests in the Chinese operating entities, but rather are purchasing equity solely in GoodFaith Technology Inc., our Cayman Islands holding company, which indirectly owns 100% equity interests in the Chinese subsidiaries. Our Ordinary Shares offered in this offering are shares of our Cayman Islands holding company instead of shares of our subsidiaries in China.

**PCAOB's Determinations on Public Accounting Firms Headquartered in Mainland China and in Hong Kong**

Our Ordinary Shares may be prohibited from trading on a national exchange in the United States under the HFCA Act, if the PCAOB is unable to inspect or fully investigate our auditors for three consecutive years beginning in 2021. As a result, an exchange may determine to delist our securities. 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 was signed into law by President Biden, which contained, among other things, an identical provision to Accelerating Holding Foreign Companies Accountable Act, which reduces the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two. Additionally, our securities may be prohibited from trading if our auditor cannot be fully inspected as more stringent criteria have been imposed by the SEC and the PCAOB recently. For example, on December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act, which became effective on January 10, 2022. On December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions. As of the date of the prospectus, the Company's auditor, UHY LLP, which is headquartered in the United States, has been inspected by the PCAOB on a regular basis, with the last inspection in 2019, and is not subject to the determinations announced by the PCAOB on December 16, 2021 relating to the PCAOB's inability to inspect or investigate completely registered public accounting firms headquartered in mainland China or Hong Kong. On August 26, 2022, the PCAOB signed the SOP Agreements with the CSRC and the MOF. The SOP Agreements established a specific, accountable framework to make possible complete inspections and investigations by the PCAOB of audit firms based in mainland China and Hong Kong, as required under U.S. law. On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB's access in the future, the PCAOB Board will consider the need to issue a new determination within three years' time. The PCAOB's December 15, 2022 determination resets the three-year clock for compliance with the HFCA Act. Even though the PCAOB's December 15, 2022 determination significantly reduces the risk of an involuntary delisting under the HFCA Act, it does not eliminate other requirements for companies with PRC operating entities' operations in China like us under both the HFCA Act and SEC guidance. The PCAOB continues to demand complete access in mainland China and Hong Kong moving forward and is making plans to resume regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as needed. The PCAOB has also indicated that it will act immediately to consider the need to issue new determinations with the HFCA Act, if needed. 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 a future time, Nasdaq may determine to delist our Ordinary Shares. A termination in the trading our of securities via an involuntary delisting or any restriction on the trading in our securities would be expected to have a negative impact on the Company as well as on the value of our securities should we face heightened operational and legal risks in relation to HFCA compliance. See "*Risk Factors - Risks Relating to Doing Business in the PRC - A recent joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and an act passed by the U.S. Senate all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our offering*."

**Our Mission** 

We are committed to providing our clients with efficient and customized pre-approval risk management and post-loan delinquent debt collection products and services in connection with their credit loan businesses, utilizing our proprietary technology infrastructure, innovative business model and extensive experience in credit loan risk management and delinquent debt collection.

**Business Overview**

We offer customized pre-approval risk management and post-loan delinquent debt collection products and services to commercial banks and non-bank financial institutions in China in connection with credit loans. We have established a national network of 16 operating centers and 3 administrative offices in over 11 cities across China, where we have also built a broad client base across more than 75 commercial banks and non-bank financial institutions. We are committed to providing products and services that address risk evaluation and solvency assessment during the pre-approval stage and credit loan debt collection during the delinquency stage.

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Credit loans refer to the loans granted to borrowers based on the creditworthiness of the borrower without any collateral requirement. Based on different financing purposes, credit loans can be categorized into personal credit loans (including personal consumption loans, auto loans, personal business operation loans) and corporate credit loans. We mainly focus on personal credit loans for both of our pre-approval risk management and post-loan debt collection businesses, due to their increasing market demand. In particular, personal credit loans typically involve (i) small principal sums in greater quantities and (ii) standardized credit review processes. Thus, there is a need for banks and financial institutions to process such personal credit loans in bulk and automate the approval process, so as to save time and resources. Additionally, banks and financial institutions are more likely to engage third parties to collect delinquent debts under personal credit loans in an effort to spare their labor and financial resources. Our client base comprises only commercial banks and non-bank financial institutions, and does not include any peer-to-peer lenders.

The intelligent risk management industry and credit loan debt collection industry in China have been expanding in recent years. According to Frost & Sullivan, the market size of intelligent risk management services in 2020 reached approximately RMB7.8 billion (approximately $1.2 billion) and is expected to reach approximately RMB22.8 billion (approximately $3.5 billion) by 2025. Similarly, the market size of credit loan debt collection services in 2020 reached RMB65.8 billion (approximately $10.2 billion) and is expected to reach approximately RMB116.0 billion (approximately $17.9 billion) by 2025. With the market sizes expanding, we believe we may have more opportunities to build a sustainable and scalable business with our ever-improving pre-approval and post-loan products and services. We endeavor to efficiently and effectively assist our clients with their pre-approval risk management and post-loan delinquent debt collection in connection with credit loans.

Our business is comprised of two segments: (i) the credit loan pre-approval stage: risk evaluation and solvency assessment products and services; and (ii) the credit loan post-loan stage: delinquent debt collection services. Currently, we are focused on providing our products and services to commercial banks, e-commerce platform affiliated finance companies, licensed consumer finance companies and other financial institutions in China which engage in the consumer credit loan business.

Before a credit loan is approved, our clients engage us to evaluate the risk of default and assess the solvency of a loan applicant. Our products and services in the pre-approval segment facilitate our clients' determinations on granting loans. Our clients are charged contingent monthly fees based on the number of verification records we process. During the post-loan stage, when a credit loan is in default, our clients engage us to collect the delinquent receivables. Unlike traditional asset management companies, our delinquent debt collection business follows a "light-asset strategy;" namely, we do not purchase the delinquent loans we collect, but only collect them on behalf of financial institution clients in exchange for commissions based on our collection success. The light-asset strategy reduces our cost of capital and cash flow requirements by avoiding debt acquisitions, while minimizing our exposure to potential bad debts. Because we do not purchase delinquent loans, we have not been, and could not be, required to take an ownership interest in the finance receivables we service. In the pre-approval stage, we utilize our self-developed advanced technology, including artificial intelligence, proprietary technology systems and digital technology, to process and analyze client-provided encrypted and anonymized data to increase our work efficiency and result accuracy. In the post-loan stage, we utilize collection process software purchased from third parties to manage and control our work process. We believe that our technology infrastructure, as we enhance its sophistication, can continue to improve our performance and optimize our financial results.

We have experienced substantial growth since the inception of our PRC operating entities. The numbers of our clients were 53, 68 and 75 for the fiscal years ended December 31, 2019, 2020 and 2021, respectively, representing growth of 28% and 10% from the previous periods, respectively. The number of our clients was 64 for the six months ended June 30, 2022, representing a decrease of 2% from the same period in 2021. For the fiscal year ended December 31, 2021, our three largest clients accounted for 49%, 15%, and 13% of our total revenue, respectively. For the six months ended June 30, 2022, our three largest clients accounted for 79%, 7%, and 3% of our total revenue, respectively. In our pre-approval segment, as of December 31, 2019, 2020 and 2021, we processed approximately 75,415,000, 52,900,000, and 63,700,000 verification records, respectively, representing a decrease of 30% and an increase of 20% in the number of verification records processed from the previous periods, respectively. The decrease in 2020 was mainly due to the COVID-19 pandemic. As of June 30, 2022, we processed approximately 28,700,000 verification records, representing an increase of 4% in the number of verification records processed from the same period in 2021. In our post-loan segment, as of December 31, 2019, 2020 and 2021, the total amount of delinquent credit loan debt we successfully collected was approximately RMB0.32 billion (approximately $0.05 billion), RMB5.27 billion (approximately $0.76 billion) and RMB11.03 billion (approximately $1.7 billion), representing growth of 1534% and 109% from the previous periods, respectively. As of June 30, 2022, the total amount of delinquent credit loan debt we successfully collected was approximately RMB7.4 billion (approximately $1.1 billion), representing growth of 85% from the same period in 2021. The total amount of delinquent credit loan debt we were engaged to collect, as of December 31, 2019, 2020 and 2021, was approximately RMB11.0 billion (approximately $1.6 billion), RMB19.6 billion (approximately $2.8 billion) and RMB33.9 billion (approximately $5.2 billion), representing growth of 79% and 73% from the previous periods, respectively. The total amount of delinquent credit loan debt we were engaged to collect, as of June 30, 2022, was RMB24.7 billion (approximately $3.8 billion), representing growth of 81% from the same period in 2021. The monthly average amount of delinquent credit loan debt collected per each collection specialist, as of December 31, 2019, 2020 and 2021, was approximately RMB124,000 (approximately $17,966), RMB668,000 (approximately $96,807) and RMB1,329,000 (approximately $205,969), representing growth of 439% and 99% from the previous periods, respectively. The monthly average amount of delinquent credit loan debt collected per each collection specialist, as of June 30, 2022, was approximately RMB1,277,000 (approximately $197,138), representing an increase of 32% from the same period in 2021.

Our total revenue amounted to $20,653,211 for the fiscal year ended December 31, 2021, representing growth of approximately 29.1% compared to the fiscal year ended December 31, 2020. Our total revenue amounted to $24,560,502 for the six months ended June 30, 2022, representing growth of approximately 182.6% from the same period in 2021. Revenue derived from pre-approval risk management services and post-loan delinquent debt collection services accounted for approximately 4.5% and 95.5%, respectively, of our total revenue for the six months ended June 30, 2022; 17.2% and 82.8%, respectively, of our total revenue for the fiscal year ended December 31, 2021; and 15.7% and 84.3%, respectively, of our total revenue for the fiscal year ended December 31, 2020. Our gross profit amounted to $3,611,539 for the fiscal year ended December 31, 2021, representing a decrease of approximately 30.7% compared to the fiscal year ended December 31, 2020. Our gross profit amounted to $5,339,221 for the six months ended June 30, 2022, representing an increase of 292.6% compared to the same period in 2021. Our net income amounted to $403,076 for the fiscal year ended December 31, 2021, representing a decrease of approximately 68.4% compared to the fiscal year ended December 31, 2020. The decrease in net income was primarily attributable to (i) an increase in cost of revenue by approximately 58.0% in 2021, resulting from (a) an increase in salaries and benefits, (b) an increase in management service costs for operating centers, and (c) an increase in data service costs; and (ii) an increase in total other expense by 139.6%, primarily driven by an increase in net expense in 2021 for penalties and interest of under-declared income taxes that were recognized as components of the non-operating expenses. Our net income amounted to $3,165,832 for the six months ended June 30, 2022, representing an increase of approximately 17,528.9% compared to the same period in 2021. The increase in net income was primarily attributable to the substantial growth of our post-loan segment gross profit by 565.2%.

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By leveraging our technological advancement, innovative approach, and experience, we aim to identify potential risks of credit loan applicants, thereby saving our clients the burden of delinquent debt collection, and effectively increasing their delinquent debt recovery rates. It is our plan to continue to devote our efforts to improving our products and services in order to better service our clients and their expanding needs. In the future, we hope to exploit the synergy between pre-loan and post-loan services, and offer financial institutions one-stop services for risk management and debt collection, which will reduce bank bad debt losses and improve post-loan recovery rates by screening out high-risk applicants and improving the efficiency of banks and other institutions in collecting delinquent loans.

***Competitive Strengths***

We believe that the following competitive strengths have contributed to our success and differentiated us from our competitors:

● sophisticated and dynamic risk management capability and competitive delinquent debt collection ability with proven performance and strong relationships with major clients;

● a portfolio of integrated, complementary products and services to optimize our results;

● proprietary IT infrastructure and strong technology team;

● visionary and experienced leadership backed by a strong team of talent;

● advanced know-how and compliance-oriented business practice; and

● innovative business model leveraging business development with a light-asset strategy.

***Growth Strategies***

Our goal is to become a leading business service provider that offers a comprehensive range of financial services across the risk management and delinquent credit loan debt collection field in China. Specifically, we plan to implement the following strategies:

● expand our client base and enhance our brand recognition;

● increase investment to improve our information technology and data analytic capabilities;

● selectively pursue strategic investments and acquisitions; and

● continue to recruit and retain talent to grow and maintain our team.

***Corporate Information***

Our principal executive office is located at 1st Floor, Building 5, Lane 55, Chuanhe Road, Pudong New District, Shanghai, China, and our phone number is +86-021-68882880. Our registered office in the Cayman Islands is located at Sertus Chambers, Governors Square, Suite # 5-204, 23 Lime Tree Bay Avenue, P.O. Box 2547, Grand Cayman, KYI-1104, Cayman Islands, and the phone number of our registered office is +1 284-495-8295. We maintain a corporate website at www.cxgoodfaith.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 Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, NY 10168.

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***Corporate Structure***

We are a Cayman Islands exempted company incorporated on May 13, 2021. Exempted companies are Cayman Islands' companies conducting business mainly outside the Cayman Islands and, as such, are exempt from complying with certain provisions of the Companies Act (as Revised). The following diagram illustrates our corporate structure as of the date of this prospectus and upon completion of our initial public offering ("IPO") based on a proposed number of 3,000,000 Ordinary Shares being offered, assuming no exercise of the underwriters' over-allotment option. For more detail on our corporate history, refer to "*Corporate History and Structure*."

![](goodfaith_f1img41.jpg)

Notes:

(1) Represents 9,460,000 Ordinary Shares held by Xiaofeng Fei and the Trust, together holding 100% of the equity interests in Qearl's Holdings Limited, an investment holding company incorporated in the British Virgin Islands, as of the date of this prospectus. Specifically, Qearl's Holdings Limited is held by (i) Wonder Phoenix Holdings Limited, as to 10%, which is in turn wholly owned by Xiaofeng Fei; and (ii) Wonder Phoenix Family Limited, as to 90%, which is in turn wholly owned by the Trust, a trust established under the laws of the Cayman Islands by Xiaofeng Fei, as settlor, with TMF (Cayman) Ltd. being appointed as the trustee and Kai Zhou as the primary beneficiary. As the First Protectors and the First Members of the Investment Committee of the Trust, Xiaofeng Fei and Kai Zhou are invested with the authority to make investment decisions for the Trust. On November 2, 2021, Xiaofeng Fei and Kai Zhou executed an acting-in-concert agreement, which provides that (a) they shall inform and discuss with each other and reach a consensus before exercising voting rights in making decisions for the Trust, and (b) if no consensus can be reached by the Parties, the decision made by Kai Zhou prevails. Through the acting-in-concert agreement, Kai Zhou has the ultimate control of the Trust, and, therefore, of Qearl's Holdings Limited.

(2) Represents 5,840,000 Ordinary Shares held by Xiaowei Wang, the 100% owner of Gread Cause Holdings Limited, an investment holding company incorporated in the British Virgin Islands, as of the date of this prospectus.

(3) Represents 1,200,000 Ordinary Shares held by Xu Dai, the 100% owner of Cloud Light Holdings Limited, an investment holding company incorporated in the British Virgin Islands, as of the date of this prospectus.

(4) Represents an agreement of 3,500,000 Ordinary Shares held by four shareholders, each one of which holds less than 5% of our Ordinary Shares, as of the date of this prospectus.

Investors are purchasing securities of our holding company, GoodFaith Cayman, instead of securities of our PRC subsidiaries. We do not use a VIE structure.

**Summary of Risk Factors** 

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

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***Risks Relating to Doing Business in the PRC***

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

● China's economic, political and social conditions, laws and regulations, as well as possible interventions and influences of any government policies and actions, are uncertain and could have a material adverse effect on our business, operations and the value of our Ordinary Shares (see page 13 of this prospectus);

● PRC laws and regulations governing our current business operations are sometimes vague and uncertain. Rules and regulations in China can change quickly with little advance notice. Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protection available to you and us. Any changes in such laws and regulations may impair our ability to operate profitably (see page 13 of this prospectus);

● The Chinese government exerts substantial influence over the manner in which we must conduct our business activities. We are currently not required to obtain approval from Chinese authorities to list on U.S exchanges, however, if our PRC subsidiaries or the holding company were required to obtain approval in the future and were denied permission from Chinese authorities to list on U.S. exchanges, we will not be able to continue listing on U.S. exchange and the value of our ordinary shares may significantly decline or become worthless, which would materially affect the interest of the investors (see page 14 of this prospectus);

● We may become subject to a variety of laws and regulations in the PRC regarding privacy, data security, cybersecurity, and data protection. We may be liable for improper use or appropriation of personal information provided by our customers (see page 15 of this prospectus);

● One of our subsidiaries is subject to various evolving Hong Kong laws and regulations regarding data security or antimonopoly conduct, which could subject it to government enforcement actions and investigations, fines, penalties, and suspension or disruption of its operations (see page 17 of this prospectus);

● You may experience difficulties in effecting service of legal process, enforcing foreign judgments, or bringing actions in China against us or our management named in the prospectus based on foreign laws (see page 17 of this prospectus);

● PRC regulations relating to offshore investment activities by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital into our PRC subsidiaries, limit our PRC subsidiaries' abilities to increase their registered capital or distribute profits to us, or may otherwise adversely affect us (see page 18 of this prospectus);

● U.S. regulatory bodies may be limited in their ability to conduct investigations or inspections of our operations in China (see page 17 of this prospectus);

● PRC regulation of parent/subsidiary loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of this offering 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 (see page 19 of this prospectus);

● Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment (see page 20 of this prospectus);

● Under the PRC Enterprise Income Tax Law, we may be classified as a PRC "resident enterprise" for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment (see page 20 of this prospectus);

● We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies (see page 21 of this prospectus);

● Our PRC subsidiaries are subject to restrictions on paying dividends or making other payments to us, and there is no assurance that the PRC government will not intervene or impose restrictions on our ability to transfer cash out of or to mainland China and Hong Kong, which may have a material adverse effect on our ability to conduct our business (see page 22 of this prospectus);

● Governmental control of currency conversion may affect the value of your investment and our payment of dividends (see page 22 of this prospectus);

● There are significant uncertainties under the EIT Law relating to the withholding tax liabilities of GoodFaith WFOE, and dividends payable by GoodFaith WFOE to our offshore subsidiaries may not qualify to enjoy certain treaty benefits (see page 22 of this prospectus);

● If we become directly subject to the scrutiny, criticism, and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources to investigate and resolve the matter which could harm our business operations, Ordinary Share price, and reputation (see page 23 of this prospectus);

● The disclosures in our reports and other filings with the SEC and our other public pronouncements are not subject to the scrutiny of any regulatory bodies in the PRC (see page 23 of this prospectus);

● A recent joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and an act passed by the U.S. Senate all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our offering (see page 23 of this prospectus);

● The approval of the CSRC may be required in connection with this offering under a regulation adopted in August 2006, and, if required, we cannot assure you that we will be able to obtain such approval, in which case we may face sanctions by the CSRC or other PRC regulatory agencies for failure to seek CSRC approval for this offering (see page 25 of this prospectus);

● The M&A Rules (as defined below) and certain other PRC regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China (see page 26 of this prospectus); and

● Because we are a Cayman Islands exempted company and all of our business is conducted in the PRC, you may be unable to bring an action against us or our officers and directors or to enforce any judgment you may obtain (see page 26 of this prospectus).

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***Risks Related to Our Business and Industries***

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

● The financial sector in China is subject to changes in regulations. Non-compliance with new financial regulations or new licensing requirements may materially affect our business operations and financial results (see page 27 of this prospectus);

● The industries we are in are still evolving, which makes it difficult to effectively assess our future prospects (see page 27 of this prospectus);

● We operate a socially sensitive business and public complaints against the pre-approval and post-loan industry in general, or against us in particular, may materially and adversely affect our business, financial condition, and results of operations (see page 28 of this prospectus);

● Our revenue would be adversely affected if our clients develop or adopt an alternative to our services (see page 28 of this prospectus);

● Our operating history, and our experience in risk evaluation and the debt collection business, may not provide an adequate basis to judge our future prospects and results of operations (see page 28 of this prospectus);

● Fraudulent activity could negatively impact our operating results, brand, and reputation, and cause the use of our risk evaluation services to decrease (see page 29 of this prospectus);

● Market, economic and other conditions in China may adversely affect the demand for our products and services (see page 29 of this prospectus);

● Our employees, including collection specialists, may violate our compliance policies and government rules and regulations during the repayment and collection management process (see page 29 of this prospectus);

● We rely on our advanced technology, including artificial intelligence, our proprietary technology system, and digital technology, to offer risk evaluation and solvency assessment products and services. If our assessment model or the underlying algorithm lacks accuracy or fails to achieve clients' goals, our reputation and market share would be materially and adversely affected, which would severely impact our business and results of operations (see page 30 of this prospectus);

● We rely on third parties to provide basic verification services to our clients. If such third parties, or critical staff of such third parties, are unable or unwilling to continue in their present positions, our business may be severely disrupted (see page 30 of this prospectus);

● Credit and other information we receive from third parties about borrowers may be inaccurate or may not accurately reflect a prospective borrower's creditworthiness, which may compromise the accuracy of our credit assessment (see page 30 of this prospectus);

● If our pre-approval risk evaluation and solvency assessments business do not achieve sufficient market acceptance, our financial results and competitive position will be harmed (see page 30 of this prospectus);

● We face increasing competition, and if we do not compete effectively, our operating results could be harmed (see page 31 of this prospectus);

● Any harm to our brand or reputation may materially and adversely affect our business and results of operations (see page 31 of this prospectus);

● We may not be able to manage the repayment and collection of consumer receivables efficiently and a decline in our ability to manage the repayment and collection of consumer receivables could adversely affect our ability to generate revenue and reputation (see page 33 of this prospectus);

● Our ability to protect the confidential information of various parties, including loan applicants and delinquent debtors, may be adversely affected by cyberattacks, computer viruses, physical or electronic break-ins or similar disruptions (see page 33 of this prospectus); and

● We face risks related to natural disasters, health epidemics, and other outbreaks, which could significantly disrupt our operations (see page 38 of this prospectus).

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***Risks Relating to this Offering and the Trading Market***

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

● There has been no public market for our Ordinary Shares prior to this offering, and you may not be able to resell our Ordinary Shares at or above the price you pay for them, or at all (see page 39 of this prospectus);

● You will experience immediate and substantial dilution in the net tangible book value of Ordinary Shares you purchased (see page 39 of this prospectus);

● If we fail to implement and maintain an effective system of internal controls or fail to remediate the material weaknesses in our internal control over financial reporting that have been identified, we may fail to meet our reporting obligations or be unable to accurately report our results of operations or prevent fraud, and investor confidence and the market price of our Ordinary Shares may be materially and adversely affected (see page 39 of this prospectus);

● We will incur substantial increased costs as a result of being a public company(see page 40 of this prospectus);

● Substantial future sales of our Ordinary Shares or the anticipation of future sales of our Ordinary Shares in the public market could cause the price of our Ordinary Shares to decline (see page 40 of this prospectus);

● We do not intend to pay dividends for the foreseeable future (see page 40 of this prospectus);

● If securities or industry analysts do not publish research or reports about our business, or if they publish a negative report regarding our Ordinary Shares, the price of our Ordinary Shares and trading volume could decline (see page 41 of this prospectus);

● The market price of our Ordinary Shares may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the initial public offering price (see page 41 of this prospectus);

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● If we cease to qualify as a foreign private issuer, we would be required to comply fully with the reporting requirements of the Exchange Act applicable to U.S. domestic issuers, and we would incur significant additional legal, accounting and other expenses that we would not incur as a foreign private issuer (see page 41 of this prospectus);

● 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, and are exempt from certain Nasdaq corporate governance standards applicable to U.S. issuers, which may limit the information publicly available to our investors and afford them less protection than if we were a U.S. issuer (see page 42 of this prospectus);

● If we cannot continue to satisfy the listing requirements and other rules of the Nasdaq Capital Market, our securities may be delisted, which could negatively impact the price of our securities and your ability to sell them (see page 42 of this prospectus);

● Anti-takeover provisions in our amended and restated memorandum and articles of association may discourage, delay, or prevent a change in control (see page 43 of this prospectus);

● Because we are an "emerging growth company," we may not be subject to requirements that other public companies are subject to, which could affect investor confidence in us and our Ordinary Shares (see page 43 of this prospectus);

● The laws of the Cayman Islands may not provide our shareholders with benefits comparable to those provided to shareholders of corporations incorporated in the United States (see page 43 of this prospectus);

● If we are classified as a passive foreign investment company, United States taxpayers who own our Ordinary Shares may have adverse United States federal income tax consequences (see page 44 of this prospectus); and

● Our pre-IPO shareholders will be able to sell their shares upon completion of this offering subject to restrictions under Rule 144 under the Securities Act (see page 44 of this prospectus).

**Impact of the COVID-19 Pandemic on Our Operations and Financial Performance**

In the beginning of February 2020, we had to temporarily suspend our services due to government restrictions. Throughout the COVID-19 pandemic, we managed to promptly implement a series of response measures, including having our full work force resuming work remotely by the end of February. We fully resumed our operation on March 10, 2020 and the COVID-19 impact on our operating results and financial performance for fiscal year 2020 seems to be temporary. During the fiscal year ended December 31, 2021, the COVID-19 pandemic did not have a material impact on the operating entities' respective financial positions and operating results. Although, during the six months ended June 30, 2022, the COVID-19 pandemic adversely affected our pre-approval risk assessment business, our post-loan debt collection business benefited from the pandemic, and overall, the COVID-19 pandemic did not have a material impact on our operating entities' financial positions and operating results. Specifically, the COVID-19 subvariant (Omicron) outbreak hit China in March 2022, spreading more quickly and easily than previous strains. As a result, a new round of lockdowns, quarantines, or travel restrictions has been imposed upon different provinces or cities in China by the relevant local government authorities. As a result, during the six months ended June 30, 2022, our revenue from the pre-approval risk management products and services decreased by 25% compared with the same period in 2021. Meanwhile, the COVID-19 pandemic has led to a rise in overdue loans, and, consequently, our post-loan debt collection business has grown significantly. Our revenue derived from the post-loan debt collection services increased by 226% for the six months ended June 30, 2022, compared to the same period in 2021. Overall, our revenue in the first half of 2022 increased by 182.6% over the same period in 2021.

In early December 2022, the PRC government announced a nationwide relaxation of its zero-COVID policy, resulting in a surge in COVID-19 infections across the PRC after related restrictions were lifted. As of the date of this prospectus, although the spread of COVID-19 appears to be under control, the extent to which the COVID-19 pandemic may impact our future financial results will depend on future developments which are uncertain and unpredictable, including the duration, spread, severity, and recurrence of COVID-19 and any COVID-19 variants, the effectiveness of efforts to contain or treat cases, and future actions that may be taken in response to these developments. In addition, the COVID-19 pandemic has also caused heightened uncertainty in the global economy. The global spread of COVID-19 pandemic in major countries of the world, including China, may also result in global economic distress, and the extent to which it may affect our results of operations will depend on future developments of the COVID-19 pandemic, which are highly uncertain and difficult to predict. There may be potential impacts on our results of operations if the pandemic and the resulting disruption were to extend over a prolonged period. Consequently, the COVID-19 pandemic may continue to adversely affect our business, financial condition, and results of operations in the current and future years. See "*Risk Factors-Risks Related to Our Business and Industries—We face risks related to natural disasters, health epidemics, and other outbreaks, which could significantly disrupt our operations*." and "*Management's Discussion and Analysis of Financial Condition and Results of Operations-Business Overview—COVID-19 Affecting Our Results of Operations.*"

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

As of the date of this prospectus, our PRC subsidiaries have obtained all necessary licenses, permissions, or approvals that are required for conducting our operations in China, such as business licenses and value-added telecommunications business licenses. However, it is uncertain whether we or our PRC subsidiaries will be required to obtain additional approvals, licenses, or permits in connection with our business operations pursuant to evolving PRC laws and regulations, and whether we would be able to obtain and renew such approvals on a timely basis or at all. Failing to do so could result in a material change in our operations, and the value of our Ordinary Shares could depreciate significantly or become worthless.

As of the date of this prospectus, our PRC counsel, AllBright, has advised us that, neither we nor our PRC subsidiaries (1) are required to obtain permission from any of the PRC authorities to operate and issue our Ordinary Shares to foreign investors, (2) are subject to approval requirements from the CSRC, the CAC, or any other entity to approve our operations in addition to the aforementioned necessary permissions, or (3) have been denied permissions by any PRC authorities to operate and issue our Ordinary Shares to foreign investors. However, 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" (the "Opinions"), which were made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies. These opinions proposed to take effective measures, such as promoting the construction of relevant regulatory systems, to deal with the risks and incidents facing China-concept overseas-listed companies and the demand for cybersecurity and data privacy protection. On February 17, 2023, the CSRC issued the Trial Measures, which will become effective on March 31, 2023. On the same date, the CSRC circulated the Guidance Rules and Notice on the CSRC's official website. Pursuant to the Trial Measures and the Guidance Rules and Notice, beginning March 31, 2023, PRC domestic enterprises that have submitted valid applications for overseas offerings and listing but have not obtained the approval from the relevant overseas regulatory authority or overseas stock exchanges shall complete filings with the CSRC prior to their overseas offerings and listings. "*Regulations—Regulations Relating to M&A and Overseas Listing."*

According to the Notice on the Administrative Arrangements for the Filing of the Overseas Securities Offering and Listing by Domestic Companies from the CSRC, or "the CSRC Notice," the domestic companies that have already been listed overseas before the effective date of the Trial Measures (namely, March 31, 2023) shall be deemed as existing issuers (the "Existing Issuers"). Existing Issuers are not required to complete the filing procedures immediately, and they shall be required to file with the CSRC for any subsequent offerings. Further, according to the CSRC Notice, domestic companies that have obtained approval from overseas regulatory authorities or securities exchanges (for example, the effectiveness of a registration statement for offering and listing in the U.S. has been obtained) for their indirect overseas offering and listing prior March 31, 2023 but have not yet completed their indirect overseas issuance and listing, are granted a six-month transition period from March 31, 2023 to September 30, 2023. Those that complete their indirect overseas offering and listing within such six-month period are deemed as Existing Issuers and are not required to file with the CSRC for their indirect overseas offerings and listings. Within such six-month transition period, however, if such domestic companies fail to complete their indirect overseas issuance and listing, they shall complete the filing procedures with the CSRC. Based on the foregoing, if the effectiveness of our registration statement on Form F-1 cannot be declared on or before March 31, 2023, or if the effectiveness of our registration statement on Form F-1 is declared on or before March 31, 2023 but we fail to complete this offering and listing on or before September 30, 2023, we will be required to complete necessary filing procedures pursuant to the Trial Measures.

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On February 24, 2023, the CSRC, together with the MOF, National Administration of State Secrets Protection and National Archives Administration of China, revised the Provisions on Strengthening Confidentiality and Archives Administration for Overseas Securities Offering and Listing, which were issued by the CSRC and National Administration of State Secrets Protection and National Archives Administration of China in 2009, or the "Provisions." The revised Provisions were issued under the title the "Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies", and will come into effect on March 31, 2023 together with the Trial Measures. One of the major revisions to the revised Provisions is expanding their application to cover indirect overseas offering and listing, as is consistent with the Trial Measures. The revised Provisions require that, among other things, (a) a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level; and (b) a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals and entities including securities companies, securities service providers and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations. As of the date of this prospectus, the revised Provisions have not come into effect. On or after March 31, 2023, any failure or perceived failure by our Company or our PRC subsidiaries to comply with the above confidentiality and archives administration requirements under the revised Provisions and other PRC laws and regulations may result in the relevant entities being held legally liable by competent authorities, and referred to the judicial organ to be investigated for criminal liability if suspected of committing a crime.

According to the Trial Measures and the revised Provisions, we may be required to comply with the filing requirements under the Trial Measures in connection with this offering. Regardless of whether this offering will be subject to any filing requirements with the CSRC under the Trial Measures and the revised Provisions, any future securities offerings and listings outside of mainland China by our Company, including, but not limited to, follow-on offerings, secondary listings, and going private transactions, will be subject to the filing requirements with the CSRC under the Trial Measures, and we cannot assure you that we will be able to comply with such filing requirements in a timely manner, or at all.

As the Trial Measures have just recently been released, uncertainties remain as to proper practices and interpretations and implementations with respect thereto which may subject us to additional procedural requirements in this offering and future financial activities. If it is determined that any approval, filing, or other administrative procedure from the CSRC or other PRC governmental authorities is required for this offering, or any future offering or listing, we cannot assure you that we can obtain the required approval or accomplish the required filings or other regulatory procedures in a timely manner, or at all. In addition, if the CSRC or other regulatory authorities later promulgate new rules or explanations requiring that we obtain their approvals or accomplish the required filing or other regulatory procedures for this offering, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties or negative publicity regarding such approval requirements could materially and adversely affect our business, prospects, financial condition, reputation, and the trading price of our Ordinary Shares. See "*Regulations— Regulations Relating to M&A and Overseas Listing*" and "*Risk Factors—Risks Relating to Doing Business in the PRC—The Chinese government exerts substantial influence over the manner in which we must conduct our business activities. We are currently not required to obtain approval from Chinese authorities to list on U.S exchanges, however, if our PRC subsidiaries or the holding company were required to obtain approval in the future and were denied permission from Chinese authorities to list on U.S. exchanges, we will not be able to continue listing on U.S. exchange and the value of our Ordinary Shares may significantly decline or become worthless, which would materially affect the interest of the investors*."

The Cybersecurity Review Measures, which became effective on February 15, 2022, provides 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 further requires that CIIOs and data processing operators that possess personal data of at least one million users must apply for a review by the Cybersecurity Review Office of the PRC before conducting listings in foreign countries. As of the date of this prospectus, neither we nor any of our PRC subsidiaries have received any notice from any authorities identifying any of our PRC subsidiaries as a CIIO or requiring any of our PRC subsidiaries to go through a cybersecurity review or network data security review by the CAC. As confirmed by our PRC counsel, AllBright, neither we nor any of our PRC subsidiaries are subject to cybersecurity review by the CAC, because neither we nor any of our PRC subsidiaries (i) actually purchase any internet products or services and our products and services are not offered directly to individual users, but rather are offered to our institutional clients; (ii) conduct our business based on the encrypted data provided by our institutional clients, which we do not own or have any access to; (iii) utilize data processed in our business that has a bearing on national security; and (iv) we are not an online platform operator. There remains uncertainty, however, as to how the Cybersecurity Review Measures will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the Cybersecurity Review Measures. For further details, see "*Risk Factors-Risks Relating to Doing Business in the PRC-We may become subject to a variety of laws and regulations in the PRC regarding privacy, data security, cybersecurity, and data protection. We may be liable for improper use or appropriation of personal information provided by our customers.*"

The main legislation in Hong Kong concerning data security is the Personal Data (Privacy) Ordinance (Cap. 486 of the Laws of Hong Kong) (the "PDPO"), which regulates the collection, usage, storage, and transfer of personal data and imposes a statutory duty on data users to comply with the six data protection principles contained therein. As of the date of this prospectus, we confirm that we and our Hong Kong subsidiary, GoodFaith HK, have complied with the laws and requirements in respect of data security in Hong Kong. However, the laws on cybersecurity and data privacy are constantly evolving and can be subject to varying interpretations, resulting in uncertainties about the scope of our responsibilities in that regard. Failure to comply with the cybersecurity and data privacy requirements in a timely manner, or at all, may subject us or our Hong Kong subsidiary to consequences, including government enforcement actions and investigations, fines, penalties, and suspension or disruption of our Hong Kong subsidiary's operations. In addition, the Competition Ordinance (Cap. 619 of the Laws of Hong Kong) prohibits and deters undertakings in all sectors from adopting anti-competitive conduct which has the object or effect of preventing, restricting, or distorting competition in Hong Kong. It provides for general prohibitions in three major areas of anti-competitive conduct described as the first conduct rule, the second conduct rule, and the merger rule. As of the date of this prospectus, we and our Hong Kong subsidiary have complied with all three areas of anti-competition laws and requirements in Hong Kong. As confirmed by our Hong Kong counsel, Ince & Co, neither the data security nor antimonopoly laws and regulations in Hong Kong restrict our ability to accept foreign investment or impose limitations on our ability to list on any U.S. stock exchange under Hong Kong laws and regulations. See "*Risk Factors-Risks Relating to Doing Business in the PRC-One of our subsidiaries is subject to various evolving Hong Kong laws and regulations regarding data security or antimonopoly conduct, which could subject it to government enforcement actions and investigations, fines, penalties, and suspension or disruption of its operations."*

To operate business activities in Hong Kong, every company must register its business with the Business Registration Office of the Inland Revenue Department in Hong Kong and make an application for business registration within one month of the commencement of business. Any person who fails to comply is subject to a maximum fine of HK$5,000 and one year of imprisonment. As of the date of this prospectus, we confirm that our Hong Kong subsidiary has obtained a valid business registration certificate. As of the date of this prospectus, our Hong Kong counsel, Ince & Co, has advised us that neither we nor our Hong Kong subsidiary is required to obtain any permission or approval from Hong Kong authorities to offer the securities being registered to foreign investors outside Hong Kong. However, it is uncertain whether we or our Hong Kong subsidiary will be required to obtain additional permissions or approval from Hong Kong authorities to operate its business or offer securities to foreign investors in the future, and whether we would be able to obtain such permissions or approvals. If we are unable to obtain such permissions or approval if required in the future because applicable laws, regulations, or interpretations change, or inadvertently conclude that such permissions or approval are not required, then the value of our Ordinary Shares may depreciate significantly or become worthless.

For the six months ended June 30, 2022 and the fiscal years ended December 31, 2021 and 2020, our PRC operating entities did not make full social insurance and housing fund contributions for all employees as required under the relevant laws and regulations. As of June 30, 2022 and December 31, 2021 and 2020, our PRC operating entities had outstanding social insurance payments payable in the aggregate amount of approximately $1,960,235, $1,525,543, and $443,175, respectively. Our current shareholders have agreed to compensate us for the relevant fines, any outstanding sum, and any related costs and expenses arising from such noncompliance if imposed by the competent PRC authorities, and we have taken measures to implement our policy on the payment of social insurance and housing fund contributions for employees for the purpose of compliance with relevant PRC laws and regulations starting from June 2022. See "*Risk Factors-Risks Related to Our Businesses and Industries-Failure to make adequate contributions to various employee benefit plans as required by PRC regulations may subject us to penalties.*" In addition, As of June 30, 2022 and December 31, 2021 and 2020, Shenzhen Xindesheng, one of our PRC operating entities, had under-declared tax payable in the aggregate amount of approximately $2,330,793, $1,333,138, and $1,008,399, respectively. Although Shenzhen Xindesheng has not received any notice from the PRC tax authorities regarding the outstanding tax payment as of the date of this prospectus, it is possible that the Company may be subject to fines, late fees, and other penalties even if the Company makes such tax payments. To address issues that may arise from Shenzhen Xindesheng's previous failure to make adequate income tax payments, the Company issued a letter of commitment stating that Suzhou GoodFaith and its subsidiaries (including Shenzhen Xindesheng) would pay any unpaid taxes before September 30, 2022. On September 21, 2022, the under-declared income taxes and associated interest for fiscal years from 2017 to 2021 as of June 30, 2022 were fully paid, and we have confirmed that any associated tax penalty has been exempted by the local tax authority as of the date of this prospectus. See "*Risk Factors-Risks Related to Our Businesses and Industries-One of our PRC operating entities failed to make adequate income tax as required by PRC regulations previously, which may subject us to penalties.*" As advised by our PRC counsel, AllBright, given the remedial measure we have taken to address our failure to make adequate income tax payments and make full contributions to the social insurance plans, the aforementioned noncompliance is unlikely to affect any permissions or approvals required for our operations in the PRC.

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**Dividend Distributions, Cash Transfer, and Tax Consequences**

We intend to keep any future earnings to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future. If we determine to pay dividends on any of our Ordinary Shares in the future, as a holding company, we will be dependent on receipt of funds from our Hong Kong subsidiary, GoodFaith HK. GoodFaith HK will rely on payments made from Suzhou GoodFaith to GoodFaith WFOE and the distribution of such payments to GoodFaith HK as dividends from GoodFaith WFOE. Our finance department is supervising cash management, following the instructions of our management. Our finance department is responsible for establishing our cash operation plan and coordinating cash management matters among our subsidiaries and departments. Each subsidiary and department initiates a cash request by putting forward a cash demand plan, which explains the specific amount and timing of cash requested, and submitting it to our finance department. The finance department reviews the cash demand plan and prepares a summary for the management of our Company. Management examines and approves the allocation of cash based on the sources of cash and the priorities of the needs. Other than the above, we currently do not have other cash management policies or procedures that dictate how funds are transferred. As of the date of this prospectus, none of our subsidiaries have made any dividends or distributions to our Company and our Company has not made any dividends or distributions to our shareholders. Nonetheless, Shenzhen Xindesheng, one of our PRC subsidiaries, made dividends to its former shareholders for fiscal years from 2019 to 2021 before it was indirectly acquired by our Company on December 31, 2021. Specifically, the revised profit distribution in 2019, 2020, and 2021 were $149,366, $593,648, and nil, respectively. See *"Note 10-Shareholders' Equity-Dividends."*

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

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

Current PRC regulations permit GoodFaith WFOE to pay dividends to GoodFaith HK only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of our PRC subsidiaries is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each of such entities in China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. Although the statutory reserves can be used, among other things, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation. The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. For instance, the Circular on Promoting the Reform of Foreign Exchange Management and Improving Authenticity and Compliance Review, or "SAFE Circular 3," issued on January 26, 2017, provides that banks shall, when dealing with dividend remittance transactions from a domestic enterprise to its offshore shareholders of more than $50,000, review the relevant board resolutions, original tax filing form, and audited financial statements of such domestic enterprise based on the principal of genuine transaction. Furthermore, if our PRC subsidiaries incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments. In addition, there can be no assurance that the PRC government will not intervene or impose other restrictions on our ability to transfer or distribute cash within our organization or to foreign investors, which could result in an inability or prohibition on making transfers or distributions outside of mainland China or Hong Kong and adversely affect our business. If we or our PRC subsidiaries are unable to receive all of the revenue from our operations, we may be unable to pay dividends on our Ordinary Shares, should we desire to do so in the future.

Cash dividends, if any, on our Ordinary Shares would be paid in U.S. dollars. GoodFaith HK may be considered a non-resident enterprise for tax purposes, so that any dividends GoodFaith WFOE pays to GoodFaith HK may be regarded as China-sourced income and, as a result, may be subject to PRC withholding tax at a rate of up to 10%. See "*Material Income Tax Considerations—Enterprise Taxation in Mainland China*."

In order for us to pay dividends to our shareholders, we will rely on payments made from Suzhou GoodFaith to GoodFaith WFOE and the distribution of such payments to GoodFaith HK as dividends from GoodFaith WFOE. Certain payments from Suzhou GoodFaith to GoodFaith WFOE are subject to PRC taxes, including business taxes and Value-Added Tax. If Suzhou GoodFaith and its subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict any such party's ability to pay dividends or make other distributions to us.

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

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**Implications of Being an "Emerging Growth Company"**

As a company with less than $1.235 billion in revenue during our last fiscal year, we qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or the "JOBS Act." An "emerging growth company" may take advantage of reduced reporting requirements that are otherwise applicable to larger public companies. In particular, as an emerging growth company, we:

● may present only two years of audited financial statements and only two years of related Management's Discussion and Analysis of Financial Condition and Results of Operations, or "MD&A;"

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

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

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

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

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

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

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

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

**Foreign Private Issuer Status**

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

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

● for interim reporting, we are permitted to comply solely with our home country 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.

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**THE OFFERING**

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| **Ordinary Shares offered by us** | 3,000,000 Ordinary Shares, or 3,450,000 Ordinary Shares if the underwriters exercise their over-allotment option in full |
| **Price per Ordinary Share** | We currently estimate that the initial public offering price will be in the range of $4.00 to $6.00 per Ordinary Share. |
| **Ordinary Shares outstanding prior to completion of this offering** | 20,000,000 Ordinary Shares |

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| **Ordinary Shares outstanding immediately after this offering** | 23,000,000 Ordinary Shares assuming no exercise of the underwriters' over-allotment option and excluding 240,000 Ordinary Shares underlying the Representative's Warrants<br>23,450,000 Ordinary Shares assuming full exercise of the underwriters' over-allotment option and excluding 276,000 Ordinary Shares underlying the Representative's Warrants |
| **Listing** | We have applied to have our Ordinary Shares listed on the Nasdaq Capital Market. At this time, Nasdaq has not yet approved our application to list our Ordinary Shares. The closing of this offering is conditioned upon Nasdaq's final approval of our listing application, and there is no guarantee or assurance that our Ordinary Shares will be approved for listing by Nasdaq. |
| **Nasdaq Capital Market symbol** | "GFCX" |
| **Transfer Agent** | Transhare Corporation |
| **Over-allotment Option** | We have granted to the underwriters an option, exercisable within 45 days after the closing of the Offering, to purchase up to an aggregate of 450,000 additional Ordinary Shares. |
| **Use of proceeds** | We intend to use the proceeds from this offering for the establishment of more subsidiaries wholly owned by us and operating centers; development of technology including updating the service systems and expanding product and service offerings; our business expansion and growth; recruitment of new talent; and for working capital and other general corporate purposes. See "*Use of Proceeds*" on page 48 for more information*.* |
| **Lock-up** | All of our directors and officers and our principal shareholders (5% or more shareholders) have agreed with the Underwriter, subject to certain exceptions, not to sell, transfer, or dispose of, directly or indirectly, any of our Ordinary Shares or securities convertible into or exercisable or exchangeable for our Ordinary Shares for a period of six (6) months from the closing date of this offering. In addition, for a period of six months from the closing date of this offering, subject to certain exceptions, we have agreed with the underwriters not to offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right, or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any Ordinary Shares or any securities convertible into or exercisable or exchangeable for our Ordinary Shares or file or cause to be filed with the SEC any registration statement relating to the offering of any of our securities.. See "*Shares Eligible for Future Sale*" and "*Underwriting*" for more information. |
| **Risk factors** | The Ordinary Shares offered hereby involve a high degree of risk. You should read "*Risk Factors*," beginning on page 13 for a discussion of factors to consider before deciding to invest in our Ordinary Shares*.* |
| Representative's Warrants | The registration statement of which this prospectus is a part also registers for sale the Representative's Warrants to purchase Ordinary Shares equal to 8% of the total number of Ordinary Shares sold in this offering, including the number of Ordinary Shares upon the exercise of the underwriters' over-allotment option, as a portion of the underwriting compensation payable to the underwriters in connection with this offering. The Representative's Warrants will be exercisable for a period of five years after the date of commencement of sales of Ordinary Shares in this offering at a per share exercise price of $6.50 (130% of the public offering price of the Ordinary Shares, based on an assumed midpoint initial offering price of $5.00 per Ordinary Share, which is the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus). Please see "*Underwriting—Representative's Warrants*" for a description of these warrants. |

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**RISK FACTORS**

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

**Risks Relating to Doing Business in the PRC**

***China's economic, political and social conditions, laws and regulations, as well as possible interventions and influences of any government policies and actions, are uncertain and could have a material adverse effect on our business, operations and the value of our Ordinary Shares.***

The PRC government authorities may strengthen oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers like us. Such actions taken by the PRC government authorities may intervene or influence our operations at any time, which are beyond our control. Any such action may adversely affect our operations and significantly limit or completely hinder our ability to offer or continue to offer our Ordinary Shares to investors and reduce the value of such securities.

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

***PRC laws and regulations governing our current business operations are sometimes vague and uncertain. Rules and regulations in China can change quickly with little advance notice. Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protection available to you and us. Any changes in such laws and regulations may impair our ability to operate profitably.***

There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations including, but not limited to, the laws and regulations governing our business and the enforcement and performance of our arrangements with customers in certain circumstances. The laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation and enforcement may involve substantial uncertainty. The effectiveness and interpretation of newly enacted laws or regulations, including amendments to existing laws and regulations, may be delayed, and our business may be affected if we rely on laws and regulations which are subsequently adopted or interpreted in a manner different from our understanding of these laws and regulations. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our business.

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

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

For example, 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," or the Opinions, which were made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies. These opinions proposed to take effective measures, such as promoting the construction of relevant regulatory systems, to deal with the risks and incidents facing China-concept overseas-listed companies and the demand for cybersecurity and data privacy protection. On February 17, 2023, the CSRC issued the Trial Measures, which will become effective on March 31, 2023.On the same date, the CSRC circulated the Guidance Rules and Notice on CSRC's official website. Pursuant to the Trial Measures, beginning March 31, 2023, PRC domestic enterprises that have submitted valid applications for overseas offerings and listing but have not obtained the approval from the relevant overseas regulatory authority or overseas stock exchanges shall complete filings with the CSRC prior to their overseas offerings and listings. "Regulations—Regulations Relating to M&A and Overseas Listing." The Opinions, the Trial Measures, the Guidance Rules and Notice, and any related implementing rules to be enacted may subject us to compliance requirements in the future. Uncertainties regarding the enforcement of laws and the fact that rules and regulations in China can change quickly with little advance notice, along with the risk that the Chinese government may intervene or influence our operations at any time, or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers could result in a material change in our operations, financial performance and/or the value of our Ordinary Shares or impair our ability to raise money.

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***The Chinese government exerts substantial influence over the manner in which we must conduct our business activities*. *We are currently not required to obtain approval from Chinese authorities to list on U.S exchanges, however, if our PRC subsidiaries or the holding company were required to obtain approval in the future and were denied permission from Chinese authorities to list on U.S. exchanges, we will not be able to continue listing on U.S. exchange and the value of our Ordinary Shares may significantly decline or become worthless, which would materially affect the interest of the investors.*** 

The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in China may 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 recent 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.

For example, the Chinese cybersecurity regulator announced on July 2, 2021 that it had begun an investigation of Didi Global Inc. (NYSE: DIDI) and two days later ordered that the company's app be removed from smartphone app stores.

As such, the Company's business segments may be subject to various government and regulatory interference in the provinces in which they operate. The Company could be subject to regulation by various political and regulatory entities, including various local and municipal agencies and government sub-divisions. The Company may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply. The Chinese government may intervene or influence our operations at any time with little advance notice, which could result in a material change in our operations and in the value of our ordinary shares. Any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or become worthless.

As of the date of this prospectus, our PRC counsel, AllBright, has advised us that neither we nor our PRC subsidiaries are currently required to obtain permission from any of the PRC government authorities, nor have we received any denial to list on the U.S. exchange. However, our operations could be adversely affected, directly or indirectly, if we or our PRC subsidiaries inadvertently conclude that such permissions are not required, or if applicable laws, regulations, or interpretations change and we or our PRC subsidiaries are required to obtain such permissions in the future. As a result, our Ordinary Shares may decline in value dramatically or even become worthless should we become subject to new requirement to obtain permissions from the PRC government to list on U.S. exchange in the future.

The General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the Opinions on Severe and Lawful Crackdown on Illegal Securities Activities, which was available to the public on July 6, 2021. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies. These opinions proposed to take effective measures, such as promoting the construction of relevant regulatory systems, to deal with the risks and incidents facing China-based overseas-listed companies and the demand for cybersecurity and data privacy protection. On February 17, 2023, the CSRC issued the Trial Measures, which will become effective on March 31, 2023. On the same date, the CSRC circulated the Guidance Rules and Notice on the CSRC's official website. Pursuant to the Trial Measures, beginning March 31, 2023, domestic enterprises that have submitted valid applications for overseas offerings and listings but have not obtained the approval from the relevant overseas regulatory authority or overseas stock exchange shall complete filings with the CSRC prior to their overseas offerings and listings. See "Regulations—Regulations Relating to M&A and Overseas Listing."

According to the CSRC Notice, the domestic companies that have already been listed overseas before the effective date of the Trial Measures (namely, March 31, 2023) shall be deemed as Existing Issuers. Existing Issuers are not required to complete the filing procedures immediately, and they shall be required to file with the CSRC for any subsequent offerings. Further, according to the CSRC Notice, domestic companies that have obtained approval from overseas regulatory authorities or securities exchanges (for example, the effectiveness of a registration statement for offering and listing in the U.S. has been obtained) for their indirect overseas offering and listing prior March 31, 2023 but have not yet completed their indirect overseas issuance and listing, are granted a six-month transition period from March 31, 2023 to September 30, 2023. Those that complete their indirect overseas offering and listing within such six-month period are deemed as Existing Issuers and are not required to file with the CSRC for their indirect overseas offerings and listings. Within such six-month transition period, however, if such domestic companies fail to complete their indirect overseas issuance and listing, they shall complete the filing procedures with the CSRC. Based on the foregoing, if the effectiveness of our registration statement on Form F-1 cannot be declared on or before March 31, 2023, or if the effectiveness of our registration statement on Form F-1 is declared on or before March 31, 2023 but we fail to complete this offering and listing on or before September 30, 2023, we will be required to complete necessary filing procedures pursuant to the Trial Measures.

On February 24, 2023, the CSRC, together with the MOF, National Administration of State Secrets Protection and National Archives Administration of China, revised the Provisions issued by the CSRC and National Administration of State Secrets Protection and National Archives Administration of China in 2009. The revised Provisions were issued under the title the "Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies", and will come into effect on March 31, 2023 together with the Trial Measures. One of the major revisions to the revised Provisions is expanding their application to cover indirect overseas offering and listing, as is consistent with the Trial Measures. The revised Provisions require that, among other things, (a) a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level; and (b) a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals and entities including securities companies, securities service providers and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations. As of the date of this prospectus, the revised Provisions have not come into effect. On or after March 31, 2023, any failure or perceived failure by our Company or our PRC subsidiaries to comply with the above confidentiality and archives administration requirements under the revised Provisions and other PRC laws and regulations may result in the relevant entities being held legally liable by competent authorities, and referred to the judicial organ to be investigated for criminal liability if suspected of committing a crime.

The Opinions, the Trial Measures, the Guidance Rules and Notice, the revised Provisions, and any related implementation rules to be enacted may subject us to additional compliance requirement in the future. While we are currently not subject to any circumstance that may cause our filing documents to be deemed as unqualified by the CSRC, the interpretations and implementation of the Trial Measures remain uncertain in several respects at this time, considering that the Trial Measures have just been released and have not yet been formally implemented. Therefore, there is no guarantee that our filing documents will meet the standards of the CSRC if we are required to file with CSRC, which could impede our ability to continue this offering. If it is determined that any approval, filing, or other administrative procedure from the CSRC or other PRC governmental authorities is required for this offering, or any future offering or listing, we cannot assure you that we can obtain the required approval or accomplish the required filings or other regulatory procedures in a timely manner, or at all. If we fail to obtain the relevant approval or complete the filings and other relevant regulatory procedures in a timely manner, we may face sanctions by the CSRC or other PRC regulatory agencies, which may include fines and penalties on our operations in China, limitations on our operating privileges in China, restrictions on or prohibition of the payments or remittance of dividends by our PRC subsidiaries in China, delay of or restriction on the repatriation of the proceeds from this offering into China, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our Ordinary Shares. The CSRC or other PRC regulatory authorities may also take actions requiring us, or making it advisable for us, to halt our offerings before settlement and delivery of the shares offered. Consequently, if investors engage in market trading or other activities in anticipation of and prior to settlement and delivery, they do so at the risk that settlement and delivery may not occur. In addition, if the CSRC or other regulatory authorities later promulgate new rules or explanations requiring that we obtain their approvals or accomplish the required filing or other regulatory procedures for this offering, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties or negative publicity regarding such approval requirements could materially and adversely affect our business, prospects, financial condition, reputation, and the trading price of our Ordinary Shares.

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Moreover, On January 4, 2022, thirteen PRC regulatory agencies, namely, the CAC, the NDRC, the Ministry of Industry and Information Technology, the Ministry of Public Security, the Ministry of State Security, the MOF, MOFCOM, SAMR, CSRC, the PBOC, the National Radio and Television Administration, National Administration of State Secrets Protection and the National Cryptography Administration, jointly adopted and published the Measures for Cybersecurity Review (2021), which became effective on February 15, 2022. The Measures for Cybersecurity Review (2021) required that, among other things, in addition to any "operator of critical information infrastructure," or any "operator of network platform" holding personal information of more than one million users which seeks to list in a foreign stock exchange should also be subject to cybersecurity review. The aforementioned policies and any related implementation rules to be enacted may subject us to additional compliance requirement in the future. While we believe that our operations are not affected by these opinions, as these opinions were recently issued, official guidance and interpretation of the opinions remain unclear in several respects at this time. Therefore, we cannot assure you that we will remain fully compliant with all new regulatory requirements of these opinions or any future implementation rules on a timely basis, or at all.

***We may become subject to a variety of laws and regulations in the PRC regarding privacy, data security, cybersecurity, and data protection. We may be liable for improper use or appropriation of personal information provided by our customers.*** 

According to our PRC counsel, AllBright, we may become subject to a variety of laws and regulations in the PRC regarding privacy, data security, cybersecurity, and data protection. These laws and regulations are continuously evolving and developing. The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting, particularly with respect to foreign laws. In particular, there are numerous laws and regulations regarding privacy and the collection, sharing, use, processing, disclosure, and protection of personal information and other user data. Such laws and regulations often vary in scope, may be subject to differing interpretations, and may be inconsistent among different jurisdictions.

We expect to obtain information about various aspects of our operations as well as regarding our employees and third parties. We also maintain information about various aspects of our operations as well as regarding our employees. The integrity and protection of our customer, employee and company data is critical to our business. Our customers and employees expect that we will adequately protect their personal information. We are required by applicable laws to keep strictly confidential the personal information that we store and use, and to take adequate security measures to safeguard such information.

The PRC Criminal Law, as amended by its Amendment 7 (effective on February 28, 2009) and Amendment 9 (effective on November 1, 2015), prohibits institutions, companies and their employees from selling or otherwise illegally disclosing a citizen's personal information obtained during the course of performing duties or providing services or obtaining such information through theft or other illegal ways. On November 7, 2016, the SCNPC issued the Cyber Security Law of the PRC, or Cyber Security Law, which became effective on June 1, 2017.

Pursuant to the Cyber Security Law, network operators must not, without users' consent, collect their personal information, and may only collect users' personal information necessary to provide their services. Providers are also obliged to provide security maintenance for their products and services and shall comply with provisions regarding the protection of personal information as stipulated under the relevant laws and regulations.

The Civil Code of the PRC (issued by the PRC National People's Congress on May 28, 2020 and effective from January 1, 2021) provides main legal basis for privacy and personal information infringement claims under the Chinese civil laws. PRC regulators, including the CAC, the MIIT, and the Ministry of Public Security have been increasingly focused on regulation in the areas of data security and data protection.

The PRC regulatory requirements regarding cybersecurity are constantly evolving. For instance, various regulatory bodies in China, including the Cyberspace Administration of China, the Ministry of Public Security and the SAMR, have enforced data privacy and protection laws and regulations with varying and evolving standards and interpretations. In April 2020, the Chinese government promulgated Cybersecurity Review Measures, or the "2020 Review Measures," which came into effect on June 1, 2020. According to the 2020 Review Measures, operators of critical information infrastructure must pass a cybersecurity review when purchasing network products and services which do or may affect national security.

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In November 2016, the SCNPC passed China's first Cybersecurity Law ("CSL"), which became effective in June 2017. The CSL is the first PRC law that systematically lays out the regulatory requirements on cybersecurity and data protection, subjecting many previously under-regulated or unregulated activities in cyberspace to government scrutiny. The legal consequences of violation of the CSL include penalties of warning, confiscation of illegal income, suspension of related business, winding up for rectification, shutting down the websites, and revocation of business license or relevant permits. In April 2020, the Cyberspace Administration of China and certain other PRC regulatory authorities promulgated the 2020 Review Measures, which became effective in June 2020. Pursuant to the 2020 Review Measures, operators of critical information infrastructure must pass a cybersecurity review when purchasing network products and services which do or may affect national security. On July 10, 2021, the Cyberspace Administration of China issued a revised draft of the Measures for Cybersecurity Review for public comments ("Draft Measures"), which required that, in addition to "operator of critical information infrastructure," any "data processor" carrying out data processing activities that affect or may affect national security should also be subject to cybersecurity review, and further elaborated the factors to be considered when assessing the national security risks of the relevant activities, including, among others, (i) the risk of core data, important data or a large amount of personal information being stolen, leaked, destroyed, and illegally used or exited the country; and (ii) the risk of critical information infrastructure, core data, important data or a large amount of personal information being affected, controlled, or maliciously used by foreign governments after listing abroad. The Cyberspace Administration of China has said that under the proposed rules companies holding data on more than 1,000,000 users must now apply for cybersecurity approval when seeking listings in other nations because of the risk that such data and personal information could be "affected, controlled, and maliciously exploited by foreign governments," The cybersecurity review will also investigate the potential national security risks from overseas IPOs. On December 28, 2021, the CAC, NDRC, MIIT, Ministry of Public Security, Ministry of Stated Security, MOF, MOFCOM, PBOC, SAMR, National Radio and Television Administration, CSRC, National Administration of State Secrets Protection, and State Cryptography Administration jointly promulgated the Cybersecurity Review Measures, or the "Cybersecurity Review Measures," which took effect on February 15, 2022, and will replace the original Cybersecurity Review Measures promulgated on April 13, 2020. Pursuant to the Cybersecurity Review Measures, if critical information infrastructure operators purchase network products and services, or network platform operators conduct data processing activities that affect or may affect national security, they will be subject to cybersecurity review. A network platform operator holding more than one million users/users' individual information also shall be subject to cybersecurity review before listing abroad. The cybersecurity review will evaluate, among others, the risk of critical information infrastructure, core data, important data, or a large amount of personal information being influenced, controlled or maliciously used by foreign governments and risk of network data security after going public overseas. We do not know what additional regulations will be adopted or how such regulations will affect us and our listing on Nasdaq. In the event that the Cyberspace Administration of China determines that we are subject to these regulations, we may be required to delist from Nasdaq and we may be subject to fines and penalties. On June 10, 2021, the SCNPC promulgated the PRC Data Security Law, which took effect on September 1, 2021. The Data Security Law also sets forth the data security protection obligations for entities and individuals handling personal data, including that no entity or individual may acquire such data by stealing or other illegal means, and the collection and use of such data should not exceed the necessary limits. The costs of compliance with, and other burdens imposed by, CSL and any other cybersecurity and related laws may limit the use and adoption of our products and services and could have an adverse impact on our business. Further, if the Cybersecurity Review Measures mandates clearance of cybersecurity review and other specific actions to be completed by companies like us, we face uncertainties as to whether such clearance can be timely obtained, or at all.

On August 20, 2021, the SCNPC promulgated the PRC Personal Information Protection Law, which took effect in November 2021. The Personal Information Protection Law provides that any entity involving processing of personal information ("Personal Information Processer")shall take various measures to prevent the disclosure, modification or losing of the personal information processed by such entity, including, but not limited to, formulating a related internal management system and standard of operation, conducting classified management of personal information, taking safety technology measures to encrypt and de-identify the processed personal information, providing regular safety training and education for staff and formulating a personal information safety emergency accident plan. The Personal Information Protection Law further provides that a Personal Information Processer shall conduct a prior evaluation of the impact of personal information protection before the occurrence of various situations, including, but not limited to, processing of sensitive personal information (personal information that, once leaked or illegally used, may lead to discrimination against an individual or serious harm to an individual's personal or property safety, including information on an individual's ethnicity, religious beliefs, personal biological characteristics, medical health, financial accounts, personal whereabouts), using personal information to make automated decisions and providing personal information to any overseas entity. The Company's business involves the processing of personal information of customers using our products or receiving our services, which may be deemed as sensitive personal information. If the Company does not take adequate measures to review and improve its mechanisms in protecting personal information pursuant to the new Personal Information Protection Law, such failure of personal information protection compliance could subject the Company to penalties, damage its reputation and brand and harm its business and results of operations.

Under the new PRC Data Security Law enacted in September, we are advised by PRC counsel, AllBright, that neither we nor any of our PRC subsidiaries are subject to the cybersecurity review by the CAC for this offering, given that: (i) our products and services are not offered directly to individual users, but rather are offered through our institutional clients; (ii) we do not possess a large amount of personal information in our servers, instead we are only given access to servers of our clients, where the data is encrypted and stored; and (iii) data processed in our business does not have a bearing on national security and thus may not be classified as core or important data by the authorities. However, there remains uncertainty as to how the Cybersecurity Review Measures will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the Cybersecurity Review Measures. If any such new laws, regulations, rules, or implementation and interpretation comes into effect, we will take all reasonable measures and actions to comply and to minimize the adverse effect of such laws on us.

We believe that we have complied with the data privacy and personal information requirements of the CAC, as of the date of this prospectus. Neither the CAC nor any other PRC regulatory agency or administration has contacted our Company in connection with the operations of our PRC operating entities. As advised by AllBright, our PRC counsel, we are currently not required to obtain regulatory approval from the CAC nor from any other PRC authority for our PRC operating entities' operations.

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Nonetheless, we cannot assure you that PRC regulatory agencies, including the CAC, would take the same view as we do, and there is no assurance that we can fully or timely comply with such laws. In the event that we are subject to any mandatory cybersecurity review and other specific actions required by the CAC, we face uncertainty as to whether any clearance or other required actions can be timely completed, or at all. Given such uncertainty, we may be further required to suspend our relevant business, shut down our website, or face other penalties, which could materially and adversely affect our business, financial condition, and results of operations.

***One of our subsidiaries is subject to various evolving Hong Kong laws and regulations regarding data security or antimonopoly conduct, which could subject it to government enforcement actions and investigations, fines, penalties, and suspension or disruption of its operations.***

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

The Competition Ordinance (Cap. 619 of the Laws of Hong Kong) prohibits and deters undertakings in all sectors from adopting anti-competitive conduct which has the object or effect of preventing, restricting, or distorting competition in Hong Kong. It provides for general prohibitions in three major areas of anti-competitive conduct described as the first conduct rule, the second conduct rule, and the merger rule. The first conduct rule prohibits undertakings from making or giving effect to agreements or decisions or engaging in concerted practices that have as their object or effect the prevention, restriction, or distortion of competition in Hong Kong. The second conduct rule prohibits undertakings that have a substantial degree of market power in a market from engaging in conduct that has as its object or effect the prevention, restriction, or distortion of competition in Hong Kong. The merger rule prohibits mergers that have or are likely to have the effect of substantially lessening competition in Hong Kong. The scope of application of the merger rule is limited to carrier licenses issued under the Telecommunications Ordinance (Cap. 106 of the Laws of Hong Kong).As of the date of this prospectus, we and our Hong Kong subsidiary have complied with all three areas of anti-competition laws and requirements in Hong Kong. Our Hong Kong subsidiary has not engaged in any concerted practices that have an object or effect to prevent, restrict, or distort competition in Hong Kong. Additionally, neither we nor our Hong Kong subsidiary possesses a substantial degree of market power in the Hong Kong market that could trigger the second conduct rule. The merger rule is equally not applicable to us or our Hong Kong subsidiary since neither we nor our Hong Kong subsidiary holds any carrier license issued under the Telecommunications Ordinance.

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

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

As a company incorporated under the laws of the Cayman Islands, we conduct a majority of our operations in China and a majority of our assets are located in China. In addition, almost all our senior executive officers reside within China for a significant portion of the time and are PRC nationals. As a result, it may be difficult for you to effect service of process upon those persons inside mainland China. It may be difficult for you to enforce judgements obtained in U.S. courts based on civil liability provisions of the U.S. federal securities laws against us and our officers and directors, as none of them currently resides in the U.S. or has substantial assets in the U.S. In addition, there is uncertainty as to whether the courts of the Cayman Islands or the PRC would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the U.S. or any state.

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

***U.S. regulatory bodies may be limited in their ability to conduct investigations or inspections of our operations in China.***

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 recently 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 investigations 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 outside of China.

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

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

In addition, we have been subject to stricter regulatory requirements in terms of entering into labor contracts with our employees and paying various statutory employee benefits, including pensions, housing fund, medical insurance, work-related injury insurance, unemployment insurance, and maternity insurance to designated government agencies for the benefit of our employees. Pursuant to the PRC Labor Contract Law, or the "Labor Contract Law," that became effective in January 2008 and its amendments that became effective in July 2013 and its implementing rules that became effective in September 2008, employers are subject to stricter requirements in terms of signing labor contracts, minimum wages, paying remuneration, determining the term of employees' probation, and unilaterally terminating labor contracts. In the event that we decide to terminate some of our employees or otherwise change our employment or labor practices, the Labor Contract Law and its implementation rules may limit our ability to effect those changes in a desirable or cost-effective manner, which could adversely affect our business and results of operations. Besides, pursuant to the Labor Contract Law and its amendments, dispatched employees are intended to be a supplementary form of employment and the fundamental form should be direct employment by enterprises and organizations that require employees.

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

***Our PRC operating entities did not make adequate social insurance and housing fund contributions for all employees as required by PRC regulations previously, which may subject us to penalties.***

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

Pursuant to the PRC Social Insurance Law and the Regulations on Administration of Housing Funds, an enterprise is required, within a prescribed time limit, to register with the relevant social security authority and housing fund management center, and to open the relevant accounts and make timely contributions for their employees; failure to do so may subject the enterprise to order for rectification, and certain fines if the enterprise fails to rectify in time. For the six months ended June 30, 2022 and the fiscal years ended December 31, 2021 and 2020, our PRC operating entities did not make full social insurance and housing fund contributions for all employees as required under the relevant laws and regulations. As of June 30, 2022 and December 31, 2021 and 2020, our PRC operating entities had outstanding social insurance payments payable in the aggregate amount of approximately $1,960,235, $1,525,543, and $443,175, respectively. They may be required to make up the social insurance contributions, as well as to pay late fees at the rate of 0.05% per day of the outstanding amount from the due date. If our PRC operating entities fail to make up for the shortfalls within the prescribed time limit, the relevant administrative authorities will impose a fine of one to three times the outstanding amount upon them. With respect to the housing fund, our PRC operating entities may be required to pay and deposit housing funds in full and on time within the prescribed time limit. If they fail to do so, relevant authorities could file applications to competent courts for compulsory enforcement of payment and deposit. As a result, our business, financial condition, and results of operations may be adversely affected. We have taken measures to implement our policy on the payment of social insurance and housing fund contributions for employees for the purpose of compliance with relevant PRC laws and regulations starting from June 2022.

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

On July 4, 2014, State Administration of Foreign Exchange ("SAFE") issued the *Circular on Issues Concerning Foreign Exchange Control over the Overseas Investment and Financing and Round-trip Investment by Domestic Residents via Special Purpose Vehicles*, or "SAFE Circular 37." According to SAFE Circular 37, prior registration with the local SAFE branch is required for PRC residents, (including PRC individuals and PRC corporate entities as well as foreign individuals that are deemed PRC residents for foreign exchange administration purpose), in connection with their direct or indirect contribution of domestic assets or interests to offshore special purpose vehicles, or "SPVs." SAFE Circular 37 further requires amendments to the SAFE registrations in the event of any changes with respect to the basic information of the offshore SPV, such as change of a PRC individual shareholder, name and operation term, or any significant changes with respect to the offshore SPV, such as an increase or decrease of capital contribution, share transfer or exchange, or mergers or divisions. SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we make in the future. In February 2015, SAFE promulgated a *Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment*, or "SAFE Notice 13," effective in June 2015. Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, will be filed with qualified banks instead of the SAFE. The qualified banks will directly examine the applications and accept registrations under the supervision of the SAFE.

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

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

***PRC regulation of parent/subsidiary loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of this offering 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.***

Under PRC laws and regulations, we are permitted to utilize the proceeds from this offering to fund our PRC subsidiaries by making loans or providing additional capital contributions to our PRC subsidiaries, subject to applicable government registration, statutory limitations on amounts, and approval requirements.

Any loans made to GoodFaith WFOE, which is treated as a foreign-invested enterprise under PRC law, are subject to PRC regulations and foreign exchange loan registrations. For example, loans made by us to GoodFaith WFOE to finance its activities cannot exceed statutory limits and must be registered with the local counterpart of the SAFE, or filed with the SAFE in its information system. Pursuant to relevant PRC regulations, we may provide loans to GoodFaith WFOE up to the larger amount of (i) the balance between the registered total investment amount and the registered capital of GoodFaith WFOE, respectively, or (ii) twice the amount of the net assets of GoodFaith WFOE, calculated in accordance with the *Circular on Full-Coverage Macro-Prudent Management of Cross-Border Financing*, or the "PBOC Circular 9." Moreover, any medium or long-term loan to be provided by us to GoodFaith WFOE or other PRC operating entities must also be filed and registered with the NDRC. We may also decide to finance GoodFaith WFOE by means of capital contributions. These capital contributions must be recorded with the MOFCOM or its local counterpart.

On March 30, 2015, the SAFE issued the *Circular of the State Administration of Foreign Exchange on Reforming the Administrative Approach Regarding the Settlement of the Foreign Exchange Capital of Foreign-invested Enterprise*s, or "SAFE Circular 19," which took effect and replaced previous regulations effective on June 1, 2015. Pursuant to SAFE Circular 19, up to 100% of foreign currency capital of a foreign-invested enterprise may be converted into RMB capital according to the actual operation, and within the business scope, of the enterprise at its will. Although SAFE Circular 19 allows for the use of RMB converted from the foreign currency-denominated capital for equity investments in the PRC, the restrictions continue to apply as to foreign-invested enterprises' use of the converted RMB for purposes beyond their business scope, for entrusted loans or for inter-company RMB loans. On June 9, 2016, the SAFE promulgated the *Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account*, or "SAFE Circular 16," effective on June 9, 2016, which reiterates some rules set forth in Circular 19, but changes the prohibition against using RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company to issue RMB entrusted loans to a prohibition against using such capital to issue loans to non-affiliated enterprises. On October 23, 2019, the SAFE issued the *Notice of the State Administration of Foreign Exchange on Further Facilitating Cross-border Trade and Investment*, which, among other things, expanded the use of foreign exchange capital to the domestic equity investment area. Non-investment foreign-funded enterprises are allowed to lawfully make domestic equity investments by using their capital on the premise without violation of prevailing special administrative measures for access of foreign investments (negative list) and the authenticity and compliance with the regulations of domestic investment projects. If our PRC operating entities require financial support from us or our wholly owned subsidiary in the future and we find it necessary to use foreign currency-denominated capital to provide such financial support, our ability to fund our PRC operating entities' operations will be subject to statutory limits and restrictions, including those described above.

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

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

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

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

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

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

Under the PRC Enterprise Income Tax Law, or the "EIT Law," that became effective in January 2008, an enterprise established outside the PRC with "de facto management bodies" within the PRC is considered a "resident enterprise" for PRC enterprise income tax, or "EIT," purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. Under the implementation rules to the EIT Law, a "de facto management body" is defined as a body that has material and overall management and control over the manufacturing and business operations, personnel and human resources, finances, and properties of an enterprise. In addition, a circular, known as SAT Circular 82, issued in April 2009 by the SAT specifies that certain offshore incorporated enterprises controlled by PRC enterprises or PRC enterprise groups will be classified as PRC resident enterprises if the following are located or resident in the PRC: senior management personnel and departments that are responsible for daily production, operation and management; financial and personnel decision making bodies; key properties, accounting books, company seal, and minutes of board meetings and shareholders' meetings; and half or more of the senior management or directors having voting rights. Further to SAT Circular 82, the SAT issued a bulletin, known as SAT Bulletin 45, which took effect in September 2011, to provide more guidance on the implementation of SAT Circular 82 and clarify the reporting and filing obligations of such "Chinese-controlled offshore incorporated resident enterprises." SAT Bulletin 45 provides procedures and administrative details for the determination of resident status and administration on post-determination matters. Although both SAT Circular 82 and SAT Bulletin 45 only apply to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreign individuals, the determining criteria set forth in SAT Circular 82 and SAT Bulletin 45 may reflect the SAT's general position on how the "de facto management body" test should be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises, PRC enterprise groups, or by PRC or foreign individuals.

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

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

In February 2015, SAT issued a Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Tax Resident Enterprises, or "SAT Circular 7." SAT Circular 7 provides comprehensive guidelines relating to indirect transfers of PRC taxable assets (including equity interests and real properties of a PRC resident enterprise) by a non-resident enterprise. In addition, in October 2017, SAT issued an Announcement on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises, or "SAT Circular 37," effective in December 2017 and amended in June 2018, which, among other things, amended certain provisions in SAT Circular 7 and further clarified the tax payable declaration obligation by non-resident enterprise. Indirect transfer of an equity interest and/or real properties in a PRC resident enterprise by their non-PRC holding companies are subject to SAT Circular 7 and SAT Circular 37.

SAT Circular 7 provides clear criteria for an assessment of reasonable commercial purposes and has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market. As stipulated in SAT Circular 7, indirect transfers of PRC taxable assets are considered as reasonable commercial purposes if the shareholding structure of both transaction parties falls within the following situations: i) the transferor directly or indirectly owns 80% or above equity interest of the transferee, or vice versa; ii) the transferor and the transferee are both 80% or above directly or indirectly owned by the same party; iii) the percentage in bullet point i) and ii) shall be 100% if over 50% the share value of a foreign enterprise is directly or indirectly derived from PRC real properties. Furthermore, SAT Circular 7 also brings challenges to both foreign transferor and transferee (or other person who is obligated to pay for the transfer) of taxable assets. Where a non-resident enterprise transfers PRC taxable assets indirectly by disposing of the equity interests of an overseas holding company, which is an indirect transfer, the non-resident enterprise as either transferor or transferee, or the PRC entity that directly owns the taxable assets, may report such indirect transfer to the relevant tax authority and the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding, or deferring PRC tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise.

According to SAT Circular 37, where the non-resident enterprise fails to declare the tax payable pursuant to Article 39 of the EIT Law, the tax authority may order it to pay the tax due within required time limits, and the non-resident enterprise shall declare and pay the tax payable within such time limits specified by the tax authority. If the non-resident enterprise, however, voluntarily declares and pays the tax payable before the tax authority orders it to do so within required time limits, it shall be deemed that such enterprise has paid the tax in time.

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

***Our PRC subsidiaries are subject to restrictions on paying dividends or making other payments to us, and there is no assurance that the PRC government will not intervene or impose restrictions on our ability to transfer cash out of or to mainland China and Hong Kong, which may have a material adverse effect on our ability to conduct our business.***

We are a holding company incorporated in the Cayman Islands. We may need dividends and other distributions on equity from our PRC subsidiaries to satisfy our liquidity requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. If our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to us.

Current PRC regulations permit our PRC subsidiaries to pay dividends to us only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, our PRC subsidiaries are required to set aside at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of their respective registered capital. There can be no assurance that the PRC government will not intervene or impose restrictions on our ability to transfer or distribute cash within our organization or to foreign investors, which could result in an inability or prohibition on making transfers or distributions outside of mainland China or Hong Kong and adversely affect our business. In addition, our PRC subsidiaries may also allocate a portion of their respective after-tax profits based on PRC accounting standards to employee welfare and bonus funds at their discretion. These reserves are not distributable as cash dividends. Such existing or potential limitations on the ability of our PRC subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments, or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.

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

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

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

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

However, based on the Circular on Certain Issues with Respect to the Enforcement of Dividend Provisions in Tax Treaties, or the "SAT Circular 81," which became effective on February 20, 2009, if the relevant PRC tax authorities determine, in their discretion, that a company benefits from such reduced income tax rate due to a structure or arrangement that is primarily tax-driven, such PRC tax authorities may adjust the preferential tax treatment. According to Circular on Several Issues regarding the "Beneficial Owner" in Tax Treaties, which became effective as of April 1, 2018, when determining an applicant's status as the "beneficial owner" regarding tax treatments in connection with dividends, interests, or royalties in the tax treaties, several factors will be taken into account. Such factors include whether the business operated by the applicant constitutes actual business activities, and whether the counterparty country or region to the tax treaties does not levy any tax, grant tax exemption on relevant incomes, or levy tax at an extremely low rate. This circular further requires any applicant who intends to be proved of being the "beneficial owner" to file relevant documents with the relevant tax authorities. GoodFaith WFOE, one of our PRC subsidiaries, is wholly owned by our Hong Kong subsidiary. However, we cannot assure you that our determination regarding our qualification to enjoy the preferential tax treatment will not be challenged by the relevant PRC tax authority or we will be able to complete the necessary filings with the relevant PRC tax authority and enjoy the preferential withholding tax rate of 5% under the Double Tax Avoidance Arrangement with respect to dividends to be paid by GoodFaith WFOE to our Hong Kong subsidiary, in which case, we would be subject to the higher withholding tax rate of 10% on dividends received.

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

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

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

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

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

On April 21, 2020, SEC Chairman Jay Clayton and PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a joint statement highlighting the risks associated with investing in companies based in or have substantial operations in emerging markets including China. The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers in China and higher risks of fraud in emerging markets.

On May 18, 2020, Nasdaq filed three proposals with the SEC to (i) apply a minimum offering size requirement for companies primarily operating in a "Restrictive Market," (ii) adopt a new requirement relating to the qualification of management or the board of directors for Restrictive Market companies, and (iii) apply additional and more stringent criteria to an applicant or listed company based on the qualifications of the Company's auditor. On October 4, 2021, the SEC approved Nasdaq's revised proposal for the rule changes.

On May 20, 2020, the U.S. Senate passed the HFCA Act requiring a foreign company to certify it is not owned or manipulated by a foreign government if the PCAOB is unable to audit specified reports because the company uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect the company's auditor for three consecutive years, the issuer's securities are prohibited to trade on a national exchange or in the over-the-counter trading market in the United States. On December 2, 2020, the U.S. House of Representatives approved the HFCA Act. On December 18, 2020, the HFCA Act was signed into law.

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

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

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

On December 18, 2020, the HFCA Act, was signed by President Donald Trump and became law. This legislation requires certain issuers of securities to establish that they are not owned or controlled by a foreign government. Specifically, an issuer must make this certification if the PCAOB is unable to audit specified reports because the issuer has retained a foreign public accounting firm not subject to inspection by the PCAOB. Furthermore, if the PCAOB is unable to inspect the issuer's public accounting firm for three consecutive years, the issuer's securities are banned from trade on a national exchange or in the over-the-counter trading market in the United States or through other methods.

On March 24, 2021, the SEC announced that it had adopted interim final amendments to implement congressionally mandated submission and disclosure requirements of the HFCA Act. The interim final amendments will apply to registrants that the SEC identifies as having filed an annual report on Forms 10-K, 20-F, 40-F or N-CSR with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by an authority in that jurisdiction. The SEC will implement a process for identifying such a registrant and any such identified registrant will be required to submit documentation to the SEC establishing that it is not owned or controlled by a governmental entity in that foreign jurisdiction, and will also require disclosure in the registrant's annual report regarding the audit arrangements of, and governmental influence on, such a registrant.

On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, and on December 29, 2022, 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.

On September 22, 2021, the PCAOB adopted a final rule implementing the HFCA Act, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCA Act, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.

On November 5, 2021, the SEC approved the PCAOB's Rule 6100, Board Determinations Under the Holding Foreign Companies Accountable Act. Rule 6100 provides a framework for the PCAOB to use when determining, as contemplated under the HFCA Act, whether it is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.

On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act, which became effective on January 10, 2022. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions.

On December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in China and in Hong Kong because of positions taken by PRC and Hong Kong authorities in those jurisdictions. The PCAOB has made such designations as mandated under the HFCA Act. Pursuant to each annual determination by the PCAOB, the SEC will, on an annual basis, identify issuers that have used non-inspected audit firms and thus are at risk of such suspensions in the future.

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

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

On August 26, 2022, the PCAOB signed the SOP Agreements with the CSRC and China's Ministry of Finance. The SOP Agreements established a specific, accountable framework to make possible complete inspections and investigations by the PCAOB of audit firms based in mainland China and Hong Kong, as required under U.S. law. On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB's access in the future, the PCAOB Board will consider the need to issue a new determination within three years' time. The PCAOB continues to demand complete access in mainland China and Hong Kong moving forward and is making plans to resume regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as needed. The PCAOB has also indicated that it will act immediately to consider the need to issue new determinations with the HFCA Act, if needed.

Our auditor, UHY LLP, the independent registered public accounting firm that issues the audit report included elsewhere in this prospectus, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. Our auditor is headquartered in New York, and has been inspected by the PCAOB on a regular basis, with the last inspection in 2019. Therefore, as of the date of this prospectus, our auditor is not subject to the PCAOB determinations announced by the PCAOB on December 16, 2021 relating to the PCAOB's inability to inspect or investigate completely registered public accounting firms headquartered in mainland China or Hong Kong because of a position taken by one or more authorities in the PRC or Hong Kong. However, there is no assurance that our auditor, following our initial public offering, would be subject to PCAOB inspection. Additionally, the recent developments have added uncertainties to our offering and we cannot assure you whether the national securities exchange we apply to for listing or regulatory authorities would apply additional or 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. Furthermore, the HFCA Act, which requires that the PCAOB be permitted to inspect the issuer's public accounting firm within two years, as amended, may result in the delisting of our Company in the future if the PCAOB is unable to inspect our accounting firm at such future time. Our securities may be prohibited from trading if our auditor cannot be fully inspected as more stringent criteria have been imposed by the SEC and the PCAOB recently. While the Company's auditor is based in the U.S. and is registered with PCAOB and subject to PCAOB inspection, in the event it is later determined that the PCAOB is unable to inspect or investigate completely the Company's auditor because of a position taken by an authority in a foreign jurisdiction, then such lack of inspection could cause trading in the Company's securities to be prohibited under the HFCA Act, and ultimately result in a determination by a securities exchange to delist the Company's securities. The PCAOB continues to demand complete access in mainland China and Hong Kong moving forward and is making plans to resume regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as needed. The PCAOB has also indicated that it will act immediately to consider the need to issue new determinations with the HFCA Act, if needed. If trading in our Ordinary Shares is prohibited under the HFCA Act in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at such future time, Nasdaq may determine to delist our Ordinary Shares. A termination in the trading our of securities or any restriction on the trading in our securities would be expected to have a negative impact on the Company as well as on the value of our securities.

It remains unclear what the SEC's implementation process related to the above rules will entail or what further actions the SEC, the PCAOB or Nasdaq will take to address these issues and what impact those actions will have on the companies that have significant operations in the PRC and have securities listed on a U.S. stock exchange (including a national securities exchange or over-the-counter stock market). In addition, the above amendments and any additional actions, proceedings, or new rules resulting from these efforts to increase U.S. regulatory access to audit information could create some uncertainty for investors, the market price of our Ordinary Shares could be adversely affected, and we could be delisted if we and our auditor are unable to meet the PCAOB inspection requirement or being required to engage a new audit firm, which would require significant expense and management time.

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

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

The Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the "M&A Rules," adopted by six PRC regulatory agencies in 2006 and amended in 2009, requires an overseas SPV formed for listing purposes through acquisitions of PRC domestic companies and controlled by PRC companies or individuals to obtain the approval of the CSRC, prior to the listing and trading of such SPV's securities on an overseas stock exchange. In September 2006, the CSRC published a notice on its official website specifying documents and materials required to be submitted to it by an SPV seeking CSRC approval of its overseas listings. The application of the M&A Rules remains unclear.

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

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

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

The M&A Rules discussed in the preceding risk factor and recently adopted regulations and rules concerning mergers and acquisitions established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time consuming and complex. For example, the M&A Rules require that the Ministry of Commerce be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise, if (i) any important industry is concerned, (ii) such transaction involves factors that have or may have impact on the national economic security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark or PRC time-honored brand. Mergers or acquisitions that allow one market player to take control of or to exert decisive impact on another market player must also be notified in advance to the Ministry of Commerce when the threshold under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings, or the "Prior Notification Rules," issued by the State Council in August 2008 is triggered. In addition, the security review rules issued by the Ministry of Commerce that became effective in September 2011 specify that mergers and acquisitions by foreign investors that raise "national defense and security" concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise "national security" concerns are subject to strict review by the Ministry of Commerce, and the rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement. In the future, we may grow our business by acquiring complementary businesses. Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactions could be time consuming, and any required approval processes, including obtaining approval from the Ministry of Commerce or its local counterparts may delay or inhibit our ability to complete such transactions. It is clear that our business would not deemed to be in an industry that raises "national defense and security" or "national security" concerns. The Ministry of Commerce or other government agencies, however, may publish explanations in the future determining that our business is in an industry subject to the security review, in which case our future acquisitions in the PRC, including those by way of entering into contractual control arrangements with target entities, may be closely scrutinized or prohibited. Our ability to expand our business or maintain or expand our market share through future acquisitions would as such be materially and adversely affected.

***Because we are a Cayman Islands company and all of our business is conducted in the PRC, you may be unable to bring an action against us or our officers and directors or to enforce any judgment you may obtain.***

We are incorporated in the Cayman Islands and conduct our operations primarily in China. Substantially all of our assets are located outside of the United States and the proceeds of this offering will primarily be held in banks outside of the United States. In addition, all of our directors and officers reside outside of the United States. 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 Islands and of China may not allow you to enforce a judgment against our assets or the assets of our directors and officers. See "*Enforceability of Civil Liabilities*."

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**Risks Related to Our Businesses and Industries**

***The financial sector in China is subject to changes in regulations. Non-compliance with new financial regulations or new licensing requirements may materially affect our business operations and financial results.***

The Company's operations are subject to evolving regulatory oversight by the Chinese governmental and local regulatory authorities. As the Chinese financial sector grows, applicable laws, rules, and regulations are evolving. Any changes in laws and regulations applicable to our operations may increase our cost of compliance or may force us to revise our business plan or cease some aspects of our operations. If we fail to continuously comply with applicable rules and regulations, we may face fines or restrictions on our business activities, or even a suspension of all or part of our business operations. Furthermore, the Chinese governmental and local authorities may institute new licensing requirements applicable to our current or future operations. If such licensing requirements were introduced, we cannot assure you that we would be able to obtain any newly required license promptly, or at all, which could materially and adversely affect our business.

***The industries we are in are still evolving, which makes it difficult to effectively assess our future prospects.***

The industries in which we operate, including the intelligent risk management and debt collection business, in the PRC are still in evolving stages. The regulatory framework for these industries remains uncertain for the foreseeable future. Many market players in these industries, including us, are inexperienced in responding effectively to market changes and steadily sustaining the growth of business when the industries enter a different stage. We may not be able to sustain our historical growth rate in the future.

You should consider our business and prospects in light of the risks and challenges we encounter or may encounter, given the rapidly evolving markets in which we operate and our limited operating history. These risks and challenges include our ability to, among other things:

● offer competitive product and services;

● broaden our prospective customer bases across all business lines;

● increase the utilization of our products and services by existing customers as well as new customers;

● maintain and enhance our relationship and business collaboration with our partners, including, but not limited to, developing cooperative relationships with new commercial banks;

● navigate a complex and evolving regulatory environment in China;

● improve our operational efficiency;

● attract, retain and motivate talented employees to support our business growth;

● enhance our technology infrastructure to support the growth of our business, maintain the security of our systems, and safeguard the confidentiality of the information provided and utilized across our systems;

● navigate economic conditions and fluctuation; and

● defend ourselves against legal and regulatory actions, such as actions involving intellectual property or privacy claims.

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***We operate a socially sensitive business. Public complaints against the debt collection industry in general, or against us in particular, may materially and adversely affect our business, financial condition and results of operations.***

The general public may have certain misconceptions about the debt collection industry, such as the perceived use of unlawful means to collect debts. Given the growth of collection service providers in China, the contentious nature associated with debt collection, the unpredictability of borrower behavior, and the inflow of small-scale market participants with weak compliance protocols, the post-loan debt collection industry is subject to potentially higher and unpredictable government scrutiny. Such development could subject our operations to regulatory restrictions, government investigations, administrative fines, and increased compliance requirements. As a result, our business and our ability to generate revenue could be materially and adversely affected.

Furthermore, negative publicity about our industry and business creates the possibility of heightened attention from the public, the media and government regulators. From time to time, complaints or allegations against us, regardless of their veracity, may result in negative publicity, which in turn could result in government inquiry or reputational harm. There is no assurance that we would not become a target for public scrutiny in the future or such scrutiny and public exposure would not severely damage our reputation, business, and prospects. Furthermore, we rely heavily on our reputation to develop and maintain client relationships. Our prospective clients, including commercial banks, may refuse to work with us if we suffer from a tarnished reputation, since any perceived or actual violation of laws and regulations by service providers could increase our clients' regulatory risks. As such, our business is particularly vulnerable to negative media coverage and negative publicity.

In addition, our directors and management may become subject to scrutiny by the media and the public regarding our business, which may result in unverified, inaccurate or misleading information about our directors and management being reported by the press. Negative publicity about our directors or management, even if untrue or inaccurate, may harm our reputation.

***Our revenue would be adversely affected if our clients develop or adopt an alternative to our services.***

If our prospective clients, including commercial banks and other financial institutions, decide to develop their own risk evaluation and loan collection solution or platform internally or rely on their in-house collection team and other service providers, our debt collection business could be adversely affected. Since our success partially depends on our ability to use our advanced technology system, clients resorting to such alternate systems may deprive us of our competitive advantage. In addition, our clients may decide against the use of third-party service providers altogether by relying on internal and proprietary resources, which could result in reduced revenue.

***Our operating history, and our experience in risk evaluation and the debt collection business, may not provide an adequate basis to judge our future prospects and results of operations.***

As we launched our credit loan risk management business in 2015 and debt collection services in 2014, we only have a limited operating history. Members of our management team have been working together only for a short period of time and are still in the running-in period. They may still be in the process of exploring approaches to running our Company and reaching consensus among themselves, which may affect the efficiency and results of our operation.

We have limited experience in most aspects of our business operations, such as service and product offerings, credit assessment, risk management, and the development of long-term relationships with commercial banks, non-bank financial institutions and other business partners. As our businesses develop or in response to competition, we may continue to introduce new products and services, adjust our existing products and service profile, or make changes to our business operation in general. Any significant change to our business model may have a material and adverse impact on our financial condition and results of operations. It is therefore difficult to effectively assess our future prospects.

Furthermore, in addition to our existing product and services offerings, we may also from time to time explore other growth opportunities, such as broadening our customer base and seeking strategic partnerships to enter new markets that are complementary to our existing business lines. These initiatives may have different impacts on our operation, including the potential cannibalization of existing services. Failure to manage our expansion may have unexpected materially adverse effect on our financial condition and results of operation.

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***Our employees, including collection specialists, may violate our compliance policies and government rules and regulations during the repayment and collection management process.***

We have compliance policies to instruct and guide our employees during the repayment and collection management process to comply with government rules and regulations. However, our employees, such as our collection specialists, may not comply with our compliance policies and may violate laws and regulations in the repayment and collection management process. They may make verbal or written threats of physical harm, use vulgar or inappropriate language, or agree to unauthorized repayment arrangements with borrowers, among other actions, to increase the likelihood of collection. They may use illegal tactics, such as impersonation of government officials or fabrication of documents to exert influence over borrowers. They may solicit loan applicants' personal information illegally and sell such information to third parties for their personal financial gains.

Although these are individual acts, such acts may still adversely affect our business, cause reputational damage, or result in monetary penalties or loss of business. If the violations are severe, our clients may terminate our services and cease cooperation with us in the future. In addition, the government may investigate our operations for potential violations of government rules and regulations, which may interrupt our normal operations, and we may be subject to administrative penalties such as monetary penalties or, in the most severe circumstances, suspension of our loan repayment and collection management business.

***Fraudulent activity could negatively impact our operating results, brand, and reputation, and cause the use of our risk evaluation services to decrease.***

We are subject to the risk of fraudulent activity associated with loan applicants and parties handling loan application and processing information. Our resources, technologies and fraud detection tools may be insufficient to accurately detect and prevent fraud. Even if we identify a fraudulent borrower and reject her loan application, such borrower may re-apply by using fraudulent information. We may fail to identify such behavior, despite our measures to verify personal identification information provided by borrowers. A significant increase in fraudulent activities could negatively impact our brand and reputation, discourage commercial banks from collaborating with us, reduce the total amount of loans originated by commercial banks that have partnered with us, and lead us to take additional steps to reduce fraud risk, which could increase our costs. High profile fraudulent activity could lead to regulatory intervention and may divert our management's attention and cause us to incur additional expenses and costs. Although we have not experienced any material business or reputational harm as a result of fraudulent activities in the past, we cannot rule out the possibility that fraudulent activities may materially and adversely affect our business, reputation, financial condition, and results of operations in the future.

