# EDGAR Filing Document

**Accession Number:** 0001917890
**File Stem:** 0001213900-23-016136
**Filing Date:** 2023-3
**Character Count:** 1101866
**Document Hash:** b68914b2b5e486f1e7227eeebc334d6f
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-23-016136.hdr.sgml**: 20230301

**ACCESSION NUMBER**: 0001213900-23-016136

**CONFORMED SUBMISSION TYPE**: F-1

**PUBLIC DOCUMENT COUNT**: 82

**FILED AS OF DATE**: 20230301

**DATE AS OF CHANGE**: 20230301

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** PSI Group Holdings Ltd.
- **CENTRAL INDEX KEY:** 0001917890
- **STANDARD INDUSTRIAL CLASSIFICATION:** ARRANGEMENT OF TRANSPORTATION OF FREIGHT & CARGO [4731]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** K3
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** F-1
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 333-270168
- **FILM NUMBER:** 23692935

**BUSINESS ADDRESS:**
- **STREET 1:** UNIT 1002, 10F, JOIN-IN HANG SING CENTRE
- **STREET 2:** NO.2-16 KWAI FUNG CRESENT, KWAI CHUNG
- **CITY:** NEW TERRITORIES
- **STATE:** K3
- **ZIP:** 999077
- **BUSINESS PHONE:** 85227543320

**MAIL ADDRESS:**
- **STREET 1:** UNIT 1002, 10F, JOIN-IN HANG SING CENTRE
- **STREET 2:** NO.2-16 KWAI FUNG CRESENT, KWAI CHUNG
- **CITY:** NEW TERRITORIES
- **STATE:** K3
- **ZIP:** 999077

**As filed with the U.S. Securities and Exchange Commission on March 1, 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**

**PSI Group Holdings Ltd**

(Exact name of registrant as specified in its charter)

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| | | |
|:---|:---|:---|
| **Cayman Islands** | **4731** | **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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**Unit 1002, 10/F, Join-in Hang Sing Centre**

**No.2-16 Kwai Fung Crescent, Kwai Chung**

**New Territories, Hong Kong**

**Tel: +852 2754 3320**

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

**c/o Cogency Global Inc.**

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

**New York, NY 10168**

**+1(800) 221-0102**

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

*Copies to:*

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| | |
|:---|:---|
| **William S. Rosenstadt, Esq.**<br> **Mengyi "Jason" Ye, Esq.**<br> **Ortoli Rosenstadt LLP**<br> **366 Madison Avenue, 3<sup>rd</sup> Floor**<br> **New York, NY 10017**<br> **+1-212-588-0022 - telephone** | **Ying Li, Esq.**<br> **Guillaume de Sampigny, Esq.**<br> **Hunter Taubman Fischer & Li LLC**<br> **950 Third Avenue, 19<sup>th</sup> Floor**<br> **New York, NY 10022**<br> **+1-212-530-2210 - telephone** |

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Approximate date of commencement of proposed sale to public: As soon as practicable after the effective date of this Registration Statement.

If any securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, 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, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

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

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

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

Emerging growth company ☒

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

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

**The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the U.S. 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 will not sell these securities until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.**

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| | |
|:---|:---|
| **PRELIMINARY PROSPECTUS** | **SUBJECT TO COMPLETION, DATED MARCH 1, 2023** |

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[**3,250,000**] **Ordinary Shares**

**PSI GROUP HOLDINGS LTD**

This is an initial public offering of [3,250,000] ordinary shares, par value US$0.0001 of PSI Group Holdings Ltd. (the "Ordinary Shares"), an exempted Cayman Islands company (the "Company," "we," "us," "our"). We expect the initial public offering price will be between US$[4.00] and US$[6.00] per Ordinary Share.

Prior to this offering, there has been no public market for our Ordinary Shares. We have applied to list our Ordinary Shares on the Nasdaq Capital Market under the symbol "PSIG." We cannot assure you that our application will be approved; however, if it is not approved, we will not complete this offering.

We are an "Emerging Growth Company" under applicable U.S. federal securities laws and are, therefore, eligible for reduced public company reporting requirements. Please read "Implications of Being an Emerging Growth Company" beginning on page 13 of this prospectus for more information.

We are an exempted company with limited liability incorporated under the laws of the Cayman Islands. Under the rules of the U.S. Securities and Exchange Commission, or the SEC, we currently qualify for treatment as a "foreign private issuer." As a foreign private issuer, we will not be required to file periodic reports and financial statements with the Securities and Exchange Commission, or the SEC, as frequently or as promptly as domestic registrants whose securities are registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act.

**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 17 to read about factors you should consider before buying our Ordinary Shares.**

PSI Group Holdings Ltd is a holding company incorporated in the Cayman Islands without any operations of its own. PSI Group Holdings Ltd conducts its operations in Hong Kong through its subsidiaries, Profit Sail Int'l Express (H.K.) Limited and Business Great Global Supply Chain Limited (collectively, the "Operating Subsidiaries"). The Ordinary Shares offered in this offering are shares of PSI Group Holdings Ltd, the Cayman Islands holding company, instead of shares of the Operating Subsidiaries. Investors in this offering will not directly hold equity interests in the Operating Subsidiaries. This structure involves unique risks to investors. For detailed risks associated with our corporate structure, see "*Risk Factors — Risk Related to our Corporate Structure*" on page 20, and "*Risk Factors — As a company incorporated in the Cayman Islands, we are permitted to adopt certain Cayman Islands' practices in relation to corporate governance matters that differ significantly from the Nasdaq Capital Market listing standards; these practices may afford less protection to shareholders than they would enjoy if we complied fully with the Nasdaq Capital Market listing standards*" on page 26.

Cash is transferred through our organization in the following manner: (i) funds may be transferred from our Cayman Islands holding company to our Operating Subsidiaries in Hong Kong through our BVI subsidiaries in the form of capital contributions or shareholder loans, as the case may be; and (ii) dividends or other distributions may be paid by our Operating Subsidiaries in Hong Kong to the Company through our BVI subsidiaries. In the fiscal year ended December 31, 2020 ("FY2020"), the fiscal year ended December 31, 2021 ("FY2021"), the six months period ended June 30, 2022 ("6M2022") up to the date of this prospectus, no transfer of cash or other types of assets has been made between our Cayman Islands holding company and subsidiaries; and our Cayman Islands holding company has not declared or made any dividends or other distribution to its shareholders, including U.S. investors, in the past, nor has any dividends or distributions been made by subsidiaries to our Cayman Islands holding company. Nonetheless, Profit Sail Int'l Express (H.K.) Limited ("PSIHK") declared an interim dividend of USD 8,750,000 on June 30, 2021, and a final dividend of USD 5,959,168 on December 30, 2021, to its then shareholders, of which USD 1,143,000 was settled by cash and the remaining was set off against the amounts due from related parties. In addition to the dividend paid, PSIHK transferred cash of USD 947,782, USD 5,471,395 and USD 807,684, to its then shareholders in FY2020, FY2021 and 6M2022, respectively. As a holding company without any operations of our own, we rely on dividends and other distributions on equity paid by our Operating Subsidiaries in Hong Kong for our cash and financing requirements. The ability of our subsidiaries to pay dividends to us may be restricted by the debt they incur on their own behalf or laws and regulations applicable to them. See "Prospectus Summary — Transfers of Cash to and from Our Subsidiaries" and "Dividend Policy."

Substantially all of our operations are conducted by our Operating Subsidiaries in Hong Kong, which are incorporated under the laws of Hong Kong, and we do not have any operation or maintain an office or personnel in Mainland China, nor do we have any variable interest entity structure in place. Accordingly, the laws and regulations of Mainland China do not currently have any material impact on our business, financial condition and results of operation.

In the event that our Operating Subsidiaries or we are to become subject to laws and regulations of Mainland China, we could incur material costs to ensure compliance, and we or our Operating Subsidiaries might be subject to fines, experience devaluation of securities or delisting, no longer be permitted to conduct offerings to foreign investors, and/or no longer be permitted to continue business operations as presently conducted.

Although we have direct ownership of our Operating Subsidiaries in Hong Kong and currently do not have or intend to have any contractual arrangement to establish a variable interest entity (VIE) structure with any entity in Mainland China, we are still subject to certain legal and operational risks associated with our Operating Subsidiaries, PSIHK and BGG, being based in Hong Kong and having all of its operations to date in Hong Kong. The legal and operational risks associated in Mainland China which may also apply to our operations in Hong Kong, and we face the risks and uncertainties associated with the complex and evolving PRC laws and regulations and as to whether and how the recent PRC government statements and regulatory developments, such as those relating to data and cyberspace security, and anti-monopoly concerns, would be applicable to our Operating Subsidiaries and us, given the substantial operations of our subsidiaries in Hong Kong and the possibilities that Chinese government may exercise significant oversight over the conduct of business in Hong Kong. These risks could result in material changes in our operations and/or the value of the securities we are registering for sale or 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 be worthless. See *Risk Factors – Risks Related to Doing Business in the Jurisdictions in which the Operating Subsidiaries Operate – All of our operations are in Hong Kong. However, due to the long arm application of the current PRC laws and regulations, the PRC government may exercise significant direct oversight and discretion over the conduct of our business and may intervene or influence our operations, which could result in a material change in our operations and/or the value of our Ordinary Shares. Our Operating Subsidiaries in Hong Kong may be subject to laws and regulations of Mainland China, which may impair our ability to operate profitably and result in a material negative impact on our operations and/or the value of our Ordinary Shares. Furthermore, the changes in the policies, regulations, rules, and the enforcement of laws of the PRC may also occur quickly with little advance notice and our assertions and beliefs of the risk imposed by the PRC legal and regulatory system cannot be certain* on page 17.

We are aware that recently, the PRC government initiated a series of regulatory actions and statements to regulate business operations in certain areas in Mainland China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over Mainland China-based companies listed overseas using a variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. Since these statements and regulatory actions are new, it is highly uncertain how soon the 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. It is also highly uncertain what the potential impact such modified or new laws and regulations will have on our daily business operation, its ability to accept foreign investments, and the listing of our Ordinary Shares on a U.S. or other foreign exchanges. These actions could result in a material change in our operations and/or the value of our Ordinary Shares and could significantly limit or completely hinder our ability to offer or continue to offer our Ordinary Shares to investors. See *Risk Factors – Risks Related to Doing Business in the Jurisdictions in which the Operating Subsidiaries Operate – Our business, financial condition and results of operations, and/or the value of our Ordinary Shares or our ability to offer or continue to offer securities to investors may be materially and adversely affected by existing or future laws and regulations of the Mainland China which may become applicable to Hong Kong and thus to company such as us* on page 18.