***Market, economic and other conditions in China may adversely affect the demand for our products and services.***

Loan services depend upon the overall level of economic conditions and consumer spending in China. A sustained deterioration in the general economic conditions in China, including any turmoil in the economy, reductions in household disposable income, distresses in financial markets, or reduced market liquidity, as well as increased government intervention, may reduce the number of our customers. Small-to-medium size business owners, in particular, are more susceptible to adverse changes in market, economic and regulatory conditions and the level of consumption in China. As a result, the demand for our existing and new repayment services could decrease, and our financial performance could be adversely affected.

Adverse market trends may affect our financial performance. Such trends may include, but are not limited to, the following:

● fluctuations in consumer demand, which reflect the prevailing economic and demographic conditions;

● low levels of consumer and business confidence associated with recessionary environments, which may in turn reduce consumer spending;

● financial institutions restricting credit lines to existing cardholders or limiting the issuance of new cards to mitigate cardholder defaults; and\or

● government intervention and regulation, and/or reduction in government investments in our customers, such as governmental funding for social welfare programs and infrastructure or reductions in consumer taxes, that may reduce consumer desire to use our products and services.

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***We rely on our advanced technology, including artificial intelligence, our proprietary technology system, and digital technology, to offer risk evaluation and solvency assessment products and services. If our assessment model or the underlying algorithm lacks accuracy or fails to achieve clients' goals, our reputation and market share would be materially and adversely affected, which would severely impact our business and results of operations.***

Our ability to attract new clients to, and build trust in, our pre-approval risk evaluation business is significantly dependent on our ability to effectively evaluate loan applicants' credit profiles and the likelihood of default. We have devised and implemented a systematic credit assessment model and an asset-driven, disciplined risk management approach to minimize a loan applicant's default risk and mitigate the impact of default. Specifically, our assessment model and risk management capabilities not only enable our commercial bank clients to select high-quality borrowers whose financial conditions and personal backgrounds satisfy them, but also protect them from against lending more than they may be able to recover in the event of default. For details on our credit assessment and risk management approach, see "*Business*-*Our Products and Services*-*Risk Evaluation and Solvency Assessment Products and Services*-*Credit Loan Pre-approval Stage*." While we are constantly training, updating and optimizing our products using new data, there can be no assurance that our risk management measures will allow us to identify or appropriately assess whether the interest and principal payments due on a loan will be repaid when due, or at all.

We also rely on analytical models (both models developed by us and those supplied by third parties) and information and data (both generated by us and supplied by third parties). Models and data will be used to make projections on loan applicants' ability to repay loans. When models and data prove to be incorrect, misleading or incomplete, any decisions made in reliance thereon might not be reliable. Some of the analytical models we use are predictive in nature. For example, through our pre-approval risk warning scoring model, or the "Pre-approval Risk Warning Scoring," we process anonymous application information, collected and provided by our clients such as banks and financial institutions through a secure and encrypted transmission to our Contractual Capacity Scoring system (as defined below), to calculate each applicant's probability of being delinquent for more than thirty (30) days. Applicants with high probability of being delinquent for more than thirty (30) days will be identified as an applicant with risks. The use of predictive models has inherent risks. For example, such models may incorrectly forecast future behavior, leading to volatility in results. In addition, the predictive models used by us may differ substantially from those models used by our competitors. Our business, financial condition, and results of operations could be materially impaired, in the event the analytical models or information data we rely on are found to be incorrect, misleading or incomplete.

***We rely on third parties to provide basic verification services to our clients. If such third parties, or critical staff of such third parties, are unable or unwilling to continue in their present positions, our business may be severely disrupted.***

We rely on certain third-party service providers for our basic verification products and services. See "Business-Products and Services-Risk Evaluation and Solvency Assessment Products and Services-Credit Loan Pre-approval Stage-Our Products and Services for Risk Evaluation and Solvency Assessment-Basic Verification." For example, we purchased brief verification, portrait comparison, and watchlist scoring services from such third-party service providers. In particular, brief verification services are used to verify loan applicants' names, ID numbers, start and end dates of their ID cards, their driving license information, and the validity of driving licenses. The portrait comparison service is an on-site verification used to confirm whether the documents presented by a loan applicant are attributable to that particular loan applicant, and the watchlist scoring service is used to determine a loan applicant's default risk. If such third-party service providers fail to function properly, we cannot assure you that we would be able to find an alternative resource in a timely and cost-efficient manner or at all. Even though the services we rely upon are usually subject to pay-per-use schedules, we do maintain a few fixed-term contracts, and we cannot assure you that we can renew any such contracts once they expire, or we can renew them with the term we desire. Such service providers may also be demanded by their customers not to work with us, or may form alliances to seek better terms dealing with us. Even though our business does not substantially depend on any particular third-party service providers, the above-mentioned occurrences may result in our diminished ability to operate our business, potential liability to borrowers, inability to attract borrowers, reputational damage, regulatory intervention, and financial harm. Such occurrences could negatively impact our business, financial condition, and results of operations.

***Credit and other information we receive from third parties about borrowers may be inaccurate or may not accurately reflect a prospective borrower's creditworthiness, which may compromise the accuracy of our credit assessment.***

For credit assessment purposes, we obtain certain information of the prospective borrowers from our clients directly, including commercial banks or other financial institutions. Such information may not be complete, accurate, or reliable, especially in instances in which some of the data needs to be anonymized for safety concerns. Our credit assessment may not reflect that particular loan applicant's actual creditworthiness because the assessment may be based on outdated, incomplete, or inaccurate borrower information. Such occurrences could negatively impact our business, financial condition, and results of operations.

***If our pre-approval risk evaluation and solvency assessments business do not achieve sufficient market acceptance, our financial results and competitive position will be harmed.***

Our pre-approval risk evaluation and solvency assessment business could fail to attain sufficient market acceptance for many reasons, including, but not limited to, any of the following:

● there may be defects, errors, or failures in our credit assessment and risk management process;

● there may be negative publicity about our risk evaluation and solvency assessment services;

● regulatory authorities may take the view that our existing and new recommendation services do not comply with PRC laws, regulations, or rules applicable to us; and\or

● there may be competing products or services introduced or anticipated to be introduced by our competitors.

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If our pre-approval risk evaluation and solvency assessment services do not maintain or achieve adequate acceptance in the market, our competitive position, results of operations and financial condition could be materially and adversely affected.

***We face increasing competition, and if we do not compete effectively, our operating results could be harmed.***

The industries in which we are operating are competitive and evolving. With respect to pre-approval risk evaluation and solvency assessment business, we compete with market players, such as Tongdun Technology Co., Ltd., Bairong Yunchuang Technology Co., Ltd., and Shanghai Bingjian Information Technology Co., Ltd. For post-loan delinquent debit collection services, our major competitors include Hunan Yongxiong Asset Management Group Co., Ltd., Shenzhen Shenjuyuan Credit Consulting Co., Ltd., Guangdong Delv Credit Management Co., Ltd., and Huadao Data Co., Ltd.

Our competitors may operate with different business models, have different cost structures or participate selectively in different market segments. They may ultimately prove to be more successful or more adaptable to new regulatory, technological and other developments. Some of our current and potential competitors have significantly more financial, technical, marketing and other resources than we do, and may be able to devote greater resources to the development, promotion, sale and support of their platforms. Our competitors may also have longer operating histories, more extensive pool of borrowers, larger amounts of data, greater brand recognition and loyalty, and broader partner relationships than we do. For example, traditional financial institutions may offer risk assessment services of their own. Such institutions are likely more experienced in financial product development and risk management and able to devote greater resource to the development, promotion, sale and technical support, and, thus, may gain a competitive edge against us. Additionally, a current or potential competitor may acquire one or more of our existing competitors or form a strategic alliance with one or more of our competitors. Any of the foregoing could adversely affect our business, results of operations, financial condition and future growth.

Our competitors may be better at developing new services and products, responding to new technologies, charging lower fees on products and services and undertaking more extensive marketing campaigns. When new competitors seek to enter our targeted markets, or when existing market participants seek to increase their market share, they sometimes undercut product and service pricing and/or terms prevalent in the markets, which could adversely affect our market share or ability to capture new market opportunities. Our pricing and terms could deteriorate if we fail to act to meet these competitive challenges.

***Any harm to our brand or reputation may materially and adversely affect our business and results of operations.***

Enhancing the recognition and reputation of our brand is critical to our business and competitiveness. Factors that are vital to this objective include, but are not limited to, our ability to:

● maintain the quality and reliability of our products and services;

● provide our customers with a satisfactory and distinguished customer experience;

● enhance and improve our credit assessment model, risk management system, and IT infrastructure;

● effectively manage and resolve customer complaints; and

● effectively protect personal information and privacy of customers and business partners.

Any malicious or innocent negative allegation made by the media or other parties about our Company, including, but not limited to, aspects of our Company with respect to our management, business, compliance with law, financial condition or prospects, whether with merit or not, could severely hurt our reputation and harm our business and operating results. As the industries in which we operate are still evolving, negative publicity may arise from time to time. Negative publicity about China's financial industry in general may also have a negative impact on our reputation, regardless of whether we have engaged in any inappropriate activities.

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In addition, certain factors that may adversely affect our reputation are beyond our control. Negative publicity about our partners, outsourced service providers or other counterparties, such as negative publicity about their business practices and any failure by them to adequately protect confidential information, to comply with applicable laws and regulations or to otherwise meet required quality and service standards, could harm our reputation. Furthermore, any negative development in the financial industry in China, such as bankruptcies or failures of finance platforms, or negative perception of the industry as a whole, even if factually incorrect or based on isolated incidents, could compromise our image, undermine the trust and credibility we have established and negatively impact our ability to acquire new customers and establish new strategic partnerships.

***Misconduct, errors and failure to function by our employees and third-party service providers could harm our business and reputation.***

We are exposed to many types of operational risks, including the risk of misconduct and errors by our employees and third-party service providers. Our business depends on our employees and third-party service providers to a variety of business activities, including, but not limited to, interacting with potential and existing customers, processing large numbers of transactions, and supporting the loan repayment and collection management process, all of which involve the use and disclosure of personal information. We could be materially adversely affected if transactions were redirected, misappropriated or otherwise improperly executed, if personal information was disclosed to unintended recipients or if an operational breakdown or failure in the processing of transactions occurred, whether as a result of human error, purposeful sabotage or fraudulent manipulation of our operations or systems. In addition, the manner in which we store and use certain personal information and interact with customers is governed by various PRC laws. It is not always possible to identify and deter misconduct or errors by employees or third-party service providers, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses. If any of our employees or third-party service providers take, convert or misuse funds, documents or data or fail to follow protocol when interacting with our customers, we could be liable for damages and subject to regulatory actions and penalties. We could also be perceived to have originated or participated in the illegal misappropriation of funds, documents or data, or the failure to follow protocol, and therefore be subject to civil or criminal liability.

***Our operations depend on the performance of the internet infrastructure and fixed telecommunications networks in China, which we do not control.***

Almost all access to the internet in China is maintained through state-owned telecommunication operators under the administrative control and regulatory supervision of the MIIT. We primarily rely on a limited number of telecommunications service providers to provide us with data communications capacity through local telecommunications lines and internet data centers to host our servers. We have limited access to alternative networks or services in the event of disruptions, failures or other problems with China's internet infrastructure or the fixed telecommunications networks provided by telecommunications service providers. With the expansion of our business, we may be required to upgrade our technology and infrastructure by relevant regulatory authorities. We cannot assure you that the internet infrastructure and the fixed telecommunications networks in China will be able to support the demands associated with the continued growth in internet usage.

In addition, we have no control over the costs of the services provided by telecommunications service providers. If the prices we pay for telecommunications and internet services rise significantly, our financial performance may be adversely affected. Furthermore, if internet access fees or other charges to internet users increase, our business may be harmed.

***We are highly dependent on IT systems, and an interruption or error in those systems could have an adverse effect on our business and results of operations.***

Our business is materially dependent on our proprietary IT systems. For example, during the credit loan pre-approval stage, we utilize our self-developed artificial intelligent system developed based on machine learning models and digital technology to offer risk evaluation and solvency assessment products and services to our clients. During the post-loan stage, other than the portals offered by banks or financial institutions, we rely on two collection operating portals we acquired to navigate through the collection process. Development and maintenance of our technology infrastructure are complex, expensive, and time-consuming, and may involve unforeseen difficulties. We may encounter technical obstacles, and it is possible that we may discover additional problems that prevent our operating portal and IT systems from functioning properly and consequently adversely affect our information infrastructure and our business. If our IT systems cease to work, become unavailable, or experience significant interruption, we may be prevented from operating business normally.

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Our business also depends on the efficient and uninterrupted operation of our computer systems. All our computer hardware and our computing services are currently located in China. Although we have prepared for contingencies through redundancy measures and disaster recovery plans, such preparation may not be sufficient, and we currently do not carry business interruption insurance. Despite any precautions we may take, the occurrence of a natural disaster, such as an earthquake, flood or fire, or other unanticipated problems at our offices in China, including power outages, telecommunications delays or failures, break-ins to our systems or computer viruses, could result in delays or interruptions to our business and loss of data for us. Any of these events could damage our reputation, significantly disrupt our operations, and subject us to liability, which could materially and adversely affect our business, financial condition, and results of operations.

***Our internal systems rely on software that is highly technical, and if it contains undetected errors, our business could be adversely affected.***

Our internal systems-including the pre-approval artificial intelligent system, two post-loan collection operating portals, and other systems utilized in our operations-rely on software that is highly technical and complex. In addition, our internal systems depend on the ability of such software to store, retrieve, process and manage immense amounts of data. The software on which we rely has contained, and may now or in the future contain, undetected errors or bugs. Some errors may only be discovered after the code has been released for external or internal use. Errors or other design defects within the software on which we rely may result in a negative experience for financial institutions and commercial banks that we partner with, delay introductions of new features or enhancements, result in errors or compromise our ability to protect borrower data or our intellectual property. Any errors, bugs or defects discovered in the software on which we rely could result in harm to our reputation, loss of customers or business partners, loss of revenue, or liability for damages, any of which could adversely affect our business and financial results.

***If we are not able to respond to technological advances in a timely manner, we may not remain competitive.***

Our success depends in a large part on our technology and IT infrastructure, such as the pre-approval artificial intelligent system and its machine learning technologies. If we are not able to respond to advances in telecommunications and computer technologies in a timely manner, we may not be able to remain competitive. We have made significant investments in technology to remain competitive and we anticipate that it will be necessary to continue to do so in the future. Although we will continue to devote significant resources to enhance and develop our technologies, we cannot assure you that we will have the capital resources available to invest in new technologies, and we may not be able to implement technology updates on a timely basis, or at all. In addition, new technologies may not succeed or integrate well with our existing systems and infrastructure, and even if integrated, may not function as expected. As telecommunications and computer technologies are changing rapidly and are characterized by short product life cycles, we may not be successful in anticipating new technology trends or adopt technological changes on a timely basis. If any of the foregoing were to occur in the future, our business and results of operation could be materially adversely affected.

***We may not be able to manage the repayment and collection of consumer receivables efficiently and a decline in our ability to manage the repayment and collection of consumer receivables could adversely affect our ability to generate revenue and reputation.***

The success of our post-loan delinquent debt collection business depends on our ability to manage the repayment and collection of such loans efficiently. We do not purchase any of delinquent loans for which we assist with delinquent debt collection. Instead, we collect commissions from our clients based on the amount of delinquent loans we successfully collect. Furthermore, we have been able to establish our industry reputation largely because we have been able to manage the repayment and collection of these loans efficiently. Our ability to manage the repayment and collection of consumer loans may be adversely affected by, among other factors, the borrowers' inability to repay during economic downturns, the age of the loans, or any issue with our operating portal. If we are unable to manage the repayment and collection of consumer loans efficiently in the future, our business, financial condition and results of operations could be significantly and adversely impacted.

***Our ability to protect the confidential information of various parties, including loan applicants and delinquent debtors, may be adversely affected by cyberattacks, computer viruses, physical or electronic break-ins or similar disruptions.***

We collect, store, and process certain personal and other sensitive data from various parties, including but not limited to loan applicants, delinquent debtors, commercial banks, and non-bank financial institutions, which makes it an attractive target and potentially vulnerable to cyberattacks, computer viruses, physical or electronic break-ins or similar disruptions. While we have taken steps to protect the confidential information that we have access to, our security measures could be breached. Because techniques used to sabotage or obtain unauthorized access to systems change frequently and generally are not recognized until they are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. Any accidental or willful security breaches or other unauthorized access to our systems could cause confidential information to be stolen and used for criminal purposes. Security breaches or unauthorized access to confidential information could also expose us to liability related to the loss of the information, time-consuming and expensive litigation and negative publicity. If security measures are breached because of third-party action, employee error, malfeasance or otherwise, or if design flaws in our technology infrastructure are exposed and exploited, our relationships with our customers, including borrowers, investors, and merchants, could be severely damaged, we could incur significant liability, and our business and operations could be adversely affected.

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Meanwhile, if there is any failure by us to protect confidential information, we may be involved in various claims and litigations raised for privacy or other damages. Such claims and litigations will take a lot of time and resources to defend and we cannot assure you any result for us litigations.

***We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position.***

We regard our trademarks, domain names, know-how, proprietary technologies and similar intellectual property as critical to our success, and we rely on trademark and trade secret law and confidentiality, invention assignment and non-compete agreements with our employees and others to protect our proprietary rights. See "*Business-Intellectual Property."* However, we cannot assure you that any of our intellectual property rights would not be challenged, invalidated or circumvented, or such intellectual property will be sufficient for providing us with competitive advantages. In addition, other parties may misappropriate our intellectual property rights, which would cause us to suffer economic or reputational damages. Because of the rapid pace of technological change, we cannot assure you that all of our proprietary technologies and similar intellectual property will be patented in a timely or cost-effective manner, or at all. Furthermore, parts of our business rely on technologies developed or licensed by other parties, or co-developed with other parties, and we may not be able to obtain or continue to obtain licenses and technologies from these other parties on reasonable terms, or at all.

It is often difficult to register, maintain and enforce intellectual property rights in China. Statutory laws and regulations are subject to judicial interpretation and enforcement and may not be applied consistently due to the lack of clear guidance on statutory interpretation. Confidentiality, invention assignment, and non-compete agreements may be breached by counterparties, and there may not be adequate remedies available to us for any such breach. Accordingly, we may not be able to effectively protect our intellectual property rights or to enforce our contractual rights in China. Preventing any unauthorized use of our intellectual property is difficult and costly, and the steps we take may be inadequate to prevent the misappropriation of our intellectual property. In the event that we resort to litigation to enforce our intellectual property rights, such litigation could result in substantial costs and diversion of our managerial and financial resources. We can provide no assurance that we will prevail in such litigation. In addition, our trade secrets may be leaked or otherwise become available to, or be independently discovered by, our competitors. To the extent that our employees or authorized third-party service providers use intellectual property owned by others in their work for us, disputes may arise as to the rights in related know-how and inventions. Any failure in protecting or enforcing our intellectual property rights could have a material adverse effect on our business, financial condition, and results of operations.

***We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.***

We cannot be certain that our operations or any aspects of our business do not or will not infringe upon or otherwise violate trademarks, copyrights, know-how, proprietary technologies or other intellectual property rights held by other parties. We may be, from time to time in the future, subject to legal proceedings and claims relating to the intellectual property rights of others. In addition, there may be other parties' trademarks, copyrights, know-how, proprietary technologies or other intellectual property rights that are infringed by our products and services or other aspects of our business without our awareness. Holders of such intellectual property rights may seek to enforce such intellectual property rights against us in China, the United States or other jurisdictions. If any infringement claims are brought against us, we may be forced to divert management's time and other resources from our business and operations to defend against these claims, regardless of their merits.

Additionally, the application and interpretation of China's intellectual property right laws and the procedures and standards for granting trademarks, copyrights, know-how, proprietary technologies or other intellectual property rights in China are still evolving and are uncertain, and we cannot assure you that PRC courts or regulatory authorities would agree with our analysis. If we were found to have violated the intellectual property rights of others, we may be subject to liability for our infringement activities or may be prohibited from using such intellectual property, and we may incur licensing fees or be forced to develop alternatives of our own. As a result, our business and results of operations may be materially and adversely affected.

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***Failure to make adequate contributions to various employee benefit plans as required by PRC regulations may subject us to penalties.***

Pursuant to PRC laws and regulations, our PRC operating entities are required to participate in various employee social insurance plans, including pension insurance, unemployment insurance, medical insurance, work-related injury insurance, maternity insurance, and the housing provident fund, and contribute to these plans and fund at the levels specified by the relevant local government authorities from time to time at locations where we operate our business. For the six months ended June 30, 2022 and the fiscal years ended December 31, 2021 and 2020, our PRC operating entities did not make full contributions to the social insurance plans as required under the relevant laws and regulations. As of June 30, 2022 and December 31, 2021 and 2020, they had outstanding social insurance payments payable in the aggregate amount of approximately $1,960,235, $1,525,543, and $443,175, respectively. Although they have not received any notice from the relevant local government authorities regarding the outstanding contributions, we cannot assure you that the relevant local government authorities will not require our PRC operating entities to pay the outstanding amount within a prescribed time or impose late fees or fines on us. A late fee of 0.05% per day and a fine of one to three times the outstanding amount may be imposed by the authority, which may materially and adversely affect our business, financial condition and results of operations. We have not made any accruals for late fees and fines that may be imposed by the relevant local government authorities in the financial statements. We have not received any inquiry, notice, warning, or sanctions regarding such late fees or fines, and the interpretation and implementation of labor-related laws and regulations are still constantly evolving which may be further amended from time to time. There are a number of policies providing that local governmental authorities shall act carefully to avoid burdensome measures over the small- and medium-size entities. For example, pursuant to the Emergency Notice on Practicing Principles of the State Council Executive Meeting and Stabilizing Work on Collecting Social Insurance Premiums, promulgated by the Ministry of Human Resources and Social Security on September 21, 2018, local authorities are prohibited from recovering the unpaid social insurance premiums from enterprises without permission in a centralized manner. In addition, our current shareholders had agreed to compensate us for the relevant fines, any outstanding sum, and any related costs and expenses arising from such noncompliance if imposed by the competent PRC authorities. We have taken measures to implement our policy on the payment of social insurance and housing fund contributions for employees for the purpose of compliance with relevant PRC laws and regulations starting from June 2022.

***One of our PRC operating entities failed to make adequate income tax as required by PRC regulations previously, which may subject us to penalties.***

Shenzhen Xindesheng, one of our PRC operating entities, did not properly file the tax return with the State Administration of Taxation (the "SAT") and pay related enterprise income taxes in a timely manner for the fiscal years from 2017 to 2021. As of June 30, 2022 and December 31, 2021 and 2020, Shenzhen Xindesheng had under-declared tax payable in the aggregate amount of approximately $2,330,793, $1,333,138, and $1,008,399, respectively. According to the Tax Collection and Administration Law of the PRC, promulgated by the SCNPC on September 4, 1992 and most recently amended on April 24, 2015, if a taxpayer fails to pay taxes due or fails to remit tax payments within required time limits, the PRC taxation authorities shall order the taxpayer or the withholding agent thereof to pay or remit the tax within a specified time limit and impose a penalty for late payment at the rate of 0.05% per day of the outstanding amount from the due date. Notably, a taxpayer commits tax evasion if he (i) forges, alters, conceals, or destroys without authorization accounting books or vouchers for the accounts, (ii) overstates expenses or omits or understates incomes in the accounting books, or (iii) refuses to make tax declaration after being notified by the PRC tax authority to do so, makes false tax declaration, or fails to pay or underpays the amount of tax payable. In addition, where taxpayers commit such tax evasion, they (i) are required to make up the tax payment due and pay late fees, and (ii) shall be fined not less than 50% but not more than five times the amount of tax such taxpayers fail to pay or underpay; where a crime is constituted, such taxpayers shall be investigated for criminal liability in accordance with the applicable PRC laws. According to the Criminal Law of the PRC, promulgated by the NPC on July 1, 1979 and most recently amended by SCNPC in 2020, if taxpayers resort to deception or concealment to make false tax declarations or fail to declare, evading the payment of a relatively large amount of tax that accounts for more than 10% of the tax payable, such taxpayers shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention, and shall also be fined; those who account for more than 30% of the taxable amount shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years and shall also be fined. If taxpayers who commit the aforementioned tax evasion, upon receiving a notice of recovery from the PRC tax authority, make up the tax payable including the late fees and have received an administrative penalty, they shall not be investigated for criminal liabilities, except in cases where such taxpayers have been received criminal punishment for evading tax payment or have been subject to two or more administrative penalties imposed by the PRC tax authority within five years.

As of the date of this prospectus, Shenzhen Xindesheng has not received any notice from the PRC tax authorities regarding the outstanding tax payment. It is, however, possible that the Company may be subject to fines, late fees, and other penalties even if the Company makes such tax payments. As a result, our business, financial condition, and results of operations may be adversely affected. In this regard, for the six months ended June 30, 2022, our Company has recognized an accrued interest of $520,935, which are mainly related to estimated tax payable for under-declared income to the tax authority for fiscal years from 2017 to 2021. For the fiscal years ended December 31, 2021 and 2020, our Company has recognized an accrued tax penalties and interest of $774,584, and $370,462, respectively, which are mainly related to estimated tax payable for under-declared income to the tax authority for fiscal years from 2017 to 2020. The tax penalty is calculated at 50% of estimated under-declared corporate income tax payable and interest is based on 0.05% per day for the estimated under-declared corporate income tax payable since the income tax settlement date on the following May 31 for each fiscal year. As of the date of this prospectus, Shenzhen Xindesheng may become subject to a tax penalty and interest in respect of its estimated under-declared corporate income tax payable for fiscal year 2021 due to its previous failure to make adequate income tax payments. To address issues that may arise from Shenzhen Xindesheng's previous failure to make adequate income tax payments, the Company issued a letter of commitment stating that Suzhou GoodFaith and its subsidiaries (including Shenzhen Xindesheng) would pay any unpaid taxes before September 30, 2022. On September 21, 2022, the under-declared income taxes and associated interest for fiscal years from 2017 to 2021 as of June 30, 2022 were fully paid, and we have confirmed that any associated tax penalty has been exempted by the local tax authority as of the date of this prospectus. Our Company expects to be exempted from any criminal liability, given that our Company and our PRC subsidiaries have not been subject to any other criminal or administrative penalties for evading taxes within the last five years. See "*Note 9 - Accrued Expenses And Other Current Liabilities*" in the notes to our consolidated financial statements.

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

Our business operations depend on the continued services of our management, particularly the executive officers named in this prospectus, and teams in charge of our risk management, research and development, customer relationship management, and collaboration with academic institutions. While we have provided different incentives to our management, we cannot assure you that we can continue to retain their services. If one or more of our management were unable or unwilling to continue in their present positions, we may not be able to replace them easily or at all, our future growth may be constrained, our business may be severely disrupted, our financial condition and results of operations may be materially and adversely affected, and we may incur additional expenses to recruit, train and retain qualified personnel. In addition, although we have entered into confidentiality and non-competition agreements with our management, there is no assurance that any member of our management team will not join our competitors, form a competing business, or disclose confidential information to the public. If any dispute arises between our current or former officers and us, we may have to incur substantial costs and expenses in order to enforce such agreements in China or we may be unable to enforce them at all.

***From time to time we may evaluate and potentially consummate strategic investments or acquisitions, which could require significant management attention, disrupt our business and adversely affect our financial results.***

We may evaluate and consider strategic investments, combinations, acquisitions or alliances to further increase the value of our business. These transactions could be material to our financial condition and results of operations if consummated. If we are able to identify an appropriate business opportunity, we may not be able to successfully consummate the transaction, and even if we do consummate such a transaction, we may be unable to obtain the benefits or avoid the difficulties and risks of such transaction.

Strategic investments or acquisitions will involve risks commonly encountered in business relationships, including:

● difficulties in assimilating and integrating the operations, personnel, systems, data, technologies, rights, platforms, products and services of the acquired business;

● the inability of the acquired technologies, products or businesses to achieve expected levels of revenue, profitability, productivity or other benefits;

● difficulties in retaining, training, motivating and integrating key personnel;

● the diversion of managements time and resources from our daily operations;

● difficulties in maintaining uniform standards, controls, procedures and policies within the combined organizations;

● difficulties in retaining relationships with borrowers, employees and suppliers of the acquired business;

● risks of entering markets in which we have limited or no prior experience;

● regulatory risks, including remaining in good standing with existing regulatory bodies or receiving any necessary pre-closing or post-closing approvals, as well as being subject to new regulators with oversight over an acquired business;

● the assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights or increase our risk of liability;

● the failure to successfully further develop the acquired technology;

● liability for activities of the acquired business before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities;

● potential disruptions to our ongoing businesses; and

● unexpected costs and unknown risks and liabilities associated with strategic investments or acquisitions.

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We may not make any investments or acquisitions, or any future investments or acquisitions may not be successful, may not benefit our business strategy, may not generate sufficient revenue to offset the associated acquisition costs or may not otherwise result in the intended benefits. In addition, we cannot assure you that any future investment in, or acquisition of, new businesses or technology will lead to the successful development of new or enhanced products and services or that any new or enhanced loan products and services, if developed, will achieve market acceptance or prove to be profitable.

***Competition for employees is intense, and we may not be able to attract and retain the qualified and skilled employees needed to support our business.***

We believe our success depends on the efforts and talent of our employees, including risk management, technology infrastructure and IT system maintenance and upgrade, financial and marketing personnel. Our future success depends on our continued ability to attract, develop, motivate and retain qualified and skilled employees. Competition for highly skilled technical, risk management and financial personnel is extremely intense. We may not be able to hire and retain such personnel at compensation levels consistent with our existing compensation and salary structure. Some of the companies with which we compete for experienced employees have greater resources than we have and may be able to offer more attractive terms of employment.

In addition, we invest significant time and expenses in training our employees, which increases their value to competitors who may seek to recruit them. If we fail to retain our employees, we could incur significant expenses in hiring and training their replacements, and our operational efficiency could diminish, resulting in a material adverse effect to our business.

***If our business does not grow as we expect, or if we fail to manage our growth effectively, our operating results and business would suffer.***

Our business has grown substantially since our inception, and we anticipate that growth to continue. Toward this end, we strive to expand our client base and improve our brand recognition as a national service provider for pre-approval risk management and post-loan debt collection. In addition, we intend to continue investing in data analytics and information technology. Starting from 2023, we also plan to establish five new operation centers for our post-loan debt collection business in the following two years through investments or mergers and acquisitions. Such expansions may cause strain on our managerial, operational, and financial resources. We must continue to hire, train, and effectively manage new employees. If our new hires perform poorly or if we are unsuccessful in hiring, training, managing, and integrating new employees, our business, financial condition, and results of operations may be materially harmed.

Our future results of operations also depend largely on our ability to execute our future plans successfully. Our continued growth may subject us to additional challenges and constraints. Specifically, we may have difficulty developing clients due to: (i) fluctuations in market demand, especially in the post-loan debt collection market; (ii) uncertainties about the adverse effects of potential financial regulatory policies on pre-approval risk management and post-loan debt collection; and (iii) uncertainties as to the customer satisfaction with existing services. Regarding technology development, we may encounter difficulties and uncertainties mainly as a result of (a) the effectiveness of the products we develop; (b) whether our technology updates can keep up with the rapid changes in market demand; and (c) the acceptance of our innovative products by customers. The potential investment or mergers and acquisitions may present us with challenges and difficulties, primarily because of (1) uncertainties regarding the willingness of a target company to cooperate; (2) whether we have sufficient capital reserves; and (3) the legal risks associated with mergers and acquisitions.

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

***We rely on third-party agencies to provide outsourced collection specialists in connection with our post-loan debt collection business, and any disruption to the provision of such outsourced collection specialists could materially and adversely affect our business, financial condition, and results of operations.***

Our post-loan debt collection business will depend, in large part, on our ability to retain a team of experienced collection specialists who are qualified to conduct direct negotiations with debtors. As of December 31, 2022, we had approximately 130 full-time employed collection specialists and 600 outsourced collection specialists. See *"Business-Employee."* Shenzhen Xindesheng, one of our PRC subsidiaries, entered into outsourcing agreements with a third-party agency who would provide such outsourced collection specialists for Shenzhen Xindesheng's post-loan debt collection services. However, as we expect to renew our outsourcing agreements with such third-party agencies for the provision of such outsourced collection specialists, we cannot assure you that we will be able to maintain such a partnership at the same level, or at all. Such third-party agencies are subject to their own unique operational and financial risks, which are beyond our control. If the third-party agencies breach, terminate, or decide to not renew the outsourcing agreements with us or experience significant disruption to their operations, we will be required to find a substitute for the provision of a sufficient number of outsourced collection specialists in order to continually maintain our daily debt collection services. If we are unable to do so in a timely or cost-effective manner, we could suffer severe interruptions to our post-loan debt collection services, which could result in a decrease in the total annual amount of delinquent credit loan debt we successfully collected. As a result, our business, financial condition, and results of operations may be adversely affected.

***Our Post-loan debt collection business primarily relies on outsourced collection specialists and such employment practices may be deemed as noncompliant with labor-related laws and regulations in China, which may adversely affect our financial performance and business prospects.***

As of December 31, 2022, we had approximately 130 full-time employed collection specialists and 600 outsourced collection specialists. See *"Business-Employee."* Specifically, Shenzhen Xindesheng, one of our PRC subsidiaries, entered into outsourcing agreements with a third-party agency who would provide such outsourced collection specialists for Shenzhen Xindesheng's post-loan debt collection services. As we have been subject to stricter labor-related regulatory requirements in terms of entering into labor contracts with our employees and paying various statutory employee benefits, including pensions, housing fund, medical insurance, work-related injury insurance, unemployment insurance, and maternity insurance to designated government agencies for the benefit of our employees, we cannot assure you that our employment practices will be deemed to be in compliance with labor-related laws and regulations in China due to the interpretation and implementation uncertainties related to the evolving labor laws and regulations, which may subject us to labor disputes or government investigations. If we are deemed to have violated relevant labor laws and regulations, we could be required to provide additional compensation to our employees or subject to administrative penalties. As a result, our business, financial condition, and results of operations may be adversely affected.

***Failure to maintain the quality of customer services could harm our reputation and our ability to retain existing customers and attract new customers, which may materially and adversely affect our business, financial condition, and results of operations.***

We depend on our customer service representatives to provide assistance to clients using our services. As such, the quality of customer services is critical to retaining our existing customers and attracting new customers. If our customer service representatives fail to satisfy our customers' individual needs, we may incur reputational harms and lose potential or existing business opportunities with our existing clients, which could have a material adverse effect on our business, financial condition, and results of operations.

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***Our largest clients generate a significant portion of our revenue and our business may rely on a few suppliers that account for more than 10% of our total purchase. Any interruption in operations in such major clients or suppliers may have an adverse effect on our** **business, financial condition, and results of operations.***

During the six months ended June 30, 2022 and the fiscal years ended December 31, 2021 and 2020, we derived most of our revenue from a few clients. Specifically, for the six months ended June 30, 2022, three clients accounted for 79%, 7%, and 3% of our total revenue, respectively. As of June 30, 2022, two clients accounted for 70% and 9% of our total accounts receivable, respectively. For the fiscal year ended December 31, 2021, three clients accounted for 49%, 15%, and 13% of our total revenue, respectively. As of December 31, 2021, two clients accounted for 37% and 26% of our total accounts receivable, respectively. For the fiscal year ended December 31, 2020, one client accounted for 60% of our total revenue. As of December 31, 2020, four clients accounted for 18%, 16%, 13%, and 20% of our total accounts receivable, respectively. These clients are generally able to reduce or cancel spending on our services on short notice for any reason. A number of factors, including our performance, that could result in the loss of, or decrease in the volume of business from, a client. Even though we have a strong record of performance, we cannot assure you that we will continue to maintain the business cooperation with these clients at the same level, or at all. The loss of business from one or more of these significant clients could materially and adversely affect our revenue and profitability. Furthermore, if any significant client terminates its relationship with us, we cannot assure you that we will be able to secure an alternative arrangement with a comparable customer in a timely manner, or at all.

In addition, we depend upon a limited number of major suppliers. Specifically, for the six months ended June 30, 2022, our top four suppliers-Supplier H, Shenzhen Ourui Consulting Co., Ltd. ("Shenzhen Ourui"), and Suppliers C, I, and J (as represented in Note 12 to the Unaudited Condensed Consolidated Financial Statements)-accounted for 27%, 14%, 12%, and 11% of our total purchase, respectively. During the fiscal year ended December 31, 2021, the top three suppliers-Supplier A, Shanghai Beiming Data Technology Co., Ltd. ("Beiming Data"), and Suppliers B and C (as represented in Note 12 to the Consolidated Financial Statements)-accounted for 28%, 11%, and 10% of our total purchase, respectively. For the fiscal year ended December 31, 2020, the top two suppliers (Beiming Data and Supplier D) accounted for 21% and 17% of our total purchase, respectively. See "NOTE 12. CONCENTRATION OF CREDIT RISK." Specifically, we purchased data verification services from Beiming Data and outsourcing management services from Suppliers B, C, and D. We cannot ensure that we will have no concentration of suppliers in the future. Such third-party suppliers are run by independent entities that are subject to their own unique operational and financial risks, which are beyond our control. If any of these suppliers breach or terminate their contracts with us, or experience significant disruptions to their operations, we will be required to find and enter into arrangements with one or more replacement suppliers. Finding alternative suppliers could involve significant delays and other costs and these suppliers may not be available to us on reasonable terms or at all. As a result, any such event could harm our business and financial results and result in lost or deferred revenue.

***One of our shareholders will own approximately [***●***]% of our Ordinary Shares after the completion of the proposed offering.***

If we sell 3,000,000 Ordinary Shares in this offering (excluding any shares that may be sold as a result of the underwriters' over-allotment option), one of our shareholders will beneficially own, in the aggregate, approximately 2.61% of our Ordinary Shares, and two members of our management will beneficially own approximately 30.61% of our Ordinary Shares. As a result, these shareholders will be able to exercise a significant level of control over all matters requiring shareholder approval, including the election of directors, amendments to our Articles of Incorporation, and approval of significant corporate transactions. This control could have the effect of delaying or preventing a change of control of our Company or changes in management and will make the approval of certain transactions difficult or impossible without the support of this shareholder.

In addition, Nasdaq provides a "controlled company," a company of which more than 50% of the voting power for the election of its directors is held by a single person, entity, or group, with exemptions from certain corporate governance requirements, including the requirement that a majority of its board of directors consist of independent directors. While we will not be a "controlled company" after the offering pursuant to Nasdaq rules, if a shareholder beneficially own approximately [●]% of our Ordinary Shares, we could become a "controlled company." If we become a "controlled company," we may elect to rely on certain exemptions from Nasdaq's corporate governance rules. In such a case, you may not have the same protection afforded to shareholders of companies that are subject to those corporate governance requirements.

***We face risks related to natural disasters, health epidemics, and other outbreaks, which could significantly disrupt our operations.***

Our business may be adversely affected by instability, disruption or destruction in a geographic region of China in which it operates, regardless of cause, including war, terrorism, riot, civil insurrection or social unrest, and natural or manmade disasters, including famine, flood, fire, earthquake, storm or pandemic events and spread of disease, including the COVID-19 pandemic. The COVID-19 pandemic has already significantly affected our overall business, results of operation, and financial conditions for the fiscal year 2020. Specifically, the COVID-19 pandemic gave rise to economic downturns and other significant changes in regional and global economic conditions. As a result, loan applicants' default and delinquency risks increased, as they experienced unemployment or generated less income. Subsequently, higher default and delinquency risks required us to dedicate more resources to maintain our current collection rate for the loan repayment and collection management business and posed risk-management challenges for our risk evaluation and solvency assessment business, increasing our operating costs. As the majority of our merchant customers are retailers whose businesses were adversely affected by the COVID-19 pandemic, the COVID-19 pandemic caused our merchant customers to stop or delay using our services, adversely impacting our revenue from these businesses.

Any significant disruption to communications and travel, including travel restrictions and other potential protective quarantine measures by governmental agencies, also increase difficulty in our operations and could make it impossible for us to conduct on-site inspection of collateralized properties, which is a necessary step of our credit assessment and risk management process. Accordingly, travel restrictions and protective measures caused the Company to incur additional unexpected labor costs and expenses and restrained our ability to retain the highly skilled personnel we needed for our operations, adversely affecting our business and results of operation.

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In the beginning of February 2020, we had to temporarily suspend our services due to government restrictions. Throughout the COVID-19 pandemic, we managed to promptly implement a series of response measures, including having our full work force resuming work remotely by the end of February. We fully resumed our operation on March 10, 2020 and the COVID-19 impact on our operating results and financial performance for fiscal year 2020 seems to be temporary. During the fiscal year ended December 31, 2021, the COVID-19 pandemic did not have a material impact on the PRC operating entities' respective financial positions and operating results. Although, during the six months ended June 30, 2022, the COVID-19 pandemic adversely affected our pre-approval risk assessment business, our post-loan debt collection business benefited from the pandemic, and overall, the COVID-19 pandemic did not have a material impact on our operating entities' financial positions and operating results. Specifically, the COVID-19 subvariant (Omicron) outbreak hit China in March 2022, spreading more quickly and easily than previous strains. As a result, a new round of lockdowns, quarantines, or travel restrictions has been imposed upon different provinces or cities in China by the relevant local government authorities. As a result, during the six months ended June 30, 2022, our revenue from the pre-approval risk management products and services decreased by 25% compared with the same period in 2021. Meanwhile, the COVID-19 pandemic has led to a rise in overdue loans, and, consequently, our post-loan debt collection business has grown significantly. Our revenue derived from the post-loan debt collection services increased by 226% for the six months ended June 30, 2022, compared to the same period in 2021. Overall, our revenue in the first half of 2022 increased by 182.6% over the same period in 2021. However, the measures taken by government authorities to contain the virus, including travel bans and restrictions, quarantines, stay-at-home or shelter-in-place orders and business shutdowns, may remain in place for a significant period of time and may adversely affect our business and results of operations. The emergence of regional recurrences of the pandemic and the corresponding restrictive measures are beyond our control. If additional waves of COVID-19 occur in the regions in which we operate or globally and cannot be contained, the risks set forth in this prospectus may be exacerbated or accelerated at a heightened level. Should a COVID-19 resurgence in China negatively affect our execution of customer contracts and collection of customer payments, it may cause the Company's revenue and cash flows to underperform in the next 12 months. The extent of any future impact of COVID-19 on our business is still highly uncertain and cannot be predicted as of the date of this prospectus.

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

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

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

***We may from time to time be subject to claims, controversies, lawsuits and legal proceedings, which could have a material adverse effect on our financial condition, results of operations, cash flows and reputation.***

We may from time to time become subject to or involved in various claims, controversies, lawsuits, and legal proceedings. However, claims and threats of lawsuits are subject to inherent uncertainties, and we are uncertain whether any of these claims would develop into a lawsuit. Lawsuits, or any type of legal proceeding, may cause us to incur defense costs, utilize a significant portion of our resources and divert management's attention from our day-to-day operations, any of which could harm our business. Any settlements or judgments against us could have a material adverse impact on our financial condition, results of operations and cash flows. In addition, negative publicity regarding claims or judgments made against us may damage our reputation and may result in a material adverse impact on us.

***Certain data and information in this prospectus were obtained from third-party sources and were not independently verified by us.***

This prospectus contains certain data and information that we obtained from various government and private entity publications and reports, including the Frost & Sullivan Report which we commissioned. Statistical data in these publications also include projections based on a number of assumptions. While we have not independently verified the data and information contained therein and such data and information may have been collected using third-party methodologies, we believe that the data and information, including projections based on a number of assumptions, from these third-party publications and reports used in this prospectus is reliable. However, the industries in which we operate may not grow at the rate projected by market data, or at all. Failure of these industries to grow at the projected rate may have a material adverse effect on our business and the market price of our Ordinary Shares. In addition, the rapidly evolving nature of these industries results in significant uncertainties for any projections or estimates relating to the growth prospects or future condition of the industries in which we operate. Furthermore, if any one or more of the assumptions underlying the market data is later found to be incorrect, actual results may differ from the projections based on these assumptions.

***We rely on assumptions and estimates to calculate certain key operating metrics and inaccuracies in such metrics may harm our reputation and adversely affect our business.***

Certain key operating metrics in this prospectus are calculated using our internal data that have not been independently verified by third parties. While these numbers are based on what we believe to be reasonable calculations for the applicable periods of measurement, there are some challenges in measuring those metrics. In addition, our key operating metrics are derived and calculated based on different assumptions and estimates, and you should be cautious of such assumptions and estimates when assessing our operating performance.

Our operating metrics may differ from estimates published by third parties or from similarly titled metrics used by our competitors due to differences in data availability, sources and methodology. If we discover material inaccuracies in our operating metrics, our reputation may be harmed and third parties may be less willing to allocate their resources or spending to us, which could adversely affect our business and operating results.

***Our current insurance policies may not provide adequate levels of coverage against all claims and we may incur losses that are not covered by our insurance.***

We believe we maintain insurance coverage that is customary for businesses of our size and type. However, our insurance policies currently do not cover certain types of losses or claims, including (i) losses caused by natural disasters or accidents in the areas where our properties are located; (ii) the death, injuries, or occupational diseases incurred by our employees resulting from accidents related to or as a consequence of engaging in work within the scope of their employment; and (iii) damages and losses caused by accidents in public places where our PRC operating entities assume the compensation responsibility pursuant to applicable laws. The occurrence of uninsured losses, damages, or incidents could have a material adverse effect on our reputation, business, results of operations, financial condition, or prospects.

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**Risks Relating to this Offering and the Trading Market**

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

Prior to this offering, there has not been a public market for our Ordinary Shares. We plan to apply for the listing of our Ordinary Shares on the Nasdaq Capital Market. An active public market for our Ordinary Shares, however, may not develop or be sustained after the offering, in which case the market price and liquidity of our Ordinary Shares will be materially and adversely affected.

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

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

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

The initial public offering price of our Ordinary Shares is substantially higher than the (pro forma) net tangible book value per share of our Ordinary Shares. Consequently, when you purchase our Ordinary Shares in the offering, upon completion of the offering you will incur immediate dilution of $4.40 per share, assuming a midpoint initial public offering price of $5. See "*Dilution.*" In addition, you may experience further dilution to the extent that additional Ordinary Shares are issued upon exercise of outstanding options we may grant from time to time.

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

Prior to this offering, we have been a private company with limited accounting personnel and other resources with which to address our internal controls and procedures. Our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. However, in preparing our consolidated financial statements as of and for the fiscal years ended December 31, 2021 and 2020, we and our independent registered public accounting firm have identified material weaknesses in our internal control over financial reporting, as defined in the standards established by the PCAOB, and other control deficiencies. The material weaknesses identified included (i) a lack of accounting staff and resources with appropriate knowledge of U.S. GAAP and SEC reporting and compliance requirements; (ii) a lack of proper systems, procedures, and segregation of duties in place to ensure effective supervision and monitoring of the financial reporting process; and (iii) a lack of a formal policy to monitor and approve related party transactions, to identify all related parties and ensure that all significant related party transactions have been properly accounted for and disclosed.

Following the identification of the material weaknesses and control deficiencies, the board of directors of our Company has adopted resolutions to appoint independent directors with extensive experience in U.S. public offerings and has established an audit committee to strengthen our corporate governance.

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

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

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Upon completion of this offering, we will become a public company in the United States subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002 will require that we include a report of management on our internal control over financial reporting in our annual report on Form 20-F beginning with our annual report for the fiscal year ending December 31, 2022. In addition, once we cease to be an "emerging growth company," as such term is defined in the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified, if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated, or reviewed, or if it interprets the relevant requirements differently from us. In addition, after we become a public company, our reporting obligations may place a significant strain on our management, operational, and financial resources and systems for the foreseeable future. We may be unable to complete our evaluation testing and any required remediation in a timely manner.

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

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

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

We are an "emerging growth company," as defined in the JOBS Act and will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Ordinary Shares that is held by non-affiliates exceeds $700 million as of the prior December 31, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 in the assessment of the emerging growth company's internal control over financial reporting and permission to delay adopting new or revised accounting standards until such time as those standards apply to private companies.

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

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

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

Sales of substantial amounts of our Ordinary Shares in the public market after this offering, or the perception that these sales could occur, could cause the market price of our Ordinary Shares to decline. An aggregate of 20,000,000 Ordinary Shares is outstanding before the consummation of this offering. An aggregate of 23,000,000 Ordinary Shares will be outstanding immediately after the consummation of this offering, assuming no exercise of the over-allotment option, and 23,450,000 Ordinary Shares will be outstanding immediately after the consummation of this offering, assuming the full exercise of the over-allotment option. Sales of these shares into the market could cause the market price of our Ordinary Shares to decline.

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

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

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

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

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

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

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

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

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

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

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

● lawsuits threatened or filed against us; and

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

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

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

There have been instances of extreme stock price run-ups followed by rapid price declines and strong stock price volatility with recent initial public offerings, especially among those with relatively smaller public floats. As a relatively small-capitalization company with a relatively small public float, we may experience greater stock price volatility, extreme price run-ups, lower trading volume, and less liquidity than large-capitalization companies. In particular, our Ordinary Shares may be subject to rapid and substantial price volatility, low volumes of trades, and large spreads in bid and ask prices. Such volatility, including any stock run-ups, may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Ordinary Shares.

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

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

We anticipate that we will use the net proceeds from this offering for working capital and other corporate purposes. Our management will have significant discretion as to the use of the net proceeds to us from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance the market price of our Ordinary Shares.

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

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

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***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, and are exempt from certain Nasdaq corporate governance standards applicable to U.S. issuers, which may limit the information publicly available to our investors and afford them less protection than if we were a U.S. issuer.***

Nasdaq listing rules require listed companies to have, among other things, a majority of its board members be independent. As a foreign private issuer, however, we are permitted to, and we may follow home country practice in lieu of the above requirements, or we may choose to comply with the above requirement within one year of listing. The corporate governance practice in our home country, the Cayman Islands, does not require a majority of our board to consist of independent directors. Thus, although a director must act in the best interests of the Company, it is possible that fewer board members will be exercising independent judgment and the level of board oversight on the management of our Company may decrease as a result. In addition, Nasdaq listing rules also require U.S. domestic issuers to have a compensation committee, a nominating/corporate governance committee composed entirely of independent directors, and an audit committee with a minimum of three members. We, as a foreign private issuer, are not subject to these requirements. Nasdaq listing rules may require shareholder approval for certain corporate matters, such as requiring that shareholders be given the opportunity to vote on all equity compensation plans and material revisions to those plans, certain ordinary share issuances. We intend to comply with the requirements of Nasdaq listing rules in determining whether shareholder approval is required on such matters and to appoint a nominating and corporate governance committee. We may, however, consider following home country practice in lieu of the requirements under Nasdaq listing rules with respect to certain corporate governance standards which may afford less protection to investors.

As a foreign private issuer, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act and therefore there may be less publicly available information about us than if we were a U.S. domestic issuer. We are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

● the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K;

● the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act;

● the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and the selective disclosure rules by issuers of material non-public information under Regulation FD.

We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer.

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

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

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

● a limited availability for market quotations for our securities;

● reduced liquidity with respect to our securities;

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

● limited amount of news and analyst coverage; and

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

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

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

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

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

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

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

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

We are an exempted company with limited liability incorporated under the laws of the Cayman Islands with limited liability. Our corporate affairs are governed by our memorandum and articles of association, the Companies Act (as Revised) of the Cayman Islands and by the common law of the Cayman Islands. The rights of shareholders to take action against our directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law in the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedents in the United States. In particular, the Cayman Islands has a less developed body of securities laws relative to the United States. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States. Therefore, our public shareholders may have more difficulty protecting their interests in the face of actions by our management, directors or controlling shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States.

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

As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by our management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States. For a discussion of significant differences between the provisions of the Companies Act (as Revised) of the Cayman Islands and the laws applicable to companies incorporated in the United States and their shareholders, see "*Description of Share Capital - Differences in Corporate Law*."

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

Cayman Islands law 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. These rights, however, may be provided in a company's articles of association. Our amended and restated memorandum and articles of association provide that upon the requisition of shareholders holding shares which carry in aggregate not less than one-third of all votes attaching to all issued and outstanding shares of our Company entitled to vote at general meetings, our board will convene an extraordinary general meeting and put the resolutions so requisitioned to a vote at such meeting. However, our post-offering amended and restated memorandum and articles of association do not provide our shareholders with any right to put any proposals before annual general meetings or extraordinary general meetings not called by such shareholders .

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

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

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

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

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

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

Depending on the amount of cash we raise in this offering, together with any other assets held for the production of passive income, it is possible that, for our 2021 taxable year or for any subsequent year, more than 50% of our assets may be assets which produce passive income, in which case we would be deemed a PFIC, which could have adverse US federal income tax consequences for US taxpayers who are shareholders. We will make this determination following the end of any particular tax year.

For purposes of the PFIC analysis, in general, a non-U.S. corporation is deemed to own its pro rata share of the gross income and assets of any entity in which it is considered to own at least 25% of the equity by value.

For a more detailed discussion of the application of the PFIC rules to us and the consequences to U.S. taxpayers if we were or are determined to be a PFIC, see "*Material Income Tax Considerations—United States Federal Income Taxation-PFIC.*"

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

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

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**DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS** 

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

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

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

● current and future economic and political conditions;

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

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

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

● uncertainty about the further spread of the COVID-19 virus and the impact it may still have on the Company's operations, the demand for the Company's products, and economic activity in general;

● trends and competition in the pre-approval risk evaluation and delinquent debt collection services industry; and

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

We describe certain material risks, uncertainties and assumptions that could affect our business, including our financial condition and results of operations, under "*Risk Factors*." In addition, there is uncertainty about the spread of the COVID-19 virus and the impact it may continue to have on the Company's operations, the demand for the Company's services and economic activities in general. We base our forward-looking statements on our management's beliefs and assumptions based on information available to our management at the time the statements are made. We caution you that actual outcomes and results may, and are likely to, differ materially from what is expressed, implied or forecast by our forward-looking statements. Except as required under the federal securities laws, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this prospectus, whether as a result of new information, future events, changes in assumptions, or otherwise.

**Industry Data and Forecasts**

This prospectus contains data related to the pre-approval risk evaluation and post-loan delinquent debt collection services industries in China. These industry data include projections that are based on a number of assumptions which have been derived from industry and government sources which we believe to be reasonable. The pre-approval risk management and post-loan delinquent debt collection industries may not grow at the rate projected by industry data, or at all. The failure of these industries to grow as anticipated is likely to have a material adverse effect on our business and the market price of our Ordinary Shares. In addition, the rapidly changing nature of the pre-approval risk evaluation and post-loan delinquent debt collection services industries subjects any projections or estimates relating to the growth prospects or future condition of our industries to significant uncertainties. Furthermore, if any one or more of the assumptions underlying the industry data turns out to be incorrect, actual results may, and are likely to, differ from the projections based on these assumptions.

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**ENFORCEABILITY OF CIVIL LIABILITIES**

We are incorporated under the laws of the Cayman Islands as an exempted company with limited liability to take advantage 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, the majority of our directors and officers are nationals or residents of the PRC and all or a substantial portion of their assets are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon us or these persons, or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States.

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

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 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.

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

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

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**USE OF PROCEEDS**

We estimate that the net proceeds from the sale of 3,000,000 Ordinary Shares in this offering will be approximately $13,800,000, after deducting the underwriting discounts, non-accountable expense allowance and estimated offering expenses payable by us, based on the assumed midpoint initial public offering price of $5.00 per Ordinary Share, the midpoint of the estimated price range set forth on the cover page of this prospectus. If the underwriters exercise their over-allotment option in full, we estimate that the net proceeds to us from this offering will be approximately $15,870,000, after deducting the underwriting discounts and estimated offering expenses payable by us.

The primary purposes of this offering are to create a public market for our shares for the benefit of all shareholders and obtain additional capital. We plan to use the net proceeds of this offering as follows:

● approximately 10% for establishing more subsidiaries wholly owned by us and operating centers to expand our customer bases;

● approximately 20% for investments in technology development including updating the IT and service systems and expanding product and service offerings;

● approximately 30% for business expansion and growth although we have not yet identified or entered into preliminary negotiations with any specific acquisition target as of the date of this prospectus;

● approximately 10% for recruitment of new talent; and

● The balance to fund working capital and for other general corporate purposes.

The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering. Our management, however, will have significant flexibility and discretion to apply the net proceeds of this offering. If an unforeseen event occurs or business conditions change, we may use the proceeds of this offering differently than as described in this prospectus. To the extent that the net proceeds we receive from this offering are not immediately used for the above purposes, we intend to invest our net proceeds in short-term, interest-bearing bank deposits or debt instruments. In the event that the net proceeds we receive from this offering, together with cash flow available from our current operations, are insufficient to fund all of the intended purposes of this offering, we intend to raise additional funds as needed through bank borrowing, shareholder contributions, and capital marketing financing. The amount of the financing cannot be determined as of the date of this prospectus, which will be dependent on factors such as the proceeds we receive from this offering and our growth strategies that will be adjusted accordingly.

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

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**DIVIDEND POLICY**

We intend to keep any future earnings to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future.

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

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

Current PRC regulations permit our PRC subsidiaries to pay dividends to us only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of our PRC subsidiaries is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each of such entity in China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation.

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

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

In order for us to pay dividends to our shareholders, we will rely on payments made from Suzhou GoodFaith to GoodFaith WFOE and the distribution of such payments to GoodFaith HK as dividends from GoodFaith WFOE. Certain payments from Suzhou GoodFaith to GoodFaith WFOE are subject to PRC taxes, including business taxes and value-added taxes. In addition, if any of our PRC operating entities incurs debt on their own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us.

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

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**CAPITALIZATION**

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

● on an actual basis; and

● on an as adjusted basis to reflect the issuance and sale of the Ordinary Shares by us in this offering at the assumed midpoint initial public offering price of $5.00 per Ordinary Share, which is the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus, after deducting the estimated discounts to the Underwriter, non-accountable expense allowance, and the estimated offering expenses payable by us.

You should read this capitalization table in conjunction with "*Use of Proceeds*," "*Selected Consolidated Financial and Operating Data*," "*Management's Discussion and Analysis of Financial Condition and Results of Operations*" and the consolidated financial statements and the related notes appearing elsewhere in this prospectus.

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| Cash and cash equivalents |
| Stockholders' Equity: |
| Ordinary shares, $0.0001 par value, 500,000,000 Ordinary Shares authorized, 10,000,000 Ordinary Shares issued and outstanding; 23,000,000 Ordinary Shares issued and outstanding, as adjusted assuming the over-allotment option is not exercised, and 23,450,000 Ordinary Shares issued and outstanding, as adjusted assuming the over-allotment option is exercised in full |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subscription receivable) |
| &nbsp;&nbsp;&nbsp;&nbsp; Additional paid-in capital<sup>(1)</sup> |
| &nbsp;&nbsp;&nbsp;&nbsp; Statutory surplus reserve |
| &nbsp;&nbsp;&nbsp;&nbsp; Retained earnings |
| &nbsp;&nbsp;&nbsp;&nbsp; Accumulated other comprehensive income) |
| &nbsp;&nbsp;&nbsp;&nbsp; Total Stockholders' Equity |
| Total Capitalization |

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(1) Reflects the sale of Ordinary Shares in this offering at an assumed midpoint initial public offering price of $5.00 per share, and after deducting the estimated underwriting discounts, non-accountable expense allowance, and estimated offering expenses payable by us. The pro forma as adjusted information is illustrative only, and we will adjust this information based on the actual initial public offering price and other terms of this offering determined at pricing. Additional paid-in capital reflects the net proceeds we expect to receive, after deducting the underwriting discounts, non-accountable expense allowance, and estimated offering expenses payable by us. We estimate that such net proceeds will be approximately $12,050,332.

A $1.00 increase (decrease) in the assumed midpoint initial public offering price of $5.00 per Ordinary Share would increase (decrease) each of additional paid-in capital, total shareholders' equity and total capitalization by $2.76 million, assuming the number of Ordinary Shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated expenses payable by us.

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**DILUTION**

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

Our net tangible book value as of June 30, 2022, was $1,811,157, or $0.08 per Ordinary Share. Net tangible book value represents the amount of our total consolidated tangible assets, less the amount of our total consolidated liabilities. Dilution is determined by subtracting the net tangible book value per Ordinary Share (as adjusted for the offering) from the initial public offering price per Ordinary Share and after deducting the estimated commissions to the underwriters and the estimated offering expenses payable by us.

After giving effect to our sale of 3,000,000 Ordinary Shares offered in this offering based on the assumed midpoint initial public offering price of $5 per Ordinary Share after deduction of the estimated commissions to the underwriters and the estimated offering expenses payable by us, our as adjusted net tangible book value as of June 30, 2022, would have been $13,861,489, or $0.60 per outstanding Ordinary Share. This represents an immediate increase in net tangible book value of $0.52 per Ordinary Share to the existing shareholders, and an immediate dilution in net tangible book value of $4.40 per Ordinary Share to investors purchasing Ordinary Shares in this offering. The as adjusted information discussed above is illustrative only.

The following table illustrates such dilution:

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|  | **Post-**<br> **Offering (1)** | **Full Exercise of Over-Allotment Option** |
| Assumed Initial public offering price per Ordinary Share | $5.00 | $5.00 |
| Net tangible book value per Ordinary Share as of June 30, 2022 | $0.08 | $08 |
| As adjusted net tangible book value per Ordinary Share attributable to payments by new investors | $0.52 | $0.60 |
| Pro forma net tangible book value per Ordinary Share immediately after this offering | $0.60 | $0.68 |

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(1) Assumes that the underwriters' over-allotment option has not been exercised.

If the underwriters exercise their over-allotment option in full, the pro forma as adjusted net tangible book value per Ordinary Share after the offering would be $0.68, the increase in net tangible book value per Ordinary Share to existing shareholders would be $0.60, and the immediate dilution in net tangible book value per Ordinary Share to new investors in this offering would be $4.32.

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

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|:---|:---|:---|:---|:---|:---|
| | **Ordinary Shares** <br> **purchased** | **Ordinary Shares** <br> **purchased** | **Total consideration** | **Total consideration** | |
| <br>**Over-allotment option not exercised** | **Number** | **Percent** | **Amount** | **Percent** | **Average** <br> **price per**<br> **Ordinary**<br>**Share** |
|  | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** |
| Existing shareholders | 20000000  | 86.96% | $2  | 0.01% | $-  |
| New investors | 3000000  | 13.04% | $15000  | 99.99% | $5.00  |
| Total | 23000000  | 100.00% | $15002  | 100% | $0.65  |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Ordinary Shares** <br> **purchased** | **Ordinary Shares** <br> **purchased** | **Total consideration** | **Total consideration** | |
| <br>**Over-allotment option exercised in full** | **Number** | **Percent** | **Amount** | **Percent** | **Average** <br> **price per**<br> **Ordinary**<br>**Share** |
|  | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** |
| Existing shareholders | 20000000  | 85.29% | $2 | 0.01% | $-  |
| New investors | 3450000  | 14.71% | $17250  | 99.99% | $5.00  |
| Total | 23450000  | 100% | $17252  | 100% | $0.74  |

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

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**CORPORATE HISTORY AND STRUCTURE**

**Our Corporate History**

We began our operations in 2015 through Shenzhen Xindesheng, Beiming Technology, and Shanghai Yuyi, each of which is a limited liability company established pursuant to PRC laws and wholly owned by Suzhou GoodFaith, a limited company incorporated in Suzhou City, Jiangsu Province, China on April 28, 2021. In particular:

● Shenzhen Xindesheng was formed in Shenzhen, Guangdong Province on September 14, 2015 and is primarily engaged in providing post-loan delinquent debt collections services. Shenzhen Xindesheng has formed or acquired the following owned subsidiaries pursuant to PRC laws: (i) Yiguoxuan (Shenzhen) Investment Holding Co., Ltd., a wholly owned subsidiary of Shenzhen Xindesheng, which was established on July 3, 2017 and dissolved on April 6, 2021; (ii) Jiujiang Xindesheng Information Consulting Service Co., Ltd. ("Jiujiang Xindesheng), a wholly owned subsidiary of Shenzhen Xindesheng, which was established on October 13, 2017; (iii) Guiyang Xindesheng Information Technology Co., Ltd. ("Guiyang Xindesheng"), a wholly owned subsidiary of Shenzhen Xindesheng, which was established on April 1, 2020; (iv) Chengdu Xindesheng Information Technology Co., Ltd. ("Chengdu Xindesheng"), a wholly owned subsidiary of Shenzhen Xindesheng, which was established on October 23, 2020; (v) Huizhou Xindesheng Information Technology Co., Ltd. ("Huizhou Xindesheng"), a wholly owned subsidiary of Shenzhen Xindesheng, which was established on March 16, 2020; (vi) Beihai Xindesheng Information Technology Co., Ltd. ("Beihai Xindesheng"), a wholly owned subsidiary of Shenzhen Xindesheng, which was established on June 10, 2021. On December 31, 2021, Suzhou GoodFaith acquired 100% of the equity interests in Shenzhen Xindesheng from its original shareholders. As a result, Suzhou GoodFaith became the 100% owner of Shenzhen Xindesheng and all of its wholly owned subsidiaries listed above.

● Beiming Technology was formed in Shanghai, China on July 21, 2015, while Shanghai Yuyi was formed in Shanghai, China on July 25, 2014. Both Beiming Technology and Shanghai Yuyi are primarily engaged in providing pre-approval risk evaluation and solvency assessments business, and are 100% owned by Beihai Beiming Investment Co., Ltd. ("Beihai Beiming"), a limited liability company incorporated in Beihai City, Guangxi Province, China on April 29, 2020. Beihai Beiming was once 100% owned by Beiming Data, a limited liability company formed in Shanghai, China on November 5, 2013. On August 30, 2021, Beiming Data transferred all its shares in Beihai Beiming to Suzhou GoodFaith. As a result, Suzhou GoodFaith became the 100% owner of Beihai Beiming, and, therefore, the 100% owner of Beiming Technology and Shanghai Yuyi.

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

● on May 13, 2021, we incorporated GoodFaith Technology Inc. ("GoodFaith Cayman") under the laws of the Cayman Islands;

● on May 26, 2021, we incorporated GoodFaith Technology Holdings Limited ("GoodFaith BVI") pursuant to the laws of the British Virgin Islands as a wholly owned subsidiary of GoodFaith Cayman;

● on June 10, 2021, we incorporated GoodFaith Technology Limited ("GoodFaith HK") in Hong Kong as a wholly owned subsidiary of GoodFaith BVI;

● on October 25, 2021, Suzhou Chuangzhixin Information Technology Co., Ltd. ("GoodFaith WFOE") was incorporated pursuant to PRC laws as a WFOE and as a wholly owned subsidiary of GoodFaith HK;

● on December 31, 2021, Chung Sun Finance Limited acquired 5% of the equity interests in Suzhou GoodFaith from Xiaowei Wang, and Suzhou GoodFaith became a joint venture; and

● on December 31, 2021, GoodFaith WFOE acquired 100% of the equity interests in Suzhou GoodFaith. Consequently, GoodFaith Cayman, through a restructuring, which is accounted for as a reorganization of entities under common control, became the ultimate holding company of all other entities mentioned above.

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**Our Corporate Structure** 

The following diagram illustrates our corporate structure as of the date of this prospectus and upon completion of our IPO based on a proposed number of 3,000,000 Ordinary Shares being offered, assuming no exercise of underwriters' over-allotment option.

![](goodfaith_f1img42.jpg)

Notes:

(1) Represents 9,460,000 Ordinary Shares held by Xiaofeng Fei and the Trust, together holding 100% of the equity interests in Qearl's Holdings Limited, an investment holding company incorporated in the British Virgin Islands, as of the date of this prospectus. Specifically, Qearl's Holdings Limited is held by (i) Wonder Phoenix Holdings Limited as to 10%, which is in turn wholly owned by Xiaofeng Fei; and (ii) Wonder Phoenix Family Limited as to 90%, which is in turn wholly owned by the Trust. As the First Protectors and the First Members of the Investment Committee of the Trust, Xiaofeng Fei and Kai Zhou are invested with the authority to make investment decisions for the Trust. On November 2, 2021, Xiaofeng Fei and Kai Zhou executed an acting-in-concert agreement, which provides that (a) they shall inform and discuss with each other and reach a consensus before exercising voting rights in making investment decisions for the Trust, and (b) if no consensus can be reached by them, the decision made by Kai Zhou prevails. Through the acting-in-concert agreement, Kai Zhou has the ultimate control of the Trust, and, therefore, of Qearl's Holdings Limited.

(2) Represents 5,840,000 Ordinary Shares held by Xiaowei Wang, the 100% owner of Gread Cause Holdings Limited, an investment holding company incorporated in the British Virgin Islands, as of the date of this prospectus.

(3) Represents 1,200,000 Ordinary Shares held by Xu Dai, the 100% owner of Cloud Light Holdings Limited, an investment holding company incorporated in the British Virgin Islands, as of the date of this prospectus.

(4) Represents an agreement of 3,500,000 Ordinary Shares held by four shareholders, each one of which holds less than 5% of our Ordinary Shares, as of the date of this prospectus.

Investors are purchasing securities of our holding company, GoodFaith Cayman, instead of securities of our PRC subsidiaries. We do not use a VIE structure.

For details of each shareholder's ownership, refer to the beneficial ownership table in the section captioned "*Principal Shareholders*."

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**MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

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

**BUSINESS OVERVIEW**

We offer customized pre-approval risk management and post-loan delinquent debt collection products and services to commercial banks and non-bank financial institutions in China in connection with credit loans. We endeavor to efficiently and effectively assist our clients with their pre-approval risk management and post-loan delinquent debt collection in connection with credit loans. We have established a national network of 16 operating centers and 3 administrative offices in over 11 cities across China. We have also built a broad client base across commercial banks and non-bank financial institutions throughout China.

Our business is comprised of two segments: (i) the credit loan pre-approval stage: risk evaluation and solvency assessment products and services; and (ii) the credit loan post-loan stage: delinquent debt collection services. Our clients typically service the loans they originate. Currently, we are focused on providing our products and services to commercial banks, e-commerce platform affiliated finance companies, licensed consumer finance companies, and other financial institutions in China who engage in the consumer credit loan business.

We are committed to providing products and services that address risk evaluation and solvency assessment during the pre-approval stage and credit loan debt collection during the delinquency stage.

We have recently achieved strong growth for post-loan delinquent debt collection businesses.

Our total revenue amounted to $20,653,211 for the fiscal year ended December 31, 2021, representing growth of approximately 29% compared to the fiscal year ended December 31, 2020. The total revenue derived from the pre-approval risk management products and services amounted to $3,557,857 for the fiscal year ended December 31, 2021, an approximate 41% increase compared to the fiscal year ended December 31, 2020. The total revenue derived from the post-loan debt collection services amounted to $17,095,354 for the fiscal year ended December 31, 2021, an approximate 27% increase compared to the fiscal year ended December 31, 2020.

For the six months ended June 30, 2022, our total revenue amounted to $24,560,502, representing growth of approximately 183% compared to $8,691,983 for the six months ended June 30, 2021. The total revenue derived from the pre-approval risk management products and services amounted to $1,115,568, an approximate 25% decrease compared to the six months ended June 30, 2021, which was due to the continuous impact of the COVID-19 resurgences in mainland China for the first half of 2022 that led to large-scale lockdowns. However, total revenue derived from the post-loan debt collection services surged to $23,444,934 for the six months ended June 30, 2022, an approximate 226% increase compared to the six months ended June 30, 2021, primarily due to the dramatic growth in delinquent credit loan debt under collection allocated by our existing clients, driven by the deteriorating economic conditions during the COVID-19 pandemic.

***Key Factors that Affect Our Results of Operations***

We believe the following key factors may affect our financial condition and results of operations:

<u>Our ability to effectively and efficiently conduct risk assessments</u>

Our ability to attract and maintain new clients for our pre-approval risk evaluation business significantly depends on our ability to effectively evaluate loan applicants' credit profiles, the likelihood of default, and return accurate verification results to our clients. Our team have devised and implemented a systematic credit assessment model and a disciplined risk management approach to facilitate our clients' decision-making in connection with approving and granting credit loans to their applicants, which further enhances the effectiveness and efficiency of their risk management systems. Specifically, through evaluating the applicants' information, we are able to identify applicants with high risks of delinquency and alert our clients accordingly, which usually leads to the rejection of loan applications directly. Further, we conduct evaluation on the solvency of the loan applicants. The results may be used to assist our clients with their determinations on loan amounts to be granted to the applicants, in order to reduce the scale and the risk of loan delinquency. While we are constantly training, updating, and optimizing our models using new data, if our own risk evaluation and solvency assessment model cannot remain effective, or if we otherwise fail or are perceived to fail to cater to the specific needs of different clients, our reputation and market share could be materially and adversely affected, which would severely impact our business and results of operations.

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<u>Our ability to provide delinquent debt collection services efficiently</u>

The success of our post-loan segment business depends on our ability to collect delinquent consumer receivables efficiently. A certain percentage of the total amount of delinquent consumer receivables collected as commission is paid to us by our clients, and the commission rate is based upon a predetermined collection rate schedule with each client. Our post-loan delinquent debt collection service has demonstrated good performance and has maintained a good reputation in the industry. We actively assist our clients with credit loan collection to lower their bad debt rates and we have achieved targets set by them. We are shortlisted by three PRC commercial banks and financial institutions as their preferred service provider and are their trusted business partner. If we are unable to maintain, develop, and expand our business or adapt to changing market needs as well as our current or future competitors are able to, or if we are unable to acquire a sufficient number of customers who need our services, we may not be able to generate the same amount of revenue and/or profits to sustain the operation of our consumer loan debt collection business. As a result, our business and results of operations may be adversely affected.

<u>Our ability to obtain prospective financial institution clients effectively and expand our customer base</u>

We started our pre-approval risk management services in July 2015. Our revenue growth in this business largely depends on our ability to obtain prospective financial institutions effectively and increase overall risk evaluation and solvency assessment products and services to them. We intend to continue to dedicate significant resources to our client acquisition efforts. We believe that our customer base is the core building block of our pre-approval risk management services business, and our ability to facilitate our clients' decision-making in their risk management systems is critical to our success and the continuous growth in our customer base. Our ability to provide customers with accurate and satisfactory results is subject to a number of factors, including our ability to provide effective services, our ability to continuously innovate and improve our services to meet customer needs, and our access to and cooperation with our business partners. If we experience service disruptions, failures, or other issues, or, if we fail to deliver satisfactory and distinct customer experiences, we may lose our customers and business partners, which could further lead to a decrease in the volume of transactions processed via our pre-approval risk management services. As a result, our business, results of operations, and financial condition may be adversely affected. If we are unable to attract potential financial institutions or if financial institutions do not continue to use our pre-approval risk evaluation and solvency assessment products and services at the current rates and/or we are unable to increase the overall business scale as we expect, our business and results of operations may be adversely affected.

<u>Our ability to expand our delinquent debt collection services</u>

We started to generate revenue from our delinquent debt collection services in September 2015. We derive our revenue primarily from providing collection services to commercial banks and online consumer finance companies. Our main source of revenue are the commissions that we receive from such services. See "*Note 2-Summary of Significant Accounting Policies-Revenue recognition."* To maintain profitability, we must continuously receive more debt collection tasks from our clients. Therefore, our ability to maintain, develop, and expand our business for debt collection services is essential to our operation. Any material change in consumer receivables for collection could have a significant impact on our results of operations. We currently maintain strong business relationships with top national commercial banks and reputable online consumer finance companies in China and have a consistent stream of receivables for collection. To this end, we need to continue to maintain our relationships with existing clients and develop business relationships with new clients to ensure that we have sufficient consumer receivables for collection. If we are unable to retain our existing clients or explore potential clients, our business and results of operations may be adversely affected.

***COVID-19 Affecting Our Results of Operations***

On January 30, 2020, the World Health Organization (the "WHO") declared the outbreak of COVID-19 a "Public Health Emergency of International Concern," and on March 11, 2020, the WHO characterized the outbreak as a pandemic. Governments in affected countries have imposed travel bans, quarantines, and other emergency public health measures, which have caused material disruption to businesses globally and resulted in an economic slowdown. These measures, though temporary in nature, may continue and increase depending on developments in the COVID-19 pandemic.

In the beginning of February 2020, we had to temporarily suspend our services due to government restrictions. Throughout the COVID-19 pandemic, we managed to promptly implement a series of response measures, including having our full work force resuming work remotely by the end of February. We fully resumed our operation on March 10, 2020 and the COVID-19 impact on our operating results and financial performance for fiscal year 2020 seems to be temporary. The COVID-19 pandemic did not have a material impact on our results of operations for the fiscal year 2021. During the fiscal years ended December 31, 2021, the COVID-19 pandemic did not have a material impact on the operating entities' respective financial positions and operating results. Although, during the six months ended June 30, 2022, the COVID-19 pandemic adversely affected our pre-approval risk assessment business, our post-loan debt collection business benefited from the pandemic, and overall, the COVID-19 pandemic did not have a material impact on our operating entities' financial positions and operating results. Specifically, the COVID-19 subvariant (Omicron) outbreak hit China in March 2022, spreading more quickly and easily than previous strains. As a result, a new round of lockdowns, quarantines, or travel restrictions has been imposed upon different provinces or cities in China by the relevant local government authorities. As a result, during the six months ended June 30, 2022, our revenue from the pre-approval risk management products and services decreased by approximately 25% compared with the same period in 2021. Meanwhile, the COVID-19 pandemic has led to a rise in overdue loans, and, consequently, our post-loan debt collection business has grown significantly. Our revenue derived from the post-loan debt collection services increased by approximately 226% for the six months ended June 30, 2022, compared to the same period in 2021. Overall, our revenue in the first half of 2022 increased by approximately 182.6% over the same period in 2021.

In early December 2022, the PRC government announced a nationwide relaxation of its zero-COVID policy, resulting in a surge in COVID-19 infections across the PRC after related restrictions were lifted. As of the date of this prospectus, although the spread of COVID-19 appears to be under control, the extent to which the COVID-19 pandemic may impact our future financial results will depend on future developments which are uncertain and unpredictable, including the duration, spread, severity, and recurrence of COVID-19 and any COVID-19 variants, the effectiveness of efforts to contain or treat cases, and future actions that may be taken in response to these developments. In addition, the COVID-19 pandemic has also caused heightened uncertainty in the global economy. The global spread of COVID-19 pandemic in major countries of the world, including China, may also result in global economic distress, and the extent to which it may affect our results of operations will depend on future developments of the COVID-19 pandemic, which are highly uncertain and difficult to predict. There may be potential impacts on our results of operations if the pandemic and the resulting disruption were to extend over a prolonged period. Consequently, the COVID-19 pandemic may continue to adversely affect our business, financial condition, and results of operations in the current and future years.

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In preparing these consolidated financial statements, we have evaluated events and transactions for potential recognition or disclosure. No events require additional adjustment to or disclosure in the consolidated financial statements.

**RESULTS OF OPERATIONS**

*<u>Comparison of Results of Operations for the Six Months Ended June 30, 2022 and 2021</u>*

The following tables set forth a summary of our consolidated results of operations for the fiscal years indicated therein. This information should be read together with our consolidated financial statements and related notes included elsewhere in this prospectus. The results of operations in any period are not necessarily indicative of our future trends.

(Amounts, other than percentages, expressed in U.S. dollars)

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|  | **For the Six Months ended June 30,** | **For the Six Months ended June 30,** | **For the Six Months ended June 30,** | **For the Six Months ended June 30,** | **For the Six Months ended June 30,** | **For the Six Months ended June 30,** |
|  | **2022** | **2022** | **2021** | **2021** | **Variance** | **Variance** |
|  | **Amount** | **% of revenue** | **Amount** | **% of revenue** | **Amount** | **%** |
| **Revenue** |  |  |  |  |  |  |
| Pre-approval risk management revenue | $1115568 | 4.5% | $1490060 | 17.1% | $(374492) | (25.1)% |
| Post-loan delinquent debt collection revenue | 23444934 | 95.5% | 7201923 | 82.9% | 16243011 | 225.5% |
| **Total operating revenue** | **24560502** | **100.0%** | **8691983** | **100.0%** | **15868519** | **182.6%** |
| Cost of revenue | 19221281 | 78.3% | 7331940 | 84.4% | 11889341 | 162.2% |
| **Gross Profit** | **5339221** | **21.7%** | **1360043** | **15.6%** | **3979178** | **292.6%** |
| **Operating expenses** |  |  |  |  |  |  |
| Selling expenses | 234761 | 1.0% | 238866 | 2.7% | (4105) | (1.7)% |
| General and administrative expenses | 1126246 | 4.6% | 985558 | 11.3% | 140688 | 14.3% |
| **Total operating expenses** | **1361007** | **5.5%** | **1224424** | **14.1%** | **136583** | **11.2%** |
| **Income from operations** | **3978214** | **16.2%** | **135619** | **1.6%** | **3842595** | **2833.4%** |
| **Other income (expenses)** |  |  |  |  |  |  |
| Other income (expense), net | 238248 | 1.0% | (59320) | (0.7)% | 297568 | (501.6)% |
| Governmental subsidies | 40844 | 0.2% | 17422 | 0.2% | 23422 | 134.4% |
| Interest income, net | 9413 | 0.0% | 323 | 0.0% | 9090 | 2811.9% |
| **Total other income (expense)** | **288505** | **1.2%** | **(41575)** | **(0.5)%** | **330080** | **(793.9)%** |
| **Income before income taxes** | **4266719** | **17.4%** | **94044** | **1.1%** | **4172675** | **4436.9%** |
| **Income tax expense** | **1100887** | **4.5%** | **76086** | **0.9%** | **1024801** | **1346.9%** |
| **Net income** | $**3165832** | **12.9%** | $**17958** | **0.2%** | $**3147874** | **17529.2%** |

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***Revenue***

Our total revenue for the six months ended June 30, 2022 was $24,560,502, a significant increase by $15,868,519, or approximately 182.6%, from $8,691,983 for the six months ended June 30, 2021. The revenue from pre-approval risk management services decreased by $374,492, or approximately 25.1%, which was mainly attributable to (i) the continuous impact of the COVID-19 resurgences in mainland China for the first half of 2022, and (ii) the termination of a one-off project, so that the demand for risk evaluation and solvency assessment from our clients, especially from non-banking financial institution clients, decreased significantly. The revenue from the post-loan delinquent debt collection services increased significantly by $16,243,011, or approximately 225.5%, which was mainly due to the dramatic growth in delinquent credit loan debt under collection allocated by our existing clients.

Our operating revenue by service type is as follows:

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|  | **For the Six Months ended June 30,** | **For the Six Months ended June 30,** | **For the Six Months ended June 30,** | **For the Six Months ended June 30,** | **For the Six Months ended June 30,** | **For the Six Months ended June 30,** |
|  | **2022** | **2022** | **2021** | **2021** | **Variance** | **Variance** |
|  | **Amount** | **% of**<br> **revenue** | **Amount** | **% of**<br> **revenue** | **Amount** | **% of**<br> **revenue** |
| **Revenue** |  |  |  |  |  |  |
| Pre-approval risk management revenue | $1115568 | 4.5% | $1490060 | 17.1% | $(374492 ) | (25.1 )% |
| Post-loan delinquent debt collection revenue | 23444934 | 95.5% | 7201923 | 82.9% | 16243011 | 225.5% |
| **Total operating revenue** | $**24560502** | **100.0%** | $**8691983** | **100.0%** | $**15868519** | **182.6%** |

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We have the following two revenue streams: (i) pre-approval risk management services, and (ii) post-loan delinquent debt collection services. For the six months ended June 30, 2022 and 2021, post-loan delinquent debt collection revenue accounted for approximately 95.5% and 82.9% of our total revenue, respectively. Pre-approval risk management revenue accounted for approximately 4.5% and 17.1% of our total revenue for six months ended June 30, 2022 and 2021, respectively.

***Pre-approval risk management revenue***

We charge our clients fees monthly based on the preset unit price and the number of verification records processed by our risk evaluation and solvency assessment products and services, and we receive regular payments on a monthly or quarterly basis, in accordance with our service agreements with specific clients.

Our pre-approval segment revenue derived from our commercial bank clients and non-bank financial institution clients accounted for approximately 83.0% and 17.0%, respectively, in the six months ended June 30, 2022, compared to approximately 46.2% and 53.8%, respectively in the six months ended June 30, 2021. The revenue portion from non-bank financial institution clients decreased primarily because of the termination in 2022 of the cooperation with a new non-bank financial institution with large verification demands, a one-off project that started in 2021.

Revenue derived from pre-approval risk management services decreased by $374,492, or approximately 25.1%, from $1,490,060 in the six months ended June 30, 2021 to $1,115,568 in the six months ended June 30, 2022. The decrease in revenue was attributable to a decrease in the average fee rate by approixmately 27.8% from RMB0.35 to RMB0.25 per verification record, and an increase in the number of verification records by approxiamtely 3.8%.

The average fee rate of pre-approval risk management revenue decreased from RMB0.35 per verification record in the six months ended June 30, 2021 to RMB0.25 per verification record in the six months ended June 30, 2022. The decrease in the fee rate was mainly due to the decreasing percentage of revenue from non-bank financial institution clients in the six months ended June 30, 2022 of approximately 17.0% compared to 53.8% in the six months ended June 30, 2021, which charged a higher rate of RMB0.31 per verification record compared to RMB0.24 per verification record charged to commercial bank clients in the six months ended June 30, 2022.

The total number of service agreements with our clients decreased by 12%, from 60 in the six months ended June 30, 2021 to 53 in the six months ended June 30, 2022. For the six months ended June 30, 2022, we processed approximately 28,700,000 verification records, representing a 4% increase from approximately 27,600,000 verification records for the six months ended June 30, 2021.

*Post-loan delinquent debt collection revenue*

We collect commissions from our clients based on the debt collection services we rendered, either measured by the number of specialists we dedicated to our clients or the performance results of debt collection. Accordingly, there are two ways we calculate our fees: amount-based and percentage-based. Amount-based fees are equivalent to the fee rate for each collection specialist multiplied by the number of collection specialists for such projects. Percentage-based fees are equivalent to the recovery amount after our debt collection service, multiplied by the commission percentage. The amount-based calculation is mostly used on credit loans that are past due for less than sixty (60) days, namely, M1-M2 receivables, while the percentage-based calculation is mainly used on credit loans that are past due for more than sixty (60) days, namely, M3 and M3+ receivables. For some specific clients, the percentage-based calculation is also used for M1-M2 receivables. Delinquent credit loan receivables are generally categorized based on the length of their delinquency. M1-M2 receivables are ones that are one to two months past due, and M3 and M3+ receivables are ones that are over two months past due. See "*Industry-Market Overview of Credit Loan Collection Management Industry in China-Introduction of Credit Loan Collection Management Market in China*."

Other than basic commissions, we may receive incentive bonuses based on our performance from time to time. Bonus amounts are determined by our clients at their discretion in a few selected months, and are calculated according to their own formula based on factors such as the performance ranking of all their suppliers in those months. The incentive bonuses are recognized when we receive notification emails from clients. The aforementioned two ways of calculation of our fees are exclusive from each other. For example, once a project is determined to use an amount-based method, no percentage-based revenue method will be used to calculate the revenue for this project. Any incentive bonus will be added to the basic commissions as total revenue. We charge our clients monthly and we receive regular payments on a monthly or quarterly basis, in accordance with our service agreements with specific clients.

Revenue generated from post-loan delinquent debt collection services increased significantly by $16,243,011, or approximately 225.5%, from $7,201,923 in the six months ended June 30, 2021 to $23,444,934 in the six months ended June 30, 2022, which was mainly due to a significant increase in percentage-based revenue by $15,475,706, or approximately 333%, from $4,651,676 in the six months ended June 30, 2021 to $20,127,382 in the six months ended June 30, 2022. Due to the dramatic growth of our major clients' delinquent credit loan debts, we have been allocated a greater volume of delinquent cases and offered a higher fee rate for successful collection of percentage-based cases from one major client. For the six months ended June 30, 2022 and 2021, percentage-based revenue accounted for approximately 85.9% and 64.6% of our total post-loan segment revenue, respectively, while amount-based revenue accounted for approximately 13.9% and 35.4% of our total post-loan segment revenue, respectively. Incentive bonuses were $49,521 and nil, respectively, for those periods, which accounted for approximately 0.2% and nil of our total post-loan segment revenue, respectively.

The following tables present the average fee rate of different categories of receivables in our post-loan delinquent collection service.

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| Average fee rate for amount-based revenue | **For the Six Months Ended** | **For the Six Months Ended** |
|  | **June 30,** | **June 30,** |
|  | **2022** | **2021** |
| **Receivables category** | **Per specialist**<br> **per month** | **Per specialist**<br> **per month** |
| Collection of M1 receivables | RMB3,000-14,000 | RMB10,000 |
| Collection of M2 receivables | RMB12,000 | RMB12,000 |

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We were engaged to provide amount-based collection services for M1 receivables to some new financial clients in the six months ended June 30, 2022, and as a result, the average fee rate for collecting M1 receivables varies from RMB3,000 to RMB14,000 per collection specialist per month in the current period. During the six months ended June 30, 2021, collection of M1 receivables was charged by RMB10,000 per collection specialist per month. The average fee rate for collection of M2 receivables remained the same during the six months ended June 30, 2022 and 2021. which was charged by RMB12,000 per collection specialist per month.

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|:---|:---|:---|
| Commission percentage for percentage-based revenue: | **For the Six Months Ended** | **For the Six Months Ended** |
|  | **June 30,** | **June 30,** |
|  | **2022** | **2021** |
| **Receivables category** | **% of Recovery amount** | **% of Recovery amount** |
| Collection of M1 receivables | 0.4% | 0.2% |
| Collection of M2 receivables | 4.0% | 1.9% |
| Collection of M3 receivables | 11.1% | 14.1% |
| Collection of M3+ receivables\* | 24.5% | 24.8% |
| Collection of other receivables\*\* | 3.7% | 33.0% |
| Collection of total percentage-based revenue | 3.9% | 2.0% |

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\* M3+ receivables refer to credit loans which are past due for more than ninety (90) days

\*\*other receivables refer to a package of collection receivables mixed with M1、M2、M3and M3+ receivables charged with a flat rate.

The average fee rate varied in terms of the aging of delinquent debt receivables. A higher rate indicates a more sophisticated collection process and older receivables. Average fee rates for M1 and M2 receivables increased significantly in the six months ended June 30, 2022, compared with the same period in 2021, as our clients offered us a higher fee rate to motivate us to deliver a higher recovery result for delinquent debts. Average fee rates for M3 receivables decreased in the six months ended June 30, 2022, compared with the same period in 2021, because a major client allocated an increased volume of M3 receivables to us while setting a lower collection target, thereby resulting in a decrease in the fee rates for M3 receivables. Average fee rates for M3+ receivables remained stable during the six months ended June 30, 2022 and 2021. The average fee rate for other receivables can vary to a large degree, which is subject to different packages. However, the proportion of collection of other receivables was approximately 3.0% and 7.5% of our total post-loan segment revenue for the six months ended June 30, 2022 and 2021, respectively, and thus the fluctuation of fee rates for collection of other receivables had a limited impact on our overall average fee rate. As a result, the overall average fee rate for percentage-based revenue increase from approximately 2.0% for the six months ended June 30, 2021 to 3.9% for the six months ended June 30, 2022.

The following table indicates our key operating data for the periods indicated:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Six Months Ended** | **For the Six Months Ended** | **For the Six Months Ended** | **For the Six Months Ended** |
|  | **June 30,** | **June 30,** | **June 30,** | **June 30,** |
|  | **2022** | **2021** | **Increase /**<br>**(Decrease)** | **Percentage**<br>**Change** |
| Monthly average delinquent receivables under collection | $634979409 | $350540326 | $284439083 | 81% |
| Total annual amount collected | 1141430094 | 616517129 | 524912965 | 85% |
| Monthly average amount collected per collection specialist | 197138 | 149567 | 47571 | 32% |
| Monthly average commission earned per collection specialist | 2025 | 1747 | 277 | 16% |

---

For the six months ended June 30, 2022, monthly average delinquent receivables under collection increased significantly by approximately 81%; total annual amount collected increased by 85%; and monthly average amount collected per collection specialist increased by approximately 32%, compared with the same period in 2021. These increases were mainly due to the increasing number of delinquent receivables allocated to us by our existing clients, as a result of the COVID-19 resurgence, especially percentage-based M2 and M3 receivables. Monthly average commission earned per collection specialist increased by approximately 16%, which was mainly attributable to the increase of average fee rate and increased volume of percentage-based delinquent receivables. The total commissions we collected for the six months ended June 30, 2022 and 2021 were $23,444,934 and $7,201,923, respectively, representing a significant increase of approximately 225.5% from the previous periods.

*Cost of Revenue*

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Six Months Ended** | **For the Six Months Ended** | **For the Six Months Ended** | **For the Six Months Ended** |
|  | **June 30,** | **June 30,** | **June 30,** | **June 30,** |
|  | **2022** | **2021** | **Increase /**<br>**(Decrease)** | **Percentage**<br>**Change** |
| Total revenue | $24560502 | $8691983 | $15868519 | 182.6% |
| Cost of revenue | 19221281 | 7331940 | 11889341 | 162.2% |
| Gross profit | 5339221 | 1360043 | 3979178 | 292.6% |
| Margin % | 21.7% | 15.6% | 6.1% |  |

---

Cost of revenue increased to $19,221,281 for the six months ended June 30, 2022 from $7,331,940 for the same period in 2021, representing an increase by $11,889,341, or approximately 162.2%. The increase was mainly attributable to the combined effects of the following: (i) an increase in management service costs for operating centers in the post-loan segment; (ii) an increase in salaries and benefits in the post-loan segment; (iii) an increase in outsourcing labor costs in the post-loan segment; (v) a decrease in data service costs in the pre-approval segment; and (v) a decrease in IT service costs in the pre-approval segment. The cost of revenue by segment is further discussed in detail below.

The following table indicates the cost and margin of the pre-approval risk management segment for the periods indicated:

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| | | | | |
|:---|:---|:---|:---|:---|
| Pre-approval risk management segment | **For the Six Months Ended** | **For the Six Months Ended** | **For the Six Months Ended** | **For the Six Months Ended** |
|  | **June 30,** | **June 30,** | **June 30,** | **June 30,** |
|  |  |  | **Increase /** | **Percentage** |
|  | **2022** | **2021** | **(Decrease)** | **Change** |
| Total revenue | $1115568 | $1490060 | $(374492) | (25.1)% |
| Cost of revenue | 770913 | 880817 | (109904) | (12.5)% |
| Gross profit | 344655 | 609243 | (264588) | (43.4)% |
| Margin % | 30.9% | 40.9% | (10.0)% |  |

---

Cost of revenue in the pre-approval segment is mainly comprised of (i) data service costs and (ii) IT service costs. Cost of revenue decreased to $1,115,568 for the six months ended June 30, 2022 from $1,490,060 for the same period in 2021, representing a decrease by $374,492, or approximately 25.1%. The decrease was mainly attributable to the combined effects of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Data service costs. Data service costs in the pre-approval segment decreased by $65,652, or approximately 8.3%, from $793,933 in the six months ended June 30, 2021 to $728,282 in the six months ended June 30, 2022. Due to the impact of the COVID-19 resurgence and decreased demand from our non-banking financial institution clients, the data service costs decreased accordingly.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) IT service costs. IT service costs in the pre-approval segment decreased significantly by $43,922, or approximately 51.8%, from $84,781 in the six months ended June 30, 2021 to $40,859 in the six months ended June 30, 2022, primarily because during the six months ended June 30, 2022, we used our own employees for daily operations and maintenance, and the demand for purchasing IT service decreased significantly.

The following table indicates the cost and margin of the post-loan segment for the periods indicated:

---

| | | | | |
|:---|:---|:---|:---|:---|
| Post-loan delinquent debt collection segment | **For the Six Months Ended** | **For the Six Months Ended** | **For the Six Months Ended** | **For the Six Months Ended** |
|  | **June 30,** | **June 30,** | **June 30,** | **June 30,** |
|  |  |  | **Increase /** | **Percentage** |
|  | **2022** | **2021** | **(Decrease)** | **Change** |
| Total revenue | $23444934 | $7201923 | $16243011 | 225.5% |
| Cost of revenue | 18450368 | 6451123 | 11999245 | 186.0% |
| Gross profit | 4994566 | 750800 | 4243766 | 565.2% |
| Margin % | 21.3% | 10.4% | 10.9% |  |

---

Cost of revenue for the post-loan segment is mainly comprised of (i) management service costs for operating centers; (ii) costs in salaries and benefits for our collection specialists; (iii) outsourcing labor costs; (iv) communication fees for operating centers; and (v) rent and utility expenses.

Cost of revenue for the post-loan segment increased to $18,450,368 for the six months ended June 30, 2022 from $6,451,123 for the same period in 2021, representing an increase by $11,999,245, or approximately 186.0%. The increase was mainly attributable to the combined effects of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Outsourcing management service costs for operating centers. Our outsourcing management service costs for operating centers in the post-loan segment increased by $8,151,237, or approximately 803.1%, from $1,014,993 in the six months ended June 30, 2021 to $9,166,230 in the six months ended June 30, 2022. As the revenue from the post-loan segment increased significantly, outsourcing management service costs increased accordingly.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Salaries and benefits. Our salary and benefit costs in the post-loan segment increased by $2,371,683, or approximately 48.8%, from $4,863,199 in the six months ended June 30, 2021 to $7,234,882 in the six months ended June 30, 2022. The increase of salaries and benefits was mainly due to the growth of revenue and collection specialists in the six months ended June 30, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Outsourcing labor costs. In order to improve our operational efficiency of collection specialists, we cooperated with a domestic third-party human resources agency to optimize our labor structure in May 2022. As of December 31, 2022, we had approximately 130 full-time employed collection specialists and 600 outsourced collection specialists, while all of our 570 collection specialists were full-time employees as of June 30, 2021, resulting in an increase in outsourcing labor costs of $1,414,845 during the six months ended June 30, 2022.

***Gross Profit***

As a result of the factors described above, our gross profit increased from $1,360,043 for the six months ended June 30, 2021 to $5,339,221 for the same period in 2022. Our gross profit as a percentage of revenue increased from approximately 15.6% for the six months ended June 30, 2021 to approximately 21.7% for the same period in 2022. The increase in overall gross profit was mainly attributable to the significant increase in gross profit and gross profit margin in the post-loan segment.

***Operating Expenses***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Six Months Ended** | **For the Six Months Ended** | **For the Six Months Ended** | **For the Six Months Ended** |
|  | **June 30,** | **June 30,** | **June 30,** | **June 30,** |
|  | **2022** | **2021** | **Increase /**<br>**(Decrease)** | **Percentage**<br>**Change** |
| Selling expenses | $234761 | $238866 | $(4105) | (1.7)% |
| % of revenue | 1.0% | 2.7% | (1.7)% | (65.2)% |
| General and administrative expenses | 1126246 | 985558 | 140688 | 14.3% |
| % of revenue | 4.6% | 11.3% | (6.7)% | (59.6)% |
| Operating expenses | $1361007 | $1224424 | $136583 | 11.2% |

---

*Selling Expenses*

Selling expenses consist primarily of salaries and benefits for the sales team, entertainment expenses, marketing expenses, commission expenses, and travel expenses. Selling expenses slightly decreased by approximately 1.7%, or $4,105, from $238,866 for the six months ended June 30, 2021 to $234,761 in the same period of 2022. The increase was mainly attributable to the combined effects of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Our salaries and benefits for the sales team decreased by $23,175, or approximately 16.3%, to $118,945 for the six months ended June 30, 2022 from $142,120 for the six months ended June 30, 2021. The decrease was mainly attributable to the decrease in the revenue derived from our pre-approval risk management services.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Our marketing expenses decreased significantly by $45,016, or approximately 97.6%, to $1,127 for the six months ended June 30, 2022, from $46,143 for the six months ended June 30, 2021. The decrease was mainly attributable to fewer marketing activities from our pre-approval risk management services due to the impact of COVID-19.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Our entertainment expenses increased by $65,781, or approximately 164.1%, to $105,856 for the six months ended June 30, 2022, from $40,075 for the six months ended June 30, 2021. The increase was mainly attributable to the increased networking expenses with the expansion of our post-loan segment business.

*General and Administrative Expenses*

General and administrative expenses consist primarily of salaries and benefits expenses for our general administrative and management staff, rent and utility expenses, office expenses, professional fees, IT service expenses, depreciation and amortization expenses, and other miscellaneous expenses incurred in connection with general operations. General and administrative expenses increased by approximately 14.3%, or $140,688, from $985,558 for the six months ended June 30, 2021 to $1,126,246 in the same period of 2022. The increase was mainly attributable to the combined effects of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Our salaries and benefits for management increased by $125,615, or approximately 17.6%, to $837,899 for the six months ended June 30, 2022 from $712,285 for the six months ended June 30, 2021. The increase was mainly attributable to the increased number of in-house employees for operation and maintenance in our pre-approval risk management service.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Our office expenses increased by $21,950, or approximately 73.8%, to $51,690 for the six months ended June 30, 2021 from $29,740 for the six months ended June 30, 2021. The increase was mainly attributable to the expansion of our post-loan segment business.

*Net Income*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the six months Ended** | **For the six months Ended** | **For the six months Ended** | **For the six months Ended** |
|  | **June 30,** | **June 30,** | **June 30,** | **June 30,** |
|  | **2022** | **2021** | **Increase /**<br>**(Decrease)** | **Percentage**<br>**Change** |
| Income from operations | $3978214 | $135619 | $3842595 | 2833.4% |
| Total other income (expense) | 288505 | (41575) | 330080 | 793.9% |
| Income before income taxes | 4266719 | 94044 | 4172675 | 4436.9% |
| Income tax expense | (1100887) | (76086) | 1024801 | 1346.9% |
| Net income | $3165832 | $17958 | $3147874 | 17528.9% |
| Effective tax rate | 25.8% | 80.9% | (55.1)% |  |

---

*Operating income*

As a result of the factors described above, operating income increased by $3,842,595, or approximately 2,833.4%, to $3,978,214 for the six months ended June 30, 2022, compared to $135,619 for the same period of 2021.

*Total other income (expense)*

Total other income was $288,505 for the six months ended June 30, 2022, while total other expense was $41,575 for the same period in 2021. On September 21, 2022, we fully paid the under-declared income taxes and associated interest for fiscal years from 2017 to 2021 as of June 30, 2022. As a result, we adjusted the accrued tax penalties and interest for fiscal years from 2017 to 2021 as of June 30, 2022 according to the subsequent actual payment amount due to the exemption of tax penalties from the local tax authority and recognized non-operating income of $225,649 in the consolidated statements of income for the six months ended June 30, 2022. Total other income increased significantly by $330,080, or approximately 793.9%, accordingly.

*Income tax expense*

Income tax expense was $1,100,887 for the six months ended June 30, 2022, compared to $76,086 for the same period of 2021. An increase of approximately 1,346.9% in income tax expense was mainly attributable to the increase of income before income taxes for the six months ended June 30, 2022, compared to the same period of 2021.

*Effective tax rate*

Effective tax rate was 25.8% for the six months ended June 30, 2022, compared to 80.9% for the same period of 2021. A decrease of approximately 55.1% in effective tax rate was mainly attributable to the decrease of tax effect of un-deductible items for the six months ended June 30, 2022, compared to the same period of 2021.

*Net income*

As a result of the factors described above, net income was $3,165,832 for the six months ended June 30, 2022, representing an increase of $3,147,874 from $17,958 for the same period of 2021.

***<u>Comparison of Results of Operations for the Fiscal Years Ended December 31, 2021 and 2020</u>***

The following tables set forth a summary of our consolidated results of operations for the fiscal years indicated. This information should be read together with our consolidated financial statements and related notes included elsewhere in this prospectus. The results of operations in any period are not necessarily indicative of our future trends.

(Amounts, other than percentages, expressed in U.S. dollars)

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Fiscal Years ended December 31,** | **For the Fiscal Years ended December 31,** | **For the Fiscal Years ended December 31,** | **For the Fiscal Years ended December 31,** | **For the Fiscal Years ended December 31,** | **For the Fiscal Years ended December 31,** |
|  | **2021** | **2021** | **2020** | **2020** | **Variance** | **Variance** |
|  | **Amount** | **% of revenue** | **Amount** | **% of revenue** | **Amount** | **%** |
| **Revenue** |  |  |  |  |  |  |
| Pre-approval risk management revenue | $3557857 | 17.2% | $2516756 | 15.7% | $1041101 | 41.4% |
| Post-loan delinquent debt collection revenue | 17095354 | 82.8% | 13481095 | 84.3% | 3614259 | 26.8% |
| **Total operating revenue** | **20653211** | **100.0%** | **15997851** | **100.0%** | **4655360** | **29.1%** |
| Cost of revenue | 17041672 | 82.5% | 10784060 | 67.4% | 6257612 | 58.0% |
| **Gross Profit** | **3611539** | **17.5%** | **5213791** | **32.6%** | **(1602252)** | **(30.7)%** |
| &nbsp;&nbsp;&nbsp;&nbsp; **Operating expenses** |  |  |  |  |  |  |
| Selling expenses | 567601 | 2.7% | 1110228 | 6.9% | (542627) | (48.9)% |
| General and administrative expenses | 1991880 | 9.6% | 2205743 | 13.8% | (213863) | (9.7)% |
| **Total operating expenses** | **2559481** | **12.4%** | **3315971** | **20.7%** | **(756490)** | **(22.8)%** |
| &nbsp;&nbsp;&nbsp;&nbsp; **Income from operations** | **1052058** | **5.1%** | **1897820** | **11.9%** | **(845762)** | **(44.6)%** |
| **Other income (expenses)** |  |  |  |  |  |  |
| Other expense, net | (389770) | (1.9)% | (238010) | (1.5)% | (151760) | 63.8% |
| Governmental subsidies | 55878 | 0.3% | 105489 | 0.7% | (49612) | (47.0)% |
| Interest income (expense), net | 3045 | 0.0% | (5542) | 0.0% | 8588 | (154.9)% |
| **Total other expense** | **(330847)** | **(1.6)%** | **(138063)** | **(0.9)%** | **(192784)** | **139.6%** |
| **Income before income taxes** | **721211** | **3.5%** | **1759757** | **11.0%** | **(1038546)** | **(59.0)%** |
| **Income tax expense** | **318135** | **1.5%** | **485693** | **3.0%** | **(167558)** | **(34.5)%** |
| **Net income** | $**403076** | **2.0%** | $**1274064** | **8.0%** | $**(870988)** | **(68.4)%** |

---

***Revenue***

Our total revenue for the fiscal year ended December 31, 2021 was $20,653,211, an increase by $4,655,360, or approximately 29.1%, from $15,997,851 for the fiscal year ended December 31, 2020. The revenue from pre-approval risk management services increased by $1,041,101, or approximately 41.4%, which was mainly attributable to the cooperation with a new client with large demand in fiscal year 2021. The revenue from the post-loan delinquent debt collection services increased by $3,614,259, or approximately 26.8%, which was mainly due to an increasing number of cases allocated from existing clients.

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Our operating revenue by service type is as follows:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Fiscal Years Ended December 31,** | **For the Fiscal Years Ended December 31,** | **For the Fiscal Years Ended December 31,** | **For the Fiscal Years Ended December 31,** | **For the Fiscal Years Ended December 31,** | **For the Fiscal Years Ended December 31,** |
|  | **2021** | **2021** | **2020** | **2020** | **Variance** | **Variance** |
|  | **Amount** | **% of**<br> **revenue** | **Amount** | **% of**<br> **revenue** | **Amount** | **% of**<br> **revenue** |
| **Revenue** |  |  |  |  |  |  |
| Pre-approval risk management revenue | $3557857 | 17.2% | $2516756 | 15.7% | $1041101 | 41.4% |
| Post-loan delinquent debt collection revenue | 17095354 | 82.8% | 13481095 | 84.3% | 3614259 | 26.8% |
| **Total operating revenue** | $**20653211** | **100.0%** | $**15997851** | **100.0%** | $**4655360** | **29.1%** |

---

We have the following two revenue streams: (i) pre-approval risk management services, and (ii) post-loan delinquent debt collection services. For the fiscal years ended December 31, 2021 and 2020, post-loan delinquent debt collection revenue accounted for approximately 82.8% and 84.3% of our total revenue, respectively. Pre-approval risk management revenue accounted for approximately 17.2% and 15.7% of our total revenue for those fiscal years, respectively.

***Pre-approval risk management revenue***

We charge our clients fees monthly based on the preset unit price and the number of verification records processed by our risk evaluation and solvency assessment products and services, and we receive regular payments on a monthly or quarterly basis, in accordance with our service agreements with specific clients.

Our pre-approval segment revenue derived from our commercial bank clients and non-bank financial institution clients accounts for approximately 45.0% and 55.0%, respectively, in the fiscal year ended December 31, 2021, compared to approximately 50.8% and 49.2%, respectively in the fiscal year ended December 31, 2020. The revenue portion from non-bank financial institution clients increased primarily because of the cooperation with a new non-bank financial institution with large verification demands in the fiscal year ended December 31, 2021.

Revenue derived from pre-approval risk management services increased by $1,041,101, or approximately 41.4%, from $2,516,756 in the fiscal year ended December 31, 2020 to $3,557,857 in the fiscal year ended December 31, 2021. The increase in revenue was attributable to an increase in the average fee rate by approximately 10.2% from RMB0.33 to RMB0.36 per verification record, and an increase in the number of verification records by 20.3%.

The average fee rate of our non-bank finance institution clients and commercial bank clients increased from RMB0.33 per verification record in fiscal year 2020 to RMB0.36 per verification record in fiscal year 2021. The increase in the fee rate is mainly due to the significant increased percentage of revenue from non-bank financial institution clients in fiscal year 2021 of approximately 55.0% compared to 49.2% in fiscal year 2020, which we charged a higher rate of RMB0.44 per verification record compared to RMB0.30 per verification record charged to commercial bank clients in 2021.

The total number of service agreements with our clients increased by 10%, from 60 in the fiscal year ended December 31, 2020 to 66 in the fiscal year ended December 31, 2021. For the fiscal year ended December 31, 2021, we processed approximately 63,700,000 verification records, representing an approximate 20% increase from approximately 52,900,000 verification records for the fiscal year ended December 31, 2020.

**Post-loan delinquent debt collection revenue**

We collect commissions from our clients based on the debt collection services we rendered, either measured by the number of specialists we dedicated to our clients or the performance results of debt collection. Accordingly, there are two ways we calculate our fees: amount-based and percentage-based. Amount-based fees are equivalent to the fee rate for each collection specialist multiplied by the number of collection specialists for such projects. Percentage-based fees are equivalent to the recovery amount after our debt collection service, multiplied by the commission percentage. The amount-based calculation is mostly used on credit loans that are past due for less than sixty (60) days, namely, M1-M2 receivables, while the percentage-based calculation is mainly used on credit loans that are past due for more than sixty (60) days, namely, M3 and M3+ receivables. For some specific clients, the percentage-based calculation is also used for M1-M2 receivables. Delinquent credit loan receivables are generally categorized based on the length of their delinquency. M1-M2 receivables are ones that are one to two months past due, and M3 and M3+ receivables are ones that are over two months past due. See "*Industry-Market Overview of Credit Loan Collection Management Industry in China-Introduction of Credit Loan Collection Management Market in China*."

Other than basic commissions, we may receive incentive bonuses based on our performance from time to time. Bonus amounts are determined by our clients at their discretion in a few selected months, and are calculated according to their own formula based on factors such as the performance ranking of all their suppliers in those months. The incentive bonuses are recognized when we receive notification emails from clients. The aforementioned two ways of calculation of our fees are exclusive from each other. For example, once a project is determined to use an amount-based method, no percentage-based revenue method will be used to calculate the revenue for this project. Any incentive bonus will be added to the basic commissions as total revenue. We charge our clients monthly and we receive regular payments on a monthly or quarterly basis, in accordance with our service agreements with specific clients.

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Revenue generated from post-loan delinquent debt collection services increased by $3,614,259, or approximately 26.8%, from $13,481,095 in the fiscal year ended December 31, 2020 to $17,095,354 in the fiscal year ended December 31, 2021, which was mainly due to a significant increase in amount-based revenue by $3,008,608, or approximately 108%, from $2,786,599 in the fiscal year ended December 31, 2020 to $5,795,206 in the fiscal year ended December 31, 2021. The amount-based revenue started from March 2020, and the total amount of M1 receivables under collection increased rapidly from the second half of fiscal year 2020, and, therefore, amount-based revenue in the fiscal year ended December 31, 2021 increased significantly. For the fiscal years ended December 31, 2021 and 2020, percentage-based revenue accounted for approximately 65.3% and 79.3% of our total post-loan segment revenue, respectively, while amount-based revenue accounted for approximately 33.9% and 20.7% of our total post-loan segment revenue, respectively. Incentive bonuses were $138,332 and $8,658, respectively, for those fiscal years, which accounted for approximately 0.8% and 0.1% of our total post-loan segment revenue, respectively.

The following tables present the average fee rate of different categories of receivables in our post-loan delinquent collection service.

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| | | |
|:---|:---|:---|
| Average fee rate for amount-based revenue | **For the Fiscal Years Ended** | **For the Fiscal Years Ended** |
|  | **December 31,** | **December 31,** |
|  | **2021** | **2020** |
| **Receivables category** | **Per specialist**<br> **per month** | **Per specialist**<br> **per month** |
| Collection of M1 receivables | RMB10,000 | RMB10,000 |
| Collection of M2 receivables | RMB12,000 | RMB12,000 |

---

The average fee rate for amount-based revenue remained the same during the fiscal years ended December 31, 2021 and 2020. Collection of M1 receivables was charged by RMB10,000 per collection specialist per month, while collection of M2 receivables was charged by RMB12,000 per collection specialist per month.

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| | | |
|:---|:---|:---|
| Commission percentage for percentage-based revenue: | **For the Fiscal Years Ended** | **For the Fiscal Years Ended** |
|  | **December 31,** | **December 31,** |
|  | **2021** | **2020** |
| **Receivables category** | **% of Recovery amount** | **% of Recovery amount** |
| Collection of M1 receivables | 0.3% | 0.4% |
| Collection of M2 receivables | 2.1% | 3.9% |
| Collection of M3 receivables | 14.4% | 11.5% |
| Collection of M3+ receivables\* | 24.5% | 27.8% |
| Collection of other receivables\*\* | 4.0% | 21.6% |
| Collection of total percentage-based revenue | 2.3% | 2.5% |

---

\* M3+ receivables refer to credit loans which are past due for more than ninety (90) days

\*\*other receivables refer to a package of collection receivables mixed with M1、M2、M3and M3+ receivables charged with a flat rate.

The average fee rate varied in terms of the aging of delinquent debt receivables. A higher rate indicates a more sophisticated collection process and older receivables. Average fee rates for M1, M2, and M3+ receivables decreased slightly in the fiscal year ended December 31, 2021, compared with the same period in 2020, which was mainly due to an increased volume of allocated cases from existing clients. We started the collection of M3 receivables since March 2020, when the average fee rate was relatively low at the beginning of collection service. The average fee rate increased to approximately 14.4% in the fiscal year ended December 31, 2021, as we demonstrated our ability to meet the collection targets of our clients. The average fee rate for other receivables can vary to a large degree, which is subject to different packages. However, the proportion of collection of other receivables was approximately 7.4% and 8.0% of our total post-loan segment revenue, and thus the fluctuation of fee rates for collection of other receivables had a limited impact on our overall average fee rate. As a result, the overall average fee rate for percentage-based revenue remained stable, which was approximately 2.3% and 2.5% for the fiscal years ended December 2021 and 2020, respectively.

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The following table indicates our key operating data for the periods indicated:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Fiscal Years Ended** | **For the Fiscal Years Ended** | **For the Fiscal Years Ended** | **For the Fiscal Years Ended** |
|  | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
|  | **2021** | **2020** | **Increase /**<br>**(Decrease)** | **Percentage**<br>**Change** |
| Monthly average delinquent receivables under collection | $437771718 | $236661180 | $201110538 | 85% |
| Total annual amount collected | 1710364073 | 764386684 | 945977389 | 124% |
| Monthly average amount collected per collection specialist | 205969 | 96807 | 109162 | 113% |
| Monthly average commission earned per collection specialist | 1710 | 1866 | (156) | (8)% |

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Monthly average delinquent receivables under collection increased significantly by approximately 85%, which was mainly due to the increasing number of delinquent receivables allocated from existing clients, especially amount-based receivables. Amount-based receivables feature a greater total amount of principal and higher recovery rates, leading to a significant increase in total annual amount collected by approximately 124% and a significant increase in monthly average amount collected per collection specialist by 113%. Monthly average commission earned per collection specialist decreased by approximately 8%, primarily because the percentage of amount-based M1 receivables revenue, which typically engaged more specialists and had a lower average fee rate, increased to approximately 28.2% of the total post-loan segment revenue in the fiscal year ended December 31, 2021, compared to approximately 15.6% of the total post-loan segment revenue in the fiscal year ended December 31, 2020. In addition, the total commissions we collected for the fiscal years 2021 and 2020 were $17,095,354 and $13,481,095, respectively, representing an increase of approximately 26.8% and 65.1%, respectively, from the previous periods.

***Cost of Revenue***

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Fiscal Years Ended** | **For the Fiscal Years Ended** | **For the Fiscal Years Ended** | **For the Fiscal Years Ended** |
|  | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
|  | **2021** | **2020** | **Increase /**<br>**(Decrease)** | **Percentage**<br>**Change** |
| Total revenue | $20653211 | $15997851 | $4655360 | 29.1% |
| Cost of revenue | 17041672 | 10784060 | 6257612 | 58.0% |
| Gross profit | 3611539 | 5213791 | (1602252) | (30.7)% |
| Margin % | 17.5% | 32.6% | (15.1)% |  |

---

Cost of revenue increased to $17,041,672 for the fiscal year ended December 31, 2021 from $10,784,060 for the same period in 2020, representing an increase by $6,257,612, or approximately 58.0%. The increase was mainly attributable to the combined effects of the following: (i) an increase in data service costs in the pre-approval segment; (ii) an increase in IT service costs in the pre-approval segment; (iii) an increase in salaries and benefits in the post-loan segment; (iv) an increase in management service costs for operating centers in the post-loan segment; and (v) a decrease in IT service costs in the post-loan segment. The cost of revenue by segment is further discussed in detail below.

The following table indicates the cost and margin of the pre-approval risk management segment for the periods indicated:

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| | | | | |
|:---|:---|:---|:---|:---|
| Pre-approval risk management segment | **For the Fiscal Years Ended** | **For the Fiscal Years Ended** | **For the Fiscal Years Ended** | **For the Fiscal Years Ended** |
|  | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
|  |  |  | **Increase /** | **Percentage** |
|  | **2021** | **2020** | **(Decrease)** | **Change** |
| Total revenue | $3557857 | $2516756 | $1041101 | 41.4% |
| Cost of revenue | 2149962 | 1240453 | 909510 | 73.3% |
| Gross profit | 1407895 | 1276303 | 131591 | 10.3% |
| Margin % | 39.6% | 50.7% | (11.1)% |  |

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Cost of revenue in the pre-approval segment is mainly comprised of (i) data service costs and (ii) IT service costs. Cost of revenue increased to $2,149,962 for the fiscal year ended December 31, 2021 from $1,240,453 in 2020, representing an increase by $909,510, or approximately 73.3%. The increase was mainly attributable to the combined effects of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Data service costs. Data service costs in the pre-approval segment increased by $755,878, or 62.5%, from $1,208,897 in the fiscal year ended December 31, 2020 to $1,964,776 in the fiscal year ended December 31, 2021. Due to our new cooperation with a new non-bank financial institution with large verification demands in the fiscal year ended December 31, 2021, our costs to purchase data services increased accordingly.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) IT service costs. IT service costs in the pre-approval segment increased by $146,950, or 493.4%, from $29,780 in the fiscal year ended December 31, 2020 to $176,731 in the fiscal year ended December 31, 2021, which was mainly attributable to the increased demand for operation and maintenance service for our operating systems and portals.

The following table indicates the cost and margin of the post-loan segment for the periods indicated:

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| | | | | |
|:---|:---|:---|:---|:---|
| Post-loan delinquent debt collection segment | **For the Fiscal Years Ended** | **For the Fiscal Years Ended** | **For the Fiscal Years Ended** | **For the Fiscal Years Ended** |
|  | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
|  |  |  | **Increase /** | **Percentage** |
|  | **2021** | **2020** | **(Decrease)** | **Change** |
| Total revenue | $17095354 | $13481095 | $3614259 | 26.8% |
| Cost of revenue | 14891709 | 9543608 | 5348101 | 56.0% |
| Gross profit | 2203645 | 3937487 | (1733843) | (44.0)% |
| Margin % | 12.9% | 29.2% | (16.3)% |  |

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Cost of revenue for the post-loan segment is mainly comprised of (i) costs in salaries and benefits for our collection specialists; (ii) management service costs for operating centers; (iii) communication fees for operating centers; (iv) rent and utility expenses; and (v) IT service costs.

Cost of revenue for the post-loan segment increased to $14,891,709 for the fiscal year ended December 31, 2021 from $9,543,608 in 2020, representing an increase by $5,348,101, or approximately 56.0%. The increase was mainly attributable to the combined effects of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Salaries and benefits. Our salary and benefit costs in the post-loan segment increased by $4,677,307, or approximately 71.4%, from $6,553,787 in the fiscal year ended December 31, 2020 to $11,231,095 in the fiscal year ended December 31, 2021. The number of our collection specialists increased from approximately 600 in the fiscal year ended December 31, 2020 to approximately 830 in the fiscal year ended December 31, 2021. Our salary and benefit costs further increased due to the cancellation of the social insurance relief policy by local governments in 2021, during which time the COVID-19 pandemic in China was brought under better control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Outsourcing management service costs for operating centers. Our outsourcing management service costs for operating centers in the post-loan segment increased by $955,642, or approximately 62.0%, from $1,541,498 in the fiscal year ended December 31, 2020 to $2,497,140 in the fiscal year ended December 31, 2021. With the rapid expansion and growth of our post-loan delinquent debt collection business since 2021, we have not only expanded the number of our operating centers, but also engaged several contractor partners for closer cooperation and partnerships since 2021, leading to the increase in outsourcing management service costs for operating centers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) IT service costs. Our IT service costs in the post-loan segment decreased by $435,141, or 100.0%, from $435,141 in the fiscal year ended December 31, 2020 to nil in the fiscal year ended December 31, 2021. This was because we initiated upgrading the network infrastructures for our nationwide operating centers in 2020, whereas in 2021, we did not incur such expenses.

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***Gross Profit***

Our gross profit decreased from $5,213,791 for the fiscal year ended December 31, 2020 to $3,611,539 for the same period in 2021. Our gross profit as a percentage of revenue decreased from approximately 32.6% for the fiscal year ended December 31, 2020 to approximately 17.5% for the same period in 2021. The decrease in gross profit in the pre-approval segment was mainly attributable to the increase in data service costs and IT service cost; and the decrease in gross profit in the post-loan segment was mainly attributable to the following: (i) the increased number of collection specialists; (ii) the termination of social insurance relief policy by local governments in 2021, during which time the COVID-19 pandemic in China was brought under better control; and (iii) the increase in outsourcing management service costs for operating centers.

***Operating Expenses***

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Fiscal Years Ended** | **For the Fiscal Years Ended** | **For the Fiscal Years Ended** | **For the Fiscal Years Ended** |
|  | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
|  | **2021** | **2020** | **Increase /**<br>**(Decrease)** | **Percentage**<br>**Change** |
| Selling expenses | $567601 | $1110228 | $(542627) | (48.9)% |
| % of revenue | 2.7% | 15% | (4.2)% | (60.4)% |
| General and administrative expenses | 1991880 | 2205743 | (213863) | (9.7)% |
| % of revenue | 9.6% | 13.8% | (4.1)% | (30.1)% |
| Operating expenses | $2559481 | $3315971 | $(756490) | (22.8)% |

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Selling Expenses

Selling expenses consist primarily of salaries and benefits for the sales team, marketing expenses, commission expenses, entertainment expenses, and travel expenses. Selling expenses decreased by approximately 48.9% or $542,627, from $1,110,228 for the fiscal year ended December 31, 2020 to $567,601 in the same period of 2021. The decrease was mainly attributable to the combined effects of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Our marketing expenses decreased significantly by $667,913 or approximately 86.7%, to $102,146 for the fiscal year ended December 31, 2021 from $770,059 for the fiscal year ended December 31, 2020. The significant decrease was mainly attributable to one-off marketing projects and events in fiscal year 2020. Specifically, in order to promote the brand of our post-loan services, we engaged a professional marketing company to conduct industry research and design branding strategies for our Company during the fiscal year 2020, and we also organized three high-end industrial seminars at the end of fiscal year 2020.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Our salaries and benefits for the sales team increased by $104,492 or approximately 42.5%, to $350,626 for the fiscal year ended December 31, 2021 from $246,134 for the fiscal year ended December 31, 2020. The increase was mainly attributable to the increase in the revenue derived from our pre-approval risk management services.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and benefits expenses for our general administrative and management staff, rent and energy expense, professional fees, office expenses, depreciation and amortization expenses, travel expenses, IT service expenses, and other miscellaneous expenses incurred in connection with general operations. General and administrative expenses decreased by approximately 9.7% or $213,863 from $2,205,743 for the fiscal year ended December 31, 2020 to $1,991,880 in the same period of 2021. The decrease was mainly attributable to the combined effects of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Our professional fees decreased significantly by $679,964 or approximately 81.8%, to $151,776 for the fiscal year ended December 31, 2021 from $831,740 for the fiscal year ended December 31, 2020. The significant decrease was mainly attributable to some consulting projects during fiscal year 2020. Specifically, we engaged two professional consulting companies to review and provide consulting services to optimize our operational management and compliance practices.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Our salaries and benefits for management increased by $424,865 or approximately 45.6%, to $1,355,900 for the fiscal year ended December 31, 2021 from $931,035 for the fiscal year ended December 31, 2020. The increase was mainly attributable to the cancellation of the social insurance relief policy by local governments since 2021.

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***Net Income***

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Fiscal Years Ended** | **For the Fiscal Years Ended** | **For the Fiscal Years Ended** | **For the Fiscal Years Ended** |
|  | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
|  | **2021** | **2020** | **Increase /**<br>**(Decrease)** | **Percentage**<br>**Change** |
| Income from operations | $1052058 | $1897820 | $(845762 ) | (44.6 )% |
| Total other expenses | (330847 ) | (138063 ) | 192784 | 139.6% |
| Income before income taxes | 721211 | 1759757 | (1038546 ) | (59.0 )% |
| Income tax expense | (318135 ) | (485693 ) | (167558 ) | (34.5 )% |
| Net income | $403076 | $1274064 | $(870988 ) | (68.4 )% |
| Effective tax rate | 44.1% | 27.6% | 16.5% |  |

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*Operating income*

As a result of the factors described above, operating income decreased by $845,762, or approximately 44.6%, to $1,052,058 for the fiscal year ended December 31, 2021, compared to $1,897,820 for the same period of 2020.

*Total other expense*

Total other expense was $330,847 for the fiscal year ended December 31, 2021, compared to $138,063 for the same period in 2020. An increase by approximately 139.6% in total other expense was mainly attributable to a net expense of $390,806 and $220,686 for penalties and interest of under-declared income taxes that were recognized in the consolidated statements of income as components of the non-operating expenses for the fiscal years ended December 31, 2021 and 2020, respectively.

*Income tax expense*

Income tax expense was $318,135 for the fiscal year ended December 31, 2021, compared to $485,693 for the same period of 2020. A decrease by approximately 34.5% in income tax expense was mainly attributable to the decrease of income before income taxes for the fiscal year ended December 31, 2021, compared to the same period of 2020.

*Effective tax rate* 

Effective tax rate was 44.1% for the fiscal year ended December 31, 2021, compared to 27.6% for the same period of 2020. An increase by approximately 16.5% in effective tax rate was mainly attributable to the increase of tax effect of un-deductible items for the fiscal year ended December 31, 2021, compared to the same period of 2020.

*Net income*

As a result of the factors described above, net income was $403,076 for the fiscal year ended December 31, 2021, representing a decrease by $870,988 from $1,274,064 for the same period of 2020.

***Unrealized foreign currency translation adjustment***

Our reporting currency is the United States dollar. The Company's operations are all conducted through our PRC operating entities where the local currency is the functional currency. The functional currency of the PRC operating entities is the Renminbi ("RMB"). Results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange rates. Translation adjustments resulting from the process of translating the financial statements denominated in RMB into U.S. dollars are included in other comprehensive income. Our foreign currency translation loss for the six months ended June 30, 2022 was $92,717, compared to the foreign currency translation gain of $11,658 for the six months ended June 30, 2021, representing a decrease by $104,375. The decrease was primarily due to the exchange rate of RMB against the U.S. dollars for the six months ended June 30, 2021 remained relatively stable compared with the greater depreciation for the six months ended June 30, 2022.

**LIQUIDITY AND CAPITAL RESOURCES**

In assessing our liquidity, management monitors and analyzes our cash on-hand, our ability to generate sufficient revenue sources in the future, and our operating and capital expenditure commitments. For the fiscal years ended December 31, 2021 and 2020, our Company recognized net income of approximately $0.4 million and $1.3 million, respectively. For the six months ended June 30, 2022 and 2021, our Company recognized net income of approximately $3.2 million and 0.02 million, respectively. As of June 30, 2022 and December 31, 2021 and 2020, we had cash of $8,645,021, $3,262,367, and $1,979,567, respectively. The working capital as of December 31, 2021 amounted to $(759,770), compared to $732,918 as of December 31, 2020. As of June 30, 2022, the working capital amounted to $2,287,735, compared to $(759,770) as of December 31, 2021.

We intend to finance our future working capital requirements and capital expenditures from cash generated from operating activities, which are primarily service fees from pre-approval risk management and commissions from post-loan delinquent debt collection services. We believe that our current cash, together with cash to be generated from our operations and access to the capital market, will be sufficient to meet our working capital needs for at least the next twelve months. The short-term cash flow of our Company comes primarily from daily operating activities. The working capital deficit as of December 31, 2021 was mainly attributable to the accrued liabilities for under-declared income taxes and associated penalty and interest, and accrued liabilities for under-paid social insurance and housing fund for employees. However, we have historically been profitable and able to generate positive net cash flow. For the fiscal years ended December 31, 2021 and 2020, we have generated positive cash flow from operations of approximately $3.1 million and $2.3 million, respectively, and the operating cash flow increased significantly by $3,117,447 or approximately 313% in the first half of 2022 compared with the same period in 2021, due to the rapid growth of our post-loan debt collection business. As such, we are not dependent upon future financing to meet our liquidity needs for the next twelve months. Additionally, in the long term, in order to implement our growth strategies, we plan to expand our business. With additional collection specialist capacity and more diversified customer base, we will be able to further expand our business in the consumer credit loan industry and integrate our resources from the pre-approval risk management and post-loan debt collection businesses by leveraging our technology and talents. To do so, we may need additional capital in the future through equity financing or credit facilities to meet our Company's liquidity requirements. Issuance of additional equity securities, including convertible debt securities, would dilute our earnings per share. The incurrence of debt would divert cash for working capital and capital expenditures to service debt obligations and could result in operating and financial covenants that restrict our operations and our ability to pay dividends to our shareholders. Our current contractual obligations consist primarily of service fees to suppliers, employee wages, taxes, and rental expenses, and we have no plans for large-scale capital expenditures in the near future, such as mergers and acquisitions and large investments. Therefore, we believe that we have sufficient cash reserves to pay short-term debts in order to maintain the liquidity of our Company.

Substantially all of our operations are conducted in China and all of our revenue, expense, and cash are denominated in RMB. RMB is subject to foreign currency exchange regulations in China, and, as a result, we may have difficulty in distributing any dividends outside of China due to PRC foreign exchange regulations which restrict our ability to convert RMB into U.S. Dollars.

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Under applicable PRC regulations, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, a foreign-invested enterprise in China is required to set aside at least 10% of its after-tax profit every year as its general reserves based on PRC accounting standards until the accumulative amount of such reserves reaches 50% of its registered capital. These reserves can't be distributed as cash dividends. The board of directors of a foreign-invested enterprise has the discretion to allocate a portion of its after-tax profits to staff welfare and bonus funds, which can't be distributed to equity owners except liquidation. Under PRC law, RMB can be converted into U.S. Dollars under the company's "current account" (including dividends, trade and service-related foreign exchange transactions) rather than the "capital account" (including foreign direct investments and loans) without the prior approval of the SAFE.

For retained earnings accrued after such date, the board of directors will declare dividends after taking into account our operations, earnings, financial condition, the demand for cash and availability, and other relevant factors. Any declaration, payment, and amount of dividends should be subject to our by-Laws, charter, and applicable Chinese and U.S. state and federal laws and regulations, including the approval from the shareholders of each subsidiary that intends to declare such dividends, if applicable.

We have limited financial obligations dominated in US dollars, thus the foreign currency restrictions and regulations in the PRC on the dividends distribution will not have a material impact on the liquidity, financial condition, and results of operations of our Company.

***<u>Cash Flows for the Six Months Ended June 30, 2022 and 2021</u>***

The following table sets forth summary of our cash flows for the periods indicated:

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| | | |
|:---|:---|:---|
|  | **For the Six Months** <br> **Ended June 30,** | **For the Six Months** <br> **Ended June 30,** |
|  | **2022** | **2021** |
| Net cash provided by operating activities | $4113397 | $995950 |
| Net cash provided by/(used in) investing activities | 1399770 | (1185868) |
| Net cash provided by financing activities | 200732 | 131382 |
| Effect of exchange rate changes | (331245) | 21655 |
| Net increase (decrease) in cash and cash equivalents | 5382654 | (36881) |
| Cash and cash equivalents, at beginning of period | 3262367 | 1979567 |
| Cash and cash equivalents, at end of period | $8645021 | $1942686 |

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***Operating Activities***

Net cash generated from operating activities was $4,113,397 for the six months ended June 30, 2022, representing a significant increase of $3,117,447, or approximately 313%, compared to net cash generated from operating activities of $995,950 for the six months ended June 30, 2021. The increase in net cash generated from operating activities was primarily due to an increase of $3,147,874 in net income, which was partially offset by a decrease of $46,994 in the adjustments for changes in working capital. The adjustments for changes in working capital mainly included:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Change in accounts receivable was approximately $5,517,116 net cash outflow for the six months ended June 30, 2022. For the six months ended June 30, 2021, change in accounts receivable was approximately $394,421 net cash outflow, which led to an approximately $5,122,695 decrease in net cash inflow from operating activities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Change in accounts payable was $4,364,641 net cash inflow for the six months ended June 30, 2022. For the six months ended June 30, 2021, the change in accounts payable was approximately $705,118 net cash inflow, which led to an approximately $3,659,523 increase in net cash inflow from operating activities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Change in accounts payable to related parties was $1,282,869 net cash inflow for the six months ended June 30, 2022. For the six months ended June 30, 2021, the change in accounts payable to related parties was approximately $104,044 net cash inflow, which led to an approximately $1,178,825 increase in net cash inflow from operating activities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Change in taxes payable was $1,429,411 net cash inflow for the six months ended June 30, 2022. For the six months ended June 30, 2021, the change in taxes payable was approximately $64,881 net cash inflow, which led to an approximately $1,364,529 increase in net cash inflow from operating activities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Change in accrued expenses and other payables was $451,391 net cash outflow for the six months ended June 30, 2022. For the six months ended June 30, 2021, the change in accrued expenses and other payables was approximately $600,462 net cash inflow, which led to an approximately $1,051,853 decrease in net cash inflow from operating activities.

***Investing Activities***

Net cash provided by investing activities was $1,399,770 for the six months ended June 30, 2022, which primarily consisted of loan repayments from related parties of $1,692,255, payment of $200,732 for the consideration of acquisition of a subsidiary in 2021, and purchase of property and equipment of $91,753.

Net cash used in investing activities was $1,185,868 for the six months ended June 30, 2021, which primarily consisted of loans to related parties of $1,070,979 and purchases of intangible assets of $110,767.

***Financing Activities***

Net cash provided by financing activities was $200,732 for the six months ended June 30, 2022. In order to pay the consideration of acquisition of a subsidiary, we received an interest-free loan of $200,732 from a related party in January 2022.

Net cash provided by financing activities was $131,382 for the six months ended June 30, 2021, primarily consisting of proceeds from short-term bank borrowing of 309,134 and repayments to a related party of $177,752.

***<u>Cash Flows for the Fiscal Years Ended December 31, 2021 and 2020</u>***

The following table sets forth summary of our cash flows for the fiscal years indicated:

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| | | |
|:---|:---|:---|
|  | **For the Fiscal Years** <br> **Ended December 31,** | **For the Fiscal Years** <br> **Ended December 31,** |
|  | **2021** | **2020** |
| Net cash provided by operating activities | $3083782 | $2258636 |
| Net cash (used in)/provided by investing activities | (3275908) | 97423 |
| Net cash (used in)/provided by financing activities | 1413005 | (951996) |
| Effect of exchange rate change on cash and restricted cash | 61921 | 106899 |
| Net increase in cash and restricted cash | 1282800 | 1510962 |
| Cash and restricted cash, beginning of year | 1979567 | 468605 |
| Cash and restricted cash, end of year | $3262367 | $1979567 |

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***Operating Activities***

Net cash generated from operating activities was $3,083,782 for the fiscal year ended December 31, 2021, representing an increase by $825,146 or approximately 37% compared to net cash generated from operating activities of $2,258,636 for the fiscal year ended December 31, 2020. The increase in net cash generated from operating activities was primarily due to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Change in prepayments and other current assets was approximately $229,104 net cash inflow for the fiscal year ended December 31, 2021. For the fiscal year ended December 31, 2020, change in prepayments and other current assets was approximately $192,295 net cash outflow, which led to an approximately $421,399 increase in net cash inflow from operating activities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Change in the amount due from related parties was nil for the fiscal year ended December 31, 2021. For the fiscal year ended December 31, 2020, change in the amount due from related parties was approximately $280,387 net cash outflow, which led to an approximately $280,387 increase in net cash inflow from operating activities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Change in accounts payable was $912,454 net cash inflow for the fiscal year ended December 31, 2021. For the fiscal year ended December 31, 2020, the change in accounts payable was approximately $334,479 net cash outflow, which led to an approximately $1,246,933 increase in net cash inflow from operating activities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Change in accounts payable to related parties was $438,300 net cash inflow for the fiscal year ended December 31, 2021. For the fiscal year ended December 31, 2020, the change in accounts payable to related parties was approximately $101,393 net cash inflow, which led to an approximately $336,907 increase in net cash inflow from operating activities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Change in taxes payable was $279,984 net cash inflow for the fiscal year ended December 31, 2021. For the fiscal year ended December 31, 2020, the change in taxes payable was approximately $464,242 net cash inflow, which led to an approximately $184,258 decrease in net cash inflow from operating activities.

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***Investing Activities***

Net cash used in investing activities was $3,275,908 for the fiscal year ended December 31, 2021, which primarily consisted of payment of $1,674,029 to a related party under the common control for 100% of the equity interests in Beihai Beiming, loans to related parties of $1,469,257, purchase of software of $111,080, and purchase of property and equipment of $114,544.

Net cash provided by investing activities was $97,423 for the fiscal year ended December 31, 2020, which consisted of loan repayments from a related party of $173,974, loans to related parties of $58,760, and purchase of property and equipment of $17,791.

***Financing Activities***

Net cash provided by financing activities was $1,413,005 for the fiscal year ended December 31, 2021. It primarily consisted of loans from a related party of $1,674,029, repayments to a related party of $416,027 and capital contribution of $155,003 from shareholders.

Net cash used in financing activities was $951,996 for the fiscal year ended December 31, 2020, primarily consisting of dividend distribution of $593,648 to shareholders and repayments to a related party of $358,348.

**CONTRACTUAL OBLIGATIONS**

***Lease commitment***

The total future minimum lease payments under the non-cancellable operating lease with respect to the office as of June 30, 2022 are payable as follows:

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| | |
|:---|:---|
|  | **Lease**<br> **Commitment** |
| Remaining 2022 | $262847 |
| 2023 | 218707 |
| 2024 | 89428 |
| 2025 and thereafter | 23789 |
| Total | $594771 |

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***Off-Balance Sheet Arrangements***

As of the date of this prospectus, we have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are indexed to our own shares and classified as shareholders' equity, or that are not reflected in our financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity, or market risk support to such entity. Moreover, we do not have any variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging, or research and development services with us.

**Trend Information**

Other than as disclosed elsewhere in this prospectus, we are not aware of any trends, uncertainties, demands, commitments, or events that are reasonably likely to have a material effect on our net revenue, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.

**Inflation**

Inflation does not materially affect our business or the results of our operations.

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**Seasonality**

Seasonality does not materially affect our business or the results of our operations.

**CRITICAL ACCOUNTING POLICIES**

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements. These financial statements are prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions that affect the reported amounts of our assets and liabilities and revenue and expenses, to disclose contingent assets and liabilities on the date of the consolidated financial statements, and to disclose the reported amounts of revenue and expenses incurred during the financial reporting period. We continue to evaluate these estimates and assumptions that we believe to be reasonable under the circumstances. We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We believe that the critical accounting policies as disclosed in this prospectus reflect the more significant judgments and estimates used in preparation of our consolidated financial statements. Further, we elected to use the extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements.

The following critical accounting policies rely upon assumptions and estimates and were used in the preparation of our consolidated financial statements:

***Use of estimates***

In preparing the consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period and accompanying notes, including the useful lives of property and equipment and intangible assets, impairment of long-lived assets, valuation allowance of deferred tax assets and uncertain tax position. Actual results could differ from those estimates.

*Accounts Receivable, net*

Accounts receivable represent trade receivable and are recognized initially at fair value and subsequently adjusted for any allowance for doubtful accounts or impairment.

The Company records impairment losses for accounts receivable based on assessments of the recoverability of the trade and other receivables and individual account analysis, including the current creditworthiness and the past collection history of each debtor. Impairments arise when there is objective evidence indicate that the balances may not be collectible. The identification of bad and doubtful debts, in particular of a loss event, requires the use of judgment and estimates, which involve the estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. Based on management of customers' credit and ongoing relationship, management makes conclusions whether any balances outstanding at the end of the period will be deemed non-collectable on an individual basis and on aging analysis basis. The provision is recorded against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of operations and comprehensive income. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable.

The Company historically has not had material bad debts in accounts receivable. There were no bad debt expenses for the fiscal years ended December 31, 2021 and 2020 and there was no allowance for doubtful accounts as of December 31, 2021 and 2020. There were bad debt expenses of $6,787 and nil for the six months ended June 30, 2022 and 2021, respectively, and there was an allowance of $6,564 and nil for doubtful accounts as of June 30, 2022 and December 31, 2021, respectively.

*Revenue recognition*

The Company follows FASB ASC 606 - "Revenue from Contracts with Customers" for all periods presented. Based on the requirements of ASC Topic 606, revenue is recognized when control of the promised goods or services is transferred to the customers in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those goods or services. Revenue is recognized when the following 5-step revenue recognition criteria are met:

1) Identify the contract with a customer

2) Identify the performance obligations in the contract

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3) Determine the transaction price

4) Allocate the transaction price

5) Recognize revenue when or as the entity satisfies a performance obligation

The Company's revenue consists of revenue from pre-approval risk management services and post-loan delinquent debt collection services.

<u>Pre-approval risk management revenue:</u>

The Company provides a set of credit risk management services for financial service providers during the loan approval process. The Company identified only one performance, which is to return accurate verification results to financial service providers via its operating system, as a reference in financial service providers' loan approval process. Once a verification result is returned to a financial service provider, a consumption record of information verification is generated, and one performance obligation is fulfilled. The Company recognizes revenue when the performance obligation is fulfilled in amount based on the agreed-upon consumption records confirmed by financial service providers and preset unit price in the contract.

<u>Post-loan delinquent debt collection revenue:</u>

The Company provides debt collection services to financial service providers for the post-loan delinquent receivables. The Company identified only one performance, which is to provide debt collection services to financial service providers. Once the services are rendered to a financial service provider, the performance obligation is fulfilled. The service fees are calculated in two main types, which are amount-based and percentage-based. Amount-based fees are equivalent to the fee rate for each collection specialist as agreed upon multiplied by the number of collection specialists for such projects. Percentage-based fees are equivalent to the recovery amount of the client's post-loan delinquent receivables after our debt collection service, multiplied by the commission percentage as agreed upon. The Company does not need to allocate transaction price to amount-based revenue and percentage-based revenue as each one is exclusive from the other. Other than the above two main service fees, we may receive incentive bonuses based on our performance from time to time. The incentive bonuses are determined by our clients at their discretion in a few selected months. The incentive bonus is a form of variable consideration, which is fully constraint, and should not be included in the transaction price as the Company does not believe it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur, because the amount of incentive bonuses is calculated by our clients according to their own formula based on factors such as the performance ranking of all their suppliers in those months. The incentive bonuses are recognized when being confirmed by or even received from our clients. Therefore, incentive bonuses do not involve a significant level of estimation uncertainty in terms of revenue recognition. The Company recognizes the service revenue on a gross basis, as the Company is acting as a principal in these transactions and is responsible for fulfilling the promise to provide the specified collection service. Revenue is recognized at the point when overdue receivables are repaid, which means the performance obligations are fulfilled.

***Income taxes***

The Company accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.

The provisions of ASC 740-10-25, "Accounting for Uncertainty in Income Taxes," prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. The Company's operating subsidiaries in the PRC are subject to examination by the relevant tax authorities. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent. The statute of limitations is extended to five years under special circumstances, where the underpayment of taxes is more than RMB100,000 ($14,537). In the case of transfer pricing issues, the statute of limitation is ten years. There is no statute of limitation in the case of tax evasion. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred.

Our Company's accrued liability, interest and penalties related to uncertain tax positions in its other expense line of its consolidated statements of income. The Company's effective tax rate includes the net impact of changes in the liability for unrecognized tax positions and subsequent adjustments as considered appropriate by management. The Company classifies interest and penalties recognized on the liability for unrecognized tax positions as non-operating expense.

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***Recently Issued Accounting Standards***

The Company is an "emerging growth company" ("EGC") as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). Under the JOBS Act, EGC can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

In February 2016, the FASB issued Accounting Standards Updates ("ASU") No. 2016-02, Leases ("Topic 842"). The guidance supersedes existing guidance on accounting for leases with the main difference being that operating leases are to be recorded in the statement of financial position as right-of-use ("ROU") assets and lease liabilities, initially measured at the present value of the lease payments. For operating leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. In July 2018, ASU 2016-02 was updated with ASU 2018-11, Targeted Improvements to ASC Topic 842, which provides entities with relief from the costs of implementing certain aspects of the new leasing standard. Specifically, under the amendments in ASU 2018-11, (1) entities may elect not to recast the comparative periods presented when transitioning to ASC 842 and (2) lessors may elect not to separate lease and non-lease components when certain conditions are met. In November 2019, ASU 2019-10, Codification Improvements to ASC 842 modified the effective dates of all other entities. In June 2020, ASU 2020-05 defers the effective date for one year for entities in the "all other" category. For all other entities, the amendments in ASU 2020-05 are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early application of the guidance continues to be permitted. The Company has assessed the impact of the adoption of the new lease standard, and concluded that it would have no significant impact on its consolidated financial statements. Upon adoption, the Company would recognize ROU assets and lease liabilities (including current and non-current) for operating leases of approximately $319,000 and $254,000, respectively, without any material impact on the shareholders' equity, as of January 1, 2022. The Company will present the application of Topic 842 in its consolidated financial statements for the year ending December 31, 2022.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 changes the impairment model for most financial assets and certain other instruments. The standard will replace the "incurred loss" approach with an "expected loss" model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they do today under the other-than-temporary impairment model. The amendments in ASU 2016-13 are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is in the process of evaluating the impact of the adoption of this guidance on its consolidated financial statements.

Other accounting standards that have been issued by the FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent standards that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures.

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**INDUSTRY**

*All the information and data presented in this section have been derived from the Frost & Sullivan Report commissioned by us in May 2021, unless otherwise stated. Frost & Sullivan has advised us that the statistical and graphical information contained herein is drawn from its database and other sources. The following discussion contains projections for future growth, which may not occur at the rates that are projected or at all.*

*Frost & Sullivan has also advised us that the projections and estimations for future growth in this section were based on the assumptions that: (i) China's economy is likely to maintain steady growth in the next decade; (ii) China's social, economic and political environment is likely to remain stable in the forecast period from to 2021 to 2025, which ensures the stable and healthy development of China's financial industry; and (iii) the COVID-19 pandemic will affect the global economy stability in the short term.*

*We believe that the sources of such information are appropriate, and we have taken reasonable care in extracting and reproducing such information. We have no reason to believe that such information is false or misleading in any material respect or that any fact has been omitted that would render such information false or misleading in any material respect. However, neither we nor any other party involved in this offering has independently verified such information, and neither we nor any other party involved in this offering makes any representation as to the accuracy or completeness of such information. Therefore, investors are cautioned not to place any undue reliance on the information, including statistics and estimates, set forth in this section or similar information included elsewhere in this prospectus.*

**Market Overview of Intelligent Risk Management Industry in China**

***Introduction of Intelligent Risk Management Market in China***

Intelligent risk management companies provide risk control services for financial institutions via utilizing advanced technologies such as machine learning, natural language processing (NLP), big data analysis, and cloud computing. The typical intelligent risk management service conforms to the following paradigm. Firstly, the large-scale and unstructured data are cleaned and preprocessed using big data analysis and NLP techniques. The processed structured data are then utilized to train the unsupervised or supervised machine learning models for feature engineering. Finally, the loan issuing decision can be obtained via building and training ensemble models, which facilitate producing more accurate predictions.

The application of intelligent risk management in the financial field can afford business safety and efficiency in a cost-efficient manner. Under the premise of effectively decreasing the probability of default, it can expand the business coverage, reduce manual review costs, and mitigate the credit risk.

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The traditional risk management methods mainly rely on the time-consuming manual verification of identity information. In addition to the slow approval process, limited coverage is another major challenge in credit evaluation with traditional solutions. Specifically, approximately 50% of people do not have lending histories. As such, relying solely on the credit report of the PBOC does not meet the credit loan needs of all. Furthermore, the linear models, along with the limited features, cannot capture the underlying patterns and therefore generate high error rates. With financial technologies, intelligent risk management service providers can address such problems in the credit loan market, aiming at conducting risk assessment effectively and efficiently. The table below illustrates the core differences between traditional and intelligent risk management solutions.

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| | | |
|:---|:---|:---|
|  | **Traditional Solutions**  | **Intelligent Solutions**  |
| **Approaches**  | Manual review, experts' experience dependent  | Model-based automatic analysis, supplemented by manual review  |
| **Data Sources**  | internal information of commercial banks and the credit bureau, information applicants submitted  | Both internal and third-party information, sources vary from telecommunication operators to travel services and educational background  |
| **Data Volumes**  | Small-scale  | Large-scale, multi-dimension  |
| **Determination Criteria**  | Mostly linear models based on limited features  | Deep learning models to capture the nonlinear and implicit relationships between numerous features  |
| **Technologies**  | Manual annotation  | NLP; Machine Learning: unsupervised machine learning and supervised machine learning such as KNN and random forest; Big Data Analytics  |

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*Source: Frost & Sullivan*

***Classification of the Intelligent Risk Management Market in China***

Intelligent risk management is an important application of intelligent technology in the financial field. Intelligent risk management services can be generally categorized into three types, which cover the entire life-cycle of risk management services.

- Pre-loan assessment: The pre-approval risk management service can be divided into customer acquisition, identity verification, and credit assessment, helping downstream application scenarios to score and predict applicants' risk. The pre-approval solution integrates application materials, judicial information, income stability, as well as loan records on multiple platforms and other information, so as to fully evaluate the borrower's risk from various dimensions and to depict the pre-approval applicant profile.

- Mid-loan monitoring: The loan monitoring service provides real-time supervision of the status of existing customers and identify and deal with potential risks prior to the default. Specifically, it assists lenders in monitoring and warning of abnormal behaviors by accessing big data, thus effectively preventing and controlling risks in lending.

- Post-loan management: The post-loan stage, as the end phase of risk management, concentrates on loan collection management. Post-lending risk management aims to identify and collect credit users with overdue signs or behaviors. Differentiated collection strategies can be formulated contingent on the status of the loan. Voice robots and phone calls are typically early-stage strategies, while legal action and asset disposal are the methods implemented at the late-collection stage.

***Market Size of the Intelligent Risk Management Market in China***

From 2016 to 2020, the market of intelligent risk management services in China has witnessed rapid growth, increasing from approximately RMB2.6 billion (approximately $0.4 billion) to approximately RMB7.8 billion (approximately $1.2 billion) due to technology advancements, at a CAGR of 32.1%.

In 2021, the market size of intelligent risk management services in China is expected to reach approximately RMB11.0 billion (approximately $1.7 billion). While the penetration rate of financial technology demonstrates an upward trend, it is expected that the intelligent risk management services market will grow accordingly from 2021 to 2025, reaching RMB22.8 billion (approximately $3.5 billion) with a CAGR of 38.0%.

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![](goodfaith_f1img5.jpg)

*Source: Frost & Sullivan*

***Value Chain Analysis of the Intelligent Risk Management Market in China***

In the intelligent risk management market of China, the upstream participants of the value chain are data source providers, such as financial service providers, e-commerce platforms, telecommunication operators, and credit bureaus, which offer third-party data to enrich data diversity.

In the midstream, intelligent risk management solution providers carry out data cleaning and preprocessing to output structured data, and deliver credit risk assessments using advanced technologies.

The downstream clients include commercial banks, e-commerce platform affiliated finance companies, and licensed consumer finance companies. They provide internal information, such as borrowers' application materials, and engage intelligent risk management services providers to mitigate credit risks.

![](goodfaith_f1img6.jpg)

*Source: Frost & Sullivan*

***Market Drivers of Intelligent Risk Management Market in China***

The development of the intelligent risk management market in China is primarily driven by the following factors:

- *<u>Technology advancements in Artificial Intelligence, Cloud Computing, and other technologies</u>*

Intelligent risk management services providers have utilized technology advancements in Artificial Intelligence, Cloud Computing, and other technologies in recent years to meet different customized needs of clients. For example, cloud technology is used to store and manage the data of clients in a more secured and trusted way, and AI is used to streamline and optimize processes ranging from pre-approval assessment to overdue loans collection. This trend helps enhance the technical capabilities of market players and drive the growth of the market.

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- *<u>Emerging real-time credit assessment driven by increasingly digitalized lifestyle</u>*

The high penetration rate of mobile Internet and smart wireless digital devices in China has made various e-payment and point-of-sale financing possible for consumers in addition to traditional credit cards. However, these payment and financing possibilities would raise new challenges for real-time credit assessment, which intelligent technology could be adopted and effectively fulfill responsible and real-time credit assessment.

- *<u>Enhancing preference on independent credit assessment service</u>*

Traditionally, financial institutions in China spend plenty of time and resources by themselves on financial risk management in the course of their operation. Currently, the emerging intelligent risk management is providing effective independent credit assessment solutions for financial institutions and obtaining more preference from them as the technology could save their costs and enable them to re-focus on managing end-customer relationships.

***Market Trends of Intelligent Risk Management Market in China***

- *<u>Increasing integration of cross-sector data</u>*

With tremendous data generated from various sectors and industries, it is inevitable that personal data and public data will become increasingly integrated from different industries, such as telecommunication, e-commerce, healthcare, transportation, and education. Risk management models will considerably improve through a more complete understanding of customer profiles resulting from such integration of cross-sector data.

- *<u>Increasing market concentration</u>*

China has witnessed increasing and rigorous regulation on the big data and fintech fields. The leading and large players in the industry typically have better established internal regulation and compliance procedures, and are more likely to comply with the stringent regulatory requirements. Therefore, the tightening of industry regulation, in the long run, is relatively beneficial for the leading companies, and the market concentration will increase accordingly.

- *<u>Moving towards full life-cycle risk management</u>*

In intelligent risk management, some financial institutions overemphasize pre-loan risks and ignore the post-loan phase. However, the lack of risk management at any phase in the credit process will increase the operational risks. The full life-cycle credit supervision, incorporated with anti-fraud, pre-loan approval, and post-loan collection, monitors all stages in the credit process and creates synergy. Full life-cycle risk management will be the future trend to improve operational efficiency.

***Entry Barriers of Intelligent Risk Management Market in China***

- *<u>Regulation barrier</u>*

In order to strengthen the supervision of China's financial technology market, multiple policies and regulations have been published by the Government in the past few years. For instance, the Regulation on Financial Information Service Management published in 2018 specifies that financial information service providers should accurately indicate the source of financial information in the forms of text, image, video, and audio. For new entrants of the market, it would be difficult and costly to establish internal control manuals, policies, and operational processes and systems to meet and comply with all related regulations in a short period.

- *<u>Technology barrier</u>*

Intelligent risk management involves AI-powered algorithms, automatic real-time analytics, stream computing, and a number of other techniques. Only with a high level of mastery of these techniques can a services provider meet all kinds of customized needs of clients. Furthermore, with the rapid development of techniques and the wider application of machine learning in the financial industry, service providers have to keep enhancing their technical capabilities and keep improving their products, in order to keep up with the pace of the market, posing a barrier to new market entrants.

- *<u>Brand barrier</u>*

The reliability of products is one of the primary concerns of clients when selecting intelligent risk management service providers. Thus, high-profile and reputable services providers are more likely to win the favor of customers. For new entrants of the market, it requires not only techniques but also time to establish a good reputation in the industry, which would be a barrier for new market entrants.

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**Market Overview of Credit Loan Collection Management Industry in China**

***Introduction of Credit Loan Market in China***

The credit market refers to the marketplace through which financial institutions lend money to individual borrowers to fulfill their short-term and long-term financial needs. Most of the credit market products in China are credit loans. Specifically, credit loans refer to the loans granted based on the creditworthiness of the borrower without collateral requirements. Contingent on the financing purpose, credit loans can be categorized into multiple types such as consumption loans, auto loans, personal business operation loans and online microcredit. Contingent on the type of borrowers, loans can be categorized into corporate loans and retail loans. Corporate loans refer to the money lent to qualified corporates for their funding needs in commercial activities. Retail loans, smaller in size compared to corporate loans, are loans that are given to individuals to meet their personal needs.

From the perspective of corporate loans, small and micro enterprises are confronted with certain difficulties in acquiring loans, especially from commercial banks, due to their limited capabilities of credit evaluation and rigorous risk control. Nevertheless, such a situation will greatly improve with the wide applications of financial technology in the credit market and favorable policies implemented by the Chinese government. The aggregate outstanding principal balance of small and micro enterprise loans is approximately RMB35.5 trillion in 2020 and is projected to increase from approximately RMB39.1 trillion in 2021 to approximately RMB59.8 trillion in 2025, representing a CAGR of 12.5%.

![](goodfaith_f1img7.jpg)

Coupled with the stable growth of the macro economy and increasing consumer demands, personal credit in China has witnessed a rapid development from 2016 to 2020. The outstanding principal balance of personal credit increased from approximately RMB 35.2 trillion in 2016 to approximately RMB 63.3 trillion in 2020, representing a CAGR of 14.2%. Looking forward, given the parallel rise of small online consumer loan products, the outstanding balance of personal credit loans in China is expected to increase from approximately RMB 76.7 trillion in 2021 to approximately RMB 122.9 trillion in 2025, representing a CAGR of 12.9%.

![](goodfaith_f1img8.jpg)

*Source: Frost & Sullivan*

In terms of the accumulative number of credit cards issued, it increased from approximately 465.0 million in 2016 to 778.0 million in 2020 at a CAGR of 13.7%. Affected by the COVID-19 epidemic, offline marketing of credit card business was suspended during January 2020, which therefore slowed down the growth of credit card issuance. Nevertheless, the further penetration of credit cards is foreseeable due to the continuous consumption stimulation. By 2025, the number of credit cards issued is estimated to reach approximately 1,126.0 million.

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![](goodfaith_f1img9.jpg)

*Source: Frost & Sullivan*

***Introduction of Credit Loan Collection Management Market in China***

Credit loan collection refers to the receivables recovery aspect of credit loans during the post-loan period. The collection management phase focus on the follow-up of any delinquencies. Upon delinquency, services are provided until the loan is paid off, which services include using in-house resources to collect delinquencies, and in certain extreme circumstances, engaging third-party law firms and initiating judicial proceedings.

Depending on the length of the delinquency period, the account receivables are categorized into three types: primary, secondary and tertiary receivables, respectively representing M1-M2 receivables which are one to two months past due, M3-M12 receivables which are three to twelve months past due, and those over twelve months past due. The recovery rate of primary receivables ranges from 50% to 90%, while tertiary receivables demonstrate the lowest recovery rate of less than 1%. Since the commission rate positively correlates with the length of the delinquency period, to simultaneously reduce losses and lower collection costs, banks and other financial institutions generally outsource the credit loan collection to third-party agencies at the early collection stage.

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|:---|:---|:---|:---|:---|:---|
|  | **Primary** | **Primary** | **Secondary** | **Secondary** | **Tertiary** |
| Category | M1 | M2 | M3 | M4-M12 | Over M12 |
| Collection strategy | Internal strategies: SMS/phone call | Internal strategies: SMS/phone call | Internal strategies: SMS/phone call | Internal + External strategies: Phone call/onsite visit/ judicial proceedings | Internal + External strategies: Phone call/onsite visit/ judicial proceedings |
| Average recovery rate | 90% | 50% | 5% | 5% | Less than 1% |

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*Source: Frost & Sullivan*

***Value Chain of Credit Loan Collection Management Market in China***

From the perspective of the timeline of loans, the value chain of the credit loan market is composed of four phases: (1) capital sourcing, (2) credit assessment and approval, (3) loan monitoring, and (4) collection. In the upstream, capital is raised from commercial banks, e-commerce platforms, and consumer finance companies. The request for a credit loan will be then evaluated through multiple factors, including creditworthiness, size of debt burden, loan size, frequency of borrowing, length of commitment, and social and community considerations. After the loan is approved, the borrower's profiles will be monitored and updated periodically in accordance with the lender's credit policies.

In the collection segment of the value chain, the credit loan collection service providers aim to collect the overdue loan. Firstly, the records of repayments and the outstanding balance will be examined to evaluate the borrowers' repayment capabilities, and payment reminders and notices will be delivered subsequently. Thereafter, an initial contact via calls or texts will be established to estimate the borrowers' repayment willingness. The fourth step is to conduct the repayment negotiation, which typically includes onsite visits, engagement of law firms, and judicial proceedings if necessary.

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![](goodfaith_f1img10.jpg)

*Source: Frost & Sullivan*

***Market Size of Credit Loan Collection Management Market in China***

The rise of the credit loan market contributes to the rise of the market of credit loan collection management services in China. The market size of the credit loan collection management market in China increased from approximately RMB25.8 billion (approximately $4.0 billion) in 2016 to approximately RMB65.8 billion (approximately $10.2 billion) in 2020, at a CAGR of 26.4%.

Diversified application channels of the credit loan, especially the emerging online financing platforms, enable borrowers to acquire money with faster processes and less strict requirements, and the delinquency rate of these loans increases accordingly, thus enlarging the demand for credit loan collection services in China. The size of the credit loan collection management market is expected to grow at a CAGR of 12.0% from approximately RMB73.7 billion (approximately $11.4 billion) in 2021 to approximately RMB116.0 billion (approximately $17.9 billion) in 2025.

![](goodfaith_f1img11.jpg)

*Source: Frost & Sullivan*

***Market Drivers of Credit Loan Collection Management Market in China***

The development of the credit loan collection management market in China is primarily driven by the following factors:

- *<u>Shifting towards a consumption-driven economy</u>*

The annual household disposable income per capita in China increased from approximately RMB 23.8 thousand (approximately $3.72 thousand) in 2016 to approximately RMB 32.2 thousand (approximately $5.04 thousand) in 2020. Along with the rising disposable income, the consumption-driven economy will continually increase the demand for personal consumption in China, which further stimulates the demand for credit loan collection management services.

- *<u>Increase of outstanding balance of non-performing loans</u>*

With the prevalence of credit loans and the stimulation of consumption, the outstanding balance of non-performing loans (NPL) of banks in China increased from approximately RMB 2.2 trillion in 2016 to approximately RMB 3.5 trillion in 2020. The outstanding balance of NPL of commercial banks in China increased from approximately RMB 1.5 trillion in 2016 to approximately RMB 2.7 trillion in 2020 according to PBOC. The consumer loan collection management market in China has been facilitated by such an increase in NPL.

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- *<u>Proliferation of online consumer loans</u>*

With an ever-faster pace of data generation through mobile Internet such as e-commerce and social networks, financial institutions have invested heavily in big data technologies and facilitated technology advancements in the consumer finance market, such as workflow automation. Since a large number of credit loans have been originated through online financing platforms, more challenges and uncertainties have been posed to loan collection services. Therefore, demand for credit loan collection services in China will grow parallelly.

***Market Trends of Credit Loan Market in China***

- *<u>Increasing Penetration of Fintech</u>*

The large-scale Chinese credit market urges technological innovation to further improve efficiency, reduce systematic risks, and thus realize sustainable development. With an increasing number of fintech companies along with their intelligent solutions, the financial institutions in China are willingly embracing fintech and investing in fintech. The penetration of fintech in the credit market is expected to continually rise to automate the loan process in the foreseeable future.

- *<u>Development of Inclusive Finance</u>*

Financial needs from low-income individuals, small and micro enterprises, and the agricultural sector are underserved in the past few years partly because these customers usually are unable to provide credit data, have relatively weak financial strength, and seek smaller amount of loans. Unfortunately, traditional financial institutions have little incentive to serve them. However, as the Chinese government is encouraging the development of inclusive finance, financial institutions are expanding their business to the field of inclusive finance.

- *<u>Rising of Online Credit Market</u>*

Since digital lending can enhance consumer experience and reduce overhead costs, financial institutions are increasing their investments in online operation, including client acquisition, issuing loans, and credit evaluation via digital platforms. With the implementation of fintech and digitalization, the online credit market will develop sustainably.

***Entry Barriers of Credit Loan Collection Management Market in China***

- *<u>Compliance of the collection management process</u>*

Commercial banks and online consumer finance companies have adopted stringent requirements for credit loan collection management service providers based on their facilities, compliance, and business scales. These requirements are implemented to ensure the regulatory compliance of the loan collection management process. Any violation of industry-standard practices and regulations could taint financial institutions' reputations and raise their regulatory risks.

- *<u>Industry expertise and market know-how</u>*

Credit loan collection management companies are obligated to have solid market know-how to understand and provide value-added services. In particular, the existing market players are equipped typically with experienced teams to collect past-due loans through initial contacts, collaboration with third-party collection agencies, and engagement of third-party law firms.

- *<u>Long established relationships with financial institutions</u>*

Long-established business relationships with commercial banks and other financial institutions constitute a critical competitive advantage. These business relationships enable these service providers to source more deals because experienced service providers with solid records will be the first choice for financial institutions.

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**BUSINESS** 

**Our Mission** 

We are committed to providing our clients with efficient and customized pre-approval risk management and post-loan delinquent debt collection products and services in connection with their credit loan businesses, utilizing our proprietary technology infrastructure, innovative business model and extensive experience in credit loan risk management and delinquent debt collection.

**Overview** 

We offer customized pre-approval risk management and post-loan delinquent debt collection products and services to commercial banks and non-bank financial institutions in China in connection with credit loans. We have a national network of 16 operating centers and 3 administrative offices in over 11 cities across China, where we have also built a broad client base across more than 75 commercial banks and non-bank financial institutions. We are committed to providing products and services that address risk evaluation and solvency assessment during the pre-approval stage and credit loan debt collection during the delinquency stage.

Credit loans refer to the loans granted to borrowers based on the creditworthiness of the borrower without any collateral requirement. Based on different financing purposes, credit loans can be categorized into personal credit loans (including personal consumption loans, auto loans, personal business operation loans) and corporate credit loans. We mainly focus on personal credit loans for both of our pre-approval risk management and post-loan debt collection businesses, due to their increasing market demand. In particular, personal credit loans typically involve (i) small principal sums in greater quantities and (ii) standardized credit review processes. Thus, there is a need for banks and financial institutions to process such personal credit loans in bulk and automate the approval process, so as to save time and resources. Additionally, banks and financial institutions are more likely to engage third parties to collect delinquent debts under personal credit loans in an effort to spare their labor and financial resources. Our client base comprises only commercial banks and non-bank financial institutions, and does not include any peer-to-peer lenders.

The intelligent risk management industry and credit loan debt collection industry in China have been expanding in recent years. According to Frost & Sullivan, the market size of intelligent risk management services in 2020 reached approximately RMB7.8 billion (approximately $1.2 billion) and is expected to reach approximately RMB22.8 billion (approximately $3.5 billion) by 2025. Similarly, the market size of credit loan debt collection services in 2020 reached approximately RMB65.8 billion (approximately $10.2 billion) and is expected to reach approximately RMB116.0 billion (approximately $17.9 billion) by 2025. With the market sizes expanding, we believe we may have more opportunities to build a sustainable and scalable business with our ever-improving pre-approval and post-loan products and services. We endeavor to efficiently and effectively assist our clients with their pre-approval risk management and post-loan delinquent debt collection in connection with credit loans.

Our business is comprised of two segments: (i) the credit loan pre-approval stage: risk evaluation and solvency assessment products and services; and (ii) the credit loan post-loan stage: delinquent debt collection services. Currently, we are focused on providing our products and services to commercial banks, e-commerce platform affiliated finance companies, licensed consumer finance companies and other financial institutions in China which engage in the consumer credit loan business.

Before a credit loan is approved, our clients engage us to evaluate the risk of default and assess the solvency of a loan applicant. Our products and services in the pre-approval segment facilitate our clients' determinations on granting loans. Our clients are charged contingent monthly fees based on the number of verification records we process. During the post-loan stage, when a credit loan is in default, our clients engage us to collect the delinquent receivables. Unlike traditional asset management companies, our delinquent debt collection business follows a "light-asset strategy;" namely, we do not purchase the delinquent loans we collect, but only collect them on behalf of financial institution clients in exchange for commissions based on our collection success. The light-asset strategy reduces our cost of capital and cash flow requirements by avoiding debt acquisitions, while minimizing our exposure to potential bad debts. Because we do not purchase delinquent loans, we have not been, and could not be, required take an ownership interest in the finance receivables we service. In the pre-approval stage, we utilize our self-developed advanced technology, including artificial intelligence, proprietary technology systems and digital technology, to process and analyze client-provided encrypted and anonymized data to increase our work efficiency and result accuracy. In the post-loan stage, we utilize collection process software purchased from third parties to manage and control our work process. We believe that our technology infrastructure, as we enhance its sophistication, can continue to improve our performance and optimize our financial results.

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We have experienced substantial growth since the inception of our PRC operating entities. The numbers of our clients were 53, 68 and 75 for the fiscal years ended December 31, 2019, 2020 and 2021, respectively, representing growth of approximately 28% and 10% from the previous periods, respectively. The number of our clients was 64 for the six months ended June 30, 2022, representing a decrease of approximately 2% from the same period in 2021. For the fiscal year ended December 31, 2021, our three largest clients accounted for 49%, 15%, and 13% of our total revenue, respectively. For the six months ended June 30, 2022, our three largest clients accounted for 79%, 7%, and 3% of our total revenue, respectively. In our pre-approval segment, as of December 31, 2019, 2020 and 2021, we processed approximately 75,415,000, 52,900,000, and 63,700,000 verification records, respectively, representing a decrease of approximately 30% and an increase of 20% in the number of verification records processed from the previous periods, respectively. The decrease in 2020 was mainly due to the COVID-19 pandemic. As of June 30, 2022, we processed approximately 28,700,000 verification records, representing an increase of 4% in the number of verification records processed from the same period in 2021. In our post-loan segment, as of December 31, 2019, 2020 and 2021, the total amount of delinquent credit loan debt we successfully collected was approximately RMB0.32 billion (approximately $0.05 billion), RMB5.27 billion (approximately $0.76 billion) and RMB11.03 billion (approximately $1.7 billion), representing significant growth of approximately 1534% and 109% from the previous periods, respectively. As of June 30, 2022, the total amount of delinquent credit loan debt we successfully collected was approximately RMB7.4 billion (approximately $1.1 billion), representing growth of 85% from the same period in 2021. The total amount of delinquent credit loan debt we were engaged to collect, as of December 31, 2019, 2020 and 2021, was approximately RMB11.0 billion (approximately $1.6 billion), RMB19.6 billion (approximately $2.8 billion) and RMB33.9 billion (approximately $5.2 billion), representing growth of approximately 79% and 73% from the previous periods, respectively. The total amount of delinquent credit loan debt we were engaged to collect, as of June 30, 2022, was RMB24.7 billion (approximately $3.8 billion), representing significant growth of approximately 81% from the same period in 2021.The monthly average amount of delinquent credit loan debt collected per each collection specialist, as of December 31, 2019, 2020 and 2021 was approximately RMB124,000 (approximately $17,966), RMB668,000 (approximately $96,807) and RMB1,329,000 (approximately $205,969), representing significant growth of approximately 439% and 99% from the previous periods, respectively. The monthly average amount of delinquent credit loan debt collected per each collection specialist, as of June 30, 2022, was approximately RMB1,277,000 (approximately $197,138), representing an increase of 32% from the same period in 2021.

As a result of our expansion and growth, our total revenue amounted to $20,653,211 for the fiscal year ended December 31, 2021, representing growth of approximately 29.1% compared to the fiscal year ended December 31, 2020. Our total revenue amounted to $24,560,502 for the six months ended June 30, 2022, representing significant growth of approximately 182.6% from the same period in 2021. Revenue derived from pre-approval risk management services and post-loan delinquent debt collection services accounted for approximately 4.5% and 95.5%, respectively, of our total revenue for the six months ended June 30, 2022; 17.2% and 82.8%, respectively, of our total revenue for the fiscal year ended December 31, 2021; and 15.7% and 84.3%, respectively, of our total revenue for the fiscal year ended December 31, 2020. Our gross profit amounted to $3,611,539 for the fiscal year ended December 31, 2021, representing a decrease of approximately 30.7% compared to the fiscal year ended December 31, 2020. Our gross profit amounted to $5,339,221 for the six months ended June 30, 2022, representing a significant increase of approximately 292.6% compared to the same period in 2021. Our net income amounted to $403,076 for the fiscal year ended December 31, 2021, representing a decrease of approximately 68.4% compared to the fiscal year ended December 31, 2020. The decrease in net income was primarily attributable to (i) an increase in cost of revenue by approximately 58.0% in 2021, resulting from (a) an increase in salaries and benefits, (b) an increase in management service costs for operating centers, and (c) an increase in data service costs; and (ii) an increase in total other expense by 139.6%, primarily driven by an increase in net expense in 2021 for penalties and interest of under-declared income taxes that were recognized as components of the non-operating expenses. Our net income amounted to $3,165,832 for the six months ended June 30, 2022, representing a significant increase of approximately 17,528.9% compared to the same period in 2021.

By leveraging our technological advancement, innovative approach, and experience, we aim to identify potential risks of credit loan applicants, thereby saving our clients the burden of delinquent debt collection, and increasing their delinquent debt recovery rates. We believe that our performance and success have been evidenced by our increasing client base and financial results. It is our plan to continue to devote our efforts to improving our products and services in order to better service our clients and their expanding needs. In the future, we hope to exploit the synergy between pre-loan and post-loan services, and offer financial institutions one-stop services for risk management and debt collection, which may reduce bank bad debt losses and improve post-loan recovery rates by screening out high-risk applicants and improving the efficiency of banks and other institutions in collecting delinquent loans.

**Our Competitive Advantages** 

We believe that the following competitive strengths contribute to our success and differentiate us from our competitors.

***Sophisticated and Dynamic Risk Management Capability and Competitive Delinquent Debt Collection Ability with Proven Performance and Strong Relationships with Major Clients***

Our risk evaluation and solvency assessment engine evaluates both contract capacity, which we define as the probability of delinquency when the first loan payment is due, and solvency of applicants, by automatically generating personalized and instant reports to assist our clients with their decisions. Our risk evaluation and solvency assessment engine is constantly evolving with increasing amount of transactional, behavioral and demographic data processed on our platform, which enables us to generate reports within seconds without manual intervention, and to swiftly adapt to new situations as they arise from time to time.

We provide nation-wide delinquent credit loan debt collection services to many renowned commercial banks and financial institutions in China. For the fiscal year ended December 31, 2021, we serviced three of the top 10 commercial banks, as measured by outstanding balances of credit loans originated by such banks in China in 2020 for the collection of credit loan receivables. In addition, we collaborate with reputable online consumer finance companies for the collection of online receivables. Most of these online consumer finance companies are financial arms of certain Chinese conglomerates and some of the largest internet giants. For the fiscal year ended December 31, 2021, we serviced two of the top 10 online consumer finance companies, as measured by outstanding balance of credit loan in China in 2021 for the collection of credit loan receivables. Due to the nature of the financial industry, in order to avoid any violation of industry standard practices and regulations, our clients, particularly commercial banks, often apply rigorous criteria when they select their partners regarding delinquent credit loan debt collection. We are shortlisted by three PRC commercial banks and online consumer finance companies as their preferred service provider and we are their trusted business partner in delinquent credit loan debt collection.

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We believe we build and maintain our client relationships with our business reputation, the quality of our products and services, work efficiency, industry experience, scale of business operation, geographic reach, infrastructure, and commitment to compliance and data security.

***A Portfolio of Integrated, Complementary Products and Services to Optimize Our Results***

According to Frost & Sullivan, the aggregate outstanding principal balance of personal credit has reached approximately RMB 63.3 trillion in 2020, and it is expected to increase to approximately RMB 122.9 trillion in 2025, given the rise of small online consumer loan products. Along with the increasing outstanding principal balances sustained in personal credit lending, the delinquency rate of these loans increases accordingly. We understand that delinquent loans could bring disadvantages to banks and financial institutions, such as reduced income, unrecoverable principal and reduced cash flow, and it is also a negative indicator to their performance and operations. Our operations are dedicated to providing quality services to relieve the stress of financial institutions in recovering delinquent credit loans, and providing customized intelligent risk management products and services during the pre-approval stage. By offering risk evaluation and solvency assessment products and services in the credit loan application process, we believe the occurrence of loan delinquency could be significantly decreased. We are committed to providing products and services that address risk evaluation and solvency assessment during the pre-approval stage and credit loan debt collection during the delinquency stage. We believe that the combination of the various products and services we offer provides us with a competitive advantage in the industry.

***Proprietary IT Infrastructure and Strong Technology Team***

Our scalable and historically reliable pre-approval technology infrastructure incorporates big data analytics and artificial intelligence, which are central to every aspect of our pre-approval operations and solutions. The proprietary risk evaluation and solvency assessment engine we built offers various products utilizing advanced algorithms, including random forest regression, or "Random Forest Regression," K-Nearest Neighbor, or "KNN," principal component analysis method, or "PCA," and k-means algorithm, or "K-means," which increase accuracy of our results. In particular, Random Forest Regression is an ensemble method, which can generate several estimation results at the first step, then compare the result list generated from step one, and produce the best result (which result appears most frequently). The KNN model computes and compares the differences between each pair of two samples, and generates a rule for estimating the result. The training process for the KNN model is faster and more efficient than other machine learning methods. The PCA method is used to reduce the data dimensions and eliminate irrelevant information, resulting in more accurate and efficient estimation models. The K-means method is used for data clustering, which separates analysis objects into different clusters automatically and helps users to understand the analysis objects. These machine learning methods can be combined to increase prediction accuracy and computing efficiency. Additionally, our advanced risk evaluation and solvency assessment engine is an advanced engine based on machine learning and artificial intelligence. In order to more effectively analyze applicant data, assess risks and enhance our product and service offerings, we, through Beiming Technology, cooperate with the Research Center on Virtual Economy & Data Science of Chinese Academy of Sciences in China (the "Research Center") to establish a big data joint laboratory to conduct research in certain areas, including a Deep Learning algorithm (a subset of a Machine Learning algorithm that uses multiple layers of neural networks to perform in processing data and computations on a large amount of data), distributed computing (to calculate data on multiple servers simultaneously to get variables) and storage technologies (to store data in multiple servers in order to increase calculation speed by computing simultaneously). The developments through the Joint Laboratory (as defined below) have been applied to improve our model scoring products and services. See "*Our Business Partners - Research and Development Partner.*"

We devote significant effort to standardize and improve our collection process, in order to optimize our collection results and efficiency through utilizing our collection operating portals. Our collection operating portals are designed to (i) address all of our client's security and safety requirements, (ii) process large volumes of debtor and receivable information, (iii) ensure compliance and information security, and (iv) be scalable to support the expansion of our business operations. With these portals, we are able to conduct delinquent debt collection practices efficiently and effectively.

***Visionary and Experienced Leadership Backed by A Strong Team of Talent***

Our management team's vision, extensive and diverse financial industry experience and rich technological expertise are critical to our success.

Mr. Xu Dai, the chairman of our board of directors, has nearly 40 years of experience in the financial industry and broad connections within such industry. He is currently a core member of the IC Card Engineering Project (Hainan) Research and Development Team of the Modern Payment System of People's Bank of China. Prior to joining our Company, he worked in multiple state-owned banks and joint-stock banks in China and served as the branch bank manager at the Shanghai branch of China Everbright Bank Co., Ltd.

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Mr. Xiaowei Wang, our chief executive officer, has 13 years of experience in the post-loan management industry. He previously served as the manager of Credit Card Debt Collection Department at Shenzhen Development Bank and the general manager at the Shenzhen Branch of Ping'an Comprehensive Financial Services Co., Ltd.

Mr. Yulin Dong, our chief financial officer, is a member of the Association of Chartered Certified Accountants. He is a seasoned accountant with years of experience working for multiple domestic listed companies. He served as a senior accountant at Ernst & Young Hua Ming CPA LLP and as a deputy director of the Investment M&A Department at Shanghai Jiafu Asset Management Co., Ltd. Mr. Dong received a master's degree in Accounting & Finance from the University of Exeter.

***Advanced Know-How and Compliance-Oriented Business Practice***

In order to provide our clients with customized solutions, we use our proprietary analytical processes, coupled with our experience derived from the large number of collection cases we have serviced from 2015 to 2022. To grow our presence in the delinquent credit loan debt collection market in China, we have consistently dedicated resources to help our employees acquire specific knowledge to maintain and enhance our service quality and reputation. We provide multi-stage training and mentorship programs for our newly recruited employees and continuing education programs for experienced employees. We also employ a performance monitoring system to monitor our collection specialists' activities and set minimum performance standards for them. This system assigns a performance score to each specialist based on a set of key performance indicators, or KPIs, which we use to evaluate service quality, collection efficiency, and compliance with relevant laws, regulations and internal procedures. This monitoring system is also linked to our compensation structure, which provides our employees with an open and transparent compensation system that, in addition to base salary, rewards them based on their performance.

We have also been operating in compliance with relevant laws and regulations and our clients' compliance policies. Beiming Technology has obtained certifications of ISO27001 Information Security Management System and ISO27701 Privacy Information Management System, while Shenzhen Xindesheng has obtained certifications of ISO9001 Quality Management System and ISO27001 Information Security Management System, both of which are in compliance with relevant standards of the Information Safety Management System. See "*Privacy Protection and Information Security*." We developed an Employee Code of Conduct and a Quality Assurance Management Plan, and we require all our employees to strictly comply with internal compliance policies and relevant laws and regulations. In addition, we have established separate departments for quality inspection, supervision, security, and legal compliance to control all phases of the risk evaluation and solvency assessment and delinquent credit loan debt collection process. As of the date of this prospectus, we have not been involved in any material litigation regarding our risk evaluation and solvency assessment and delinquent credit loan debt collection services.

***Innovative Business Model Leveraging Business Development with A Light-Asset Strategy***

Although the majority of our net revenue is derived from our delinquent credit loan debt collection segment, we differentiate ourselves from an asset management company, or an "AMC." One of the main differences between us and an AMC is that we do not purchase delinquent loans. Traditional AMCs acquire delinquent loans before they dispose or restructure them, in order to generate revenue. We do not purchase any of the delinquent loans for which we assist with delinquent debt collection. Instead, we collect commissions from our clients based on the amount of delinquent loans we successfully collect. We believe this business model is best suited to support our current business, in that, on the one hand, it reduces our cost of capital and the need of cash flow by avoiding such acquisitions, and increases the amount of working capital available to be deployed for other purposes, such as information technology development and research; on the other hand, it minimizes our risks in the acquisition of potential bad debts.

**Our Growth Strategies** 

Our mission is to provide our clients with efficient and customized risk management and delinquent debt collection products and services in connection with credit loans. We plan to pursue the following strategies to achieve this mission:

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***Expand Our Client Base and Enhance Our Brand Recognition***

We seek to expand our client base and increase our penetration in China's credit loan intelligent risk management market and delinquent credit loan debt collection market by offering quality customized products and services, adding operating centers in new locations, and implementing targeted marketing. We are looking into opportunities to expand our geographic reach. With additional locations in new regions, we expect to establish more business relationships with new clients in such regions. Additionally, we expect to further our cooperation relationships with our existing clients who also have business in the new regions. We will also continuously optimize our client acquisition channels by deploying marketing campaigns and initiatives to reach a broader client audience. For example, Notice on Launching the Pilot Work for the Transfer of Non-Performing Loans issued by China Banking and Insurance Regulatory Commission in PRC became effective on January 7, 2021. Since the aforementioned regulations became effective, there have been fierce competitions among AMCs on acquiring delinquent loans from commercial banks. In anticipation of the expansion of delinquent loan acquisition as a potential opportunity for our business, we started exploring partnership opportunities through negotiations with some AMCs. We expect to form cooperation relationships with some AMCs to assist them with delinquent loan collection, although there is no guarantee that we will be able to do so. We believe, with our expertise and experience in the delinquent debt collection industry, we are in a good position to capture such opportunities to further expand our business into the consumer non-performing asset management markets. As our client base grows, we expect to be able to access and analyze more information from our existing and new clients, which could enrich our professional experience, and ultimately could improve our product and service quality and client satisfaction, and help us in innovating new and improved product and services tailored to our clients.

Our goal is to become a national service provider in the areas of pre-approval risk management and post-loan debt collection within three years, starting in 2023. To achieve this goal, we expect selling expenses to continue to increase as we expand our client base and acquire new businesses. By 2025, we intend to set aside 10% of our revenue for selling expenses. The funds are expected to come from shareholders' investments and capital market financing as well as cash inflows from ongoing operations. We may face challenges and difficulties in client development due to: (i) fluctuations in market demand, especially the post-loan debt collection market; (ii) uncertainties about the adverse effects of potential financial regulatory policies on pre-approval risk management and post-loan debt collection; and (iii) uncertainties as to the customer satisfaction with existing services.

***Increase Investment to Improve Our Information Technology and Data Analytic Capabilities.***

Information technology is a key driver of innovation in the financing industry. We intend to focus on improving our technology framework to be more efficient and scalable to prepare us for future business growth. We expect to continue to invest in data and information technology and strive to strengthen our data analytics and technology capabilities and upgrade our IT system for artificial intelligence compatibility and functionality. We believe that artificial intelligence will allow us to optimize work productivity and efficiency, customize our products, services and solutions, further automate various components of our businesses, and ultimately achieve greater client satisfaction and improve our overall financial results. We plan to continue to upgrade and fine-tune our analysis models and algorithm based on digital technologies.

We are developing more tools to supplement our solutions and attract and retain business. We plan to continue to develop and provide more innovative solutions through our research and development, or "R&D", team. We have employees within the R&D team working on artificial intelligence, data source assessments and other projects of possible application to our business. We also plan to invest significantly in strengthening our data analytics capabilities and the sophistication and reliability of our technology system through both in-house research and development and strategic collaborations. For example, in order to more effectively analyze applicant data, assess risks and enhance our product and service offerings, we, through Beiming Technology, cooperate with the Research Center to establish a big data joint laboratory to conduct research in certain areas, including a Deep Learning algorithm and distributed computing and storage technologies. Additionally, we hired Mr. Guangju Zhou, an fintech expert with 15 years of experience in credit risk control as our chief risk control officer in 2021. Mr. Zhou will dedicate his efforts to strengthen our R&D capacities and data analytics capabilities. In addition, we plan to recruit more talent with data and modeling expertise to enhance our overall research and development capabilities. We also hope to continue both in-house development and external acquisition of technology to better utilize our technical know-how in our risk management segment to provide better products, services and results.

We plan to continuously invest in technology starting in 2023 and to explore a solution that offers one-stop services for pre-approval risk management and post-loan debt collection services to large institutions in China. Our technical team needs to be strengthened and our hardware needs to be upgraded in order to achieve this goal. Consequently, we expect our spending in technology development to continue to grow. In 2023-2025, we expect to spend approximately $5 million on technology research, product development, and equipment upgrades. Funds are expected to be generated from cash inflows from operations, bank borrowings, shareholder contributions, and capital market financing. We may face difficulties and uncertainties in technology development, primarily driven by: (i) the effectiveness of the developed products; (ii) whether our technology updates can keep up with the rapid changes in market demand; and (iii) how well our innovative products are accepted by our customers.

***Selectively Pursue Strategic Investments and Acquisitions.***

To expand our business and market share, promote our development, and increase the number and loyalty of our clients, we intend to, at reasonable and proper prices, pursue strategic investments and acquisitions in China that are complementary and/or in furtherance to our business and operations when suitable opportunities arise. This may include opportunities to diversify our product and service offerings and strengthen our technology infrastructure and data analytics capabilities. Starting from 2023, we plan to spend approximately $250,000 to establish five new operation centers for our post-loan debt collection business over a period of two years. Specifically, the estimated cost of each operation center is $50,000, including: (i) $8,500 for rent and deposits; (ii) $5,500 for decoration; (iii) $8,500 for network equipment installation; (iv) $7,500 for office equipment and furniture; and (v) $20,000 for employee salaries and training. The new operation centers will be funded by cash flow generated by our operations. For the pre-approval risk management business, we plan to acquire competitive technology through mergers and acquisitions after a thorough evaluation of such technology, although we do not have a target yet. The funds will be raised through bank borrowings, shareholder contributions, and capital market financing. In this regard, we expect to reserve 30% of the IPO proceeds for future strategic investments or mergers and acquisitions. In our potential investments or mergers and acquisitions, we may face challenges and difficulties, primarily due to uncertainties regarding (i) the willingness of a target company to cooperate; (ii) whether we have sufficient capital reserves; and (iii) the legal risks associated with mergers and acquisitions.

***Continue to Recruit and Retain Talent to Grow and Maintain Our Team***

As of December 31, 2022, we had approximately 130 full-time employed collection specialists and 600 outsourced collection specialists. As we consider this team one of the most valuable elements of our business and development, we plan to continue to place considerable focus on attracting, training, retaining and motivating our team of collection specialists. We intend to recruit and hire more senior employees with extensive debt-collection experience through social recruitment. As to our existing employees, we intend to nurture, retain and motivate them by continuing to provide multi-stage training and mentorship programs for our newly recruited collection specialists and continuing education programs for experienced collection specialists. We also offer ample opportunities of upward mobility to our collection specialists, including incentive bonuses and a fast promotion track based on their performance. We offer employees competitive salaries, performance-based cash bonuses and other incentives. We believe our ability to hire, develop and retain a strong collection specialist team is critical to our continued growth and profitability, and creates a strong competitive advantage. Starting from 2023, we plan to add five new operation centers and approximately 1,000 debt collection specialists by 2025. Consequently, we expect our salary and wage costs to rise by more than $20 million per year during the period from 2024 to 2025. The funds are projected to come from shareholders' investments and capital market financing as well as cash inflows from ongoing operations. We may face challenges and difficulties primarily driven by (i) whether our operating results will grow as anticipated; (ii) the stability of our business personnel system; and (iii) the impact of regulatory policies and market changes on our Company.