On August 20, 2021, the 30th meeting of the Standing Committee of the 13th National People's Congress voted and passed the "Personal Information Protection Law of the People's Republic of China", or "PRC Personal Information Protection Law", which became effective on November 1, 2021. The PRC Personal Information Protection Law applies to the processing of personal information of natural persons within the territory of Mainland China that is carried out outside of Mainland China where (1) such processing is for the purpose of providing products or services for natural persons within Mainland China, (2) such processing is to analyze or evaluate the behavior of natural persons within Mainland China, or (3) there are any other circumstances stipulated by related laws and administrative regulations.

On December 24, 2021, the China Securities Regulatory Commission ("CSRC"), together with other relevant government authorities in Mainland China issued the Provisions of the State Council on the Administration of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments), and the Measures for the Filing of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments) ("Draft Overseas Listing Regulations"). The Draft Overseas Listing Regulations require that a Mainland China domestic enterprise seeking to issue and list its shares overseas ("Overseas Issuance and Listing") shall complete the filing procedures of and submit the relevant information to the CSRC. The Overseas Issuance and Listing include direct and indirect issuance and listing. Where an enterprise whose principal business activities are conducted in Mainland China seeks to issue and list its shares in the name of an overseas enterprise ("Overseas Issuer") on the basis of the equity, assets, income or other similar rights and interests of the relevant Mainland China domestic enterprise, such activities shall be deemed an indirect overseas issuance and listing ("Indirect Overseas Issuance and Listing") under the Draft Overseas Listing Regulations.

On February 17, 2023, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures, and five supporting guidelines, which will come into effect on March 31, 2023 (the "Overseas Listing Regulations"). The Overseas Listing Regulations require that a PRC domestic enterprise seeking to issue and list its shares overseas shall complete the filing procedures of and submit the relevant information to CSRC, failing which we may be fined between RMB 1 million and RMB 10 million. According to the Notice on the Management Arrangements for Overseas Issuance and Listing of Domestic Enterprises issued by CSRC on the same day, if we can obtain the SEC's Notice of Effectiveness before March 31 and complete the issuance and listing before September 30, 2023, we will no longer need to submit the relevant information to CSRC for the filing procedures, otherwise we still need to complete the filing procedures with CSRC before our listing on U.S. exchanges. Should the Overseas Listing Regulations be applicable to us, we may be subject to additional compliance requirement in the future, and we cannot assure you that we will be able to get the clearance of filing procedures as required on a timely basis, or at all. Any failure of us to fully comply with new regulatory requirements may significantly limit or completely hinder our ability to offer or continue to offer our ordinary shares, cause significant disruption to our business operations, and severely damage our reputation, which would materially and adversely affect our financial condition and results of operations and cause our ordinary shares to significantly decline in value or become worthless.

On December 28, 2021, the Cyberspace Administration of China (the "CAC") jointly with the relevant authorities formally published the Measures for Cybersecurity Review (2021) which took effect on February 15, 2022 and replaced the former Measures for Cybersecurity Review (2020) issued on July 10, 2021. The Measures for Cybersecurity Review (2021) provide that operators of critical information infrastructure purchasing network products and services, and online platform operators carrying out data processing activities that affect or may affect national security (together with the operators of critical information infrastructure, the "Operators"), shall conduct a cybersecurity review, and that any online platform operator who controls more than one million users' personal information must go through a cybersecurity review by the cybersecurity review office if it seeks to be listed in a foreign country.

Our Operating Subsidiaries may collect and store certain data (including certain personal information) from our customers, some of whom may be individuals in Mainland China, in connection with our business and operations and for "Know Your Customers" purposes (to combat money laundering). As advised by Guangdong Wesley Law Firm, our counsel with respect to PRC legal matters, the Measures for Cybersecurity Review (2021), the PRC Personal Information Protection Law and the Draft Overseas Listing Regulations will not have an impact on our business, operations or this offering, given that (i) our Operating Subsidiaries are incorporated in Hong Kong (ii) we have no subsidiary, VIE structure nor any direct operations in Mainland China, and (iii) pursuant to the Basic Law of the Hong Kong Special Administrative Region (the "Basic Law"), which is a national law of the PRC and the constitutional document for Hong Kong, national laws of the Mainland China shall not be applied in Hong Kong except for those listed in Annex III of the Basic Law (which is confined to laws relating to defense and foreign affairs, as well as other matters outside the autonomy of Hong Kong). As advised by Guangdong Wesley Law Firm, our Operating Subsidiaries will not be deemed to be an "Operator" required to file for cybersecurity review before listing in the United States, because (i) our Operating Subsidiaries were incorporated in Hong Kong and operate in Hong Kong without any subsidiary or VIE structure in Mainland China and each of the Measures for Cybersecurity Review (2021), the PRC Personal Information Protection Law and the Draft Overseas Listing Regulations do not clearly provide whether it shall be applied to a company based in Hong Kong; (ii) as of date of this prospectus, our Operating Subsidiaries have in aggregate collected and stored personal information of less than one million users; (iii) all of the data our Operating Subsidiaries have collected is stored in servers located in Hong Kong; and (iv) as of the date of this prospectus, neither of our Operating Subsidiaries has been informed by any PRC governmental authority of any requirement that it files for a cybersecurity review or a CSRC review.

Additionally, as the Company is based in Hong Kong, and the Trial Measures have not come into effect as of the date of this prospectus, under the currently effective PRC laws and regulations, we are not required to seek approval from the CSRC, or any other PRC governmental authorities for our overseas listing plan, nor have we received any inquiry, notice, warning or sanctions regarding our planned overseas listing from the CSRC or any other PRC governmental authorities as of the date of this prospectus. However, since the Trial Measures was newly promulgated, its interpretation, application and enforcement remain unclear and there also remains significant uncertainty as to the enactment, interpretation and implementation of other regulatory requirements related to overseas securities offerings and other capital markets activities. In the event that the Trial Measures are applicable to us or our subsidiaries, if we and our subsidiaries (i) do not receive or maintain such filings, permissions or approvals required by the PRC government, (ii) inadvertently conclude that such filings, permissions or approvals are not required, or (iii) applicable laws, regulations, or interpretations change and we are required to obtain such filings, permissions or approvals in the future, our operations and financial conditions could be materially adversely affected, and our ability to offer securities to investors could be significantly limited or completely hindered and the securities currently being offered may substantially decline in value and be worthless. In addition, implementation of industry-wide regulations affecting our operations could limit our ability to attract new customers and/or users and cause the value of our securities to significantly decline. While, we do not believe we are covered by the permission requirements from CSRC or CAC, investors of our company and our business may face potential uncertainty from actions taken by the PRC government affecting our business.

Furthermore, as more stringent criteria have been imposed by the SEC and the Public Company Accounting Oversight Board (the "PCAOB") recently, our Ordinary Shares may be prohibited from trading if our auditor cannot be fully inspected by the PCAOB. On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the Holding Foreign Companies Accountable Act (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 determination that it was unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in Mainland China and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions. The PCAOB made its determinations pursuant to PCAOB Rule 6100, which provides a framework for how the PCAOB fulfills its responsibilities under the HFCA Act. The report further listed in its Appendix A and Appendix B Registered Public Accounting Firms Subject to the Mainland China Determination and Registered Public Accounting Firms Subject to the Hong Kong Determination, respectively. On December 29, 2022, the Accelerating Holding Foreign Companies Accountable Act was enacted, which amended the HFCA Act by requiring the SEC to prohibit an issuer's securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three, thus reducing the time period for triggering the prohibition on trading.

Our auditor, WWC, P.C., the independent registered public accounting firm that issues the audit report included in this prospectus, as a firm headquartered in California and registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess WWC, P.C.'s compliance with applicable professional standards with the last inspection in November 2021, and as of the date of this prospectus, our auditor 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 because of a position taken by one or more authorities in the Mainland China or Hong Kong. However, 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 HFCAA and ultimately result in a determination by a securities exchange to delist the Company's securities. On August 26, 2022, the PCAOB signed a Statement of Protocol (the "SOP") Agreement with the CSRC and China's Ministry of Finance. The SOP, together with two protocol agreements governing inspections and investigations (together, the "SOP Agreements"), establishes 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 announced that it was able to secure complete access to inspect and investigate PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong completely in 2022. The PCAOB Board vacated its previous 2021 determinations that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong. However, whether the PCAOB will continue to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong is subject to uncertainties and depends on a number of factors out of our and our auditor's control. 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 HFCAA if needed. See "Risk Factors — Risks Related to Our Ordinary Shares and this Offering — *The recent joint statement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and the Holding Foreign Companies Accountable 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. In the event it is later determined that the PCAOB is unable to inspect or investigate completely the Group's auditor, then such lack of inspection could cause trading in the Group's securities to be prohibited under the HFCAA, and ultimately result in a determination by a securities exchange to delist the Group's securities*" on page 22.

Upon the completion of this offering, our outstanding shares will consist of [25,000,000] Ordinary Shares, assuming the underwriters do not exercise their over-allotment option to purchase additional Ordinary Shares, or [25,487,500] Ordinary Shares, assuming the over-allotment option is exercised in full. We are and will continue to be a "controlled company" as defined under the Nasdaq Stock Market Rules because, immediately after the completion of this offering, Grand Pro Development Limited, our controlling shareholder will own [58.87]% of the total issued and outstanding Ordinary Shares, assuming that the underwriters do not exercise their over-allotment option, or [57.75]% of the total issued and outstanding Ordinary Shares, assuming that the over-allotment option is exercised in full.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Per Share** | **Per Share** | **Total<sup>(4)</sup>** | **Total<sup>(4)</sup>** |
| Offering price<sup>(1)</sup> | USD | 5.00 | USD | 16250000 |
| Underwriting discounts<sup>(2)</sup> | USD | 0.35 | USD | 1137500 |
| Proceeds to the company before expenses<sup>(3)</sup> | USD | 4.65 | USD | 15112500 |

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<sup>(1)</sup> Initial public offering price per share is assumed as USD [5.00], which is the midpoint of the range set forth on the cover page of this prospectus.