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**Our Products and Services** 

Credit loans refer to the loans granted to borrowers based on the creditworthiness of the borrower without any collateral requirement. Based on the different financing purposes, credit loans can be categorized into multiple types, such as consumption loans, auto loans, personal business operation loans and online microcredit. From the perspective of collateral, loans can be divided into credit loans and collateral loans. Specifically, credit loans refer to the loans granted based on the creditworthiness of the borrower without any collateral requirement, while collateral loans refer to the loans secured by some forms of collateral. We mainly focus on personal credit loans, due to their increasing market demand. In particular, personal credit loans usually involve small principal amounts, but are often greater in quantity, due to higher demand. This increases the demand for automated processing on a large scale in the pre-approval stage. Additionally, banks and financial institutions are more likely to engage third parties to collect delinquent debts from personal credit loans to spare their labor and financial resources.

As of the date of this prospectus, our focus has been on providing our products and services to commercial banks, e-commerce platform affiliated finance companies, licensed consumer finance companies and other financial institutions in China who engage in the personal credit loan business.

We offer our solutions in connection with credit loans in two segments: (1) the credit loan pre-approval stage: risk evaluation and solvency assessment products and services; and (2) the credit loan post-loan stage: delinquent debt collection services.

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***Risk Evaluation and Solvency Assessment Products and Services - Credit Loan Pre-approval Stage***

During the credit loan pre-approval stage, we utilize our advanced technology, including artificial intelligence, proprietary technology system and digital technology, to offer risk evaluation and solvency assessment products and services to our clients. Our products and services under this segment can facilitate our clients' decision-making in connection with approving and granting credit loans to their applicants, which further contributes to their risk management systems. Specifically, through evaluating the applicants' information, we are able to identify applicants with high risks of delinquency and can alert our clients accordingly, which usually leads to rejection of loan application directly. Further, we conduct evaluation on the solvency of the loan applicants. The results may be used to assist our clients with their determinations on loan amounts to be granted to the applicants, in order to reduce the scale and the risk of loan delinquency. In the process of determining and granting credit loans, other than our reports, our clients will also consider other factors and resources they deem necessary and important. Therefore, our assessment and evaluation reports, if being used to facilitate the determination of loan approval, only serve as supplement sources in a client's determination process. Depending on the needs of different entities, our clients may also use our products and services for other purposes as they see fit.

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For the six months ended June 30, 2022 and for the fiscal years ended December 31, 2021 and 2020, we generated approximately $1,115,568, $3,557,857, and $2,516,756 in revenue, respectively, from our products and services provided during the credit loan pre-approval stage, which contributed to approximately 4.5%, 17.2%, and 15.7%, respectively, of our revenue for such period and fiscal years. As of June 30, 2022, we processed approximately 28,700,000 verification records, representing an increase of approximately 4% in the number of verification records processed from the same period in 2021. As of December 31, 2021, 2020, and 2019, we processed approximately 63,700,000, 52,900,000, and 75,415,000 verification records, respectively, representing an increase of 20% and a decrease of 30% in the number of verification records processed from the previous periods, respectively. The decrease in 2020 was mainly due to the COVID-19 pandemic.

*Our Products and Services for Risk Evaluation and Solvency Assessment*

In order to depict a comprehensive profile of a loan applicant to facilitate our clients, we design and offer a series of products and services to address different perspectives. We are able to provide customized combinations and configurations of these products and services to cater to the specific needs of different clients. Other than the existing products and services, our clients may also engage us to develop tailored products and services on a case-by-case basis from time to time. Our products and services for risk evaluation and solvency assessment can be applied to personal credit loans of any amount. Most of our clients utilize our products and services on their personal credit loan products ranging from $100 to $10,000.

The following chart sets out the existing products and services provided by us for risk evaluation and solvency assessment.

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Our products and services for the credit loan pre-approval stage are classified in two categories: a) model scoring; and b) basic verification. Model scoring products and services are provided through our own risk evaluation and solvency assessment engine while basic verification products and services are provided with the cooperation of third parties.

**Model Scoring:**

Each model scoring product is used for a different scenario and purpose.

*1. Contractual Capacity Scoring* 

Through a contractual capacity scoring model, or the "Contractual Capacity Scoring," created utilizing the Random Forest Regression algorithm, we process anonymous application information, collected and provided by our clients such as banks and financial institutions through a secure and encrypted transmission to our Contractual Capacity Scoring system, to calculate each applicant's probability of delinquency when the first loan payment is due. Applicants with high probability of delinquency, which is determined by the score of the applicant's application, when the first payment is due will be identified as an applicant with no or low contractual capacity. With a report from the contractual capacity system, our clients are able to evaluate the risk of no or low contractual capacity in such application and determine on the application result.

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*2. Pre-approval Risk Warning Scoring*

Through a pre-approval risk warning scoring model, or the "Pre-approval Risk Warning Scoring," created utilizing the Random Forest Regression, we process anonymous application information, collected and provided by our clients through a secure and encrypted transmission to our Pre-approval Risk Warning Scoring system, to calculate each applicant's probability of being delinquent for more than thirty (30) days. Applicants with high probability of being delinquent for more than thirty (30) days will be identified as an applicant with risks. With a report from the Pre-approval Risk Warning Scoring system, our clients are able to evaluate the risks of loans being delinquent for more than thirty (30) days and also make strategic risk management arrangements and decisions regarding the applications.

*3. High-risk Client Group Identification*

Through a high-risk client group identification model, or the "High-risk Client Group Identification," created utilizing the Random Forest Regression, we process anonymous application information, collected and provided by our clients through a secure and encrypted transmission to our High-risk Client Group Identification system, to calculate each applicant's probability of being delinquent for more than thirty (90) days. Applicants with high probability of being delinquent for more than thirty (90) days will be identified as a high-risk applicant with a risk of insolvency. With a report from the High-risk Client Group Identification system, our clients are able to identify the applicants with a delinquency rate of 10% or higher, evaluate the risk of loan applications and also make a determination on the application results.

*4. Customer Portrait*

Through a customer portrait model, or the "Customer Portrait," created utilizing the PCA and K-means, we process anonymous application information, collected and provided by our clients through a secure and encrypted transmission to our Customer Portrait system, to depict a financial portrait of each applicant. With a Customer Portrait, our clients are able to design strategies to manage their existing client relationships or conduct marketing activities.

**Basic Verification**

We cooperate with five information verification service providers to provide basic verification services to our clients. With the resources and software from our information verification service providers, we provide the following services: (i) *Persons of Concern Scoring*, which involves obtaining the scores indicating the default likelihood of applicants through searches based on their names and identification numbers such that our clients can identify persons of concern with high risk of default; (ii) *Vehicle Information Checking,* which verifies the applicants' vehicle information; (iii) *Portrait Comparison,* which verifies the applicants' faces, names and identification card information; (iv) *Abbreviated Information Verification*, which verifies the applicants' names and identification card numbers; and (v) *Identify Verification,* which verifies the applicants' names, identification card information and their effective dates.

*Risk Evaluation and Solvency Assessment Process*

Step 1: Engagement

Approximately 95% of the engagements we obtain for our pre-approval risk evaluation and solvency assessment products and services from our clients are through a bidding process while the remaining 5% are through direct engagement.

Before the engagement, we normally provide our potential clients with the opportunity to test our products and they will internally analyze the accuracy of the results of our products to ensure satisfaction.

When an engagement agreement is entered into, our technical team will assist with interface development to connect our system with our clients' system to enable data transfer.

Step 2: Collect applicants' information

Loan applicants provide personal information to the banks or financial institutions in connection with loan application through various channels, such as through filling in application forms over-the-counter or online or through the client's mobile apps. Banks or financial institutions then encrypt, anonymize, and transfer the applicants' personal information relating to the loan process and risk evaluation to our system for further processing.

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Step 3: Basic Verification

If a client has purchased any of the basic verification products, the aforementioned applicants' information collected by the client, including the applicants' personal information relating to the loan process and risk evaluation, will be encrypted and transferred, though our Company, to the systems provided by our information verification service providers. Such systems will process the data received and generate reports accordingly to provide to the banks or the financial institutions.

Step 4: Contractual Capacity Scoring

a. Banks or financial institutions encrypt, anonymize, and transfer certain applicants' personal information relating to the loan process and risk evaluation to our Contractual Capacity Scoring system.

b. Contractual Capacity Scoring system will process the data received and generate reports accordingly to provide to the banks or the financial institutions. The scores in the reports range from 300 to 900 and the probability of delinquency increases as the scores decrease.

c. Banks or the financial institutions receive reports and may determine whether to reject the application at once or to enter into the next application process based on the reports.

Step 5: Pre-approval Risk Warning Scoring

a. After Step 3, if the banks or the financial institutions wish to continue the loan application process further, they will further transfer the applicants' personal information relating to the loan process and risk evaluation in an encrypted and anonymous form to our Pre-approval Risk Warning Scoring system.

b. Pre-approval Risk Warning Scoring system will process the data received and generate reports accordingly to provide to the banks or the financial institutions. The scores in the reports range from 100 to 700. Pursuant to the score, our clients can identify the level of risk of each applicant, such as extremely high, very high, high or no risk.

c. Banks or the financial institutions receive reports and may further process the loan application based on the reports, their own internal risk management policies and their internal loan management procedures.

Step 6: High-risk Client Group Identification (if purchased)

a. Banks or the financial institutions which purchase our High-risk Client Group Identification product will transfer the applicants' personal information relating to the loan process and risk evaluation in an encrypted and anonymous form to our High-risk Client Group Identification system.

b. High-risk Client Group Identification system will process the data received and generate reports accordingly to provide to the banks or the financial institutions. A report will indicate 1 or 0, which identifies whether an applicant is among the high-risk client group or not.

c. Banks or the financial institutions receive reports and may further process the loan application based on the reports, their own internal risk management policies and their internal loan management procedures.

Step 7: Customer Portrait (if purchased)

a. Banks or the financial institutions that purchase our Customer Portrait product will transfer the applicants' personal information relating to the loan process and risk evaluation in an encrypted and anonymous form to our Customer Portrait system.

b. Customer Portrait system will process the data received and depict financial portraits of applicants accordingly to provide to the banks or the financial institutions. A report will provide certain information about an applicant, including the applicant's risk level, solvency and consumption and financial habits through different labels.

c. Banks or the financial institutions receive portraits and may design strategies to manage their existing client relationships or conduct marketing activities.

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The above is the standard process for our existing products and services. If our clients engage us to develop tailored products and services, we start our development process based on the needs and requirements of the clients after engagement agreements are entered into.

*Quality Control and Assurance*

We believe that quality assurance is critical to the success of our business. We prioritize our clients' priorities, which are accuracy, timeliness and stability, and we have designed and adopted the following methods in our quality assurance process:

a. *Maintain System Stability*. Our data storage, web application and other applications operate through cluster operation with a monitor system, which ensures that our information technology system operates continuously 24/7. We have five (5) servers in our cluster. If one server experiences technical difficulties or outage, the cluster will immediately and automatically separate such server and switch to the other servers to ensure uninterrupted operation.

b. *Improve Accuracy.* Our pre-approval artificial intelligent system utilizes machine learning technologies and can adapt to new changes immediately and continuously enhance and update itself to be more tailored to specific tasks and different business scenarios, in order to deliver more up-to-date results. See "*Our Technology Infrastructure and Technology-Our Pre-approval and Post-Loan Systems-Pre-Approval Artificial Intelligent System*."

*Compliance*

We believe our core competence lies in our ability to provide quality service and compliance with applicable laws and regulations. We have undertaken the following measures to ensure compliance.

Our Compliance Policies

We have designed and implemented the following compliance policies and our administration departments and information technology department will conduct period inspections to ensure compliance:

● *Compliance Policies and Requirements Between the Company and the Clients.* Our Compliance Policies and Requirements Between the Company and the Clients set forth certain policies and procedures applicable to the company and its clients to maintain compliance status through the whole service process. In particular, such policies and requirements emphasize the importance of keeping proprietary information confidential and conducting due diligence on both parties' qualifications and any authorizations obtained, and have guidelines that prohibit unauthorized use of information or the Company's products and services.

● *Internal Compliance Management System.* The goals embodied in our Internal Compliance Management System are to strengthen our compliance management, standardize the compliance procedures and ensure compliance with government and internal regulations to promote the steady and healthy development of the Company. The system sets forth our compliance structure, our principles of compliance management, the responsible parties and the responsibilities of different parties in connection with compliance management.

Compliance Structure

The general manager of Beiming Technology also serves as the Company's compliance supervisor. A compliance specialist is responsible for reviewing and verifying our potential clients' materials and the business materials submitted by our sales department pursuant to our compliance policies. Such compliance specialist reports to the compliance supervisor and submits any pre-approved documents to the compliance supervisor for further review and final approval.

Complaint Management

Our clients may file complaints against us in respect of our products or services, with or without merit, from time to time. We have maintained a low complaint rate. Our complaint rate was 0% for the six months ended June 30, 2022 and the fiscal years ended December 31, 2021 and 2020.

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We take complaints and allegations seriously and have developed and adopted a systematic policy to address and process complaints. Our deputy general manager is responsible for processing general complaints while our general manager is responsible for all complaints. We also have a compliance department which handles complaints on a daily basis.

*Our Business Partners* 

<u>Verification Partners</u>

To diversify and increase the categories of our pre-approval product and services and expand our business coverage, we, through Beiming Technology, have partnered with three information verification service providers (Suppliers E, F, and G, collectively, the "Third-Party Verification Partners") in China to provide our basic verification products and services. For this purpose, we have entered into standard service agreements with our Third-Party Verification Partners, pursuant to which we are obligated to pay service fees to them after they have satisfied their performance obligations. Specifically, on January 25, 2021, we entered into a data service cooperative agreement with Supplier E for its watchlist scoring service, which is used in our *Persons of Concern Scoring* service. The watchlist scoring service refers to a data service utilized to determine a loan applicant's default risk. Pursuant to the agreement, which has a term from January 25, 2021 to January 25, 2023, we are required to pay service fees based on the amount of data to verify and certain fixed annual fees to Supplier E, and Supplier E is required to verify the legally authorized information of the person to be verified and provide feedback on the verification results using its own resources and data platforms in compliance with relevant laws. The agreement may be terminated by either party in the event of a material breach by the other party of the agreement or when either party engages in bankruptcy, reorganization, liquidation, and other similar procedures. This agreement expired on January 25, 2023, and was not renewed. On July 1, 2022, we entered into a data service agreement with Supplier F for its brief verification service, a data service used to verify loan applicants' names, ID numbers, start and end dates of their ID cards, their driving license information, and the validity of driving licenses. Brief verification services are applied in three of our five basic verification services including *Abbreviated Information Verification*, *Identify Verification*, and *Vehicle Information Checking* services. Pursuant to the agreement, which has a term from July 1, 2022 to June 30, 2023, we are required to pay service fees based on the amount of data to verify and Supplier F is required to provide brief verification services in compliance with relevant laws. The agreement may be terminated if: (i) either party materially breaches the agreement and fails to rectify it within a specified period of time; (ii) either party commits crimes or engages in other detrimental business practices; or (iii) a bankruptcy, reorganization, liquidation, and other similar procedure occurs with respect to either party. On February 24, 2022, we entered into a data service agreement with Supplier G for its brief verification and portrait comparison services. The portrait comparison service is an on-site verification used to confirm whether the documents presented by a loan applicant are attributable to that particular loan applicant. Pursuant to the agreement, which has a term from February 24, 2022 to February 23, 2023, we are required to pay a flat service fee of RMB190,000 (approximately $29,450) to Supplier G, and Supplier G is required to provide the brief verification and portrait comparison services as requested in compliance with relevant laws. The agreement will be terminated if either party materially breaches the agreement and fails to rectify it within a specified period of time. On February 14, 2023, the agreement was renewed and extended until February 23, 2024. A separate written agreement will need to be signed if both parties intend to cooperate once the current agreement term expires.

In addition to our Third-Party Verification Partners, we also entered into a strategic cooperation agreement and several supplementary agreements, on April 23, 2019, with Beiming Data, a related party to our Company. Pursuant to the agreements, which had a term from April 23, 2019 to April 22, 2022, Beiming Data was required to provide data verification services including brief verification, portrait comparison, and watchlist scoring services through its data interfaces, and we were required to provide fully authorized encrypted information and pay service fees agreed upon by both parties. The agreements may be terminated if either party materially breaches the agreement and fails to rectify it within a specified period of time, or a bankruptcy, reorganization, liquidation, and other similar procedure occurs with respect to either party. On September 13, 2022, the agreements were renewed for another two years, from April 23, 2022 to April 22, 2024. On August 5, 2020, we entered into a strategic cooperation agreement and a supplementary agreement with another related party, Shanghai Yuanjin Information Technology Co., Ltd. ("Shanghai Yuanjin"). According to the agreements, which have a term from August 5, 2020 to August 4, 2023, Shanghai Yuanjin is required to provide data services including brief verification and portrait comparison services through its data interfaces, and we are required to provide anonymized and encrypted information about the person being assessed with their full and voluntary consent and authorization and pay the service fees agreed upon by both parties. Similarly, the strategic cooperation agreement may be terminated if either party materially breaches the agreement and fails to rectify it within a specified period of time, or a bankruptcy, reorganization, liquidation, and other similar procedure occurs with respect to either party.

<u>Research and Development Partner</u>

In order to more effectively analyze applicant data, assess risks and enhance our product and service offerings, we, through Beiming Technology, entered into a strategic cooperation agreement with the Research Center to establish a big data joint laboratory (the "Joint Laboratory") to conduct research in certain areas, including a Deep Learning algorithm and distributed computing and storage technologies. The Chinese Academy of Sciences, established in 1949, has played a significant part in China's scientific research and development, as it is the highest academic institution of natural science, the highest consultation institution of scientific technology, and the comprehensive research and development center for natural science and high technology in China. As of the date of this prospectus, Beiming Technology is the only company that cooperates with the Chinese Academy of Sciences on the research and development of Deep Learning algorithm and distributed computing and storage technologies in the areas of risk assessment and intelligent risk management. So far, the developments of the research and development of the Joint Laboratory have been used to improve our model scoring products.

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On September 2, 2020, we entered into a strategic cooperation agreement with the Research Center to establish the Joint Laboratory for the purpose of collaborating on basic technology research, high-tech applications, and talent development. Pursuant to the agreement, which has an effective term of three years from September 2, 2020 to September 1, 2023, we are required to provide funds to the Joint Laboratory and commercialize the results of Joint Laboratory cooperative projects. According to the strategic cooperation agreement, we are required to fund the Joint Laboratory primarily for its (i) daily operating costs and (ii) project development costs. Since the Joint Laboratory projects are currently more focused on basic theories and algorithms, we have not yet established any specific research and development cooperative projects, as of the date of this prospectus. As such, the Company is currently only responsible for the Joint Laboratory's daily operating expenses. As of the date of this prospectus, we have provided funds or resources in the form of (i) providing junior technicians (approximately $77,000), and (ii) purchasing cloud servers for the Joint Laboratory (approximately $32,000). In particular, we provided junior technicians who assist the scientists in the Joint Laboratory with coding, data processing, and algorithm testing. Additionally, we purchased cloud servers to improve the computing capabilities of the Joint Laboratory to run the algorithm for model training, data processing, and model testing. If a Joint Laboratory cooperative project needs to be established in the future, we intend to enter into a technology development agreement with the Joint Laboratory and expect to be obliged to pay the project development costs based on the project development budget.

Since the Joint Laboratory projects are currently more focused on basic theories and algorithms, our cooperation has not yet resulted in commercially viable research results. As such, we are not commercializing, and have not commercialized, any results of the Joint Laboratory projects as of the date of this prospectus. Pursuant to the agreement, neither party may disclose, license, or sell research results arising from Joint Laboratory cooperative projects without the consent of the other, except that we have the priority right to independently exploit intellectual property rights arising from the Joint Laboratory projects without the consent of the counterparty if we exclusively fund Joint Laboratory projects associated with those intellectual property rights. If our Company decides to use or exploit such intellectual property rights attributable to our exclusive funding of a Joint Laboratory project, the Research Center shall not use the products or research results resulting from that project for any commercial purposes. We and the Research Center will have joint ownership of the intellectual property rights for research results of cooperative projects that are proposed jointly by the parties, and patent applications for research results derived from such projects can only be made by mutual agreement with the Research Center. Moreover, we do not share revenue with the Research Center—we are required to pay the project development costs for Joint Laboratory cooperative projects, and, in the event that the research and development is completed and results in the adoption of additional Company products, we are entitled to any income or benefits derived from these cooperative new products. In the event that the Joint Laboratory cooperatively produces commercially viable research results that we decide to adopt, we are required to (i) commercialize the results and bear the necessary marketing expenses; and (ii) provide timely market feedback on the research results to the Joint Laboratory. We are not responsible for commercializing or marketing products or commercially viable research results if we do not adopt such products or research results. As of the date of this prospectus, the Company has not yet acquired any license or independently exploited any intellectual property rights under the strategic cooperation agreement with the Research Center. The strategic cooperation agreement may be terminated in the following situations: (i) both parties agree to terminate the agreement; (ii) either party materially breaches the agreement and fails to rectify it within specified period of time; or (iii) a *force majeure* event prevents either party from performing its obligations.

*Our Business Infrastructure and Network*

As of the date of this prospectus, we have one office located in Shanghai for our pre-approval segment. All of the staff of our pre-approval segment, including management, business, sales, research and development, risk control and compliance, conduct their business in this office.

*Business Model, Fee Structure, Pricing and Contract Summary*

We charge our clients monthly fees based on a pre-determined unit price and the number of verification records processed by our risk evaluation and solvency assessment products and services, and we receive regular payments on a monthly or quarterly basis, in accordance with our service agreements with specific clients. Multiple factors contribute to the pricing of our products and services in the pre-approval segment. We mainly determine our prices based on three factors: (a) the requirements set by the financial institutions during bidding; (b) market rates; and (c) industrial experience on similar products.

In a typical service agreement entered into between our Company and a commercial bank or non-bank financial institution, we are obligated to provide our risk evaluation and solvency assessment products and services (such as *Persons of Concern Scoring*) to the commercial bank or non-bank financial institution during the term of the agreement, typically lasting for a year. The agreement will be terminated if: (i) either party materially breaches the agreement and fails to rectify it within a specified period of time; (i) either party commits crimes or engages in other detrimental business practices; and (iii) a bankruptcy, reorganization, liquidation, and other similar procedure occurs with respect to either party. In addition, the service agreement does not require commercial banks or non-bank financial institutions to exclusively use our risk evaluation and solvency assessment products and services during the term of the agreement.

***Delinquent Debt Collection Services - Credit Loan Post-Loan Stage***

During the credit loan post-loan stage, we provide delinquent debt collection services to our clients, by utilizing our team of collection specialists and our standardized collection process, which process has been improved from time to time. Our post-loan delinquent debt collection segment has been in operation since 2015. We actively assist our clients with credit loan collection to lower their bad debt rates and to successfully achieve the targets set by them. These services are offered on a nation-wide basis.

As of the date of this prospectus, our services under this segment have been provided mostly to commercial banks and other financial institutions in China with respect to delinquent credit card receivables collection. We also provide receivables collection services to consumer finance companies. The loans on which we facilitate collection services include M1 receivables (loan payments which are delinquent for a period between 1 and 30 days), M2 receivables (loan payments which are delinquent for a period between 31 and 60 days), M3 receivables (loan payments which are delinquent for a period between 61 and 90 days), primary receivables (loan payments which are delinquent for a period between 91 and 180 days), secondary receivables (loan payments which are delinquent for a period between 181 and 270 days), tertiary receivables (receivables to the loans which are delinquent for a period between 271 and 360 days), and quaternary receivables (loan payments which are delinquent for a period between 361 and 450 days).

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For the six months ended June 30, 2022 and for the fiscal years ended December 31, 2021 and 2020, we generated approximately $23,444,934, $17,095,354, and $13,481,095 in revenue, respectively, from our services provided during the credit loan delinquency stage, which contributed to 95.5%, 82.8%, and 84.3%, respectively, of our revenue for such fiscal years. As of June 30, 2022 and for the fiscal years ended December 31, 2021 and 2020, the total amount of delinquent credit loan debt we successfully collected was approximately RMB7.4 billion (approximately $1.1 billion), approximately RMB11.03 billion (approximately $1.71 billion), and approximately RMB5.27 billion (approximately $0.76 billion), representing growth of 85%, 109%, and 1534% from the previous period or fiscal years, respectively. Total commissions we collected for the six months ended June 30, 2022 and the fiscal years ended December 31, 2021 and 2020 were $23,444,934, $17,095,354, and $13,481,095, respectively, representing an increase of 225.5%, 26.8% and 65.1% from the previous period or fiscal years, respectively.

*Delinquent Debt Collection Process*

Step 1: Engagement

We obtain all engagements for credit loan collection services from our clients through bidding processes.

Depending on the various bidding opportunities the banks or financial institutions offer, we may bid on opportunities to collect delinquent credit loans in different categories for a certain term or for a certain project. Almost all of our current agreements are entered into for a specified term.

To participate in a bidding process, we will first sign up and provide bidding materials, including our business qualification certifications, land use certifications, form of employment agreement, credit certifications and other policies, and sometimes refundable deposits, if required, to the target banks or financial institutions according to the bidding requirements posted on their respective websites. We will also provide our bidding prices, which are determined based on (a) the market standard; (b) our commission rate on similar services; (c) our practical experience; and (d) the recommended prices provided by the target banks or financial institutions, if any. After the target banks or financial institutions' initial review, they may arrange for on-site inspections, to ensure the authenticity of the application materials submitted and to examine our hardware and software equipment, information security and compliance status. We will also present and further explain our bidding materials in face-to-face meetings. Following the foregoing steps, the target banks and financial institutions will score each bidder's bidding materials announce the results of bidding.

Once engagement is confirmed, we enter into engagement agreements with the banks and financial institutions. The terms and conditions of our engagement agreements may vary, depending on client and loan requirements. We have until the expiration date of the engagement period to collect credit loans assigned to us. Our clients may choose to renew our agreements based on our performance during or after the initial term.

The service scope of each engagement depends on (a) the demand of the banks or the financial institutions; (b) our preference; and (c) our performance and ability. Customarily, the banks or financial institutions will assign some small projects to us, then, based on our performance, they may assign more projects to us with greater collection amounts or different loan categories.

Step 2: Import Case Information and Data and Specialist Assignment

We rely on our collection operating portals or portals offered by banks or financial institutions to navigate through the collection process.

*Case Information and Data Import*

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| We usually utilize our own collection operating portals in connection with the collection services for credit loans which have been delinquent for more than sixty (60) days. The number of collection specialists assigned to a project is determined by (a) the size of the project, and (b) the performance of each collection specialist during the previous month. Once the number of collection specialist is determined, the banks or financial institutions will transfer the case information to us and we will import the material information to our collection operating portals. |
| Depending on the requirements of the banks or financial institutions we work with, we may use the banks or financial institutions' collection systems instead of our collection operating portals, which may factor into collection specialist staffing decisions. Afterwards, the systems of the banks or financial institutions will automatically assign the projects to each collection specialist and no information would need to be imported from our end. |

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*Specialist Assignment*

We consider various factors in our specialist assignments. See "*Delinquent Debt Collection Services-Credit Loan Post-loan Stage-Our In-House Team.*"

Step 3: Delinquent Debt Collection

We have developed a standardized process to collect delinquent loans. The following is an overview of our collection process:

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<u>Initial Collection</u> 

Once a case is assigned, a collection specialist will first call the delinquent debtor to communicate on matters such as repayment time and amount. If the collection specialist is not able to reach the delinquent debtor through phone calls, he/she will then try the delinquent debtor's emergency contact number, family number or work place number which the debtor previously provided. During the above process, the collection specialist may also use SMSs, emails, mails or WeChat messages to communicate with the delinquent debtor or his/her family or work place.

<u>Collection Strategies for Longer Overdues</u>

Based on our experience, loans past due for a longer time are usually more difficult to collect. As a result, our strategies for collecting delinquent loans vary based on the length of time such loans are delinquent. With the loans which are past due for less than sixty (60) days, we focus on sending reminders and notices to inform debtors of their past due payments. With the loans which are past due for more than sixty (60) days, our collection specialists will spend more time on communication and negotiation in each case. Additionally, depending on the specific status of the debtors and the loans, our specialists may spend even more time on sending collection letters to debtors who we are not able to locate, finding solutions to collect repayments, or tailoring repayment plans or installment plans pursuant to the policies set by our clients. During this stage, we focus on communication and negotiation, which require more sophisticated skills from our collection specialists.

<u>Collection Methods</u>

We may try to reach the debtors through phone calls, SMSs, e-mails, mails or social media messages. Based on our experience, telephone call is the most efficient, effective and preferable method as our collection specialists can have real-time conversations with debtors and may receive clear replies from them. E-mails, SMSs and social media messages are good for sending notices but not all debtors will reply to them. Mails can be slow in delivery and also difficult to be kept track of.

We primarily rely on the contact information of debtors collected by our clients during the debtors' application process. Debtors provide their telephone numbers, home numbers, work numbers, e-mail addresses, residential addresses, work place names and other information to the commercial banks or financial institutions when they apply for credit loans. Such information will be provided to us by our clients or through our clients' collection systems when the cases are assigned to us. If we are not able to get in touch with the debtors after we exhaust all the contact information provided by the debtors previously, we may try other methods. For example, in instances where a debtor's contact information is limited, we may call a street office, which is a self-government organization within a geographic region in which the local community members may fulfill certain management functions, or a residents' committee, which is a governmental organization which manages relevant communities, to locate the debtor or a family contact. In addition, with the debtors who we are not able to locate after we have exhausted all other means, we may contact their family, friends, colleagues or other third parties for the debtors' latest contact information. However, unless such third-party agrees, we do not contact him/her more than twice. Our collection activities do not involve face-to-face interaction with debtors, to avoid potential physical confrontation, control compliance-related risks, streamline and standardize the collection process, and increase collection efficiency.

All of the above activities and processes, including communication summaries and call records documenting such measures, are recorded and maintained in our collection operating portals or our clients' systems.

Step 4: Case Termination

If a debtor repays his/her delinquent loan during our engagement period with our clients, or if we are unable to get in touch with the debtor or a debtor is not willing or able to repay his/her delinquent debt before the expiration of our engagement period, such case will be considered and marked complete in our collection operating portals or our clients' systems.

Upon the expiration of an engagement period of a project, we will verify the amount of delinquent debt we successfully collect with our clients. After such amount is confirmed and verified, our clients will calculate commission fees accordingly and settle our payments. See "*Delinquent Debt Collection Services-Credit Loan Post-loan Stage-Business Model, Fee Structure, Pricing and Contract Summary.*"

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*Quality Control and Assurance*

To ensure our collection specialists consistently provide quality services that meet our standards, we have designed and implemented the following policies and procedures to help them improve, incentive them and efficiently manage their workload.

● *Daily Inspection.* Our compliance specialists perform daily spot checks on several collection cases for potential compliance violations. Our collection operating portals record all telephone conversations and communication summaries between our collection specialists and debtors. Our operating portals also conduct daily keyword searches against all the work logs generated that day for potential violations. If a violation is identified, we issue a disciplinary action against the collection specialist. Our disciplinary actions vary from warning to termination, which are issued in each case depending on the seriousness of the violation. Furthermore, we analyze work logs and telephone recordings collected from daily inspections for performance trends and non-compliant activities and train our specialists based on these findings in order to improve their performance.

● *Performance Evaluation and Review.* We consider call records from the collection operating portals to be a direct indicator of work capacity and workload. We utilize records from the operating portals to monitor our collection specialists' performances and work capacity at different stages of the loan collection process and evaluate them based on a set of KPIs. We use KPIs to assess our collection specialists' service quality, collection efficiency, work capacity and compliance with relevant laws, regulations and internal procedures. To evaluate the performance of a collection specialist, we will also take into consideration the target achievement rate we pre-set to such collection specialist. Our quality assurance team continuously monitors the performance, work capacity and compliance of our collection specialists to ensure that they employ appropriate collection methods to achieve better collection performance through KPI tracking, phone call recording assessment, complaint call feedback, and internal training and examination.

● *Performance-based Compensation Structure.* We require our collection specialists to meet the minimum performance standards predetermined by our management team and tie their performance to compensation structures.

● *Case assignment.* We consider various factors in our specialist assignment. For example, we assign more cases or more complicated cases, including the loans which are past due for a longer period, to the collection specialists who maintain good performance. One of our general principles is to balance our case assignment between case number and complexity. See "*Delinquent Debt Collection Services-Credit Loan Post-loan Stage-Our In-House Team*."

We require all of our employees to strictly comply with our compliance policies and laws and regulations. For example, our collection specialists are not allowed to receive payment directly from our clients, make payments on behalf of our clients, or acquire personal information illegally. If our employee violates such requirements, we will issue certain penalties that range from warnings to termination of employment. We will also require our specialists to complete self-check compliance forms at least once a month to ensure their compliance.

Certain clients may require a reasonably enhanced level of supervisory review and others may require customized reports. We require our collection specialists to contact the debtors only through the means allowed under our standard procedure. Our collection specialists are not allowed to have face-to-face contact with any debtor. When we contact debtors by telephone, our collection specialists are required to make such calls only from our operating center landline or encrypted mobile phones issued by us, which records all of the telephone conversations are kept in our system or the clients' systems.

*Compliance*

We believe our core competence lies in our ability to provide quality customer service and compliance with applicable laws and regulations. We have undertaken the following measures to ensure compliance.

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Our Compliance Policies

We have designed and implemented the following compliance policies and our administration departments and information technology department will conduct period inspections to ensure compliance:

● *Employee Code of Conduct*. Our efforts to maintain compliant operations starts with the training and continuing education of our employees. The Employee Code of Conduct sets forth the basic code of ethics, proper business conduct and obligations to clients. In particular, the code emphasizes the importance of keeping proprietary information confidential and maintaining a high level of professionalism in the performance of work functions, and have strict guidelines that prohibit certain actions such as selling debtor information, impersonating government officials, threat of violence, and use of vulgar or inappropriate language. In addition, the code specifies the reward and disciplinary actions for employees abiding by or violating this Employee Code of Conduct and other company regulations.

● *Quality Assurance Management Plan*. The goals embodied in our Quality Assurance Management Plan are to standardize the repayment and collection management operations, minimize risks related to repayment and collection management services, and ensure compliance with government and internal regulations. The plan sets forth definitions of violating conduct, including improper management of private and personal information, procedural violations, and fraudulent conducts and violations specific to loan repayment and collection management. The plan also includes corresponding penalties for employee violations and subsequent remediation plans to minimize the damage and prevent future incidents of similar violations. The plan consists of (i) a Work Place and Computer Room Sign-In and Sign-Out Policy; (ii) an Emergency Management Policy; (iii) a Complaint Processing Policy; (iv) a Work Process Policy; (v) Telephone Record Inspection Regulation; (vi) Compliance Management Regulation; (vii) Information Security Regulation; (viii) Work Log Inspection Regulation; and (ix) Trade Secret Protection Regulation.

We are also subject to our clients' respective compliance policies for which they will conduct their own periodic inspections to ensure compliance.

Compliance Structure

The general manager of Shenzhen Xindesheng also serves as Shenzhen Xindesheng's compliance supervisor who supervises all internal compliance related matters. In addition to implementing our compliance policies to regulate employee conduct, we have also established an internal department to monitor employee conduct, investigate possible violations, and ensure policy adherence on a regular basis. The department is responsible for monitoring employee activities to observe and detect possible violations and investigating possible violations after the violations have been reported to the management team of the company. The department is also in charge of communicating with debtors who raise disputes or complaints in person, if necessary, in order to explain and ameliorate the situation. We engage third-party legal counsel, who assist us with regulation and policy interpretation. Additionally, our clients will monitor our compliance status from time to time to ensure we meet their requirements.

Customer Services and Complaint Management

Debtors may occasionally file complaints against our collection practices, with or without merit, due to the contentious nature associated with delinquent debt collection and unpredictable debtor behavior. We have maintained a low complaint rate. Specifically, our complaint rate for our top three major clients, who collectively represented the majority of our post-loan business, was 0%, 1%, and 1%, respectively, for the fiscal year ended December 31, 2021.

Complaints may lead to business suspension or monetary penalties by government agencies, or monetary penalties under the agreements with our clients. Additionally, it may adversely affect our reputation and cooperation relationship with our clients. We take complaints and allegations seriously and have developed a systematic approach to address complaints. We generally comply with the complaint processing policies of our clients and our designated team actively cooperate with our clients to resolve any complaints or service-related issues. Once a complaint is notified, our staff will conduct preliminary investigation to verify the allegations. We will try to reach an initial agreement with debtors to resolve any issues. If the allegations are substantiated and we are at fault, we will further communicate with the debtors and may undertake certain actions to rectify the problems. Depending on the nature of a complaint, such complaint will normally be handled as follows: (a) a general compliant will be handled by us; (b) a serious complaint will be handled by us with the assistant of our clients; and (c) a major complaint will be handled by us and our clients jointly. If a complaint is filed against our clients in connection with our collection practices, such complaint will be transferred to us for further verification: if we are at fault, we will take responsibilities such as paying penalties to our clients or debtors while the personnel at fault and his or her supervisor will be ultimately responsible; if we are not at fault, we take no responsibility. For the fiscal year ended December 31, 2021 and 2020, the penalties we were required to pay to our clients or debtors were nil and RMB68,987 (approximately $10,147), respectively.

To avoid complaints, we endeavor to assign our cases prudently, monitor our collection specialists' conducts on a regular basis and provide them with continuous compliance and operation training.

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*Our In-House Team* 

As of December 31, 2022, we employed 126 collection specialists, including 65 senior collection specialists who have years of experience and are qualified to conduct direct negotiation with debtors. Most of our senior collection specialists, including the team leaders, supervisors, and managers have experience working in banks and are proficient in delinquent debt collection. We retain our collection specialists based on certain requirements, such as their education levels, language proficiency, and background check results. We assign different assignments among our collection specialists based on their respective experience and performance. Our collection specialists are based in sixteen (16) operating centers in nine (9) cities in China with the capacity to accommodate approximately 730 collection specialists. See "*Our Business Infrastructure and Network."* Regardless of their locations, all of our collection specialists use the same collection operating portals and are required to comply to the same policies and standards at work.

To maximize the effectiveness of our loan collection efforts, our collection specialist team is organized based on levels of seniority and specific areas of expertise. They are organized by work groups based on projects, with each work group under the supervision of a senior team leader, who in turn reports to a single senior supervisor responsible for the work group. Each supervisor will report to a manager, who will supervise several projects and will report to the general manager. As our collection specialist members are assigned to different stages of the delinquent debt collection process, they are able to familiarize themselves with clients' specific needs and requirements, enhance operational efficiency and service quality, and become specialized experts in their assigned stages.

We rank collection specialists in four levels: manager, supervisor, team leader and specialist. Each work group consists of one manager, one supervisor, two team leaders and various specialists. Generally, each manager manages an operating center or certain or multiple business of an operating center, each supervisor manages certain business or certain stage of the business, and each team leader is responsible for managing a team of collection specialists. We had 10 work groups as of June 30, 2022, each of which focuses on one particular project. Generally, the collection specialists directly communicated and negotiate with the debtors. We promote collection specialists mainly based on performance and compliance with applicable laws, regulations and policies. Below is a diagram illustrating the structure of our in-house team.

![](goodfaith_f1img25.jpg)

We provide training programs to our collection specialists, which includes introduction training covering our business culture, operation policies and procedures, basic business knowledge, compliance requirements and risks and safety education, and regular training covering business knowledge upgrade and collection skill improvement. We endeavor to update our collection specialists with our most recent policies and requirements and to enrich their collection and negotiation skills.

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We consider various factors in our specialist assignment. For example, we assign more cases or more complicated cases, and the loans which are past due for a longer period, to the collection specialists who maintain good performance or have more sophisticated experience, and we also assign specialists to different projects based on their geographic origins or locations as we believe they work more efficiently if they speak the same dialects of the debtors or share similar geographic culture of the debtors. One of our general principles is to balance our case assignment between case number and complexity. To ensure that our collection specialists are in good working condition and work effectively, we will balance the workload among different collection specialists. With M1 projects, one specialist usually handles approximately 500 collection cases per month; with M2 projects, one specialist usually handles approximately 300 collection cases per month; with M3 and above projects, one specialist usually handles approximately 400 collection cases per month. We believe our workload arrangement is reasonable and our collection specialists' performance is above the average market standard.

We monitor the performance of our collection specialists through our collection operating portals and also the portals of our clients, if applicable. See "*Delinquent Debt Collection Services-Credit Loan Post-loan Stage-Quality Control and Assurance.*"

We compensate our collection specialists by salaries and commissions, depending on how we calculate our fees with our clients. See "*Delinquent Debt Collection Services-Credit Loan Post-loan Stage-Business Model, Fee Structure, Pricing and Contract Summary.*" We also provide different levels of incentive and bonus to our collection specialists based on their performance.

*Our Business Infrastructure and Network*

As of the date of this prospectus, we have operated one (1) administrative office in Shenzhen and sixteen (16) operating centers in nine (9) cities in China with the capacity to accommodate approximately 1,830collection specialists. Among these operating centers, three (3) are located in Shenzhen, and the remaining thirteen (13) are located in Chengdu, Henan, Huizhou, Jinan, Guiyang, Shenyang, Tai'an, and Jiujiang.

![](goodfaith_f1img26.jpg)

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Each operating center is staffed with a dedicated team of management and administrative personnel and collection specialists to provide comprehensive services to our clients.

To ensure a consistent and high-quality service experience, we require all of our operating centers to follow our standardized operating procedures. Our headquarters and provincial branch offices closely monitor the daily operations of our operating centers and provide comprehensive training and ongoing support.

![](goodfaith_f1img43.jpg)

\* Collection specialists consist of in-house collection specialists and outsourced collection specialists. As of December 31, 2022, we had 126 employed collection specialists and 604 outsourced collection specialists.

![](goodfaith_f1img28.jpg)

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Our centralized planning team coordinates the development and expansion of new and existing operating centers, including site selection, facility layout design, and equipment purchase. As we strive to provide efficient and effective services to our clients, we regularly contemplate our opportunities to improve our services. We will consider adding new operating centers if they help optimize our services or increase our capacity. We select the locations based on certain factors, including, but not limited to: (i) client density, (ii) costs of labor, (iii) rent pricing, (iv) surrounding infrastructure and environment, and (v) talent density.

All of our operating centers are located on leased lands.

We hire 10 to 109 collection specialists in each of our operating centers, depending on the local case volume, and we provide each center with software and equipment.

*Our Contractor Partners* 

With the rapid expansion and growth of our post-loan delinquent debt collection business since 2021, we are shortlisted by three PRC commercial banks and top online consumer finance companies as their preferred service provider, and we are their trusted business partner in delinquent credit loan debt collection. This in turn has enabled us to acquire more business and facilitated our deeper cooperation with our clients.

In order to provide better service for our increased business volume, we have not only expanded the number of our operating centers, but also engaged several contractor partners for close cooperation and partnerships since 2021. See *"Note 13 Commitments and Contingencies."* We believe our engaged contractor partners' experience and familiarity with local customs may be helpful in implementing our delinquent credit loan debt collection. Pursuant to a typical agreement with contractor partners, which has a term of one year, such contract partners are required to supervise daily operations, enhance compliance practices, and develop local talent teams for our branches and subsidiaries. Under the terms of our engagements with our contractor partners, we are required to share operating profits or losses derived from a given branch or subsidiary with the responsible contractor therefrom based on a pre-determined fixed sharing ratio on a monthly basis. The profit/loss sharing ratios (Company:contractor) range from 30%:70% to 85%:15%, with the average and mean ratios being 50%:50% and 50%:50%, respectively. A specific sharing ratio is determined based on various factors, including (i) the management skills and experience of our contractor partners; (ii) the length of their cooperation with us; and (iii) the complexity and type of cooperative loan debt collection cases. We negotiate the specific sharing ratio with each outsourcing contractor after evaluating all factors listed above. Such profit sharing is recognized as an outsourcing management service cost in the consolidated financial statements. The agreement will be automatically extended for another year upon expiration of the initial term, unless either party notifies the other that it does not intend to renew it, and the number of extensions is unlimited. The total outsourcing management service fees amounted to $9,166,230 and $2,500,823 for the six months ended June 30, 2022 and the year ended December 31, 2021, respectively.

We rely on those contractor partners to a limited extent to conduct our business. To that end, we have options to cooperate with other competent contractor partners if our existing contractor partners are unable to deliver satisfactory management services.

*Business Model, Fee Structure, Pricing and Contract Summary*

To better evaluate and maintain our industry position and competitive advantage, we monitor our performance using operational data, including the monthly average delinquent receivables under collection, total annual amount collected, monthly average amount collected per collection specialist, total commission earned per year, and monthly average commission earned per collection specialist, pursuant to the following formulas:

*Monthly Average Delinquent Receivables Under Collection =* 

*Total Annual Engagement Amount / 12*

*Total Annual Amount Collected =* 

*Total Annual Collected Amount + Total Annual Amount of Refund*

*Monthly Average Amount Collected Per Collection Specialist =* 

*Total Annual Amount Collected / Number of Collection Specialist /12*

*Monthly Average Commission Earned Per Collection Specialist =*

*Total Annual Commission Earned / Number of Collection Specialist /12*

We collect commissions from our clients based on the amounts of receivables we successfully collect pursuant to the service agreements entered into with our clients. Our commission rates are mostly determined at the discretion of our clients. Other than basic commissions, we may receive incentive bonuses based on our performance from time to time. Bonuses, if any, may be based on our performance or rank among the different service providers to our clients. We will not receive any payments on the amounts of delinquent debt we have not collected. If any delinquent debt is settled for less than the full amount, we will only collect commissions based on the amount we successfully collect.

There are two ways we calculate our fees: amount-based and percentage-based. The amount-based calculation is based on the amount collected by our collection specialists. Our clients preset several levels of targeted collection amounts, each level with a specific rate for each collection specialist. The amount of our total fees is equivalent to the rate in connection with the level we achieve multiplied by the number of collection specialists for such projects. Percentage-based fees are calculated based on the commission percentage. The amount of our total fees under this calculation are the equivalent to the recovery amount multiply by the commission percentage.

The amount-based calculation is mostly used on credit loans which are past due for less than sixty (60) days, while the percentage-based calculation is mainly used on credit loans which are past due for more than sixty (60) days.

We enter into collection service agreements with our clients that define, among other things, engagement period, fee arrangements, service requirements, scope of services and termination provisions.

**Our Technology Infrastructure and Technology**

Our technology infrastructure, which is comprised of a pre-approval artificial intelligent system, two post-loan collection operating portals and other systems utilized in our operations, supports each key step in our business operations. As of the date of this prospectus, Beiming Technology holds 10 registered copyrights for software in China. See "*Intellectual Property*."

During the credit loan pre-approval stage, we utilize our self-developed artificial intelligent system developed based on machine learning models and digital technology to offer risk evaluation and solvency assessment products and services to our clients.

During the post-loan stage, other than the portals offered by banks or financial institutions, we rely on two collection operating portals we acquired to navigate through the collection process. These systems have been developed and maintained by two non-related third parties (the "Collection Operating Portal Suppliers"). In accordance with the sales agreements entered into between our Company and the Collection Operating Portal Suppliers, we were required to pay each of the Collection Operating Portal Suppliers a specified amount to purchase their debt collection operating portal systems and related services to receive the right to use the software for life, while the Collection Operating Portal Suppliers were obligated to provide implementation and training services, as well as technical maintenance and standard updates. These agreements are one-time purchases of their collection systems and software, and thus we do not have ongoing agreements with the Collection Operating Portal Suppliers. Nonetheless, we may enter into new agreements with them in the future, if we need more modules and functions on our collection operating portals.

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Beiming Technology and Shanghai Yuyi also use an internal business management system for our pre-approval risk management business. The business management system comprises four modules, including the "Beiming Intelligent Settlement System," the "Beiming Contract Management System," the "Beiming Electronic Reconciliation System" and the "Beiming Multi-Dimension BI Report System," which enables the financial department and the business department to understand the business in real time and the statistics of the verification volume generated by each customer per month. We acquired the system and the right to use it through a one-time buyout from a related party, Shanghai Hicore Information Technology Co., Ltd., who developed these four modules and related software. As such, as of the date of this prospectus, we do not have ongoing agreements with Shanghai Hicore Information Technology Co., Ltd.

We plan to continue both in-house development and external acquisition of technology to enable us to provide better services to our clients and improve our operating results.

As of December 31, 2022, we had a team of four full-time employees to monitor and maintain our information technology and infrastructure. To promote our long-term business growth, our technology team focuses on ensuring that our technology systems, operating centers, financial systems, and security protocols are well established, reviewed, tested and continuously strengthened.

***Our Pre-approval and Post-Loan Systems***

*Pre-Approval Artificial Intelligent System*

We currently own our pre-approval system for risk evaluation and solvency assessment. We started our research and development on this system in September 2017 and it was first launched in January 2018. During the ensuing years, our research and development team has been improving this system with new technology and innovative ideas. As of the date of this prospectus, we have spent approximately $600,000 (RMB3.9 million) on developing and maintaining our pre-approval system while our research and development team continues to grow. See "*Research and Development*." In order to more effectively analyze applicant data, assess risks and enhance our product and service offerings, we, through Beiming Technology, cooperate with the Research Center to establish a big data joint laboratory to conduct research in certain areas, including a Deep Learning algorithm and distributed computing and storage technologies. The developments through the Joint Laboratory have been applied to improve our model scoring products and services. Our pre-approval system is now an artificial intelligent system which utilizes its extensive data dimension and advanced data processing method and algorithm.

Our model scoring products and services are provided through a risk evaluation and solvency assessment engine. Among our model scoring products and services, Contractual Capacity Scoring, Pre-approval Risk Warning Scoring and High-risk Client Group Identification utilize Random Forest Regression and KNN algorithms, while Customer Portrait utilizes PCA and K-means algorithms. Random Forest Regression is a supervised learning algorithm that uses ensemble learning method, a technique that combines predictions from multiple machine learning algorithms to make a more accurate prediction than a single model, for regression. Our system can generate a report within 30 seconds. We believe the above system increases accuracy, stability and efficiency to our products and services.

Additionally, our system utilizes machine learning technologies and can adapt to new changes immediately and continuously enhance and update itself to be more tailored to specific tasks and different business scenarios, in order to deliver more up-to-date results. It conducts real-time calculations, different from the traditional offline calculation methods used by many other companies in our industry, and these calculation results are transmitted instantly back to the system for further analysis. Our software system adopts modular architecture that consists of multiple connected components, each of which can be separately upgraded and replaced without compromising the functioning of other components. This makes our platform both highly reliable and scalable. Once an algorithm or technology update or improvement is needed, our system will be automatically updated according to the pre-set rules. Our model monitor system also monitors calculation results regularly and compares them with the actual delinquent status information provided by our clients. If such comparison results indicate inconsistency to a certain degree, our system will automatically update the current model based on the new data. As a result, continual updates will be implemented to our automated models based on the newest metrics. Additionally, if economic situation or social situation changes, or if our clients notice any decrease in accuracy to our products, we will obtain new data from our clients to program and update the current system to ensure our result accuracy. As a system update may impact the business strategies of our clients, each time after our system is updated, we will ask our clients to provide confirmation of accuracy and application success. We focus on bad debt rates when we monitor the accuracy of our models and reports.

If the need to update the system is due to replacement of new technology or change of data transfer structure because of any safety concerns, our system may be updated more thoroughly instead of only one component. Such updates may take place once or twice per year.

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Our risk evaluation and solvency assessment system is comprised of several modules, including data collection, data processing, data storage, model training, model application, model monitor and model optimization. Its working mechanism is demonstrated in the chart below:

![](goodfaith_f1img44.jpg)

To further ensure the accuracy and efficiency of our system and results, our clients will also provide us with the delinquency status of their credit loans from time to time. With such information, we can assess and identify our accuracy and determine if any improvement or adjustment is needed.

The data we process for our pre-approval products and services is provided by our clients. Such data will be encrypted before it is transferred to our system for processing. After we process and analyze the data, reports generated will be encrypted and transferred back to our clients. During this process, we rely solely on our algorithm to generate reports. As a result, we do not have access to the personal data provided by our clients, neither do we aggregate any of such data.

Regarding products and services for basic verification, we collaborate with our information verification service providers who are specialized in, among others, facial recognition, identity verification and automobile data solutions. They grant us access to their databases to search for the loan applicant or automobile-related data pursuant to the respective service agreements we enter into with them.

We depend on cloud-based services for computing power for our systems and services. Cloud-based technology allows us to process large amounts of complicated data, which we believe has significantly improved our operational efficiency. As of the date of this prospectus, we are using a total of ten (10) cloud-based servers for our pre-approval segment. Among them, five (5) are for providing services to our clients and the remaining five (5) are for model computing. As our business is growing at a fast pace, our cloud-based services allow us to scale up services to fit our needs as we expand and adjust our resources according to business demand.

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*Post-loan Collection Operating Portal*

Other than the portals provided by our clients, we use two collection operating portals to manage and monitor our delinquent debt collection cases and their process. The collection operating portals we are currently using are credit loan collection systems developed and maintained by the Collection Operating Portal Suppliers.

Our collection operating portals have different modules covering various aspects of the collection process, including case information collection, collection process management and litigation application. Such portals digitize and standardize the delinquent debt collection process by consolidating debtor profiles, repayment records, and other functions under one platform. We use the operating portals for, among other things, case assignment, portfolio management, collection activity management, repayment management and collection specialist performance monitoring. Once a case is assigned to us, we will import necessary information to our portal. Our portals will then assign each case automatically to one collection specialist based on the rules we previously set up. Each collection specialist's working progress and records are kept and maintained in the portal. Collection reports may also be exported for inspection when requested by our clients.

With this portal, we are able to assign our cases to specific collection specialists pursuant to our preferences and rules, to avoid repetitive work due to unclear responsibilities, and to monitor the work capacity of each collection specialist with supporting data. We believe that our system affords our collection specialist team sufficient operational support to efficiently perform tasks related to delinquent debt collection.

***Maintenance and Update***

With our pre-approval artificial intelligent system, we conduct our maintenance and updates in two aspects:

*Current Models Maintenance and Update:* 

Our pre-approval artificial intelligent system utilizes machine learning technologies. Our intelligent monitor system constantly monitors any changes of parameters in the current models. Once any material changes are detected, the monitor system will automatically abstract new data to train and evaluate new models according to a preset model training process, as well as logic and evaluation principles. Once a new model has been updated and evaluated and the evaluation result is accepted, it will be automatically put into use. As a result, continual updates will be implemented to our automated models based on the newest metrics. See "*Our Technology Infrastructure and Technology-Our Pre-approval and Post-Loan Systems-Pre-Approval Artificial Intelligent System*."

*New Products and Services Update:*

Our system deployment is conducted through our server cluster. There are five (5) servers in our server cluster. When we update new products and services in our system, we do not shut down the whole system. Instead, we isolate one (1) server from the server cluster at a time and shut it down to conduct the update. Such server will rejoin the server cluster after such update. The update continues until all the five (5) servers have been updated. As a result, at least four (4) servers are in operation at any time and our services will not be interrupted.

The post-loan collection operating portals we are currently using have been maintained and updated from time to time by the Collection Operating Portal Suppliers.

We actively explore greater use of technology to manage data resources. We expect to continue making improvements to our current information technology and infrastructure, which in turn is expected to enable us to utilize our technology and data resources more efficiently.

***Backup System***

For our pre-approval products and services, we maintain nine (9) independent servers -four (4) servers located in Shanghai and five (5) virtual servers via elastic computer services, which are IT services provided by third parties that enable us to deploy virtual servers within their cloud computing platforms. Critical data, such as work log data and user data will be backed up daily while non-critical data will be backed up quarterly.

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**Branding, Sales and Marketing** 

For our post-loan services, we maintain one (1) server located in Shenzhen. All data, such as case data and personal data, is backed up twice per day.

**Privacy Protection and Information Security** 

We are dedicated to privacy protection of our clients during all phases of our businesses. We have access to a significant amount of data that could be considered as confidential, including operational data of our clients and personal information of the loan applicants and debtors. We consider the protection of such confidential information to be important. For both our pre-approval and post-loan segments, we have adopted a strict internal data policy to protect confidential information at all levels. These policies establish day-to-day data use requirements, data and information classifications, data encryption requirements, back-up requirements, approval procedures and user rights for confidential information and data. These policies also specify the methods in which data must be stored, such as in encrypted format and with backup. We enter into confidentiality agreements with our employees and require each of them to agree in writing to abide by our data policy and to protect the confidentiality of our data.

We use a variety of technologies to protect the data with which we are entrusted and have a team of data security professionals dedicated to the ongoing review and monitoring of data security practices. Also, with our pre-approval system, we conduct product development, testing, trial and official operation under different computer environments which are subject to different safety requirements and procedures. We also utilize firewalls to protect against potential attacks or unauthorized access. We do not distribute or sell our data to other companies for any purpose.

We continue to deploy both physical and system security enhancements to help ensure ongoing data protection. We prohibit collection specialists from bringing their personal cellphones to workplaces or taking photos of workplaces, prohibit work computers from being connected to the internet, prohibit our employees from using data transmission equipment at work, and require sophisticated log-in passwords, access authentication controls and firewalls and emphasize security awareness as part of our employee training programs. We are also subject to our clients' respective compliance policies and they will conduct periodic inspections to ensure compliance. Since our inception, we have not experienced any material information breach or other system failure that led to the loss of any client's, loan applicant's or debtor's information.

Additionally, our data security and management capabilities have been certified by various national standards, which are often required for bidding the business of banks and large financial institutions. For example, Beiming Technology has obtained the certifications of ISO27001 Information Security Management System (an international standard focused on information security) and ISO27701 Privacy Information Management System (an international standard focused on data privacy), while Shenzhen Xindesheng has obtained certifications of ISO9001 Quality Management System (an international standard focused on quality management system) and ISO27001 Information Security Management System (an international standard focused on information security), both of which are in compliance with relevant standards of the Information Safety Management System.

**Intellectual Property** 

We use a combination of trade secrets, software copyrights, domain names, trademarks, know-how and other rights, to protect our intellectual property and our brand. As of the date of this prospectus, Beiming Technology holds 10 registered copyrights for software and Suzhou GoodFaith holds one (1) registered domain name (*cxgoodfaith.com*) in China. Additionally, we have registered two (2) trademarks in China as of the date of this prospectus.

In addition to our intellectual property rights, we believe that we maintain a competitive advantage over our peers through our industry knowledge and our constantly improving technology and know-how. We also enter into contracts with our employees and third-party partners to prevent the unauthorized dissemination of our technology. To date, we have not experienced a material misappropriation of our intellectual property.

Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to infringe upon our intellectual property rights. Monitoring unauthorized use of our intellectual property rights is difficult and costly, and we cannot be certain that the steps we have taken will prevent misappropriation of our intellectual property rights. From time to time, we may have to resort to litigation to enforce our intellectual property rights, which could result in substantial costs and diversion of our resources.

In addition, third parties may initiate litigation against us alleging infringement of their proprietary rights or declaring their non-infringement of our intellectual property rights. In the event of a successful claim of infringement and our failure or inability to develop non-infringing technology or license the infringed or similar technology on a timely basis, our business could be adversely affected. Even if we are able to license the infringed or similar technology, license fees could be substantial and may adversely affect our results of operations. See "*Risk Factors - Risks Related to Our Business and Our Industry - We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position" and "- We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations*."

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As of the date of this prospectus, we have not been subject to any material dispute or claims for infringement upon third-party trademarks, licenses, and other intellectual property rights in China.

**Competition** 

The industries in which we are operating are competitive and evolving. With respect to our pre-approval and post-loan segments, we compete with market players such as traditional financial institutions, small loan companies, e-commerce driven installment platforms, and other consumer finance platforms. For pre-approval risk evaluation and solvency assessment products and services, our major competitors include Tongdun Technology Co., Ltd., Bairong Yunchuang Technology Co., Ltd., and Shanghai Bingjian Information Technology Co., Ltd. For post-loan delinquent debt collection services, we primarily compete with institutions such as Hunan Yongxiong Asset Management Group Co., Ltd., Shenzhen Shenjuyuan Credit Consulting Co., Ltd., Guangdong Delv Credit Management Co., Ltd., and Huadao Data Co., Ltd.

Some of our larger competitors have significantly more financial, personnel, technical, marketing and other resources than we do and may be able to devote greater resources to the development, promotion, sale and support of their services. Our competitors may also have more extensive client bases, greater brand recognition and brand loyalty and broader partner relationships than us. We believe that our ability to compete effectively for clients and garner increased market share will depend on many factors, including our advanced and proprietary technology and technological capabilities, the variety of our product and service offerings, user experience with our products and services, effectiveness of our products and services, the expertise of our management team, the track record of our performance, our partnerships with third parties, our marketing and selling efforts and the strength and reputation of our brand.

Furthermore, as our business continues to grow rapidly, we face significant competition for highly skilled personnel, including management, engineers, product managers and risk management personnel. The success of our growth strategy depends in part on our ability to retain existing personnel and add additional highly skilled employees.

**Branding, Sales and Marketing** 

As our businesses cover various parts in China, our in-house marketing department, which consists of experienced professionals, is responsible for coordinating our marketing efforts. While we acquire a majority of our clients through bidding processes, in order to promote our sales and broaden our customer reach, our marketing team also expands our potential client pool through cold visits, client referrals and participation in different conferences.

Our products and services have a demonstrated record of brand awareness in the industry, which is evidenced by our ability to maintain loyal clients and our successful bidding results in the fierce competition for services. We believe our ever-improving products and services and our dedication to our clients will serve as a marketing force. Since our inception, we developed cooperation and business relationships with six of the top ten commercial banks/financial institutions in China as of December 31, 2022.

**Employees** 

We had 163 full-time employees as of December 31, 2022. We had 891 and 670 full-time employees as of December 31, 2021 and 2020, respectively. We had 10, 23, and 10 part-time employees as of December 31, 2022, 2021, and 2020, respectively. All of our employees are located in China. The following table sets forth the numbers of our full-time employees categorized by function as of December 31, 2022:

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|  | **As of December 31, 2022** | **As of December 31, 2022** |
| **Functions** | **Number** | **% of Total**<br> **Employees** |
| Management and administrative | 16 | 9.7% |
| Sales and Marketing | 5 | 3.1% |
| Information Technology  | 5 | 3.1% |
| Products, services development and operations | 132 | 81.0% |
| Finance | 5 | 3.1% |
| **Total** | **163** | **100.0%** |

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As of December 31, 2022, we hired five employees in our in-house R&D team in Beiming Technology, and we had 126 full-time employed collection specialists and 604 outsourced collection specialists to conduct the business.

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As required by laws and regulations in China, we participate in various employee social security plans that are organized by municipal and provincial governments, including housing, pension, medical insurance and unemployment insurance. We are required under PRC laws to make contributions to employee benefit plans at specified percentages of the salaries, bonuses and certain allowances of our employees, up to a maximum amount specified by the local government from time to time.

We enter into standard confidentiality and employment agreements with our employees.

We believe that we maintain a good working relationship with our employees and none of our employees are represented by labor unions. We have not experienced any material labor disputes.

We also engage certain dispatched workers from independent third-party professional employment agencies, who primarily provide collection and call center services. As of the date of this prospectus, we have not experienced any business interruption due to this arrangement, and we do not foresee any difficulty in finding any replacement employment agencies.

**Research and Development** 

As information technology plays an essential role in our business and services, we endeavor to develop and adopt advanced information technology to increase efficiency and accuracy in operations, enhance client experience and satisfaction, and ultimately contribute to our growth and success.

We maintain an in-house R&D team in Beiming Technology, as illustrated in the diagram below:

![](goodfaith_f1img30.jpg)

Our in-house R&D team consists of two (2) departments, as listed below:

i. Data Development and Maintenance Team (three employees), which is responsible for database management, optimization and development; and

ii. Model Development and Maintenance Team (three employees), which is responsible for algorithm design, service design and development.

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Both of the aforementioned departments are under the supervision of our chief data officer, or the "CDO." Our R&D team focuses primarily on the research and development of our pre-approval artificial intelligent system.

Additional developments have been made through the Joint Laboratory and have been applied to improve our model scoring products and services. See "*Our Business Partners - Research and Development Partner.*"

As of the date of this prospectus, we have applied for nine (9) computer software copyrights with the PRC National Copyright Administration. It is the Company's plan to continue its dedication to the research and development on information technology to enhance efficiency, accuracy and client experience.

For more details on our technology infrastructure and intellectual property, please refer to "*Our Technology Infrastructure*" and "*Intellectual Property*."

**Properties and Facilities**

Our principal executive office is located at Shanghai, where we, through Shanghai Yuyi, lease such property from a related party, Shanghai Hicore Information Technology Co., Ltd., with an area of approximately 2,258 square feet, for a twelve-month term that commenced January 1, 2022. According to the lease, we have priority to renew the lease as long as we use the property for the same purpose, but we are required to notify the landlord at least one (1) month in advance if we would like to renew the lease. Our headquarter serves as our center of management, human resources, and administrative activities.

In addition to our headquarter in Shanghai, we also lease office space with an aggregate area of approximately 69,565 square feet in ten cities for 16 operating centers and two administrative/operating offices, as of the date of this prospectus, as shown in the chart below. The lease term for each location varies from 12 months to 4 years. All of our rental properties are leased from independent third parties, except for our headquarter in Shanghai, and we plan to renew these leases from time to time as needed. Our servers are hosted at internet data centers owned by major domestic internet data center providers.

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| **Location** | **Lease Term** | **Current Use** | **Area (Square Feet)** |
| Shanghai | 12 months | Headquarter, Office for Pre-Approval Segment, and Administrative Office | 2258 |
| Suzhou | 36 months | Administrative Office | 1075 |
| Shenzhen | 12 to 36 months | Office for Post-Loan Segment and Operating Centers | 11077 |
| Chengdu | 24 months | Operating Center | 2454 |
| Guiyang | 12 months | Operating Center | 2688 |
| Henan | 36 to 48 months | Operating Centers | 5746 |
| Huizhou | 24 months | Operating Center | 2452 |
| Jinan | 12 to 24 months | Operating Centers | 5249 |
| Jiujiang | 12 months | Operating Center | 3663 |
| Shenyang | 12 months | Operating Center | 3763 |
| Tai'an | 12 to 36 months | Operating Centers | 31397 |

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We believe that our existing facilities are generally adequate to meet our current needs. We also believe that we will be able to obtain adequate facilities, principally through leasing, to accommodate our future expansion plans.

**Seasonality**

Our businesses are not affected by seasonality.

**Insurance** 

We provide social security insurance including pension insurance, unemployment insurance, work-related injury insurance and medical insurance for our employees. We do not maintain property insurance to protect our equipment and other properties essential to our business operation against risks and unexpected events. We do not maintain business interruption insurance or general third-party liability insurance, nor do we maintain product liability insurance or key-man insurance. We consider our insurance coverage sufficient and in line with market practices for our business operations in China.

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**Legal Proceedings** 

As of the date of this prospectus, we have not been a party to any material legal or administrative proceedings. We may from time to time be subject to various legal or administrative claims and proceedings arising in the ordinary course of business. Litigation or any other legal or administrative proceeding, regardless of the outcome, is likely to result in substantial cost and diversion of our resources, including our management's time and attention.

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**REGULATIONS**

This section sets forth a summary of the principal PRC laws, regulations, and rules relevant to our business and operations in China.

**Regulations on Delinquent Consumer Receivables Recovery Service Providers**

Currently, the PRC has not adopted any laws or regulations directly regulating independent delinquent consumer receivables recovery service providers. In order to conduct our business as a delinquent consumer receivables recovery service provider, we must comply with the rules and regulations governing collection methods of receivables which should be followed by the commercial banks.

The former China Banking Regulatory Commission (which was replaced by China Banking and Insurance Regulatory Commission), promulgated the Notice on Further Regulating the Credit Card Business on June 23, 2009, the Guidelines for Outsourcing Risk Management of Financial Institutions in the Banking Sector on June 4, 2010, and the Commercial Bank Credit Card Business Supervision and Management Methods on January 13, 2011, respectively. These rules set out provisions governing the receivable collection business authorized by commercial banks to the delinquent consumer receivables recovery services providers. A commercial bank has the right to entrust its delinquent consumer receivables recovery to a third-party service provider, while the commercial bank should bear the risk and take the responsibility of such outsourcing. The commercial bank, as the credit card issuing bank, and its authorized delinquent consumer receivables recovery services provider, should collect the debts directly from the debtors and their guarantors, without interfering with the business or life of any third parties who are unrelated to the debts, and should not use inappropriate debt collection methods such as violence, coercion, intimidation or verbal abuse.

We have adopted internal standards to ensure our employees collect delinquent consumer receivables through appropriate means.

**Regulations on Personal Information Protection**

Currently, the PRC has not adopted any laws or regulations directly regulating independent loan risk evaluation and solvency assessment service providers. While we may store and use personal information of our clients' target borrowers when conducting such services, the PRC has adopted comprehensive legislation governing personal information protection. The regulations relevant to our business mainly include the following:

● Decision of the SCNPC on Strengthening Network Information Protection, effective December 28, 2012;

● the Order for the Protection of Telecommunication and Internet User Personal Information, effective September 1, 2013;

● Cyber Security Law of the PRC, promulgated on November 7, 2016 and became effective on June 1, 2017;

● Criminal Law of the PRC, most recently amended on December 26, 2020, and the Interpretations on Several Issues concerning the Application of Law in the Handling of Criminal Cases Involving Infringement of Citizens' Personal Information jointly promulgated by the PRC Supreme People's Court and the PRC Supreme People's Procuratorate on May 8, 2017; and

● the Civil Code of the PRC, effective January 1, 2021.

Under these laws and regulations, "personal information" refers to all kinds of information that are recorded electronically or that can otherwise be used to independently identify or be combined with other information to identify natural persons' personal information, including but not limited to natural persons' names, dates of birth, identification numbers, biologically identified personal information, addresses, and telephone numbers, among others. The personal information of a natural person should be protected by laws and regulations. Any organization or individual should legally obtain the personal information of others when necessary and ensure the safety of such personal information, and should not illegally collect, use, process or transmit the personal information of others, or illegally buy or sell, provide or make public the personal information of others. Apart from the aforementioned laws and regulations, the General Administration of Quality Supervision, Inspection and Quarantine of the PRC and the Standardization Administration of the PRC jointly promulgated the Guidelines for Personal Information Protection in Information Security Technology on Public and Commercial Service Information Systems, or the Guidelines, which became effective on February 1, 2013. The Guidelines, though non-binding, are the PRC's first set of personal information protection guidelines, which sets forth detailed information protection requirements on personal information collection, processing, transfer, and deletion.

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In addition, personal information protection in specific businesses and industries is also governed by administrative laws and regulations, including, among others, (i) Notice on Banking Financial Institutions to Get the Personal Financial Information Protection Work Well Done and Notice on Further Proper Protection of Personal Financial Information of Customers by Financial Institutions, promulgated by the PBOC on January 21, 2011, and March 27, 2012, respectively; (ii) Provisions on Protecting the Personal Information of Telecommunications and Internet Users and Several Provisions on Regulation of the Order of Internet Information Service Market, promulgated by MIIT on July 16, 2013, and December 29, 2011, respectively; (iii) the Administrative Provisions on Mobile Internet Applications Information Services, promulgated by the Cyberspace Administration of China on June 28, 2016; (iv) the Circular on the Special Campaign of Correcting Unlawful Collection and Usage of Personal Information via Apps, jointly promulgated by the PRC Office of the Central Cyberspace Affairs Commission and other three authorities on January 23, 2019; (v) the Guidelines for Internet Personal Information Security Protection, promulgated by the Ministry of Public Security on April 10, 2019; (vi) the Measures for the Determination of the Collection and Use of Personal Information by Apps in Violation of Laws and Regulations, jointly promulgated by the Cyberspace Administration of China, MIIT, the Ministry of Public Security and SAMR on November 28, 2019.

We have adopted internal standards to ensure that our collection business complies with the requirements of personal information protection and the requirements of our clients. Our clients, before providing loans, will sign an authorization agreement with the borrowers in which the borrowers authorize our clients and our clients' cooperation partners to use their various personal information to assess their repayment ability and credit. Depending on such authorization agreement, we, as our clients' cooperation partner, will at the same time be entitled the access to eh personal information we need conducting our business. As of the date of this prospectus, we have not been notified of any noncompliance by the relevant government authorities of any of the foregoing regulations.

**Regulations on Foreign Investment Restrictions**

***Regulations on Company Establishment***

The PRC Company Law, as amended in 2018, applies to the establishment, operation, and management of both PRC domestic companies and foreign-invested enterprises. Investment in the PRC by foreign investors are also regulated by (i) the Foreign-Owned Enterprise Law of the PRC promulgated on April 12, 1986 and amended on October 31, 2000 and September 3, 2016, (ii) the Implementing Rules for the Foreign-Owned Enterprise Law of the PRC promulgated on December 12, 1990 and amended on April 12, 2001 and February 19, 2014, (iii) the Sino-foreign Equity Joint Venture Enterprise Law, promulgated on July 1, 1979 and most recently amended on September 3, 2016, and (iv) the Interim Administrative Measures for the Record-filing of the Incorporation and Change of Foreign-invested Enterprises promulgated on October 8, 2016 and amended on July 30, 2017 and June 29, 2018. Under these laws and regulations, the establishment of a wholly foreign-owned enterprise is subject to the approval of, or the filing with MOFCOM or its local counterpart, and such wholly foreign-owned enterprises must register and file with the appropriate administrative bureau of industry and commerce. On January 1, 2020, the Interim Administrative Measures for the Record-filing of the Incorporation and Change of Foreign-invested Enterprises was terminated and replaced by the Measures on Reporting of Foreign Investment Information.

Our PRC subsidiaries are limited liability companies legally incorporated in the PRC in accordance with the above regulations on company establishment.

***Regulations on Foreign Investment***

The establishment, operation, and management of companies in the PRC are mainly governed by the Company Law, which was issued by the SCNPC and was last amended in October 2018. The Company Law applies to both PRC domestic companies and foreign-invested companies. The investment activities in China of foreign investors are also governed by the Foreign Investment Law, which was approved by the National People's Congress of China in March 2019 and took effect on January 1, 2020. Along with the Foreign Investment Law, the Implementing Rules of Foreign Investment Law promulgated by the State Council and the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the Foreign Investment Law promulgated by the Supreme People's Court became effective on January 1, 2020. Pursuant to the Foreign Investment Law, the term "foreign investments" refers to any direct or indirect investment activities conducted by any foreign investor in the PRC, including foreign individuals, enterprises, or organizations; such investment includes any of the following circumstances: (i) foreign investors establishing foreign-invested enterprises in the PRC solely or jointly with other investors, (ii) foreign investors acquiring shares, equity interests, property portions or other similar rights and interests thereof within the PRC, (iii) foreign investors investing in new projects in the PRC solely or jointly with other investors, and (iv) other forms of investments as defined by laws, regulations, or as otherwise stipulated by the State Council.

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Pursuant to the Foreign Investment Law, the State Council shall promulgate or approve a list of special administrative measures for access to foreign investments. We refer to this as the negative list. The Foreign Investment Law grants treatment to foreign investors and their investments at the market access stage which is no less favorable than that given to domestic investors and their investments, except for the investments of foreign investors in industries deemed to be either "restricted" or "prohibited" on the negative list. The Foreign Investment Law provides that foreign investors shall not invest in the "prohibited" industries on the negative list, and shall meet such requirements as stipulated under the Negative List for making an investment in "restricted" industries on the negative list. Accordingly, the NDRC and the MOFCOM promulgated the Special Entry Management Measures ("Negative List") for the Access of Foreign Investment (2021 version), or the 2021 Negative List, which took effect on January 1, 2022, and the NDRC and the Ministry of Commerce promulgated the Encouraged Industry Catalogue for Foreign Investment (2020 version), or the 2020 Encouraged Industry Catalogue, which took effect on January 27, 2021. Industries not listed in the 2021 Negative List and 2020 Encouraged Industry Catalogue are generally open for foreign investments unless specifically restricted by other PRC laws.

The Foreign Investment Law and its implementing rules also provide several protective rules and principles for foreign investors and their investments in the PRC, including, among others, local governments shall abide by their commitments to the foreign investors; foreign-invested enterprises are allowed to issue stocks and corporate bonds; except for special circumstances, in which case statutory procedures shall be followed and fair and reasonable compensation shall be made in a timely manner; expropriation or requisition of the investment of foreign investors is prohibited; mandatory technology transfer is prohibited; and the capital contributions, profits, capital gains, proceeds out of asset disposal, licensing fees of intellectual property rights, indemnity or compensation legally obtained, or proceeds received upon settlement by foreign investors within China, may be freely remitted inward and outward in RMB or a foreign currency. Also, foreign investors or the foreign investment enterprise will have legal liabilities imposed for failing to report investment information in accordance with the requirements. Furthermore, the Foreign Investment Law provides that foreign-invested enterprises established prior to the effectiveness of the Foreign Investment Law may maintain their legal form and structure of corporate governance within five years after January 1, 2020.

We are an exempted company incorporated in the Cayman Islands and our PRC subsidiaries are considered foreign-invested enterprises or their subsidiaries. As confirmed by our PRC counsel, AllBright, none of our current business operations is stipulated on the 2021 Negative List. Therefore, we are able to conduct our business through our wholly owned PRC Subsidiaries without being subject to restrictions on foreign investment access imposed by the foreign investment laws and regulations of the PRC.

**Regulations on Taxation**

***Enterprise Income Tax***

According to the Enterprise Income Tax Law of the People's Republic of China, enterprise income tax shall be payable by a resident enterprise for income derived from or accruing in or outside China, and the tax rate shall be 25%.

In accordance with the Notice of the State Council on Implementation of Transitional Enterprise Income Tax Incentives issued on December 26, 2007, enterprises which had benefited from the tax rate preferential policies provided by the former enterprise income tax law shall be gradually subject to the new statutory tax rate scheme over a five-year period commencing on the first day of implementing the EIT Law, which became effective on January 1, 2008. For enterprises that were entitled to regular enterprise income tax exemption and reduction incentives shall, following the implementation of the Enterprise Income Tax Law, continue to be entitled to such tax incentives until such exemption and incentive periods expire pursuant to previous tax laws and relevant administrative regulations. For enterprises that did not previously enjoy tax reduction incentives due to non-profitability, the tax incentive period specified in the notice shall commence in 2008.

According to the EIT Law, enterprises lawfully incorporated pursuant to the laws of a foreign country (region) but whose actual management functions are conducted in China will need to pay corporate income tax for income derived from or accruing in or outside China.

In addition, the SAT and the MOF issued a notice related to the tax relief policy of small-scale enterprises in January 2019. According to the notice, from January 1, 2019 to December 31, 2021, if a small profit-making enterprise has annual taxable income less than or equal to RMB1 million, only 25% of its annual taxable income will be subject to income tax at a reduced rate of 20%; for those with annual taxable income more than RMB1 million but did not exceed RMB3 million, 50% of their annual taxable income will be subject to income tax at the same reduced rate of 20%. According to the latest notice issued by the SAT, from January 1, 2021 to December 31, 2022, if a small profit-making enterprise has annual taxable income less than or equal to RMB1 million, only 12.5% of its annual taxable income will be subject to income tax at a reduced rate of 20%; from January 1, 2021 to December 31, 2021, for those with annual taxable income more than RMB1 million but did not exceed RMB3 million, 50% of their annual taxable income will be subject to income tax at the same reduced rate of 20%. According to the latest notice issued by the State Administration of Taxation, from January 1, 2022 to December 31, 2024, for those with annual taxable income more than RMB1 million but not exceeding RMB3 million, 25% of their annual taxable income will be subject to income tax at the same reduced rate of 20%. The annual taxable income of Beiming Technology, Shanghai Yuyi, Huizhou Xindesheng, Guiyang Xindesheng, and Jiujiang Xindesheng for the six months ended June 30, 2022 and 2021 were eligible for the tax relief policy, whereas Shenzhen Xindesehng was subject to the enterprise income tax at the rate of 25%.

Shenzhen Xindesheng, one of our PRC operating entities, did not properly file the tax return with the SAT and pay related enterprise income taxes in a timely manner for the fiscal years from 2017 to 2021. The tax penalty is calculated at 50% of estimated under-declared corporate income tax payable and interest is based on 0.05% per day for the estimated under-declared corporate income tax payable since the income tax settlement date on the following May 31 for each fiscal year. As of May 31, 2022, Shenzhen Xindesheng may become subject to tax penalty and interest of estimated under-declared corporate income tax payable for fiscal year 2021. To address issues that may arise from Shenzhen Xindesheng's previous failure to pay adequate income tax, the Company has issued a letter of commitment stating that Suzhou GoodFaith and its subsidiaries (including Shenzhen Xindesheng) will pay any unpaid taxes before September 30, 2022. On September 21, 2022, the under-declared income taxes and associated interest for fiscal years from 2017 to 2021 as of June 30, 2022 were fully paid, and we have confirmed that any associated tax penalty has been exempted by the local tax authority as of the date of this prospectus.

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***Value-Added Tax (the "VAT") and Business Tax***

Pursuant to (i) the Provisional Regulations on Value-Added Tax of the PRC, or the VAT Regulations, promulgated by the State Council on December 13, 1993 and amended on November 10, 2008, February 6, 2016, and November 19, 2017, respectively, and (ii) the Implementation Rules of the Provisional Regulations on Value Added Tax of the PRC promulgated by the MOF on December 25, 1993 and amended on December 15, 2008 and October 28, 2011, respectively, entities and individuals that sell goods or labor services of processing, repair or replacement, sell services, intangible assets, or immovables, or import goods within the territory of the People's Republic of China are taxpayers of value-added tax. The VAT rate is 17% for taxpayers selling goods, labor services, or tangible movable property leasing services or importing goods, except otherwise specified; 11% for taxpayers selling goods, labor services, or tangible movable property leasing services or importing goods, except otherwise specified; 6% for taxpayers selling services or intangible assets.

In accordance with the Notice of the Ministry of Finance and the State Administration of Taxation on Full Launch of the Pilot Scheme on Levying Value-added Tax in Place of Business Tax, which was released by MOF and the SAT on March 23, 2016 and became effective on May 1, 2016, the pilot scheme on levying value-added tax in place of business tax shall be launched nation-wide. All business tax taxpayers in the construction industry, real estate industry, financial industry, living service industry, etc., shall be included in the scope of the pilot scheme and subject to value-added tax instead of business tax.

In accordance with the applicable regulations on VAT, a 6% VAT rate is applicable to our PRC operating entities.

***Dividend Withholding Tax***

Pursuant to the EIT Law and the implementation rules promulgated on December 6, 2007 and amended on April 23, 2019, dividends payable by a qualified foreign-invested enterprise in China to its foreign enterprise investors are subject to a 10% withholding tax, unless any such foreign investor's jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement. Under the Arrangement between the Mainland and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, or the "China-HK Taxation Arrangement," income tax on dividends payable to a company resident in Hong Kong that holds more than 25% equity interest of a PRC resident enterprise may be reduced to a rate of 5%. In February 2018, the SAT issued the Announcement on Issues concerning Beneficial Owners in Tax Treaties, or "Circular 9," to replace the Circular of the SAT on the Interpretation and the Determination of the Beneficial Owners in the Tax Treaties from April 1, 2018. Circular 9 provides a more elastic guidance to determine whether the applicant engages in substantive business activities. Furthermore, under the Administrative Measures for Non-Resident Enterprises to Enjoy Treatments under Tax Treaties effective November 1, 2015, non-resident taxpayers who satisfy the criteria for entitlement to tax treaty benefits may, at the time of tax declaration or withholding declaration through a withholding agent, enjoy the tax treaty benefits, and be subject to follow-up administration by the tax authorities. Where the non-resident taxpayer does not apply to the withholding agent to claim the tax treaty benefits, or the materials and the information stated in the relevant reports and statements provided to the withholding agent do not satisfy the criteria for entitlement to tax treaty benefits, the withholding agent should withhold tax pursuant to the provisions of PRC tax laws. The Administrative Measures for Entitlement to Treaty Benefits for Non-resident Taxpayers has been issued by SAT on November 14, 2019 and has replaced the Administrative Measures for Non-Resident Enterprises to Enjoy Treatments under Tax Treaties on January 1, 2020, pursuant to which, a non-resident taxpayer may judge by itself whether it meets the conditions for entitlement to treaty benefits and obtain such entitlement when making tax declarations, or making withholding declarations via withholding agents, where it shall retain relevant materials for future reference by the PRC tax authorities. In addition, according to the Notice of SAT on the Issues Concerning the Application of the Dividend Clauses of Tax Agreements on February 20, 2009, if the main purpose of an offshore arrangement is to obtain a preferential tax treatment, the PRC tax authorities have the discretion to adjust the preferential tax rate enjoyed by the relevant offshore entity. Although our WFOE is currently wholly owned by GoodFaith HK, we cannot assure you that we will be able to enjoy the preferential withholding tax rate of 5% under the China-HK Taxation Arrangement.

***Stamp Duty***

In accordance with the Provisional Rules of the People's Republic of China on Stamp Duty, all units (including business entities, administrative organizations, and regulatory bodies) individuals receiving any of the taxable documents listed in the provisional rules shall be regarded as the obligatory payers of stamp duty (hereinafter referred to as taxpayers). The following documents shall be regarded as taxable documents: (i) documents issued for purchase and sale transactions, process contracting, property leasing, commodity transportation, storage and custody of goods, loans, property insurance, technology contracts, and other documents of a contractual nature; (ii) documents of transfer of property title; (iii) business books of account; (iv) documentation of rights or licenses; and (v) other documents determined by the MOF as taxable. A taxpayer shall calculate the amount of stamp duty payable based on the specific type of taxable documents.

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Our PRC subsidiaries have completed tax registration and timely paid taxes in accordance with applicable tax laws and regulations in the PRC.

**Regulations on Foreign Exchange and Dividend Distribution**

***Regulations on Foreign Currency Exchange***

RMB is the legal currency in China, which is subject to foreign exchange control and is not freely convertible. State Administration of Foreign Exchange of the People's Republic of China ("SAFE") has the power to manage all matters related to foreign exchange, including the implementation of foreign exchange control provisions.

In accordance with the Foreign Exchange Control Regulations of the People's Republic of China, promulgated by the State Council on January 29, 1996, international payments and transfers are divided into two categories, namely, current account and capital account. The capital account shall be approved by SAFE, but any international payment or transfer under the current account is not subject to SAFE's approval. The foreign exchange income of the current account may be retained or sold to the financial institutions engaging in foreign exchange settlement or sale. Except those not required by the State, the foreign exchange income of capital account shall be retained or sold to the financial institutions engaging in foreign exchange settlement or sale, subject to the approval of relevant foreign exchange management institutions.

According to the Circular on Issues Concerning Foreign Exchange Control over the Overseas Investment and Financing and Round-trip Investment by Domestic Residents via Special Purpose Vehicles (Hui Fa [2014] 37, "SAFE Circular 37"), released by SAFE on July 4, 2014, SAFE and its branches (hereinafter referred to as the foreign exchange bureau) shall implement regulations and rules relating to registration and administration of special purpose vehicles established by Chinese residents. Special purpose vehicles registered by Chinese resident individuals and foreign exchange control related to the special purpose vehicles shall comply with SAFE Circular 37. Special purpose vehicles registered by domestic organizations and foreign exchange control related to the special purpose vehicles shall comply with the Foreign Exchange Control Regulations of PRC and SAFE Circular 37. Prior to making capital contribution in a special purpose vehicle with a Chinese resident's legitimate assets or interests in China or overseas, the Chinese resident shall apply to the foreign exchange bureau to complete foreign exchange registration for overseas investment. A Chinese resident making capital contribution using his or her legitimate assets or interests in China shall also apply to the foreign exchange bureau at his or her place of registration or the foreign exchange bureau at the location where his or her assets or interests are located to complete the registration. A Chinese resident making capital contribution using his or her legitimate assets or interests overseas shall apply to the foreign exchange bureau at his or her place of registration or the foreign exchange bureau located in his/her domicile to complete the registration.

The Notice of the SAT on Further Simplifying and Improving the Foreign Exchange Management Policies for Direct Investment (Hui Fa [2015] No.13), which was released by SAFE on February 13, 2015, canceled two administrative approval requirements: foreign exchange registration approval under domestic direct investment and foreign exchange registration approval under overseas direct investment. The notice further specifies that banks authorized by SAFE will directly review and approve foreign exchange registration under domestic direct investment and foreign exchange registration under overseas direct investment. SAFE and its branches shall implement indirect supervision over foreign exchange registration of direct investment.

In accordance with the Notice of the State Administration of Foreign Exchange on Policies for Reforming and Regulating the Control over Foreign Exchange Settlement under the Capital Account (Hui Fa [2016] No. 16), which was released by SAFE on June 9, 2016, except financial institutions, domestic enterprises (including Chinese-funded enterprises and foreign-invested enterprises) may complete foreign exchange settlement for their foreign debts at their discretion. Based on business operation conditions and in light of relevant regulations and policies, domestic institutions may settle their foreign exchange receipts with banks under the capital account entitled to discretionary settlement. Domestic institutions may, at their discretion, settle up to 100% of their foreign exchange receipts under the capital account for the time being. SAFE may adjust the aforesaid proportion in due time in light of the balance of payment.

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These aforementioned regulations apply to our direct and indirect shareholders who are PRC residents and apply to any offshore acquisitions and share transfer that we may make in the future if our Ordinary Shares are issued to PRC residents. As of the date of this prospectus, the current Chinese resident shareholders of our Company have completed the registration procedures in accordance with the regulations on foreign exchange.

***Regulations on Dividend Distribution***

The principal regulations governing dividend distributions by companies include the PRC Company Law, the Foreign Invested Enterprise Law and its implementing rules. Under these laws and regulations, both domestic companies and foreign-invested companies in the PRC are required to set aside, as general reserves, at least 10% of their after-tax profit, until the cumulative amount of their reserves reaches 50% of their registered capital unless the laws and regulations regarding foreign investment provide otherwise. PRC companies are not permitted to distribute any profits until any losses from prior fiscal years have been offset. Profits retained from prior fiscal years may be distributed together with distributable profits from the current fiscal year. As advised by our PRC counsel, AllBright, there can be no assurance that the PRC government will not intervene or impose restrictions on our ability to transfer or distribute cash within our organization or to foreign investors, which could result in an inability or prohibition on making transfers or distributions outside of mainland China or Hong Kong and adversely affect our business.

**Regulations on Intellectual Property**

***Regulations on Copyrights***

Copyrights in the PRC, including software copyrights, are principally protected under the PRC Copyright Law, which took effect in 1991 and was most recently amended in 2020 and became effective as of June 1, 2021, and other related rules and regulations. Under the PRC Copyright Law, the term of protection for software copyrights is 50 years after the copyright holder's death. The Regulation on the Protection of the Right to Communicate Works to the Public over Information Networks, as most recently amended on January 30, 2013, provides specific rules on fair use, statutory license, and a safe harbor for use of copyrights and copyright management technology and specifies the liabilities of various entities for violations, including copyright holders, libraries and Internet service providers.

***Regulations on Trademark***

Registered trademarks are protected under the Trademark Law and related rules and regulations. Trademarks are registered with the Trademark office of the National Intellectual Property Administration under the SAMR, formerly the Trademark Office of the State Administration of Industry and Commerce. Where registration is sought for a trademark that is identical or similar to another trademark that has already been registered or given preliminary examination and approval for use in the same or similar category of commodities or services, the application for registration of this trademark may be rejected. Trademark registrations are effective for a renewable ten-year period, unless otherwise revoked.

***Regulations on Domain Names***

Domain names are protected under the Administrative Measures on Internet Domain Names promulgated by the MIIT on August 24, 2017 and effective as of November 1, 2017. Domain name registrations are handled through domain name service agencies established under the relevant regulations, and applicants become domain name holders upon successful registration.

***Regulations on Trade Secret***

Trade secrets are protected under the Anti-Unfair Competition Law was promulgated by the SCNPC and came into effect on April 23, 2019. Business operators and other natural persons, legal persons and unincorporated organizations are prohibited from implementing several behaviors that infringe trade secrets.

We have legally obtained adequate copyrights, trademarks and domains names to support our operations and as our business develops, we may need to apply for or obtain more intellectual property rights. We have not infringed or have any disputes about intellectual property of others since our inception.

**Regulations on Employment and Social Welfare**

Pursuant to the PRC Labor Law, which was promulgated in 1994 and most recently amended in 2018, and the PRC Labor Contract Law, which was promulgated on June 29, 2007 and amended on December 28, 2012, employers must execute written labor contracts with full-time employees. All employers must comply with local minimum wage standards. Violations of the PRC Labor Contract Law and the PRC Labor Law may result in the imposition of fines and other administrative and criminal liability in the case of serious violations.

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In addition, according to the PRC Social Insurance Law implemented on July 1, 2011 and most recently amended on December 29, 2018, and the Regulations on the Administration of Housing Funds which was promulgated by the State Council in 1999 and most recently amended in 2019, employers in the PRC must provide employees with welfare schemes covering pension insurance, unemployment insurance, maternity insurance, work-related injury insurance, medical insurance, and housing funds. Employers shall pay basic endowment insurance premiums in accordance with the proportion of the total wages of their employees as stipulated by the state, and shall be credited to the basic endowment insurance pooling fund. Furthermore, employs shall register with the housing provident fund management center within 30 days from the date of employment, and go through the formalities for the establishment or transfer of the employee housing provident fund account. If employers fails to make social insurance registration or pay social insurance premiums or housing provident fund in full and on time, it may be subject to fines and penalties.

On September 21, 2018, PRC Human Resources and Social Security promulgated Emergency Notice on Practicing Principles of the State Council Executive Meeting and Stabilizing Work on Collecting Social Insurance Premiums, which reiterated the strict implementation of the current social security premium collection policies and strictly forbidden to organize the centralized settlement of the historical arrears of the enterprise.

On March 24, 2019, the State Council promulgated the Interim Regulations on Levying Social Insurance Premiums, which provides the employers and employees shall pay social insurance premiums in full in currency and such payments shall not be reduced or exempted. If employers fail to pay or withhold social insurance premiums as required, the labor and social security administrative department or the taxation authority shall order the payment within a time limit; if payments are still not made within the time limit, in addition to making up the outstanding amount, from the date of arrears, the late fee of 2‰ will be charged per day. Late payment fees are incorporated into the social insurance fund.

We did not fully comply with PRC laws and regulations regarding employment and social welfare prior to June 2022. For example, our PRC operating entities did not make adequate social insurance and housing fund contributions for all our employees. We, however, have taken measures to implement our policy on the payment of social insurance and housing fund contributions for employees for the purpose of compliance with relevant PRC laws and regulations starting from June 2022.

**Regulations on Leasing**

Pursuant to the Law on Administration of Urban Real Estate of the PRC, promulgated by the SCNPC on July 5, 1994, last amended on August 26, 2019, and effective as of January 1, 2020, for leasing premises, the lessor and lessee are required to enter into a written lease contract, containing provisions such as the leasing terms, use of the premises, rental and repair liabilities, and other rights and obligations of both parties. Pursuant to the Administrative Measures for Commodity House Leasing, promulgated by the Ministry of Housing and Urban-Rural Development in China in December 2010 and effective as of February 1, 2011, both the lessor and lessee are also required to register the lease with the real estate administration department. If the lessor and lessee fail to complete the registration procedures, both lessor and lessee may be subject to fines ranging from RMB1,000 (approximately $155) to RMB10,000 (approximately $1,553). In addition, although the unregistered lease agreements are considered binding agreements, in practice, some of the remedies generally available to the parties to registered lease agreements may not be fully applicable to the unregistered lease agreements, such as specific performance of lease agreement against new purchasers of the property. As of the date of this prospectus, our PRC operating entities have not completed the registration for some of their leases. In the event that any fines are imposed on the PRC operating entities for their failure to register their lease agreements, the PRC operating entities may not be able to recover such losses from the lessors. However, because the fines, if any, will be minimal, the PRC operating entities' business and financial results will likely not be materially affected.

According to the Civil Code of the PRC, the lessee may sublease the leased property and let a third party occupy the premises, subject to the consent of the lessor. Where the lessee subleases the premises, the lease contract between the lessee and the lessor remains valid. The lessor is entitled to terminate the lease contract if the lessee subleases the premises without the consent of the lessor. In addition, if the lessor transfers the premises, the lease contract between the lessee and the lessor will still remain valid.

**Regulations Relating to M&A and Overseas Listings**

On August 8, 2006, six PRC regulatory agencies, including the CSRC, adopted the Regulations on Mergers of Domestic Enterprises by Foreign Investors, or the "M&A Rules," which became effective on September 8, 2006 and was amended on June 22, 2009. Foreign investors shall comply with the M&A Rules (i) when they purchase equity interests of a domestic company or subscribe the increased capital of a domestic company, thus changing the nature of the domestic company into a foreign-invested enterprise; (ii) when the foreign investors establish a foreign-invested enterprise in the PRC, through which to purchase and operate the assets of a domestic company; or (iii) when the foreign investors purchase the asset of a domestic company, which will be transferred to and operated by a foreign-invested enterprise established by the foreign investor. The M&A Rules purport, among other things, to require offshore special purpose vehicles formed for overseas listing purposes through acquisitions of PRC domestic companies and controlled by PRC companies or individuals, to obtain the approval of the CSRC prior to publicly listing their securities on an overseas stock exchange. See "*Risk Factors-Risks Relating to Doing Business in the PRC-The approval of the CSRC may be required in connection with this offering under a regulation adopted in August 2006, and, if required, we cannot assure you that we will be able to obtain such approval, in which case we may face sanctions by the CSRC or other PRC regulatory agencies for failure to seek the CSRC approval for this offering*."

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The M&A Rules, and other regulations and rules concerning mergers and acquisitions established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time-consuming and complex. For example, the M&A Rules require that MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise, if (i) any important industry is concerned, (ii) such transaction involves factors that impact or may impact national economic security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark or PRC time-honored brand. See "*Risk Factors-Risks Relating to Doing Business in the PRC-The M&A Rules and certain other PRC regulations establish complex procedures for certain acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China*."

In addition, according to the Notice on Establishing the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors issued by the General Office of the State Council on February 3, 2011 and became effective on March 3, 2011, and the Rules on Implementation of Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors issued by MOFCOM on August 25, 2011 and became effective on September 1, 2011, mergers and acquisitions by foreign investors that raise "national defense and security" concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise "national security" concerns are subject to strict review by MOFCOM, and the regulations prohibit any activities attempting to bypass such security review, including by structuring the transaction through a proxy or contractual control arrangement.

On February 17, 2023, the CSRC issued the Trial Measures, which will become effective on March 31, 2023. On the same date, the CSRC circulated the Guidance Rules and Notice on the CSRC's official website. The Trial Measures, together with the Guidance Rules and Notice, impose substantially the same requirements for overseas securities offering and listing by domestic enterprises. Under the Trial Measures and the Guidance Rules and Notice, beginning March 31, 2023, PRC domestic enterprises conducting overseas securities offerings and listing, either directly or indirectly, shall complete filings with the CSRC pursuant to the Trial Measures' requirements within three working days following the submission of an initial public offering or listing application.

According to the CSRC Notice, the domestic companies that have already been listed overseas before the effective date of the Trial Measures (namely, March 31, 2023) shall be deemed as Existing Issuers. Existing Issuers are not required to complete the filing procedures immediately, and they shall be required to file with the CSRC for any subsequent offerings. Further, according to the CSRC Notice, domestic companies that have obtained approval from overseas regulatory authorities or securities exchanges (for example, the effectiveness of a registration statement for offering and listing in the U.S. has been obtained) for their indirect overseas offering and listing prior March 31, 2023 but have not yet completed their indirect overseas issuance and listing, are granted a six-month transition period from March 31, 2023 to September 30, 2023. Those that complete their indirect overseas offering and listing within such six-month period are deemed as Existing Issuers and are not required to file with the CSRC for their indirect overseas offerings and listings. Within such six-month transition period, however, if such domestic companies fail to complete their indirect overseas issuance and listing, they shall complete the filing procedures with the CSRC. Based on the foregoing, if the effectiveness of our registration statement on Form F-1 cannot be declared on or before March 31, 2023, or if the effectiveness of our registration statement on Form F-1 is declared on or before March 31, 2023 but we fail to complete this offering and listing on or before September 30, 2023, we will be required to complete necessary filing procedures pursuant to the Trial Measures.

On February 24, 2023, the CSRC, together with the MOF, National Administration of State Secrets Protection and National Archives Administration of China, revised the Provisions issued by the CSRC and National Administration of State Secrets Protection and National Archives Administration of China in 2009. The revised Provisions were issued under the title the "Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies", and will come into effect on March 31, 2023 together with the Trial Measures. One of the major revisions to the revised Provisions is expanding their application to cover indirect overseas offering and listing, as is consistent with the Trial Measures. The revised Provisions require that, among other things, (a) a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level; and (b) a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals and entities including securities companies, securities service providers and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations. As of the date of this prospectus, the revised Provisions have not come into effect. On or after March 31, 2023, any failure or perceived failure by our Company or our PRC subsidiaries to comply with the above confidentiality and archives administration requirements under the revised Provisions and other PRC laws and regulations may result in the relevant entities being held legally liable by competent authorities, and referred to the judicial organ to be investigated for criminal liability if suspected of committing a crime.

According to the Trial Measures and the revised Provisions, we may be required to comply with the filing requirements under the Trial Measures in connection with this offering. As of the date of this prospectus, our PRC counsel does not expect there to be any material legal obstacle for us to comply with the filing requirements under the Trial Measures. Regardless of whether this offering will be subject to any filing requirements with the CSRC under the Trial Measures, any future securities offerings and listings outside of mainland China by our Company, including but not limited to follow-on offerings, secondary listings, and going private transactions, will be subject to the filing requirements with the CSRC under the Trial Measures, and we cannot assure you that we will be able to comply with such filing requirements in a timely manner, or at all.

As the Trial Measures have just recently been released, uncertainties remain as to proper practices and interpretations and implementations with respect thereto which may subject us to additional procedural requirements in this offering and future financial activities. If it is determined that any approval, filing, or other administrative procedure from the CSRC or other PRC governmental authorities is required for this offering, or any future offering or listing, we cannot assure you that we can obtain the required approval or accomplish the required filings or other regulatory procedures in a timely manner, or at all. If we fail to obtain the relevant approval or complete the filings and other relevant regulatory procedures in a timely manner, we may face sanctions by the CSRC or other PRC regulatory agencies, which may include fines and penalties on our operations in China, limitations on our operating privileges in China, restrictions on or prohibition of the payments or remittance of dividends by our PRC subsidiaries in China, delay of or restriction on the repatriation of the proceeds from this offering into China, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our Ordinary Shares. The CSRC or other PRC regulatory authorities may also take actions requiring us, or making it advisable for us, to halt our offerings before settlement and delivery of the shares offered. Consequently, if investors engage in market trading or other activities in anticipation of and prior to settlement and delivery, they do so at the risk that settlement and delivery may not occur. In addition, if the CSRC or other regulatory authorities later promulgate new rules or explanations requiring that we obtain their approvals or accomplish the required filing or other regulatory procedures for this offering, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties or negative publicity regarding such approval requirements could materially and adversely affect our business, prospects, financial condition, reputation, and the trading price of our Ordinary Shares.

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**MANAGEMENT**

Set forth below is information concerning our directors, director appointees, and executive officers.

The following individuals are our executive management and members of the board of directors.

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| **Name** | **Age** | **Position(s)** |
| Xu Dai  | 59 | Chairman of the Board and Director |
| Xiaowei Wang | 37 | Chief Executive Officer |
| Yulin Dong | 34 | Chief Financial Officer |
| Ting Kong | 36 | Director |
| Joel Gallo | 50 | Independent Director Appointee\* |
| Borys Priadko | 66 | Independent Director Appointee\* |
| Chunyi (Charlie) Hao | 63 | Independent Director Appointee\* |

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\* Joel Gallo, Borys Priadko, and Chunyi (Charlie) Hao have accepted appointments to be our directors, effective immediately prior to the effectiveness of the registration statement of which this prospectus forms a part.

The following is a brief biography of each of our executive officers and directors or director appointees:

*Mr. Xu Dai* is our Chairman of the board of directors and director. Mr. Dai has extensive experience in the financial industry and has served in a variety of financial intuitions, including multiple state-owned banks and joint-stock banks in China. Mr. Dai has served as the chief executive officer at Shanghai Zhongchuang Asset Management Co., Ltd. since April 2018, where he is responsible for the management of day-to-day operations and high-level strategy making and business planning. He is also a core member of the IC Card Engineering Project (Hainan) Research and Development Team of the Modern Payment System of the People's Bank of China. Mr. Dai also served as a branch director at the Shanghai branch of China Everbright Bank from May 2014 to April 2018. He received his bachelor's degree in Economic Law from Hainan University in 2001. Mr. Dai has been chosen as our Chairman because of his knowledge and extensive experience in the financial industry and our business.

*Mr. Xiaowei Wang* has been our Chief Executive Officer since May 2021. He has 13 years of experience in the post-loan management industry. Mr. Wang has served as a general manager at Shenzhen Xindesheng since October 2018, where he plays a leading role in planning and implementing operation and sale strategies. Prior to joining Shenzhen Xindesheng, Mr. Wang served as a general manager in charge of the credit card collection business at the Shenzhen branch of Ping An Bank from May 2011 to October 2018. From May 2008 to May 2011, Mr. Wang also served as a manager of the credit card debt collection department at Shenzhen Development Bank, where he was responsible for tasks including strategy formulation, personnel management, and performance assessment. Mr. Wang received his bachelor's degree in Business Management from Jiangxi Vocational College of Finance and Economics in 2007. Mr. Wang's extensive experience in post-loan management and proven track record in business management make him a valuable asset to our Company.

*Mr. Yulin Dong* has been our Chief Financial Officer since September 2021, and he oversees the Company's tax compliance, accounting, and financial management. He is a seasoned accountant with years of experience working for multiple domestic listed companies. From August 2020 to August 2021, Mr. Dong served as a director secretary at Shanghai Zhongchuang Asset Management Co., Ltd., where he assisted the chairman of the board of directors with the daily operations and management of the company. Mr. Dong is well versed in corporate financing and has extensive experience in mergers and acquisitions. He also served as a financial director at Shanghai Luca Trail Education Technology Co., Ltd. from May 2019 to July 2020, and as a deputy director of the investment M&A department at Shanghai Jiafu Asset Management Co., Ltd. from July 2016 to April 2019. Mr. Dong was a senior accountant at Ernst & Young from August 2013 to June 2016. He obtained his bachelor's degree in Accounting from Jiangxi University of Finance and Economics in 2011, and his master's degree in Accounting & Finance from the University of Exeter, England in 2013. Mr. Dong is a member of the Association of Chartered Certified Accountants. Mr. Dong is well qualified to serve as our Chief Financial Officer due to his expertise in accounting, corporate financing, and mergers and acquisitions.

*Ms. Ting Kong* has been our director since May 2021, and she has extensive knowledge and experience in the financial industry and our business. Ms. Kong has served as a general manager at Beiming Technology since May 2018, where she is responsible for implementing business plans, optimizing resource allocations, and providing guidance to the company's daily operations. From May 2013 to May 2018, she served as a director of the marketing department at Shanghai Longtuan Information Technology Co., Ltd. Ms. Kong received her bachelor's degree in Accounting from Hebei University of Technology in China in 2009. Ms. Kong's experience in the financial industry and knowledge of our business made her a valuable addition to our board of directors.

*Mr. Joel Gallo* will serve as our independent director starting immediately prior to the effectiveness of the registration statement of which this prospectus forms a part. Mr. Gallo has over 25 years of experience in global finance, capital markets, and technology. He has served as the chief financial officer since 2022 at CoinTiger, a blockchain/cryptocurrency exchange service provider with operations in China, Southeast Asia, the Middle East, and Europe, and is responsible for planning, implementing, and managing all financial-related activities of the company and leading the company's IPO effort for listing on the New York Stock Exchange in 2023. Mr. Gallo has also served as an adjunct faculty since 2021 at New York University, responsible for teaching Master's courses such as Corporate Finance and Accounting and International Business. Since 2020, Mr. Gallo has also served as an independent director and audit committee member at Hywin Holding Ltd. (Nasdaq: HYW), which is the third largest wealth management firm in mainland China with operations in Hong Kong, the U.K., and the U.S., where he is responsible for providing guidance on Nasdaq listing regulations and collaborating with external auditors to address internal controls and material weakness. Since July 2019, Mr. Gallo has also served as an independent director of International Technical Holdings Corporation. From February 2021 to May 2022, Mr. Gallo served as the chief financial officer at ETAO International Group, a global healthcare firm that provides a network of private specialized hospitals, telemedicine platforms, and AI healthcare technologies on a global scale, where he was responsible for implementing and managing all financial-related activities of the company and coordinating fundraising and the IPO effort on the New York Stock Exchange. From November 2019 to February 2021, Mr. Gallo served as the chief executive officer of Columbia China League Business Advisory, where he was responsible for advising Chinese companies on Nasdaq IPO listing. From April 2013 to December 2019, he co-founded and served as the principal at GLS Group LLC, where he oversaw the provision of management consulting services to financial sector firms. From 2002 to 2013, Mr. Gallo served as a senior manager or director at Price Waterhouse Coopers, Ernst & Young, Dell EMC corporation, and Deloitte, responsible for advising and leading global projects with over 100 firms. Mr. Gallo received his Master's degree in Public Administration from the School of International and Public Affairs of Columbia University in 2018, and his Master's degree in International Relations from the Fletcher School of Law and Diplomacy of Tufts University in 2008. He received his bachelor's degree in Management from Binghamton University, State University of New York in 1993. Mr. Gallo is well qualified to serve as our independent director due to his extensive experience in global finance, capital markets, and technology.

*Mr. Borys Priadko* will serve as our independent director starting immediately prior to the effectiveness of the registration statement of which this prospectus forms a part. Mr. Priadko is the founder and managing partner of Shanghai Xing Sen Management Consulting Co. Ltd., a business consulting company established in 2009 in Shanghai. He has more than 40 years of experience in finance and corporate governance. Mr. Priadko has lived and worked in China for the past 20 years. Prior to founding his business consulting company, Mr. Priadko served as the chief financial officer of Siemens Building Technologies (Hong Kong) Limited from December 1996 to July 2005, where he was responsible for the company's overall financial management and internal control. Mr. Priadko received his bachelor's degree in Accounting from the University of New England in 1979. He is also a certified practicing accountant and a fellow of CPA Australia. Mr. Priadko's finance and corporate governance expertise makes him a valuable addition to our board of directors.

*Mr. Chunyi (Charlie) Hao* will serve as our independent director starting immediately prior to the effectiveness of the registration statement of which this prospectus forms a part. Mr. Hao is a founding partner and has served as a managing director of East Stone Capital Limited, a private equity firm focusing on emerging industries, since October 2017. From August 2018 to November 2022, Mr. Hao served as the chairman of the board of directors and chief financial officer of East Stone Acquisition Corporation (Formerly Nasdaq: ESSC), a special purpose acquisition company focused on acquiring businesses that provide technology services to the financial industry in North America and the Asia-Pacific region. From December 2015 to March 2019, Mr. Hao served as the chief executive officer and president of Shandong Haizhishe Energy Engineering Co., Ltd., a solar and wind engineering company in China, and was in charge of the daily operations and business development of the company. Since August 2018, Mr. Hao has served as an independent director of Cogobuy Group PLC (HKSE: 0400.HK), an e-commerce platform and distributor for electronic goods in China. Mr. Hao received his bachelor's degree in French from Beijing Language and Culture University in 1982, a Master of Arts degree from the University of Notre Dame in 1988, and an MBA degree from Pace University in 1993. Mr. Hao is well qualified to serve as our independent director due to his expertise in management, finance, and capital investments.

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Our officers are appointed by and serve at the discretion of our board of directors and the shareholders voting by ordinary resolution. Our directors are not subject to a set term of office and hold office until the next general meeting called for the election of directors and until their successor is duly appointed or such time as they die, resign or are removed from office by a shareholders' ordinary resolution. The office of a director will be vacated automatically if, among other things, the directors resign in writing, becomes bankrupt or makes any arrangement or composition with his/her creditors generally or is found to be or becomes of unsound mind.

For additional information, see "*Description of Share Capital-Directors*."

**Family Relationships**

None of our directors or executive officers has a family relationship as defined in Item 401 of Regulation S-K.

**Involvement in Certain Legal Proceedings** 

To the best of our knowledge, none of our directors or executive officers has, during the past 10 years, been involved in any legal proceedings described in subparagraph (f) of Item 401 of Regulation S-K.

**Board of Directors**

Our board of directors will consist of five directors upon closing of this offering, three of whom shall be "independent" within the meaning of the corporate governance standards of the Nasdaq listing rules and will meet the criteria for independence set forth in Rule 10A-3 of the Exchange Act.

**Duties of Directors**

Under Cayman Islands law, our directors owe fiduciary duties to our Company, including a duty of loyalty, a duty to act honestly, and a duty to act in what they consider in good faith to be in our best interests. Our directors must also exercise their powers only for a proper purpose. Our directors also owe to our Company a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience. However, English and Commonwealth Courts have moved toward an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands. In fulfilling their duty of care to us, our directors must ensure compliance with our amended and restated memorandum and articles of association, as amended and restated from time to time, and the class rights vested thereunder in the holders of the shares. Our Company has the right to seek damages if a duty owed by our directors is breached. A shareholder may in certain circumstances have rights to seek damages in our name if a duty owed by the directors is breached.

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Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs. The functions and powers of our board of directors include, among others:

● convening shareholders' annual general meetings and reporting its work to shareholders at such meetings;

● declaring dividends and distributions;

● appointing officers and determining the term of office of the officers;

● exercising the borrowing powers of the company and mortgaging the property of the company; and

● approving the transfer of shares of our Company, including the registering of such shares in our share register.

**Terms of Directors and Executive Officers**

Our directors may be appointed by a resolution of our board of directors, or by an ordinary resolution of our shareholders, pursuant to the amended and restated memorandum and articles of association of our Company effective immediately prior to completion of this offering. Our directors are not subject to a term of office and hold office until such time as they are removed from office by ordinary resolution of the shareholders (unless he has sooner vacated office) or upon any specified event or after any specified period in a written agreement between our Company and the director, if any, and an appointment of a director may be on terms that the director shall automatically retire from office (unless he has sooner vacated office) at the next or a subsequent annual general meeting; but no such term shall be implied in the absence of an express provision. A director will cease to be a director if, among other things, the director (1) becomes bankrupt or makes any arrangement or composition with his creditors; (2) dies or is found by our Company to be or becomes of unsound mind; (3) resigns his office by notice in writing to our Company; (4) without special leave of absence from our board, is absent from three consecutive board meetings and our board of directors resolve that his office be vacated; (5) is prohibited by law from being a director; or (6) is removed from office pursuant to any other provision of our amended and restated memorandum and articles of association.

All of our executive officers are appointed by and serve at the discretion of our board of directors, and may be removed by our board of directors.

**Qualification**

There is currently no shareholding qualification for directors, although a shareholding qualification for directors may be fixed by our shareholders by ordinary resolution.

**Employment Agreements and Indemnification Agreements**

We will enter into employment agreements with each of our executive officers. Pursuant to employment agreements, the form of which is filed as Exhibit 10.1 to this Registration Statement, we will agree to employ each of our executive officers for a specified time period, which may be renewed upon both parties' agreement 30 days before the end of the current employment term, and payment of cash compensation and benefits shall become payable when the Company becomes a public reporting company in the US. We may terminate the employment for cause, at any time, without notice or remuneration, for certain acts of the executive officer, including but not limited to the commitments of any serious or persistent breach or non-observance of the terms and conditions of the employment, conviction of a criminal offense, willful disobedience of a lawful and reasonable order, fraud or dishonesty, receipt of bribery, or severe neglect of his or her duties. An executive officer may terminate his or her employment at any time with a one-month prior written notice. Each executive officer will agree to hold, both during and after the employment agreement expires, in strict confidence and not to use or disclose to any person, corporation or other entity without written consent, any confidential information.

We will also enter into indemnification agreements with each of our directors and executive officers. Under these agreements, we agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our Company.

**Compensation of Directors and Executive Officers**

For the fiscal year ended December 31, 2022, we paid an aggregate of $219,700 as compensation to our executive officers, and we did not compensate our non-executive directors for their services other than to reimburse them for out-of-pocket expenses incurred in connection with their attendance at meetings of the board of directors. We have not set aside or accrued any amount to provide pension, retirement, or other similar benefits to our directors and executive officers. Our PRC subsidiaries are required by law to make contributions equal to certain percentages of each employee's salary for his or her pension insurance, medical insurance, unemployment insurance, and other statutory benefits and a housing provident fund.

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**Insider Participation Concerning Executive Compensation**

Our board of directors has determined executive officer compensation from our inception. When our Compensation Committee is set up, it will determine executive officer compensation (please see below).

**Committees of the Board of Directors**

We will establish three committees under the board of directors prior to the closing of this offering: an audit committee, a compensation committee, and a nominating and corporate governance committee. The appointment to the committees will be effective immediately upon the effective date of the registration statement of which this prospectus forms a part. We will adopt a charter for each of the three committees. Each committee's members and functions are described below.

*Audit Committee*. Our audit committee will consist of Joel Gallo, Borys Priadko, and Chunyi (Charlie) Hao. Borys Priadko will be the chairperson of our audit committee. We have determined that Joel Gallo, Borys Priadko, and Chunyi (Charlie) Hao will satisfy the "independence" requirements of the Nasdaq listing rules under and Rule 10A-3 under the Securities Exchange Act. Our board also has determined that Borys Priadko qualifies as an audit committee financial expert within the meaning of the SEC rules or possesses financial sophistication within the meaning of the Nasdaq listing rules. The audit committee will oversee our accounting and financial reporting processes and the audits of the financial statements of our Company. The audit committee will be responsible for, among other things:

● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors;

● reviewing with the independent auditors any audit problems or difficulties and management's response;

● discussing the annual audited financial statements with management and the independent auditors;

● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures;

● reviewing and approving all proposed related party transactions;

● meeting separately and periodically with management and the independent auditors; and

● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.

*Compensation Committee.* Our compensation committee will consist of Joel Gallo, Borys Priadko, and Chunyi (Charlie) Hao. Joel Gallo will be the chairperson of our compensation committee. We have determined that Joel Gallo, Borys Priadko, and Chunyi (Charlie) Hao will satisfy the "independence" requirements of the Nasdaq listing rules and Rule 10C-1 under the Securities Exchange Act. The compensation committee will assist the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated. The compensation committee will be responsible for, among other things:

● reviewing and approving the total compensation package for our most senior executive officers;

● approving and overseeing the total compensation package for our executives other than the most senior executive officers;

● reviewing and recommending to the board with respect to the compensation of our directors;

● reviewing periodically and approving any long-term incentive compensation or equity plans;

● selecting compensation consultants, legal counsel or other advisors after taking into consideration all factors relevant to that person's independence from management; and

● reviewing programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans.

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*Nominating and Corporate Governance Committee.* Our nominating and corporate governance committee will consist of Joel Gallo, Borys Priadko, and Chunyi (Charlie) Hao. Chunyi (Charlie) Hao will be the chairperson of our nominating and corporate governance committee. Joel Gallo, Borys Priadko, and Chunyi (Charlie) Hao satisfy the "independence" requirements of the Nasdaq listing rules. The nominating and corporate governance committee will assist the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board and its committees. The nominating and corporate governance committee will be responsible for, among other things:

● identifying and recommending nominees for election or re-election to our board of directors or for appointment to fill any vacancy;

● reviewing annually with our board of directors its current composition in light of the characteristics of independence, age, skills, experience and availability of service to us;

● identifying and recommending to our board the directors to serve as members of committees;

● advising the board periodically with respect to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to our board of directors on all matters of corporate governance and on any corrective action to be taken; and

● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.

**Code of Business Conduct and Ethics**

Our board of directors will adopt a code of business conduct and ethics, which is to be filed as Exhibit 99.1 of this registration statement and applicable to all of our directors, officers and employees. We will make our code of business conduct and ethics publicly available on our website prior to the initial closing of this offering.

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**PRINCIPAL SHAREHOLDERS**

The following table sets forth information with respect to the beneficial ownership, within the meaning of Rule 13d-3 under the Exchange Act, of our Ordinary Shares as of the date of this prospectus, and as adjusted to reflect the sale of the Ordinary Shares offered in this offering for:

● each of our directors, director appointees, and executive officers; and

● each person known to us to own beneficially more than 5% of our Ordinary Shares.

Beneficial ownership includes voting or investment power with respect to the securities. Except as indicated below, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all Ordinary Shares shown as beneficially owned by them. Percentage of beneficial ownership of each listed person prior to this offering is based on 20,000,000 Ordinary Shares outstanding as of the date of this prospectus immediately prior to the effectiveness of the registration statement of which this prospectus is a part. Percentage of beneficial ownership of each listed person after this offering includes Ordinary Shares outstanding immediately after the completion of this offering.

Information with respect to beneficial ownership has been furnished by each director, officer, or beneficial owner of 5% or more of our Ordinary Shares. Beneficial ownership is determined in accordance with the rules of the SEC and generally requires that such person have voting or investment power with respect to securities. In computing the number of Ordinary Shares beneficially owned by a person listed below and the percentage ownership of such person, Ordinary Shares underlying options, warrants, or convertible securities held by each such person that are exercisable or convertible within 60 days of the date of this prospectus are deemed outstanding, but are not deemed outstanding for computing the percentage ownership of any other person. Except as otherwise indicated in the footnotes to this table, or as required by applicable community property laws, all persons listed have sole voting and investment power for all Ordinary Shares shown as beneficially owned by them. As of the date of the prospectus, we have eight shareholders of record, none of whom are located in the United States. We will be required to have at least 300 unrestricted round lot shareholders at closing in order to satisfy the Nasdaq listing rules.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Ordinary Shares Beneficially**<br> **Owned Prior to this Offering**  | **Ordinary Shares Beneficially**<br> **Owned Prior to this Offering**  | **Ordinary Shares**<br> **Beneficially Owned**<br> **After this Offering**<br> **(Over-allotment option**<br> **not exercised)** | **Ordinary Shares**<br> **Beneficially Owned**<br> **After this Offering**<br> **(Over-allotment option**<br> **not exercised)** | **Ordinary Shares**<br> **Beneficially Owned**<br> **After this Offering**<br> **(Over-allotment option**<br> **fully exercised)** | **Ordinary Shares**<br> **Beneficially Owned**<br> **After this Offering**<br> **(Over-allotment option**<br> **fully exercised)** |
|  | **Beneficially**  | **Percent** | **Number** | **Percent** | **Number** | **Percent** |
| **Directors and Executive Officers<sup>(1)</sup>:** |  |  |  |  |  |  |
| Xu Dai<sup>(2)</sup>  | 1200000 | 6% | 1200000 | 5.22% | 1200000 | 5.12% |
| Xiaowei Wang<sup>(3)</sup> | 5840000 | 29.2% | 5840000 | 25.39% | 5840000 | 24.90% |
| Yulin Dong |  |  |  |  |  |  |
| Ting Kong |  |  |  |  |  |  |
| Joel Gallo |  |  |  |  |  |  |
| Borys Priadko |  |  |  |  |  |  |
| Chunyi (Charlie) Hao |  |  |  |  |  |  |
| **All directors and executive officers as a group (seven individuals):** | 7040000 | 35.2% | 7040000 | 30.61% | 7040000 | 30.02% |
| **5% Shareholders<sup>(4)</sup>:** |  |  |  |  |  |  |
| Qearl's Holdings Limited<sup>(5)</sup> | 9460000 | 47.3% | 9460000 | 41.13% | 9460000 | 40.34% |
| Cloud Light Holdings Limited<sup>(2)</sup> | 1200000 | 6% | 1200000 | 5.22% | 1200000 | 5.12% |
| Gread Cause Holdings Limited<sup>(3)</sup> | 5840000 | 29.2% | 5840000 | 25.39% | 5840000 | 24.9% |

---

Notes:

(1) Unless otherwise indicated, the business address of each of the individuals is 1<sup>st</sup> Floor, Building 5, Lane 55, Chuanhe Road, Pudong New District, Shanghai, the PRC.

(2) Represents 1,200,000 Ordinary Shares held by Cloud Light Holdings Limited, a British Virgin Islands company, which is 100% owned by Xu Dai.

(3) Represents 5,840,000 Ordinary Shares held by Gread Cause Holdings Limited, a British Virgin Islands company, which is 100% owned by Xiaowei Wang.

(4) Unless otherwise indicated, the business address of the following shareholders is Sertus Chambers, P.O. Box 905, Quastisky building, Road Town, Tortola, British Virgin Islands.

(5) The number of Ordinary Shares beneficially owned prior to this offering represents 9,460,000 Ordinary Shares held by Qearl's Holdings Limited, a British Virgin Islands company, which is (i) 10% owned by Wonder Phoenix Holdings Limited (also a British Virgin Islands company), which is in turn 100% owned by Xiaofeng Fei; and (ii) 90% owned by Wonder Phoenix Family Limited (also a British Virgin Islands company), which is in turn 100% owned by the Trust, a trust established under the laws of the Cayman Islands by Xiaofeng Fei as settlor with TMF (Cayman) Ltd. being appointed as the trustee and Kai Zhou as the primary beneficiary. As the First Protectors and the First Members of the Investment Committee of the Trust, Xiaofeng Fei and Kai Zhou are invested with the authority to make investment decisions for the Trust. On November 2, 2021, Xiaofeng Fei and Kai Zhou executed an acting-in-concert agreement, which provides that (i) they shall inform and discuss with each other and reach a consensus before exercising voting rights in making decisions for the Trust, and (ii) if no consensus can be reached, the decision made by Kai Zhou prevails. By virtue of the acting-in-concert agreement, Kai Zhou has the ultimate control of the Trust, and consequently, of Qearl's Holdings Limited.

As of the date of this prospectus, none of our outstanding Ordinary Shares is held by record holders in the United States.

We are not aware of any arrangement that may, at a subsequent date, result in a change of control of the Company.

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**RELATED PARTY TRANSACTIONS**

**Employment Agreements**

*See "Management-Employment Agreements and Indemnification Agreements."*

**Material Transactions with Related Parties**

The relationship and the nature of related party transactions are summarized as follows:

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| | | |
|:---|:---|:---|
| **No.** | **Name of Related Parties** | **Relationship** |
| 1 | Beiming Data | Controlled by Kai Zhou\* |
| 2 | Shanghai Hicore Information Technology Co., Ltd. ("Shanghai Hicore") | Controlled by Kai Zhou |
| 3 | Shanghai Yuanjin | Controlled by Kai Zhou |
| 4 | Shanghai Mingzong Information Technology Co., Ltd. ("Shanghai Mingzong") | Controlled by Kai Zhou |
| 5 | Shanghai Zhongchuang Asset Management Co., Ltd. ("Shanghai Zhongchuang) | Controlled by Kai Zhou |
| 6 | Zhongchuang Investment Management Co., Ltd. ("Zhongchuang Investment") | Controlled by Kai Zhou |
| 7 | Shenzhen Ourui Consulting Co., Ltd. ("Shenzhen Ourui") | Controlled by a former employee of Shenzhen Xindesheng, who left our Company in January 2022 |
| 8 | Xiaofeng Fei | 5% shareholder, who acts in concert with Kai Zhou |
| 9 | Xiaowei Wang | 29.2% shareholder, and CEO |
| 10 | Yueping Yin | CEO's wife |
| 11 | Xu Dai | 6% shareholder, and Chairman |
| 12 | Other minority shareholders | Collectively represent 14.5% shareholders |

---

\* Our Company is controlled by Qearl's Holdings Limited, which owns 47.3% of the equity interests in GoodFaith Cayman. Qearl's Holding Limited, a British Virgin Islands company, is ultimately held by Xiaofeng Fei as to 10% and by the Trust as to 90%. As the First Protectors and the First Members of the Investment Committee of the Trust, Xiaofeng Fei and Kai Zhou are invested with the authority to make investment decisions for the Trust. On November 2, 2021, Xiaofeng Fei and Kai Zhou executed an acting-in-concert agreement, which provides that (i) they shall inform and discuss with each other and reach a consensus before exercising voting rights in making decisions for the Trust, and (ii) if no consensus can be reached, the decision made by Kai Zhou prevails. By virtue of the acting-in-concert agreement, Kai Zhou has the ultimate control of the Trust, and consequently, of Qearl's Holdings Limited and our Company.

The following represented related party balances as of June 30, 2022:

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| | | | |
|:---|:---|:---|:---|
|  |  | **As of**  | **As of**  |
|  |  | **June 30,**<br> **2022**<br> **(unaudited)** | **December 31,**<br> **2021**<br> **(audited)** |
| **Accounts receivable** | **Nature** |  |  |
| Shanghai Yuanjin | Pre-approval risk management service | $63957 | $51933 |
| Shanghai Hicore | Pre-approval risk management service | 1456 | - |
|  |  | $65413 | $51933 |
| **Accounts payable** |  |  |  |
| Beiming Data | Data service | $8016 | $729975 |
| Shenzhen Ourui | Outsourcing service | 2148284 | 346292 |
| Shanghai Yuanjin | Data service | 165307 | 75456 |
| Shanghai Hicore | Data service | 27236 | 12157 |
|  |  | 2348843 | 1163880 |

---

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| | | | |
|:---|:---|:---|:---|
|  |  | **As of** | **As of** |
|  |  | **June 30,**<br> **2022**<br> **(unaudited)** | **December 31,**<br> **2021**<br> **(audited)** |
| **Due from related parties** |  |  |  |
| Beiming Data<sup>(1)</sup> | Loan | $40105 | $42123 |
| Shenzhen Ourui<sup>(2)</sup> | Loan |  | 80422 |
| Shanghai Zhongchuang<sup>(3)</sup> | Loan |  | 836672 |
| Xiaowei Wang<sup>(3)</sup> | Loan |  | 803861 |
| Yueping Yin | Cash advance | 217 | - |
|  |  | $40322 | $1763078 |

---

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| | | | |
|:---|:---|:---|:---|
|  |  | **As of** | **As of** |
|  |  | **June 30,**<br> **2022**<br> **(unaudited)** | **December 31,**<br> **2021**<br> **(audited)** |
| **Due from related parties-non current** |  |  |  |
| Beiming Data<sup>(4)</sup> | Long-term deposit | $298668 | $313691 |
|  |  | $298668 | $313691 |
| **Due to related parties** |  |  |  |
| Shanghai Hicore<sup>(5)</sup> | Rent/IT service | $138402 | $168975 |
| Zhongchuang Investment<sup>(6)</sup> | IPO costs paid on behalf of the Company | 883791 | 681545 |
| Xiaofeng Fei<sup>(7)(8)</sup> | Loan/Equity transfer consideration | 1657607 | 1639647 |
| Xiaowei Wang<sup>(7)</sup> | Reimbursement/Equity consideration | 867 | 50254 |
| Yueping Yin | Reimbursement |  | 432 |
| Xu Dai<sup>(7)</sup> | Equity consideration |  | 12234 |
| Other minority shareholders<sup>(7)</sup> | Equity consideration | - | 29565 |
|  |  | $2680667 | $2582652 |

---

(1) The loan to Beiming Data was used for Beiming Data's daily business activities. The loan was interest free, and the loan term was from May 1, 2017 to December 31, 2022. The unsettled balances of loan payments from Beiming Data were $40,105 and $42,123 as of June 30, 2022 and December 31, 2021, respectively. Pursuant to the agreement between Beiming Data and the Company, the unsettled balance as of June 30, 2022 will be due on December 31, 2022.

(2) In July 2021, the Company provided a loan of RMB500,000 ($78,423) to Shenzhen Ourui for its daily operation with an annual interest rate of 6%. The principal and interest of the loan was not recovered as of December 31, 2021. The loan principal and interest were fully repaid on June 22, 2022.

(3) In 2019, 2020, and 2021, Shenzhen Xindesheng, one of the Company's PRC subsidiaries, announced dividends of $363,229, $652,408 and $1,329,754, respectively, to its former shareholders, Shanghai Zhongchuang and Mr. Xiaowei Wang. Shenzhen Xindesheng, in these dividend distributions in the three years, distributed an excess of $1,640,533 ($211,481, $76,744 and $1,352,308, respectively) to its former shareholders, which excessive distributions have been deemed as interest-free loans to the two former shareholders. As of December 31, 2021, the loan receivables from Shanghai Zhongchuang was $836,672, and the loan receivables from Xiaowei Wang was $803,861, respectively. On June 29, 2022, Shanghai Zhongchuang and Xiaowei Wang fully repaid their interest-free loans.

(4) The Company has a long-term deposit in Beiming Data since the fiscal year 2019 in the course of purchasing services provided by Beiming Data, and the deposit is expected to be released on September 30, 2025 pursuant to the agreement between Beiming Data and the Company.

(5) As of June, 2022, the unsettled balance of IT service fees was $67,200, and rent payable was $71,202. As of December 31, 2021, the unsettled balance of IT service fees was $141,161, and rent payable was $27,814.

(6) Zhongchuang Investment paid IPO cost of $211,260 and $681,545 on behalf of the Company for the six months ended June 30, 2022 and the year ended December 31, 2021. Pursuant to the agreement between Zhongchuang Investment and the Company, the cash advance was interest-free and the repayment term is to be mutually agreed upon by both parties.

(7) On December 31, 2021, 100% equity interest of Suzhou GoodFaith was transferred from Ultimate Shareholders to GoodFaith WFOE. The consideration payable to Xiaofeng Fei, Xiaowei Wang, Xu Dai, and other minority shareholders were $102,561, $49,344, $12,234 and $29,565, respectively. The consideration was fully paid in January 2022.

(8) In 2021, the Company received an interest-free loan of $1,693,932 from Xiaofeng Fei for the purpose of restructuring. The Company repaid $156,846 to Xiaofeng Fei in December 2021. In order to pay the consideration to the Ultimate Shareholders, GoodFaith WFOE received an interest-free loan of $200,732 from Xiaofeng Fei in January 2022. The consideration of the transfer of equity interest of Suzhou GoodFaith payable to Xiaofeng Fei was $102,561, and the Company repaid $102,561 of equity transfer consideration to Xiaofeng Fei in January 2022. The unsettled balances of $1,657,607 as of June 30, 2022 were fully repaid to Xiaofeng Fei on July 15, 2022.

---

| | | | |
|:---|:---|:---|:---|
|  |  | **For the six months ended** <br> **June 30,** | **For the six months ended** <br> **June 30,** |
|  |  | **2022**<br> **(unaudited)** | **2021**<br> **(unaudited)** |
| **Revenue** | **Nature** |  |  |
| Shanghai Yuanjin | Pre-approval risk management revenue | $14156 | $84365  |
| Shanghai Hicore | Pre-approval risk management revenue | 1420 | - |
|  |  | $15576 | $84365 |

---

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| | | | |
|:---|:---|:---|:---|
|  |  | **For the six months ended** <br> **June 30,** | **For the six months ended** <br> **June 30,** |
|  |  | **2022**<br> **(unaudited)** | **2021**<br> **(unaudited)** |
| **Cost of revenue** | **Nature** |  |  |
| Beiming Data | Data service costs | $587955  | $436657  |
| Shenzhen Ourui | Outsourcing service fees | 3180980 | 225516 |
| Shanghai Yuanjin | Data service costs | 120045 | 82312 |
| Shanghai Hicore | IT service costs | - | 65618 |
| Shanghai Hicore | Data service costs  | -  | 70255 |
|  |  | $3888980 | $880358 |

---

**<u>Other related party transactions</u>**

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| | | | |
|:---|:---|:---|:---|
|  | **Nature** | **For the six months ended** <br> **June 30,** | **For the six months ended** <br> **June 30,** |
|  | **Nature** | **2022**<br> **(unaudited)** | **2021**<br> **(unaudited)** |
| Beiming Data | Loan repayment to a related party | $- | $177752 |
| Beiming Data | Loan proceeds from a related party | - | 30913 |
| Shenzhen Ourui | Loan proceeds from a related party | 77205 | - |
| Shanghai Zhongchuang | Loan proceeds from a related party | 823676 | - |
| Xiaowei Wang | Loan proceeds from a related party | 791375 | - |
| Shanghai Hicore | Rent paid to a related party | 67542 | 77779  |
| Shanghai Mingzong | Service fee paid to a related party | 4909 | 8421 |
| Zhongchuang Investment | Advance payment for IPO costs on behalf of the Company | 211260 | 464429 |
| Xiaofeng Fei | Loan from a related party | 200732  | - |

---

The following represented related party balances as of December 31, 2021 and 2020:

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| | | | |
|:---|:---|:---|:---|
|  |  | **As of December 31,** | **As of December 31,** |
|  |  | **2021** | **2020** |
| **Accounts receivable** | **Nature** |  |  |
| Shanghai Yuanjin | Pre-approval risk management service | $51933 | $18338 |
|  |  | $51933 | $18338 |
| **Accounts payable** |  |  |  |
| Beiming Data | Data service | $729975 | $401740 |
| Shenzhen Ourui | Outsourcing service | 346292 | 90541 |
| Shanghai Yuanjin | Data service | 75456 | 211616 |
| Shanghai Hicore | Data service | 12157 | - |
|  |  | 1163880 | 703897 |

---

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| | | | |
|:---|:---|:---|:---|
|  |  | **As of December 31,** | **As of December 31,** |
|  |  | **2021** | **2020** |
| **Due from related parties** |  |  |  |
| Beiming Data<sup>(1)</sup> | Loan | $42123 | $71811 |
| Shenzhen Ourui<sup>(2)</sup> | Loan | 80422 | - |
| Shanghai Zhongchuang<sup>(3)</sup> | Loan | 836672 | 146995 |
| Xiaowei Wang<sup>(3)</sup> | Loan | 803861 | 141230 |
|  |  | $1763078  | $360036 |

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| | | | |
|:---|:---|:---|:---|
|  |  | **As of December 31,** | **As of December 31,** |
|  |  | **2021** | **2020** |
| **Due from related parties-non current** |  |  |  |
| Beiming Data<sup>(4)</sup> | Long-term deposit | $313691 | $306518 |
|  |  | $313691 | $306518 |
| **Due to related parties** |  |  |  |
| Beiming Data<sup>(5)</sup> | Loan | $- | $258088 |
| Shanghai Hicore<sup>(6)</sup> | Rent/IT service | 168975 | 212709 |
| Zhongchuang Investment<sup>(7)</sup> | IPO costs paid on behalf of the Company | 681545 | - |
| Xiaofeng Fei<sup>(8)(9)</sup> | Loan/Equity transfer consideration | 1639647  | - |
| Xiaowei Wang<sup>(8)</sup> | Reimbursement/Equity consideration | 50254 | 889 |
| Yueping Yin | Reimbursement | 432 | 994 |
| Xu Dai<sup>(8)</sup> | Equity consideration | 12234 | - |
| Other minority shareholders<sup>(8)</sup> | Equity consideration | 29565 |  |
|  |  | $2582652  | $472680  |

---

(1) The loan to Beiming Data was used for Beiming Data's daily business activities. The loan was interest free, and the loan term was from May 1, 2017 to December 31, 2022. The unsettled balances of loan payments from Beiming Data were $42,123 and $71,811 as of December 31, 2021 and 2020, respectively. Pursuant to the agreement between Beiming Data and the Company, the unsettled balance as of December 31, 2021 will be due on December 31, 2022.

(2) In July 2021, the Company provided a loan of RMB500,000 ($78,423) to Shenzhen Ourui for its daily operation with an annual interest rate of 6%. The principal and interest of the loan was not recovered as of December 31, 2021. The loan principal and interest were fully repaid on June 22, 2022.

(3) In 2019, 2020, and 2021, Shenzhen Xindesheng, one of the Company's PRC subsidiaries, announced dividends of $363,229, $652,408 and $1,329,754, respectively, to its former shareholders, Shanghai Zhongchuang and Mr. Xiaowei Wang. Shenzhen Xindesheng, in these dividend distributions in three years, distributed an excess of $1,640,533 ($211,481, $76,744 and $1,352,308, respectively) to its former shareholders, which excessive distributions have been deemed as interest-free loans to the two former shareholders. As of December 31, 2021 and 2020, the loan receivables from Shanghai Zhongchuang was $836,672 and $146,995, and the loan receivables from Xiaowei Wang was $803,861 and $141,230, respectively. On June 29, 2022, Shanghai Zhongchuang and Xiaowei Wang fully repaid their interest-free loans.

(4) The Company has a long-term deposit in Beiming Data since the fiscal year 2019 in the course of purchasing services provided by Beiming Data.

(5) The loan from Beiming Data was used for Shanghai Yuyi's daily operations. The loan was interest free, and the loan term was from January 1, 2019 to December 31, 2021. The outstanding balance of loan payable to Beiming Data was $258,088 as of December 31, 2020, repayment of the loan was settled as of December 31, 2021.

(6) As of December 31, 2021, the unsettled balance of IT service fees was $141,161, and rent payable was $27,814. As of December 31, 2020, rent payable was $212,709.

(7) Zhongchuang Investment paid IPO cost of $681,545 on behalf of the Company for the fiscal year ended December 31, 2021. Pursuant to the agreement between Zhongchuang Investment and the Company, the cash advance was interest-free and the repayment term is to be mutually agreed upon by both parties.

(8) On December 31, 2021, 100% equity interest of Suzhou GoodFaith was transferred from Ultimate Shareholders (defined below) to GoodFaith WFOE. The consideration payable to Xiaofeng Fei, Xiaowei Wang, Xu Dai, and other minority shareholders were $102,561, $49,344, $12,234 and $29,565, respectively. The consideration was fully paid in January 2022.

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(9) In 2021, the Company received an interest-free loan of $1,693,932 from Xiaofeng Fei for the purpose of restructuring. The Company repaid $156,846 to Xiaofeng Fei in December 2021. The unsettled balances of advance of $1,537,086 will be due on August 29, 2022. The consideration of transfer of equity interest of Suzhou GoodFaith payable to Xiaofeng Fei was $102,561.

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| | | | |
|:---|:---|:---|:---|
|  |  | **For the fiscal years ended** <br> **December 31,** | **For the fiscal years ended** <br> **December 31,** |
|  |  | **2021** | **2020** |
| **Revenue** | **Nature** |  |  |
| Shanghai Yuanjin | Pre-approval risk management revenue | $112065 | $12717  |
|  |  | $112065 | $12717 |

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| | | | |
|:---|:---|:---|:---|
|  |  | **For the fiscal years ended** <br> **December 31,** | **For the fiscal years ended** <br> **December 31,** |
|  |  | **2021** | **2020** |
| **Cost of revenue** | **Nature** |  |  |
| Beiming Data | Data service costs | $1592538 | $1155180 |
| Shanghai Zhongchuang | Management costs | - | 955700 |
| Shenzhen Ourui | Outsourcing service fees | 562748 | 273089 |
| Shanghai Yuanjin | Data service costs | 143037 | 53717 |
| Shanghai Hicore | IT service costs | 131606 |  |
| Shanghai Hicore | Data service costs  | 70453 | - |
|  |  | $2500382 | $2437686 |

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**<u>Other related party transactions</u>**

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| | | | |
|:---|:---|:---|:---|
|  |  | **For the fiscal years ended** <br> **December 31,** | **For the fiscal years ended** <br> **December 31,** |
|  | **Nature** | **2021** | **2020** |
| Beiming Data | Loan repayment to a related party | - | 173974 |
| Beiming Data | Loan proceeds from a related party | 31001 | 173974 |
| Shanghai Hicore | Rent paid to a related party | 126399 | 94068 |
| Shanghai Mingzong | Service fee paid to a related party | 12667 | - |
| Zhongchuang Investment | Advance payment for IPO costs on behalf of the Company | 681545 | - |
| Xiaofeng Fei | Loan from a related party | 1693932 | - |

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**DESCRIPTION OF SHARE CAPITAL**

The following description of our share capital and provisions of our amended and restated memorandum and articles of association, as amended from time to time, are summaries and do not purport to be complete. Reference is made to our memorandum and articles of association, copies of which are filed as an exhibit to the registration statement of which this prospectus is a part (and which is referred to in this section as, respectively, the "memorandum" and the "articles").

We were incorporated as an exempted company with limited liability under the Companies Act (as Revised) of the Cayman Islands, or the "Cayman Companies Act," or the "Company Act" on May 13, 2021.

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;

● does not have to hold an annual general meeting;

● does not have to make its register of members open to inspection by shareholders of that company;

● 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).

We will adopt an amended and restated memorandum and articles of association on [ ], which will become effective immediately prior to the completion of this offering.

The following are summaries of material provisions of our amended and restated memorandum and articles of association that we expect will become effective immediately prior to the completion of this offering and the Companies Act insofar as they relate to the material terms of our Ordinary Shares.

The following description of our share capital and provisions of our amended and restated memorandum and articles of association are summaries and are qualified by reference to the amended and restated memorandum and articles of association that will be in effect immediately prior to the completion of this offering. Copies of these documents have been filed with the SEC as exhibits to the registration statement of which this prospectus forms a part. The descriptions of the Ordinary Shares reflect changes to our capital structure that will occur when our amended and restated memorandum and articles of association become effective.

**Ordinary Shares**

All of our issued and outstanding Ordinary Shares are fully paid and non-assessable. Our Ordinary Shares are issued in registered form, and are issued when registered in our register of members. Unless the board of directors determine otherwise, each holder of our Ordinary Shares will not receive a certificate in respect of such Ordinary Shares. Our shareholders who are non-residents of the Cayman Islands may freely hold and vote their Ordinary Shares. We may not issue shares or warrants to bearer.

Our authorized share capital is $50,000 divided into 500,000,000 Ordinary Shares, par value $0.0001 per share. Subject to the provisions of the Cayman Companies Act and our articles regarding redemption and purchase of the shares, the directors have general and unconditional authority to allot (with or without confirming rights of renunciation), grant options over or otherwise deal with any unissued shares to such persons, at such times and on such terms and conditions as they may decide. Such authority could be exercised by the directors to allot shares which carry rights and privileges that are preferential to the rights attaching to Ordinary Shares. No share may be issued at a discount except in accordance with the provisions of the Cayman Companies Act. The directors may refuse to accept any application for shares, and may accept any application in whole or in part, for any reason or for no reason.

At the completion of this offering, there will be [●] Ordinary Shares issued and outstanding held by at least 300 unrestricted round lot shareholders and beneficial owners which is the minimum requirement by the Nasdaq Capital Market. Shares sold in this offering will be delivered against payment from the underwriters upon the closing of the offering in New York, New York, on or about [●].

**Listing**

We have applied to list our Ordinary Shares on the Nasdaq Capital Market under the symbol "GFCX". At this time, Nasdaq has not yet approved our application to list our Ordinary Shares. The closing of this offering is conditioned upon Nasdaq's final approval of our listing application, and there is no guarantee or assurance that our Ordinary Shares will be approved for listing by Nasdaq.

**Transfer Agent and Registrar**

The transfer agent and registrar for the Ordinary Shares is Transhare Corporation, at Bayside Center 1, 17755 North U.S. Highway 19, Suite #140, Clearwater, FL 33764.

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**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 in any currency to be paid to our shareholders; and

(b) our shareholders may, by ordinary resolution, declare dividends but no such dividend shall exceed the amount recommended by the directors.

Under the laws of the Cayman Islands, dividends may be declared and paid out of our profits or out of the share premium account. Our amended and restated memorandum and articles of association provide that dividends may be declared and paid out of the funds of our Company lawfully available therefor. In no circumstances may a dividend be paid if this would result in our Company being unable to pay its debts as they fall due in the ordinary course of business. Holders of our Ordinary Shares will be entitled to such dividends as may be declared by our board of directors. 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 either with the consent in writing of the holders of not less than two-thirds of the issued shares of that class, or with the sanction of a special resolution passed at a general meeting of the holders of the shares of that class.

The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be materially adversely varied by the creation, allotment or issue of further shares ranking *pari passu* with or subsequent to them or the redemption or purchase of any shares of any class by our Company. The rights of the holders of shares shall not be deemed to be materially adversely varied by the creation or issue of shares with preferred or other rights including, without limitation, the creation of shares with enhanced or weighted voting rights.

**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) 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

(d) 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.

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 and any capital redemption reserve in any manner authorized by law.

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**Calls on Shares and Related Liens**

Subject to the terms of allotment, the directors may from time to time make calls on the shareholders in respect of any monies unpaid on their shares 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, but the directors shall be at liberty to waive payment of that interest wholly or in part.

The directors may, if they think fit, receive from any shareholder willing to advance the same all or any part of the moneys uncalled and unpaid upon any partly paid shares held by him, and upon all or any of the moneys so advanced may (until the same would, but for such advance, become presently payable) pay interest at such rate (not exceeding without the sanction of an ordinary resolution, eight percent per annum) as may be agreed upon between the shareholder paying the sum in advance and the directors. No such sum paid in advance of calls shall entitle the shareholder paying such sum to any portion of a dividend declared in respect of any period prior to the date upon which such sum would, but for such payment, become presently payable.

We have a first and paramount lien on all shares (whether fully paid up or not) registered in the name of a shareholder (whether solely or jointly with others). The lien is for all monies payable to us by the shareholder or the shareholder's estate:

(a) either alone or jointly with any other person, whether or not that other person is a shareholder; and

(b) whether or not those monies are presently payable.

At any time the directors may declare any share to be wholly or partly exempt from the lien provisions of the articles.

We may sell, in such manner as the directors may determine, any share on which we have a lien, but no sale shall be made unless an amount in respect of which the lien exists is presently payable nor until the expiration of 14 calendar days after a notice in writing, demanding payment of such part of the amount in respect of which the lien exists as is presently payable, has been given to the registered holder for the time being of the Share, or the persons entitled thereto by reason of his death or bankruptcy.

**Unclaimed Dividend**

A dividend that remains unclaimed for a period of six years after it became due for payment may be forfeited by the directors and, if so forfeited, shall revert to the company.

**Forfeiture of Shares**

If a shareholder fails to pay any call or installment of a call in respect of partly paid shares on the day appointed for payment, the directors may give to such shareholder not less than 14 calendar 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 or otherwise disposed of on such terms and in such manner as the directors determine and at any time before a sale 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 forfeited, but his liability shall cease if and when we receive payment in full of the unpaid amount.

A certificate in writing under the hand of a director shall be conclusive evidence that the person making the declaration is our director and that the particular shares have been forfeited on a particular date.

**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.

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**Redemption, Purchase, and Surrender of Shares**

Subject to the Cayman Companies Act and our amended and restated memorandum and articles of association, we may:

(a) issue shares that are to be redeemed or liable to be redeemed, at our option or the shareholder holding those redeemable shares. The redemption of shares shall be effected in such manner and upon such terms as may be determined, before the issue of such Shares, by either the directors or by the shareholders by special resolution;

(b) purchase all or any of our own shares of any class including any redeemable shares on the terms and in the manner and terms as have been approved by the directors or by the shareholders by ordinary resolution, or are otherwise authorized by our amended and restated memorandum and articles of association; and

(c) make a payment in respect of the redemption or purchase of its own Shares in any manner permitted by the Companies Act, including out of capital.

The directors may accept the surrender for no consideration of any fully paid share.

**Transfer of Shares**

Provided that a transfer of Ordinary Shares complies with applicable rules of the Nasdaq Capital Market, 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 the Nasdaq Capital Market, 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) the Ordinary Share transferred is fully paid and free of any lien in favor of us; and

(e) any fee related to the transfer has been paid to us.

If our directors refuse to register a transfer, they are required, within 3 calendar months 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.

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The registration of transfers may 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 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 (save for our amended and restated memorandum and articles of association, register of mortgages and charges and special resolutions of our shareholders). However, we will in our articles provide our shareholders with the right to inspect our list of shareholders and to receive annual audited financial statements.

**General Meetings**

As a Cayman Islands exempted company, we are not obligated by the Cayman Companies Act to call shareholders' annual general meetings. Our amended and restated memorandum and articles of association provide that 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.

Shareholders' meetings may be convened by a majority of our board of directors or our chairman. Advance notice of at least ten calendar days is required for the convening of our annual general shareholders' meeting (if any) and any other general meeting of our shareholders. A quorum required for a meeting of shareholders consists of one or more shareholders present or by proxy, representing not less than one-third of all votes attached to all issued voting shares in our company.

The 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 post-offering amended and restated memorandum and articles of association provide that upon the requisition of shareholders holding shares which carry in aggregate not less than one-third of all votes attaching to all issued and outstanding shares of our company entitled to vote at general meetings, our board will convene an extraordinary general meeting and put the resolutions so requisitioned to a vote at such meeting. However, our post-offering amended and restated memorandum and articles of association do not provide our shareholders with any right to put any proposals before annual general meetings or extraordinary general meetings not called by such shareholders.

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**Directors**

We may by ordinary resolution, from time to time, fix the maximum and minimum number of directors to be appointed. Under the amended and restated memorandum and articles of association, we are required to have no less than three directors.

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 hold office until the expiration of their respective terms of office and until their successors shall have been appointed and qualified.

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 shall be vacated if the director:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) he is prohibited by the law of the Cayman Islands from acting as a director;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) becomes bankrupt or makes any arrangement or composition with his creditors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) dies or is found to be or becomes of unsound mind;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) resigns his office by notice in writing to the Company; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) without special leave of absence from the board of directors, is absent from meetings of the board for three consecutive meetings and the board of directors resolves that his office be vacated.

Each of the compensation committee and the nominating and corporate governance committee shall consist of at least three directors and the majority of the committee members shall be independent within the meaning of Section 5605(a)(2) of the Nasdaq listing rules. The audit committee shall consist of at least three directors, all of whom shall be independent within the meaning of Section 5605(a)(2) of the Nasdaq listing rules and will meet the criteria for independence set forth in Rule 10A-3 or Rule 10C-1 of the Exchange Act.

**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 resolution passed by the Company in general meeting shall invalidate any prior act of the directors that would have been valid if that resolution had not been passed.

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. Upon the initial closing of this offering, our board of directors will have established an audit committee, compensation committee, and nomination and corporate governance committee.

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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.

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**Liquidation Rights**

On a return of capital on winding up or otherwise (other than on conversion, redemption, or purchase of ordinary shares, if the assets available for distribution amongst our shareholders shall be more than sufficient to repay the whole of the share capital at the commencement of the winding up, the surplus shall be distributed among the holders of the ordinary shares in proportion to the par value of the shares held by them at the commencement of the winding up, subject to a deduction from those shares in respect of which there are monies due, of all monies payable to our company for unpaid calls or otherwise. If our assets available for distribution are insufficient to repay all of the paid-up capital, the assets will be distributed so that the losses are borne by our shareholders in proportion to the par value of the shares held by them.

**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, a statement of the shares held by each shareholder, and of the amount paid or agreed to be considered as paid, on the shares of each shareholder;

● 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. Upon the completion of this offering, the register of members will be immediately updated to record and give effect to the issuance of shares by us to the custodian or its nominee. Once our register of members has been updated, the shareholders recorded in the register of members will be deemed to have legal title to the shares set against their name.

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.

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**Differences in Corporate Law**

The Cayman Companies Act is derived, to a large extent, from the older Companies Acts of England and Wales but does not follow recent United Kingdom statutory enactments, and accordingly there are significant differences between the Cayman Companies Act and the current Companies Act of the UK. In addition, the Cayman Companies Act differs from laws applicable to United States corporations and their shareholders. Set 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.

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|  | **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 of a Cayman Islands company is in the position of a fiduciary with respect to the company and therefore it is considered that he owes the following duties to the company-a duty to act *bona fide* in the best interests of the company, a duty not to make a profit based on his or her position as director (unless the company permits him to do so) and a duty not to put himself in a position where the interests of the company conflict with his or her personal interest or his or her duty to a third party.<br>A director of a Cayman Islands company owes to the company a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his or her duties a greater degree of skill than may reasonably be expected from a person of his or her knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands. |

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| *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 Companies Act has no equivalent provision to Delaware law regarding the limitation of director's liability. However, as a matter of public policy, Cayman Islands law will not allow the limitation of a director's liability to the extent that the liability is a consequence of the director committing a crime or of the director's own fraud, dishonesty or willful default.  |

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| *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. | 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.<br>Our amended and restated articles of association provide that our directors and officers (but not including the Company's auditors) shall be indemnified and secured harmless against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities sustained by them, other than by reason of their own willful default or fraud, in or about the conduct of the Company's business or affairs (including as a result of any mistake of judgment) or in the execution or discharge of his duties, powers, authorities or discretions, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by such persons in defending (whether successfully or otherwise) any civil proceedings concerning the Company or its affairs in any court whether in the Cayman Islands or elsewhere. In addition, we have entered into indemnification agreements with our directors and senior executive officers that provide such persons with additional indemnification beyond that provided in our amended and restated memorandum and articles of association.<br>Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under 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.  |

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| *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. |

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| *Voting Requirements* | The certificate of incorporation may include a provision requiring supermajority approval by the directors or shareholders for any corporate action.<br>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. <br>The 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. <br>The 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. |

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| *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. | Our amended and restated memorandum and articles of association provide that our directors may be appointed by a resolution of our board of directors to fill a casual vacancy on the board of directors or as an addition to the board of directors or by an ordinary resolution of our shareholders. |
| *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. |

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**Anti-money Laundering-Cayman Islands**

In order to comply with legislation or regulations aimed at the prevention of money laundering, we are required to adopt and maintain anti-money laundering procedures, and may require subscribers to provide evidence to verify their identity and source of funds. Where permitted, and subject to certain conditions, we may also delegate the maintenance of our anti-money laundering procedures (including the acquisition of due diligence information) to a suitable person.

We reserve the right to request such information as is necessary to verify the identity of a subscriber. In 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.

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We also reserve the right to refuse to make any redemption payment to a shareholder if our directors or officers suspect or are advised that the payment of redemption proceeds to such shareholder might result in a breach of applicable anti-money laundering or other laws or regulations by any person in any relevant jurisdiction, or if such refusal is considered necessary or appropriate to ensure our compliance with any such laws or regulations in any applicable jurisdiction.

If any person resident in the Cayman Islands knows or suspects or has reason for knowing or suspecting that another person is engaged in criminal conduct or is involved with terrorism or terrorist property and the information for that knowledge or suspicion came to their attention in the course of their business in the regulated sector, or other trade, profession, business or employment, the person will be required to report such knowledge or suspicion to (i) a nominated officer (appointed in accordance with the Proceeds of Crime Act (as Revised) of the Cayman Islands) or the Financial Reporting Authority of the Cayman Islands, pursuant to the Proceeds of Crime Law (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.

**Data Protection in the Cayman Islands - Privacy Notice**

This privacy notice explains the manner in which we collect, process, and maintain personal data about our investors pursuant to the Data Protection Act (as Revised) of the Cayman Islands, as amended from time to time and any regulations, codes of practice, or orders promulgated pursuant thereto (the "DPA**"**).

We are committed to processing personal data in accordance with the DPA. In our use of personal data, we will be characterized under the DPA as a "data controller," whilst certain of our service providers, affiliates, and delegates may act as "data processors" under the DPA. These service providers may process personal information for their own lawful purposes in connection with services provided to us.

By virtue of your investment in our Company, we and certain of our service providers may collect, record, store, transfer, and otherwise process personal data by which individuals may be directly or indirectly identified.

Your personal data will be processed fairly and for lawful purposes, including (a) where the processing is necessary for us to perform a contract to which you are a party or for taking pre-contractual steps at your request, (b) where the processing is necessary for compliance with any legal, tax, or regulatory obligation to which we are subject, or (c) where the processing is for the purposes of legitimate interests pursued by us or by a service provider to whom the data are disclosed. As a data controller, we will only use your personal data for the purposes for which we collected it. If we need to use your personal data for an unrelated purpose, we will contact you.

We anticipate that we will share your personal data with our service providers for the purposes set out in this privacy notice. We may also share relevant personal data where it is lawful to do so and necessary to comply with our contractual obligations or your instructions or where it is necessary or desirable to do so in connection with any regulatory reporting obligations. In exceptional circumstances, we will share your personal data with regulatory, prosecuting, and other governmental agencies or departments, and parties to litigation (whether pending or threatened), in any country or territory including to any other person where we have a public or legal duty to do so (e.g. to assist with detecting and preventing fraud, tax evasion, and financial crime or compliance with a court order).

Your personal data shall not be held by our Company for longer than necessary with regard to the purposes of the data processing.

We will not sell your personal data. Any transfer of personal data outside of the Cayman Islands shall be in accordance with the requirements of the DPA. Where necessary, we will ensure that separate and appropriate legal agreements are put in place with the recipient of that data.

We will only transfer personal data in accordance with the requirements of the DPA, and will apply appropriate technical and organizational information security measures designed to protect against unauthorized or unlawful processing of the personal data and against the accidental loss, destruction, or damage to the personal data.

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If you are a natural person, this will affect you directly. If you are a corporate investor (including, for these purposes, legal arrangements such as trusts or exempted limited partnerships) that provides us with personal data on individuals connected to you for any reason in relation to your investment into our Company, this will be relevant for those individuals and you should inform such individuals of the content.

You have certain rights under the DPA, including (a) the right to be informed as to how we collect and use your personal data (and this privacy notice fulfils our obligation in this respect), (b) the right to obtain a copy of your personal data, (c) the right to require us to stop direct marketing, (d) the right to have inaccurate or incomplete personal data corrected, (e) the right to withdraw your consent and require us to stop processing or restrict the processing, or not begin the processing of your personal data, (f) the right to be notified of a data breach (unless the breach is unlikely to be prejudicial), (g) the right to obtain information as to any countries or territories outside the Cayman Islands to which we, whether directly or indirectly, transfer, intend to transfer, or wish to transfer your personal data, general measures we take to ensure the security of personal data, and any information available to us as to the source of your personal data, (h) the right to complain to the Office of the Ombudsman of the Cayman Islands, and (i) the right to require us to delete your personal data in some limited circumstances.

If you consider that your personal data has not been handled correctly, or you are not satisfied with our responses to any requests you have made regarding the use of your personal data, you have the right to complain to the Cayman Islands' Ombudsman. The Ombudsman can be contacted by calling +1 (345) 946-6283 or by email at info@ombudsman.ky.

**History of Share Capital**

The following is a summary of our share issuances since incorporation.

***Share Issuances in May 2021***

We were incorporated in the Cayman Islands as an exempted company with limited liability on May 13, 2021. We issued the following Ordinary Shares to our founding shareholders:

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| **Purchaser** | **Date of Issuance** | **Number of**<br> **Ordinary**<br> **Shares** |
| Qearl's Holdings Limited  | May 13, 2021  | 5030000 |
| Gread Cause Holdings Limited  | May 13, 2021 | 2920000 |
| Cloud Light Holdings Limited  | May 13, 2021  | 600000 |
| Yieldfilled Holdings Limited  | May 13, 2021 | 480000 |
| Litu Holdings Limited  | May 13, 2021 | 470000 |
| PeggyGF Holdings Limited  | May 13, 2021 | 300000 |
| MLGF Holdings Limited  | May 13, 2021 | 200000 |

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***Share Transfer in 2022***

On May 20, 2022, our board of directors approved the following transfers of Ordinary Shares:

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| **Transferor** | **Transferee** | **Number of**<br> **Ordinary**<br> **Shares** | **Number of**<br> **Ordinary**<br> **Shares** |
| Qearl's Holdings Limited | Xiaoming Li |  | 300000 |

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***Share Issuances in March 2023***

On March 17, 2023, our board of directors approved the following issuance of Ordinary Shares:

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| **Purchaser** | **Date of Issuance** | **Number of**<br> **Ordinary**<br> **Shares** |
| Qearl's Holdings Limited  | March 17, 2023  | 4730000 |
| Gread Cause Holdings Limited  | March 17, 2023 | 2920000 |
| Cloud Light Holdings Limited  | March 17, 2023  | 600000 |
| Yieldfilled Holdings Limited  | March 17, 2023 | 480000 |
| Litu Holdings Limited  | March 17, 2023 | 470000 |
| PeggyGF Holdings Limited  | March 17, 2023 | 300000 |
| MLGF Holdings Limited  | March 17, 2023 | 200000 |
| Xiaoming Li | March 17, 2023 | 300000 |

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**SHARES ELIGIBLE FOR FUTURE SALE**

Before our initial public offering, there has not been a public market for our Ordinary Shares, and although we expect to make an application for the Ordinary Shares to be listed on the Nasdaq Capital Market, a regular trading market for our Ordinary Shares may not develop. Future sales of substantial amounts of shares of our Ordinary Shares in the public market after our initial public offering, or the possibility of these sales occurring, could cause the prevailing market price for our Ordinary Shares to fall or impair our ability to raise equity capital in the future. Upon completion of this offering, we will have outstanding Ordinary Shares held by public shareholders representing approximately 13.04% of our Ordinary Shares in issue. All of the Ordinary Shares sold in this offering will be freely transferable by persons other than our "affiliates" without restriction or further registration under the Securities Act.

**Lock-Up Agreements**

For a period of six months from the closing date of this offering, subject to certain exceptions, we have agreed with the underwriters not to offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right, or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any Ordinary Shares or any securities convertible into or exercisable or exchangeable for Ordinary Shares or file or cause to be filed with the SEC any registration statement relating to the offering of any of our securities. In addition, all of our directors, executive officers, and holders of 5% or more of our Ordinary Shares have entered into lock-up agreements with the representative prior to the commencement of this offering pursuant to which each of these persons, for a period of six months from the closing date of this offering, without the prior written consent of the representative, agree not to (i) offer, issue, sell, contract to sell, encumber, grant any option for sale, or otherwise dispose of, or announce the intention to otherwise dispose of, any of our Ordinary Shares or any securities convertible into or exercisable or exchangeable for our Ordinary Shares whether now owed or hereafter acquired or with respect to which the director or executive officer has or hereafter acquires the power of disposition; (ii) enter into any swap, hedge, or similar agreement or arrangement that transfers in whole or in part, the economic consequences of ownership of such securities; or (iii) engage in any short selling of such securities.

Other than this offering, we are not aware of any plans by any significant shareholders to dispose of significant numbers of our Ordinary Shares. However, one or more existing shareholders or owners of securities convertible or exchangeable into or exercisable for our Ordinary Shares may dispose of significant numbers of our Ordinary Shares in the future. We cannot predict what effect, if any, future sales of our Ordinary Shares, or the availability of Ordinary Shares for future sale, will have on the trading price of our Ordinary Shares from time to time. Sales of substantial amounts of our Ordinary Shares in the public market, or the perception that these sales could occur, could adversely affect the trading price of our Ordinary Shares.

**Rule 144**

All of our Ordinary Shares outstanding prior to this offering are "restricted securities" as that term is defined in Rule 144 under the Securities Act and may be sold publicly in the United States only if they are subject to an effective registration statement under the Securities Act or pursuant to an exemption from the registration requirement such as those provided by Rule 144 and Rule 701 promulgated under the Securities Act.

In general, under Rule 144 as currently in effect, beginning 90 days after the date of this prospectus, a person who is not deemed to have been our affiliate at any time during the three months preceding a sale and who has beneficially owned restricted securities within the meaning of Rule 144 for more than six months would be entitled to sell an unlimited number of those shares, subject only to the availability of current public information about us. A non-affiliate who has beneficially owned restricted securities for at least one year from the later of the date these shares were acquired from us or from our affiliate would be entitled to freely sell those shares.

A person who is deemed to be an affiliate of ours and who has beneficially owned "restricted securities" for at least six months would be entitled to sell, within any three-month period, a number of shares that is not more than the greater of:

● 1% of the number of Ordinary Shares then outstanding, in the form of Ordinary Shares or otherwise, which will equal approximately [●] shares immediately after this offering, assuming the underwriters do not exercise their over-allotment option; or

● the average weekly trading volume of the Ordinary Shares on the Nasdaq Capital Market during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.

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Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us.

**Rule 701**

In general, under Rule 701 of the Securities Act as currently in effect, each of our employees, consultants, or advisors who purchases our Ordinary Shares from us in connection with a compensatory stock plan or other written agreement executed prior to the completion of this offering is eligible to resell those Ordinary Shares in reliance on Rule 144, but without compliance with some of the restrictions, including the holding period, contained in Rule 144. However, the Rule 701 shares would remain subject to lock-up arrangements and would only become eligible for sale when the lock-up period expires.

**Regulation S**

Regulation S provides generally that sales made in offshore transactions are not subject to the registration or prospectus-delivery requirements of the Securities Act.

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**MATERIAL INCOME TAX CONSIDERATION**

S

**<u>Enterprise Taxation in Mainland China</u>**

The following brief description of Chinese enterprise income taxation is designed to highlight the enterprise-level taxation on our earnings, which will affect the amount of dividends, if any, we are ultimately able to pay to our shareholders. See "*Dividend Policy*."

According to the EIT Law, which was promulgated by the SCNPC on March 16, 2007, became effective on January 1, 2008, and was last amended on December 29, 2018, and the *Implementation Rules of the EIT Law*, which were promulgated by the State Council on December 6, 2007, and became effective on January 1, 2008, enterprises are divided into resident enterprises and non-resident enterprises. Resident enterprises pay enterprise income tax on their incomes obtained in and outside the PRC at the rate of 25%. Non-resident enterprises setting up institutions in the PRC pay enterprise income tax on the incomes obtained by such institutions in and outside the PRC at the rate of 25%. Non-resident enterprises with no institutions in the PRC, and non-resident enterprises with income having no substantial connection with their institutions in the PRC, pay enterprise income tax on their income obtained in the PRC at a reduced rate of 10%.

We are a holding company incorporated in the Cayman Islands and we gain substantial income by way of dividends paid to us from GoodFaith WFOE, one of our PRC subsidiaries. The EIT Law and its implementation rules provide that China-sourced income of foreign enterprises, such as dividends paid by a PRC subsidiary to its equity holders that are non-resident enterprises, will normally be subject to PRC withholding tax at a rate of 10%, unless any such foreign investor's jurisdiction of incorporation has a tax treaty with China that provides for a preferential tax rate or a tax exemption.

Under the EIT Law, an enterprise established outside of China with a "de facto management body" within China is considered a "resident enterprise," which means that it is treated in a manner similar to a Chinese enterprise for enterprise income tax purposes. Although the implementation rules of the EIT Law define "de facto management body" as a managing body that actually, comprehensively manage and control the production and operation, staff, accounting, property, and other aspects of an enterprise, the only official guidance for this definition currently available is set forth in SAT Notice 82, which provides guidance on the determination of the tax residence status of a Chinese-controlled offshore incorporated enterprise, defined as an enterprise that is incorporated under the laws of a foreign country or territory and that has a PRC enterprise or enterprise group as its primary controlling shareholder. Although GoodFaith Cayman does not have a PRC enterprise or enterprise group as our primary controlling shareholder and is therefore not a Chinese-controlled offshore incorporated enterprise within the meaning of SAT Notice 82, in the absence of guidance specifically applicable to us, we have applied the guidance set forth in SAT Notice 82 to evaluate the tax residence status of GoodFaith Cayman and its subsidiaries organized outside the PRC.

According to SAT Notice 82, a Chinese-controlled offshore incorporated enterprise will be regarded as a PRC tax resident by virtue of having a "de facto management body" in China and will be subject to PRC enterprise income tax on its worldwide income only if all of the following criteria are met: (i) the places where senior management and senior management departments that are responsible for daily production, operation and management of the enterprise perform their duties are mainly located within the territory of China; (ii) financial decisions (such as money borrowing, lending, financing and financial risk management) and personnel decisions (such as appointment, dismissal and salary and wages) are decided or need to be decided by organizations or persons located within the territory of China; (iii) main property, accounting books, corporate seal, the board of directors and files of the minutes of shareholders' meetings of the enterprise are located or preserved within the territory of China; and (iv) one half (or more) of the directors or senior management staff having the right to vote habitually reside within the territory of China.

We believe that we do not meet some of the conditions outlined in the immediately preceding paragraph. For example, as a holding company, the key assets and records of GoodFaith Cayman, including the resolutions and meeting minutes of our board of directors and the resolutions and meeting minutes of our shareholders, are located and maintained outside the PRC. In addition, we are not aware of any offshore holding companies with a corporate structure similar to ours that has been deemed a PRC "resident enterprise" by the PRC tax authorities. Accordingly, we believe that GoodFaith Cayman and its offshore subsidiaries should not be treated as a "resident enterprise" for PRC tax purposes if the criteria for "de facto management body" as set forth in SAT Notice 82 were deemed applicable to us. However, as the tax residency status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term "de facto management body" as applicable to our offshore entities, we will continue to monitor our tax status.

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The implementation rules of the EIT Law provide that, (i) if the enterprise that distributes dividends is domiciled in the PRC or (ii) if gains are realized from transferring equity interests of enterprises domiciled in the PRC, then such dividends or gains are treated as China-sourced income. It is not clear how "domicile" may be interpreted under the EIT Law, and it may be interpreted as the jurisdiction where the enterprise is a tax resident. Therefore, if we are considered as a PRC tax resident enterprise for PRC tax purposes, any dividends we pay to our overseas shareholders which are non-resident enterprises as well as gains realized by such shareholders from the transfer of our shares may be regarded as China-sourced income and as a result become subject to PRC withholding tax at a rate of up to 10%. AllBright, our PRC counsel, is unable to provide a "will" opinion because it believes that it is more likely than not that we and our offshore subsidiaries would be treated as non-resident enterprises for PRC tax purposes because we do not meet some of the conditions outlined in SAT Notice 82. Therefore, AllBright believes that it is possible but highly unlikely that the income received by overseas shareholders who are not PRC residents will be regarded as China-sourced income. See "*Risk Factors-Risks Relating to Doing Business in the PRC-Under the PRC Enterprise Income Tax Law, we may be classified as a PRC 'resident enterprise' for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment.*"

Currently, as resident enterprises in the PRC, GoodFaith WFOE as well as Suzhou GoodFaith and its subsidiaries in China are subject to the enterprise income tax at the rate of 25%, except that once an enterprise meets certain requirements and is identified as a small-scale minimal profit enterprise, the part of its taxable income not more than RMB1 million is subject to a reduced rate of 5% and the part between RMB1 million and RMB3 million is subject to a reduced rate of 10%. The EIT is calculated based on the entity's global income as determined under PRC tax laws and accounting standards. If the PRC tax authorities determine that GoodFaith Cayman is a PRC resident enterprise for enterprise income tax purposes, we may be required to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises. In addition, non-resident enterprise shareholders may be subject to a 10% PRC withholding tax on gains realized on the sale or other disposition of our Ordinary Shares, if such income is treated as sourced from within the PRC. It is unclear whether our non-PRC individual shareholders would be subject to any PRC tax on dividends or gains obtained by such non-PRC individual shareholders in the event we are determined to be a PRC resident enterprise. If any PRC tax were to apply to dividends or gains realized by non-PRC individuals, it would generally apply at a rate of 20% unless a reduced rate is available under an applicable tax treaty. However, it is also unclear whether our non-PRC shareholders would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise. There is no guidance from the PRC government to indicate whether or not any tax treaties between the PRC and other countries would apply in circumstances where a non-PRC company was deemed to be a PRC tax resident, and thus there is no basis for expecting how tax treaty between the PRC and other countries may impact non-resident enterprises.

**<u>Hong Kong Taxation</u>**

Entities incorporated in Hong Kong are subject to profits tax in Hong Kong at the rate of 16.5%.

**<u>Cayman Islands Taxation</u>**

The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains, or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the Government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or, after execution, brought within the jurisdiction of the Cayman Islands. No stamp duty is payable in the Cayman Islands on the issue of shares by, or any transfers of shares of, Cayman Islands companies (except those which hold interests in land in the Cayman Islands). There are no exchange control regulations or currency restrictions in the Cayman Islands.

Payments of dividends and capital in respect of our Ordinary Shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of our Ordinary Shares, as the case may be, nor will gains derived from the disposal of our Ordinary Shares be subject to Cayman Islands income or corporate tax.

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**<u>United States Federal Income Taxation</u>**

The following does not address the tax consequences to any particular investor or to persons in special tax situations such as:

● banks;

● financial institutions;

● insurance companies;

● regulated investment companies;

● broker-dealers;

● persons that elect to mark their securities to market;

● U.S. expatriates or former long-term residents of the U.S.;

● governments or agencies or instrumentalities thereof;

● tax-exempt entities;

● persons liable for alternative minimum tax;

● persons holding our Ordinary Shares as part of a straddle, hedging, conversion or integrated transaction;

● persons that actually or constructively own 10% or more of our voting power or value (including by reason of owning our Ordinary Shares);

● persons who acquired our Ordinary Shares pursuant to the exercise of any employee share option or otherwise as compensation;

● persons holding our Ordinary Shares through partnerships or other pass-through entities;

● beneficiaries of a Trust holding our Ordinary Shares; or

● persons holding our Ordinary Shares through a trust.

The discussion set forth below is addressed only to U.S. Holders that purchase Ordinary Shares in this offering. Prospective purchasers are urged to consult their own tax advisors about the application of the U.S. federal income tax rules to their particular circumstances as well as the state, local, foreign and other tax consequences to them of the purchase, ownership and disposition of our Ordinary Shares.

***Material Tax Consequences Applicable to U.S. Holders of Our Ordinary Shares***

The following sets forth the material U.S. federal income tax consequences related to the ownership and disposition of our Ordinary Shares. It is directed to U.S. Holders (as defined below) of our Ordinary Shares and is based upon laws and relevant interpretations thereof in effect as of the date of this prospectus, all of which are subject to change. This description does not deal with all possible tax consequences relating to ownership and disposition of our Ordinary Shares or U.S. tax laws, other than the U.S. federal income tax laws, such as the tax consequences under non-U.S. tax laws, state, local and other tax laws.

The following brief description applies only to U.S. Holders (defined below) who hold Ordinary Shares as capital assets and that have the U.S. dollar as their functional currency. This brief description is based on the federal income tax laws of the United States in effect as of the date of this prospectus and on U.S. Treasury regulations in effect or, in some cases, proposed, as of the date of this prospectus, as well as judicial and administrative interpretations thereof available on or before such date. All of the foregoing authorities are subject to change, which change could apply retroactively and could affect the tax consequences described below.

The brief description below of the U.S. federal income tax consequences to "U.S. Holders" will apply to you if you are a beneficial owner of Ordinary Shares and you are, for U.S. federal income tax purposes,

● an individual who is a citizen or resident of the United States;

● a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized under the laws of the United States, any state thereof or the District of Columbia;

● an estate whose income is subject to U.S. federal income taxation regardless of its source; or

● a trust that (1) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons for all substantial decisions or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

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If a partnership (or other entities treated as a partnership for United States federal income tax purposes) is a beneficial owner of our Ordinary Shares, the tax treatment of a partner in the partnership will depend upon the status of the partner and the activities of the partnership. Partnerships and partners of a partnership holding our Ordinary Shares are urged to consult their tax advisors regarding an investment in our Ordinary Shares.

***Taxation of Dividends and Other Distributions on our Ordinary Shares***

Subject to the PFIC (defined below) rules discussed below, the gross amount of distributions made by us to you with respect to the Ordinary Shares (including the amount of any taxes withheld therefrom) will generally be includable in your gross income as dividend income on the date of receipt by you, but only to the extent that the distribution is paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). With respect to corporate U.S. Holders, the dividends will not be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from other U.S. corporations.

With respect to non-corporate U.S. Holders, including individual U.S. Holders, dividends will be taxed at the lower capital gains rate applicable to qualified dividend income, provided that (1) the Ordinary Shares are readily tradable on an established securities market in the United States, or we are eligible for the benefits of an approved qualifying income tax treaty with the United States that includes an exchange of information program, (2) we are not a PFIC (defined below) for either our taxable year in which the dividend is paid or the preceding taxable year, and (3) certain holding period requirements are met. Because there is no income tax treaty between the United States and the Cayman Islands, clause (1) above can be satisfied only if the Ordinary Shares are readily tradable on an established securities market in the United States. Under U.S. Internal Revenue Service authority, Ordinary Shares are considered for purpose of clause (1) above to be readily tradable on an established securities market in the United States if they are listed on certain exchanges, which presently include the NYSE and the Nasdaq Stock Market. You are urged to consult your tax advisors regarding the availability of the lower rate for dividends paid with respect to our Ordinary Shares, including the effects of any change in law after the date of this prospectus.

Dividends will constitute foreign source income for foreign tax credit limitation purposes. If the dividends are taxed as qualified dividend income (as discussed above), the amount of the dividend taken into account for purposes of calculating the foreign tax credit limitation will be limited to the gross amount of the dividend, multiplied by the reduced rate divided by the highest rate of tax normally applicable to dividends. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends distributed by us with respect to our Ordinary Shares will constitute "passive category income" but could, in the case of certain U.S. Holders, constitute "general category income."

To the extent that the amount of the distribution exceeds our current and accumulated earnings and profits (as determined under U.S. federal income tax principles), it will be treated first as a tax-free return of your tax basis in your Ordinary Shares, and to the extent the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain. We do not intend to calculate our earnings and profits under U.S. federal income tax principles. Therefore, a U.S. Holder should expect that a distribution will be treated as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above.

***Taxation of Dispositions of Ordinary Shares***

Subject to the PFIC rules discussed below, you will recognize taxable gain or loss on any sale, exchange or other taxable disposition of a share equal to the difference between the amount realized (in U.S. dollars) for the share and your tax basis (in U.S. dollars) in the Ordinary Shares. The gain or loss will be capital gain or loss. If you are a non-corporate U.S. Holder, including an individual U.S. Holder, who has held the Ordinary Shares for more than one year, you will generally be eligible for reduced tax rates. The deductibility of capital losses is subject to limitations. Any such gain or loss that you recognize will generally be treated as United States source income or loss for foreign tax credit limitation purposes which will generally limit the availability of foreign tax credits.

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***PFIC***

A non-U.S. corporation is considered a PFIC, as defined in Section 1297(a) of the US Internal Revenue Code, for any taxable year if either:

● at least 75% of its gross income for such taxable year is passive income; or

● at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income (the "asset test").

Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets. We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, at least 25% (by value) of the stock. In determining the value and composition of our assets for purposes of the PFIC asset test, (1) the cash we raise in this offering will generally be considered to be held for the production of passive income and (2) the value of our assets must be determined based on the market value of our Ordinary Shares from time to time, which could cause the value of our non-passive assets to be less than 50% of the value of all of our assets (including the cash raised in this offering) on any particular quarterly testing date for purposes of the asset test.

Based on our operations and the composition of our assets we do not expect to be treated as a PFIC under the current PFIC rules. We must make a separate determination each year as to whether we are a PFIC, however, and there can be no assurance with respect to our status as a PFIC for our current taxable year or any future taxable year. Depending on the amount of cash we raise in this offering, together with any other assets held for the production of passive income, it is possible that, for our current taxable year or for any subsequent taxable year, more than 50% of our assets may be assets held for the production of passive income. We will make this determination following the end of any particular tax year. In addition, because the value of our assets for purposes of the asset test will generally be determined based on the market price of our Ordinary Shares and because cash is generally considered to be an asset held for the production of passive income, our PFIC status will depend in large part on the market price of our Ordinary Shares and the amount of cash we raise in this offering. Accordingly, fluctuations in the market price of the Ordinary Shares may cause us to become a PFIC. In addition, the application of the PFIC rules is subject to uncertainty in several respects and the composition of our income and assets will be affected by how, and how quickly, we spend the cash we raise in this offering. We are under no obligation to take steps to reduce the risk of our being classified as a PFIC, and as stated above, the determination of the value of our assets will depend upon material facts (including the market price of our Ordinary Shares from time to time and the amount of cash we raise in this offering) that may not be within our control. If we are a PFIC for any year during which you hold Ordinary Shares, we will continue to be treated as a PFIC for all succeeding years during which you hold Ordinary Shares. If we cease to be a PFIC and you did not previously make a timely "mark-to-market" election as described below, however, you may avoid some of the adverse effects of the PFIC regime by making a "purging election" (as described below) with respect to the Ordinary Shares.

If we are a PFIC for your taxable year(s) during which you hold Ordinary Shares, you will be subject to special tax rules with respect to any "excess distribution" that you receive and any gain you realize from a sale or other disposition (including a pledge) of the Ordinary Shares, unless you make a "mark-to-market" election as discussed below. Distributions you receive in a taxable year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years or your holding period for the Ordinary Shares will be treated as an excess distribution. Under these special tax rules:

● the excess distribution or gain will be allocated ratably over your holding period for the Ordinary Shares;

● the amount allocated to your current taxable year, and any amount allocated to any of your taxable year(s) prior to the first taxable year in which we were a PFIC, will be treated as ordinary income, and

● the amount allocated to each of your other taxable year(s) will be subject to the highest tax rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.

The tax liability for amounts allocated to years prior to the year of disposition or "excess distribution" cannot be offset by any net operating losses for such years, and gains (but not losses) realized on the sale of the Ordinary Shares cannot be treated as capital, even if you hold the Ordinary Shares as capital assets.

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A U.S. Holder of "marketable stock" (as defined below) in a PFIC may make a mark-to-market election under Section 1296 of the US Internal Revenue Code for such stock to elect out of the tax treatment discussed above. If you make a mark-to-market election for first taxable year which you hold (or are deemed to hold) Ordinary Shares and for which we are determined to be a PFIC, you will include in your income each year an amount equal to the excess, if any, of the fair market value of the Ordinary Shares as of the close of such taxable year over your adjusted basis in such Ordinary Shares, which excess will be treated as ordinary income and not capital gain. You are allowed an ordinary loss for the excess, if any, of the adjusted basis of the Ordinary Shares over their fair market value as of the close of the taxable year. Such ordinary loss, however, is allowable only to the extent of any net mark-to-market gains on the Ordinary Shares included in your income for prior taxable years. Amounts included in your income under a mark-to-market election, as well as gain on the actual sale or other disposition of the Ordinary Shares, are treated as ordinary income. Ordinary loss treatment also applies to any loss realized on the actual sale or disposition of the Ordinary Shares, to the extent that the amount of such loss does not exceed the net mark-to-market gains previously included for such Ordinary Shares. Your basis in the Ordinary Shares will be adjusted to reflect any such income or loss amounts. If you make a valid mark-to-market election, the tax rules that apply to distributions by corporations which are not PFICs would apply to distributions by us, except that the lower applicable capital gains rate for qualified dividend income discussed above under "-*Taxation of Dividends and Other Distributions on our Ordinary Shares*" generally would not apply.

The mark-to-market election is available only for "marketable stock", which is stock that is traded in other than de minimis quantities on at least 15 days during each calendar quarter ("regularly traded") on a qualified exchange or other market (as defined in applicable U.S. Treasury regulations), including the Nasdaq Capital Market. If the Ordinary Shares are regularly traded on the Nasdaq Capital Market and if you are a holder of Ordinary Shares, the mark-to-market election would be available to you were we to be or become a PFIC.

Alternatively, a U.S. Holder of stock in a PFIC may make a "qualified electing fund" election under Section 1295(b) of the US Internal Revenue Code with respect to such PFIC to elect out of the tax treatment discussed above. A U.S. Holder who makes a valid qualified electing fund election with respect to a PFIC will generally include in gross income for a taxable year such holder's pro rata share of the corporation's earnings and profits for the taxable year. The qualified electing fund election, however, is available only if such PFIC provides such U.S. Holder with certain information regarding its earnings and profits as required under applicable U.S. Treasury regulations. We do not currently intend to prepare or provide the information that would enable you to make a qualified electing fund election. If you hold Ordinary Shares in any taxable year in which we are a PFIC, you will be required to file U.S. Internal Revenue Service Form 8621 in each such year and provide certain annual information regarding such Ordinary Shares, including regarding distributions received on the Ordinary Shares and any gain realized on the disposition of the Ordinary Shares.

If you do not make a timely "mark-to-market" election (as described above), and if we were a PFIC at any time during the period you hold our Ordinary Shares, then such Ordinary Shares will continue to be treated as stock of a PFIC with respect to you even if we cease to be a PFIC in a future year, unless you make a "purging election" for the year we cease to be a PFIC. A "purging election" creates a deemed sale of such Ordinary Shares at their fair market value on the last day of the last year in which we are treated as a PFIC. The gain recognized by the purging election will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging election, you will have a new basis (equal to the fair market value of the Ordinary Shares on the last day of the last year in which we are treated as a PFIC) and holding period (which new holding period will begin the day after such last day) in your Ordinary Shares for tax purposes.

IRC Section 1014(a) provides for a step-up in basis to the fair market value for our Ordinary Shares when inherited from a decedent that was previously a holder of our Ordinary Shares. However, if we are determined to be a PFIC and a decedent that was a U.S. Holder did not make either a timely qualified electing fund election for our first taxable year as a PFIC in which the U.S. Holder held (or was deemed to hold) our Ordinary Shares, or a mark-to-market election and ownership of those Ordinary Shares are inherited, a special provision in IRC Section 1291(e) provides that the new U.S. Holder's basis should be reduced by an amount equal to the Section 1014 basis minus the decedent's adjusted basis just before death. As such if we are determined to be a PFIC at any time prior to a decedent's passing, the PFIC rules will cause any new U.S. Holder that inherits our Ordinary Shares from a U.S. Holder to not get a step-up in basis under Section 1014 and instead will receive a carryover basis in those Ordinary Shares.

You are urged to consult your tax advisors regarding the application of the PFIC rules to your investment in our Ordinary Shares and the elections discussed above.

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***Information Reporting and Backup Withholding***

Dividend payments with respect to our Ordinary Shares and proceeds from the sale, exchange or redemption of our Ordinary Shares may be subject to information reporting to the U.S. Internal Revenue Service and possible U.S. backup withholding under Section 3406 of the US Internal Revenue Code with at a current flat rate of 24%. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification on U.S. Internal Revenue Service Form W-9 or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status generally must provide such certification on U.S. Internal Revenue Service Form W-9. U.S. Holders are urged to consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.

Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the U.S. Internal Revenue Service and furnishing any required information. We do not intend to withhold taxes for individual shareholders. Transactions effected through certain brokers or other intermediaries, however, may be subject to withholding taxes (including backup withholding), and such brokers or intermediaries may be required by law to withhold such taxes.

Under the Hiring Incentives to Restore Employment Act of 2010, certain U.S. Holders are required to report information relating to our Ordinary Shares, subject to certain exceptions (including an exception for Ordinary Shares held in accounts maintained by certain financial institutions), by attaching a complete Internal Revenue Service Form 8938, Statement of Specified Foreign Financial Assets, with their tax return for each year in which they hold Ordinary Shares.

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**UNDERWRITING**

A.G.P./Alliance Global Partners, the Representative, is acting as the lead book-running manager of the offering and as representative of the underwriters named below. We have entered into an underwriting agreement dated , 2023 with the Representative. Subject to the terms and conditions of the underwriting agreement dated the date of this prospectus, the underwriters named below, through the Representative, have severally and not jointly agreed to purchase, and we have agreed to sell to the underwriters, the following respective number of Ordinary Shares set forth opposite the underwriters' name below:

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| **Underwriter** | **Number of** <br> **Shares** |
| A.G.P./Alliance Global Partners |  |
| Total | 3000000 |

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The underwriting agreement provides that the obligation of the underwriters to purchase the Ordinary Shares offered by this prospectus is subject to certain conditions. The underwriters are obligated to purchase all of the Ordinary Shares (other than those covered by the over-allotment option to purchase additional Ordinary Shares described below) offered hereby if any of the shares are purchased.

**Underwriting Discounts, Commissions and Expenses**

We have agreed to sell the securities to the underwriters at the offering price of $ per share, which represents the offering price of such securities set forth on the cover page of this prospectus, less the applicable 7.5% underwriting discount.

We have also agreed to reimburse the underwriters for accountable legal expenses not to exceed $175,000 and non-accountable expenses not to exceed 0.5% of the aggregate gross proceeds of this offering. We estimate that expenses payable by us in connection with this offering, including reimbursement of the underwriters' out-of-pocket expenses, but excluding the underwriting discount referred to above, will be approximately $175,000. Any expense deposits in excess of the amount paid by us on account of the underwriters' out-of-pocket expenses will be refunded to us in accordance with FINRA Rule 5110(g)(4).

The following table shows the underwriting discounts and commissions payable to the underwriters by us in connection with this offering (assuming both the exercise and non-exercise of the over-allotment option to purchase additional Ordinary Shares we have granted to the underwriters).