<sup>(2)</sup> We have agreed to pay the underwriters a discount equal to 7% of the gross proceeds of the offering. For a description of the other compensation to be received by the underwriters, see "Underwriting" beginning on page 137.

<sup>(3)</sup> Excludes fees and expenses payable to the underwriters.

<sup>(4)</sup> Assumes that the underwriters do not exercise any portion of their over-allotment option.

This offering is being conducted on a firm commitment basis. The underwriters are obligated to take and pay for all of the shares offered by the Company if any such shares are taken. We have granted the underwriters an option, exercisable one or more times in whole or in part, to purchase up to [487,500] additional Ordinary Shares from us at the initial public offering price, less underwriting discounts, within 45 days from the closing of this offering to cover over-allotments, if any. If the underwriters exercise the option in full, assuming the public offering price per share is USD[5.00], the total underwriting discounts payable will be USD[1,308,125], and the total proceeds to us, before expenses, will be USD[17,379,375].

We expect our total cash expenses for this offering to be approximately USD[1,703,512], including expenses payable to the underwriters for their reasonable out-of-pocket expenses and non-accountable expense allowance, exclusive of the above discounts.

If we complete this offering, net proceeds will be delivered to us on the closing date.

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

![](image_001.jpg)

The date of this prospectus is ____________, 2023.

**TABLE OF CONTENTS**

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|:---|:---|
|  | **Page** |
| [PROSPECTUS SUMMARY](#a_001) | 1 |
| [RISK FACTORS](#a_003) | 17 |
| [SPECIAL NOTES REGARDING FORWARD-LOOKING STATEMENTS](#a_004) | 44 |
| [USE OF PROCEEDS](#a_005) | 44 |
| [DIVIDEND POLICY](#a_006) | 45 |
| [CAPITALIZATION](#a_007) | 45 |
| [DILUTION](#a_008) | 46 |
| [MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](#a_009) | 48 |
| [Industry](#a_028) | 67 |
| [BUSINESS](#a_024) | 77 |
| [REGULATIONS](#a_010) | 93 |
| [MANAGEMENT](#a_011) | 104 |
| [EXECUTIVE COMPENSATION](#a_012) | 110 |
| [RELATED PARTY TRANSACTIONS](#a_013) | 111 |
| [PRINCIPAL SHAREHOLDERS](#a_014) | 113 |
| [DESCRIPTION OF SHARE CAPITAL](#a_015) | 114 |
| [SHARES ELIGIBLE FOR FUTURE SALE](#a_016) | 127 |
| [MATERIAL TAX CONSEQUENCES APPLICABLE TO U.S. HOLDERS OF OUR ORDINARY SHARES](#a_017) | 129 |
| [ENFORCEABILITY OF CIVIL LIABILITIES](#a_018) | 135 |
| [UNDERWRITING](#a_019) | 137 |
| [EXPENSES RELATING TO THIS OFFERING](#a_020) | 141 |
| [LEGAL MATTERS](#a_021) | 142 |
| [EXPERTS](#a_025) | 142 |
| [WHERE YOU CAN FIND ADDITIONAL INFORMATION](#a_022) | 142 |
| [INDEX TO FINANCIAL STATEMENTS](#finn_007) | F-1 |

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You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized anyone to provide you with information different from what is contained in this prospectus. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell securities in any jurisdiction where the offer or sale is not permitted. The information contained in this prospectus is accurate only as of the date on the front of this prospectus, regardless of the time of delivery of this prospectus or any sale of the securities. Our business, financial condition, results of operations and prospects may have changed since that date.

For investors outside of the United States of America (the "United States" or the "U.S."): Neither we nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction, other than the United States, where action for that purpose is required. Persons outside of the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of our ordinary shares and the distribution of this prospectus outside of the United States.

Until and including , 2023 (the 25<sup>th</sup> day after the date of this prospectus), all dealers that buy, sell or trade our Ordinary Shares, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

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**PROSPECTUS SUMMARY**

This summary highlights information contained in greater detail elsewhere in this prospectus. This summary is not complete and does not contain all of the information you should consider in making your investment decision. You should read the entire prospectus carefully before making an investment in our Ordinary Shares. You should carefully consider, among other things, our consolidated financial statements and the related notes and the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus.

**Prospectus Conventions**

Except where the context otherwise requires and for purposes of this prospectus only, references to:

● "BGG" are to Business Great Global Supply Chain Limited, a company incorporated under the laws of Hong Kong;

● "China" or the "PRC" are to the People's Republic of China, including Hong Kong and Macau;

● "CIC" are to China Insights Consultancy Limited, an independent research firm commissioned by the Company;

● "CIC Report" is to the Industry Report on the Integrated Freight Forwarding Industry dated March 1, 2022 prepared by CIC and commissioned by the Company;

● "FY2020", "FY2021", "6M2021" and "6M2022" are to fiscal year ended December 31, 2020 and 2021, six months period ended June 30, 2021 and six months period ended June 30, 2022, respectively;

● "HKD" or "HK$" are to the legal currency of Hong Kong. "US$" or "USD" refers to the legal currency of the United States;

● "Hong Kong" refer to the Hong Kong Special Administrative Region of the People's Republic of China for the purposes of this prospectus only;

● "Mainland China" are to the mainland of 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;

● "Memorandum and Articles of Association" are to the memorandum and articles of association of the Company, as amended from time to time;

● "Ordinary Shares" are to the ordinary shares of the PSI Group Holdings Ltd, par value US$0.0001 per share;

● "Operating Subsidiaries" are to PSIHK and BGG;

● "Our company" and "Company" are to PSI Group Holdings, Ltd, a Cayman Islands company, unless otherwise indicated or the context otherwise requires;

● "PSIHK" are to Profit Sail Int'l Express (H.K.) Limited, a company incorporated under the laws of Hong Kong; and

● "we", "us", "our" and "Group" are to PSI Group Holdings Ltd and its subsidiaries.

PSI Group Holdings Ltd is a holding company incorporated in the Cayman Islands with operations conducted in Hong Kong through its operating subsidiaries in Hong Kong, using Hong Kong dollars. The reporting currency is U.S. dollars. Assets and liabilities denominated in foreign currencies are translated at year-end exchange rates, income statement accounts are translated at average rates of exchange for the year and equity is translated at historical exchange rates. Any translation gains or losses are recorded in other comprehensive income (loss). Gains or losses resulting from foreign currency transactions are included in net income. The conversion of Hong Kong dollars into U.S. dollars are based on the exchange rates set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System. Unless otherwise noted, all translations from Hong Kong dollars to U.S. dollars and from U.S. dollars to Hong Kong dollars in this prospectus were made at a rate of HKD 7.80 to USD 1.00.

This prospectus contains information derived from various public sources and certain information from an industry report commissioned by us and prepared by China Insights Consultancy Limited, or CIC, a third-party industry research firm, to provide information regarding our industry and market position. Industry data, projections and estimates are subject to inherent uncertainty as they necessarily require certain assumptions and judgments. If any one or more of the assumptions underlying the market data turns out to be incorrect, actual results may differ from the projections based on these assumptions. While we generally believe the information contained in such report to be accurate and reliable, we have not independently verified the accuracy or completeness of the data contained in these industry publications and reports.

**Overview**

We are a freight forwarding service provider headquartered in Hong Kong with networks across the globe. We conduct our operations through our subsidiaries in Hong Kong, Profit Sail Int'l Express (H.K.) Limited and Business Great Global Supply Chain Limited (collectively the "Operating Subsidiaries").

Our Operating Subsidiaries provide air and ocean export and import freight forwarding services with optional ancillary logistics related services (such as cargo pick up, cargo handling at ports and local transportation) and warehousing related services (such as repackaging, labelling, palletization, preparation of shipping documentation, arrangement of customs clearance and warehousing) to meet the requirement of our customers.

Our Operating Subsidiaries derive their revenue principally from air freight forwarding services and ocean freight forwarding services. For FY2020 and FY2021, PSIHK's total revenue amounted to approximately USD 71.0 million and USD 130.9 million, respectively. In 6M2022, taking into account the acquisition of BGG in March 2022, our Operating Subsidiaries' total revenue amounted to approximately USD 49.5 million. Most of the revenue is generated from air freight forwarding services, which represented 94.6%, 94.4% and 92.9% of the total revenue during FY2020, FY2021 and 6M2022 respectively as compared to 3.7%, 5.1% and 7.1% generated by ocean freight forwarding services.

During FY2020, FY2021 and 6M2022, our Operating Subsidiaries had served an aggregate of more than 500 customers, including freight forwarders and direct customers (i.e. customers that are not freight forwarders who purchase cargo space from the Operating Subsidiaries and directly ship their consignments, for example, manufacturers which directly ship their products to their customers through purchasing cargo space directly from the Operating Subsidiaries, or buyers of goods which arrange shipment by themselves). Our Operating Subsidiaries are capable of securing cargo space from their suppliers to reach a wide range of destinations, offering routes to over 90 countries. The revenue of the freight forwarding services is mainly derived from air freight export shipments to North America, Europe and Asia.

Our Operating Subsidiaries' suppliers mainly include airlines, freight forwarders and shipping liners for cargo space and other suppliers for logistics related services such as transportation and warehousing related services. Our Operating Subsidiaries procure cargo space directly from airlines and shipping liners as well as from other freight forwarders under different arrangements, including direct booking, block space arrangements, and flight charters.

The Operating Subsidiaries operate an asset-light, structurally flexible and scalable business model. The Operating Subsidiaries do not own or operate aircraft or vessels. Instead, the Operating Subsidiaries contract asset-intensive third-party carriers to ship freight on our behalf. This setup allows us to tailor our services to the customers' needs by choosing among the various transportation methods and providers available. In addition, by not owning substantial physical assets such as planes and ships, the base fixed cost and capital expenditure requirements are limited, which allows us to scale quickly. The Operating Subsidiaries derive revenues from charging a spread over the carrier's charge to us for transporting the shipment, in addition to charges for customs brokerage and other ancillary services that we provide. Due to larger volume of freight, and our control and ability to consolidate shipments, we are generally able to obtain lower rates per kilogram or container than the shipper would be able to procure by going directly to the carrier. Due to our experience in providing these services and our understanding of the global transportation network, we are able to provide our customers with highly effective and flexible solutions.

Investors in our Ordinary Shares should be aware that they are purchasing equity in PSI Group Holdings Ltd, the Cayman Islands holding company, instead of shares of the Operating Subsidiaries. Please refer to the information contained in and incorporated by reference under the heading "Risks Related to Our Corporate Structure" on page 20 of this prospectus.

**Our Industry**

Companies in our industry provide supply chain management and transportation solutions to local, regional and international customers. An integrated freight forwarder act as the midstream intermediary connecting the upstream carrier and the downstream consigners. The upstream carriers serve to transport goods, which include airlines, ocean vessel companies, and ground transportation companies. A downstream consigner is a party that initiates the movement or transport of goods, such as trading companies, wholesalers, distributors and manufacturing companies. Using air cargo as an example, prior to delivery, the freight forwarder will arrange flight bookings, cartage for crating and consolidation facility and delivery to airport at the origin for loading. The service continues when the cargo arrives at the cargo terminal of its destination where an agency or a partner of the freight forwarder will provide services including crate breakdown, storage, distribution and delivery to the consignee through warehousing and land freight transportation services providers.

Most international transportation is completed via integrated air freight forwarding services and integrated ocean freight forwarding services. As of 2020, the total market size for the global logistics industry measured in terms of overall logistics expenses was around USD 9.1 trillion. The Asia Pacific region occupied the largest proportion of the global market for logistics in 2020 (USD 3.9 trillion in 2020, accounting for approximately 42.9% of total logistics expenses worldwide), followed by North America (22.3%) and Europe (18.2%).<sup>1</sup>

<sup>1</sup> Source: International Monetary Fund, China Insights Consultancy.

The dominant majority of our revenue is derived from our integrated air freight forwarding services. The total revenue of the global integrated freight forwarding industry has been on the rise. According to CIC, the total revenue for the integrated air freight forwarding industry expanded from USD 73.7 billion to USD 133.6 billion between 2016 to 2020, representing a Compound Annual Growth Rate ("CAGR") of 16.0%. According to the CIC Report, it is expected that this number will continue to rise between 2020 and 2025, reaching USD 212.8 billion by 2025, representing a CAGR of 9.8%. From 2020 to 2025, despite the ongoing COVID-19 pandemic, the total revenue for the integrated air freight forwarding industry is anticipated to follow a trend towards continued growth, which reflects the following factors: 1) freight rates have increased significantly due to a severe shortage of cargo capacity resulting from the COVID-19 pandemic; 2) a projected rising demand for cross-border e-commerce worldwide; and 3) fiscal and monetary policy support from the governments of major economies that is expected to help bolster economic growth which will therefore have a positive impact on international trade activity.

We are headquartered in Hong Kong. Located at the center of Asia-Pacific region, Hong Kong has a long history as a logistics hub in Asia. Hong Kong has the geographic advantage of being in the center of global cargo and transport routes via land, sea, and air, making it an unparalleled supply chain destination. Hong Kong is also well regarded as a gateway between Mainland China and oversea countries; approximately 50% of Hong Kong's exports originated from Mainland China and approximately 55% of were destined for Mainland China in 2019. Hong Kong has been benefiting from its status as a free port, which pursues a free trade policy and does not maintain barriers on trade nor charges tariff on the import or export of goods, and its mature logistics value-chain and well-developed common law legal system. However, the Hong Kong legal system embodies uncertainties, for the possibility that PRC government may choose to implement the laws of the Mainland China to Hong Kong and exercise significant direct influence and intervention over our operation, at any time. *See Risk Factors – Risks Related to Doing Business in the Jurisdictions in which the Operating Subsidiaries Operate – All of our operations are in Hong Kong. However, due to the long arm application of the current PRC laws and regulations, the PRC government may exercise significant direct oversight and discretion over the conduct of our business and may intervene or influence our operations, which could result in a material change in our operations and/or the value of our Ordinary Shares. Our Operating Subsidiaries in Hong Kong may be subject to laws and regulations of Mainland China, which may impair our ability to operate profitably and result in a material negative impact on our operations and/or the value of our Ordinary Shares. Furthermore, the changes in the policies, regulations, rules, and the enforcement of laws of the PRC may also occur quickly with little advance notice and our assertions and beliefs of the risk imposed by the PRC legal and regulatory system cannot be certain* on page 17*.* Furthermore, on July 14, 2020, the United States signed an executive order to end the special status under the United States-Hong Kong Policy Act of 1992. This includes special treatment in areas including but not limited to customs tariffs, export controls, immigration, foreign investment, and extradition. The suspension or elimination of Hong Kong's preferential treatment and continued tension between the United States and the PRC could potentially impact Hong Kong's common law legal system and may, in turn, bring about uncertainty in, for example, the enforcement of our contractual rights. *See Risk Factors – Risks Related to Doing Business in the Jurisdictions in which the Operating Subsidiaries Operate – The Hong Kong legal system embodies uncertainties which could limit the legal protections available to the Operating Subsidiaries* on page 19.

According to the CIC Report, between 2016 and 2020, the revenue of Hong Kong's integrated air freight forwarding industry grew from HKD 40.9 billion (USD 5.2 billion) to HKD 60.9 billion (USD 7.8 billion), representing a CAGR of 10.4%. Such growth was mainly driven by: 1) the increasing air cargo import and export volume of products manufactured in Hong Kong such as electrical machinery and parts, telecommunications, sound equipment, office machines and automatic data processing machines, etc.; and 2) a rising import and export activity stimulated by the development of cross-border e-commerce industry in Mainland China, especially regarding the products manufactured in Mainland China mainly exported to other countries through Hong Kong by air.

Due to the COVID-19 pandemic, most airlines have suspended partly or all services, especially services for passenger flights, which subsequently caused the disruption in air transportation, short supply of cargo space and the surge in the price of air cargo space. However, the growth in price of the integrated air freight forwarding industry has significantly driven the size and revenue of the integrated air freight forwarding industry in Hong Kong. Despite the impact of the COVID-19 pandemic, according to the CIC Report, the total revenue of the Hong Kong air freight forwarding industry increased from HKD 43.6 billion (USD 5.6 billion) in 2019 to HKD 60.9 billion (USD 7.8 billion) in 2020; and the total revenue of Hong Kong air freight forwarding industry is expected to reach approximately HKD 95.9 billion (USD 12.3 billion) in 2025, representing a CAGR of around 9.5% between 2020 and 2025.

One of our growth strategies is the potential expansion to the United State market. Between 2016 and 2020, the total revenue of the integrated air freight forwarding industry in the U.S. grew from USD 8.2 billion to USD 17.0 billion, representing a CAGR of 20.0%. The growth of the integrated air freight forwarding market size in the U.S. is mainly attributable to the following factors: 1) the growth in the global economy from 2016-2020; 2) development of cross-border e-commerce; 3) the increasing volume of exports, especially considering the increasing demand for high-tech products, with the ongoing trend towards the reshoring of manufacturing. According to the CIC Report, from 2020 to 2025, it is expected that the market size of integrated air freight forwarding services in the U.S. will continuously increase to USD 30.4 billion, representing a CAGR of 12.3%.

 

With the increase in the international trade volume by air and continuous improvement in airport infrastructure in Mainland China, Hong Kong, and the United States, the global economic recovery and the increase of global trade volume, the growth of the domestic and global cross-border e-commerce, we expect a consistent increase in the demand for integrated air freight forwarding services. We plan to capitalize on these market drivers for our further growth.

Among freight forwarders, those who can provide integrated end-to-end solutions have a clear competitive advantage. The increasingly global footprint of customers' supply chains and end markets creates a demand for service providers who have the global scale, relationships and technology in place to oversee and optimize operations. We also see increasing demand from companies looking for "one-stop" providers, who are able to offer integrated end-to-end freight forwarding solutions, which optimize the performance, cost and cash flow of their supply chains, and provide greater visibility.

**Our Services**

Our objective is to be a premier worldwide global freight forwarder and logistics provider in the world. As a freight forwarding service provider, we arrange the transportation of shipments, and source cargo space from our suppliers (airlines, shipping liners, and other freight forwarders) under different arrangements including direct booking, block space arrangements and flight charters and resells that space to our customers (from whom we receive and forward individual, unconsolidated shipments) at a lower price than they would be able to negotiate themselves for their individual shipments. We are also able to secure capacity for our customers during times of high demand. We offer our customers routing expertise, familiarity with local business practices, knowledge of export and import documentation and procedures, and the ability to arrange for ancillary services.

The Operating Subsidiaries mainly offers air and ocean freight forwarding services to our customers who are direct shippers and other freight forwarders. The dominant majority of our revenue is derived from the provision of air freight forwarding services. Our Operating Subsidiaries provide freight forwarding, as well as distribution and logistics, services from the origin of our customers' products to the delivery of the products to the end user. Our freight forwarding services include both import and export of goods and principally involve arranging shipment upon receipt of booking instructions from our customers, obtaining cargo space from cargo space suppliers (including airlines, shipping liners and other freight forwarders) and preparing the relevant documentations (such as customs clearance from origin of consignment). We also arrange ancillary logistics services from independent service providers (such as cargo pickup, cargo handling at ports and local transportation) and warehousing related services (such as repackaging, labelling, palletization, preparation of shipping documentation, arrangement of customs clearance and warehousing) to meet our customers' requirements. Our freight forwarding services income is mainly derived from air freight export shipments to North America, Europe, and Asia.

The Operating Subsidiaries source cargo space from suppliers through various arrangements, including direct booking, block space arrangements, and flight charters. The Operating Subsidiaries also source cargo space from other freight forwarders depending on their cargo space' availability, capacity, routing, and timing. Upon receipt of booking instructions from the customers, the Operating Subsidiaries determine the routing, consolidate shipments bound for a particular airport distribution point, and then select the airline for transportation to the distribution point, where either the Operating Subsidiaries or one of their agents then arrange for the consolidated lot to be broken down into its component shipments and for the transportation of each individual shipment to its destination.