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|  | | **Paid by the Company** | **Paid by the Company** | **Paid by the Company** |
|  | | **No Exercise of** **Over-allotment** <br> option | | **Full Exercise of** **Over-allotment** <br> option |
|  | <br><br>**Per Share** | **Total** | <br>**Per Share** | **Total** |
| Public Offering Price | $| $| $| $|
| Underwriting discounts and commissions (7.5%) |  |  |  |  |
| Proceeds to us, before expenses | $| $| $| $|

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**Over-Allotment Option to Purchase Additional Shares**

Pursuant to the underwriting agreement, we have granted the underwriters an option, exercisable for up to 45 days from the date of this prospectus, to purchase up to 450,000 additional Ordinary Shares (15%) on the same terms as the other Ordinary Shares being purchased by the underwriters from us. The underwriters may exercise the option solely to cover over-allotments. If the over-allotment option to purchase additional Ordinary Shares is exercised in full, the total public offering price, underwriting compensation (including discounts, but not including any other compensation described hereunder) and proceeds to us before offering expenses will be approximately $15.96 million.

Representative's Warrants

In addition, we have agreed to issue warrants to the underwriters to purchase a number of Ordinary Shares equal to 8% of the total number of Ordinary Shares sold in this offering. The Representative's Warrants shall have an exercise price equal to 130% of the initial public offering price of the Ordinary Shares sold in this offering. The Representative's Warrants may be purchased in cash, will be exercisable for five years from the closing of this offering and will terminate on the fifth anniversary of the closing date of this offering. In addition, although the Representative's Warrants and the underlying Ordinary Shares will be registered in the registration statement of which this prospectus forms a part, we have also agreed that the Representative's Warrants will provide for registration rights in certain cases. These registration rights apply to all of the securities directly and indirectly issuable upon exercise of the Representative's Warrants. The piggyback registration right provided will not be greater than five years from the effective date of the offering in compliance with FINRA Rule 5110(g)(8)(D). We will bear all fees and expenses attendant to registering the Ordinary Shares issuable upon exercise of the piggyback registration right of the Representative's Warrants, other than underwriting or discounts and commissions or brokerage or other selling expenses incurred and payable by the holders of the Representative's Warrants. The exercise price and number of Ordinary Shares issuable upon exercise of the Representative's Warrants may be adjusted in certain circumstances, including in the event of a share dividend, extraordinary cash dividend or our recapitalization, reorganization, merger or consolidation.

The Representative's Warrants and the underlying shares will be deemed compensation by FINRA, and therefore will be subject to FINRA Rule 5110(e)(1). In accordance with FINRA Rule 5110(e)(1), and except as otherwise permitted by FINRA rules, neither the Representative's Warrants nor any of our shares issued upon exercise of the Representative's Warrants may be sold, transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of such securities by any person, for a period of 180 days immediately following the effective date of the registration statement of which this prospectus forms a part.

**Indemnification**

We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act and liabilities arising from breaches of representations and warranties contained in the underwriting agreement, or to contribute to payments that the underwriters may be required to make in respect any of those liabilities.

**Lock-Up Agreements**

For a period of six months from the closing date of this offering, subject to certain exceptions, we have agreed with the underwriters not to offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right, or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any Ordinary Shares or any securities convertible into or exercisable or exchangeable for our Ordinary Shares or file or cause to be filed with the SEC any registration statement relating to the offering of any of our securities. In addition, all of our directors, executive officers, and holders of 5% or more of our Ordinary Shares have entered into lock-up agreements with the Representative prior to the commencement of this offering pursuant to which each of these persons, for a period of six months from the closing date of this offering, without the prior written consent of the Representative, agree not to (i) offer, issue, sell, contract to sell, encumber, grant any option for sale, or otherwise dispose of, or announce the intention to otherwise dispose of, any of our Ordinary Shares or any securities convertible into or exercisable or exchangeable for our Ordinary Shares whether now owed or hereafter acquired or with respect to which the director or executive officer has or hereafter acquires the power of disposition; (ii) enter into any swap, hedge, or similar agreement or arrangement that transfers in whole or in part, the economic consequences of ownership of such securities; or (iii) engage in any short selling of such securities.

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**Pricing of the Offering**

Prior to this offering, there has been no public market for our Ordinary Shares. The initial public offering price of the shares has been negotiated between us and the underwriter. Among the factors considered in determining the initial public offering price of the shares, in addition to the prevailing market conditions, are our historical performance, estimates of our business potential and earnings prospects, an assessment of our management and the consideration of the above factors in relation to market valuation of companies in related businesses.

**Price Stabilization, Short Positions, and Penalty Bids**

The underwriters may also impose a penalty bid. This occurs when a particular underwriter or dealer repays selling concessions allowed to it for distributing our Ordinary Shares in this offering because such underwriter repurchases those shares in stabilizing or short covering transactions.

**Passive Market Making**

In connection with this offering, the underwriters and any selling group members may engage in passive market making transactions in our Ordinary Share on Nasdaq in accordance with Rule 103 of Regulation M under the Securities Exchange Act of 1934, as amended, during a period before the commencement of offers or sales of Ordinary Share and extending through the completion of the distribution. A passive market maker must display its bid at a price not in excess of the highest independent bid of that security. However, if all independent bids are lowered below the passive market maker's bid that bid must then be lowered when specified purchase limits are exceeded.

**Electronic Distribution**

This prospectus in electronic format may be made available on websites or through other online services maintained by the underwriters, or by their affiliates. Other than this prospectus in electronic format, the information on any underwriter's website and any information contained in any other website maintained by any of the underwriters is not part of this prospectus or the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or the underwriters in their capacity as underwriters, and should not be relied upon by investors.

**Other**

From time to time, the underwriters and/or their affiliates have provided, and may in the future provide, various investment banking and other financial services for us which services they have received and may in the future receive, customary fees. In the course of their businesses, the underwriters and their affiliates may actively trade our securities or loans for its own account or for the accounts of customers, and, accordingly, the underwriters and their affiliates may at any time hold long or short positions in such securities or loans. Except for services provided in connection with this offering, the underwriters have not provided any investment banking or other financial services to us during the 180-day period preceding the date of this prospectus, and we do not expect to retain the underwriters to perform any investment banking or other financial services for at least 90 days after the date of this prospectus.

**Selling Restrictions**

This prospectus does not constitute an offer to sell to, or a solicitation of an offer to buy from, anyone in any country or jurisdiction (i) in which such an offer or solicitation is not authorized, (ii) in which any person making such offer or solicitation is not qualified to do so or (iii) in which any such offer or solicitation would otherwise be unlawful. No action has been taken that would, or is intended to, permit a public offer of the securities or possession or distribution of this prospectus or any other offering or publicity material relating to the securities in any country or jurisdiction (other than the United States) where any such action for that purpose is required. Accordingly, the underwriters have undertaken that they will not, directly or indirectly, offer or sell any securities or have in its possession, distribute, or publish any prospectus, form of application, advertisement, or other document or information in any country or jurisdiction except under circumstances that will, to the best of its knowledge and belief, result in compliance with any applicable laws and regulations and all offers and sales of securities by it will be made on the same terms.

**Selling Restrictions outside the United States**

No action has been taken in any jurisdiction (except in the United States) that would permit a public offering of the Ordinary Shares, or the possession, circulation, or distribution of this prospectus or any other material relating to us or the Ordinary Shares, where action for that purpose is required. Accordingly, the Ordinary Shares may not be offered or sold, directly or indirectly, and neither this prospectus nor any other offering material or advertisements in connection with the Ordinary Shares may be distributed or published, in or from any country or jurisdiction except in compliance with any applicable rules and regulations of any such country or jurisdiction.

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**EXPENSES RELATING TO THIS OFFERING**

Set forth below is an itemization of the total expenses, excluding placement discounts and commissions, that we expect to incur in connection with this offering. With the exception of the SEC registration fee, the FINRA filing fee and the Nasdaq Capital Market listing fee, all amounts are estimates.

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| Securities and Exchange Commission Registration Fee | $2518  |
| Nasdaq Capital Market Listing Fee | $5000  |
| FINRA Filing Fee | $650  |
| Legal Fees and Expenses | $659360  |
| Accounting Fees and Expenses | $875308 |
| Printing and Engraving Expenses | $35000  |
| Transfer Agent Expenses | $[●]  |
| Miscellaneous Expenses | $[●]  |
| **Total Expenses** | $[●]  |

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These expenses will be borne by us. Underwriting discounts will be borne by us in proportion to the numbers of Ordinary Shares sold in the offering.

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**LEGAL MATTERS**

We are being represented by Hunter Taubman Fischer & Li LLC with respect to certain legal matters as to United States federal securities and New York State law. The validity of the Ordinary Shares offered in this offering and certain other legal matters as to Cayman Islands law will be passed upon for us by Maples and Calder (Hong Kong) LLP, our counsel as to Cayman Islands law. Legal matters as to PRC law will be passed upon for us by AllBright Law Offices. Loeb & Loeb LLP is acting as counsel to the underwriters in connection with this offering.

**EXPERTS**

The consolidated financial statements for the fiscal years ended December 31, 2021 and 2020, included in this prospectus have been so included in reliance on the report of UHY LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting. The office of UHY LLP is located at 1185 Avenue of the Americas, 38th Floor, New York, NY, 10036.

**WHERE YOU CAN FIND ADDITIONAL INFORMATION**

We have filed with the SEC a registration statement on Form F-1, including relevant exhibits and schedules under the Securities Act, covering the Ordinary Shares offered by this prospectus. You should refer to this registration statement and its exhibits and schedules if you would like to find out more about us and about the Ordinary Shares. This prospectus summarizes material provisions of contracts and other documents that we refer you to. Since the prospectus may not contain all the information that you may find important, you should review the full text of these documents.

Immediately upon the completion of this offering, we will be subject to periodic reporting and other informational requirements of the Exchange Act, as applicable to foreign private issuers. Accordingly, we will be required to file reports, including annual reports on Form 20-F, and other information with the SEC. As a foreign private issuer, we are exempt from the rules of the Exchange Act prescribing the furnishing and content of proxy statements to shareholders under the federal proxy rules contained in Sections 14(a), (b) and (c) of the Exchange Act, and our executive officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.

The registration statements, reports and other information so filed can be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You can request copies of these documents upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. The SEC also maintains a website that contains reports, proxy statements, and other information about issuers, such as us, who file electronically with the SEC. The address of that website is http://www.sec.gov. The information on that website is not a part of this prospectus.

No dealers, salesperson, or other person is authorized to give any information or to represent anything not contained in this prospectus. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

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| 161 |
| *[**Table of Contents**](#toc)* |

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**INDEX TO CONSOLIDATED FINANCIAL STATEMENTS**

**GOODFAITH TECHNOLOGY INC. AND SUBSIDIRIES**

**TABLE OF CONTENTS**

---

| | |
|:---|:---|
| **Audited Consolidated Financial Statements** |  |
| [Report of Independent Registered Public Accounting Firm](#fsreport) | F-2 |
| [Consolidated Balance Sheets as of December 31, 2021 and 2020](#fsbs) | F-3 |
| [Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2021 and 2020](#fsci) | F-4 |
| [Consolidated Statements of Changes in Shareholders' Equity (Deficit) for the years ended December 31, 2021 and 2020](#fsse) | F-5 |
| [Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020](#fscf) | F-6 |
| [Notes to Consolidated Financial Statements](#fsnotes) | F-7 - F-24 |

---

---

| | |
|:---|:---|
| **Unaudited Condensed Consolidated Financial Statements** |  |
| [Unaudited Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021](#bs2) | F-25 |
| [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income for the six months ended June 30, 2022 and 2021](#income2) | F-26 |
| [Unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity (Deficit) for six months ended June 30, 2022 and 2021](#eqt2) | F-27 |
| [Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021](#cf2) | F-28 |
| [Notes to the Unaudited Condensed Consolidated Financial Statements](#notes2) | F-29 - F-47 |

---

---

| |
|:---|
| F-1 |
| *[**Table of Contents**](#fstoc)* |

---

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Board of Directors and

Shareholders of GoodFaith Technology Inc.

**Opinion on the Consolidated Financial Statements**

We have audited the accompanying consolidated balance sheets of GoodFaith Technology Inc. and its subsidiaries (the "Company") as of December 31, 2021 and 2020, and the related consolidated statements of operations and comprehensive income, changes in shareholders' equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 2021, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

**Basis for Opinion**

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ UHY LLP

We have served as the Company's auditor since 2021.

New York, New York

July 13, 2022, except for Notes 1, 2 and 10, as to which the date is September 20, 2022, Note 3, as to which the date is December 5, 2022, and Note 14, as to which the date is March 30, 2023.

---

| |
|:---|
| F-2 |
| *[**Table of Contents**](#fstoc)* |

---

**GOODFAITH TECHNOLOGY INC. AND SUBSIDIARIES** 

**CONSOLIDATED BALANCE SHEETS**

**As of December 31, 2021 and 2020** 

**(In U.S. dollars, except for share and per share data, or otherwise noted)**

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2021** | **2020** |
| **Assets** |  |  |
| **Current assets:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | $3262367 | $1979567 |
| &nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable, net | 3537074 | 3060122 |
| &nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable-related parties, net | 51933 | 18338 |
| &nbsp;&nbsp;&nbsp;&nbsp; Deferred offering cost | 681545 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Prepayments and other current assets, net | 160719 | 383571 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amount due from related parties | 1763078 | 360036 |
| **Total current assets** | 9456716 | 5801634 |
| &nbsp;&nbsp;&nbsp;&nbsp; Property and equipment, net | 117373 | 31846 |
| &nbsp;&nbsp;&nbsp;&nbsp; Intangible assets, net | 91939 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Amounts due from related parties-non current | 313691 | 306518 |
| **Total non-current assets** | 523003 | 338364 |
| **TOTAL ASSETS** | $9979719 | $6139998 |
| **Liabilities** |  |  |
| **Current liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Accounts payable  | $1142143 | $213837 |
| &nbsp;&nbsp;&nbsp;&nbsp; Accounts payable - related parties | 1163880 | 703897 |
| &nbsp;&nbsp;&nbsp;&nbsp; Advance from customers | 13070 | 24325 |
| &nbsp;&nbsp;&nbsp;&nbsp; Taxes payable | 1579334 | 1266386 |
| &nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses and other current liabilities  | 3735407 | 2387591 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amounts due to related parties | 2582652 | 472680 |
| Total current liabilities | 10216486 | 5068716 |
| **TOTAL LIABILITIES** | 10216486 | 5068716 |
| **Shareholders' equity** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Ordinary Shares ($0.0001 par value, 500,000,000 authorized, 10,000,000 shares issued and outstanding as of December 31, 2021 and 2020, respectively \*) | 1000 | 1000 |
| &nbsp;&nbsp;&nbsp;&nbsp; Subscription receivable | (1000) | (1000) |
| &nbsp;&nbsp;&nbsp;&nbsp; Additional paid-in capital |  | 180553 |
| &nbsp;&nbsp;&nbsp;&nbsp; Statutory surplus reserves | 208364 | 186911 |
| &nbsp;&nbsp;&nbsp;&nbsp; (Accumulated deficit) Retained earnings | (502513) | 654793 |
| &nbsp;&nbsp;&nbsp;&nbsp; Accumulated other comprehensive income | 57382 | 49025 |
| **Total shareholders' (deficit) equity** | (236767) | 1071282 |
| **TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY** | $9979719 | $6139998 |

---

\* Par value per share and the number of shares has been retrospectively restated for all the periods presented.

The accompanying notes are an integral part of these consolidated financial statements.

---

| |
|:---|
| F-3 |
| *[**Table of Contents**](#fstoc)* |

---

**GOODFAITH TECHNOLOGY INC. AND SUBSIDIARIES** 

**CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME**

**For the years ended December 31, 2021 and 2020.**

 **(In U.S. dollars, except for share and per share data, or otherwise noted)**

---

| | | |
|:---|:---|:---|
|  | **For the years ended** <br> **December 31,** | **For the years ended** <br> **December 31,** |
|  | **2021** | **2020** |
| Revenue |  |  |
| Service to third parties  | $20541146 | $15985134 |
| Service to related parties | 112065 | 12717 |
| Total revenue | 20653211 | 15997851 |
| Cost of revenue | 17041672 | 10784060 |
| Gross profit | 3611539 | 5213791 |
| Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Selling expenses | 567601 | 1110228 |
| &nbsp;&nbsp;&nbsp;&nbsp; General and administrative expenses | 1991880 | 2205743 |
| Total operating expenses | 2559481 | 3315971 |
| Income from operations | 1052058 | 1897820 |
| Other income (expense): |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Other expense, net | (389770) | (238010) |
| &nbsp;&nbsp;&nbsp;&nbsp; Governmental subsidies | 55878 | 105489 |
| &nbsp;&nbsp;&nbsp;&nbsp; Interest income (expense), net | 3045 | (5542) |
| Total other expense | (330847) | (138063) |
| Income before income tax provision | 721211 | 1759757 |
| &nbsp;&nbsp;&nbsp;&nbsp; Income tax expense | 318135 | 485693 |
| **Net Income** | $403076 | $1274064 |
| **Other comprehensive income** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Foreign currency translation gain  | 8357 | 61636 |
| **Total comprehensive income** | $411433 | $1335700 |
| **Earnings per ordinary share** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Basic and diluted | 0.04 | 0.13 |
| **Weighted average number of ordinary shares outstanding** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Basic and diluted\* | 10000000 | 10000000 |

---

\* Par value per share and the number of shares has been retrospectively restated for all the periods presented.

The accompanying notes are an integral part of these consolidated financial statements.

---

| |
|:---|
| F-4 |
| *[**Table of Contents**](#fstoc)* |

---

**GOODFAITH TECHNOLOGY INC. AND SUBSIDIARIES** 

**CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)**

**For the years ended December 31, 2021 and 2020.** 

**(In U.S. dollars, except for share and per share data, or otherwise noted)**

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Ordinary Shares\*** | **Ordinary Shares\*** | | | | | | |
|  | **Shares** | **Amount**  | **Subscription** <br>**receivable** | **Additional** <br> **paid-in** <br>**capital** | **Statutory** <br>**reserves** | **Retained** <br> **earnings** <br>**(deficit)** | **Accumulated other** <br> **comprehensive** <br>**income (loss)** | **Total** <br> **shareholders'**<br>**Equity** |
| **Balance as of January 1, 2020** | **10000000** | $**1000** | $**(1000)** | $**180553** | $**92971** | $**68317** | $**(12611)** | $**329230** |
| Net income |  |  |  |  |  | 1274064 |  | 1274064 |
| Distribution to owners |  |  |  |  |  | (593648) |  | (593648) |
| Appropriation to statutory reserve |  |  |  |  | 93940 | (93940) |  |  |
| Foreign currency translation adjustment | - | - | - | - | - | - | 61636 | 61636 |
| **Balance as of December 31, 2020** | **10000000** | $**1000** | $**(1000)** | **180553** | **186911** | **654793** | **49025** | **1071282** |
| Net income |  |  |  |  |  | 403076 |  | 403076 |
| Appropriation to statutory reserve |  |  |  |  | 21453 | (21453) |  |  |
| Contribution from shareholders |  |  |  | 155003 |  |  |  | 155003 |
| Acquisitions of Beihai Beiming and Suzhou GoodFaith |  |  |  | (335556) |  | (1538929) |  | (1874485) |
| Foreign currency translation adjustment | - | - | - | - | - | - | 8357 | 8357 |
| **Balance as of December 31, 2021** | **10000000** | $**1000** | $**(1000)** | $**-** | $**208364** | $**(502513)** | $**57382** | $**(236767)** |

---

\* Par value per share and the number of shares has been retrospectively restated for all the periods presented.

The accompanying notes are an integral part of these consolidated financial statements.

---

| |
|:---|
| F-5 |
| *[**Table of Contents**](#fstoc)* |

---

**GOODFAITH TECHNOLOGY INC. AND SUBSIDIARIES** 

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**For the years ended December 31, 2021 and 2020.** 

**(In U.S. dollars, except for share and per share data, or otherwise noted)**

---

| | | |
|:---|:---|:---|
|  | **For the years ended** <br> **December 31,** | **For the years ended** <br> **December 31,** |
|  | **2021** | **2020** |
| **CASH FLOWS FROM OPERATING ACTIVITIES:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Net income | $403076 | $1274064 |
| &nbsp;&nbsp;&nbsp;&nbsp; Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 50979 | 26968 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest (income) expense | (3045) | 5404 |
| &nbsp;&nbsp;&nbsp;&nbsp;(Increase) decrease in operating assets |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable | (400579) | (282734) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable from related parties | (32776) | (15187) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amount due from related parties |  | (280387) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepayments and other current assets | 229104 | (192295) |
| &nbsp;&nbsp;&nbsp;&nbsp; Increase (decrease) in operating liabilities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | 912454 | (334479) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable to related parties | 438300 | 101393 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Taxes payable | 279984 | 464242 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses and other payables | 1266688 | 1328355 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Advance from customers | (11685) | 4088 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amount due to related parties | (48718) | 159204 |
| Net cash provided by operating activities | 3083782 | 2258636 |
| **CASH FLOWS FROM INVESTING ACTIVITIES:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchase of property and equipment | (114544) | (17791) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchase of Intangible assets | (111080) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans to related parties | (1469257) | (58760) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans repayment from related parties | 93002 | 173974 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of a subsidiary | (1674029) |  |
| Net cash (used in)/provided by investing activities | (3275908) | 97423 |
| **CASH FLOWS FROM FINANCING ACTIVITIES:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans received from a related party | 1674029 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repayments to related parties  | (416027) | (358348) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceed from short-term bank borrowing | 310005 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repayment of short-term bank borrowing | (310005) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contribution from shareholders | 155003 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividend paid to shareholders |  | (593648) |
| Net cash provided by/(used in) financing activities | 1413005 | (951996) |
| Effect of exchange rate changes | 61921 | 106899 |
| Net increase in cash and cash equivalents | 1282800 | 1510962 |
| Cash and cash equivalents, at beginning of year | 1979567 | 468605 |
| Cash and cash equivalents, at end of year | $3262367 | $1979567 |
| **Noncash Investing and Financing Activities** |  |  |
| Increase in payables for acquisition of a subsidiary | $201504 | $- |
| **SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:** |  |  |
| Income tax paid | $62182 | $140324 |
| Interest paid | $7407 | $25812 |

---

The accompanying notes are an integral part of these consolidated financial statements.

---

| |
|:---|
| F-6 |
| *[**Table of Contents**](#fstoc)* |

---

**GOODFAITH TECHNOLOGY INC. AND SUBSIDIARIES** 

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 1. ORGANIZATION AND PRINCIPAL ACTIVITIES**

GoodFaith Technology Inc. ("GoodFaith Cayman" or the "Company") was incorporated under the laws of the Cayman Islands on May 13, 2021. It is a holding company with no material operations of its own. GoodFaith Cayman offers customized pre-approval risk management and post-loan delinquent debt collection products and services to commercial banks and non-bank financial institutions in China in connection with credit loans, through its wholly owned subsidiaries in China.

The consolidated financial statements of the Company include the following entities:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Entity Name** | **Registered** <br> **Location** | **Percentage of** <br> **ownership** | **Date of** <br> **incorporation** | **Registered** <br> **capital** | **Principal** <br> **activities** |
| GoodFaith Technology Inc. ("GoodFaith Cayman") | Cayman | Parent | May 13, 2021 | N/A | Investment holding |
| GoodFaith Technology Holdings Limited ("GoodFaith BVI") | BVI | 100% by GoodFaith Cayman | May 26, 2021 | N/A | Investment holding |
| GoodFaith Technology Limited ("GoodFaith HK") | Hong Kong | 100% by GoodFaith BVI | June 10, 2021 | HKD 10,000 | Investment holding |
| 苏州创之信信息科技有限公司<br> Suzhou Chuangzhixin Information Technology Co., Ltd. ("GoodFaith WOFE") | Suzhou | 100% by GoodFaith HK | October 25, 2021 | RMB10,000,000 | Investment holding |
| 苏州承信信息科技有限公司<br> Suzhou GoodFaith Information Technology Co., Ltd. ("Suzhou GoodFaith") | Suzhou | 100% by GoodFaith WOFE | April 28, 2021 | RMB1,000,000 | Investment holding  |
| 深圳市信德盛金融服务有限公司<br> Shenzhen Xindesheng Financial Services Co., Ltd. ("Shenzhen Xindesheng") | Shenzhen | 100% by Suzhou GoodFaith | September 14, 2015 | RMB20,000,000 | Post-loan delinquent debt collection |
| 北海北溟投资有限公司<br> Beihai Beiming Investment Co., Ltd. ("Beihai Beiming") | Beihai | 100% by Suzhou GoodFaith | April 29, 2020 | RMB20,000,000 | Investment holding |
| 上海北溟信息科技有限公司<br> Shanghai Beiming Information Technology Co., Ltd. ("Beiming Technology") | Shanghai | 100% by Beihai Beiming | July 21, 2015 | RMB10,000,000 | Pre-approval risk management service |
| 上海宇壹信息科技有限公司<br> Shanghai Yuyi Information Technology Co., Ltd ("Shanghai Yuyi") | Shanghai | 100% by Beihai Beiming | July 25, 2014 | RMB10,000,000 | Pre-approval risk management service |
| 亿国轩（深圳）投资控股有限公司<br> Yiguoxuan (Shenzhen) Investment Holding Co., Ltd. ("Shenzhen Yiguoxuan")\* | Shenzhen | 100% by Shenzhen Xindesheng | July 3, 2017 | RMB20,000,000 | Post-loan delinquent debt collection |
| 九江市信德盛信息咨询服务有限公司<br> Jiujiang Xindesheng Information Consulting Service Co., Ltd. ("Jiujiang Xindesheng) | Jiujiang | 100% by Shenzhen Xindesheng | October 13, 2017 | RMB5,000,000 | Post-loan delinquent debt collection |
| 贵阳信德盛信息技术有限公司<br> Guiyang Xindesheng Information Technology Co., Ltd. ("Guiyang Xindesheng") | Guiyang | 100% by Shenzhen Xindesheng | April 1, 2020 | RMB1,000,000 | Post-loan delinquent debt collection |
| 成都市信德盛信息技术有限公司<br> Chengdu Xindesheng Information Technology Co., Ltd. ("Chengdu Xindesheng") | Chengdu | 100% by Shenzhen Xindesheng | October 23, 2020 | RMB200,000 | Post-loan delinquent debt collection |
| 惠州市信德盛信息技术有限公司<br> Huizhou Xindesheng Information Technology Co., Ltd. ("Huizhou Xindesheng") | Huizhou | 100% by Shenzhen Xindesheng | March 22, 2021 | RMB2,000,000 | Post-loan delinquent debt collection |
| 北海信德盛信息科技有限公司<br> Beihai Xindesheng Information Technology Co., Ltd. ("Beihai Xindesheng") | Beihai | 100% by Shenzhen Xindesheng | June 10, 2021 | RMB2,000,000 | Post-loan delinquent debt collection |

---

---

| |
|:---|
| F-7 |
| *[**Table of Contents**](#fstoc)* |

---

\* On April 6, 2021, Shenzhen Xindesheng disposed of 100% equity interest of Shenzhen Yiguoxuan for a consideration of RMB1. Shenzhen Yiguoxuan was established as a shell company and not intended to be used in the future. Shenzhen Yiguoxuan had no capital injection and no operations from its inception until disposal, so it basically did not result in gain or loss on the consolidation of financial statements for the year ended December 31, 2021. The disposal of Shenzhen Yiguoxuan did not qualify as a discontinued operation as it did not individually or in the aggregate represent a strategic shift that has had a major impact on the Company's operations or financial results.

***Reorganization***

On July 21, 2015, Beiming Technology was 100% owned by Shanghai Beiming Data Technology Co., Ltd ("Beiming Data") and its 100% owned subsidiary Beihai Beiming. 100% equity interest of Shanghai Yuyi was acquired on June 10, 2018 by Beiming Data. Beiming Data was controlled by Kai Zhou since 2017. Beiming Technology and Shanghai Yuyi were 100% owned by Beihai Beiming, which was a 100% owned subsidiary of Beiming Data before the Reorganization. As a result, Beiming Technology and Shanghai Yuyi were controlled by Kai Zhou from July 21, 2015 and June 10, 2018, respectively, until the Reorganization.

In February 2019, 51% equity interest of Shenzhen Xindesheng was acquired by Shanghai Zhongchuang Asset Management Co., Ltd. ("Shanghai Zhongchuang"), which is 70% owned by Xiaofeng Fei. In accordance with the ownership holding trust agreement signed between Xiaofeng Fei and Kai Zhou, the equity ownership of Xiaofeng Fei in the Shanghai Zhongchuang was held on behalf of Kai Zhou and at his willingness to execute relative rights in Shanghai Zhongchuang and its subsidiaries. As a result, from February 28, 2019, until the Reorganization, Shenzhen Xindesheng was under control of Kai Zhou.

On April 28, 2021, Suzhou GoodFaith was incorporated for the purpose of foreign exchange registration under the laws of the People's Republic of China. Suzhou GoodFaith was owned by 7 natural person shareholders ("Ultimate Shareholders").

On May 13, 2021, GoodFaith Cayman ("the Company") was incorporated in the Cayman Islands and issued 10,000,000 outstanding Ordinary Shares at par value of $0.0001 to 7 BVI companies which were set up by the same group of Ultimate Shareholders. The Company is controlled by Qearl's Holdings Limited, which takes 47.3% of the total outstanding shares of GoodFaith. Qearl's Holding Limited, a BVI company, is 90% ultimately held by Kai Zhou, Qearl's Holding Limited's remaining 10% equity interest is held by Xiaofeng Fei, who takes a same voting position as Kai Zhou.

GoodFaith BVI, GoodFaith HK and GoodFaith WOFE are newly established companies, which have no operations and are used to control Shenzhen Xindesheng, Beiming Technology and Shanghai Yuyi.

On September 1, 2021, Beiming Data agreed to transfer all its shares held in Beihai Beiming to Suzhou GoodFaith, Beihai Beiming became the wholly owned subsidiary of Suzhou GoodFaith with consideration of RMB10,800,000 ($1,669,836).

On December 31, 2021, 100% equity interest of Suzhou GoodFaith was transferred from Ultimate Shareholders to GoodFaith WFOE. On December 31, 2021, 100% equity interest of Shenzhen Xindesheng was transferred from its original shareholders to Suzhou GoodFaith.

On April 28, 2021 and May 10, 2021, Xiaofeng Fei and Kai Zhou ("Parties") executed two Acting-in-Concert Agreements respectively. The major terms of these two agreements are:

· The Parties shall inform and discuss with each other and reach a consensus before exercising voting rights in the Company's decision making.

· If no consensus can be reached by the Parties, the decision will be made by Kai Zhou prevails.

As a result of the Acting-in-Concert agreement, Kai Zhou has the ultimate control of the Company.

During the periods presented in these consolidated financial statements, the control of the entities never changed (i.e., always under the control of Kai Zhou). Accordingly, the combination has been treated as a corporate reorganization of entities under common control (the "Reorganization") and thus the current capital structure has been retroactively presented in prior periods as if such structure existed at that time and in accordance with Accounting Standards Codification ("ASC") 805-50-45-5, the entities under common control are presented on a combined basis for all periods to which such entities were under common control. Since all of the subsidiaries were under common control for the entirety of the years ended December 31, 2021 and 2020, the results of these subsidiaries are included in the consolidated financial statements for both periods.

The discussion and presentation of financial statements herein assumes the completion of the Reorganization, which is accounted for retroactively as if it occurred on January 1, 2020, and the equity has been restated to reflect the change as well.

**NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

***Risks and Uncertainties***

The main operations of the Company are located in the PRC. Accordingly, the Company's business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the economy in the PRC. The Company's results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, such experience may not be indicative of future results.

The Company's business, financial condition, and results of operations may also be negatively impacted by risks related to natural disasters, extreme weather conditions, health epidemics, and other catastrophic incidents, which could significantly disrupt the Company's operations.

The ongoing impact of COVID-19 pandemic may significantly affect the Company's business, results of operations, and financial condition. The COVID-19 pandemic may cause an increase in borrowers' default and delinquency risks. Specifically, the COVID-19 pandemic may give rise to economic downturn and other significant changes in regional and global economic conditions. As a result, borrowers' default and delinquency risks might increase as they experience unemployment or generate less income. Subsequently, higher default and delinquency risks may require the Company to dedicate more resources to maintain its current collection rate for the post-loan delinquent debt collection business and pose new challenges for its pre-approval risk management business, increasing its operating costs.

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***Basis of presentation and principles of consolidation***

The consolidated financial statements include all accounts of the Company and its wholly owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). All intercompany transactions have been eliminated.

***Use of estimates***

In preparing the consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period and accompanying notes, including the useful lives of property and equipment and intangible assets, impairment of long-lived assets, valuation allowance of deferred tax assets and uncertain tax position. Actual results could differ from those estimates.

***Fair Value Measurement***

Accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Accounting guidance establishes three levels of inputs that may be used to measure fair value:

· Level 1 applies to assets or liabilities for which there are quoted prices, in active markets for identical assets or liabilities.

· Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical asset or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

· Level 3 applies to asset or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

Based on the short-term nature of cash and cash equivalents, accounts receivable, amounts due from related parties, deferred offering cost, prepayments and other current assets, accounts payable, advances from customers, accrued expenses and other current liabilities, management has determined that the carrying value approximates their fair values as of December 31, 2021 and 2020.

***Cash and cash equivalents***

Cash and cash equivalents consist of cash on hand, the Company's demand deposits placed with financial institutions, which have original maturities of less than three months and are unrestricted as to withdrawal and use. As of December 31, 2021 and 2020, there were no cash equivalents, and cash refers to demand deposits placed with banks. The Company maintains all bank accounts in the mainland China. Cash balances in bank accounts in mainland China are not insured by the Federal Deposit Insurance Corporation or other programs.

***Accounts Receivable, net***

Accounts receivable represent trade receivable and are recognized initially at fair value and subsequently adjusted for any allowance for doubtful accounts or impairment.

The Company records impairment losses for accounts receivable based on assessments of the recoverability of the trade and other receivables and individual account analysis, including the current creditworthiness and the past collection history of each debtor. Impairments arise when there is objective evidence indicating that the balances may not be collectible. The identification of bad and doubtful debts, in particular of a loss event, requires the use of judgment and estimates, which involve the estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. Based on management of customers' credit and ongoing relationship, management makes conclusions whether any balances outstanding at the end of the period will be deemed non-collectable on an individual basis and on aging analysis basis. The provision is recorded against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of operations and comprehensive income. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable.

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| F-9 |
| *[**Table of Contents**](#fstoc)* |

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The Company historically has not had material bad debts in accounts receivable. There were no bad debt expenses for the years ended December 31, 2021 and 2020 and there was no allowance for doubtful accounts as of December 31, 2021 and 2020.

***Deferred IPO costs***

The Company complies with the requirement of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin ("SAB") Topic 5A - "Expenses of Offering". Deferred offering costs consist of underwriting, legal, accounting, and other expenses incurred through the balance sheet date that are directly related to the Company's initial public offering. Deferred offering costs will be charged to shareholders' equity upon the completion of the initial public offering. Should the initial public offering prove to be unsuccessful, these deferred costs, as well as additional expenses to be incurred, will be charged to operations. As of December 31, 2021 and 2020, the deferred IPO costs were $681,545 and nil, respectively. The deferred IPO cost of $681,545 was paid by Zhongchuang Investment on behalf of the Company and was recorded in amounts due to related parties. Pursuant to the agreement between Zhongchuang Investment and the Company, the cash advance was interest-free and the repayment term is to be mutually agreed upon by both parties. See "NOTE 11. RELATED PARTY TRANSACTIONS".

***Property and equipment, net***

Property and equipment are recorded at their historic cost, less accumulated depreciation. The Company calculates depreciation using the straight-line method, after consideration of the estimated residual values, over the following estimated useful lives:

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| | |
|:---|:---|
| **Category** | **Estimated useful lives** |
| Office equipment | 3 years |
| Electronic equipment | 3 years |
| leasehold improvement | 3 years |

---

Repair and maintenance costs are charged to expenses as incurred, whereas the cost of renewals and betterment that extends the useful lives of property and equipment are capitalized as additions to the related assets. Retirements, sales and disposals of assets are recorded by removing the costs, accumulated depreciation and impairment with any resulting gain or loss recognized in the consolidated statements of income.

***Intangible Assets***

Intangible assets are non-monetary assets without physical substance. These items are initially measured at cost and subsequently carried at cost less any accumulated amortization and impairment losses. Intangible assets with finite useful lives are amortized on a straight-line basis over their estimated useful lives. Amortization of finite-lived intangible assets is computed using the straight-line method over the estimated useful lives, which is as follows:

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| | |
|:---|:---|
| **Category** | **Estimated useful lives** |
| Software | 3-5 years |

---

***Impairment of long-lived assets (other than goodwill)***

The Company accounts for impairment of long-lived assets in accordance with ASC 360, Property, Plant and Equipment. ("ASC 360"). Long-lived assets consist primarily of property, plant and equipment, and intangible assets. In accordance with ASC 360, the Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. When these events occur, the Company measures impairment by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Company would recognize an impairment loss, which is the excess of carrying amount over the fair value of the assets, using the expected future discounted cash flows. No impairment of long-lived assets was recognized as of December 31, 2021 and 2020. There can be no assurance that future events will not have impact on company revenue or financial position which could result in impairment in the future.

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| F-10 |
| *[**Table of Contents**](#fstoc)* |

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***Commitments and contingencies***

In the normal course of business, the Company is subject to commitments and contingencies, including operating lease commitments, legal proceedings and claims arising out of its business that relate to a wide range of matters, such as government investigations and tax matters. The Company recognizes a liability for such contingency if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Company may consider many factors in making these assessments on liability for contingencies, including historical and the specific facts and circumstances of each matter.

***Revenue recognition***

Effective January 1, 2018, the Company adopted ASC Topic 606 using the modified retrospective adoption method. Based on the requirements of ASC Topic 606, revenue is recognized when control of the promised goods or services is transferred to the customers in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those goods or services. Revenue is recognized when the following 5-step revenue recognition criteria are met:

1) Identify the contract with a customer

2) Identify the performance obligations in the contract

3) Determine the transaction price

4) Allocate the transaction price

5) Recognize revenue when or as the entity satisfies a performance obligation

The Company's revenue consists of revenue from pre-approval risk management services and post-loan delinquent debt collection services.

<u>Pre-approval risk management revenue:</u>

The Company provides a set of credit risk management services for financial service providers during the loan approval process. The Company identified only one performance, which is to return accurate verification results to financial service providers via its operating system, as a reference in financial service providers' loan approval process. Once a verification result is returned to a financial service provider, a consumption record of information verification is generated, and one performance obligation is fulfilled. The Company recognizes revenue when the performance obligation is fulfilled in amount based on the agreed-upon consumption records confirmed by financial service providers and preset unit price in the contract.

<u>Post-loan delinquent debt collection revenue:</u>

The Company provides debt collection services to financial service providers for the post-loan delinquent receivables. The Company identified only one performance, which is to provide debt collection services to financial service providers. Once the services are rendered to a financial service provider, the performance obligation is fulfilled. The service fees are calculated in two main types, which are amount-based and percentage-based. Amount-based fees are equivalent to the fee rate for each collection specialist as agreed upon multiplied by the number of collection specialists for such projects. Percentage-based fees are equivalent to the recovery amount of the client's post-loan delinquent receivables after our debt collection service, multiply by the commission percentage as agreed upon. The Company does not need to allocate transaction price to amount-based revenue and percentage-based revenue, as each one is exclusive from the other. Other than the above two main service fees, we may receive incentive bonuses based on our performance from time to time. The incentive bonuses are determined by our clients at their discretion in a few selected months. The incentive bonus is a form of variable consideration, which is fully constraint, and should not be included in the transaction price as the Company does not believe it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur, because the amount of incentive bonuses is calculated by our clients according to their own formula based on factors such as the performance ranking of all their suppliers in those months. The incentive bonuses are recognized when being confirmed by or even received from our clients. Therefore, incentive bonuses do not involve a significant level of estimation uncertainty in terms of revenue recognition. The Company recognizes the service revenue on a gross basis, as the Company is acting as a principal in these transactions and is responsible for fulfilling the promise to provide the specified collection service. Revenue is recognized at the point when overdue receivables are repaid, which means the performance obligations are fulfilled.

The following table identifies the disaggregation of the Company's revenue for the years ended December 31, 2021 and 2020:

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| | | |
|:---|:---|:---|
|  | **2021** | **2020** |
| Pre-approval risk management revenue - third parties | 3445792 | 2504039 |
| Pre-approval risk management revenue - related parties | 112065 | 12717 |
| Post-loan delinquent debt collection revenue\* | 17095354 | 13481095 |
| Total | $20653211 | $15997851 |

---

\* Included in the post-loan delinquent debt collection revenue, incentive bonuses were $138,332 and $8,658 for the years ended December 2021 and 2020, respectively, which accounted for 0.8% and 0.1% of our total post-loan delinquent debt collection revenue, respectively.

***Cost of revenue***

Cost of revenue mainly consists of labor costs for collection specialists, management service costs for call centers, data service costs and communication fees.

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***Selling expenses***

Selling expenses mainly consists of labor expenses for sales personnel, marketing expenses, commission expenses and other miscellaneous selling expenses.

***General and administrative expenses***

General and administrative expenses mainly consist of labor expenses, professional service fees, rent and energy expenses and other miscellaneous administrative expenses.

***Leases***

Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for as operating leases. Rental expense is recognized from the date of initial possession of the leased property, which includes rent holidays, on a straight-line basis over the term of the lease. Lease renewal periods are considered on a lease-by-lease basis and are generally not included in the initial lease terms.

***Income taxes***

The Company accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.

The provisions of ASC 740-10-25, "Accounting for Uncertainty in Income Taxes," prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. The Company's operating subsidiaries in PRC are subject to examination by the relevant tax authorities. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent. The statute of limitations is extended to five years under special circumstances, where the underpayment of taxes is more than RMB100,000 ($14,537). In the case of transfer pricing issues, the statute of limitation is ten years. There is no statute of limitation in the case of tax evasion.

The Company classifies interest and penalties related to uncertain tax positions in its other expense line of its consolidated statements of income for the years ended December 31, 2021 and 2020, respectively. The Company's effective tax rate includes the net impact of changes in the liability for unrecognized tax positions and subsequent adjustments as considered appropriate by management.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which removes specific exceptions to the general principles in Topic 740 and to simplifies accounting for income taxes. The guidance is effective for public business entities for fiscal years beginning after December 15, 2020 and for interim periods within those fiscal years. The adoption of ASU 2019-12 had no significant impact on the consolidated financial statements.

***Value added tax ("VAT")***

The Company is subject to VAT and related surcharges on revenue generated from sales of products, Value-Added Services and platform services. The Company records revenue net of VAT. This VAT may be offset by qualified input VAT paid by the Company to suppliers. Net VAT balance between input VAT and output VAT is recorded in the line item of other current assets on the consolidated balance sheets.

For revenue generated from services, the VAT rate is 6% depending on whether the entity is a general taxpayer, and related surcharges on revenue generated from providing services. Entities that are VAT general taxpayers are allowed to offset qualified input VAT, paid to suppliers against their output VAT liabilities.

On March 20, 2019, Ministry of Finance, State Administration of Taxation and General Administration of Customs published the "Announcement on policies related to deepening the reform of value-added tax", which allows a general taxpayer's production and living services to add 10% of the current deductible input tax to offset the VAT output tax from April 1, 2019 to December 31, 2021. This tax preference is applicable to Shenzhen Xindesheng, Beiming Technology and Shanghai Yuyi.

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| F-12 |
| *[**Table of Contents**](#fstoc)* |

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***Related Parties***

Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all significant related party transactions.

***Foreign currency transactions and translations***

The Company's reporting currency is the United States dollar ("US$"). The Company's operations are principally conducted through the PRC subsidiaries where the local currency is the functional currency. Therefore, the functional currency of the Company's PRC subsidiaries is the Renminbi ("RMB").

Transactions denominated in other than the functional currencies are re-measured into the functional currency of the entity at the exchange rates prevailing on the transaction dates. Monetary assets and liabilities denominated in currencies other than the applicable functional currency are translated into the functional currency at the prevailing rates of exchange at the balance date. The resulting exchange differences are reported in the consolidated statements of income and comprehensive income.

The assets and liabilities of the Company are translated at the exchange spot rate at the balance sheet date, stockholders' equity is translated at the historical rates and the revenue and expenses are translated at the average exchange rates for the periods. The resulting translation adjustments are reported under other comprehensive income in the consolidated statements of operations and comprehensive income in accordance with Financial Accounting Standards Board ("FASB") ASC 220, *Comprehensive Income*. The following are the exchange rates that were used in translating the Company's PRC subsidiaries' financial statements into the consolidated financial statements:

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| | | |
|:---|:---|:---|
|  | **For the Years Ended December 31** | **For the Years Ended December 31** |
|  | **2021** | **2020** |
| Period Ended spot | US$1=RMB6.3757 | US$1=RMB6.5249 |
| Period Average | US$1=RMB6.4515 | US$1=RMB6.8976 |

---

***Earnings per share***

Basic earnings per share is computed by dividing net earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares.

***Segment reporting***

The Company has organized its operations into two operating segments. The segments reflect the way the Company evaluates its business performance and manages its operations by the Company's chief operating decision maker (the "CODM") for making decisions, allocating resources and assessing performance. The Company's CODM has been identified as the chief executive officer, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Company.

The Company has determined that it operates in two operating segments: (1) pre-approval risk management segment, and (2) post-loan delinquent debt collection segment.

Substantially all of the Company's long-lived assets, revenue and expenses are located or derived in the PRC therefore no geographical information is presented.

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| F-13 |
| *[**Table of Contents**](#fstoc)* |

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The following tables present summary information by operating segment for the years ended December 31, 2021 and 2020, respectively:

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| | | | |
|:---|:---|:---|:---|
|  | **For the Year Ended December 31, 2021** | **For the Year Ended December 31, 2021** | **For the Year Ended December 31, 2021** |
|  | **Pre-approval** <br> **risk management**<br> **services** | **Post-loan** <br> **delinquent debt collection**<br> **services** | **Total** |
| Revenue | $3557857 | $17095354 | $20653211 |
| Cost of revenue | 2149962 | 14891710 | 17041672 |
| Operating expenses | 901610 | 1657365 | 2558975 |
| Income from operations | 506285 | 546279 | 1052564 |
| Income tax expense | 14875 | 303260 | 318135 |
| Net income (loss) | 537563 | (133936) | 403627 |
| Depreciation and amortization | 19908 | 31071 | 50979 |
| Total assets | $2714394 | $6584337 | $9298731 |

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| | | | |
|:---|:---|:---|:---|
|  | **For the Year Ended December 31, 2020** | **For the Year Ended December 31, 2020** | **For the Year Ended December 31, 2020** |
|  | **Pre-approval** <br> **risk management**<br> **services** | **Post-loan** <br> **delinquent debt collection**<br> **services** | **Total** |
| Revenue | $2516756 | $13481095 | $15997851 |
| Cost of revenue | 1240453 | 9543607 | 10784060 |
| Operating expenses | 646571 | 2669400 | 3315971 |
| Income from operations | 629732 | 1268088 | 1897820 |
| Income tax expense  | 31997 | 453696 | 485693 |
| Net income | 639816 | 634248 | 1274064 |
| Depreciation and amortization | 9420 | 17548 | 26968 |
| Total assets | $2310971 | $3829027 | $6139998 |

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***Recently Issued Accounting Standards***

The Company is an "emerging growth company" ("EGC") as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). Under the JOBS Act, EGC can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

In February 2016, the FASB issued Accounting Standards Updates ("ASU") No. 2016-02, Leases (Topic 842). The guidance supersedes existing guidance on accounting for leases with the main difference being that operating leases are to be recorded in the statement of financial position as right-of-use assets and lease liabilities, initially measured at the present value of the lease payments. For operating leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. In July 2018, ASU 2016-02 was updated with ASU 2018-11, Targeted Improvements to ASC Topic 842, which provides entities with relief from the costs of implementing certain aspects of the new leasing standard. Specifically, under the amendments in ASU 2018-11, (1) entities may elect not to recast the comparative periods presented when transitioning to ASC 842 and (2) lessors may elect not to separate lease and non-lease components when certain conditions are met. In November 2019, ASU 2019-10, Codification Improvements to ASC 842 modified the effective dates of all other entities. In June 2020, ASU 2020-05 defers the effective date for one year for entities in the "all other" category. For all other entities, the amendments in ASU 2020-05 are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early application of the guidance continues to be permitted. The Company has assessed the impact of the adoption of the new lease standard, and concluded that it would have no significant impact on its consolidation financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 changes the impairment model for most financial assets and certain other instruments. The standard will replace the "incurred loss" approach with an "expected loss" model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they do today under the other-than-temporary impairment model. The amendments in ASU 2016-13 are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is in the process of evaluating the impact of the adoption of this guidance on its consolidated financial statements.

Other accounting standards that have been issued by the FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent standards that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures.

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**NOTE 3. ACCOUNTS RECEIVABLE, NET**

Accounts receivable, net, consisted of the following:

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| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2021** | **2020** |
| Accounts receivable | $3537074 | $3060122 |
| Accounts receivable-related party | 51933 | 18338 |
| Less: allowance for doubtful accounts | - | - |
| Total accounts receivable, net | $3589007 | $3078460 |

---

The detailed aging of accounts receivable consisted of the following:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31,**<br> **2021** | **December 31,**<br> **2021** | **December 31,**<br> **2020** | **December 31,**<br> **2020** |
|  | **Amount** | **% of**<br> **total amount** | **Amount** | **% of**<br> **total amount** |
| 1-3 months | $3447899 | 96.1% | $2682408 | 87.1% |
| 4-6 months | 79708 | 2.2% | 318772 | 10.4% |
| 7-9 months | 53939 | 1.5% | 75657 | 2.4% |
| 10-12 months | 7461 | 0.2% | 1623 | 0.1% |
| **Total accounts receivable, net** | $**3589007** | **100.0%** | $**3078460** | **100.0%** |

---

The total accounts receivable are service fees receivable from the Company's financial institution clients and do not account for personal delinquent loan receivables from the financial institution clients' debtors. Typically, the Company's contractual payment term is 3 months, and the Company would extend the payment term to 12 months for a few long-term stable and key customers. However, some customers slowed down their payments due to the COVID-19 pandemic. As of October 31, 2022, 96.9% of the total outstanding balance as of December 31, 2021 had been collected and the remaining balance of $110,752 is expected to be collected by the end of December 2022.

**NOTE 4. PREPAYMENTS AND OTHER CURRENT ASSETS, NET**

Prepayments and other current assets, net, consisted of the following:

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| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2021** | **2020** |
| Prepayments | $94855 | $218596 |
| Deposit | 64295 | 148327 |
| Others | 1569 | 16648 |
| Total prepayments and other current assets, net | $160719 | $383571 |

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**NOTE 5. PROPERTY AND EQUIPMENT, NET**

Property and equipment, net, consisted of the following:

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| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2021** | **2020** |
| Office equipment | $41239 | $8326 |
| Electronic equipment | 196341 | 126887 |
| Leasehold improvement | 16703 |  |
| Subtotal | 254283 | 135213 |
| Less: accumulated depreciation | (136910) | (103367) |
| Property and equipment, net | $117373 | $31846 |

---

Depreciation expense was $30,758 and $26,968 for the years ended December 31, 2021 and 2020, respectively.

**NOTE 6. INTANGIBLE ASSETS**

Intangible assets consisted of the following:

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| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2021** | **2020** |
| Software | $112400 | $- |
| Less: accumulated amortization | (20461) | - |
| Intangible assets, net | $91939 | $- |

---

Amortization expense was $20,221 and nil for the years ended December 31, 2021 and 2020, respectively.

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| F-15 |
| *[**Table of Contents**](#fstoc)* |

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**NOTE 7. Taxes Payable**

Taxes payable consisted of the following:

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| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2021** | **2020** |
| VAT payable | $216745 | $174968 |
| Income tax payable | 1338807 | 1057361 |
| Other taxes payable | 23782 | 34057 |
| Total | $1579334 | $1266386 |

---

As of December 31, 2021 and 2020, income tax payable is adjusted for income and expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions. The Company evaluates each uncertain tax position (including the potential application of interest and penalties) and accrues a liability recorded as Accrued tax penalties and interest in Note 9. The under-declared income taxes and associated penalty and interest are expected to be fully paid no later than September 30, 2022.

**NOTE 8. INCOME TAXES**

***Cayman Islands***

Under the current laws of the Cayman Islands, GoodFaith Technology Inc. is not subject to tax on income or capital gain. Additionally, upon payments of dividends to the shareholders, no Cayman Islands withholding tax will be imposed.

***British Virgin Islands ("BVI")***

The Company's subsidiary, GoodFaith Technology Holdings Limited, is incorporated in the BVI and under the current laws of the BVI. GoodFaith Technology Holdings Limited is currently exempt from income and corporate tax. In addition, the BVI does not levy capital gains tax on it. There are currently no withholding taxes or exchange control regulations in the British Virgin Islands applicable to GoodFaith Technology Holdings Limited.

***Hong Kong***

Under the current Hong Kong Inland Revenue Ordinance, the Company's Hong Kong subsidiary, GoodFaith HK, is subject to 16.5% income tax on its taxable income generated from operations in Hong Kong. On December 29, 2017, the Hong Kong government announced a two-tiered profit tax rate regime. Under the two-tiered tax rate regime, the first HK$2.0 million assessable profits will be subject to an 8.25% lower tax rate and the remaining taxable income will continue to be taxed at the existing 16.5% tax rate. The two-tiered tax regime becomes effective from the assessment year of 2018/19, which is on or after April 1, 2018. The application of the two-tiered rates is restricted to only one nominated enterprise among connected entities. The Company did not make any provisions for Hong Kong profit tax as there were no assessable profits derived from or earned in Hong Kong for any of the periods presented.

***PRC***

The Company's PRC operating subsidiaries, incorporated in the PRC, are governed by the income tax law of the PRC and are subject to PRC enterprise income tax ("EIT"). The EIT rate of PRC is 25%, which applies to both domestic and foreign invested enterprises. The State Administration of Taxation and the Ministry of Finance issued a notice related to the tax relief policy of small-scale enterprises in January 2019. According to the notice, from January 1, 2019 to December 31, 2021, if a small profit-making enterprise has annual taxable income less than or equal to RMB1 million, only 25% of its annual taxable income will be subject to income tax at a reduced rate of 20%; for those with annual taxable income more than RMB1 million but did not exceed RMB3 million, 50% of their annual taxable income will be subject to income tax at the same reduced rate of 20%. According to the latest notice issued by the State Administration of Taxation, from January 1, 2021 to December 31, 2022, if a small profit-making enterprise has annual taxable income less than or equal to RMB1 million, only 12.5% of its annual taxable income will be subject to income tax at a reduced rate of 20%. Both Beiming Technology's and Shanghai Yuyi's annual taxable income for the years ended December 31, 2020 and 2021 makes the two subsidiaries eligible for the tax relief policy.

The income tax provision consisted of the following components:

---

| | | |
|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2021** | **2020** |
| Provisions for current income tax | $318135 | $485693 |
| Provisions for deferred income tax | - | - |
| Total income tax expense | $318135 | $485693 |

---

---

| |
|:---|
| F-16 |
| *[**Table of Contents**](#fstoc)* |

---

A reconciliation between the Company's actual provision for income taxes and the provision at the PRC, mainland statutory rate is as follows:

---

| | | |
|:---|:---|:---|
|  | **For the years ended** <br> **December 31,** | **For the years ended** <br> **December 31,** |
|  | **2021** | **2020** |
| Profit before income tax expense | $721211 | $1759757 |
| Computed income tax expense with statutory tax rate | 180303 | 439939 |
| Changes in valuation allowance | (230794) | (23000) |
| Tax effect of non-deductible items | 419826 | 134872 |
| Tax effect of preferential tax rate | (51375) | (66118) |
| Others | 175 | - |
| **Income tax expense** | $318135 | $485693 |

---

The reconciliation of tax computed by applying the statutory income tax rate of 25% for the years ended December 31, 2021 and 2020 applicable to the PRC operations to income tax expenses was as follows:

---

| | | |
|:---|:---|:---|
|  | **For the years ended** <br> **December 31,** | **For the years ended** <br> **December 31,** |
|  | **2021** | **2020** |
| Profit before income tax expense | 25.00% | 25.00% |
| Changes in valuation allowance | (32.00)% | (1.31)% |
| Tax effect of non-deductible items | 58.21% | 7.67% |
| Tax effect of preferential tax rate | (7.12)% | (3.76)% |
| Others | 0.02% | - |
| **Effective tax rate** | 44.11% | 27.60% |

---

The tax effects of temporary differences that give rise to the deferred income tax assets balances as of December 31, 2021 and 2020 were as follows:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2021** | **2020** |
| Deferred income tax assets: |  |  |
| Accrued expenses | $- | $138819 |
| Tax losses carried forward | 39904 | 114372 |
| Less: Valuation allowance | (39904) | (253191) |
| **Total Deferred income tax assets, net** | $- | $- |

---

The movements of the valuation allowance are as follows:

---

| | | |
|:---|:---|:---|
|  | **For the years ended** <br> **December 31,** | **For the years ended** <br> **December 31,** |
|  | **2021** | **2020** |
| Balances as of January 1, | $270698 | $276191 |
| Reduction of valuation allowance | (230794) | (23000) |
| **Balances as of December 31,** | $39904 | $253191 |

---

As of December 31, 2021, the Company had net operating loss carried forward from one PRC entity of $159,617. The carry forward loss was generated in 2019, which would expire by 2024 if not utilized.

The valuation allowance as of December 31, 2021 and 2020 was primarily provided for the deferred income tax assets of certain PRC subsidiaries, which were at cumulative loss positions or had unstable historical profit position. In assessing the realization of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible or utilizable. Management considers projected future taxable income and tax planning strategies in making this assessment.

---

| |
|:---|
| F-17 |
| *[**Table of Contents**](#fstoc)* |

---

***Uncertain Tax Positions***

The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of December 31, 2021 and 2020, the Company did not have any significant unrecognized uncertain tax positions.

A net expense of $390,806 and $220,686 for penalties and interest were recognized in the consolidated statements of income as components of the non-operating expenses for the years ended December 31, 2021 and 2020, respectively. The Company have recognized liabilities for tax penalties and interest associated with unrecognized tax benefit as of December 31, 2021 and 2020 in Note 9.

**NOTE 9. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES**

As of December 31, 2021 and 2020, accrued expenses and other current liabilities consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2021** | **2020** |
| Payroll - Salary  | $1213226 | $993065 |
| Payroll - Social insurance and housing provident fund | 1547744 | 500970 |
| Accrued tax penalties and interest | 774584 | 370462 |
| Other service fee | 102767 | 461279 |
| Others | 97086 | 61815 |
| Total | $3735407 | $2387591 |

---

Payroll-Social insurance and housing provident fund mainly relate to the estimated under-paid amounts for employees for fiscal years from 2019 to 2021.There were no accruals for late fees and fines that may be imposed by the relevant local government authorities in the financial statements. We have not received any inquiry, notice, warning, or sanctions regarding such late fees or fines, and the interpretation and implementation of labor-related laws and regulations are still constantly evolving which may be further amended from time to time. There are a number of policies providing that local governmental authorities shall act carefully to avoid burdensome measures over the small- and medium-size entities. In addition, our current shareholders had agreed to compensate us for the relevant fines, any outstanding sum, and any related costs and expenses arising from such noncompliance if imposed by the competent PRC authorities. We have taken measures to implement our policy on the payment of social insurance and housing fund contributions for employees for the purpose of compliance with relevant PRC laws and regulations starting from June 2022.

Accrued tax penalties and interest mainly relate to estimated tax payable for under-declared income to the tax authority for fiscal years from 2017 to 2020. The tax penalty is calculated at 50% of estimated under-declared corporate income tax payable and interest is based on 0.05% per day for the estimated under-declared corporate income tax payable since the income tax settlement date on the following May 31 for each fiscal year. As of May 31, 2022, Shenzhen Xindesheng was possibly subject to tax penalty and interest of estimated under-declared corporate income tax payable for fiscal year 2021. To address issues that may arise from Shenzhen Xindesheng's previous failure to pay adequate income tax, the Company has issued a letter of commitment stating that Suzhou GoodFaith and its subsidiaries (including Shenzhen Xindesheng) will pay any unpaid taxes before September 30, 2022.

**NOTE 10. SHAREHOLDERS' EQUITY**

***Ordinary shares***

The Company was incorporated under the laws of the Cayman Islands on May 13, 2021. The authorized number of ordinary shares was 500,000,000 shares with a par value of $0.0001 per ordinary share, and 10,000,000 ordinary shares were issued as of May 13, 2021. The Company has retroactively restated all shares and per share data for all the periods presented pursuant to ASC 260. As a result, the Company had 500,000,000 authorized ordinary shares, par value $0.0001 per share, of which 10,000,000 were issued and outstanding as of December 31, 2021 and 2020. The proceeds from the subscription of ordinary shares by the shareholders in the amount of $1,000 remained outstanding and presented as subscription receivable, a contra-equity account on the consolidated financial statements.

***Statutory Surplus Reserves and Restricted Net Assets***

Pursuant to laws applicable to entities incorporated in the PRC, the Company is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC ("PRC GAAP"). Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entity's registered capital. Appropriations to the discretionary surplus reserve are made at the discretion of the board of directors. As of December 31, 2021 and 2020, the Company did not have a discretionary surplus reserve.

---

| |
|:---|
| F-18 |
| *[**Table of Contents**](#fstoc)* |

---

Under PRC laws and regulations, statutory surplus reserves are restricted to set-off against losses, expansion of production and operation and increasing registered capital of the respective company and are not distributable other than upon liquidation. The reserves are not allowed to be transferred to the Company in terms of cash dividends, loans or advances, nor allowed for distributions except under liquidation.

As a result of these PRC laws and regulations and the requirement that distributions by PRC entities can only be paid out of distributable profits computed in accordance with PRC GAAP, the PRC entities are restricted from transferring a portion of their net assets to the Company. The restricted net assets were the total book value of the share capital, additional paid-in capital and statutory reserve which were not allowed to transfer to the shareholders in the forms of dividends. As of December 31, 2021 and 2020, the restricted amounts as determined pursuant to PRC statutory laws totaled $208,364 and $186,911, respectively, and total restricted net assets amounted to $543,920 and $367,464, respectively.

***Dividends***

The declaration, amount and payment of dividends are subject to (i) compliance with applicable law regarding the declaration and payment of dividends with respect to any year including the establishment of the statutory reserve fund and (ii) the absence of any adverse effect on our business plan for the current or subsequent fiscal year as a result of the payment of any dividend.

Dividends are paid from the Company's distributable earnings in RMB. Dividends are expected to be made payable in cash and in one or more payments as determined in the relevant ordinary shareholders' meeting approving dividends.

In 2019, 2020, and 2021, Shenzhen Xindesheng, one of the Company's PRC subsidiaries, announced dividends of $363,229, $652,408 and $1,329,754 in respect of the periods September 2015 to February 2019, March to December 2019, and January to December 2020, respectively, which were fully paid to the former shareholders of Shenzhen Xindesheng, Shanghai Zhongchuang Asset Management Co., Ltd. ("Shanghai Zhongchuang") and Mr. Xiaowei Wang.

In 2019, 2020, and 2021, the excessive distributions were $211,481, $76,744 and $1,352,308, respectively. The Company and the two shareholders reached agreements to treat the excessive distributions as interest-free loans lent to shareholders required to be fully paid to Shenzhen Xindesheng by June 30, 2022. As of December 31, 2019, 2020 and 2021, the cumulative deemed loan receivables from the shareholders were $211,481, $288,225, and $1,640,533, respectively, which were disclosed as Due from related parties in Note 11. The interest-free loans were fully repaid by Shanghai Zhongchuang and Xiaowei Wang on June 29, 2022.

The revised profit distribution in 2019, 2020, and 2021 were $149,366, $593,648, and nil, respectively.

***Acquisitions of Beihai Beiming and Suzhou GoodFaith***

As described in Note 1- Reorganization, the Company completed two acquisitions under common control in 2021. On September 1, 2021, the Company acquired a 100% equity interest in Beihai Beiming with a consideration of RMB10,800,000 ($1,669,836), and the consideration was fully paid in 2021. On December 31, 2021, the Company acquired a 100% equity interest in Suzhou GoodFaith with a consideration of RMB1,300,000 ($203,899), and the consideration was paid in January 2022 and recorded in Due to related parties as of December 31, 2021.

The acquisitions were accounted for as a reorganization of entities under common control in a manner similar to a pooling of interest using historical cost in accordance with ASC 805-50-25-2B. As a result of the reorganization, the acquirees' assets and liabilities have been presented as "combined" with the Company at their carrying values as though the transaction occurred at the beginning of the periods presented, and the considerations were recorded with an offsetting adjustment to equity in the consolidated statements of equity.

**NOTE 11. RELATED PARTY TRANSACTIONS**

The following is a list of related parties which the Company has transactions with:

---

| | | |
|:---|:---|:---|
| **No.** | **Name of Related Parties** | **Relationship** |
| 1 | Shanghai Beiming Data Technology Co., Ltd. ("Beiming Data") | Controlled by Kai Zhou |
| 2 | Shanghai Hicore Information Technology Co., Ltd. ("Shanghai Hicore") | Controlled by Kai Zhou |
| 3 | Shanghai Yuanjin Information Technology Co., Ltd. ("Shanghai Yuanjin") | Controlled by Kai Zhou |
| 4 | Shanghai Mingzong Information Technology Co., Ltd. ("Shanghai Mingzong") | Controlled by Kai Zhou |
| 5 | Shanghai Zhongchuang Asset Management Co., Ltd. ("Shanghai Zhongchuang) | Controlled by Kai Zhou |
| 6 | Zhongchuang Investment Management Co., Ltd. ("Zhongchuang Investment") | Controlled by Kai Zhou |
| 7 | Shenzhen Ourui Consulting Co., Ltd. ("Shenzhen Ourui") | Controlled by an employee of Shenzhen Xindesheng |
| 8 | Xiaofeng Fei | 5% shareholder, who acts in concert with Kai Zhou |
| 9 | Xiaowei Wang | 29.2% shareholder, and CEO |
| 10 | Yueping Yin | CEO's wife |
| 11 | Xu Dai | 6% shareholder, and Chairman |
| 12 | Other minority shareholders | Collectively represent 14.5% shareholders |

---

---

| |
|:---|
| F-19 |
| *[**Table of Contents**](#fstoc)* |

---

The following represented related party balances as of December 31, 2021 and 2020:

---

| | | | |
|:---|:---|:---|:---|
|  |  | **As of December 31,** | **As of December 31,** |
|  |  | **2021** | **2020** |
| **Accounts receivable** | **Nature** |  |  |
| Shanghai Yuanjin | Pre-approval risk management service | $51933  | $18338  |
|  |  | $51933  | $18338  |
| **Accounts payable** |  |  |  |
| Beiming Data | Data service | $729975  | $401740  |
| Shenzhen Ourui | Outsourcing service | 346292 | 90541 |
| Shanghai Yuanjin | Data service | 75456 | 211616 |
| Shanghai Hicore | Data service | 12157 | - |
|  |  | 1163880 | 703897 |

---

---

| | | | |
|:---|:---|:---|:---|
|  |  | **As of December 31,** | **As of December 31,** |
|  |  | **2021** | **2020** |
| **Due from related parties** |  |  |  |
| Beiming Data<sup>(1)</sup> | Loan | $42123  | $71811 |
| Shenzhen Ourui<sup>(2)</sup> | Loan | 80422 | - |
| Shanghai Zhongchuang<sup>(3)</sup> | Loan | 836672 | 146995 |
| Xiaowei Wang<sup>(3)</sup> | Loan | 803861 | 141230 |
|  |  | $1763078  | $360036  |

---

---

| | | | |
|:---|:---|:---|:---|
|  |  | **As of December 31,** | **As of December 31,** |
|  |  | **2021** | **2020** |
| **Due from related parties-non current** |  |  |  |
| Beiming Data<sup>(4)</sup> | Long-term deposit | $313691 | $306518 |
|  |  | $313691 | $306518 |
| **Due to related parties** |  |  |  |
| Beiming Data<sup>(5)</sup> | Loan | $- | $258088 |
| Shanghai Hicore<sup>(6)</sup> | Rent/IT service | 168975 | 212709 |
| Zhongchuang Investment<sup>(7)</sup> | IPO costs paid on behalf of the Company | 681545 | - |
| Xiaofeng Fei<sup>(8)(9)</sup> | Loan/Equity transfer consideration | 1639647  | - |
| Xiaowei Wang<sup>(8)</sup> | Reimbursement/Equity consideration | 50254 | 889 |
| Yueping Yin | Reimbursement | 432 | 994 |
| Xu Dai<sup>(8)</sup> | Equity consideration | 12234 | - |
| Other minority shareholders<sup>(8)</sup> | Equity consideration | 29565 |  |
|  |  | $2582652  | $472680  |

---

---

| |
|:---|
| F-20 |
| *[**Table of Contents**](#fstoc)* |

---

(1) The loan to Beiming Data was used for Beiming Data's daily business activities. The loan was interest free, and the loan term was from May 1, 2017 to December 31, 2022. The unsettled balances of loan payments from Beiming Data were $42,123 and $71,811 as of December 31, 2021 and 2020, respectively. Pursuant to the agreement between Beiming Data and the Company, the unsettled balance as of December 31, 2021 will be due on December 31, 2022.

(2) In July 2021, the Company provided a loan of RMB500,000 ($78,423) to Shenzhen Ourui for its daily operation with an annual interest rate of 6%. The principal and interest of the loan was not recovered as of December 31, 2021. The loan principal and interest were fully repaid on June 22, 2022.

(3) As mentioned in Note 10, in 2019, 2020, and 2021, Shenzhen Xindesheng, one of the Company's PRC subsidiaries, announced dividends of $363,229, $652,408 and $1,329,754, respectively, to its former shareholders, Shanghai Zhongchuang and Mr. Xiaowei Wang. Shenzhen Xindesheng, in these dividend distributions in the three years, distributed an excess of $1,640,533 ($211,481, $76,744 and $1,352,308, respectively) to its former shareholders, which excessive distributions have been deemed as free-interest loans to the two former shareholders. As of December 31, 2021 and 2020, the loan receivables from Shanghai Zhongchuang was $836,672 and $146,995, and the loan receivables from Xiaowei Wang was $803,861 and $141,230, respectively. On June 29, 2022, Shanghai Zhongchuang and Xiaowei Wang fully repaid their interest-free loans.

(4) The Company has a long-term deposit in Beiming Data since the fiscal year 2019 in the course of purchasing service provided by Beiming Data.

(5) The loan from Beiming Data was used for Shanghai Yuyi's daily operations. The loan was interest free, and the loan term was from January 1, 2019 to December 31, 2021. The outstanding balance of loan payable to Beiming Data was $258,088 as of December 31, 2020, repayment of the loan was settled as of December 31, 2021.

(6) As of December 31, 2021, the unsettled balance of IT service fees was $141,161, and rent payable was $27,814. As of December 31, 2020, rent payable was $212,709.

(7) Zhongchuang Investment paid IPO cost of $681,545 on behalf of the Company for the year ended December 31, 2021. Pursuant to the agreement between Zhongchuang Investment and the Company, the cash advance was interest-free and the repayment term is to be mutually agreed by both parties.

(8) On December 31, 2021, 100% equity interest of Suzhou GoodFaith was transferred from Ultimate Shareholders to GoodFaith WFOE. The consideration payable to Xiaofeng Fei, Xiaowei Wang, Xu Dai, and other minority shareholders were $102,561, $49,344, $12,234 and $29,565, respectively. The consideration was fully paid in January 2022.

(9) In 2021, the Company received an interest-free loan of $1,693,932 from Xiaofeng Fei for the purpose of restructuring. The Company repaid $156,846 to Xiaofeng Fei in December 2021. The unsettled balances of advance of $1,537,086 will be due on August 29, 2022. The consideration of transfer of equity interest of Suzhou GoodFaith payable to Xiaofeng Fei was $102,561.

---

| | | | |
|:---|:---|:---|:---|
|  |  | **For the years ended** <br> **December 31,** | **For the years ended** <br> **December 31,** |
|  |  | **2021** | **2020** |
| **Revenue** | **Nature** |  |  |
| Shanghai Yuanjin | Pre-approval risk management revenue | $112065 | $12717  |
|  |  | $112065 | $12717 |

---

---

| | | | |
|:---|:---|:---|:---|
|  |  | **For the years ended** <br> **December 31,** | **For the years ended** <br> **December 31,** |
|  |  | **2021** | **2020** |
| **Cost of revenue** | **Nature** |  |  |
| Beiming Data | Data service costs | $1592538  | $1155180  |
| Shanghai Zhongchuang | Management costs | - | 955700 |
| Shenzhen Ourui | Outsourcing service fees | 562748 | 273089 |
| Shanghai Yuanjin | Data service costs | 143037 | 53717 |
| Shanghai Hicore | IT service costs | 131606 |  |
| Shanghai Hicore | Data service costs  | 70453  | - |
|  |  | $2500382 | $2437686  |

---

---

| |
|:---|
| F-21 |
| *[**Table of Contents**](#fstoc)* |

---

**<u>Other related party transactions</u>**

---

| | | | |
|:---|:---|:---|:---|
|  | **Nature** | **For the years ended** <br> **December 31,** | **For the years ended** <br> **December 31,** |
|  | **Nature** | **2021** | **2020** |
| Beiming Data | Loan repayment to a related party | - | 173974 |
| Beiming Data | Loan proceeds from a related party | 31001 | 173974 |
| Shanghai Hicore | Rent paid to a related party | 126399 | 94068 |
| Shanghai Mingzong | Service fee paid to a related party | 12667 | - |
| Zhongchuang Investment | Advance payment for IPO costs on behalf of the Company | 681545 | - |
| Xiaofeng Fei | Loan from a related party | 1693932  | - |

---

**NOTE 12. CONCENTRATION OF CREDIT RISK**

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of accounts receivable. The Company conducts credit evaluations of its customers, and generally does not require collateral or other security from them. The Company evaluates its collection experience and long outstanding balances to determine the need for an allowance for doubtful accounts. The Company conducts periodic reviews of the financial condition and payment practices of its customers to minimize collection risk on accounts receivable.

For the years ended December 31, 2021 and 2020, the following table sets forth a summary of single customers who represent 10% or more of the Company's total revenue.

---

| | | |
|:---|:---|:---|
|  | **For the years ended** <br> **December 31,** | **For the years ended** <br> **December 31,** |
|  | **2021** | **2020** |
| Percentage of the Company's revenue |  |  |
| Customer A | 49% | 60% |
| Customer B | 15% | \*% |
| Customer C | 13% | \*% |

---

The following table sets forth a summary of single customers who represent 10% or more of the Company's total accounts receivable:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2021** | **2020** |
| Percentage of the Company's accounts receivable |  |  |
| Customer A | 37% | 18% |
| Customer B | 26% | 16% |
| Customer C | \* | 13% |
| Customer D | \* | 20% |

---

---

| |
|:---|
| F-22 |
| *[**Table of Contents**](#fstoc)* |

---

The following table sets forth a summary of single suppliers who represent 10% or more of the Company's total purchases:

---

| | | |
|:---|:---|:---|
|  | **For the years ended** <br> **December 31,** | **For the years ended** <br> **December 31,** |
|  | **2021** | **2020** |
| Percentage of the Company's purchase |  |  |
| Supplier A | 28% | 21% |
| Supplier B | 11% | \* |
| Supplier C | 10% | \* |
| Supplier D | \* | 17% |

---

The Company mainly purchased data service, outsourced management service, and IT service from suppliers. The total purchase amount recorded in cost of revenue and operating expenses was $5,747,558 and $5,480,126 for the years ended December 31, 2021 and 2020, respectively.

\*Represent percentage less than 10%

**NOTE 13. COMMITMENTS AND CONTINGENCIES**

*Lease Commitments*

The Company leases certain office premises under non-cancellable leases. Rent expenses under operating leases for the fiscal year ended December 31, 2021 and 2020 were approximately $365,000 and $406,000, respectively.

The total future minimum lease payments under the non-cancellable operating lease with respect to the office as of December 31, 2021 are payable as follows:

---

| | |
|:---|:---|
|  | **Lease** <br> **Commitment** |
| 2022 | $153114 |
| 2023 | 15059 |
| Total | $168173 |

---

*Contingencies*

In the ordinary course of business, the Company may be subject to legal proceedings regarding contractual and employment relationships and a variety of other matters. The Company records contingent liabilities resulting from such claims, when a loss is assessed to be probable and the amount of the loss is reasonably estimable. In the opinion of management, there were no pending or threatened claims and litigation as of December 31, 2021 and through the issuance date of these consolidated financial statements.

*Risks in relation to the outsourcing management service*

With the rapid expansion and growth of our post-loan delinquent debt collection business since 2021, we are shortlisted by three PRC commercial banks and top online consumer finance companies as their preferred service provider and we are their trusted business partner in delinquent credit loan debt collection. This in turn has enabled us to acquire more business and facilitated our deeper cooperation with our clients.

---

| |
|:---|
| F-23 |
| *[**Table of Contents**](#fstoc)* |

---

In order to provide better service for our increased business volume, we have not only expanded the number of our operating centers, but also engaged several contractor partners for closer cooperation and partnerships since 2021. Highly experienced and familiar with local customs, contractor partners are helpful in implementing our delinquent credit loan debt collection, where they are engaged to supervise daily operations, enhance compliance practices, and develop local talent teams for our branches and subsidiaries. We shared operating profits or losses derived from a branch or subsidiary with the responsible contractor therefrom based on a pre-determined fixed sharing ratio. The following table sets forth a summary of contractor details and the corresponding profit/loss sharing ratios.

---

| | | |
|:---|:---|:---|
| **Contractor Name** | **Branch/Subsidiary**  | **Profit/loss sharing ratio (Company:contractor)** |
| Kai Shun Sheng Shi Information Consulting Service Department | Jinan | 40%:60% |
| Juxin Shengda Information Consulting Service Department | Guiyang | 50%:50% |
| Sheng Ju Yuan Information Consulting Service Department | Shenyang | 30%:70% |
| Xinsheng Yuanxin Information Consulting Service Department | Chengdu | 50%:50% |
| Zhong Hui Xin Information Consulting Service Department | Jiujiang | 30%:70% |
| Zhuochao Information Consulting Service Department | Huizhou | 70%:30% |
| Hongteng Information Consulting Service Department | Henan | 50%:50% |
| Shenzhen Baichuilian Technology Co., Ltd.("Shenzhen Baichuilian") | Shenzhen office II | 50%:50% |
| Shenzhen Ourui | Shenzhen office III | 50%:50% |

---

Except that Shenzhen Baichuilian and Shenzhen Ourui are enterprises, the remaining of above listed contractor partners are self-employed individuals. We had terminated our cooperation with Shenzhen Baichuilian since June 30, 2021. The total outsourcing management service fee was $2,500,823 for the year ended December 31, 2021, which was recorded in the cost of revenue in the consolidated income statement.

We intend to continue our cooperation with existing contractors in the foreseeable future and deliver quality service and better collection results to meet our clients' expectation.

**NOTE 14. SUBSEQUENT EVENTS**

The Company evaluated subsequent events and transactions that occurred after the balance sheet date through March 30, 2023, the issuance date of the consolidated financial statements, and the following subsequent events required additional disclosure in these consolidated financial statements.

On May 20, 2022, Kai Zhou, through Qearl's Holdings Limited, transferred 300,000 Ordinary Shares to Xiaoming Li with a total consideration of $30, representing 3% equity interest of GoodFaith Technology Inc.

On March 17, 2023, 10,000,000 new ordinary shares were issued to existing shareholders. As a result, the Company had 500,000,000 authorized ordinary shares, par value $0.0001 per share, of which 20,000,000 were issued and outstanding as of the date of the prospectus.

On January 16, 2023, the Company provided a loan of RMB2,000,000 ($289,969) to Shanghai Jincan Technology Co., Ltd., a third party, for its business operation with an annual interest rate of 6% from January 16, 2023 to March 16, 2023. The loan principal and interest were fully repaid on March 2, 2023.

On February 16, 2023, the Company terminated the engagement letter with Network 1 Financial Securities, Inc. ("Network 1"), which was signed on March 15, 2021 and extended on March 31, 2022. As of March 30, 2023, the Company had paid a total of $75,000 and no payable balance to Network 1. On March 21, 2023, the Company entered into an underwriter agreement with Alliance Global Partners ("A.G.P.") in connection with the offering, which was later amended on March 25, 2023. According to the amended agreement, the Company will pay A.G.P. an underwriting discount or spread of 7.5% of the offering. The Company have agreed to reimburse the underwriters for accountable legal expenses not to exceed $175,000 and non-accountable expenses not to exceed 0.5% of the aggregate gross proceeds of this offering.

---

| |
|:---|
| F-24 |
| *[**Table of Contents**](#fstoc)* |

---

**GOODFAITH TECHNOLOGY INC. AND SUBSIDIARIES** 

**UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS**

**As of June 30, 2022 and December 31, 2021** 

**(In U.S. dollars, except for share and per share data, or otherwise noted)**

---

| | | |
|:---|:---|:---|
|  | **As of**  | **As of**  |
|  | **June 30,**<br> **2022**<br> **(unaudited)** | **December 31,**<br> **2021**<br> **(audited)** |
| **Assets** |  |  |
| **Current assets:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | $8645021 | $3262367 |
| &nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable, net | 8696892 | 3537074 |
| &nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable-related parties, net | 65413 | 51933 |
| &nbsp;&nbsp;&nbsp;&nbsp; Deferred offering cost | 949518 | 681545 |
| &nbsp;&nbsp;&nbsp;&nbsp; Prepayments and other current assets, net | 303254 | 160719 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amount due from related parties | 40322 | 1763078 |
| **Total current assets** | 18700420 | 9456716 |
| &nbsp;&nbsp;&nbsp;&nbsp; Property and equipment, net | 174272 | 117373 |
| &nbsp;&nbsp;&nbsp;&nbsp; Intangible assets, net | 75673 | 91939 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amounts due from related parties-non current | 298668 | 313691 |
| **Total non-current assets** | 548613 | 523003 |
| **TOTAL ASSETS** | $19249033 | $9979719 |
| **Liabilities** |  |  |
| **Current liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Accounts payable  | $5308627 | $1142143 |
| &nbsp;&nbsp;&nbsp;&nbsp; Accounts payable - related parties | 2348843 | 1163880 |
| &nbsp;&nbsp;&nbsp;&nbsp; Advance from customers | 12444 | 13070 |
| &nbsp;&nbsp;&nbsp;&nbsp; Taxes payable | 2886126 | 1579334 |
| &nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses and other current liabilities  | 3175978 | 3735407 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amounts due to related parties | 2680667 | 2582652 |
| Total current liabilities | 16412685 | 10216486 |
| **TOTAL LIABILITIES** | 16412685 | 10216486 |
| **Shareholders' equity** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Ordinary Shares ($0.0001 par value, 500,000,000 authorized, 10,000,000 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively) | 1000 | 1000 |
| &nbsp;&nbsp;&nbsp;&nbsp; Subscription receivable | (1000) | (1000) |
| &nbsp;&nbsp;&nbsp;&nbsp; Statutory surplus reserves | 208364 | 208364 |
| &nbsp;&nbsp;&nbsp;&nbsp; Retained earnings (Accumulated deficit)  | 2663319 | (502513) |
| &nbsp;&nbsp;&nbsp;&nbsp; Accumulated other comprehensive (loss) income | (35335) | 57382 |
| **Total shareholders' equity (deficit)**  | 2836348 | (236767) |
| **TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY** | $19249033 | $9979719 |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

---

| |
|:---|
| F-25 |
| *[**Table of Contents**](#fstoc)* |

---

**GOODFAITH TECHNOLOGY INC. AND SUBSIDIARIES** 

**UNAUIDTED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME**

**For the six months ended June 30, 2022 and 2021.**

 **(In U.S. dollars, except for share and per share data, or otherwise noted)**

---

| | | |
|:---|:---|:---|
|  | **For the six months ended**<br> **June 30,** | **For the six months ended**<br> **June 30,** |
|  | **2022** <br> **(unaudited)** | **2021** <br> **(unaudited)** |
| Revenue |  |  |
| Service to third parties  | $24544926 | $8607618 |
| Service to related parties | 15576 | 84365 |
| Total revenue | 24560502 | 8691983 |
| Cost of revenue | 19221281 | 7331940 |
| Gross profit | 5339221 | 1360043 |
| Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Selling expenses | 234761 | 238866 |
| &nbsp;&nbsp;&nbsp;&nbsp; General and administrative expenses | 1126246 | 985558 |
| Total operating expenses | 1361007 | 1224424 |
| Income from operations | 3978214 | 135619 |
| Other income (expense): |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Other income (expense), net | 238248 | (59320) |
| &nbsp;&nbsp;&nbsp;&nbsp; Governmental subsidies | 40844 | 17422 |
| &nbsp;&nbsp;&nbsp;&nbsp; Interest income, net | 9413 | 323 |
| Total other income (expense) | 288505 | (41575) |
| Income before income tax provision | 4266719 | 94044 |
| Income tax expense | 1100887 | 76086 |
| **Net Income** | $3165832 | $17958 |
| **Other comprehensive income** |  |  |
| Foreign currency translation (loss) gain  | (92717) | 11658 |
| **Total comprehensive income** | $3073115 | $29616 |
| **Earnings per ordinary share** |  |  |
| Basic and diluted | 0.32 | 0.00 |
| **Weighted average number of ordinary shares outstanding** |  |  |
| Basic and diluted\* | 10000000 | 10000000 |

---

\* Par value per share and the number of shares has been retrospectively restated for all the periods presented.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

---

| |
|:---|
| F-26 |
| *[**Table of Contents**](#fstoc)* |

---

**GOODFAITH TECHNOLOGY INC. AND SUBSIDIARIES** 

**UNAUIDTED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)**

**For the six months ended June 30, 2022 and 2021.** 

**(In U.S. dollars, except for share and per share data, or otherwise noted)**

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Ordinary Shares\*** | **Ordinary Shares\*** | | | | | | |
|  | **Shares** | **Amount**  | **Subscription** <br>**receivable** | **Additional**<br> **paid-in** <br>**capital** | **Statutory** <br>**reserves** | **Retained** <br> **earnings** <br>**(deficit)** | **Accumulated other** <br> **comprehensive** <br>**income (loss)** | **Total**<br> **shareholders'**<br>**Equity** |
| **Balance as of January 1, 2021** | **10000000** | $**1000** | $**(1000)** | $**180553** | $**186911** | $**654793** | $**49025** | $**1071282** |
| Net income |  |  |  |  |  | 17958 |  | 17958 |
| Foreign currency translation adjustment | - | - | - | - | - | - | 11658 | 11658 |
| **Balance as of June 30, 2021 (unaudited)** | **10000000** | $**1000** | $**(1000)** | **180553** | **186911** | **672751** | **60683** | **1100898** |
| **Balance as of January 1, 2022** | **10000000** | $**1000** | $**(1000)** | $**-** | $**208364** | $**(502513)** | **57382** | **(236767)** |
| Net income |  |  |  |  |  | 3165832 |  | 3165832 |
| Foreign currency translation adjustment | - | - | - | - | - | - | (92717) | (92717) |
| **Balance as of June 30, 2022 (unaudited)** | **10000000** | $**1000** | $**(1000)** | $**-** | $**208364** | $**2663319** | $**(35335)** | $**2836348** |

---

\* Par value per share and the number of shares has been retrospectively restated for all the periods presented.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

---

| |
|:---|
| F-27 |
| *[**Table of Contents**](#fstoc)* |

---

**GOODFAITH TECHNOLOGY INC. AND SUBSIDIARIES** 

**UNAUIDTED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**For the six months ended June 30, 2022 and 2021.** 

**(In U.S. dollars, except for share and per share data, or otherwise noted)**

---

| | | |
|:---|:---|:---|
|  | **For the six months ended** <br> **June 30,** | **For the six months ended** <br> **June 30,** |
|  | **2022**<br> **(unaudited)** | **2021** <br> **(unaudited)** |
| **CASH FLOWS FROM OPERATING ACTIVITIES:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Net income | $3165832 | $17958 |
| &nbsp;&nbsp;&nbsp;&nbsp; Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provision for doubtful accounts | 6787 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 39375 | 18649 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income | (11270) | (323) |
| &nbsp;&nbsp;&nbsp;&nbsp;(Increase) decrease in operating assets |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable | (5517116) | (394421) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable from related parties | (16511) | (87607) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amount due from related parties | (224) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepayments and other current assets | (155337) | 106341 |
| &nbsp;&nbsp;&nbsp;&nbsp; Increase (decrease) in operating liabilities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | 4364641 | 705118 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable to related parties | 1282869 | 104044 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Taxes payable | 1429411 | 64881 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses and other payables | (451391) | 600462 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Advance from customers |  | 5145 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amount due to related parties | (23669) | (144297) |
| Net cash provided by operating activities | 4113397 | 995950 |
| **CASH FLOWS FROM INVESTING ACTIVITIES:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchase of property and equipment | (91753) | (35035) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchase of Intangible assets |  | (110767) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans to related parties |  | (1070979) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans repayment from related parties | 1692255 | 30913 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payment for a subsidiary acquisition in 2021 | (200732) | - |
| Net cash provided by/(used in) investing activities | 1399770 | (1185868) |
| **CASH FLOWS FROM FINANCING ACTIVITIES:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans received from a related party | 200732 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repayments to a related party |  | (177752) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceed from short-term bank borrowing | - | 309134 |
| Net cash provided by financing activities | 200732 | 131382 |
| Effect of exchange rate changes | (331245) | 21655 |
| Net increase (decrease) in cash and cash equivalents | 5382654 | (36881) |
| Cash and cash equivalents, at beginning of period | 3262367 | 1979567 |
| Cash and cash equivalents, at end of period | $8645021 | $1942686 |
| **SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:** |  |  |
| Income tax paid | $9497 | $45821 |
| Interest paid | $- | $1130 |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

---

| |
|:---|
| F-28 |
| *[**Table of Contents**](#fstoc)* |

---

**GOODFAITH TECHNOLOGY INC. AND SUBSIDIARIES** 

**NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 1. ORGANIZATION AND PRINCIPAL ACTIVITIES**

GoodFaith Technology Inc. ("GoodFaith Cayman" or the "Company") was incorporated under the laws of the Cayman Islands on May 13, 2021. It is a holding company with no material operations of its own. GoodFaith Cayman offers customized pre-approval risk management and post-loan delinquent debt collection products and services to commercial banks and non-bank financial institutions in China in connection with credit loans, through its wholly owned subsidiaries in China.

The unaudited condensed consolidated financial statements of the Company include the following entities:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Entity Name** | **Registered** <br> **Location** | **Percentage of** <br> **ownership** | **Date of** <br> **incorporation** | **Registered** <br> **capital** | **Principal** <br> **activities** |
| GoodFaith Technology Inc. ("GoodFaith Cayman") | Cayman | Parent | May 13, 2021 | N/A | Investment holding |
| GoodFaith Technology Holdings Limited ("GoodFaith BVI") | BVI | 100% by GoodFaith Cayman | May 26, 2021 | N/A | Investment holding |
| GoodFaith Technology Limited ("GoodFaith HK") | Hong Kong | 100% by GoodFaith BVI | June 10, 2021 | HKD 10,000 | Investment holding |
| 苏州创之信信息科技有限公司<br> Suzhou Chuangzhixin Information Technology Co., Ltd. ("GoodFaith WOFE") | Suzhou | 100% by GoodFaith HK | October 25, 2021 | RMB10,000,000 | Investment holding |
| 苏州承信信息科技有限公司<br> Suzhou GoodFaith Information Technology Co., Ltd. ("Suzhou GoodFaith") | Suzhou | 100% by GoodFaith WOFE | April 28, 2021 | RMB1,000,000 | Investment holding  |
| 深圳市信德盛金融服务有限公司<br> Shenzhen Xindesheng Financial Services Co., Ltd. ("Shenzhen Xindesheng") | Shenzhen | 100% by Suzhou GoodFaith | September 14, 2015 | RMB20,000,000 | Post-loan delinquent debt collection |
| 北海北溟投资有限公司<br> Beihai Beiming Investment Co., Ltd. ("Beihai Beiming") | Beihai | 100% by Suzhou GoodFaith | April 29, 2020 | RMB20,000,000 | Investment holding |
| 上海北溟信息科技有限公司<br> Shanghai Beiming Information Technology Co., Ltd. ("Beiming Technology") | Shanghai | 100% by Beihai Beiming | July 21, 2015 | RMB10,000,000 | Pre-approval risk management service |
| 上海宇壹信息科技有限公司<br> Shanghai Yuyi Information Technology Co., Ltd ("Shanghai Yuyi") | Shanghai | 100% by Beihai Beiming | July 25, 2014 | RMB10,000,000 | Pre-approval risk management service |
| 亿国轩（深圳）投资控股有限公司<br> Yiguoxuan (Shenzhen) Investment Holding Co., Ltd. ("Shenzhen Yiguoxuan")\* | Shenzhen | 100% by Shenzhen Xindesheng | July 3, 2017 | RMB20,000,000 | Post-loan delinquent debt collection |
| 九江市信德盛信息咨询服务有限公司<br> Jiujiang Xindesheng Information Consulting Service Co., Ltd. ("Jiujiang Xindesheng) | Jiujiang | 100% by Shenzhen Xindesheng | October 13, 2017 | RMB5,000,000 | Post-loan delinquent debt collection |
| 贵阳信德盛信息技术有限公司<br> Guiyang Xindesheng Information Technology Co., Ltd. ("Guiyang Xindesheng") | Guiyang | 100% by Shenzhen Xindesheng | April 1, 2020 | RMB1,000,000 | Post-loan delinquent debt collection |
| 成都市信德盛信息技术有限公司<br> Chengdu Xindesheng Information Technology Co., Ltd. ("Chengdu Xindesheng") | Chengdu | 100% by Shenzhen Xindesheng | October 23, 2020 | RMB200,000 | Post-loan delinquent debt collection |
| 惠州市信德盛信息技术有限公司<br> Huizhou Xindesheng Information Technology Co., Ltd. ("Huizhou Xindesheng") | Huizhou | 100% by Shenzhen Xindesheng | March 22, 2021 | RMB2,000,000 | Post-loan delinquent debt collection |
| 北海信德盛信息科技有限公司<br> Beihai Xindesheng Information Technology Co., Ltd. ("Beihai Xindesheng") | Beihai | 100% by Shenzhen Xindesheng | June 10, 2021 | RMB2,000,000 | Post-loan delinquent debt collection |

---

---

| |
|:---|
| F-29 |
| *[**Table of Contents**](#fstoc)* |

---

\* On April 6, 2021, Shenzhen Xindesheng disposed of 100% equity interest of Shenzhen Yiguoxuan for a consideration of RMB1. Shenzhen Yiguoxuan was established as a shell company and not intended to be used in the future. Shenzhen Yiguoxuan had no capital injection and no operations from its inception until disposal, so it basically did not result in gain or loss on the consolidation of financial statements for the six months ended June 30, 2021. The disposal of Shenzhen Yiguoxuan did not qualify as a discontinued operation as it did not individually or in the aggregate represent a strategic shift that has had a major impact on the Company's operations or financial results.

*Reorganization* 

On July 21, 2015, Beiming Technology was 100% owned by Shanghai Beiming Data Technology Co., Ltd ("Beiming Data") and its 100% owned subsidiary Beihai Beiming. 100% equity interest of Shanghai Yuyi was acquired on June 10, 2018 by Beiming Data. Beiming Data was controlled by Kai Zhou since 2017. Beiming Technology and Shanghai Yuyi were 100% owned by Beihai Beiming, which was a 100% owned subsidiary of Beiming Data before the Reorganization. As a result, Beiming Technology and Shanghai Yuyi were controlled by Kai Zhou from July 21, 2015 and June 10, 2018, respectively, until the Reorganization.

In February 2019, 51% equity interest of Shenzhen Xindesheng was acquired by Shanghai Zhongchuang Asset Management Co., Ltd. ("Shanghai Zhongchuang"), which is 70% owned by Xiaofeng Fei. In accordance with the ownership holding trust agreement signed between Xiaofeng Fei and Kai Zhou, the equity ownership of Xiaofeng Fei in the Shanghai Zhongchuang was held on behalf of Kai Zhou and at his willingness to execute relative rights in Shanghai Zhongchuang and its subsidiaries. As a result, from February 28, 2019, until the Reorganization, Shenzhen Xindesheng was under control of Kai Zhou.