The following illustrates how the Operating Subsidiaries source cargo space from our suppliers (such as airlines, shipping liners or freight forwarders) and sell them to our customers (such as direct customers and freight forwarders):

![](image_002.jpg)

**Competition**

The freight forwarding industry is highly fragmented and has low barriers to entry compared to other industries. We compete with freight forwarders of different sizes, ranging from global leading participants having their own global network of offices and transportation fleet, to small- and medium-scaled freight forwarders like ourselves.

According to the CIC Report, in 2020, the integrated air freight forwarding market in Hong Kong had over 1,000 market participants. There are two tiers of freight forwarding companies in Hong Kong. Tier 1 players are the leading participants in the industry, with approximately 20 players, accounting for approximately 45% of total integrated air freight forwarding market in terms of revenue in Hong Kong in 2020. They are mainly multinational enterprises with global network of offices and own transportation fleets and have long-term relationships with international large carriers.

Tier 2 players are small- and medium-scale Hong Kong-based local enterprises like ourselves. These enterprises usually have a turnover of below HKD 1.5 billion (USD 0.2 billion) per year, but with a deeper understanding of customers' business nature and have long-term relationships with customers. According to the CIC Report, there were over 1,000 Tier 2 players in Hong Kong in 2020. The top 10 Tier 2 market participants account for approximately 18.2% of total revenue of tier 2 air freight forwarders in 2020. Our group ranked sixth among all Tier 2 air freight forwarding companies with a market share of approximately 1.8% in 2020 in Hong Kong.

**Competitive Strength**

We believe that we can leverage our global presence and competence in air and ocean freight industry by collaborating with our customers to unlock value in their supply chains and together build smart and efficient end-to-end logistics solutions. Our competitive advantages include:

● A highly experienced and dedicated team with extensive experience in freight forwarding industries;

● An established reputation in the freight forwarding industry;

● Comprehensive business network and stable business relationships with our suppliers; and

● The established stable relationships with our customers.

**Growth Strategy**

We plan to grow our business by upgrading our current operations as well as through the development of our service targeting the cross-border e-commerce market and the expansion to the U.S. market. With (i) the lifting or scaling back of COVID-19 restrictions in many countries around the world, and (ii) the continuous growth of cross border e-commerce, we intend to leverage our achievements in air and ocean freight forwarding services by pursuing the following business strategies:

● Enhance operational efficiency and quality. We plan to continue to enhance our technology infrastructure and our network with local partners to streamline our operations to lower transportation, labor and other operating costs associated with the transport of goods. We also plan to further expand our sales and operation team to accommodate the organic growth of service and the contemplated expansion to the United States market. We intend to expand our service targeting the cross-border e-commerce, Business-to-Customer ("B2C"), and door to door logistic service, as a one-stop service provider in order to capture more business opportunities and increase customer loyalty.

● Enhance our information technology system. We plan to enhance our information technology system in relation to freight forwarding services to improve our productivity and efficiency and better serve our cross-border e-commerce customers. We plan to develop a freight operations system which (i) provides integrated and real-time dynamic information; (ii) provides a user-friendly interface for our customers to log in to our system to check information of their freight bookings or cargo information; and (iii) can be integrated with our warehousing system and the operation system of our customers (which shall be subject to the information technology service provider's analysis on the system used by our customers and thus the feasibility of system integration).

● *Expand our service presence in the cross-border e-commerce market.* To benefit from the prospering global cross-border e-commerce market, especially in the United States, Mainland China and Hong Kong, we plan to leverage our extensive delivery network and capabilities to strengthen our presence in the cross-border e-commerce markets as a one-stop service provider, by: (1) leasing different types of warehouses in Hong Kong and the US, such as overseas bonded warehouses, distribution warehouses, logistic warehouses, and palletization warehouses; (2) upgrading our existing IT system to respond to the demands of our customers; (3) developing logistical solutions to manage each step of the shipping of small parcels common in cross-border e-commerce B2C transactions; and (4) expanding our network amongst local partners in our target markets to increase our route portfolio and market coverage and enhance our door-to-door small parcel delivery capacity.

● *Expand our operation to the United States.* To leverage our presence in the United States market and to further expand our reach to customers who require export and import service in the United States, we plan to establish offices and warehouses in various major cities of the United States and to enhance our cooperation and link-up with local postal offices, in order to tap into a new pool of customers who require air export freight forwarding services.

● *Strengthen our market position in by purchasing more cargo space in order to cater for our customers demand.* To take advantages of the market opportunity presented above and to ensure our market expansion, we plan to strengthen our capital base to finance our additional payment obligation and for provision of bank guarantee to airlines (which is a common industry practice) to purchase more cargo space in order to seize the growth opportunity and to cater to the expected growth demand from our customers.

● *Pursue strategic alliances and select acquisition opportunities.* We aim to selectively form additional strategic alliances with overseas logistics companies and other partners that bring synergies with our business. We also plan to selectively pursue acquisitions, investments, joint ventures and partnerships that are complementary to our business and operations.

 

**Coronavirus (COVID-19) Update**

Since early 2020, the ongoing COVID-19 pandemic has caused significant disruption to worldwide economic activities, including economic activities in Hong Kong where our Operating Subsidiaries are located, and in Mainland China, the United States, and Europe, where our customer base is principally located. Furthermore, due to the COVID-19 pandemic, most airlines have suspended partly or all services due to the travel restrictions imposed by Hong Kong government and other countries, especially services for passenger flights, which subsequently caused the disruption in air transportation, short supply of cargo space and the surge in the price of air cargo space.

However, the travel restrictions imposed by the Hong Kong government and other countries generally focus on restrictions on passenger travels and not on air cargo transportation, which only lead to a drop in the availability of passenger aircrafts for the transport of air cargoes as a result of which the shipment of our customers might be affected due to the change in flight schedule. Our daily operation as a freight forwarder is not suspended or limited and, for the bookings that we made with our suppliers for air cargo space, none of our suppliers have cancelled our bookings due to the outbreak of COVID-19. The Operating Subsidiaries are able to obtain cargo space from airlines or other freight forwarders even though there are cancellation of passenger aircrafts due to the COVID-19 pandemic, and there has been no material impact brought by the cancellation of passenger aircrafts on our business operation since the outbreak of COVID-19.

In early March 2022, our shipments originating from Mainland China were temporarily interrupted due to the outbreak of the COVID-19 in Shenzhen and the implementation of border control and various lockdown measures which led to trucking shortages. As a result, the transportation of goods between ports and from factories to ports was temporarily interrupted and our shipment volume in the first quarter of 2022 was adversely affected. To mitigate the adverse impact of such supply chain interruptions, we continue to monitor the development of the pandemic and communicate closely with our customers and suppliers to adjust our service planning timely. For example, we have (i) liaised with customers and assisted them in arranging delivery of products from Mainland China to Hong Kong through sea transportation during time of trucking shortage; (ii) maintained close communications with other freight forwarders on more flexible and efficient co-loading arrangement so as to optimize the utilization of cargo space on transportation vehicles; and (iii) timely communicated with customers on the latest status and flexibly arranged and prioritized the delivery schedule based on the urgency of orders. Going forward, we would continue to (i) seek alternatives to road transportation, such as sea and air freights, during time of trucking shortage; (ii) seek alternative ports for transportation to enable a timely arrangement when there is congestion in one port; (iii) maintain close communication with customers and other freight forwarders and ensure timely response to any potential supply chain disruption; (iv) stay up-to-date about the pandemic from trusted sources such as the World Health Organization, governments and health organization in Hong Kong and Mainland China; and (v) enhance our customer base to cover more geographical locations so as to increase geographic diversity and avoid over-reliance on customers located in one particular location. Since the outbreak of COVID-19 and up to the date of prospectus, (i) our business operations have not been suspended, and for instance, PSIHK's revenue increased from approximately USD 71.0 million in FY2020 to approximately USD 130.9 million in FY2021; while our net income increased from approximately USD 3.7 million in FY2020 to approximately USD 12.6 million in FY2021; (ii) we maintained all of our major customers; (iii) no order was cancelled by our customers due to the outbreak of COVID-19; (iv) our Operating Subsidiaries continued to perform our obligations after receiving the orders placed by our customers from time to time; (v) our Operating Subsidiaries have complied with the relevant Hong Kong laws and regulations in relation to the COVID-19 pandemic. Based on the foregoing, we are not aware of any material delay on our ability in providing our services.

According to the CIC Report, from 2020 to 2025, despite the ongoing COVID-19 pandemic, the total revenue for the integrated air freight forwarding industry is anticipated to follow a trend towards continued growth, which reflects the following factors: 1) freight rates have increased significantly due to the shortage of cargo capacity resulting from the COVID-19 pandemic; 2) a rising demand for cross-border e-commerce worldwide, especially online shopping on consumer goods as a result of reduced social contact; 3) substantial increase in shipments for medical and sanitary products, such as face mask and vaccines which are time-sensitive; and 4) fiscal and monetary policy support from the governments of major economies that is expected to help bolster economic growth which will therefore have a positive impact on international trade activity. For example, according to the CIC Report, the total revenue of the Hong Kong air freight forwarding industry increased from HKD 43.6 billion (USD 5.6 billion) in 2019 to HKD 60.9 billion (USD 7.8 billion) in 2020 and is expected to reach approximately HKD 95.9 billion (USD 12.3 billion) in 2025, representing a CAGR of around 9.5% between 2020 and 2025.

Since January 2022, Hong Kong has been experiencing a surge of the Omicron variant. Since January 5, 2022, the Hong Kong government has imposed several measures to address the spread of the Omicron variant, including stringent social distancing measures, mass testing, and a ban on all incoming passenger flights from certain countries.

As of the date of this prospectus, the Hong Kong government has not imposed any regulation regarding the recent Omicron variant outbreak, which require: (a) suspension of operations for all enterprises in Hong Kong; (b) the suspension of operations at the air cargo terminals inside the Hong Kong International Airport; and (c) the suspension of cross-border logistics services between Hong Kong and the Mainland China.

We are closely monitoring the recent Omicron variant outbreak in Hong Kong; its potential impact on our business and operation will depend on future developments and the severity of the Omicron variant outbreak in Hong Kong and actions taken by the Hong Kong government authorities to contain the Omicron variant outbreak and mitigate its impact, almost all of which are beyond our control. Because of these uncertainties, the possible business disruption and the related financial impact related to the outbreak of the Omicron variant outbreak in Hong Kong cannot be reasonably estimated at this time. For a detailed description of the risks associated with the COVID-19 pandemic, please refer to the sections headed "*Risk factors – Risks Related to our business and industry – Natural disasters, acts of God, wars, epidemics and other events may adversely affect our business operations, financial condition and results of operations"* and "*Risk factors – Risks Related to our business and industry – The COVID-19 pandemic may cause supply chain disruptions and may have a material adverse effect our business operation and results of operations"* in this prospectus for further details.

**Risk Factors Summary**

Investing in our Ordinary Shares involves a high degree of risk. Below is a summary of material factors that make an investment in our Ordinary Shares speculative or risky. Importantly, this summary does not address all of the risks that we face. Please refer to the information under the heading "Risk Factors" on page 17 of this prospectus for additional discussion of the risks summarized in this risk factor summary as well as other risks that we face. These risks include, but are not limited to, the following:

***Risks Related to Doing Business in the Jurisdictions in which the Operating Subsidiaries Operate***

 ****

● Substantially all of our operations are in Hong Kong. The laws and regulations of the Mainland China are not directly applicable to Hong Kong, being a Special Administrative Region, which is constitutionally autonomous from the Mainland China. However, the Hong Kong legal system embodies uncertainties, given the possibility that the PRC government may choose to implement the laws of the Mainland China to Hong Kong and exercise significant direct influence and intervention over our operation, at any time. If the PRC government exerts more oversight and control over offerings that are conducted overseas and/or foreign investment in Mainland China or Hong Kong-based issuers and we were to be subject to such oversight and control, it could materially and adversely affect and hinder our business, financial condition and results of operations, the value of our Ordinary Shares, and/or our ability to offer or continue to offer securities to investors. See *Risk Factors – Risks Related to Doing Business in the Jurisdictions in which the Operating Subsidiaries Operate – All of our operations are in Hong Kong. However, due to the long arm application of the current PRC laws and regulations, the PRC government may exercise significant direct oversight and discretion over the conduct of our business and may intervene or influence our operations, which could result in a material change in our operations and/or the value of our Ordinary Shares. Our Operating Subsidiaries in Hong Kong may be subject to laws and regulations of Mainland China, which may impair our ability to operate profitably and result in a material negative impact on our operations and/or the value of our Ordinary Shares. Furthermore, the changes in the policies, regulations, rules, and the enforcement of laws of the PRC may also occur quickly with little advance notice and our assertions and beliefs of the risk imposed by the PRC legal and regulatory system cannot be certain* on page 17.

● Uncertainties arising from the legal system in Mainland China, including uncertainties regarding the interpretation and enforcement of Mainland China laws and the possibility that regulations and rules can change quickly with little advance notice, and the implementation of the Mainland China law and regulation to Hong Kong could materially and adversely affect and hinder our business, financial condition and results of operations, the value of our Ordinary Shares, and/or our ability to offer or continue to offer securities to investors. See *Risk Factors – Risks Related to Doing Business in the Jurisdictions in which the Operating Subsidiaries Operate – Our business, financial condition and results of operations, and/or the value of our Ordinary Shares or our ability to offer or continue to offer securities to investors may be materially and adversely affected by existing or future laws and regulations of the Mainland China which may become applicable to Hong Kong and thus to company such as us* on page 18.

● On July 14, 2020, the United States signed an executive order to end the special status enjoyed by Hong Kong under the United States-Hong Kong Policy Act of 1992. This includes special treatment in areas including but not limited to customs tariffs, export controls, immigration, foreign investment, and extradition. The suspension or elimination of Hong Kong's preferential treatment and continued tension between the United States and the PRC could potentially impact Hong Kong's common law legal system and may, in turn, bring about uncertainty in, for example, the enforcement of our contractual rights *.* See *Risk Factors – Risks Related to Doing Business in the Jurisdictions in which the Operating Subsidiaries Operate – The Hong Kong legal system embodies uncertainties which could limit the legal protections available to the Operating Subsidiaries* on page 19.

● The political, economic and social conditions in Hong Kong are susceptible to changes and a downturn in the economic, political, or social conditions or government policies worldwide and in the PRC, such as: (1) trade war or restrictions, whether in form of embargo, tariff, or otherwise; (2) prolonged slowdown in the global or Chinese economy; (3) the degree of autonomy and the special status of Hong Kong to be separated from the Mainland China as recognized by other countries such as the United States, regarding their preferential treatment of Hong Kong including tariff, trade agreement, and shipping agreement; (4) the level of interference of the PRC government to the politics and economy of Hong Kong. See *Risk Factors – Risks Related to Doing Business in the Jurisdictions in which the Operating Subsidiaries Operate – Changes and a downturn in the economic, political, or social conditions of Hong Kong, Mainland China and other countries or changes to the government policies of Hong Kong and Mainland China could have a material adverse effect on our business and operations* on page 19.

***Risks Related to Our Corporate Structure***

● Our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States. See *Risk Factors – Risk Related to our Corporate Structure – You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated in the Cayman Islands* on page 20.

● We rely on dividends to be paid by our Hong Kong Operating Subsidiaries to fund our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders, service any debt we may incur, and pay our operating expenses. If our Hong Kong 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. See *Risk Factors – Risk Related to our Corporate Structure – We rely on dividends and other distributions on equity paid by the Operating Subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of the Operating Subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business* on page 21.

● Mr. Yee Kit, CHAN, our Chairman and Director will beneficially own approximately [67.57]% of our issued and outstanding Ordinary Shares assuming the underwriters do not exercise their over-allotment option and approximately [66.28]% of our issued and outstanding Ordinary Shares if the underwriters' over-allotment option is exercised in full. Accordingly, our controlling shareholder could control the outcome of any corporate transaction or other matter submitted to the shareholders for approval. For more information regarding our principal shareholders and their affiliated entities, see "Principal Shareholders." or make other distributions to us. See *Risk Factors – Risk Related to our Corporate Structure – Our controlling shareholder has substantial influence over the Company. Its interests may not be aligned with the interests of our other shareholders, and it could prevent or cause a change of control or other transactions* on page 22.

***Risks Related to Our Ordinary Shares and this Offering***

● 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 our auditor and we 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. See *Risk Factors – Risks Related to our Ordinary Shares and this Offering* – *The recent joint statement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and the Holding Foreign Companies Accountable 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. In the event it is later determined that the PCAOB is unable to inspect or investigate completely the Group's auditor, then such lack of inspection could cause trading in the Company's securities to be prohibited under the HFCAA, and ultimately result in a determination by a securities exchange to delist the Company's securities* on page 22.

● There has been no public market for our Ordinary Shares prior to this offering. Assuming our Ordinary Shares begin trading on the Nasdaq Capital Market, our Ordinary Shares may be "thinly-traded," a broad or active public trading market for our Ordinary Shares may not develop or be sustained, in which case our ordinary shares' market price and liquidity will be materially and adversely affected. See *Risk Factors – Risks Related to our Ordinary Shares and this Offering* – *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 paid, or at all* on page 23.

● The trading price of our Ordinary Shares is likely to be volatile and could fluctuate widely due to broad market and industry factors which are beyond our control. Please see *Risk Factors – Risks Related to our Ordinary Shares and this Offering* – *The trading price of our Ordinary Shares may be volatile, which could result in substantial losses to you* on page 23 for the list of factors which may cause the volatility of our trading price.

● Our board of directors has complete discretion as to whether to distribute dividends. You may only receive a return on your investment in our Ordinary Shares if the market price of our Ordinary Shares increases. See *Risk Factors – Risks Related to our Ordinary Shares and this Offering* – *Because the amount, timing, and whether or not we distribute dividends at all is entirely at the discretion of our board of directors, you must rely on price appreciation of our Ordinary Shares for return on your investment* on page 25.

● The sale or availability for sale of substantial amounts of our Ordinary Shares in the public market, by (1) our existing shareholder, (2) our underwriters, and (3) exercise of options under our Equity Incentive Plan, could adversely affect the market price of our Ordinary Shares. See *Risk Factors – Risks Related to our Ordinary Shares and this Offering* – *The sale or availability for sale of substantial amounts of our Ordinary Shares in the public market could adversely affect the market price of our Ordinary Shares* on page 25.

● As a company incorporated in the Cayman Islands, we are permitted to adopt certain Cayman Islands' practices in relation to corporate governance matters that differ significantly from the Nasdaq Capital Market listing standards; these practices may afford less protection to shareholders than they would enjoy if we complied fully with the Nasdaq Capital Market listing standards. Please see *Risk Factors* – *Risks Related to our Ordinary Shares and this Offering* – *We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies* on page 26 for detailed discussion of this risk factor.

 

● There can be no assurance that we will not be a Passive Foreign Investment Company, or PFIC, for United States federal income tax purposes for any taxable year, which could subject United States investors in our Ordinary Shares to significant adverse United States income tax consequences. Please see *Risk Factors* – *Risks Related to our Ordinary Shares and this Offering* – *There can be no assurance that we will not be a passive foreign investment company, or PFIC, for United States federal income tax purposes for any taxable year, which could subject United States investors in our Ordinary Shares to significant adverse United States income tax consequences* on page 26 for a detailed discussion of this risk factor.

● We will incur increased costs as a result of being a public company, particularly after we cease to qualify as an "emerging growth company." See *Risk Factors – Risks Related to our Ordinary Shares and this Offering – We will incur increased costs as a result of being a public company, particularly after we cease to qualify as an emerging growth company* on page 27.

● As an "emerging growth company," the reduced disclosure requirements applicable to emerging growth companies may make our Ordinary Shares less attractive to investors. *Risk Factors – Risks Related to our Ordinary Shares and this Offering – We are an "emerging growth company," and the reduced disclosure requirements applicable to emerging growth companies may make our Ordinary Shares less attractive to investors* on page 28.