On April 28, 2021, Suzhou GoodFaith was incorporated for the purpose of foreign exchange registration under the laws of the People's Republic of China. Suzhou GoodFaith was owned by 7 natural person shareholders ("Ultimate Shareholders").

On May 13, 2021, GoodFaith Cayman ("the Company") was incorporated in the Cayman Islands and issued 10,000,000 outstanding Ordinary Shares at par value of $0.0001 to 7 BVI companies which were set up by the same group of Ultimate Shareholders. The Company is controlled by Qearl's Holdings Limited, which takes 47.3% of the total outstanding shares of GoodFaith. Qearl's Holding Limited, a BVI company, is 90% ultimately held by Kai Zhou, Qearl's Holding Limited's remaining 10% equity interest is held by Xiaofeng Fei, who takes a same voting position as Kai Zhou.

GoodFaith BVI, GoodFaith HK and GoodFaith WOFE are newly established companies, which have no operations and are used to control Shenzhen Xindesheng, Beiming Technology and Shanghai Yuyi.

On September 1, 2021, Beiming Data agreed to transfer all its shares held in Beihai Beiming to Suzhou GoodFaith, Beihai Beiming became the wholly owned subsidiary of Suzhou GoodFaith with consideration of RMB10,800,000 ($1,669,836).

On December 31, 2021, 100% equity interest of Suzhou GoodFaith was transferred from Ultimate Shareholders to GoodFaith WFOE. On December 31, 2021, 100% equity interest of Shenzhen Xindesheng was transferred from its original shareholders to Suzhou GoodFaith.

On April 28, 2021 and May 10, 2021, Xiaofeng Fei and Kai Zhou ("Parties") executed two Acting-in-Concert Agreements respectively. The major terms of these two agreements are:

• The Parties shall inform and discuss with each other and reach a consensus before exercising voting rights in the Company's decision making.

• If no consensus can be reached by the Parties, the decision will be made by Kai Zhou prevails.

As a result of the Acting-in-Concert agreement, Kai Zhou has the ultimate control of the Company.

On May 20, 2022, Kai Zhou, through Qearl's Holdings Limited, transferred 300,000 Ordinary Shares to Xiaoming Li with a total consideration of $30, representing 3% equity interest of GoodFaith Technology Inc. Kai Zhou is still the controlling shareholder after the shares transfer.

During the periods presented in these consolidated financial statements, the control of the entities never changed (i.e., always under the control of Kai Zhou). Accordingly, the combination has been treated as a corporate reorganization of entities under common control (the "Reorganization") and thus the current capital structure has been retroactively presented in prior periods as if such structure existed at that time and in accordance with Accounting Standards Codification ("ASC") 805-50-45-5, the entities under common control are presented on a combined basis for all periods to which such entities were under common control. Since all of the subsidiaries were under common control for the entirety of the years ended December 31, 2021 and 2020, the results of these subsidiaries are included in the consolidated financial statements for both periods.

The discussion and presentation of financial statements herein assumes the completion of the Reorganization, which is accounted for retroactively as if it occurred on January 1, 2020, and the equity has been restated to reflect the change as well.

**NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

*Risks and Uncertainties*

The main operations of the Company are located in the PRC. Accordingly, the Company's business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the economy in the PRC. The Company's results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, such experience may not be indicative of future results.

The Company's business, financial condition, and results of operations may also be negatively impacted by risks related to natural disasters, extreme weather conditions, health epidemics, and other catastrophic incidents, which could significantly disrupt the Company's operations.

The ongoing impact of COVID-19 pandemic may significantly affect the Company's business, results of operations, and financial condition. The COVID-19 pandemic may cause an increase in borrowers' default and delinquency risks. Specifically, the COVID-19 pandemic may give rise to economic downturn and other significant changes in regional and global economic conditions. As a result, borrowers' default and delinquency risks might increase as they experience unemployment or generate less income. Subsequently, higher default and delinquency risks may require the Company to dedicate more resources to maintain its current collection rate for the post-loan delinquent debt collection business and pose new challenges for its pre-approval risk management business, increasing its operating costs.

---

| |
|:---|
| F-30 |
| *[**Table of Contents**](#fstoc)* |

---

*Basis of presentation and principles of consolidation*

The unaudited interim consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The accompanying interim consolidated financial statements include our accounts and those of our wholly owned subsidiaries. Accordingly, all intercompany balances and transactions have been eliminated through the consolidation process.

In the opinion of management, these unaudited interim consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly, in all material respects, the Company's consolidated financial position, results of operations, cash flows, and changes in equity for the interim periods presented. These unaudited interim financial statements do not include certain information and footnote disclosures as required by the U.S. GAAP for complete annual financial statements. Therefore, these unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company's registration statement on Form F-1 for the years ended December 31, 2021 and 2020.

*Use of estimates*

In preparing the unaudited condensed consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period and accompanying notes, including the useful lives of property and equipment and intangible assets, impairment of long-lived assets, valuation allowance of deferred tax assets and uncertain tax position. Actual results could differ from those estimates.

*Fair Value Measurement*

Accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Accounting guidance establishes three levels of inputs that may be used to measure fair value:

• Level 1 applies to assets or liabilities for which there are quoted prices, in active markets for identical assets or liabilities.

• Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical asset or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

• Level 3 applies to asset or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

Based on the short-term nature of cash and cash equivalents, accounts receivable, amounts due from related parties, deferred offering cost, prepayments and other current assets, accounts payable, advances from customers, accrued expenses and other current liabilities, management has determined that the carrying value approximates their fair values as of June 30, 2022 and December 31, 2021.

*Cash and cash equivalents*

Cash and cash equivalents consist of cash on hand, the Company's demand deposits placed with financial institutions, which have original maturities of less than three months and are unrestricted as to withdrawal and use. As of June 30, 2022 and December 31, 2021, there were no cash equivalents, and cash refers to demand deposits placed with banks. The Company maintains all bank accounts in the mainland China. Cash balances in bank accounts in mainland China are not insured by the Federal Deposit Insurance Corporation or other programs.

*Accounts Receivable, net*

Accounts receivable represent trade receivable and are recognized initially at fair value and subsequently adjusted for any allowance for doubtful accounts or impairment.

The Company records impairment losses for accounts receivable based on assessments of the recoverability of the trade and other receivables and individual account analysis, including the current creditworthiness and the past collection history of each debtor. Impairments arise when there is objective evidence indicating that the balances may not be collectible. The identification of bad and doubtful debts, in particular of a loss event, requires the use of judgment and estimates, which involve the estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. Based on management of customers' credit and ongoing relationship, management makes conclusions whether any balances outstanding at the end of the period will be deemed non-collectable on an individual basis and on aging analysis basis. The provision is recorded against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of operations and comprehensive income. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable.

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| *[**Table of Contents**](#fstoc)* |

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The Company historically has not had material bad debts in accounts receivable. There were bad debt expenses of $6,787 and nil for the six months ended June 30, 2022 and 2021, respectively, and there was an allowance of $6,564 and nil for doubtful accounts as of June 30, 2022 and December 31, 2021.

*Deferred IPO costs*

The Company complies with the requirement of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin ("SAB") Topic 5A - "Expenses of Offering". Deferred offering costs consist of underwriting, legal, accounting, and other expenses incurred through the balance sheet date that are directly related to the Company's initial public offering. Deferred offering costs will be charged to shareholders' equity upon the completion of the initial public offering. Should the initial public offering prove to be unsuccessful, these deferred costs, as well as additional expenses to be incurred, will be charged to operations. As of June 30, 2022 and December 31, 2021, the deferred IPO costs were $949,518 and $681,545, respectively. The deferred IPO cost of $883,791 was paid by Zhongchuang Investment on behalf of the Company and was recorded in amounts due to related parties. Pursuant to the agreement between Zhongchuang Investment and the Company, the cash advance was interest-free and the repayment term is to be mutually agreed upon by both parties. See "NOTE 11. RELATED PARTY TRANSACTIONS".

*Property and equipment, net*

Property and equipment are recorded at their historic cost, less accumulated depreciation. The Company calculates depreciation using the straight-line method, after consideration of the estimated residual values, over the following estimated useful lives:

---

| | |
|:---|:---|
| **Category** | **Estimated useful lives** |
| Office equipment | 3 years |
| Electronic equipment | 3 years |
| leasehold improvement | 3 years |

---

Repair and maintenance costs are charged to expenses as incurred, whereas the cost of renewals and betterment that extends the useful lives of property and equipment are capitalized as additions to the related assets. Retirements, sales and disposals of assets are recorded by removing the costs, accumulated depreciation and impairment with any resulting gain or loss recognized in the consolidated statements of income.

*Intangible Assets*

Intangible assets are non-monetary assets without physical substance. These items are initially measured at cost and subsequently carried at cost less any accumulated amortization and impairment losses. Intangible assets with finite useful lives are amortized on a straight-line basis over their estimated useful lives. Amortization of finite-lived intangible assets is computed using the straight-line method over the estimated useful lives, which is as follows:

---

| | |
|:---|:---|
| **Category** | **Estimated useful lives** |
| Software | 3-5 years |

---

*Impairment of long-lived assets (other than goodwill)*

The Company accounts for impairment of long-lived assets in accordance with ASC 360, Property, Plant and Equipment. ("ASC 360"). Long-lived assets consist primarily of property, plant and equipment, and intangible assets. In accordance with ASC 360, the Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. When these events occur, the Company measures impairment by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Company would recognize an impairment loss, which is the excess of carrying amount over the fair value of the assets, using the expected future discounted cash flows. No impairment of long-lived assets was recognized as of June 30, 2022 and December 31, 2021. There can be no assurance that future events will not have impact on company revenue or financial position which could result in impairment in the future.

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*Commitments and contingencies*

In the normal course of business, the Company is subject to commitments and contingencies, including operating lease commitments, legal proceedings and claims arising out of its business that relate to a wide range of matters, such as government investigations and tax matters. The Company recognizes a liability for such contingency if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Company may consider many factors in making these assessments on liability for contingencies, including historical and the specific facts and circumstances of each matter.

*Revenue recognition*

The Company follows FASB ASC 606 - "Revenue from Contracts with Customers" for all periods presented. Based on the requirements of ASC Topic 606, revenue is recognized when control of the promised goods or services is transferred to the customers in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those goods or services. Revenue is recognized when the following 5-step revenue recognition criteria are met:

1) Identify the contract with a customer

2) Identify the performance obligations in the contract

3) Determine the transaction price

4) Allocate the transaction price

5) Recognize revenue when or as the entity satisfies a performance obligation

The Company's revenue consists of revenue from pre-approval risk management services and post-loan delinquent debt collection services.

<u>Pre-approval risk management revenue:</u>

The Company provides a set of credit risk management services for financial service providers during the loan approval process. The Company identified only one performance, which is to return accurate verification results to financial service providers via its operating system, as a reference in financial service providers' loan approval process. Once a verification result is returned to a financial service provider, a consumption record of information verification is generated, and one performance obligation is fulfilled. The Company recognizes revenue when the performance obligation is fulfilled in amount based on the agreed-upon consumption records confirmed by financial service providers and preset unit price in the contract.

<u>Post-loan delinquent debt collection revenue:</u>

The Company provides debt collection services to financial service providers for the post-loan delinquent receivables. The Company identified only one performance, which is to provide debt collection services to financial service providers. Once the services are rendered to a financial service provider, the performance obligation is fulfilled. The service fees are calculated in two main types, which are amount-based and percentage-based. Amount-based fees are equivalent to the fee rate for each collection specialist as agreed upon multiplied by the number of collection specialists for such projects. Percentage-based fees are equivalent to the recovery amount of the client's post-loan delinquent receivables after our debt collection service, multiply by the commission percentage as agreed upon. The Company does not need to allocate transaction price to amount-based revenue and percentage-based revenue, as each one is exclusive from the other. Other than the above two main service fees, we may receive incentive bonuses based on our performance from time to time. The incentive bonuses are determined by our clients at their discretion in a few selected months. The incentive bonus is a form of variable consideration, which is fully constraint, and should not be included in the transaction price as the Company does not believe it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur, because the amount of incentive bonuses is calculated by our clients according to their own formula based on factors such as the performance ranking of all their suppliers in those months. The incentive bonuses are recognized when being confirmed by or even received from our clients. Therefore, incentive bonuses do not involve a significant level of estimation uncertainty in terms of revenue recognition. The Company recognizes the service revenue on a gross basis, as the Company is acting as a principal in these transactions and is responsible for fulfilling the promise to provide the specified collection service. Revenue is recognized at the point when overdue receivables are repaid, which means the performance obligations are fulfilled.

The following table identifies the disaggregation of the Company's revenue for the six months ended June 30, 2022 and 2021:

---

| | | |
|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** |
|  | **2022**<br> **(unaudited)** | **2021**<br> **(unaudited)** |
| Pre-approval risk management revenue - third parties | 1099992 | 1405695 |
| Pre-approval risk management revenue - related parties | 15576  | 84365 |
| Post-loan delinquent debt collection revenue\* | 23444934 | 7201923 |
| Total | $24560502 | $8691983 |

---

\* Included in the post-loan delinquent debt collection revenue, incentive bonuses were $49,521 and nil for the six months ended June 30, 2022 and 2021, respectively, which accounted for 0.2% and nil of our total post-loan delinquent debt collection revenue, respectively.

*Cost of revenue*

Cost of revenue mainly consists of management service costs for call centers, labor costs for collection specialists, data service costs and communication fees.

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*Selling expenses*

Selling expenses mainly consists of labor expenses for sales personnel, entertainment expenses, and other miscellaneous selling expenses.

*General and administrative expenses*

General and administrative expenses mainly consist of labor expenses, rent and energy expenses, office expenses, and other miscellaneous administrative expenses.

*Income taxes*

The Company accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.

The provisions of ASC 740-10-25, "Accounting for Uncertainty in Income Taxes," prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. The Company's operating subsidiaries in PRC are subject to examination by the relevant tax authorities. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent. The statute of limitations is extended to five years under special circumstances, where the underpayment of taxes is more than RMB100,000 ($14,537). In the case of transfer pricing issues, the statute of limitation is ten years. There is no statute of limitation in the case of tax evasion.

The Company classifies interest and penalties related to uncertain tax positions in its other expense line of its consolidated statements of income for the six months ended June 30, 2022 and 2021, respectively. The Company's effective tax rate includes the net impact of changes in the liability for unrecognized tax positions and subsequent adjustments as considered appropriate by management.

*Value added tax ("VAT")*

The Company is subject to VAT and related surcharges on revenue generated from sales of products, Value-Added Services and platform services. The Company records revenue net of VAT. This VAT may be offset by qualified input VAT paid by the Company to suppliers. Net VAT balance between input VAT and output VAT is recorded in the line item of other current assets on the consolidated balance sheets.

For revenue generated from services, the VAT rate is 6% depending on whether the entity is a general taxpayer, and related surcharges on revenue generated from providing services. Entities that are VAT general taxpayers are allowed to offset qualified input VAT, paid to suppliers against their output VAT liabilities.

On March 20, 2019, Ministry of Finance, State Administration of Taxation and General Administration of Customs published the "Announcement on policies related to deepening the reform of value-added tax", which allows a general taxpayer's production and living services to add 10% of the current deductible input tax to offset the VAT output tax from April 1, 2019 to December 31, 2021. The implementation period was extended to December 31, 2022 on March 3, 2022. This tax preference is applicable to Shenzhen Xindesheng, Beiming Technology and Shanghai Yuyi.

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*Related Parties*

Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all significant related party transactions.

*Foreign currency transactions and translations*

The Company's reporting currency is the United States dollars ("US$"). The Company's operations are principally conducted through the PRC subsidiaries where the local currency is the functional currency. Therefore, the functional currency of the Company's PRC subsidiaries is the Renminbi ("RMB").

Transactions denominated in other than the functional currencies are re-measured into the functional currency of the entity at the exchange rates prevailing on the transaction dates. Monetary assets and liabilities denominated in currencies other than the applicable functional currency are translated into the functional currency at the prevailing rates of exchange at the balance date. The resulting exchange differences are reported in the consolidated statements of income and comprehensive income.

The assets and liabilities of the Company are translated at the exchange spot rate at the balance sheet date, stockholders' equity is translated at the historical rates and the revenue and expenses are translated at the average exchange rates for the periods. The resulting translation adjustments are reported under other comprehensive income in the consolidated statements of operations and comprehensive income in accordance with Financial Accounting Standards Board ("FASB") ASC 220, *Comprehensive Income*. The following are the exchange rates that were used in translating the Company's PRC subsidiaries' financial statements into the unaudited condensed consolidated financial statements:

---

| | | | |
|:---|:---|:---|:---|
|  | **June 30,**<br> **2022** | **December 31,**<br> **2021** | **June 30,**<br> **2021** |
| Period-end spot rate | US$1=RMB6.6964 | US$1=RMB6.3757 | US$1=RMB6.4549 |
| Average rate | US$1=RMB6.4763 | US$1=RMB6.4515 | US$1=RMB6.4697 |

---

*Earnings per share*

Basic earnings per share is computed by dividing net earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares.

*Segment reporting*

The Company has organized its operations into two operating segments. The segments reflect the way the Company evaluates its business performance and manages its operations by the Company's chief operating decision maker (the "CODM") for making decisions, allocating resources and assessing performance. The Company's CODM has been identified as the chief executive officer, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Company.

The Company has determined that it operates in two operating segments: (1) pre-approval risk management segment, and (2) post-loan delinquent debt collection segment.

Substantially all of the Company's long-lived assets, revenue and expenses are located or derived in the PRC therefore no geographical information is presented.

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The following tables present summary information by operating segment for the six months ended June 30, 2022 and 2021, respectively:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Six Months Ended June 30, 2022** | **For the Six Months Ended June 30, 2022** | **For the Six Months Ended June 30, 2022** |
|  | **Pre-approval** <br> **risk management**<br> **services**<br> **(unaudited)** | **Post-loan** <br> **delinquent debt collection**<br> **services**<br> **(unaudited)** | **Total**<br> **(unaudited)** |
| Revenue | $1115568 | $23444934 | $24560502 |
| Cost of revenue | 770913 | 18450299 | 19221212 |
| Operating expenses | 424996 | 931061 | 1356057 |
| (Loss) income from operations | (80341) | 4063574 | 3983233 |
| Income tax expense | - | 1100887 | 1100887 |
| Net (loss) income | (65768) | 3236750 | 3170982 |
| Depreciation and amortization | 9681 | 29694 | 39375 |
| Total assets | $1832176 | $16472850 | $18305026 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Six Months Ended June 30, 2021** | **For the Six Months Ended June 30, 2021** | **For the Six Months Ended June 30, 2021** |
|  | **Pre-approval** <br> **risk management**<br> **services**<br> **(unaudited)** | **Post-loan** <br> **delinquent debt collection**<br> **services**<br> **(unaudited)** | **Total**<br> **(unaudited)** |
| Revenue | $1490060 | $7201923 | $8691983 |
| Cost of revenue | 880817 | 6451123 | 7331940 |
| Operating expenses | 369157 | 855267 | 1224424 |
| Income from operations | 240086 | (104467) | 135619 |
| Income tax expense  | 3653 | 72434 | 76087 |
| Net income | 246643 | (228685) | 17958 |
| Depreciation and amortization | 8251 | 10398 | 18649 |
| Total assets | $2633381 | $5061297 | $7694678 |

---

*Recently Issued Accounting Standards*

The Company is an "emerging growth company" ("EGC") as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). Under the JOBS Act, EGC can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

In February 2016, the FASB issued Accounting Standards Updates ("ASU") No. 2016-02, Leases (Topic 842). The guidance supersedes existing guidance on accounting for leases with the main difference being that operating leases are to be recorded in the statement of financial position as right-of-use ("ROU") assets and lease liabilities, initially measured at the present value of the lease payments. For operating leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. In July 2018, ASU 2016-02 was updated with ASU 2018-11, Targeted Improvements to ASC Topic 842, which provides entities with relief from the costs of implementing certain aspects of the new leasing standard. Specifically, under the amendments in ASU 2018-11, (1) entities may elect not to recast the comparative periods presented when transitioning to ASC 842 and (2) lessors may elect not to separate lease and non-lease components when certain conditions are met. In November 2019, ASU 2019-10, Codification Improvements to ASC 842 modified the effective dates of all other entities. In June 2020, ASU 2020-05 defers the effective date for one year for entities in the "all other" category. For all other entities, the amendments in ASU 2020-05 are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early application of the guidance continues to be permitted. The Company have assessed the impact of the adoption of the new lease standard, and concluded that it would have no significant impact on its consolidation financial statements. Upon adoption, the Company would recognize ROU assets and lease liabilities (including current and non-current) for operating leases of approximately $319,000 and $254,000, respectively, without any material impact on the shareholders' equity, as of January 1, 2022. The Company will present the application of Topic 842 in its consolidated financial statements for the year ending December 31, 2022.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 changes the impairment model for most financial assets and certain other instruments. The standard will replace the "incurred loss" approach with an "expected loss" model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they do today under the other-than-temporary impairment model. The amendments in ASU 2016-13 are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is in the process of evaluating the impact of the adoption of this guidance on its unaudited condensed consolidated financial statements.

Other accounting standards that have been issued by the FASB that do not require adoption until a future date are not expected to have a material impact on the unaudited condensed consolidated financial statements upon adoption. The Company does not discuss recent standards that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures.

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**NOTE 3. ACCOUNTS RECEIVABLE, NET**

Accounts receivable, net, consisted of the following:

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| | | |
|:---|:---|:---|
|  | **As of**  | **As of**  |
|  | **June 30,**<br> **2022**<br> **(unaudited)** | **December 31,**<br> **2021**<br> **(audited)** |
| Accounts receivable | $8703456 | $3537074 |
| Accounts receivable-related party | 65413 | 51933 |
| Less: allowance for doubtful accounts | (6564) | - |
| Total accounts receivable, net | $8762305 | $3589007 |

---

The movements in the allowance for doubtful accounts for the six months ended 30, 2022 and fiscal years ended December 31, 2021 were as follows:

---

| | | |
|:---|:---|:---|
|  | **June 30,**<br> **2022**<br> **(unaudited)** | **December 31,**<br> **2021**<br> **(audited)** |
| Balance at beginning of the year | $- | $- |
| Additions | (6787) |  |
| Exchange effect | 223 | - |
| Balance at end of the period | $(6564) | $- |

---

Bad debt expenses were $6,787 and nil for the six months ended June 30, 2022 and 2021, respectively.

The detailed aging of accounts receivable consisted of the following:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **June 30, 2022**<br> **(unaudited)** | **June 30, 2022**<br> **(unaudited)** | **December 31, 2021**<br> **(audited)** | **December 31, 2021**<br> **(audited)** |
|  | **Amount** | **% of**<br> **total amount** | **Amount** | **% of**<br> **total amount** |
| 1-3 months | $8367799 | 95.5% | $3447899 | 96.1% |
| 4-6 months | 160843 | 1.8% | 79708 | 2.2% |
| 7-9 months | 144906 | 1.7% | 53939 | 1.5% |
| 10-12 months | 62844 | 0.7% | 7461 | 0.2% |
| 13-15 months | 25913 | 0.3% | - | 0.0% |
| **Total accounts receivable, net** | $8762305 | 100.0% | $3589007 | 100.0% |

---

The total accounts receivable are service fees receivable from the Company's financial institution clients and do not account for personal delinquent loan receivables from the financial institution clients' debtors. Typically, the Company's contractual payment term is 3 months, and the Company would extend the payment term to 12 months for a few long-term stable and key customers. However, some customers slowed down the payments due to the COVID-19 pandemic. The accounts receivable over 1 year were from a related party and were fully collected in July 2022. As of October 31, 2022, 93.9% of the total outstanding balance as of June 30, 2022 had been collected and the remaining balance of $536,282 is expected to be collected by the end of June 2023.

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**NOTE 4. PREPAYMENTS AND OTHER CURRENT ASSETS, NET**

Prepayments and other current assets, net, consisted of the following:

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| | | |
|:---|:---|:---|
|  | **As of**  | **As of**  |
|  | **June 30,**<br> **2022**<br> **(unaudited)** | **December 31,**<br> **2021**<br> **(audited)** |
| Prepayments | $114621 | $94855 |
| Deposit | 154138 | 64295 |
| Others | 34495 | 1569 |
| Total prepayments and other current assets, net | $303254 | $160719 |

---

**NOTE 5. PROPERTY AND EQUIPMENT, NET**

Property and equipment, net, consisted of the following:

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| | | |
|:---|:---|:---|
|  | **As of**  | **As of**  |
|  | **June 30,**<br> **2022**<br> **(unaudited)** | **December 31,**<br> **2021**<br> **(audited)** |
| Electronic equipment  | $243228 | $196341 |
| Office equipment | 71711 | 41239 |
| Leasehold improvement | 15903 | 16703 |
| Subtotal | 330842 | 254283 |
| Less: accumulated depreciation | (156570) | (136910) |
| Property and equipment, net | $174272 | $117373 |

---

Depreciation expense was $27,109 and $12,660 for the six months ended June 30, 2022 and 2021, respectively.

**NOTE 6. INTANGIBLE ASSETS, NET**

Intangible assets consisted of the following:

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| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **June 30,**<br> **2022**<br> **(unaudited)** | **December 31,**<br> **2021**<br> **(audited)** |
| Software | $107017 | $112400 |
| Less: accumulated amortization | (31344) | (20461) |
| Intangible assets, net | $75673 | $91939 |

---

Amortization expense was $12,266 and $5,989 for the six months ended June 30, 2022 and 2021, respectively.

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**NOTE 7. Taxes Payable**

Taxes payable consisted of the following:

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| | | |
|:---|:---|:---|
|  | **As of**  | **As of**  |
|  | **June 30,**<br> **2022**<br> **(unaudited)** | **December 31,**<br> **2021**<br> **(audited)** |
| VAT payable | $471955 | $216745 |
| Income tax payable | 2335807 | 1338807 |
| Other taxes payable | 78364 | 23782 |
| Total | $2886126 | $1579334 |

---

As of June 30, 2022 and December 31, 2021, income tax payable is adjusted for income and expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions. The Company evaluates each uncertain tax position (including the potential application of interest and penalties) and accrues a liability recorded as Accrued tax penalties and interest in Note 9. The under-declared income taxes and associated interest for fiscal years from 2017 to 2021 as of June 30, 2022 were fully paid on September 21, 2022.

**NOTE 8. INCOME TAXES**

*Cayman Islands*

Under the current laws of the Cayman Islands, GoodFaith Technology Inc. is not subject to tax on income or capital gain. Additionally, upon payments of dividends to the shareholders, no Cayman Islands withholding tax will be imposed.

*British Virgin Islands ("BVI")*

The Company's subsidiary, GoodFaith Technology Holdings Limited, is incorporated in the BVI and under the current laws of the BVI. GoodFaith Technology Holdings Limited is currently exempt from income and corporate tax. In addition, the BVI does not levy capital gains tax on it. There are currently no withholding taxes or exchange control regulations in the British Virgin Islands applicable to GoodFaith Technology Holdings Limited.

*Hong Kong*

Under the current Hong Kong Inland Revenue Ordinance, the Company's Hong Kong subsidiary, GoodFaith HK, is subject to 16.5% income tax on its taxable income generated from operations in Hong Kong. On December 29, 2017, the Hong Kong government announced a two-tiered profit tax rate regime. Under the two-tiered tax rate regime, the first HK$2.0 million assessable profits will be subject to an 8.25% lower tax rate and the remaining taxable income will continue to be taxed at the existing 16.5% tax rate. The two-tiered tax regime becomes effective from the assessment year of 2018/19, which is on or after April 1, 2018. The application of the two-tiered rates is restricted to only one nominated enterprise among connected entities. The Company did not make any provisions for Hong Kong profit tax as there were no assessable profits derived from or earned in Hong Kong for any of the periods presented.

*PRC*

The Company's PRC operating subsidiaries, incorporated in the PRC, are governed by the income tax law of the PRC and are subject to PRC enterprise income tax ("EIT"). The EIT rate of PRC is 25%, which applies to both domestic and foreign invested enterprises. According to the notice related to the tax relief policy of small-scale enterprises issued by the State Administration of Taxation, from January 1, 2021 to December 31, 2022, if a small profit-making enterprise has annual taxable income less than or equal to RMB1 million, only 12.5% of its annual taxable income will be subject to income tax at a reduced rate of 20%; from January 1, 2021 to December 31, 2021, for those with annual taxable income more than RMB1 million but did not exceed RMB3 million, 50% of their annual taxable income will be subject to income tax at the same reduced rate of 20%. According to the latest notice issued by the State Administration of Taxation, from January 1, 2022 to December 31, 2024, for those with annual taxable income more than RMB1 million but did not exceed RMB3 million, 25% of their annual taxable income will be subject to income tax at the same reduced rate of 20%. The annual taxable income of Beiming Technology, Shanghai Yuyi, Huizhou Xindesheng, Guiyang Xindesheng and Jiujiang Xindesheng for the six months ended June 30, 2022 and 2021 were eligible for the tax relief policy.

The income tax provision consisted of the following components:

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| | | |
|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** |
|  | **2022**<br> **(unaudited)** | **2021**<br> **(unaudited)** |
| Provisions for current income tax | $1100887 | $76086 |
| Provisions for deferred income tax | - | - |
| Total income tax expense | $1100887 | $76086 |

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A reconciliation between the Company's actual provision for income taxes and the provision at the PRC, mainland statutory rate is as follows:

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| | | |
|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** |
|  | **2022**<br> **(unaudited)** | **2021**<br> **(unaudited)** |
| Profit before income tax expense | $4266719 | $94044 |
| Computed income tax expense with statutory tax rate | 1066680 | 23511 |
| Changes in valuation allowance | 9472 | (80350) |
| Tax effect of non-deductible items | 94909 | 165798 |
| Tax effect of preferential tax rate | (71144) | (32873) |
| Others | 970 | - |
| **Income tax expense** | $1100887 | $76086 |

---

The reconciliation of tax computed by applying the statutory income tax rate of 25% for the six months ended June 30, 2022 and 2021 applicable to the PRC operations to income tax expenses was as follows:

---

| | | |
|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** |
|  | **2022**<br> **(unaudited)** | **2021**<br> **(unaudited)** |
| Profit before income tax expense | 25.00% | 25.00% |
| Changes in valuation allowance | 0.22% | (85.44)% |
| Tax effect of non-deductible items | 2.22% | 176.30% |
| Tax effect of preferential tax rate | (1.66)% | (34.95)% |
| Others | 0.02% | - |
| **Effective tax rate** | 25.80% | 80.91% |

---

The tax effects of temporary differences that give rise to the deferred income tax assets balances as of June 30, 2022 December 31, 2021 and June 30, 2021 were as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **As of** | **As of** | **As of** |
|  | **June 30,**<br> **2022**<br> **(unaudited)** | **December 31,**<br> **2021**<br> **(audited)** | **June 30,**<br> **2021**<br> **(unaudited)** |
| Deferred income tax assets: |  |  |  |
| Accrued expenses | $- | $- | $99483 |
| Tax losses carried forward | 49224 | 39904 | 90103 |
| Less: Valuation allowance | (49224) | (39904) | (189586) |
| **Total Deferred income tax assets, net** | $- | $- | - |

---

The movements of the valuation allowance are as follows:

---

| | | |
|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** |
|  | **2022**<br> **(unaudited)** | **2021**<br> **(unaudited)** |
| Balances as of January 1, | $39752 | $269936 |
| Increase (reduction) of valuation allowance | 9472  | (80350 ) |
| **Balances as of June 30,** | $49224 | $189586 |

---

As of June 30, 2022, the Company had net operating loss carried forward from two PRC entities of $190,423. The carry forward loss of $39,804 from one PRC entity was generated in 2019, which would expire by 2024 if not utilized. The carry forward loss of $150,619 from one PRC entity was generated in 2022, which would expire by 2027 if not utilized.

The valuation allowance as of June 30, 2022 and December 31 was primarily provided for the deferred income tax assets of certain PRC subsidiaries, which were at cumulative loss positions or had unstable historical profit position. In assessing the realization of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible or utilizable. Management considers projected future taxable income and tax planning strategies in making this assessment.

---

| |
|:---|
| F-40 |
| *[**Table of Contents**](#fstoc)* |

---

*Uncertain Tax Positions*

The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of June 30, 2022 and December 31, 2021, the Company did not have any significant unrecognized uncertain tax positions.

A net expense of $55,737 for penalties and interest were recognized in the consolidated statements of income as components of the non-operating expenses for the six months ended June 30, 2021. The Company have recognized liabilities for tax penalties and interest associated with unrecognized tax benefit as of June 30, 2022 and December 31, 2021 in Note 9.

On September 21, 2022, the Company fully paid the under-declared income taxes and associated interest for fiscal years from 2017 to 2021 as of June 30, 2022. As a result, the Company adjusted the balance of accrued interest for fiscal years from 2017 to 2021 as of June 30, 2022 according to the subsequent actual payment amount due to the exemption of tax penalties from the local tax authority and recognized non-operating income of $225,649 in the consolidated statements of income for the six months ended June 30, 2022.

**NOTE 9. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES**

As of June 30, 2022 and December 31, 2021, accrued expenses and other current liabilities consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **As of**  | **As of**  |
|  | **June 30,**<br> **2022**<br> **(unaudited)** | **December 31,**<br> **2021**<br> **(audited)** |
| Payroll - Salary  | $581563 | $1213226 |
| Payroll - Social insurance and housing provident fund | 1974790 | 1547744 |
| Accrued tax penalties and interest | 520935 | 774584 |
| Other service fee | 70655 | 102767 |
| Others | 28035 | 97086 |
| Total | $3175978 | $3735407 |

---

Payroll-Social insurance and housing provident fund mainly relate to the estimated under-paid amounts for employees for fiscal years from 2019 to the first half year of 2022. There were no accruals for late fees and fines that may be imposed by the relevant local government authorities in the financial statements. We have not received any inquiry, notice, warning, or sanctions regarding such late fees or fines, and the interpretation and implementation of labor-related laws and regulations are still constantly evolving which may be further amended from time to time. There are a number of policies providing that local governmental authorities shall act carefully to avoid burdensome measures over the small- and medium-size entities. In addition, our current shareholders had agreed to compensate us for the relevant fines, any outstanding sum, and any related costs and expenses arising from such noncompliance if imposed by the competent PRC authorities. We have taken measures to implement our policy on the payment of social insurance and housing fund contributions for employees for the purpose of compliance with relevant PRC laws and regulations starting from June 2022.

Accrued tax penalties and interest mainly relate to estimated tax payable for under-declared income to the tax authority for fiscal years from 2017 to 2021. The tax penalty is calculated at 50% of estimated under-declared corporate income tax payable and interest is based on 0.05% per day for the estimated under-declared corporate income tax payable since the income tax settlement date on the following May 31 for each fiscal year. On September 21, 2022, the Company fully paid the under-declared income taxes and associated interest. As a result, the Company adjusted the accrued tax penalties and interest for fiscal years from 2017 to 2021 due to the exemption of tax penalties from the local tax authority.

**NOTE 10. SHAREHOLDERS' EQUITY**

*Ordinary shares*

The Company was incorporated under the laws of the Cayman Islands on May 13, 2021. The authorized number of ordinary shares was 500,000,000 shares with a par value of $0.0001 per ordinary share, and 10,000,000 ordinary shares were issued as of May 13, 2021. The Company has retroactively restated all shares and per share data for all the periods presented pursuant to ASC 260. As a result, the Company had 500,000,000 authorized ordinary shares, par value $0.0001 per share, of which 10,000,000 were issued and outstanding as of June 30, 2022 and December 31, 2021. The proceeds from the subscription of ordinary shares by the shareholders in the amount of $1,000 remained outstanding and presented as subscription receivable, a contra-equity account on the consolidated financial statements.

*Statutory Surplus Reserves and Restricted Net Assets*

Pursuant to laws applicable to entities incorporated in the PRC, the Company is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC ("PRC GAAP"). Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entity's registered capital. Appropriations to the discretionary surplus reserve are made at the discretion of the board of directors. As of June 30, 2022 and December 31, 2021, the Company did not have a discretionary surplus reserve.

---

| |
|:---|
| F-41 |
| *[**Table of Contents**](#fstoc)* |

---

Under PRC laws and regulations, statutory surplus reserves are restricted to set-off against losses, expansion of production and operation and increasing registered capital of the respective company and are not distributable other than upon liquidation. The reserves are not allowed to be transferred to the Company in terms of cash dividends, loans or advances, nor allowed for distributions except under liquidation.

As a result of these PRC laws and regulations and the requirement that distributions by PRC entities can only be paid out of distributable profits computed in accordance with PRC GAAP, the PRC entities are restricted from transferring a portion of their net assets to the Company. The restricted net assets were the total book value of the share capital, additional paid-in capital and statutory reserve which were not allowed to transfer to the shareholders in the forms of dividends. As of June 30, 2022 and December 31, 2021, the restricted amounts as determined pursuant to PRC statutory laws totaled $208,364 and $208,364, respectively, and total restricted net assets amounted to $543,920 and $543,920, respectively.

*Dividends*

The declaration, amount and payment of dividends are subject to (i) compliance with applicable law regarding the declaration and payment of dividends with respect to any year including the establishment of the statutory reserve fund and (ii) the absence of any adverse effect on our business plan for the current or subsequent fiscal year as a result of the payment of any dividend.

Dividends are paid from the Company's distributable earnings in RMB. Dividends are expected to be made payable in cash and in one or more payments as determined in the relevant ordinary shareholders' meeting approving dividends.

In the six months ended June 30, 2021, Shenzhen Xindesheng, one of the Company's PRC subsidiaries, announced dividends of $1,070,979, in respect of January to December 2020, which were fully paid to the former shareholders of Shenzhen Xindesheng, Shanghai Zhongchuang Asset Management Co., Ltd. ("Shanghai Zhongchuang") and Mr. Xiaowei Wang. The excessive distributions were $1,070,979. The Company and the two shareholders reached agreements to treat the excessive distributions as interest-free loans lent to shareholders required to be fully paid to Shenzhen Xindesheng by June 30, 2022.The interest-free loans were fully repaid by Shanghai Zhongchuang and Xiaowei Wang on June 29, 2022.

The revised profit distributions were nil in the six months ended June 30, 2022 and 2021, respectively.

*Acquisitions of Beihai Beiming and Suzhou GoodFaith*

As described in Note 1- Reorganization, the Company completed two acquisitions under common control in 2021. On September 1, 2021, the Company acquired a 100% equity interest in Beihai Beiming with a consideration of RMB10,800,000 ($1,669,836), and the consideration was fully paid in 2021. On December 31, 2021, the Company acquired a 100% equity interest in Suzhou GoodFaith with a consideration of RMB1,300,000 ($203,899), and the consideration was paid in January 2022 and recorded in Due to related parties as of December 31, 2021.

The acquisitions were accounted for as a reorganization of entities under common control in a manner similar to a pooling of interest using historical cost in accordance with ASC 805-50-25-2B. As a result of the reorganization, the acquirees' assets and liabilities have been presented as "combined" with the Company at their carrying values as though the transaction occurred at the beginning of the periods presented, and the considerations were recorded with an offsetting adjustment to equity in the consolidated statements of equity.

**NOTE 11. RELATED PARTY TRANSACTIONS**

The following is a list of related parties which the Company has transactions with:

---

| | | |
|:---|:---|:---|
| **No.** | **Name of Related Parties** | **Relationship** |
| 1 | Shanghai Beiming Data Technology Co., Ltd. ("Beiming Data") | Controlled by Kai Zhou |
| 2 | Shanghai Hicore Information Technology Co., Ltd. ("Shanghai Hicore") | Controlled by Kai Zhou |
| 3 | Shanghai Yuanjin Information Technology Co., Ltd. ("Shanghai Yuanjin") | Controlled by Kai Zhou |
| 4 | Shanghai Mingzong Information Technology Co., Ltd. ("Shanghai Mingzong") | Controlled by Kai Zhou |
| 5 | Shanghai Zhongchuang Asset Management Co., Ltd. ("Shanghai Zhongchuang) | Controlled by Kai Zhou |
| 6 | Zhongchuang Investment Management Co., Ltd. ("Zhongchuang Investment") | Controlled by Kai Zhou |
| 7 | Shenzhen Ourui Consulting Co., Ltd. ("Shenzhen Ourui") | Controlled by a former employee of Shenzhen Xindesheng, who left the Company in January 2022 |
| 8 | Xiaofeng Fei | 5% shareholder, who acts in concert with Kai Zhou |
| 9 | Xiaowei Wang | 29.2% shareholder, and CEO |
| 10 | Yueping Yin | CEO's wife |
| 11 | Xu Dai | 6% shareholder, and Chairman |
| 12 | Other minority shareholders | Collectively represent 14.5% shareholders |

---

---

| |
|:---|
| F-42 |
| *[**Table of Contents**](#fstoc)* |

---

The following represented related party balances as of June 30, 2022 and December 31, 2021:

---

| | | | |
|:---|:---|:---|:---|
|  |  | **As of**  | **As of**  |
|  |  | **June 30,**<br> **2022**<br> **(unaudited)** | **December 31,**<br> **2021**<br> **(audited)** |
| **Accounts receivable** | **Nature** |  |  |
| Shanghai Yuanjin | Pre-approval risk management service | $63957 | $51933 |
| Shanghai Hicore | Pre-approval risk management service | 1456 | - |
|  |  | $65413 | $51933 |
| **Accounts payable** |  |  |  |
| Beiming Data | Data service | $8016 | $729975 |
| Shenzhen Ourui | Outsourcing service | 2148284 | 346292 |
| Shanghai Yuanjin | Data service | 165307 | 75456 |
| Shanghai Hicore | Data service | 27236 | 12157 |
|  |  | 2348843 | 1163880 |

---

---

| | | | |
|:---|:---|:---|:---|
|  |  | **As of** | **As of** |
|  |  | **June 30,**<br> **2022**<br> **(unaudited)** | **December 31,**<br> **2021**<br> **(audited)** |
| **Due from related parties** |  |  |  |
| Beiming Data<sup>(1)</sup> | Loan | $40105 | $42123 |
| Shenzhen Ourui<sup>(2)</sup> | Loan |  | 80422 |
| Shanghai Zhongchuang<sup>(3)</sup> | Loan |  | 836672 |
| Xiaowei Wang<sup>(3)</sup> | Loan |  | 803861 |
| Yueping Yin | Cash advance | 217 | - |
|  |  | $40322 | $1763078 |

---

---

| | | | |
|:---|:---|:---|:---|
|  |  | **As of** | **As of** |
|  |  | **June 30,**<br> **2022**<br> **(unaudited)** | **December 31,**<br> **2021**<br> **(audited)** |
| **Due from related parties-non current** |  |  |  |
| Beiming Data<sup>(4)</sup> | Long-term deposit | $298668 | $313691 |
|  |  | $298668 | $313691 |
| **Due to related parties** |  |  |  |
| Shanghai Hicore<sup>(5)</sup> | Rent/IT service | $138402 | $168975 |
| Zhongchuang Investment<sup>(6)</sup> | IPO costs paid on behalf of the Company | 883791 | 681545 |
| Xiaofeng Fei<sup>(7)(8)</sup> | Loan/Equity transfer consideration | 1657607 | 1639647 |
| Xiaowei Wang<sup>(7)</sup> | Reimbursement/Equity consideration | 867 | 50254 |
| Yueping Yin | Reimbursement |  | 432 |
| Xu Dai<sup>(7)</sup> | Equity consideration |  | 12234 |
| Other minority shareholders<sup>(7)</sup> | Equity consideration | - | 29565 |
|  |  | $2680667 | $2582652 |

---

---

| |
|:---|
| F-43 |
| *[**Table of Contents**](#fstoc)* |

---

(1) The loan to Beiming Data was used for Beiming Data's daily business activities. The loan was interest free, and the loan term was from May 1, 2017 to December 31, 2022. The unsettled balances of loan payments from Beiming Data were $40,105 and $42,123 as of June 30, 2022 and December 31, 2021, respectively. Pursuant to the agreement between Beiming Data and the Company, the unsettled balance as of June 30, 2022 will be due on December 31, 2022.

(2) In July 2021, the Company provided a loan of RMB500,000 ($78,423) to Shenzhen Ourui for its daily operation with an annual interest rate of 6%. The principal and interest of the loan was not recovered as of December 31, 2021. The loan principal and interest were fully repaid on June 22, 2022.

(3) In 2019, 2020, and 2021, Shenzhen Xindesheng, one of the Company's PRC subsidiaries, announced dividends of $363,229, $652,408 and $1,329,754, respectively, to its former shareholders, Shanghai Zhongchuang and Mr. Xiaowei Wang. Shenzhen Xindesheng, in these dividend distributions in the three years, distributed an excess of $1,640,533 ($211,481, $76,744 and $1,352,308, respectively) to its former shareholders, which excessive distributions have been deemed as free-interest loans to the two former shareholders. As of December 31, 2021, the loan receivables from Shanghai Zhongchuang was $836,672, and the loan receivables from Xiaowei Wang was $803,861, respectively. On June 29, 2022, Shanghai Zhongchuang and Xiaowei Wang fully repaid their interest-free loans.

(4) The Company has a long-term deposit in Beiming Data since the fiscal year 2019 in the course of purchasing service provided by Beiming Data, and the deposit is expected to be collected on September 30, 2025 pursuant to the agreement between Beiming Data and the Company.

(5) As of June, 2022, the unsettled balance of IT service fees was $67,200, and rent payable was $71,202. As of December 31, 2021, the unsettled balance of IT service fees was $141,161, and rent payable was $27,814.

(6) Zhongchuang Investment paid IPO cost of $211,260 and $681,545 on behalf of the Company for the six months ended June 30, 2022 and the year ended December 31, 2021. Pursuant to the agreement between Zhongchuang Investment and the Company, the cash advance was interest-free and the repayment term is to be mutually agreed by both parties.

(7) On December 31, 2021, 100% equity interest of Suzhou GoodFaith was transferred from Ultimate Shareholders to GoodFaith WFOE. The consideration payable to Xiaofeng Fei, Xiaowei Wang, Xu Dai, and other minority shareholders were $102,561, $49,344, $12,234 and $29,565, respectively. The consideration was fully paid in January 2022.

(8) In 2021, the Company received an interest-free loan of $1,693,932 from Xiaofeng Fei for the purpose of restructuring. The Company repaid $156,846 to Xiaofeng Fei in December 2021. In order to pay the consideration to the Ultimate Shareholders, GoodFaith WFOE received an interest-free loan of $200,732 from Xiaofeng Fei in January 2022. The consideration of the transfer of equity interest of Suzhou GoodFaith payable to Xiaofeng Fei was $102,561, and the Company repaid $102,561 of equity transfer consideration to Xiaofeng Fei in January 2022. The unsettled balances of $1,657,607 as of June 30, 2022 were fully repaid to Xiaofeng Fei on July 15, 2022.

---

| | | | |
|:---|:---|:---|:---|
|  |  | **For the six months ended** <br> **June 30,** | **For the six months ended** <br> **June 30,** |
|  |  | **2022**<br> **(unaudited)** | **2021**<br> **(unaudited)** |
| **Revenue** | **Nature** |  |  |
| Shanghai Yuanjin | Pre-approval risk management revenue | $14156 | $84365 |
| Shanghai Hicore | Pre-approval risk management revenue | 1420 | - |
|  |  | $15576 | $84365 |

---

---

| | | | |
|:---|:---|:---|:---|
|  |  | **For the six months ended** <br> **June 30,** | **For the six months ended** <br> **June 30,** |
|  |  | **2022**<br> **(unaudited)** | **2021**<br> **(unaudited)** |
| **Cost of revenue** | **Nature** |  |  |
| Beiming Data | Data service costs | $587955 | $436657 |
| Shenzhen Ourui | Outsourcing service fees | 3180980 | 225516 |
| Shanghai Yuanjin | Data service costs | 120045 | 82312 |
| Shanghai Hicore | IT service costs | - | 65618 |
| Shanghai Hicore | Data service costs  | -  | 70255 |
|  |  | $3888980 | $880358 |

---

---

| |
|:---|
| F-44 |
| *[**Table of Contents**](#fstoc)* |

---

**<u>Other related party transactions</u>**

---

| | | | |
|:---|:---|:---|:---|
|  | **Nature** | **For the six months ended** <br> **June 30,** | **For the six months ended** <br> **June 30,** |
|  | **Nature** | **2022**<br> **(unaudited)** | **2021**<br> **(unaudited)** |
| Beiming Data | Loan repayment to a related party | $- | $177752 |
| Beiming Data | Loan proceeds from a related party | - | 30913 |
| Shenzhen Ourui | Loan proceeds from a related party | 77205 | - |
| Shanghai Zhongchuang | Loan proceeds from a related party | 823676 | - |
| Xiaowei Wang | Loan proceeds from a related party | 791375 | - |
| Shanghai Hicore | Rent paid to a related party | 67542 | 77779  |
| Shanghai Mingzong | Service fee paid to a related party | 4909 | 8421 |
| Zhongchuang Investment | Advance payment for IPO costs on behalf of the Company | 211260 | 464429 |
| Xiaofeng Fei | Loan from a related party | 200732 | - |

---

**NOTE 12. CONCENTRATION OF CREDIT RISK**

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of accounts receivable. The Company conducts credit evaluations of its customers, and generally does not require collateral or other security from them. The Company evaluates its collection experience and long outstanding balances to determine the need for an allowance for doubtful accounts. The Company conducts periodic reviews of the financial condition and payment practices of its customers to minimize collection risk on accounts receivable.

The following table sets forth a summary of single customers who represent 10% or more of the Company's total revenue.

---

| | | |
|:---|:---|:---|
|  | **For the six months ended** <br> **June 30,** | **For the six months ended** <br> **June 30,** |
|  | **2022**<br> **(unaudited)** | **2021**<br> **(unaudited)** |
| Percentage of the Company's revenue |  |  |
| Customer A | 79% | 47% |
| Customer B | \*% | 11% |
| Customer C | \*% | 18% |

---

The following table sets forth a summary of single customers who represent 10% or more of the Company's total accounts receivable:

---

| | | |
|:---|:---|:---|
|  | **As of**  | **As of**  |
|  | **June 30,**<br> **2022**<br> **(unaudited)** | **December 31,**<br> **2021**<br> **(audited)** |
| Percentage of the Company's accounts receivable |  |  |
| Customer A | 70% | 37% |
| Customer B | \*% | 26% |

---

---

| |
|:---|
| F-45 |
| *[**Table of Contents**](#fstoc)* |

---

The following table sets forth a summary of single suppliers who represent 10% or more of the Company's total purchases:

---

| | | |
|:---|:---|:---|
|  | **For the six months ended** <br> **June 30,** | **For the six months ended** <br> **June 30,** |
|  | **2022**<br> **(unaudited)** | **2021**<br> **(unaudited)** |
| Percentage of the Company's purchase |  |  |
| Supplier H | 27% | \* |
| Supplier C | 14% | \* |
| Supplier I | 12% | \* |
| Supplier J | 11% | \* |
| Supplier A | \* | 18% |
| Supplier B | \* | 12% |

---

The Company mainly purchased outsourced management service, outsourced labor service, and data service from its suppliers. The total purchase amount recorded in cost of revenue and operating expenses was $11,817,259 and $2,385,102 for the six months ended June 30, 2022 and 2021, respectively.

The following table sets forth a summary of single customers who represent 10% or more of the Company's total accounts payable:

---

| | | |
|:---|:---|:---|
|  | **As of**  | **As of**  |
|  | **June 30,**<br> **2022**<br> **(unaudited)** | **December 31,**<br> **2021**<br> **(audited)** |
| Percentage of the Company's accounts payable |  |  |
| Supplier H | 28% | 15% |
| Supplier I | 18% | \* |
| Supplier C | 17% | 17% |
| Supplier J | 10% | \*% |
| Supplier A | \* | 32% |
| Supplier B | \* | 12% |

---

\*Represent percentage less than 10%

**NOTE 13. COMMITMENTS AND CONTINGENCIES**

*Lease Commitments*

The Company leases certain office premises under non-cancellable leases. Rent expenses under operating leases for the six months ended June 30, 2022 and 2021 were approximately $166,900 and $211,300, respectively.

The total future minimum lease payments under the non-cancellable operating lease with respect to the office as of June 30, 2022 are payable as follows:

---

| | |
|:---|:---|
|  | **Lease**<br> **Commitment** |
| Remaining 2022 | $262847 |
| 2023 | 218707 |
| 2024 | 89428 |
| 2025 and thereafter | 23789 |
| Total | $594771 |

---

*Contingencies*

In the ordinary course of business, the Company may be subject to legal proceedings regarding contractual and employment relationships and a variety of other matters. The Company records contingent liabilities resulting from such claims, when a loss is assessed to be probable and the amount of the loss is reasonably estimable. In the opinion of management, there were no pending or threatened claims and litigation as of June 30, 2022 and through the issuance date of these unaudited condensed consolidated financial statements.

*Risks in relation to the outsourcing management service*

With the rapid expansion and growth of our post-loan delinquent debt collection business since 2021, we are shortlisted by three PRC commercial banks and top online consumer finance companies as their preferred service provider and we are their trusted business partner in delinquent credit loan debt collection. This in turn has enabled us to acquire more business and facilitated our deeper cooperation with our clients.

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| |
|:---|
| F-46 |
| *[**Table of Contents**](#fstoc)* |

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In order to provide better service for our increased business volume, we have not only expanded the number of our operating centers, but also engaged several contractor partners for closer cooperation and partnerships since 2021. Highly experienced and familiar with local customs, contractor partners are helpful in implementing our delinquent credit loan debt collection, where they are engaged to supervise daily operations, enhance compliance practices, and develop local talent teams for our branches and subsidiaries. We shared operating profits or losses derived from a branch or subsidiary with the responsible contractor therefrom based on a pre-determined fixed sharing ratio. The following table sets forth a summary of contractor details and the corresponding profit/loss sharing ratios.

---

| | | |
|:---|:---|:---|
| **Contractor Name** | **Branch/Subsidiary**  | **Profit/loss sharing ratio (Company:contractor)** |
| Kai Shun Sheng Shi Information Consulting Service Department | Jinan | 40%:60% |
| Juxin Shengda Information Consulting Service Department | Guiyang | 50%:50% |
| Sheng Ju Yuan Information Consulting Service Department | Shenyang | 30%:70% |
| Xinsheng Yuanxin Information Consulting Service Department | Chengdu | 50%:50% |
| Zhong Hui Xin Information Consulting Service Department | Jiujiang | 30%:70% |
| Zhuochao Information Consulting Service Department | Huizhou | 70%:30% |
| Hongteng Information Consulting Service Department | Henan | 50%:50% |
| Shenzhen Baichuilian Technology Co., Ltd.("Shenzhen Baichuilian") | Shenzhen office II | 50%:50% |
| Shenzhen Ourui | Shenzhen office III | 50%:50% |
| Xintai Jinrong Enterprise Management Center("Xintai Jinrong") | Tai'an | 85%:15% |

---

Except that Shenzhen Baichuilian and Shenzhen Ourui are enterprises, the remaining of above listed contractor partners are self-employed individuals. We had terminated our cooperation with Shenzhen Baichuilian since June 30, 2021. Our cooperation with Xintai Jinrong began in April 2022. The total outsourcing management service fee was $9,166,230 and $1,014,993 for the six months ended June 30, 2022 and 2021, which was recorded in the cost of revenue in the consolidated income statement.

We intend to continue our cooperation with existing contractors in the foreseeable future and deliver quality service and better collection results to meet our clients' expectation.

**NOTE 14. SUBSEQUENT EVENTS**

The Company evaluated subsequent events and transactions that occurred after the balance sheet date through March 30, 2023, the issuance date of the unaudited condensed consolidated financial statements, with the exception of those matters discussed in Note 8 and Note 11, the following subsequent events required additional disclosure in these unaudited condensed consolidated financial statements.

On March 17, 2023, 10,000,000 new ordinary shares were issued to existing shareholders. As a result, the Company had 500,000,000 authorized ordinary shares, par value $0.0001 per share, of which 20,000,000 were issued and outstanding as of the date of the prospectus.

On January 16, 2023, the Company provided a loan of RMB2,000,000 ($289,969) to Shanghai Jincan Technology Co., Ltd., a third party, for its business operation with an annual interest rate of 6% from January 16, 2023 to March 16, 2023. The loan principal and interest were fully repaid on March 2, 2023.

On February 16, 2023, the Company terminated the engagement letter with Network 1 Financial Securities, Inc. ("Network 1"), which was signed on March 15, 2021 and extended on March 31, 2022. As of March 30, 2023, the Company had paid a total of $75,000 and no payable balance to Network 1. On March 21, 2023, the Company entered into an underwriter agreement with Alliance Global Partners ("A.G.P.") in connection with the offering, which was later amended on March 25, 2023. According to the amended agreement, the Company will pay A.G.P. an underwriting discount or spread of 7.5% of the offering. The Company have agreed to reimburse the underwriters for accountable legal expenses not to exceed $175,000 and non-accountable expenses not to exceed 0.5% of the aggregate gross proceeds of this offering.

---

| |
|:---|
| F-47 |
| *[**Table of Contents**](#fstoc)* |

---

Until [●], 2023 (the 25th day after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.*3,000,000 Ordinary Shares*![](goodfaith_f1img31.jpg)**GOODFAITH TECHNOLOGY INC.**______________________________**PROSPECTUS**______________________________**A.G.P**Prospectus dated [●], 2023 

*[**Table of Contents**](#toc)*

**PART II**

**INFORMATION NOT REQUIRED IN PROSPECTUS**

**ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.**

The Cayman Islands law does not limit the extent to which a company's amended and restated memorandum and 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 articles of association, which will become effective upon or before completion of this offering, provide that, 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:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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)'s, secretary's, or officer's duties, powers, authorities or discretions; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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 secretary, or any of our officers in respect of any matter identified in above on condition that the secretary, or officer must repay the amount paid by us to the extent that it is ultimately found not liable to indemnify the secretary or that officer for those legal costs.

Pursuant to indemnification agreements, the form of which will be filed as Exhibit 10.2 to this registration statement, we will agree to indemnify our directors and officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being such a director or officer.

The Underwriting Agreement, the form of which will be filed as Exhibit 1.1 to this registration statement, will also provide for indemnification of us and our officers and directors.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

**ITEM 7. RECENT SALES OF UNREGISTERED SECURITIES.**

Set forth below is the information regarding share capital issued by us during the past three years. None of the below described transactions involved any underwriter, underwriting discounts or commissions, or any public offering. The issuances below were not registered under the Securities Act. We believe that the following offers, sales and issuances of the securities were exempt from registration (a) under Section 4(a)(2) of the Securities Act and the rules and regulations promulgated thereunder (including Regulation D and Rule 506), in that the transactions were between an issuer and sophisticated investors or members of its senior executive management and did not involve any public offering within the meaning of Section 4(a)(2), (b) under Regulation S promulgated under the Securities Act in that offers, sales and issuances were not made to persons in the United States and no directed selling efforts were made in the United States, or (c) under Rule 701 promulgated under the Securities Act in that the transactions were underwritten compensatory benefit plans or written compensatory contracts.

---

| | | | |
|:---|:---|:---|:---|
| **Securities/Purchaser** | **Date of Issuance** | **Number of** <br> **Securities\*** | **Consideration** |
| **Ordinary Shares\*\*** |  |  |  |
| Qearl's Holdings Limited  | May 13, 2021  | 5030000 \* | $503 |
| Gread Cause Holdings Limited  | May 13, 2021 | 2920000 | $292 |
| Cloud Light Holdings Limited  | May 13, 2021  | 600000 | $60 |
| Yieldfilled Holdings Limited  | May 13, 2021 | 480000 | $48 |
| Litu Holdings Limited  | May 13, 2021 | 470000 | $47 |
| PeggyGF Holdings Limited  | May 13, 2021 | 300000 | $30 |
| MLGF Holdings Limited  | May 13, 2021 | 200000 | $20 |
| Qearl's Holdings Limited  | March 17, 2023  | 4730000 | $473 |
| Gread Cause Holdings Limited  | March 17, 2023  | 2920000 | $292 |
| Cloud Light Holdings Limited  | March 17, 2023  | 600000 | $60 |
| Yieldfilled Holdings Limited  | March 17, 2023  | 480000 | $48 |
| Litu Holdings Limited  | March 17, 2023  | 470000 | $47 |
| PeggyGF Holdings Limited  | March 17, 2023  | 300000 | $30 |
| MLGF Holdings Limited  | March 17, 2023  | 200000 | $20 |
| Xiaoming Li | March 17, 2023 | 300000 | $30 |

---

**\*** On May 20, 2022, Qearl's Holdings Limited transferred 300,000 of the Ordinary Shares to Xiaoming Li with a total consideration of $30, representing 3% of the equity interest in GoodFaith Technology Inc.

---

| |
|:---|
| II-1 |
| *[**Table of Contents**](#toc)* |

---

**ITEM 8. *EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.***

**(a) Exhibits**

See Exhibit Index beginning on page II-5 of this registration statement.

**(b) Financial Statement Schedules**

Schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the Consolidated Financial Statements or the Notes thereto.

**ITEM 9. *UNDERTAKINGS.***

The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described in Item 6, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant under Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) For the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) For the purpose of determining any liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

---

| |
|:---|
| II-2 |
| *[**Table of Contents**](#toc)* |

---

**SIGNATURES**

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Shanghai, People's Republic of China, on March 30, 2023.

---

| | |
|:---|:---|
| **GoodFaith Technology Inc.**  | **GoodFaith Technology Inc.**  |
| By: | */s/ Xiaowei Wang* |
|  | Xiaowei Wang |
|  | Chief Executive Officer  |
|  | (Principal Executive Officer) |

---

**Power of Attorney**

Each person whose signature appears below constitutes and appoints each of Xiaowei Wang and Yulin Dong as attorneys-in-fact with full power of substitution, for him or her in any and all capacities, to do any and all acts and all things and to execute any and all instruments which said attorney and agent may deem necessary or desirable to enable the registrant to comply with the Securities Act, and any rules, regulations, and requirements of the Securities and Exchange Commission thereunder, in connection with the registration under the Securities Act of ordinary shares of the registrant, including, without limitation, the power and authority to sign the name of each of the undersigned in the capacities indicated below to the Registration Statement on Form F-1 (the "Registration Statement") to be filed with the Securities and Exchange Commission with respect to such Shares, to any and all amendments or supplements to such Registration Statement, whether such amendments or supplements are filed before or after the effective date of such Registration Statement, to any related Registration Statement filed pursuant to Rule 462(b) under the Securities Act, and to any and all instruments or documents filed as part of or in connection with such Registration Statement or any and all amendments thereto, whether such amendments are filed before or after the effective date of such Registration Statement; and each of the undersigned hereby ratifies and confirms all that such attorney and agent shall do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

---

| | | |
|:---|:---|:---|
| **Signature** | **Title** | **Date** |
| */s/ Xiaowei Wang* | Chief Executive Officer | March 30, 2023 |
| Name: Xiaowei Wang | (Principal Executive Officer) |  |
| */s/ Yulin Dong* | Chief Financial Officer | March 30, 2023 |
| Name: Yulin Dong | (Principal Accounting and Financial Officer) |  |
| */s/Xu Dai* | Chairman of the Board and Director | March 30, 2023 |
| Name: Xu Dai |  |  |
| */s/ Ting Kong* | Director | March 30, 2023 |
| Name: Ting Kong |  |  |

---

---

| |
|:---|
| II-3 |
| *[**Table of Contents**](#toc)* |

---

**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 GoodFaith Technology Inc., has signed this registration statement thereto in New York, NY on March 30, 2023.

---

| | |
|:---|:---|
| Cogency Global Inc. | Cogency Global Inc. |
| Authorized U.S. Representative | Authorized U.S. Representative |
| By: | */s/ Colleen A. De Vries* |
| Name:  | Colleen A. De Vries |
| Title:  | Senior Vice-President on behalf of Cogency Global Inc. |

---

---

| |
|:---|
| II-4 |
| *[**Table of Contents**](#toc)* |

---

**EXHIBIT INDEX**

---

| | |
|:---|:---|
| **Description** |  |
| 1.1\*\* | Form of Underwriting Agreement |
| 3.1\*\* | Amended and Restated Memorandum and Articles of Association |
| [4.1\*](goodfaith_ex41.htm) | [Specimen Certificate for Ordinary Shares](goodfaith_ex41.htm) |
| 4.2\*\* | Form of the Representative's Warrant |
| 5.1\*\* | Opinion of Maples and Calder (Hong Kong) LLP regarding the validity of the Ordinary Shares being registered |
| 5.2\*\* | Opinion of Hunter Taubman Fischer & Li LLC regarding the enforceability of the Representative's Warrants |
| 5.3\*\* | Opinion of AllBright Law Offices regarding PRC regulations |
| 8.1\*\* | Opinion of AllBright Law Offices regarding certain PRC tax matters (included in Exhibit 5.3) |
| 8.2\*\* | Opinion of Maples and Calder (Hong Kong) LLP regarding certain Cayman Islands tax matters (included in Exhibit 5.1) |
| 10.1\* | Form of Employment Agreement by and between executive officers and the Registrant |
| [10.2\*](goodfaith_ex102.htm) | [Form of Indemnification Agreement with the Registrant's directors and officers](goodfaith_ex102.htm) |
| [10.3\*](goodfaith_ex103.htm) | [Form of Director Offer Letter between the Registrant and its directors](goodfaith_ex103.htm) |
| [10.4\*](goodfaith_ex104.htm) | [Form of Risk Modeling Service Contract by and between the Registrant and its customers](goodfaith_ex104.htm) |
| [10.5\*](goodfaith_ex105.htm) | [Form of Debt Collection Service Contract by and between the Registrant and its customers](goodfaith_ex105.htm) |
| [10.6\*](goodfaith_ex106.htm) | [Strategic Cooperation Agreement dated September 2, 2020 by and between the Research Center on Virtual Economy & Data Science of Chinese Academy of Sciences in China and the Registrant](goodfaith_ex106.htm) |
| [21.1\*](goodfaith_ex211.htm) | [Subsidiaries](goodfaith_ex211.htm) |
| [23.1\*](goodfaith_ex231.htm) | [Consent of UHY LLP](goodfaith_ex231.htm) |
| 23.2\*\* | Consent of Maples and Calder (Hong Kong) LLP (included in Exhibit 5.1) |
| 23.3\*\* | Consent of AllBright Law Offices (included in Exhibit 5.3) |
| 23.4\*\* | Consent of Hunter Taubman Fischer & Li LLC (included in Exhibit 5.2) |
| [23.5\*](goodfaith_ex235.htm) | [Consent of Ince & Co](goodfaith_ex235.htm) |
| 24.1\* | Powers of Attorney (included on signature page) |
| [99.1\*](goodfaith_ex991.htm) | [Code of Business Conduct and Ethics of the Registrant](goodfaith_ex991.htm) |
| [99.2\*](goodfaith_ex992.htm) | [Consent of Frost & Sullivan](goodfaith_ex992.htm) |
| [99.3\*](goodfaith_ex993.htm) | [Consent of Joel Gallo](goodfaith_ex993.htm) |
| [99.4\*](goodfaith_ex994.htm) | [Consent of Borys Priadko](goodfaith_ex994.htm) |
| 99.5\*\* | Consent of Chunyi (Charlie) Hao |
| [107\*](goodfaith_ex107.htm) | [Filing Fee Table](goodfaith_ex107.htm) |

---

\* Filed herewith <br> \*\* To be filed by amendment

## Exhibit 4.1

**EXHIBIT 4.1**

**Share Certificate**

Certificate Number Number of Shares <br>    

**GoodFaith Technology Inc.** 

**Incorporated in the Cayman Islands under the Companies Act (as Revised)**

**Authorized Share Capital is US$50,000 divided into 500,000,000 Ordinary Shares of a par value of US$0.0001 each**

This certifies that [Name] of [Address] is the registered holder of [Number] Ordinary Shares fully paid and non-assessable, subject to the Memorandum and Articles of Association of the Company.

[Transfer date]

Director Director/ Secretary <br>

## Exhibit 10.2

**EXHIBIT 10.2**

**INDEMNIFICATION**

**AGREEMENT**

This Indemnification Agreement (this "<u>Agreement</u>") is entered into as of [DATE] by and between GoodFaith Technology Inc., a Cayman Islands company (the "<u>Company</u>"), and the undersigned, a director and/or an officer of the Company ("<u>Indemnitee</u>"), as applicable.

**RECITALS**

The Board of Directors of the Company (the "<u>Board of Directors</u>") has determined that the inability to attract and retain highly competent persons to serve the Company is detrimental to the best interests of the Company and its shareholders and that it is reasonable and necessary for the Company to provide adequate protection to such persons against risks of claims and actions against them arising out of their services to the corporation.

**AGREEMENT**

In consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

A. DEFINITIONS

The following terms shall have the meanings defined below:

***Expenses*** shall include, without limitation, damages, judgments, fines, penalties, settlements and costs, attorneys' fees and disbursements and costs of attachment or similar bond, investigations, and any other expenses paid or incurred in connection with investigating, defending, being a witness in, participating in (including on appeal), or preparing for any of the foregoing in, any Proceeding.

***Indemnifiable Event*** means any event or occurrence that takes place either before or after the execution of this Agreement, related to the fact that Indemnitee is or was a director or an officer of the Company, or is or was serving at the request of the Company as a director or officer of another corporation, partnership, joint venture or other entity, or related to anything done or not done by Indemnitee in any such capacity, including, but not limited to neglect, breach of duty, error, misstatement, misleading statement or omission.

***Participant*** means a person who is a party to, or witness or participant (including on appeal) in, a Proceeding.

***Proceeding*** means any threatened, pending, or completed action, suit, arbitration or proceeding, or any inquiry, hearing or investigation, whether civil, criminal, administrative, investigative or other, including appeal, in which Indemnitee may be or may have been involved as a party or otherwise by reason of an Indemnifiable Event.

B. AGREEMENT TO INDEMNIFY

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>General Agreement</u>. In the event Indemnitee was, is, or becomes a Participant in, or is threatened to be made a Participant in, a Proceeding, the Company shall indemnify the Indemnitee from and against any and all Expenses which Indemnitee incurs or becomes obligated to incur in connection with such Proceeding, to the fullest extent permitted by applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Indemnification of Expenses of Successful Party</u>. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits in defense of any Proceeding or in defense of any claim, issue or matter in such Proceeding, the Company shall indemnify Indemnitee against all Expenses incurred in connection with such Proceeding or such claim, issue or matter, as the case may be.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Partial Indemnification</u>. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for a portion of Expenses, but not for the total amount of Expenses, the Company shall indemnify the Indemnitee for the portion of such Expenses to which Indemnitee is entitled.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>No Employment Rights</u>. Nothing in this Agreement is intended to create in Indemnitee any right to continued employment with the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Contribution</u>. If the indemnification provided in this Agreement is unavailable and may not be paid to Indemnitee for any reason other than those set forth in Section B.4, then the Company shall contribute to the amount of Expenses paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in such proportion as is appropriate to reflect (i) the relative benefits received by the Company on the one hand and by the Indemnitee on the other hand from the transaction or events from which such Proceeding arose, and (ii) the relative fault of the Company on the one hand and of the Indemnitee on the other hand in connection with the events which resulted in such Expenses, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and of the Indemnitee on the other hand shall be determined by reference to, among other things, the parties' relative intent, knowledge, access to information and opportunity to correct or prevent the circumstances resulting in such Expenses, judgments, fines or settlement amounts. The Company agrees that it would not be just and equitable if contribution pursuant to this Section B.5 were determined by pro rata allocation or any other method of allocation which does not take account of the foregoing equitable considerations.

C. INDEMNIFICATION PROCESS

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Notice and Cooperation by Indemnitee</u>. Indemnitee shall, as a condition precedent to his/her right to be indemnified under this Agreement, give the Company notice in writing as soon as practicable of any claim made against Indemnitee for which indemnification will or could be sought under this Agreement, provided that the delay of Indemnitee to give notice hereunder shall not prejudice any of Indemnitee's rights hereunder, unless such delay results in the Company's forfeiture of substantive rights or defenses. Notice to the Company shall be given in accordance with Section F.7 below. If, at the time of receipt of such notice, the Company has directors' and officers' liability insurance policies in effect, the Company shall give prompt notice to its insurers of the Proceeding relating to the notice. The Company shall thereafter take all necessary and desirable actions to cause such insurers to pay, on behalf of Indemnitee, all Expenses payable as a result of such Proceeding. In addition, Indemnitee shall give the Company such information and cooperation as the Company may reasonably request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Indemnification Payment.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *Advancement of Expenses*. Indemnitee may submit a written request with reasonable particulars to the Company requesting that the Company advance to Indemnitee all Expenses that may be reasonably incurred in advance by Indemnitee in connection with a Proceeding. The Company shall, within 10 business days of receiving such a written request by Indemnitee, advance all requested Expenses to Indemnitee. Any excess of the advanced Expenses over the actual Expenses will be repaid to the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *Reimbursement of Expenses*. To the extent Indemnitee has not requested any advanced payment of Expenses from the Company, Indemnitee shall be entitled to receive reimbursement for the Expenses incurred in connection with a Proceeding from the Company immediately after Indemnitee makes a written request to the Company for reimbursement unless the Company refers the indemnification request to the Reviewing Party in compliance with Section C.2(c) below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) *Determination by the Reviewing Party*. If the Company reasonably believes that it is not obligated under this Agreement to indemnify the Indemnitee, the Company shall, within 10 days after the Indemnitee's written request for an advancement or reimbursement of Expenses, notify the Indemnitee that the request for advancement of Expenses or reimbursement of Expenses will be submitted to the Reviewing Party (as hereinafter defined). The Reviewing Party shall make a determination on the request within 30 days after the Indemnitee's written request for an advancement or reimbursement of Expenses. Notwithstanding anything foregoing to the contrary, in the event the Reviewing Party informs the Company that Indemnitee is not entitled to indemnification in connection with a Proceeding under this Agreement or applicable law, the Company shall be entitled to be reimbursed by Indemnitee for all the Expenses previously advanced or otherwise paid to Indemnitee in connection with such Proceeding; p<u>rovided</u>, <u>however</u>, that Indemnitee may bring a suit to enforce his/her indemnification right in accordance with Section C.3 below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Suit to Enforce Rights</u>. Regardless of any action by the Reviewing Party, if Indemnitee has not received full indemnification within 30 days after making a written demand in accordance with Section C.2 above or 50 days if the Company submits a request for advancement or reimbursement to the Reviewing Party under Section C.2(c) above, Indemnitee shall have the right to enforce its indemnification rights under this Agreement by commencing litigation in any court of competent jurisdiction seeking a determination by the court or challenging any determination by the Reviewing Party or any aspect of this Agreement. Any determination by the Reviewing Party not challenged by Indemnitee and any judgment entered by the court shall be binding on the Company and Indemnitee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Assumption of Defense</u>. In the event the Company is obligated under this Agreement to advance or bear any Expenses for any Proceeding against Indemnitee, the Company shall be entitled to assume the defense of such Proceeding, with counsel approved by Indemnitee, upon delivery to Indemnitee of written notice of its election to do so. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same Proceeding, unless (i) the employment of counsel by Indemnitee has been previously authorized by the Company, (ii) Indemnitee shall have reasonably concluded, based on written advice of counsel, that there may be a conflict of interest of such counsel retained by the Company between the Company and Indemnitee in the conduct of any such defense, or (iii) the Company ceases or terminates the employment of such counsel with respect to the defense of such Proceeding, in any of which events the fees and expenses of Indemnitee's counsel shall be at the expense of the Company. At all times, Indemnitee shall have the right to employ counsel in any Proceeding at Indemnitee's expense.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Defense to Indemnification, Burden of Proof and Presumptions</u>. It shall be a defense to any action brought by Indemnitee against the Company to enforce this Agreement that it is not permissible under this Agreement or applicable law for the Company to indemnify the Indemnitee for the amount claimed. In connection with any such action or any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified under this Agreement, the burden of proving such a defense or determination shall be on the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>No Settlement without Consent</u>. Neither party to this Agreement shall settle any Proceeding in any manner that would impose any damage, loss, penalty or limitation on Indemnitee without the other party's written consent. Neither the Company nor Indemnitee shall unreasonably withhold its consent to any proposed settlement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Company Participation</u>. Subject to Section B.5, the Company shall not be liable to indemnify the Indemnitee under this Agreement with regard to any judicial action if the Company was not given a reasonable and timely opportunity, at its expense, to participate in the defense, conduct and/or settlement of such action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. <u>Reviewing Party.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) For purposes of this Agreement, the Reviewing Party with respect to each indemnification request of Indemnitee that is referred by the Company pursuant to Section C.2(c) above shall be (A) the Board of Directors by a majority vote of a quorum consisting of Disinterested Directors (as hereinafter defined), or (B) if a quorum of the Board of Directors consisting of Disinterested Directors is not obtainable or, even if obtainable, said Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee. If the Reviewing Party determines that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within 10 days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee's entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any Independent Counsel or member of the Board of Directors shall act reasonably and in good faith in making a determination under this Agreement of the Indemnitee's entitlement to indemnification. Any reasonable costs or expenses (including reasonable attorneys' fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee's entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom. "<u>Disinterested</u> Director" means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the determination of entitlement to indemnification is to be made by Independent Counsel, the Independent Counsel shall be selected as provided in this Section C.8(b). The Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board of Directors, in which event the proceeding sentence shall apply), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either event, Indemnitee or the Company, as the case may be, may, within 10 days after such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; *provided*, *however*, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of "<u>Independent Counsel</u>" as defined in Section C.8(d) of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If, within 20 days after submission by Indemnitee of a written request for indemnification, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition a court of competent jurisdiction for resolution of any objection which shall have been made by the Company or Indemnitee to the other's selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel. The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting under this Agreement, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section C.8(b), regardless of the manner in which such Independent Counsel was selected or appointed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In making a determination with respect to entitlement to indemnification hereunder, the Reviewing Party shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with this Agreement, and the Company shall have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption. The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement (with or without court approval), conviction, or upon a plea of *nolo contendere* or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he/she reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his/her conduct was unlawful. For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee's action is based on the records or books of account of the Company and any other corporation, partnership, joint venture or other entity of which Indemnitee is or was serving at the written request of the Company as a director, officer, employee, agent or fiduciary, including financial statements, or on information supplied to Indemnitee by the officers and directors of the Company or such other corporation, partnership, joint venture or other entity in the course of their duties, or on the advice of legal counsel for the Company or such other corporation, partnership, joint venture or other entity or on information or records given or reports made to the Company or such other corporation, partnership, joint venture or other entity by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Company or such other corporation, partnership, joint venture or other entity. In addition, the knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Company or such other corporation, partnership, joint venture or other entity shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement. The provisions of this Section C.8(c) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) "<u>Independent Counsel</u>" means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee's rights under this Agreement. The Company agrees to pay the reasonable fees of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

D. DIRECTOR AND OFFICER LIABILITY INSURANCE

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Good Faith Determination</u>. The Company shall from time to time make the good faith determination whether or not it is practicable for the Company to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the officers and directors of the Company with coverage for losses incurred in connection with their services to the Company or to ensure the Company's performance of its indemnification obligations under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Coverage of Indemnitee</u>. To the extent the Company maintains an insurance policy or policies providing directors' and officers' liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any of the Company's directors or officers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>No Obligation</u>. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain any director and officer insurance policy if the Company determines in good faith that such insurance is not reasonably available in the case that (i) premium costs for such insurance are disproportionate to the amount of coverage provided, or (ii) the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit.

E. NON-EXCLUSIVITY; U.S. FEDERAL PREEMPTION; TERM

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Non-Exclusivity</u>. The indemnification provided by this Agreement shall not be deemed exclusive of any rights to which Indemnitee may be entitled under the Company's current memorandum and articles of association, as may be amended from time to time, applicable law or any written agreement between Indemnitee and the Company (including its subsidiaries and affiliates). The indemnification provided under this Agreement shall continue to be available to Indemnitee for any action taken or not taken while serving in an indemnified capacity even though he/she may have ceased to serve in any such capacity at the time of any Proceeding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>U.S. Federal Preemption</u>. Notwithstanding the foregoing, both the Company and Indemnitee acknowledge that in certain instances, U.S. federal law or public policy may override applicable law and prohibit the Company from indemnifying its directors and officers under this Agreement or otherwise. Such instances include, but are not limited to, the prohibition by the U.S. Securities and Exchange Commission (the "<u>SEC</u>") on indemnification for liabilities arising under certain U.S. federal securities laws. Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the SEC an obligation to submit the question of indemnification to a court in certain circumstances for a determination of the Company's right under public policy to indemnify Indemnitee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Duration of Agreement</u>. All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is an officer and/or a director of the Company (or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise) and shall continue thereafter so long as Indemnitee shall be subject to any Proceeding by reason of his/her former or current capacity at the Company, whether or not he/she is acting or serving in any such capacity at the time any Expense is incurred for which indemnification can be provided under this Agreement. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as an officer and/or a director of the Company or any other enterprise at the Company's request.

F. MISCELLANEOUS

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Amendment of this Agreement</u>. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by the parties hereto. No waiver of any of the provisions of this Agreement shall operate as a waiver of any other provisions (whether or not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided in this Agreement, no failure to exercise or any delay in exercising any right or remedy shall constitute a waiver.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Subrogation</u>. In the event of payment to Indemnitee by the Company under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company to bring suit to enforce such rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Assignment; Binding Effect</u>. Neither this Agreement nor any of the rights or obligations hereunder may be assigned by either party hereto without the prior written consent of the other party; except that the Company may, without such consent, assign all such rights and obligations to a successor in interest to the Company which assumes all obligations of the Company under this Agreement. Notwithstanding the foregoing, this Agreement shall be binding upon and inure to the benefit of and be enforceable by and against the parties hereto and the Company's successors (including any direct or indirect successor by purchase, merger, consolidation, or otherwise to all or substantially all of the business and/or assets of the Company) and assigns, as well as Indemnitee's spouses, heirs, and personal and legal representatives.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Severability and Construction</u>. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law. The Company's inability, pursuant to a court order, to perform its obligations under this Agreement shall not constitute a breach of this Agreement. In addition, if any portion of this Agreement shall be held by a court of competent jurisdiction to be invalid, void, or otherwise unenforceable, the remaining provisions shall remain enforceable to the fullest extent permitted by applicable law. The parties hereto acknowledge that they each have opportunities to have their respective counsels review this Agreement. Accordingly, this Agreement shall be deemed to be the product of both of the parties hereto, and no ambiguity shall be construed in favor of or against either of the parties hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Counterparts</u>. This Agreement may be executed in two counterparts, both of which taken together shall constitute one instrument.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Governing Law</u>. This agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of New York, without giving effect to conflicts of law provisions thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Notices</u>. All notices, demands, and other communications required or permitted under this Agreement shall be made in writing and shall be deemed to have been duly given if delivered by hand, against receipt, or mailed via postage prepaid, certified or registered mail, return receipt requested, and addressed to the Company at:

GoodFaith Technology Inc.

Attention: Chief Executive Officer

and to Indemnitee at his/her address last known to the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. <u>Entire Agreement</u>. This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof.

(Signature page follows)

IN WITNESS WHEREOF, the parties hereto execute this Agreement as of the date first written above.

**GoodFaith Technology Inc.**

By:

Name:

Title:

**Indemnitee**

Signature:

Name:

[Signature Page to Indemnification Agreement]

## Exhibit 10.3

**EXHIBIT 10.3**

**GoodFaith Technology Inc.**

**1st Floor, Building 5, Lane 55, Chuanhe Road,** 

**Pudong New District, Shanghai, The People's Republic of China, 200135**

[Date]

**Re: <u>Director Offer Letter for an Independent Director</u>**

Dear [Director Nominee Name]

GOODFAITH TECHNOLOGY INC., a Cayman Islands exempt company (the "**Company**"), is pleased to offer you a position as a member of its Board of Directors (the "**Board**"). We believe your background and experience will be a significant asset to the Company and we look forward to your participation on the Board. Should you choose to accept this position as a member of the Board, this letter agreement (the "**Agreement**") shall constitute an agreement between you and the Company and contains all the terms and conditions relating to the services you agree to provide to the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. **<u>Term</u>**. This Agreement is effective upon the effectiveness of the Company's registration statement on Form F-1(the "**Effective Date**"), provided that upon the Effective Date, the Company has included you as insured under its officers and directors insurance policy. Your term as a director shall commence upon the effectiveness of your appointment to the Board. Subject to the Company's memorandum and articles of association, as amended, and the provisions in <u>Section 8</u> below, your term shall continue until your successor is duly elected and qualified. The position shall be up for re-election each year at the annual shareholder's meeting, and upon re-election, the terms and provisions of this Agreement shall remain in full force and effect. Notwithstanding the foregoing, this Agreement may be terminated at any time in accordance with <u>Section 8</u> hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. **<u>Services</u>**. You shall render services as a member of the Board and the Board committees set forth on ***<u>Schedule A</u>*** attached hereto (hereinafter, your "**Duties**"). During the term of this Agreement, you shall attend and participate in such number of meetings of the Board and of the Board committee(s) of which you are a member as are regularly or specially called. You may attend and participate at each such meeting via teleconference, video conference, or in person. You shall consult with the other members of the Board and Board committee(s) as necessary via telephone, electronic mail, or other forms of correspondence.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. **<u>Compensation</u>**. As compensation for your services to the Company, you will receive compensation as set forth on ***<u>Schedule B</u>*** attached hereto (hereinafter, the "**Compensation**") for serving on the Board during your term as a director. You shall be reimbursed for reasonable and approved expenses incurred by you in connection with the performance of your Duties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. **<u>D&O Insurance Policy</u>**. During the term under this Agreement, the Company shall include you as an insured under its officers and directors insurance policy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. **<u>No Assignment</u>**. Because of the personal nature of the services to be rendered by you, this Agreement may not be assigned by you.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. **<u>Confidential Information; Non-Disclosure</u>**. In consideration of your access to certain Confidential Information (as defined below) of the Company, in connection with your business relationship with the Company, you hereby represent and agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. **<u>Definition</u>**. For purposes of this Agreement, the term "Confidential Information" means:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. Any information which the Company possesses that has been created, discovered, or developed by or for the Company, and which has or could have commercial value or utility in the business in which the Company is engaged; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. Any information which is related to the business of the Company and is generally not known by non-Company personnel.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. Confidential Information includes, without limitation, trade secrets and any information concerning services provided by the Company, concepts, ideas, improvements, techniques, methods, research, data, know-how, software, formats, marketing plans, and analyses, business plans and analyses, strategies, forecasts, customer and supplier identities, characteristics and agreements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. **<u>Exclusions</u>**. Notwithstanding the foregoing, the term "Confidential Information" shall not include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. Any information which becomes generally available to the public other than as a result of a breach of the confidentiality portions of this Agreement, or any other agreement requiring confidentiality between the Company and you;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. Information received from a third party in rightful possession of such information who is not restricted from disclosing such information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. Information known by you prior to receipt of such information from the Company, which prior knowledge can be documented.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. **<u>Documents</u>**. You agree that, without the express written consent of the Company, you will not remove from the Company's premises, any notes, formulas, programs, data, records, machines, or any other documents or items which in any manner contain or constitute Confidential Information, nor will you make reproductions or copies of same. You shall promptly return any such documents or items, along with any reproductions or copies, to the Company upon the earliest of Company's demand, termination of this Agreement, or your termination or Resignation, as defined in <u>Section 8</u> herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. **<u>Confidentiality</u>**. You agree that you will hold in trust and confidence all Confidential Information and will not disclose to others, directly or indirectly, any Confidential Information or anything relating to such information without the prior written consent of the Company, except as maybe necessary in the course of your business relationship with the Company. You further agree that you will not use any Confidential Information without the prior written consent of the Company, except as may be necessary in the course of your business relationship with the Company, and that the provisions of this paragraph (d) shall survive termination of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. **<u>Ownership</u>**. You agree that Company shall own all right, title, and interest (including patent rights, copyrights, trade secret rights, mask work rights, trademark rights, and all other intellectual and industrial property rights of any sort throughout the world) relating to any and all inventions (whether or not patentable), works of authorship, mask works, designations, designs, know-how, ideas, and information made or conceived or reduced to practice, in whole or in part, by you during the term of this Agreement and that arise out of your Duties (collectively, "**Inventions**") and you will promptly disclose and provide all Inventions to the Company. You agree to assist the Company, at its expense, to further evidence, record and perfect such assignments, and to perfect, obtain, maintain, enforce, and defend any rights assigned.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. **<u>Non-Solicitation</u>**. So long as you are a member of the Board and for a period of 12 months thereafter, you shall not directly or indirectly solicit for employment any individual who was an employee of the Company during your tenure.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. **<u>Termination and Resignation</u>**. Your membership on the Board may be terminated for any or no reason by an ordinary resolution, in accordance with the Company's articles of association, as amended. Your membership on the Board or on any Board committee shall be terminated if you become of unsound mind or are prohibited by law from being so. Your membership on any Board committee will be terminated on the same effective date when your membership on the Board is terminated. You may also terminate your membership on the Board or on any Board committee for any or no reason by delivering your written notice of resignation to the Company ("**Resignation**"), and such Resignation shall be effective upon the time specified therein or, if no time is specified, upon receipt of the notice of Resignation by the Company. Upon the effective date of the termination or Resignation, your right to compensation hereunder will be subject to the Company's obligations to pay you any compensation (including the vested portion of the Shares) that you have already earned and to reimburse you for approved expenses already incurred in connection with your performance of your Duties as of the effective date of such termination or Resignation. Any Shares that have not vested as of the effective date of such termination or Resignation shall be forfeited and cancelled.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. **<u>Governing Law</u>**. All questions with respect to the construction and/or enforcement of this Agreement, and the rights and obligations of the parties hereunder, shall be determined in accordance with the internal laws of the State of New York without regard to conflict of laws provisions therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. **<u>Entire Agreement; Amendment; Waiver; Counterparts</u>**. This Agreement expresses the entire understanding with respect to the subject matter hereof and supersedes and terminates any prior or contemporaneous oral or written agreements with respect to the subject matter hereof. Any term of this Agreement may be amended and observance of any term of this Agreement may be waived only with the written consent of the parties hereto. Waiver of any term or condition of this Agreement by any party shall not be construed as a waiver of any subsequent breach or failure of the same term or condition or waiver of any other term or condition of this Agreement. The failure of any party at any time to require performance by any other party of any provision of this Agreement shall not affect the right of any such party to require future performance of such provision or any other provision of this Agreement. This Agreement may be executed in separate counterparts each of which will be an original and all of which taken together will constitute one and the same agreement, and may be executed using facsimiles of signatures, and a facsimile of a signature shall be deemed to be the same, and equally enforceable, as an original of such signature.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. **<u>Indemnification</u>**. The Company shall, to the maximum extent provided under applicable law, indemnify and hold you harmless from and against any expenses, including reasonable attorney's fees, judgments, fines, settlements, and other legally permissible amounts ("**Losses**"), incurred in connection with any proceeding arising out of, or related to, your performance of your Duties, other than any such Losses incurred as a result of your negligence, fraud, or willful misconduct. The Company shall advance to you any expenses, including reasonable attorneys' fees and costs of settlement, incurred in defending any such proceeding to the maximum extent permitted by applicable law. Such costs and expenses incurred by you in defense of any such proceeding shall be paid by the Company in advance of the final disposition of such proceeding promptly upon receipt by the Company of (a) written request for payment; (b) appropriate documentation evidencing the incurrence, amount, and nature of the costs and expenses for which payment is being sought; and (c) an undertaking adequate under applicable law made by or on your behalf to repay the amounts so advanced if it shall ultimately be determined pursuant to any non-appealable judgment or settlement that you are not entitled to be indemnified by the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. **<u>Not an Employment Agreement</u>**. This Agreement is not an employment agreement, and shall not be construed or interpreted to create any right for you to continue employment with the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. **<u>Acknowledgement</u>**. You accept this Agreement subject to all the terms and provisions of this Agreement. You agree to accept as binding, conclusive, and final all decisions or interpretations of the Board of the Company of any questions arising under this Agreement.

[*Signature Page Follows*]

The Agreement has been executed and delivered by the undersigned and is made effective as of the date set first set forth above.

---

| | |
|:---|:---|
| Sincerely,<br>**GOODFAITH TECHNOLOGY INC.** | Sincerely,<br>**GOODFAITH TECHNOLOGY INC.** |
| By: | /s/  |
| Name: | Xiaowei Wang |
| Title: | Chief Executive Officer  |

---

**AGREED AND ACCEPTED:**

---

| |
|:---|
| /s/ |
| [Director Nominee Name] |

---

**Schedule A**

The Director is offered to serve on the following Board committee(s):

---

| | |
|:---|:---|
| **Committee** | **Title** |
| Audit Committee |  |
| Nominating and Corporate Governance Committee |  |
| Compensation Committee |  |

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**Schedule B**

Compensation

During your term as a member of the Board, you will receive cash compensation in the amount of US$ per year, which shall be paid to you quarterly at the end of each quarter.

## Exhibit 10.4

**EXHIBIT 10.4**

<br> No.: \*\*\*\*\*\*\*\*\*\*\*\*\*\*\*

**\*\*\* BANK**

**RISK EVALUATION AND SOLVENCY ASSESSMENT SERVICE CONTRACT**

BETWEEN

Part A: \*\*\*BANK CO., LTD.

AND

Part B: SHANGHAI BEIMING INFORMATION TECHNOLOGY CO., LTD.

1/13

Party A: \*\*\* Bank Co., Ltd.

Legal Representative: \*\*\*

Domicile: \*\*\*

Contact Person: \*\*\*

Contact Phone: \*\*\*

Email: \*\*\*

Party B: Shanghai Beiming Information Technology Co., Ltd.

Legal Representative: \*\*\*

Domicile: \*\*\*

Contact Person: \*\*\*

Contact Phone: \*\*\*

Email: \*\*\*

Party A and Party B (hereinafter referred to individually as a "**Party**", and collectively as the "**Parties**") intending to be legally bound, hereby enter into this Risk Evaluation and Solvency Assessment Service Contract (the "Contract") with respect to Party A's request of Risk Evaluation and Solvency Assessment services from Party B, on the basis of voluntary and equal consultation and pursuant to the Civil Code of the People's Republic of China and other applicable laws and regulations.