***Risks Related to Our Business and Industry***

● The demand for our services is easily affected by unpredictable factors, such as the changes in the global and regional economic conditions and the international trading volumes, in particular, the decrease in the level of Mainland China's export of goods could have a material adverse effect on our business. See *Risk Factors **–** Risks Related to our Business and Industry – The demand for our services is easily affected by unpredictable factors, and our results of operations are affected by changes in the global and regional economic conditions and the international trading volumes* on page 29; and *Risk Factors **–** Risks Related to our Business and Industry – A decrease in the level of* Mainland *China's export of goods could have a material adverse effect on our business* on page 29.

 

● Fluctuations in the price of cargo space could have adverse impact on our results of operation. Our profitability is also susceptible to the seasonality and the volatility in demand and supply for cargo space. See *Risk Factors **–** Risks Related to our Business and Industry – Fluctuations in the price of cargo space could have adverse impact on our results of operations* on page 30; *Risk Factors **–** Risks Related to our Business and Industry – Our profitability is susceptible to the volatility and uncertainties in demand and supply for cargo space* on page 30; and *Risk Factors **–** Risks Related to our Business and Industry – Our revenue is subject to seasonal fluctuations, our results for different periods in any given financial year may not be relied upon as indicators of our performance* on page 31.

 

● The loss of certain major customers may materially affect our business and financial conditions. See *Risk Factors – Risks Related to our Business and Industry - We derive a significant portion of our revenue from few major customers with whom we do not enter into long-term contracts, the loss of one or more of which could have a material adverse effect on our business* on page 32.

 

● Should we fail to identify shipments which carry goods of illicit or dangerous nature we may be subject to investigations and administrative or even criminal penalties, or civil compensation for personal injury or property damage. See *Risk Factors – Risks Related to our Business and Industry -We face risks associated with the items we deliver and the contents of shipments and inventories handled through our service network* on page 32.

 

● The disruption, non-performance and delayed performance of our suppliers may adversely affect our operations and substantially impact our financial results. See *Risk Factors **–** Risks Related to our Business and Industry – We are dependent on our suppliers, and any disruption, non-performance and delayed performance of these suppliers may adversely affect our operations and substantially impact our financial results* on page 33.

● Our business operation is dependent on our warehouse and other operation facility, which we are subject to risk relating to leased property. See *Risk Factors **–** Risks Related to our Business and Industry – Our business is dependent on our major operational facility. We do not own any real properties and we lease a number of properties for our business operations. Therefore, we are exposed to risks in relation to unpredictable and increasing rental costs and relocation costs* on page 34.

 

● Our management team may not successfully or efficiently manage our transition to becoming a U.S.-listed public company. See *Risk Factors **–** Risks Related to our Business and Industry – Our management team lacks experience in managing a U.S. public company and complying with laws applicable to such company, the failure of which may adversely affect our business, financial condition and results of operations* on page 36.

 

● Our growth prospects may be limited if we do not successfully implement our future plans and growth strategy. Failure to obtain sufficient funding at reasonable costs and on acceptable terms for our development plans could delay, reduce the scope of, or eliminate future activities or growth initiatives and adversely affect our business and prospect. See *Risk Factors **–** Risks Related to our Business and Industry – Our growth prospects may be limited if we do not successfully implement our future plans and growth strategy* on page 37.

● We are dependent on our senior management team and other key employees, and the loss of any such personnel could materially and adversely affect our business, operating results and financial condition. Please see *Risk Factors **–** Risks Related to our Business and Industry – We are dependent on our senior management team and other key employees, and the loss of any such personnel could materially and adversely affect our business, operating results and financial condition* on page 38 for detailed discussion of this risk factor.

● The freight forwarding industry in which we operate are highly fragmented and competitive. See *Risk Factors **–** Risks Related to our Business and Industry – The freight forwarding industry in which we operate are highly fragmented and competitive and there can be no assurance that we can compete successfully in the future and adequately address the downward pricing pressure* on page 39.

● A major driver for third-party logistics and supply chain service providers is the high cost and degree of difficulty associated with developing in-house logistics. If our customers are able to increase utilization of their internal solutions, our business and operating results may be materially and adversely affected. See *Risk Factors **–** Risks Related to our Business and Industry – If our merchant and non-freight forwarders customers are able to reduce their logistics and supply chain costs or increase utilization of their internal solutions, our business and operating results may be materially and adversely affected* on page 39.

● Natural disasters, acts of God, wars, the ongoing coronavirus pandemic, and measures taken in response thereto, could and could continue to cause supply chain disruptions and could have a material adverse effect on our business, results of operations and financial condition. See *Risk Factors **–** Risks Related to our Business and Industry – Natural disasters, acts of God, wars, epidemics and other events may adversely affect our business operations, financial condition and results of operations* on page 40.

● We may be subject to a variety of cybersecurity, data privacy, data protection, and other laws and regulations related to data, which may restrict our business activities and require us to incur increased costs and efforts to comply, and any breach or noncompliance may materially and adversely affect our business, financial condition, and results of operations. See *Risk Factors **–** Risks Related to our Business and Industry – Failure to comply with cybersecurity, data privacy, data protection, or any other laws and regulations related to data may materially and adversely affect our business, financial condition, and results of operations* on page 42.

***Our Securities***

At incorporation, our authorized share capital was US$20,000 divided into 200,000,000 ordinary shares with a US$0.0001 par value per share.

**Our Corporate Structure**

The following diagram illustrates our corporate structure, including our significant subsidiaries and consolidated affiliated entities, as of the date of this prospectus and after the initial public offering:

![](image_003.jpg)

We commenced operation in 1993 with the establishment of PSIHK, a company incorporated under the laws of Hong Kong on May 27, 1993. BGG was established under the laws of Hong Kong on November 11, 2016, and was acquired by us in March 2022 during the restructuring transaction.

On March 11, 2022, PSI (BVI) Ltd and BGG (BVI) Ltd were incorporated under the laws of the British Virgin Islands. PSI (BVI) Ltd holds 99.2% of PSIHK with the remainder 0.8% held by two independent individuals at 0.4% each. BGG (BVI) Ltd owns 100% of BGG.

On March 7, 2022, PSI Group Holdings Ltd, our current ultimate holding company, was incorporated under the laws of the Cayman Islands as part of the restructuring in contemplation of this offering. In connection with its incorporation, in March 2022, we completed a share swap transaction and issued Ordinary Shares of PSI Group Holdings Ltd to certain of the then existing shareholders of PSIHK and BGG, based on their then respective equity interests held in PSIHK and BGG. PSIHK and BGG then became our 99.2% and wholly owned subsidiaries, respectively.

For more details on our corporate history please refer to "Corporate History and Structure" on page 78 of this prospectus.

**Holding Company Structure**

PSI Group Holdings Ltd is a holding company incorporated in the Cayman Islands with no material operations of its own. We conduct our operations primarily in Hong Kong through our Operating Subsidiaries in Hong Kong. The Ordinary Shares offered in this offering are shares of the Cayman Islands holding company, instead of shares of our Operating Subsidiaries in Hong Kong. Investors in our Ordinary Shares should be aware that they may never directly hold equity interests in our subsidiaries in Hong Kong.

As a result of our corporate structure, our ability to pay dividends to our shareholders depends upon dividends paid by our Hong Kong subsidiaries through our BVI subsidiaries. If our existing Hong Kong subsidiaries or any newly formed ones incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us.

**Transfers of Cash to and from Our Subsidiaries**

PSI Group Holdings Ltd is permitted under the laws of the Cayman Islands to provide funding to our subsidiaries incorporated in the British Virgin Islands and Hong Kong through loans or capital contributions without restrictions on the amount of the funds. Our Operating Subsidiaries are permitted under the respective laws of the British Virgin Islands and Hong Kong to provide funding to PSI Group Holdings Ltd through dividend distribution without restrictions on the amount of the funds. Subject to the Companies Act (2022 Revision) of the Cayman Islands, which we refer to as the Companies Act, and our Memorandum and Articles of Association, our board of directors may authorize and declare a dividend to shareholders from time to time out of the profits from the Company, realized or unrealized, or out of the share premium account, provided that the Company will remain solvent, meaning the Company is able to pay its debts as they come due in the ordinary course of business. There is no further Cayman Islands statutory restriction on the amount of funds which may be distributed by us in the form of dividends.

Under the current practice of the Inland Revenue Department of Hong Kong, no tax is payable in Hong Kong in respect of dividends paid by us. The laws and regulations of the Mainland China do not currently have any material impact on the transfer of cash from PSI Group Holdings Ltd to PSIHK or BGG or from PSIHK or BGG to PSI Group Holdings Ltd. There are no restrictions or limitations under the laws of Hong Kong imposed on the conversion of HK dollar into foreign currencies and the remittance of currencies out of Hong Kong, nor is there any restriction on any foreign exchange to transfer cash between PSI Group Holdings Ltd and its subsidiaries, across borders and to U.S. investors, nor there is any restrictions and limitations to distribute earnings from the subsidiaries to PSI Group Holdings Ltd and U.S. investors and amounts owed.

Cash is transferred through our organization in the following manner: (i) fund may be transferred from our Cayman Islands holding company to our Operating Subsidiaries in Hong Kong through our BVI subsidiaries in the form of capital contributions or shareholder loans, as the case may be; and (ii) dividends or other distributions may be paid by our Operating Subsidiaries in Hong Kong to the Company through our BVI subsidiaries. In FY2020, FY2021, 6M2022 and up to the date of this prospectus, no transfer of cash or other types of assets has been made between our Cayman Islands holding company and subsidiaries.

Our Cayman Islands holding company has not declared or made any dividend or other distribution to its shareholders, including U.S. investors, in the past, nor have any dividends or distributions been made by subsidiaries to our Cayman Islands holding company. Nonetheless, PSIHK declared an interim dividend of USD 8,750,000 on June 30, 2021, and a final dividend of USD 5,959,168 on December 30, 2021, to their then shareholders, of which USD1,143,000 was settled by cash and the remaining was set off against the amounts due from related parties. In addition to the dividend paid, PSIHK transferred cash of USD 947,782, USD 5,471,395 and USD 807,684, to their then shareholders in FY2020, FY2021 and 6M2022, respectively. U.S. investors will not be subject to Cayman Islands, Hong Kong, or British Virgin Islands taxation on dividend distributions, and no withholding will be required on the payment of dividends or distributions to them while they may be subject to U.S. federal income tax. See "Material Tax Consequences Applicable to U.S. Holders of Our Ordinary Shares – United States Federal Income Tax Considerations."