**1. Definitions:**

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| | |
|:---|:---|
| **Terms** | **Unless otherwise provided herein, the following terms shall have the meanings ascribed to them below:** |
| Risk Evaluation and Solvency Assessment  | Refers to the data information and related services to be provided by Party B to Party A hereunder, as further specified in Appendix 1 hereto. |
| Users | Refers to the domestic (excluding Hong Kong, Macao and Taiwan) incorporated or unincorporated organizations established and legally existing in accordance with the laws and regulations of the People's Republic of China that use Party A's products and services. |
| IP | Refers to any (i) copyright, patent, know-how, domain name, trademark, trade name, service mark, brand name, business name, logo, sign and design (registered or unregistered) and all associated goodwill; (ii) application for registration and the right to apply for registration; and (iii) all other intellectual property objects or similar protected forms (including, without limitation, application programming interfaces).  |
| Party B's Platform | Refers to the equipment and facilities, software and hardware systems and related resources and systems used by Party B to operate its services. |
| PRC | Refers to the People's Republic of China, which, for the purpose of this Contract, excludes Taiwan, the Hong Kong Special Administrative Region, and the Macau Special Administrative Region. |
| Adverse Information | Refers to the (A) information that has a negative effect on the credit standing of the Users, concerning (i) the Users' failure to perform any contractually agreed upon obligations in the activities of borrowing, credit purchases, guaranteeing, leasing, insurance, and use of credit cards, (ii) administrative penalties imposed on the information subjects, and (iii) the decision or ruling of people's court on the performance of obligations by or enforcement against the information subjects, as well as (B) other adverse information stipulated by the credit regulatory department under the State Council. |
| Taxes | Refer to any governmental taxes, levies, charges, interest thereon and related penalties. |
| business day | Refers to any day other than Saturday, Sunday, or legal holidays in the PRC. |
| day | Refers to a calendar day. |
| year or month | Refers to a period from the start date of such year or month to the date before the date corresponding to the said start date in the immediately following calendar year or calendar month. |

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| | |
|:---|:---|
| **2.** | **Risk Evaluation and Solvency Assessment Services** |
| Party B shall provide the Risk Evaluation and Solvency Assessment services under this Contract in accordance with Appendix 1 hereto. Party A shall use the Risk Evaluation and Solvency Assessment services provided by Party B and obtain the corresponding information arising from the services, within the extent of its self-operated business, i.e. [credit financing operations], pursuant to the provisions of this Contract. Unless otherwise agreed to by the Parties, Party A shall not use Party B's services to perform any services for any third party or on any third-party website, except as provided herein. | Party B shall provide the Risk Evaluation and Solvency Assessment services under this Contract in accordance with Appendix 1 hereto. Party A shall use the Risk Evaluation and Solvency Assessment services provided by Party B and obtain the corresponding information arising from the services, within the extent of its self-operated business, i.e. [credit financing operations], pursuant to the provisions of this Contract. Unless otherwise agreed to by the Parties, Party A shall not use Party B's services to perform any services for any third party or on any third-party website, except as provided herein. |
| **3.** | **Fees and Payment Settlement** |
| A. | The unit rates of the Risk Evaluation and Solvency Assessment shall be further specified in Appendix 1. The prices of the Risk Evaluation and Solvency Assessment service hereunder shall include VAT at the rate of 6%. During the cooperation period of the Contract, the VAT-exclusive unit rate shall not change with any change of PRC tax rate; and in case of any adjustment to PRC VAT rate, the VAT-inclusive price shall be adjusted based on the VAT-exclusive unit rate as agreed upon herein at the adjusted VAT rate applicable at the time of issuing an invoice. [Note: VAT-exclusive unit rate = VAT-inclusive unit rate / (1 + VAT rate agreed upon herein)] |
| B. | Payment Terms: |
|  | Payable by month (month/quarter). Party B shall provide Party A with the Risk Evaluation and Solvency Assessment service settlement statement of the previous month (month/quarter) within 10 business days after the end of each month (month/quarter), which shall be verified and confirmed by Party A within 10 business days upon receipt thereof; and any objection to which shall be checked and agreed upon through negotiation by the Parties as soon as possible. In the event of no objection, Party B shall issue a legal special VAT invoice of equivalent amount to Party A within 10 business days after the completion of verification, and Party A shall complete the payment within 10 business days upon receipt of the invoice. |
| C. | All amounts payable by Party A shall be paid to the bank account of Party B below: |
|  | Account Holder: Shanghai Beiming Information Technology Co., Ltd.<br> Account No.:\*\*\*<br> Bank Name: \*\*\*<br> Party B shall notify Party A of any change in the above account information within 5 business days; otherwise, Party B shall bear all the legal consequences and liabilities arising therefrom. |

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| | |
|:---|:---|
| D. | Any special VAT invoice provided by Party B which fails to pass the verification shall be re-issued. Where Party B submits no special VAT invoice to Party A or fails to submit a special VAT invoice to Party A within the agreed upon time, Party B shall pay liquidated damages to Party A at the payable tax rate, and shall also compensate for any extra taxes paid that would otherwise not be payable by Party A but for the unavailability of the corresponding tax credit to Party A caused by Party B's actions, the amount of which may be deducted by Party A from any outstanding payment. |
| **4.** | **Representations and Warranties** |
| Each Party makes the following representations and warranties to the other Party and acknowledges that the other Party has entered into this Contract on the basis of such representations and warranties: | Each Party makes the following representations and warranties to the other Party and acknowledges that the other Party has entered into this Contract on the basis of such representations and warranties: |
| A. | It |
| (i) | is an independent legal person or organization duly incorporated, validly existing and in good standing under the laws of its place of incorporation; |
| (ii) | is validly registered to carry on business in all jurisdictions in which it carries on business; |
| (iii) | has all the permits, licenses, regulatory approvals and powers required by law for business operation in each jurisdiction in which it carries on business; and |
| (iv) | has the corporate authority, power and legal right necessary for it to execute and perform this Contract and to perform its obligations hereunder. |
| B. | This Contract, once duly executed by it, constitutes its valid and binding obligations enforceable against it in accordance with the terms hereof. Except as otherwise agreed to herein, it is not required under law or any contract to obtain any license or consent from any person, government or authority for the execution of this Contract and performance of its obligations hereunder. |
| C. | Its execution and performance of this Contract will not: (i) conflict with its certificate of incorporation or articles of association (or similar corporate documents under any applicable law), or (ii) violate any judgment, decree, order, law, or administrative regulation applicable to it. |
| D. | To the best of its knowledge, there is no action, proceeding or investigation which would reasonably be expected to have an adverse effect on its performance of the obligations hereunder. |
| E. | It will comply with the laws, regulations and ordinances applicable to the products, services and business operations provided by it hereunder. |
| **5.** | **Rights and Obligations of the Parties** |
| A. | Party A shall use Party B's Risk Evaluation and Solvency Assessment services only within the territory of the People's Republic of China (excluding Hong Kong, Macao and Taiwan), and shall not transfer any data abroad. |
| B. | Party A shall take protective measures to ensure the security of the business system. Party A shall not: (i) tamper with, disclose or illegally use any data obtained, (ii) make public or transfer the software or data, or (iii) violate the Cybersecurity Law of the People's Republic of China or applicable PRC laws and regulations on data security. |
| C. | Without prior written consent of Party A, Party B may not provide to any third party any Users' information provided by Party A. |
| D. | Party A shall make payment as agreed upon herein. |
| E. | Party A warrants that it will be solely responsible for any measures taken on its own, such as restricting the Users' use of Party A's services or contacting the Users, based on any Adverse Information or other risk information or any contact information of the Users, which has been queried through the performance of this Contract. Party A will not inform or disclose the above information or its sources to any third party other than the Parties hereto, except for the disclosure required under applicable laws and regulations or by competent judicial or administrative authorities. If needed by Party A's business services, Party B shall cooperate to provide the specific basis of the Adverse Information or other risk information of the Users queried by Party B, so as to assist Party A in properly handling any disputes with the Users arising from said measures. The data provided by Party B shall come from a compliant data source, and Party B warrants to transfer the data with utmost good faith and effort to keep it consistent with the data source. Party A shall be entitled to claim compensation from Party B for any indemnification liabilities assumed by Party A to the Users or any third party, arising from any inconsistency between the data or information provided by Party B hereunder and the data source, or Party B's failure to provide a specific basis, or other reasons solely on the part of Party B, provided that Party B shall be exempted from liability if the failure to provide a specific basis is caused by any reason attributable to the data source (other than Party B's own data). |

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F. Party B shall complete the delivery of Risk Evaluation and Solvency Assessment services to Party A as required within 15 business days after the execution of the Contract. Upon initiation of the engagement, Party B shall, to the extent that Party A provides a technical environment that meets Party B's requirements, assist Party A in completing the data loading and input and the installation and commissioning of data synchronization tools, so that Party A can log in for normal transfer data.

G. Where Party B identifies any abnormal query of the service at any time, Party B shall have the right to take any emergency measures, such as suspending the query permission, which shall be notified by Party B to Party A on the day of taking such measures, and Party A shall timely cooperate with Party B to provide relevant information to verify the abnormal query.

H. Where Party B identifies any error in the data and information transferred or provided by it to Party A or makes any revision, correction, supplement or update thereto on its own initiative, Party B shall transfer such revised, corrected, supplemented or updated information to Party A within 24 hours by means of system connection, and shall also notify Party A of the same manually.

I. The information provided by Party B shall be for reference only, and any decision made by Party A in reliance on such information shall have nothing to do with Party B, provided that Party B shall compensate for any loss of Party A arising from any false or wrong information provided by Party B to Party A.

J. Party B shall ensure that the Risk Evaluation and Solvency Assessment services provided to Party A comply with PRC laws and regulations and industrial regulatory rules, which services shall also be free from any risk of legal compliance.

K. Party B shall ensure that the information provided to Party A be the latest data from the data source and of its origination.

L. Party A shall have the right to conduct a comprehensive assessment against Party B regularly or from time to time and synchronize the assessment items and results to Party B. If Party A finds that Party B no longer meets the qualification conditions (such as the enterprise credit agency filing), Party A shall have the right to terminate the Contract with immediate effect.

M. Party B undertakes to cooperate with Party A in accepting the inspection of the banking regulatory authority and by providing relevant information and materials.

N. Party A undertakes that it has obtained legal, valid and sufficient authorization from the information subjects before using Party B's services, including, without limitation, the information subjects' authorization for Party A to collect their personal information, authorization for Party A to provide collect and query information to and from Party B, and consent for Party A to delegate Party B to provide, collect, query and compare personal information to, from and with third-party data sources. The relevant terms or content of the authorization shall be in a form and manner in line with the regulatory requirements, and shall explicitly inform the information subjects of the nature, and purpose, method and scope of use, of the information. If Party A obtains the consent of the information subjects by incorporating the authorization terms into a standard contract, it shall highlight the same in the standard contract sufficiently to attract the attention of the information subjects.

O. Party B shall have the right to confirm from time to time whether Party A has obtained the authorization of the information subjects by means of, without limitation, site survey and remote sampling. Party B may suspend the provision of services or terminate the Agreement, in the event that the authorization of the information subjects obtained by Party A for this cooperation is not in line with the agreed upon and regulatory requirements.

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**6.** **Indemnification** 

A. Unless otherwise agreed to by the Parties, a Party who breaches any warranty, undertaking hereof, or any agreed upon or statutory obligation will constitute a breach of this Contract. A Party shall indemnify the other Party against all losses, costs and expenses (including, without limitation, litigation/arbitration costs, fines, attorney's fees, investigation and evidence collection fees, notary fees, service costs, announcement costs, property preservation fees, enforcement fees, assessment fees, appraisal fees, auction expenses, travel expenses and all other reasonable fees) arising from any breach of this Contract by it or any of its employees and agents.

B. Party A shall perform the payment obligation as agreed; otherwise, in the event that Party A defaults in any payment without due cause, Party B shall have the right to require Party A to pay liquidated damages at 0.03% of the payable but unpaid amount for each day in default, which shall be capped at 5% of the total payable but unpaid amount.

C. If Party A makes public or transfers the software in breach of this Contract, Party B shall be entitled to unilaterally terminate the Contract with immediate effect and require Party A to compensate for all losses of Party B caused thereby.

D. Party B shall timely provide and update the existing data. If Party B fails to timely provide or update the data due to its own reasons, Party A shall be entitled to suspend the performance of the Contract immediately until Party B provides and updates the same as agreed. Party A shall be entitled to require Party B to pay liquidated damages at 0.05% of the amount already paid by Party A for each day beyond the agreed upon time; and in case of any delay for over 15 days, Party A shall be entitled to unilaterally terminate the Contract by notice and require Party B to pay liquidated damages at 20% of the amount already paid by Party A, and require Party B to assume the corresponding liability for compensation. In the event that any data provided by Party B that comes from a third-party data source fails to be timely provided or updated due to reasons not attributable to Party B, Party A may unilaterally terminate the Contract, but Party B shall not be liable for breach of this Contract.

E. No outstanding liabilities and obligations of a Party hereunder shall be exempted by the payment of liquidated damages or compensation by such Party to the non-breaching Party.

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| | |
|:---|:---|
| **7.** | **IP** |
|  | Each Party shall have all rights, title and interests in and to the services, data and information provided by it, including the right to the intellectual property of the respective services. Subject to this Contract, to the extent that a Party grants the other Party a non-exclusive, non-transferable and non-sublicensable license to use its intellectual property only for the purpose of this Contract within the term of the Contract, then such Party may revise or revoke such license in writing at any time during the term hereof if it finds that the other Party is infringing upon its interest or causing negative effect by using the corresponding IP. It is agreed that no Party will be conferred any proprietary right in or to any intellectual property of the other Party hereunder by its use of such intellectual property hereunder, and each Party will exercise reasonable care to protect the intellectual property of the other Party from infringement and damage, and will cease the use of such intellectual property immediately upon termination of this Contract. Without written consent of the other Party, neither Party shall place or display in the relevant business facilities the other Party's name, trademark, sign, logo or other content that can indicate its brand. |
| **8.** | **Taxes** |
|  | Unless otherwise agreed by the Parties in writing, each Party shall bear its own Taxes arising from the performance of this Contract. |
| **9.** | **Confidential Information** |
| A. | Each Party (the "**Receiving Party**") shall be obliged to keep confidential the content of this Contract and the Confidential Information of the other Party (the "**Disclosing Party**") obtained as a result of the performance of this Contract. The Receiving Party shall not disclose or otherwise inform the content of this Contract or the Confidential Information of the Disclosing Party known to any third party other than the Parties hereto (including any employee of the Parties who does not need to access such information), nor use the same for any purposes other than the performance of this Contract, except for the disclosure required under applicable laws, regulations or other administrative rules, or by courts, government departments or stock exchanges and other competent authorities; provided that, the Receiving Party shall send a written notice on such disclosure to the Disclosing Party at least three business days in advance, and give the Disclosing Party a reasonable opportunity to comment on the proposed disclosure and to seek a protective order or prevent such disclosure, and the Parties shall work together to endeavor to avoid or reduce any losses or adverse effects caused thereby, subject to laws and regulations. The Receiving Party shall limit the disclosure to the minimum extent required by such order or applicable regulations, and shall make truthful disclosure instead of falsified or misleading disclosure, and the Receiving Party shall make best efforts to ensure the recipient of such information so disclosed will keep it in strict confidence. No content may be disclosed unless mutually confirmed in writing, except content required explicitly to be disclosed in a valid written order of a court or competent authority which has been presented by the Receiving Party to the Disclosing Party. |
| B. | "**Confidential Information**" refers to all non-public, proprietary or other secret information, whether oral, written or in other forms, including, without limitation, the content and performance of this Contract and any supplementary agreement hereto, the documents and materials generated in the course of cooperation hereunder; information of registered members & financial information, technical information, business information, customer information; business plans, capital structure chart, budgets, financial reports, costs, prices and market plans, contracts and licenses; lists of employees, customers, suppliers, shareholders, partners or investors; technologies, know-how, business processes, trade secrets, business models; descriptions, sketches, flow charts, formulas, blueprints and their constituent elements; source codes, object codes, graphic designs, user interfaces and other IP (including IP of customers, suppliers and other third parties); interface technology, security protocols, credentials, etc. |

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C. The Parties shall take all reasonable and necessary measures to ensure that they (and their employees) comply with the above, so that no information they receive will be distributed, disseminated, disclosed, copied, misused or accessed by unrelated persons. Each Party shall take reasonable precautions to protect the Confidential Information, which shall be at least as significant as those taken for its own Confidential Information, but no less than reasonable care.

D. Without written consent of a Party, the other Party shall not disclose the content of this Contract or the cooperative relationship by press conference, announcement or otherwise.

E. This Article of confidentiality shall remain valid permanently from the date of execution of this Contract. Party A and Party B undertake to continue abiding by the duty of confidentiality under this Article upon termination of this Contract. Each Party shall be entitled to claim compensation for any losses arising from the other Party's intentional or negligent disclosure of its Confidential Information.

**10.** **Notice and Service** 

A. The addresses and contacts first written above shall be the addresses for service of all notices involved or related to this Contract and of relevant documents and legal instruments in case of any dispute arising out of this Contract, between the Parties. Service in electronic form shall have the same legal effect as service in writing form.

B. The notices or documents given by the Parties hereunder, and the arbitration or litigation documents issued by the dispute resolution body in connection with this Contract (including, without limitation, court and arbitration institution) shall be served (i) on the date when the notified party or its receiving agent signs for receipt, if sent by personal delivery or service by mandate; (ii) on the fifth business day after the date of posting, if sent by courier or registered mail; and (iii) at the sending time of the SMS or email as recorded in the system of the Parties or the dispute resolution body, if sent by SMS or email.

C. The Parties' addresses for service above shall apply to the service of all non-litigation notices, contracts and documents, and the service of relevant documents and legal instruments in case of any dispute arising out of the Contract, including those required when the dispute is submitted to arbitration, or first instance, second instance, re-trial and enforcement proceedings in civil litigation procedures, between the Parties.

D. Each Party shall be obliged to give a written notice to the other Party about any change to its service address. Where a Party fails to so notify, the address for service stated above shall still be deemed as a valid address for service. Any legal instrument [served but] failing to be actually received by a Party due to inaccurate address provided or confirmed by such Party, or such Party's failure of timely notifying any changed address for service as agreed to the other Party and the dispute resolution body, or refusal of receipt by such Party or its designated recipient, etc. shall still have the legal consequences of being served.

E. In such cases, the date of service shall be (i) the date of returning such instrument, if sent by post; (ii) the date when the deliveryman indicates the situation on the proof of service on site, if sent by personal delivery; (iii) the sending time of the SMS or email as recorded in the system of the sending Party or the dispute resolution body, if sent by SMS or email. Any changed address for service shall be a valid address for service after the obligation to notify the changed address has been performed. The dispute resolution body may directly serve any instrument by post to the addresses for service of the Parties explicitly agreed upon herein, and the instrument so posted shall be deemed to be served, even if the Parties fail to receive the same.

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F. After a dispute enters arbitration or civil proceedings, if a Party responds and directly submits a confirmation on address for service to the dispute resolution body, indicating an address different from that confirmed before the action, then the address for service as submitted and confirmed to the dispute resolution body shall prevail. In the event that the address for service stated in the confirmation on address for service is the address of lawyer or agent ad litem, then the address for service confirmed before the action shall also remain valid.

G. The service provisions hereof shall be independent, and not affected by the validity of the entire Contract or other provisions hereof.

**11.** **Cooperation Term and Termination** 

A. The cooperation term of this Contract shall be [one] year, from April 1, 2022 to April 1, 2023. The Parties shall enter into a separate written contract for continuing their cooperation upon the expiration of the cooperation term.

B. Unless otherwise expressly agreed to herein, either Party may terminate this Contract without notice, if: (i) the other Party's material breach of this Contract has not been cured within 10 business days from the date of receipt of notice, (ii) the other Party's serious bad business practices affect its business reputation, and harm its goodwill or product image, or (iii) the other Party enters into bankruptcy, insolvency, reorganization, liquidation, dissolution or similar proceedings.

C. In the event of an early termination of the Contract for whatever reason, Party A shall still pay Party B the price for the portion of services already provided. If this Contract is terminated early due to Party B's breach, Party B shall pay 10% of the total amount already paid by Party A as liquidated damages, which may be deducted by Party A from any payable but unpaid amount.

**12.** **Force Majeure** 

A. Neither Party shall be liable for failure or delay in performance due to Force Majeure. Force Majeure, however, shall not release either Party from its obligation of paying any payable but unpaid amount. Any of the factors which act as Force Majeure shall be requisite for the performance of this Contract, and the extent of its effect shall be calculated as the portion beyond the control of the affected Party within its actual duration. The Party who encounters Force Majeure after it delays in the performance of this Contract shall not use such Force Majeure as defense of its delay. "**Force Majeure**" refers to any objective circumstance which is unpredictable, inevitable and insurmountable, including, without limitation, "act of god", fires, and other unexpected and unavoidable accidents. Neither Party shall be liable for any failure or delay in performance of the Contract due to interruption of a communication network, computer virus, hacker attack, or third-party data source, which shall be deemed a Force Majeure.

B. After the occurrence of a Force Majeure event, the affected Party shall take appropriate measures to mitigate any loss and immediately notify the other Party as soon as practicably possible, and provide supporting documents stating the details of such event and reasons for non-performance, partial performance or delay in performance of this Contract, within 10 business days after the occurrence of such event. The Parties shall decide through negotiation and enter into a written agreement on whether to postpone the performance of this Contract or terminate this Contract.

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| | |
|:---|:---|
| **13.** | **Planned Downtime** |
|  | "**Planned Downtime**" refers to a pre-scheduled shutdown, suspension or disruption of the operation of Party B's Platform or the services provided by Party B for a period of time, which is generally for the purpose of (1) introducing new services or upgrading existing services to the service recipients; (2) conducting defensive maintenance of the system; (3) installing or making significant changes to the infrastructure; or (4) conducting maintenance of the services and the platform. Party B shall not be liable for any service interruption caused by the Planned Downtime, provided that it shall notify Party A in writing on the day when the Planned Downtime is arranged, and restore the operation of Party B's Platform or the normal access and use of the services as soon as possible. |
| **14.** | **Governing Laws / Dispute Resolution** |
|  | This Contract shall be governed by and construed in accordance with the laws of the mainland of the People's Republic of China. Any dispute or claim arising out of or in connection with this Contract, including, without limitation, the interpretation, validity, breach and termination hereof, may be resolved through friendly negotiation; and if the negotiation fails, such dispute or claim shall be resolved through litigation. The venue shall be the people's court with jurisdiction at the domicile of the plaintiff. |
| **15.** | **Fees and Costs** |
|  | Unless otherwise expressly provided herein, each Party shall bear and be responsible for its own expenses and costs incurred in connection with its performance of this Contract. |
| **16.** | **No Commercial Bribery** |
| A. | Both Party A and Party B are clear about and willing to strictly comply with the applicable laws and regulations of the People's Republic of China on anti-commercial bribery, and understand that any form of bribery may be against the laws and lead to severe punishment under the laws. |
| B. | Neither Party A nor Party B may solicit, receive, offer, or give any benefit not agreed upon herein to the other Party or its personnel and their relatives and friends or other related persons, including, without limitation, any kickback (whether on or off balance sheet), cash, shopping card, physical items, negotiable securities, tourism or other non-material benefits and services, etc. |
| C. | Party A strictly prohibits any commercial bribery (including offering and accepting bribes) committed by its personnel. Any of Party A's personnel who commits any act listed in Paragraph B of this Article during and after the execution and performance of this Contract shall violate Party A's rules and regulations. Party B shall report the relevant personnel and acts to the related department of Party A. Party A's reporting hotline: [\*\*\*]; and reporting email: [\*\*\*]. |
| D. | Party B shall be deemed to be in breach of this Contract, if it offers bribes to Party A's personnel in order to seek direct or indirect commercial interests (including, without limitation, cooperation opportunities and interests in agreement) against the provisions hereof. Party A may terminate this Contract and/or require Party B to pay liquidated damages of RMB100,000, which may be directly deducted from the payable contract price; and Party B shall also compensate for any loss of Party A which is not covered by the liquidated damages. To the extent that Party B actively cooperates with the investigation and punishment against and of the personnel accepting commercial bribery, Party A may reduce or exempt the corresponding liquidated damages. The relevant personnel shall be referred to the judicial authority for further action if his commercial bribery constitutes a crime, with which Party A and Party B shall provide active cooperation. |

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| | |
|:---|:---|
| **17.** | **Entire Agreement** |
| Unless otherwise expressly provided herein, any amendment to this Contract shall be made only in writing affixed with the common seals of the Parties. | Unless otherwise expressly provided herein, any amendment to this Contract shall be made only in writing affixed with the common seals of the Parties. |

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The notice of award, the bidding documents and the tender documents with respect to the ______________ shall be integral parts of this Contract. The several documents forming this Contract are to be taken as mutually explanatory of one another, but in case of ambiguities or discrepancies, the same shall be explained and applied in the following order:

1) This Contract (including appendices) and its supplementary documents (if any);

2) The notice of award issued by Party A;

3) The tender documents provided by Party A and the clarification documents or amendments thereof;

4) The bidding documents submitted by Party B; and

5) Other written materials related to this Contract.

**18. Assignment**

Without prior written consent of the other Party, neither Party hereto may assign or transfer any rights or obligations hereunder.

**19. Relationship of the Parties**

Nothing in this Agreement shall be construed to create a joint venture, partnership, agency, trust or employment relationship between the Parties. Under no circumstances shall a Party make any statement on any occasion which would mislead others that the Parties have a relationship other than that under this Contract. Moreover, without written consent of the other Party, neither Party may publicize the information of cooperation between the Parties to any third party on its own or through the media or by other means.

**20. No Implied Waiver**

No waiver by either Party of any breach of any provision hereof by the other Party and no failure by either Party to exercise any right or privilege hereunder shall be deemed as a waiver of any subsequent breach by the other Party or a waiver of any other provision, right or privilege hereunder.

**21. Severability**

Any provision hereof which is unenforceable or held to be invalid shall be deemed as not existing or to be deleted, while the remaining provisions shall remain valid and enforceable.

**22. Miscellaneous**

This Contract shall take effect as of the date on which the legal representatives of Party A and Party B or their authorized representatives sign (or seal) or affix the common seals or special contract stamps on this Contract. This Contract shall be made in quadruplicate with each Party holding two copies of the same effect.

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(REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)

Party A (Seal): Party B (Seal): <br> Legal Representative or Authorized Representative: (signature or seal): Legal Representative or Authorized Representative: (signature or seal): <br> Date: Date:

12/13

Appendix 1: Risk Evaluation and Solvency Assessment Service Details and Rates

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| | | | |
|:---|:---|:---|:---|
| Service Name | Tax-inclusive Unit Rate<br> (CNY) | Tax Rate | Note |
| Persons of Concern Scoring | \*\*\* | 6% | Billed by query |

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## Exhibit 10.5

**EXHIBIT 10.5**

**Delinquent Debt Collection Service Contract**

Party A: \*\*\*

Address: \*\*\*

Tel: \*\*\*

Email: \*\*\*

Party B: Shenzhen Xindesheng Financial Services Co., Ltd.

Address: \*\*\*

Tel: \*\*\*

Email: \*\*\*

Party A and its affiliates, due to failure to timely collect delinquent accounts of certain customers under their management, hereby commission Party B for debt collection against such delinquent customers managed by them; and Party B agrees to provide services to Party A and its affiliates in a legal manner. The Parties hereby enter into this Delinquent Debt Collection Service Contract (the "Contract") with respect to the commissioned matters to specify their rights and obligations:

**Article 1 Commissioned Matters**

Party A commissions Party B to urge the customers of delinquent accounts (hereinafter referred to as the "**Delinquent Customers**") designated by Party A to timely repay to the creditor their delinquent amounts and those not yet due (which may include, as the case may be, principal, interest, default interest, liquidated damages and other fees), by means of, without limitation, telephone calls, in-person visits and collection letters, in accordance with this Contract and other requirements of Party A. Party B shall use legal debt collection techniques appropriate to the specific circumstances of a Delinquent Customer.

**Article 2 Term of Contract**

The term of this Contract shall be three years, from __________to __________. This Contract will terminate upon expiry of the term, unless renewed by mutual agreement of the Parties. The termination of the Contract shall not affect the commission of any cases whose commission period is not expired.

**Article 3 Targets of Debt Collection**

Party B's debt collection shall target the Delinquent Customers designated by Party A. Party B shall not arbitrarily conduct debt collection against any person other than the Delinquent Customers, without the consent of Party A.

**Article 4 Debt Collection Period of Individual Case and Closing of Case**

4.1 Debt Collection Period of Individual Case: From the starting date to the ending date, given at the commission of the case.

4.2 Automatic Closing: Each individual case will close automatically upon the expiry of the commission period agreed to in Article 4.1. Party B shall not conduct debt collection against any Delinquent Customers whose cases have closed automatically, unless consented to by Party A in writing.

4.3 Extended Closing: Party B may request an extension of the debt collection commission period on a case-by-case basis, and Party A will decide whether to consent to such extension and on the time of such extension, based on the circumstances of the individual case and Party B's work records. Each individual case will close automatically after the expiry of the extended period consented by Party A in writing. Party B shall not conduct debt collection against any Delinquent Customer whose case has closed.

4.4 Early Closing: Party A may decide to close certain cases early (including those during an extended period) based on the actual working circumstances, by giving a written notice to that effect to Party B. From the date of written notice of early closing from Party A, Party B shall no longer conduct debt collection against any Delinquent Customer whose case has been closed early.

4.5 Party B shall have no right to charge service fees or any other fees hereunder against Party A for any delinquent accounts successfully collected by Party A after a debt collection case is closed in accordance with Article 4.2, 4.3 or 4.4 above (exclusive of the date of closing of the case). For the avoidance of doubt, if Party A receives any repayment of a Delinquent Customer on the date of closing of the case, Party B may charge service fees as agreed herein.

**Article 5 Provision of Debt Collection Information and Retention of Debt Collection Records**

5.1 Party A agrees to issue a power of attorney (see Appendix 1) and regularly a confirmation on accounts for authorized debt collection (see Appendix 2) and provide the information related to the corresponding Delinquent Customers, to Party B during the term hereof and subject to the laws and Party A's particular business purpose, so as to facilitate Party B's collection against the Delinquent Customers. Party A shall not be liable for compensation for any losses of Party B arising from its reminding the Delinquent Customers to pay off their delinquent accounts based on the information provided by Party A and in accordance with this Contract, except for those losses caused by Party A's breach of this Article.

5.2 Party B shall provide the case information of the Delinquent Customers to Party A's designee as requested by Party A. Party B's debt collection services for Party A shall be strictly based on, but not beyond or against, the case information submitted by Party A.

5.3 Party B shall keep complete and accurate records for the debt collection process of delinquent accounts of each Delinquent Customer in accordance with Party A's requirements, and shall ensure Party A's review of and written consent to, and retain as required herein, valid written records of any agreement reached in the debt collection process. Party B shall properly manage the debt collection records of each debt collection case in whatever form (including, without limitation, paper or electronic files, audio recordings, videos, etc.). Party A shall have the right to consult such records and inquire about the handling protocol at any time during Party B's business hours. Party B shall deliver the originals of all of its debt collection records to Party A at the closing of a case or the termination of cooperation between the Parties.

5.4 Party B's debt collection process records shall be kept as follows:

(1) Retention of Audio Recordings: all phone calls between Party B and the Delinquent Customers must be recorded and properly kept (i) for no less than 24 months from the date of closing of each individual case, or, (ii) until the expiration date of the commission period hereunder, whichever is later.

(2) Written Records of Debt Collection Handling: the written records of debt collection handling of each Delinquent Customer shall include but not be limited to: commission date, customer name, title and series number of the contract involved, date and time of debt collection, summary of debt collection activities.

5.5 In-person Visit

(1) The in-person visit process shall comply with Party A's requirements, and shall not violate PRC laws and regulations.

(2) At the in-person visit for debt collection, Party B shall present a certificate authenticating identity and confirm information relating to and with a customer, before urging repayment. After such visit, Party B shall ask the customer to sign on the in-person visit registration book for confirmation.

(3) Party B must document any in-person visit organized by it into in-person visit records, which shall contain the following and be affixed with Party B's common seal:

A. Address of in-person visit, and description of the appearance of the site;

B. A list of persons to be visited and the time of visit; and

C. Summary description of the in-person visit results, and the abstract of the content of any agreement, if reached.

(4) Party B shall make audio recordings of the whole process of and relevant image recordings of any in-person visit, which shall be properly kept (i) for no less than 24 months from the date of closing of each individual case, or (ii) until the expiration date of the commission period hereunder, whichever is later.

5.6 Reporting System:

(1) Party B shall submit a written work report to Party A as requested by Party A.

(2) After each individual debt collection case is ended, successfully or not, Party B shall submit a written closing report to Party A, together with all relevant debt collection records and materials, within 7 business days upon closing of the case.

(3) Party B shall timely report to Party A any change to its operation circumstances, operation network, office phone number, principal, special debt collection team, etc., for record.

**Article 6 Service Fee**

6.1 Unless otherwise agreed to herein, the service fee for each individual case commissioned hereunder shall be calculated by the following formula: Service Fee = Recovered Amount of Delinquent Accounts \* Service Fee Rate.

The Service Fee Rate shall be: Base Fee Rate ()% + Incentive Fee Rate ()%

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| | | |
|:---|:---|:---|
| **Type of Account** | **Base Fee (Rate)** | **Incentive Fee Rate** |
| Exclusive Amount-based Cases (Specialist /Month) | \*\*\* | Subject to email |
| INS Cases | \*\*\*% | Subject to email |
| 1st Round M3+ Cases | \*\*\*% | Subject to email |
| 2nd Round M3+ Cases | \*\*\*% | Subject to email |
| 3rd Round M3+ Cases | \*\*\*% | Subject to email |
| Special Cases | \*\*\*% | Subject to email |
| Special Case: a special case may be established, with matching incentive and penalty rules, based on the amount in arrears, past due days, circumstances of loss of contact, regional characteristics, and difficulty of the case, etc. | Special Case: a special case may be established, with matching incentive and penalty rules, based on the amount in arrears, past due days, circumstances of loss of contact, regional characteristics, and difficulty of the case, etc. | Special Case: a special case may be established, with matching incentive and penalty rules, based on the amount in arrears, past due days, circumstances of loss of contact, regional characteristics, and difficulty of the case, etc. |

---

Incentive Fee Rate: Party A will from time to time send monthly/quarterly targets and incentive fee rate plans to Party B's email address first written above from its email address (i.e. with a suffix of @[\*\*\*].com). Party B shall be deemed to have accepted such plans, unless objected to within one day upon receipt of such plans. Party B shall give prior notice of any change to its email address to Party A. Party A agrees that Party A will apply the incentive fee rate corresponding to the Party B's extent of completion of the plans .

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| | |
|:---|:---|
| 6.2 | The service fee shall be paid by Party A to the following bank account of Party B as agreed to herein: |
|  | Account Holder: Shenzhen Xindesheng Financial Services Co., Ltd. |
|  | Bank Name: \*\*\* |
|  | Account No.: \*\*\* |
| 6.3 | Party A and Party B may otherwise agree on the debt collection service fee rate rules for Party A's special business according to Party A's business needs, provided that Party A and Party B shall enter into a separate supplementary agreement for such rules. |
| 6.4 | Such service fee shall be settled on a monthly basis in accordance with the provisions of this Article. Party A and Party B may properly adjust the service fee rates in accordance with their business operation needs and Party B's performance of this Contract, provided that Party A and Party B shall enter into a separate supplementary agreement for such adjustment. |
| 6.5 | Party A and Party B agree to check the repayment circumstances of the individual debt collection cases handled by Party B in the previous month by the 15th day of each month (or the first business day immediately after the end of holidays if such day is on holidays), and calculate the service fee payable by Party A in accordance with Article 6.1 based on the mutually confirmed repayment status. Party B shall timely provide Party A with legal special VAT invoices (hereinafter referred to as the "**Invoice**") at the tax rate of 6% upon receipt and verification of the statement of accounts of the month, and Party A shall pay the service fee to Party B within 15 business days upon receipt of the Invoice. |
| 6.6 | Party B shall solely bear all costs incurred in the debt collection process, including, without limitation, the travel expenses of Party B's personnel, charges collected by relevant authorities, attorney's fee, postage, and the fee for Party B's subcontracting (with separate written consent from Party A). Party A shall only have the obligation to pay the service fee to Party B based on the actual use of services in accordance with the standards set forth in Article 6.1, but no other fee to Party B shall be required. |

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**Article 7 Party A's Rights and Obligations**

7.1 Party A shall state the facts of cases objectively and in detail to Party B and provide authentic information related to the cases.

7.2 Party A shall pay the service fee agreed upon herein in a timely manner.

7.3 Party A shall provide necessary legal assistance to Party B in debt collection.

7.4 Party A shall have the right to inspect and supervise the case handling progress and quality of Party B's services at any time.

7.5 Party A shall have the right to inquire from Party B about the investigation information and handling status of the cases, and request Party B to provide information related to the cases.

7.6 In the event of any material adverse effect on Party A that arises or will arise from Party B's provision of the commissioned debt collection services, Party A shall have the right to propose termination of this Contract and all authorizations related to this Contract by giving a written notice to that effect, in which case, this Contract shall terminate from the date when Party A's written notice is delivered to Party B, and Party B shall no longer carry out the debt collection hereunder. Otherwise, Party B shall make full compensation for any losses so caused to Party A or any third party.

7.7 Party A may decide the number of cases outsourced to Party B according to the latter's track record, peer review, service quality, and its own outsourcing strategy, outsourcing needs, etc.

7.8 Party A shall have the right to claim compensation against Party B for the latter's breach of this Contract in accordance with laws and regulations and this Contract.

7.9 Party A shall have the right to audit Party B's business from time to time, including regular audits and extraordinary audits. A regular audit shall generally be a non-field audit, which will be done mainly by means of a review of statements (debt collection records, outsourcing history of cases, expected recovered amount, debt collection results statistics, past due reasons statistics, etc.), review of recordings, spot checks on follow-up of the Delinquent Customers, and follow-up on complaints. An extraordinary audit shall generally be a field audit which will be done without prior notice from Party A to Party B, and Party B shall cooperate with any retrieval and consultation of information requested by Party A. Party A may engage a professional agency to audit Party B.

7.10 To the extent that a Delinquent Customer is a merchant registered in Party A's online system and has funds retained in its online account (hereinafter referred to as the "**Retained Funds** "):

(1) Since the Retained Funds of merchants in all cases during the case commission period will be frozen, Party B shall not take the initiative to induce such customer to make repayment by unfreezing the Retained Funds during the debt collection, and shall not inform a debtor of the result of any voluntary request of such debtor for unfreezing the Retained Funds after repayment, until filing an application to and obtaining approval from Party A.

(2) No Retained Funds frozen during the case commission period shall be transferred by Party A to offset all or part of the debts.

(3) Where Party B requests transfer of the Retained Funds in any individual account, Party A may do so after approval, provided that the amount so transferred shall not be included in Party B's recovery performance, nor be used to calculate the commission payable.

7.11 Party A shall have the right to conduct an inspection against Party B at any time, and may terminate this Contract at any time if Party B is found to have committed any of the following breaches in such inspection, in which case, Party B shall be liable for compensation for any loss so caused to Party A:

(1) Qualification Fraud: Provision of false or expired qualification information or making false, exaggerated representations or misrepresentations about its corporate qualifications and operations, including, without limitation, the materials and related explanations provided during the earlier bidding.

(2) Misappropriation of Customer's Payment: Failure to pay in time or in full any repayment collected from customers, or collecting unreasonable interest or liquidated damages in the debt collection process.

(3) Misconduct in Repayment Reminder to the Detriment of Customer's Rights and Interests: For example, violence, coercion and other illegal operations that cause damage to the reputation of Party A or Party A's cooperation partners.

(4) Improper Administrative Procedures: Intentional or negligent leakage, loss, omission or destruction of customer data of the commissioned cases.

(5) Other Matters Uncovered: Other circumstances that intentionally or negligently cause damage to the rights and interests of Party A or Party A's cooperation partners.

(6) With respect to any positive facts found in the inspection, Party A shall also have the right to issue an inspection report together with request for rectification to Party B, upon receipt of which, Party B shall make timely rectification, and submit a rectification report to Party A within two weeks. Party A will then conduct another inspection against the rectified matters, and, may impose penalties on Party B according to the degree of damage, in case of no or poor improvement.

**Article 8 Party B's Rights and Obligations**

8.1 Party B shall fulfill the commissioned matters pursuant to the laws and the provisions hereof, in a lawful manner, with the duty of care as a bona fide manager and in good faith. Party B shall not urge any Delinquent Customers to repay their delinquent accounts in any way that is illegal, unreasonable or harmful to Party A's goodwill and other legitimate rights and interests of Party A.

8.2 During the performance of the services, Party B shall not commit any act against the applicable laws and regulations, or resort to violence, intimidation or other illegal means to urge the debtors for repayment. Party B shall be fully liable for any personal injury or property damage caused to the debtors during the performance of the services, and Party B shall be responsible for eliminating any negative effect caused thereby on Party A.

8.3 Party B shall safeguard the legitimate rights and interests of Party A and creditors during the debt collection process, and make repayment reminder fully as per the amount and content commissioned by Party A. Without the prior written consent of Party A, Party B shall not reduce or exempt any delinquent accounts (including principal, interest, default interest, liquidated damages and other fees) of a Delinquent Customer in whole or in part. Party B shall neither privately promise anything to, nor sign any document with, a debtor (regardless in what capacity). Party B shall not collude with a debtor (including, without limitation, privately accepting banquets and gifts from the debtor, etc.) to the detriment of the interests of Party A. Where Party B privately reduces or exempts any debts owed by a customer or causes other losses to Party A under any of the circumstances above, Party A shall be entitled to deduct the corresponding amount directly from the service fee payable to Party B.

8.4 To the extent that Party B is a law firm, Party B shall send lawyer's letters for debt collection in cooperation with Party A's request, and retain relevant records on sending and signing for receipts, with respect to the cases commissioned by Party A, and return the same to Party A after the cases are closed. To the extent that Party B is not a law firm, Party B shall carry out in-person visits for debt collection as requested by Party A during the commission period, and retain relevant records on in-person visits, with respect to the cases commissioned by Party A, and return the same to Party A after the cases are closed.

8.5 Any notification, lawyer's letters, repayment agreements and other standard documents to be sent by Party B shall first be approved by Party A, and may not be used until written confirmation by Party A is provided. Party B shall bear the costs of mailing such letters.

8.6 Party B shall regularly report to Party A any change to its Business License or other information and the publicity of the annual report of its enterprise credit information. Party B shall timely report any change to its business outlets, office number, persons in charge, etc.

8.7 Party B shall clearly indicate or identify itself as a debt collection agency authorized by Party A or its affiliates, in all communications and negotiations directly or indirectly related to debt collection of delinquent accounts, and shall not carry out any business externally in the name of Party A.

8.8 Party B shall inform Party A of any information which is beneficial to the commissioned matters upon its knowledge thereof, and shall immediately inform Party A upon knowledge of any death, bankruptcy, or relocation of place of business or domicile of a Delinquent Customer. Any written proof obtained by Party B from the Delinquent Customers or other stakeholders, including, without limitation, any death certificate, judicial certificate and repayment commitment, shall be timely forwarded to Party A for custody.

8.9 The agency authority of Party B shall be general agency. Party B and its employees shall not collude with the Delinquent Customers to harm Party A's interests. Without written consent of Party A, Party B and its employees shall not promise any matter to, nor receive cash or seek improper benefits from, the Delinquent Customers. Should Party B or any of its employees breach such obligation, then Party B and such employee shall be jointly and severally liable for compensation to Party A.

8.10 Without written consent of Party A, Party B shall not incur any costs or debts in the name of Party A. Otherwise, such costs or debts so incurred shall be solely borne by Party B.

8.11 In order to avoid any risk from directly collecting delinquent accounts from the Delinquent Customers, Party B and its employees shall not collect any money from the Delinquent Customers directly without written consent of Party A, but rather, Party B shall urge the Delinquent Customers to make repayment to the relevant accounts of such Delinquent Customers or the bank account otherwise designated by Party A in writing within the time required by Party A.

8.12 Without written consent of Party A, Party B shall not assign any matter hereunder to others.

8.13 When handling the commissioned matters, Party B shall immediately report to Party A any error in accounts, suspected spoofing or other material dispute raised by the Delinquent Customers or relevant parties, which shall then be handled by Party A itself or Party B under the instructions of Party A.

8.14 Party B shall be solely liable for any civil and criminal legal liabilities arising from its breach of this Contract or violation of the laws. In the event Party A suffers damage or loss as a result thereof, Party B shall be liable for compensation and unconditionally reimburse any damages paid by Party A to any third party. In the event that the damage is caused by Party B's employees, Party B shall not be exempted from liability by claiming that due care has been exercised in selecting the employees and supervising the performance of their duties, or that the damage is inevitable, even if due care has been exercised.

8.15 Party B shall be obligated to fully cooperate with Party A in accepting inspections by relevant regulators or industry organizations at the request of Party A.

8.16 In performing the provisions hereof, Party B shall not have any illegal act against the PRC laws or any misconduct to the detriment of Party A's goodwill, reputation, financial condition and property, including, without limitation, coercing, abusing, harassing, misleading, deception of, or infringement upon the privacy of, a debtor or relevant third parties. Should Party B or any of its employees cause any damage to Party A or any third party or any other consequences by breaching this obligation, then Party B and such breaching employee shall be jointly and severally liable for compensation to Party A and/or the third party.

8.17 Party B shall not collect any money repaid in cash by debtors on behalf of Party A. If a debtor indicates at any time an intention to repay Party B in cash, Party B shall immediately advise or accompany the debtor directly to an effective repayment channel of Party A for such repayment.

8.18 Party B agrees to comply with the requirements for civilized debt collection set forth in the Voluntary Pact of Internet Finance Companies in Relation to the Collection of Overdue Loans, to maintain the good corporate image of Party A. Where Party B's misconduct in debt collection has caused any negative public opinion on Party A or its affiliates, Party B shall have the obligation to make every effort to assist Party A in properly handling the relevant public opinion incident, in addition to the relevant liabilities for breach as agreed upon herein. For the purpose of this Article, negative public opinion includes, but is not limited to, complaints and reporting by a number of debtors to the regulators, complaints by a number of debtors to well-known complaint websites, the public incidents with a broad scope of impact, etc.

8.19 Party B agrees to abide by the complaint management, quality management and other debt collection related management rules and any subsequent amendment, update, supplement or adjustment thereto, published by Party A or its Group to which Party A is subordinated (hereinafter referred to collectively as the "**Debt Collection Management Rules** "), and act in a diligent and responsible manner to safeguard the legitimate rights and interests of Party A. Party B agrees that Party A shall have the right to terminate this Contract and all commissioned matters relating to this Contract, if Party B breaches the Debt Collection Management Rules, or the effect of Party B's debt collection fails the requirements of the Debt Collection Management Rules, which has not been cured by Party B within the rectification period given by Party A.

8.20 Where Party B breaches any of the foregoing obligations, Party A shall be entitled to immediately terminate this Contract. Party B shall be liable for full compensation for any loss of Party A or any third party caused thereby.

**Article 9 Duty of Confidentiality and Return or Deletion of Materials**

9.1 Each Party shall be obliged to properly maintain, keep confidential and prudently use any documents or data as well as information of the Delinquent Customers acquired from the other Party in the performance of this Contract, and shall neither use the same for any other purpose other than the outsourced debt collection, nor disclose to any third party or permit any third party to use the same in any way, without the written consent of the other Party.

9.2 Such duty of confidentiality shall survive the termination of this Contract.

9.3 Within 3 days after any individual debt collection case is closed or at the request of Party A, Party B shall hand over to Party A or dispose according to requirements of Party A, all other materials relating to such individual cases (including, without limitation, materials of the Delinquent Customers provided to Party B by Party A, and the written records of debt collection generated by Party B in the debt collection process), other than the audio recordings, videos and other audio and video materials generated by Party B in the debt collection process, and Party B shall not arbitrarily retain or use the same in any form. Where Party A requires to clear relevant data, Party B shall timely delete relevant data and/or effectively destroy the corresponding storage medium according to the requirements then proposed by Party A.

9.4 Party B shall be responsible for restraining and supervising its employees to comply with this Article 9.1, and shall ensure that Party B and its breaching employees shall otherwise be jointly and severally liable for compensating for any damage of Party A arising from any breach of the foregoing obligation by Party B or its employees.

**Article 10 Security Requirements**

10.1 Party B shall meet Party A's technical security requirements, which are set forth in Appendix 3: Security Requirements hereto. Should Party B fail any security requirement, Party A shall have the right to adjust the service fee rates, number of cases commissioned and other terms of cooperation with Party B, or early terminate this Contract if Party A deems necessary, as the case may be.

10.2 During services, Party B shall establish a security incident reporting procedure and an emergency response plan, which must specify the person in charge of security. Party A may conduct an information security audit against Party B out of actual needs, and Party B shall be obliged to cooperate with such audit, and timely make rectification towards any security risks raised by Party A. Party A shall be entitled to terminate this Contract at any time if the results of such rectification still fail Party A's technical security rules.

**Article 11 Independent Party**

11.1 When performing obligations hereunder, Party B and its employees shall be independent parties, and Party B shall be jointly and severally liable for the acts of its own and its employees.

11.2 Party B shall have no right to enter into any agreement with a third party on behalf of Party A or any of Party A's affiliates, nor to bind Party A to any obligation to any person.

11.3 When performing obligations hereunder, Party B shall fully disclose to its employees the obligations to Party A on the part of Party B and its employees, and shall be fully responsible for the acts of its own and its employees. The personnel employed by Party B shall have experience in this sector and passed Party B's test, or have passed the relevant specialized training courses or tests organized by Party B, and shall not:

(1) have a criminal record, have been sentenced, or be wanted in a pending case;

(2) have had a bad credit record in the bank (for the purpose of this provision, "bad record" refers to any record of loan delinquency of any type for over three months and of outstanding amounts the preceding six months); or

(3) have any legal incapacity or limited capacity for civil conduct.

**Article 12 Cancellation and Termination of Contract**

12.1 Party A shall have the right to unilaterally terminate this Contract early and require Party B to assume the corresponding compensation liability, by giving a written notice to that effect to Party B, and from the date when Party A's written notice is served to Party B, this Contract shall immediately terminate and Party B shall no longer provide the debt collection services hereunder, if:

(1) Party B breaches any provision hereunder;

(2) Party B is liquidated, bankrupt, has severe deterioration in business operation, has material negative public opinion or is under other circumstances which, in the opinion of Party A, may reduce Party B's ability for debt collection;

(3) the applicable laws, regulations or regulatory rules or policies change, rendering possible loss to or negative impact on Party A by the continued performance of this Contract; or

(4) Party A terminates this Contract early out of business operation needs.

12.2 Party A shall pay the service fee on time. If Party A defaults in the payment of service fees for two consecutive periods without due cause, Party B shall have the right to terminate the services by notifying Party A in writing 7 business days in advance, in which case, Party A shall be liable for compensation.

12.3 Upon termination of Contract, Party A shall be entitled to retain any outstanding service fee hereunder payable to Party B (of an amount not exceeding RMB100,000) for the sole purpose of resolving any complaints and disputes relating to the cases handled by Party B hereunder, and Party B agrees that Party A may at its own discretion resolve such complaints and disputes in accordance with its internal handling procedures and compensation standards. Any balance of such outstanding service fee after twelve (12) calendar months from the date of termination of Contract will be paid by Party A (without interest) to Party B within fifteen (15) business days.

**Article 13 Liabilities for Breach**

Except as agreed in other provisions hereof, the Parties shall assume the following liabilities for breach:

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| | |
|:---|:---|
| 13.1 | Party A's Liabilities for Breach of Contract |
|  | Party A shall compensate in accordance with applicable laws and regulations for any reputation or image damage or economic losses to Party B, arising from false information contained in the statement of facts made by Party A to Party B, or in the Delinquent Customer information submitted by Party A to Party B, unless such false information is caused by the Delinquent Customer's submission of false information to Party A or because the information submitted by the Delinquent Customer is incomplete, untrue or inaccurate. |
| 13.2 | Party B's Liabilities for Breach of Contract |

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(1) Party B shall be liable for compensation for any reputation or image damage or economic losses to Party A, arising from Party B or its personnel's breach of any provision hereof, or commitment of any illegal act, misconduct, or conduct beyond the authorized scope hereof or other faults during the performance of services hereunder. Party B shall assume the compensation liability for any loss so caused to the Delinquent Customers by the foregoing act of Party B or its personnel.

(2) Any cash repayment collected by Party B or its personnel from the Delinquent Customers or other related persons without written consent of Party A shall be immediately deposited into the account designated by Party A, and entitle Party A to liquidated damages at 0.05% of the amount of such cash repayment on a daily basis for the days of possession.

**Article 14 Dispute Resolution**

Any dispute in connection with this Contract shall first be resolved by the Parties through negotiation, and in case of failure to do so, it shall be brought before the people's court at the domicile of Party A.

**Article 15 Miscellaneous**

15.1 This Contract shall be made in duplicate with Party A and Party B each holding one copy of the same legal effect, and shall take effect from the date of seal by the Parties. The appendices to this Contract shall be integral parts of this Contract and of the same legal effect as this Contract.

15.2 Any matter not covered herein or any adjustment to the matters herein shall be otherwise agreed to by the Parties in a written supplementary agreement, which shall prevail and have the equal legal effect as this Contract.

[The remainder of this page is intentionally left blank.]

Party A: Party B: <br> Common Seal: Date: Common Seal: Date:

## Exhibit 10.6

**EXHIBIT 10.6**

**STRATEGIC COOPERATION AGREEMENT**

**BETWEEN**

**SHANGHAI BEIMING INFORMATION TECHNOLOGY CO., LTD.** 

**AND**

**RESEARCH CENTER ON VIRTUAL ECONOMY & DATA SCIENCE OF CHINESE ACADEMY OF SCIENCES**

**Party A: Shanghai Beiming Information Technology Co., Ltd.** (hereinafter referred to as "**Beiming Technology**" or the "**Company**")

**Party B: Research Center on Virtual Economy & Data Science of Chinese Academy of Sciences** (hereinafter referred to as the "**Research Center**")

**Chapter 1 General Provisions**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 It is unanimously agreed, upon amicable negotiation, to build a joint laboratory and establish a comprehensive, long-term and stable cooperative relationship between Party A and Party B on the principle of complementary advantage, so as to improve the innovative technological strength of the Company, realize the benign development of the Company and promote the effective transformation of any scientific research results of the Chinese Academy of Sciences.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2 The Key Laboratory of Big Data Mining and Knowledge Management, Chinese Academy of Sciences is founded in reliance on the Research Center on Virtual Economy & Data Science of Chinese Academy of Sciences, which has gathered a group of talents from School of Mathematical Sciences, School of Computer and Control Engineering, School of Economics and Management, of the University of Chinese Academy of Sciences.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3 Beijing Zhongke Wuji Data Technology Co., Ltd. (hereinafter referred to as the "**Platform Company**") is a platform company which aims to transform research results, as established by the Research Center on Virtual Economy & Data Science of Chinese Academy of Sciences with other joint venturers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4 The Joint Laboratory will carry out extensive cooperation mainly in the fields of basic technology research, high-tech application, and talent development.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.5 Any specific cooperation project will be specified in a separate technical agreement or contract, which will also serve as the basis for determining the development funds for the project.

**Chapter 2 Content of Cooperation**

2.1 Name of the Joint Laboratory

Chinese Name:

**中国科学院虚拟经济与数据科学研究中心, 上海北溟信息科技有限公司**

**大数据联合实验室**

**Research Center on Virtual Economy & Data Science of Chinese Academy of Sciences - Shanghai Beiming Information Technology Co., Ltd.**

**Big Data Joint Laboratory**

(hereinafter referred to as the "**Joint Laboratory**")

2.2 Areas of Cooperation

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| | |
|:---|:---|
| 1. | Basic technology research |
| ✧ | Projects in big data research |
| ✧ | Research on algorithm and model |
| ✧ | Other projects |
| 2. | High-tech application |
| ✧ | Research on big data with respect to credit rating |
| ✧ | Research on big data with respect to smart city |
| ✧ | Research on big data with respect to public security |
| ✧ | Research on big data with respect to national defense construction |

---

---

| | |
|:---|:---|
| ✧ | Research on big data with respect to other aspects |
| 3. | Talent development |
| ✧ | Establishment of doctoral stations |
| ✧ | Training of expertise in specialized technical areas |
| 4. | Method of Cooperation: |

---

Any technical cooperative project will be carried out primarily in areas that are in line with the product strategic development direction of Beiming Technology. The methods of cooperation include, but are not limited to:

1) Research projects provided and funded by Party A;

2) Third-party development projects undertaken by Party A in cooperation with Party B or the Platform Company;

3) Other beneficial modes of cooperation actively explored by the Parties.

**Chapter 3 Funds, Facilities, and Finance Management**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 Party A will have its Finance Department open a specific account for any funds provided by Party A for the research projects and the Joint Laboratory, including overhead and project development fees, which shall be used for centralized management of all costs incurred by the projects, to ensure the funds be used for the specified purposes only.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 The Joint Laboratory will endeavor to obtain R&D funding and projects (such as the 863 Plan, provincial production, education and research projects, etc.) from national, provincial or other channels, by fully utilizing its platform.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3 Fixed assets, such as instruments, equipment, software and materials purchased with the cooperation funds for the cooperation projects, shall be owned by the Party who pays, and managed by the Joint Laboratory during the usage period.

**Chapter 4 Responsibilities of the Parties**

4.1 Party A's Responsibilities

1. To provide funds to the Joint Laboratory;

2. To propose any research topics to Party B on a priority basis if there are any project requirements;

3. To provide convenience for Party B's personnel during their work at Party A;

4. To commercialize the results of the cooperative projects of the Joint Laboratory; and

5. To provide Party B with market demand information on a regular basis.

4.2 Party B's Responsibilities

1. To provide Party A with necessary office space, laboratory equipment, etc.;

2. To assign any existing scientific research results to Party A on a priority basis;

3. To accomplish the scientific research results and provide relevant information to Party A pursuant to the project agreement;

4. To facilitate Party A's personnel while working at Party B, and to provide support for the skill development and educational advancement of Party A's employees;

5. To assist Party A in the commercialization of the results of the cooperative projects.

**Chapter 5 Organization Body and Management**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 The Joint Laboratory shall be a non-independent organization jointly operated by Party A and Party B, under dual leadership of Beiming Technology and the Research Center. The Joint Laboratory shall manage the cooperation between Party B and Party A in a unified manner and coordinate any cooperation tasks.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 The organization bodies of the Joint Laboratory shall consist of a Joint Laboratory Technical Committee and a Joint Laboratory Administrative Committee:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The Joint Laboratory Technical Committee will be responsible for the annual work report of the Joint Laboratory and for making decisions on major issues and technical directions arising from the operation of the Joint Laboratory. The directors of the Administrative Committee and of the Technical Committee shall be jointly served by the competent leaders of Party A and Party B. There will be four members in both the Administrative Committee and of the Technical Committee, two from Party A and two from Party B, served by persons recommended by Party A and Party B.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The Joint Laboratory Administrative Committee will adopt a director-accountability mechanism, and consist of four members, with the director appointed by Party B, the deputy-director appointed by Party A and two staff members respectively appointed by Party A and Party B. The director will be in charge of the use of the implementation facilities and funds and other daily management work of the cooperative projects of the Joint Laboratory, and may authorize an appropriate person of the Joint Laboratory to take charge of the work.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3 The scientific research tasks of the Joint Laboratory will be comprised of (i) the research topics funded or proposed by Party A; and (ii) the cooperative development projects jointly proposed by Party A and Party B. The Joint Laboratory will carry out project research and topics management jointly according to the technical cooperation agreement by and between the Parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.4 The Joint Laboratory will organize technical exchanges and seminars from time to time, and Party B shall be responsible for disclosing its technological results to Party A in a timely manner, so as to facilitate more project cooperation between the Parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.5 The Joint Laboratory will have technical discussions at least once a year.

**Chapter 6 Attribution and Sharing of Research Results; Non-disclosure of Cooperation**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1 Without the written consent of both Party A and Party B, neither Party shall disclose or transfer to a third party in any way any research results of the cooperative projects initiated and completed by the Joint Laboratory.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2 Party A shall have priority to use [the results of] any project completed with the funds solely provided by Party A. If such project [results] are used by Party A, then Party B shall no longer use the same for any commercial purpose. In principle, the Parties shall jointly own the intellectual property rights attributable to Joint Laboratory cooperative projects that are jointly proposed by the Parties, and any patent application for which shall not be made unless mutually decided and shall be subject to the corresponding project agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3 Any research results obtained during the project cooperation period which are filed for technical certification or awards shall take (i) Party A as the first completion entity and Party B as the second completion entity, for those led by Party A; and (ii) Party B as the first completion entity and Party A as the second completion entity, for those led by Party B.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.4 Party B may use the research results of the cooperative project of the Joint Laboratory for teaching and research activities, and may, with the written consent of the Joint Laboratory and to the extent of not involving any technical secret and Party A's trade secret, publish a paper which shall indicate the support of the Joint Laboratory.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.5 The original records, photos, audio recordings, video recordings, samples, disks, documents, experimental results and other authentic records of the Joint Laboratory in the R&D process shall be properly kept by the Joint Laboratory, which shall be strictly prohibited from being consulted or used by anyone other than the researchers of the Parties or from being disclosed to any third party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.6 The research results developed through the cooperation between the Parties or between Party A and the Platform Company, as well as all the results and big data resources legally obtained in the process of external cooperation shall be unconditionally accessible by both Parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.7 The text and the content hereof, and any information related to the matters mentioned herein and the specific development projects under the framework hereof shall be confidential information, and kept in confidence by both Party A and Party B.

**Chapter 7 Term, Amendment and Termination of Agreement**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1 The Parties shall strictly comply with all provisions of this Agreement once executed. It is agreed that the term of this Agreement shall be three years, and the Parties will decide on whether to renew or terminate the Agreement based on the then cooperation circumstances six months before the expiration of the term.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2 Any cooperation between the affiliates and subsidiaries of Party A and Party B shall be made under the framework of this Agreement. Such cooperation between the affiliates and subsidiaries hereunder shall be integral parts of the performance of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.3 This Agreement may be amended or terminated, if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. it is agreed by the Parties through negotiation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. it becomes impossible to perform this Agreement due to the occurrence of a *force majeure* event; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. a Party breaches this Agreement which makes it unnecessary to continue the performance of this Agreement, in which case, the non-breaching Party shall have the right to terminate this Agreement by giving a notice to the breaching Party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.4 Any dispute arising from the interpretation and performance of the Agreement shall be resolved through negotiation based on the principles of amicable cooperation, equality and mutual understanding. Where such dispute cannot be resolved through negotiation, it shall be submitted to the Beijing Arbitration Commission for arbitration in accordance with the rules of the Commission.

**Chapter 8 Supplementary Provisions**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1 This Agreement shall take effect as of the date of signature and/or seal by the Parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2 Any matter not covered herein shall be resolved by the Parties through amicable negotiation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3 This Agreement shall be made in quadruplicate with the Parties each holding two copies of the same legal effect.

(THIS PAGE IS THE SIGNATURE PAGE AND INTENTIONALLY LEFT BLANK.)

Signed for and on behalf of Party A: Seal of Party A: September 2, 2020 Signed for and on behalf of Party B: Seal of Party B: September 1, 2020

## Exhibit 21.1

**EXHIBIT 21.1**

**GOODFAITH TECHNOLOGY INC.**

**Subsidiaries of the Registrant**

---

| | |
|:---|:---|
| **Subsidiaries** | **Place of Incorporation** |
| GoodFaith Technology Holdings Limited | British Virgin Islands |
| GoodFaith Technology Limited | Hong Kong |
| Suzhou Chuangzhixin Information Technology Co., Ltd. | PRC |
| Suzhou GoodFaith Information Technology Co., Ltd. | PRC |
| Beihai Beiming Investment Co., Ltd. | PRC |
| Shanghai Beiming Information Technology Co., Ltd. | PRC |
| Shanghai Yuyi Information Technology Co., Ltd. | PRC |
| Shenzhen Xindesheng Financial Services Co., Ltd. | PRC |
| Jiujiang Xindesheng Information Technology Co., Ltd. | PRC |
| Guiyang Xindesheng Information Technology Co., Ltd. | PRC |
| Chengdu Xindesheng Information Technology Co., Ltd. | PRC |
| Huizhou Xindesheng Information Technology Co., Ltd. | PRC |
| Beihai Xindesheng Information Technology Co., Ltd. | PRC |

---

## Exhibit 23.1

**EXHIBIT 23.1**

**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

We hereby consent to the inclusion in the Registration Statement on Form F-1 of GoodFaith Technology Inc. (the "Company") of our report dated July 13, 2022, except for Notes 1, 2 and 10, as to which the date is September 20, 2022, Note 3, as to which the date is December 5, 2022, and Note 14, as to which the date is March 30, 2023, with respect to our audit of the Company's consolidated financial statements as of December 31, 2021 and 2020 and for each of the years in the two-year period ended December 31, 2021, which appears in the Prospectus as part of the Registration Statement. We also consent to the reference to our Firm under the caption "Experts" in such Prospectus.

/s/ UHY LLP

New York, New York

March 30, 2023

## Exhibit 23.5

**EXHIBIT 23.5**

![](goodfaith_ex235img1.jpg)

Date: 13 March 2023 Our ref: 036.67958-13

**GoodFaith Technology Inc.**

1st Floor, Building 5, Lane 55, Chuanhe Road,

Pudong New District, Shanghai,

The People's Republic of China, 200135

Re: **Consent of Ince & Co**

Dear Sirs or Madams,

We, Ince & Co, have acted as the Hong Kong legal advisers to GoodFaith Technology Inc. (the "Company") in connection with the Company's registration statement on Form F-1, including all amendments or supplements thereto (the "Registration Statement"), initially filed with the U.S. Securities and Exchanges Commission under the U.S. Securities Act of 1933, as amended, on July 13, 2022, relating to the initial public offering by the Company of its ordinary shares and listing of the Company's ordinary shares on the Nasdaq Capital Market.

We hereby consent to the inclusion in the Registration Statement of our name, our view, letters, statements, opinion and/or reports, as appropriate, and all references thereto, in the form and context in which they respectively appear in the Registration Statement. We also consent to the reference to our Firm under the caption "Hong Kong counsel" in the Registration Statement.

Yours faithfully,

---

| |
|:---|
| /s/ Ince & Co |
| **Ince & Co** |

---

![](goodfaith_ex235img3.jpg)

## Exhibit 99.1

**EXHIBIT 99.1**

**CODE OF BUSINESS CONDUCT AND ETHICS OF**

**GOODFAITH TECHNOLOGY INC.**

**INTRODUCTION**

**Purpose**

This Code of Business Conduct and Ethics (this "Code") contains general guidelines for the conduct of business of GoodFaith Technology Inc., a Cayman Islands company (the "<u>Company</u>"), consistent with the highest standards of business ethics. To the extent where this Code requires a higher standard than required by commercial practice or applicable laws, rules or regulations, we shall adhere to these higher standards.

This Code applies to all the directors, officers, and employees of the Company and its subsidiaries (which, unless the context otherwise requires, are collectively referred to as the "Company" in this Code). We refer to all persons covered by this Code as "<u>Company employees</u>" or simply "<u>employees</u>." We also refer our chief executive officer and our chief financial officer as our "<u>principal financial officers</u>."

**Seeking Help and Information**

This Code is not intended to be a comprehensive rulebook and cannot address every situation that you may face. If you feel uncomfortable about a situation or if you have any doubts whether it is consistent with the Company's ethical standards, do seek help. We encourage you to first contact your supervisor for help. If your supervisor cannot answer your question or resolve your problem, or if you do not feel comfortable contacting your supervisor, you may contact the Compliance Officer of the Company, who shall be a person appointed by the Board of Directors of the Company. Xiaowei Wang has been appointed by the Board of Directors of the Company as the Compliance Officer of the Company. The Company will notify you if there is a change in the appointment of the Compliance Officer. You may remain anonymous and will not be required to reveal your identity in your communication to the Company.

**Reporting Violations of the Code**

All employees have a duty to report any known or suspected violation of this Code, including any violation of the laws, rules, regulations or policies that apply to the Company. If you know of or suspect a violation of this Code, immediately report the conduct to your supervisor. Your supervisor will contact the Compliance Officer, who will work with you and your supervisor to investigate the matter. If you do not feel comfortable reporting the matter to your supervisor or you do not get a satisfactory response, you may contact the Compliance Officer directly. Employees making a report need not leave their name or other personal information and reasonable efforts will be used to conduct the investigation that follows from the report in a manner that protects the confidentiality and anonymity of the employee submitting the report. All reports of known or suspected violations of the law or this Code will be handled sensitively and with discretion. Your supervisor, the Compliance Officer and the Company will protect your confidentiality to the extent possible, consistent with law and the Company's need to investigate your report.

It is the Company's policy that any employee who violates this Code will be subject to appropriate discipline, which may include termination of employment. This determination will be based upon the facts and circumstances of each situation. An employee accused of violating this Code will be given an opportunity to present his or her version of the events at issue prior to any determination of appropriate discipline. Employees who violate the law or this Code may expose themselves to substantial civil damages, criminal fines and prison terms. The Company may also face substantial fines and penalties, and many incur damage to its reputation and standing in the community. Your conduct as a representative of the Company, if it does not comply with the law or with this Code, can result in serious consequences for both you and the Company.

**Policy Against Retaliation**

The Company prohibits retaliation against an employee who, in good faith, seeks help or reports known or suspected violations. Any reprisal or retaliation against an employee because such employee, in good faith, sought help or filed a report will be subject to disciplinary action, including potential termination of employment.

**Waivers of the Code**

Waivers of this Code for employees may be granted only by an executive officer of the Company. Any waiver of this Code for our directors, executive officers or other principal financial officers may be granted only by our Board of Directors or the appropriate committee of our Board of Directors and will be disclosed to the public as required by law or the rules of Nasdaq.

**CONFLICTS OF INTEREST**

**Identifying Potential Conflicts of Interest**

A conflict of interest may occur when an employee's private interest interferes, or appears to interfere, with the interests of the Company as a whole. You should avoid any private interest that influences your ability to act in the interests of the Company or that makes it difficult to perform your work objectively and effectively.

Identifying potential conflicts of interest may not always be clear-cut. The following situations are examples of conflicts of interest:

· <u>Outside Employment</u>. No employee should be employed by, serve as a director of, or provide any services not in his or her capacity as a Company's employee to a company that is a material customer, supplier, or competitor of the Company.

· <u>Improper Personal Benefits</u>. No employee should obtain any material (as to him or her) personal benefits or favors because of his or her position in the Company. Please see "Gifts and Entertainment" below for additional guidelines in this area.

· <u>Financial Interests</u>. No employee should have a significant financial interest (ownership or otherwise) in any company that is a material customer, supplier or competitor of the Company. A "significant financial interest" means (i) ownership of greater than 1% of the equity of a material customer, supplier or competitor or (ii) an investment in a material customer, supplier or competitor that represents more than 5% of the total assets of the employee.

· <u>Loans or Other Financial Transactions</u>. No employee should obtain loans or guarantees of personal obligations from, or enter into any other personal financial transaction with, any company that is a material customer, supplier or competitor of the Company. This guideline does not prohibit arms-length transactions with banks, brokerage firms or other financial institutions.

· <u>Service on Boards and Committees</u>. No employee should serve on a board of directors or trustees or on a committee of any entity (whether profit or not-for-profit) whose interests would reasonably be expected to be in conflict with those of the Company.

· <u>Actions of Family Members</u>. The actions of family members outside the workplace may also give rise to the conflicts of interest described above because they may influence an employee's objectivity in the making of decisions on behalf of the Company. For the purposes of this Code, " <u>family members</u> " include your spouse or life-partner, brothers, sisters and parents, in-laws and children, whether such relationships are by blood or adoption.

For the purposes of this Code, a company is considered to be a "material" customer if that company has made payments to the Company in the past year in excess of US$100,000 or 10% of the customer's gross revenues, whichever is greater. A company is considered as a "material" supplier if that company has received payments from the Company in the past year in excess of US$100,000 or 10% of the supplier's gross revenues, whichever is greater. A company is considered as a "material" competitor if that company competes in the Company's line of business and has annual gross revenues from such line of business in excess of US$500,000. If you are uncertain whether a particular company is a material customer, supplier or competitor, please contact the Compliance Officer for assistance.

**Disclosure of Conflicts of Interest**

The Company requires employees to disclose any situations that would reasonably be expected to give rise to a conflict of interest. If you suspect that you have a conflict of interest, or something that others could reasonably perceive as a conflict of interest, you must report it to your supervisor or the Compliance Officer. Your supervisor and the Compliance Officer will work with you to determine whether you have a conflict of interest and, if so, how best to address it. Although conflicts of interest are not automatically prohibited, they are not desirable and may only be waived as described in "Waivers of the Code" above.

**CORPORATE OPPORTUNITIES**

As an employee of the Company, you have an obligation to advance the Company's interests when the opportunity to do so arises. If you discover or are presented with a business opportunity through the use of corporate property, information, or because of your position in the Company, you should first present the business opportunity to the Company before pursuing the opportunity in your individual capacity. No employee may use corporate property, information, or his or her position in the Company for personal gain or in a manner that may compete with the Company.

You should disclose to your supervisor the terms and conditions of each business opportunity covered under this Code that you wish to pursue. Your supervisor will contact the Compliance Officer and the appropriate management personnel to determine whether the Company wishes to pursue the business opportunity. If the Company waives its right to pursue the business opportunity, you may pursue the business opportunity on the same terms and conditions as originally proposed and consistent with the other ethical guidelines set forth in this Code.

**Confidential Information and Company's Property**

Employees have access to a variety of confidential information while being employed at the Company. Confidential information includes all non-public information that might be of use to competitors, or, if disclosed, harmful to the Company or its customers. Each employee has a duty to respect and safeguard the confidentiality of the Company's information and the information of our suppliers and customers, except when disclosure is authorized or legally mandated. In addition, you must refrain from using any confidential information from any previous employment if, in doing so, you could reasonably be expected to breach your duty of confidentiality to your former employers. An employee's obligation to protect confidential information continues after he or she leaves the Company. Unauthorized disclosure of confidential information could cause competitive harm to the Company and/or its customers and could result in legal liability to you and the Company.

Employees also have a duty to protect the Company's intellectual property and other business assets. The intellectual property, business systems and the security of the Company are critical to the Company's business.

Any questions or concerns on whether the disclosure of Company information is legally mandated should be promptly referred to the Compliance Officer.

**Safeguarding Confidential Information and Company's Property**

Care must be taken to safeguard and protect confidential information and the Company's property. Accordingly, the following measures should be adhered to:

· The Company's employees should conduct their business and social activities so as not to risk inadvertent disclosure of confidential information. For example, when not in use, confidential information should be securely stored. Besides, review of confidential documents or discussion of confidential subjects in public places (e.g., airplanes, trains, taxis, buses, etc.) should not be conducted so as to prevent being overheard or accessed by unauthorized persons.

· When in the Company's offices, confidential matters should not be discussed within hearing range of visitors or others not working on such matters.

· Confidential matters should not be discussed with other employees not working on such matters or with friends or relatives, including those living in the same household as a Company's employee.

· The Company's employees are only to access, use, and disclose confidential information that is necessary for them to perform their duties. They are not to disclose confidential information to other employees or contractors at the Company unless it is necessary for those employees or contractors to have such confidential information in the course of their duties.

· The Company's files, personal computers, networks, software, internet access, internet browser programs, emails, voice mails, and other business equipment (e.g., desks and cabinets) and resources are provided for business use, and they are the exclusive property of the Company. Misuse of such Company's property is not tolerable.

**COMPETITION AND FAIR DEALING**

All employees are obligated to deal fairly with fellow employees and with the Company's customers, suppliers and competitors. Employees should not take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair-dealing practice.

**Relationships with Customers**

Our business success depends upon our ability to foster lasting customer relationships. The Company is committed to dealing with customers fairly, honestly, and with integrity. Specifically, you should keep the following guidelines in mind when dealing with customers:

· Information we supply to customers should be accurate and complete to the best of our knowledge. Employees should not deliberately misrepresent information to customers.

· Employees should not refuse to sell, service, or maintain products the Company has produced simply because a customer is buying products from another supplier.

· Customer entertainment should not exceed the reasonable and customary business practice of the Company. Employees should not provide entertainment or other benefits that could be viewed as an inducement to or a reward for customer's purchase decisions. Please see "Gifts and Entertainment" below for additional guidelines in this area.

**Relationships with Suppliers**

The Company deals fairly and honestly with its suppliers. This means that our relationships with suppliers are based on price, quality, service, and reputation, among other factors. Employees dealing with suppliers should carefully guard their objectivity. Specifically, no employee should accept or solicit any personal benefit from a supplier or potential supplier that might compromise, or appear to compromise, their objective assessment of the supplier's products and prices. Employees can give or accept promotional items of nominal value or moderately scaled entertainment within the limits of reasonable and customary business practice of the Company. Please see "Gifts and Entertainment" below for additional guidelines in this area.

**Relationships with Competitors**

The Company is committed to free and open competition in the marketplace. Employees should avoid actions that would be contrary to laws governing competitive practices in the marketplace, including antitrust laws. Such actions include misappropriation and/or misuse of a competitor's confidential information or making false statements about the competitor's business and business practices.

**PROTECTION AND USE OF COMPANY'S ASSETS**

Employees should protect the Company's assets and ensure their efficient use for legitimate business purposes only. Theft, carelessness and waste have a direct impact on the Company's profitability. The use of Company funds or assets, whether or not for personal gain, for any unlawful or improper purpose is prohibited.

To ensure the protection and proper use of the Company's assets, each employee should:

· exercise reasonable care to prevent theft, damage or misuse of Company's property;

· report the actual or suspected theft, damage or misuse of Company's property to a supervisor;

· use the Company's telephone system, other electronic communication services, written materials and other property primarily for business-related purposes;

· safeguard all electronic programs, data, communications and written materials from inadvertent access by others; and

· use Company's property only for legitimate business purposes, as authorized in connection with your job responsibilities.

Employees should be aware that Company's property includes all data and communications transmitted or received to or by, or contained in, the Company's electronic or telephonic systems, as well as all written communications. Employees and other users of Company's property should have no expectation of privacy with respect to these communications and data. To the extent permitted by law, the Company has the ability, and reserves the right, to monitor all electronic and telephonic communication. These communications may also be subject to disclosure to law enforcement or government officials.

**GIFTS AND ENTERTAINMENT**

The act of giving and receiving of gifts is a common business practice. Appropriate business gifts and entertainment are welcome courtesies designed to build relationships and understanding among business partners. However, gifts and entertainment should not compromise, or appear to compromise, your ability to make objective and fair business decisions.

It is your responsibility to use good judgment in this area. As a general rule, you may give or receive gifts or entertainment to or from customers or suppliers only if the gift or entertainment would not be viewed as an inducement to or reward for any particular business decision. All gifts and entertainment expenses should be properly accounted for on expense reports. The following specific examples may be helpful:

· <u>Meals and Entertainment</u>. You may occasionally accept or give meals, refreshments or other entertainment if:

· The items are of reasonable value;

· The purpose of the meeting or attendance at the event is business related; and

· The expenses would be paid by the Company as a reasonable business expense if not paid for by another party.

Entertainment of reasonable value may include food and tickets for sporting and cultural events if they are generally offered to other customers, suppliers or vendors.

· <u>Advertising and Promotional Materials</u>. You may occasionally accept or give advertising or promotional materials of nominal value.

· <u>Personal Gifts</u>. You may accept or give personal gifts of reasonable value that are related to recognized special occasions, such as a graduation, promotion, new job, wedding, retirement or a holiday. A gift is also acceptable if it is based on a family or personal relationship and unrelated to the business involved between the individuals.

· <u>Gifts Rewarding Service or Accomplishment</u>. You may accept a gift from a civic, charitable or religious organization specifically related to your service or accomplishment.

You must be particularly careful that gifts and entertainment are not construed as bribes, kickbacks, or other improper payments. See "The Foreign Corrupt Practices Act" below for a more detailed discussion of our policies on giving or receiving gifts related to business transactions.

You should make every effort to refuse or return a gift that is beyond these permissible guidelines. If it would be inappropriate to refuse a gift or you are unable to return a gift, you should promptly report the gift to your supervisor. Your supervisor will bring the gift to the attention of the Compliance Officer, who may require you to donate the gift to an appropriate community organization. If you have any questions on whether it is permissible to accept a gift or something else of value, contact your supervisor or the Compliance Officer for additional guidance.

**COMPANY RECORDS**

Accurate and reliable records are crucial to our business. Our records are the basis of our earnings statements, financial reports and other disclosures to the public and guide our business decision-making and strategic planning. Company records include booking information, payroll, timecards, travel and expense reports, e-mails, accounting and financial data, measurement and performance records, electronic data files and all other records maintained in the ordinary course of our business.

All Company records must be complete, accurate and reliable in all material respects. Undisclosed or unrecorded funds, payments or receipts are inconsistent with our business practices and are prohibited. You are responsible for understanding and complying with our record-keeping policy. Ask your supervisor if you have any questions.

**ACCURACY OF FINANCIAL REPORTS AND OTHER PUBLIC COMMUNICATIONS**

As a public company we are subject to various securities laws, regulations and reporting obligations. These laws, regulations and obligations and our policies require the disclosure of accurate and complete information regarding the Company's business, financial condition and results of operations. Inaccurate, incomplete or untimely reporting will not be tolerated and can severely damage the Company's reputation and integrity, and result in legal liability.

It is essential that the Company's financial records, including all filings with the Securities and Exchange Commission ("SEC") be accurate and timely. Accordingly, in addition to adhering to the conflict of interest policy and other policies and guidelines under this Code, the principal financial officers and other senior financial officers must take special care to exhibit integrity at all times and to instill this value within their organizations. In particular, these senior officers must ensure their conduct is honest and ethical that they abide by all public disclosure requirements by providing full, fair, accurate, timely and understandable disclosures, and that they comply with all other applicable laws and regulations. These financial officers must also understand and strictly comply with generally accepted accounting principles in the U.S. and all standards, laws and regulations for accounting and financial reporting of transactions, estimates and forecasts.

In addition, U.S. federal securities law requires the Company to maintain proper internal books and records and to devise and maintain an adequate system of internal accounting controls. The SEC has supplemented the statutory requirements by adopting rules that prohibit (1) any person from falsifying records or accounts subject to the above requirements and (2) officers or directors from making any materially false, misleading, or incomplete statement to an accountant in connection with an audit or any filing with the SEC. These provisions reflect the SEC's intent to discourage officers, directors, and other persons with access to the Company's books and records from taking action that might result in the communication of materially misleading financial information to the investing public.

**COMPLIANCE WITH LAWS AND REGULATIONS**

Each employee has an obligation to comply with all laws, rules and regulations applicable to the Company's operations. These include, without limitation, laws covering bribery and kickbacks, copyrights, trademarks and trade secrets, information privacy, insider trading, illegal political contributions, antitrust prohibitions, foreign corrupt practices, offering or receiving gratuities, environmental hazards, employment discrimination or harassment, occupational health and safety, false or misleading financial information or misuse of corporate assets. You are expected to understand and comply with all laws, rules and regulations that apply to your job position. If any doubt exists about whether a course of action is lawful, you should seek advice from your supervisor or the Compliance Officer.

**COMPLIANCE WITH INSIDER TRADING LAWS**

The Company has an insider trading policy, which may be obtained from the Compliance Officer. The following is a summary of some of the general principles relevant to insider trading, and should be read in conjunction with the aforementioned specific policy.

Company employees are prohibited from trading in shares or other securities of the Company while in possession of material, non-public information about the Company. In addition, Company employees are prohibited from recommending, "tipping" or suggesting that anyone else buy or sell shares or other securities of the Company on the basis of material, non-public information. Company employees who obtain material non-public information about another company in the course of their employment are prohibited from trading in shares or securities of the other company while in possession of such information or "tipping" others to trade on the basis of such information. Violation of insider trading laws can result in severe fines and criminal penalties, as well as disciplinary action by the Company, up to and including termination of employment.

Information is "non-public" if it has not been made generally available to the public by means of a press release or other means of widespread distribution. Information is "material" if a reasonable investor would consider it important in a decision to buy, hold or sell stock or other securities. As a rule of thumb, any information that would affect the value of stock or other securities should be considered material. Examples of information that is generally considered "material" include:

· Financial results or forecasts, or any information that indicates the Company's financial results may exceed or fall short of forecasts or expectations;

· Important new products or services;

· Pending or contemplated acquisitions or dispositions, including mergers, tender offers or joint venture proposals;

· Possible management changes or changes of control;

· Pending or contemplated public or private sales of debt or equity securities;

· Acquisition or loss of a significant customer or contract;

· Significant write-offs;

· Initiation or settlement of significant litigation; and

· Changes in the Company's auditors or a notification from its auditors that the Company may no longer rely on the auditor's report.

The laws against insider trading are specific and complex. Any questions about information you may possess or about any dealings you have had in the Company's securities should be promptly brought to the attention of the Compliance Officer.

**PUBLIC COMMUNICATIONS AND PREVENTION OF SELECTIVE DISCLOSURE**

**Public Communications Generally**

The Company places a high value on its credibility and reputation in the community. What is written or said about the Company in the news media and investment community directly impacts our reputation, positively or negatively. Our policy is to provide timely, accurate and complete information in response to public requests (media, analysts, etc.), consistent with our obligations to maintain the confidentiality of competitive and proprietary information and to prevent selective disclosure of market-sensitive financial data. To ensure compliance with this policy, all news media or other public requests for information regarding the Company should be directed to the Company's Investor Relations Department. The Investor Relations Department will work with you and the appropriate personnel to evaluate and coordinate a response to the request.

**Prevention of Selective Disclosure**

Preventing selective disclosure is necessary to comply with United States securities laws and to preserve the reputation and integrity of the Company as well as that of all persons affiliated with it. "Selective disclosure" occurs when any person provides potentially market-moving information to selected persons before the news is available to the investing public generally. Selective disclosure is a crime under United States law and the penalties for violating the law are severe.

The following guidelines have been established to avoid improper selective disclosure. Every employee is required to follow these procedures:

· All contact by the Company with investment analysts, the press and/or members of the media shall be made through the chief executive officer, chief financial officer or persons designated by them (collectively, the "Media Contacts").

· Other than the Media Contacts, no officer, director or employee shall provide any information regarding the Company or its business to any investment analyst or member of the press or media.

· All inquiries from third parties, such as industry analysts or members of the media, about the Company or its business should be directed to a Media Contact. All presentations to the investment community regarding the Company will be made by us under the direction of a Media Contact.

· Other than the Media Contacts, any employee who is asked a question regarding the Company or its business by a member of the press or media shall respond with "No comment" and forward the inquiry to a Media Contact.

These procedures do not apply to the routine process of making previously released information regarding the Company available upon inquiries made by investors, investment analysts and members of the media.

Please contact the Compliance Officer if you have any questions about the scope or application of the Company's policies regarding selective disclosure.

**THE FOREIGN CORRUPT PRACTICES ACT**

**Foreign Corrupt Practices Act**

The Foreign Corrupt Practices Act of 1977 (the "FCPA") prohibits the Company and its employees and agents from offering or giving money or any other item of value to win or retain business or to influence any act or decision of any governmental official, political party, candidate for political office or official of a public international organization. Stated more concisely, the FCPA prohibits the payment of bribes, kickbacks or other inducements to foreign officials. This prohibition also extends to payments to a sales representative or agent if there is a reason to believe that the payment will be used indirectly for a prohibited payment to foreign officials. Violation of the FCPA is a crime that can result in severe fines and criminal penalties, as well as disciplinary action by the Company, up to and including termination of employment.

Certain small facilitation payments to foreign officials may be permissible under the FCPA if customary in the country or locality and intended to secure routine governmental action. Governmental action is "routine" if it is ordinarily and commonly performed by a foreign official and does not involve the exercise of discretion. For instance, "routine" functions would include setting up a telephone line or expediting a shipment through customs. To ensure legal compliance, all facilitation payments must receive prior written approval from the Compliance Officer and must be clearly and accurately reported as a business expense.

**ENVIRONMENT, HEALTH AND SAFETY**

The Company is committed to providing a safe and healthy working environment for its employees and avoiding adverse impact and injury to the environment and the communities in which we do business. Company's employees must comply with all applicable environmental, health and safety laws, regulations and Company's standards. It is your responsibility to understand and comply with the laws, regulations and policies that are relevant to your job. Failure to comply with environmental, health and safety laws and regulations can result in civil and criminal liability against you and the Company, as well as disciplinary action by the Company, up to and including termination of employment. You should contact the Compliance Officer if you have any questions about the laws, regulations and policies that apply to you.

**Environment**

All Company's employees should strive to conserve resources and reduce waste and emissions through recycling and other energy conservation measures. You have a responsibility to promptly report any known or suspected violations of environmental laws or any events that may result in a discharge or emission of hazardous materials. Employees whose jobs involve manufacturing have a special responsibility to safeguard the environment. Such employees should be particularly alert to the storage, disposal and transportation of waste, and handling of toxic materials and emissions into the land, water or air.

**Health and Safety**

The Company is committed not only to complying with all relevant health and safety laws, but also to conducting business in a manner that protects the safety of its employees. All employees are required to comply with all applicable health and safety laws, regulations and policies relevant to their jobs. If you have a concern about unsafe conditions or tasks that present a risk of injury to you, please report these concerns immediately to your supervisor or the Human Resources Department.

**EMPLOYMENT PRACTICES**

The Company pursues fair employment practices in every aspect of its business. The following is intended to be a summary of our employment policies and procedures. Copies of our detailed policies are available from the Human Resources Department. Company employees must comply with all applicable labor and employment laws, including anti-discrimination laws and laws related to freedom of association, privacy and collective bargaining. It is your responsibility to understand and comply with the laws, regulations and policies that are relevant to your job. Failure to comply with labor and employment laws can result in civil and criminal liability against you and the Company, as well as disciplinary action by the Company, up to and including termination of employment. You should contact the Compliance Officer or the Human Resources Department if you have any questions about the laws, regulations and policies that apply to you.

**Harassment and Discrimination**

The Company is committed to providing equal opportunity and fair treatment to all individuals on the basis of merit, without discrimination because of race, color, religion, national origin, gender (including pregnancy), sexual orientation, age, disability, veteran status or other characteristic protected by law. The Company prohibits harassment in any form, whether physical or verbal and whether committed by supervisors, non-supervisory personnel or non-employees. Harassment may include, but is not limited to, offensive sexual flirtations, unwanted sexual advances or propositions, verbal abuse, sexually or racially degrading words, or the display in the workplace of sexually suggestive objects or pictures.

If you have any complaints about discrimination or harassment, report such conduct to your supervisor or the Human Resources Department. All complaints will be treated with sensitivity and discretion. Your supervisor, the Human Resources Department and the Company will protect your confidentiality to the extent possible, consistent with law and the Company's need to investigate your concern. Where our investigation uncovers harassment or discrimination, we will take prompt corrective action, which may include disciplinary action by the Company, up to and including, termination of employment. The Company strictly prohibits retaliation against an employee who, in good faith, files a complaint.

Any member of management who has reason to believe that an employee has been the victim of harassment or discrimination or who receives a report of alleged harassment or discrimination is required to report it to the Human Resources Department immediately.

**CONCLUSION**

This Code of Business Conduct and Ethics contains general guidelines for conducting the business of the Company consistent with the highest standards of business ethics. If you have any questions about these guidelines, please contact your supervisor or the Compliance Officer. We expect all Company employees to adhere to these standards.

*This Code of Business Conduct and Ethics, as applied to the Company's principal financial officers, shall be the Company's "code of ethics" within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder.*

*This Code and the matters contained herein are neither a contract of employment nor a guarantee of continuing Company policy. We reserve the right to amend, supplement or discontinue this Code and the matters addressed herein, without prior notice, at any time.*

## Exhibit 99.2

**EXHIBIT 99.2**

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| | |
|:---|:---|
| ![](goodfaith_ex992img2.jpg) | 3006, Two Exchange Square<br> 8 Connaught Place<br> Central, Hong Kong<br> Tel: 852 2191 5788<br> Fax: 852 2191 8500<br> www.frost.com |

---

February 2, 2023

**GoodFaith Technology Inc.**

1st Floor, Building 5, Lane 55, Chuanhe Road

Pudong New District, Shanghai

The People's Republic of China, 200135

**Re: Consent of Frost & Sullivan (Beijing) Inc., Shanghai Branch Co.**

Ladies and Gentlemen,

We understand that GoodFaith Technology Inc. (the **"Company"**) intends to file a draft registration statement (the **"Registration Statement"**) with the United States Securities and Exchange Commission (the **"SEC"**) in connection with its proposed initial public offering (the **"Proposed IPO"**).

We hereby consent to the references to our name and the inclusion of information, data, and statements from our research reports and amendments thereto, including but not limited to the industry research report titled "The Intelligent Risk Management Market Study in China" (the **"Report"**), and any subsequent amendments to the Report, as well as the citation of our research report and amendments thereto, (i) in the Registration Statement and any amendments thereto, (ii) in any written correspondences with the SEC, (iii) in any other future filings with the SEC by the Company, including, without limitation, filings on Form 20-F, Form 6-K or other SEC filings (collectively, the **"SEC Filings"**), (iv) on the websites of the Company and its subsidiaries and affiliates, (v) in institutional and retail road shows and other activities in connection with the Proposed IPO, and in other publicity materials in connection with the Proposed IPO.

We further hereby consent to the filing of this letter as an exhibit to the Registration Statement and any amendments thereto and as an exhibit to any other SEC Filings. In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the U.S. Securities Act of 1933, as amended, or the rules and regulations of the SEC thereunder.

Yours faithfully

For and on behalf of

**Frost & Sullivan (Beijing) Inc., Shanghai Branch Co.**

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| |
|:---|
| /s/![](goodfaith_ex992img1.gif) |
| Name: Jessica Lau |
| Title: Executive Director |

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## Exhibit 99.3

**EXHIBIT 99.3**

**CONSENT OF JOEL GALLO**

GoodFaith Technology Inc. (the "Company") intends to file a Registration Statement on Form F-1 (together with any amendments or supplements thereto, the "Registration Statement") registering securities for issuance in its initial public offering. As required by Rule 438 under the Securities Act of 1933, as amended, the undersigned hereby consents to being named in the Registration Statement as a Director Nominee.

Dated: February 7, 2023

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| |
|:---|
| ![](goodfaith_ex993img1.jpg) |
| /s/ Joel Gallo |
| **Joel Gallo** |

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## Exhibit 99.4

**EXHIBIT 99.4**

**CONSENT OF BORYS PRIADKO** 

GoodFaith Technology Inc. (the "Company") intends to file a Registration Statement on Form F-1 (together with any amendments or supplements thereto, the "Registration Statement") registering securities for issuance in its initial public offering. As required by Rule 438 under the Securities Act of 1933, as amended, the undersigned hereby consents to being named in the Registration Statement as a Director Nominee.

Dated: February 7, 2023

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| |
|:---|
| /s/ Borys Priadko |
| **Borys Priadko**  |

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## Ex-Filing

**EXHIBIT 107**

**Calculation of Filing Fee Tables**

<u>F-1</u> 

(Form Type)

<u>GoodFaith Technology Inc.</u>

(Exact Name of Registrant as Specified in its Charter)

<u>Table 1: Newly Registered Securities</u>

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | <br>**Security**<br>**Type** | <br>**Security**<br>**Class**<br>**Title** | **Fee**<br>**Calculation**<br>**or Carry**<br>**Forward**<br>**Rule** |<br><br>**Amount**<br>**Registered** | **Proposed**<br>**Maximum**<br>**Offering**<br>**Price Per**<br>**Unit** | **Proposed**<br>**Maximum**<br>**Aggregate**<br>**Offering**<br>**Price<sup>(1)</sup>** |<br><br>**Fee Rate** |<br>**Amount of**<br>**Registration**<br>**Fee** |
|  | Equity | Ordinary shares, par value $0.0001 per share<sup>(2)</sup> | Rule 457(a) | 3450000 | $6.00 | $20700000 | 0.00011020 | $22281.14 |
| Fees to Be Paid | Equity | Representative's warrants<sup>(3)</sup> | Rule 457(g) | – | – | – | – | – |
|  | Equity | Ordinary shares underlying the representative's warrants | Rule 457(a) | 276000 | $7.80 | $2152800 | 0.00011020 | $237.24 |
|  | **Total Offering Amounts** | **Total Offering Amounts** | **Total Offering Amounts** | **Total Offering Amounts** |  | $22852800 |  | $2518.38 |
|  | **Total Fees Previously Paid** | **Total Fees Previously Paid** | **Total Fees Previously Paid** | **Total Fees Previously Paid** |  |  |  | $0 |
|  | **Total Fee Offset** | **Total Fee Offset** | **Total Fee Offset** | **Total Fee Offset** |  |  |  | $0 |
|  | **Net Fee Due** | **Net Fee Due** | **Net Fee Due** | **Net Fee Due** |  |  |  | $2518.38 |

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_______________

(1) Estimated solely for the purpose of determining the amount of registration fee in accordance with Rule 457(a) under the Securities Act of 1933, as amended (the "Securities Act"). Includes ordinary shares that may be purchased by the underwriters pursuant to their option to purchase additional ordinary shares to cover over-allotment, if any.

(2) In accordance with Rule 416, the Registrant is also registering an indeterminate number of additional ordinary shares that shall be issuable after the date hereof as a result of share splits, share dividends, or similar transactions.

(3) The Registrant will issue to the representative of the several underwriters warrants to purchase a number of ordinary shares equal to an aggregate of 8% of the ordinary shares sold in the offering, including any ordinary shares issued upon exercise of the underwriters' over-allotment option. The exercise price of the representative's warrants is equal to 130% of the offering price of the ordinary shares offered hereby. The representative's warrants are exercisable at any time, and from time to time, in whole or in part, after the date of issuance and expiring on the fifth-year anniversary of the commencement of sales of ordinary shares in this offering. In accordance with Rule 457(g) under the Securities Act, because the Registrant's ordinary shares underlying the representative's warrants are registered hereby, no separate registration fee is required with respect to the warrants registered hereby.