We do not have any present plan to declare or pay any dividends on our Ordinary Shares in the foreseeable future. We currently intend to retain all available funds and future earnings, if any, for the operation and expansion of our business. Any future determination related to our dividend policy will be made at the discretion of our board of directors after considering our financial condition, results of operations, capital requirements, contractual requirements, business prospects and other factors the board of directors deems relevant, and subject to the restrictions contained in any future financing instruments, in our Memorandum and Articles of Association and in the Companies Act. See "Dividend Policy" and "Risk Factors — Risks Related to our Corporate Structure – We rely on dividends and other distributions on equity paid by the Operating Subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of the Operating Subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business." for more information.

**Recent Regulatory Development in the PRC** 

We are aware that, recently, the PRC government initiated a series of regulatory actions and statements to regulate business operations in certain areas in Mainland China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over Mainland China-based companies listed overseas using a variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement.

For example, on June 10, 2021, the Standing Committee of the National People's Congress enacted the PRC Data Security Law, which took effect on September 1, 2021. The law requires data collection to be conducted in a legitimate and proper manner, and stipulates that, for the purpose of data protection, data processing activities must be conducted based on data classification and hierarchical protection system for data security.

On July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued a document to crack down on illegal activities in the securities market and promote the high-quality development of the capital market, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over Mainland China-based companies listed overseas, and to establish and improve the system of extraterritorial application of the PRC securities laws.

On August 20, 2021, the 30th meeting of the Standing Committee of the 13th National People's Congress voted and passed the "Personal Information Protection Law of the People's Republic of China", or "PRC Personal Information Protection Law", which became effective on November 1, 2021. The PRC Personal Information Protection Law applies to the processing of personal information of natural persons within the territory of Mainland China that is carried out outside of Mainland China where (1) such processing is for the purpose of providing products or services for natural persons within Mainland China, (2) such processing is to analyze or evaluate the behavior of natural persons within Mainland China, or (3) there are any other circumstances stipulated by related laws and administrative regulations.

On December 24, 2021, the China Securities Regulatory Commission ("CSRC"), together with other relevant government authorities in Mainland China issued the Provisions of the State Council on the Administration of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments), and the Measures for the Filing of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments) ("Draft Overseas Listing Regulations"). The Draft Overseas Listing Regulations require that a Mainland China domestic enterprise seeking to issue and list its shares overseas ("Overseas Issuance and Listing") shall complete the filing procedures of and submit the relevant information to CSRC. The Overseas Issuance and Listing includes direct and indirect issuance and listing. Where an enterprise whose principal business activities are conducted in Mainland China seeks to issue and list its shares in the name of an overseas enterprise ("Overseas Issuer") on the basis of the equity, assets, income or other similar rights and interests of the relevant Mainland China domestic enterprise, such activities shall be deemed an indirect overseas issuance and listing ("Indirect Overseas Issuance and Listing") under the Draft Overseas Listing Regulations.

On February 17, 2023, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures, and five supporting guidelines, which will come into effect on March 31, 2023. Pursuant to the Trial Measures, domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedure and report relevant information to the CSRC. Since these statements and regulatory actions by the PRC government are newly published, their interpretation, application and enforcement of unclear and there also remains significant uncertainty as to the enactment, interpretation and implementation of other regulatory requirements related to overseas securities offerings and other capital markets activities,; our ability to offer, or continue to offer, securities to investors would be potentially hindered and the value of our securities might significantly decline or be worthless, by existing or future laws and regulations relating to its business or industry or by intervene or interruption by PRC governmental authorities, if we or our subsidiaries (i) do not receive or maintain such filings, permissions or approvals required by the PRC government, (ii) inadvertently conclude that such filings, permissions or approvals are not required, (iii) applicable laws, regulations, or interpretations change and we are required to obtain such filings, permissions or approvals in the future, or (iv) any intervention or interruption by PRC governmental with little advance notice.

On December 28, 2021, the CAC jointly with the relevant authorities formally published the Measures for Cybersecurity Review (2021) which took effect on February 15, 2022 and replace the former Measures for Cybersecurity Review (2020) issued on July 10, 2021. The Measures for Cybersecurity Review (2021) provide that operators of critical information infrastructure purchasing network products and services, and online platform operators (together with the operators of critical information infrastructure, the "Operators") carrying out data processing activities that affect or may affect national security, shall conduct a cybersecurity review, any online platform operator who controls more than one million users' personal information must go through a cybersecurity review by the cybersecurity review office if it seeks to be listed in a foreign country.

Our Operating Subsidiaries may collect and store certain data (including certain personal information) from our customers, some of whom may be individuals in Mainland China, in connection with our business and operations and for "Know Your Customers" purposes (to combat money laundering). As advised by Guangdong Wesley Law Firm , our counsel with respect to PRC legal matters, the Measures for Cybersecurity Review (2021), the PRC Personal Information Protection Law and the Draft Overseas Listing Regulations will not have an impact on our business, operations or this offering, given that (1) our Operating Subsidiaries are incorporated in Hong Kong (2) we have no subsidiary, VIE structure nor any direct operations in Mainland China, and (3) pursuant to the Basic Law of the Hong Kong Special Administrative Region (the "Basic Law"), which is a national law of the PRC and the constitutional document for Hong Kong, national laws of the PRC shall not be applied in Hong Kong except for those listed in Annex III of the Basic Law (which is confined to laws relating to defense and foreign affairs, as well as other matters outside the autonomy of Hong Kong). As advised by Guangdong Wesley Law Firm , our Operating Subsidiaries will not be deemed to be an "Operator" required to file for cybersecurity review before listing in the United States, because (i) our Operating Subsidiaries were incorporated in Hong Kong and operate in Hong Kong without any subsidiary or VIE structure in Mainland China and each of the Measures for Cybersecurity Review (2021), the PRC Personal Information Protection Law and the Draft Overseas Listing Regulations do not clearly provide whether it shall be applied to a company based in Hong Kong; (ii) as of date of this prospectus, our Operating Subsidiaries have in aggregate collected and stored personal information of less than one million users; (iii) all of the data our Operating Subsidiaries have collected is stored in servers located in Hong Kong; and (iv) as of the date of this prospectus, neither of our Operating Subsidiaries has been informed by any PRC governmental authority of any requirement that it files for a cybersecurity review or a CSRC review. Therefore, we do not believe we are covered by the permission requirements from CSRC nor CAC.

As of the date of this prospectus, we are compliant with all applicable regulations and policies. Based on Mainland China laws and regulations effective as of the date of this prospectus and subject to interpretations of these laws and regulations that may be adopted by PRC authorities, and as advised by Guangdong Wesley Law Firm, neither we, nor our Operating Subsidiaries in Hong Kong are currently required to obtain any permission or approval from the PRC authorities, including the CSRC and CAC, to operate our business and offer the securities being registered to foreign investors. Therefore, no application to obtain permission or approval from the PRC authorities is required and no permissions or approvals have been denied as of the date of this prospectus. However, given the uncertainties arising from the legal system in Mainland China and Hong Kong, including uncertainties regarding the interpretation and enforcement of PRC laws and the significant authority of the PRC government to intervene or influence the offshore holding company headquartered in Hong Kong, there remains significant uncertainty in the interpretation and enforcement of relevant Mainland China cybersecurity laws and other regulations. See "*Risk Factors - Risks Related to Doing Business in the Jurisdictions in which the Operating Subsidiaries Operate*" on page 17 and "*Risk Factors – Risks Related to our Business and Industry – Failure to comply with cybersecurity, data privacy, data protection, or any other laws and regulations related to data may materially and adversely affect our business, financial condition, and results of operations*" on page 42.

If the Draft Overseas Listing Regulations are adopted into law in the future and become applicable to our Operating Subsidiaries in Hong Kong, if any of our Operating Subsidiaries is deemed to be an "Operator", or if the Measures for Cybersecurity Review (2021) or the PRC Personal Information Protection Law become applicable to our Operating Subsidiaries in Hong Kong, the business operation of our Operating Subsidiaries and the listing of our Ordinary Shares in the United States could be subject to the CAC's cybersecurity review or the CSRC Overseas Issuance and Listing review in the future. If we were required to obtain such permissions or approvals in the future in connection with the listing or continued listing of our securities on a stock exchange outside of the PRC, it is uncertain how long it will take for us to obtain such approval, and, even if we obtain such approval, the approval could be rescinded. Any failure to obtain or a delay in obtaining the necessary permissions from the PRC authorities to conduct offerings or list outside of the Mainland China may subject us to sanctions imposed by the PRC regulatory authorities, which could include fines and penalties, proceedings against us, and other forms of sanctions, and our ability to conduct our business, invest into the Mainland China as foreign investments or accept foreign investments, or list on a U.S. or other overseas exchange may be restricted, and our business, reputation, financial condition, and results of operations may be materially and adversely affected. See "*Risk Factors – Risks Related to our Business and Industry – Failure to comply with cybersecurity, data privacy, data protection, or any other laws and regulations related to data may materially and adversely affect our business, financial condition, and results of operations*" on page 42.

In the event that (i) the PRC government expands the categories of industries and companies whose foreign securities offerings are subject to review by the CSRC or the CAC and that we are required to obtain such permissions or approvals; or (ii) we inadvertently concluded that relevant permissions or approvals were not required or that we did not receive or maintain relevant permissions or approvals required, any action taken by the PRC government could significantly limit or completely hinder our operations in Hong Kong and our ability to offer or continue to offer securities to investors and could cause the value of such securities to significantly decline or be worthless.

If our Operating Subsidiaries fail to receive or maintain such permissions or if the required approvals are denied, our Operating Subsidiaries may become subject to fines and other penalties which may have a material adverse effect on our business, operations and financial condition and may hinder our ability to offer or continue to offer Ordinary Shares to investors and cause the value of our Ordinary Shares to significantly decline or be worthless.

Additionally, due to long arm provisions under the current Mainland China laws and regulations, there remains regulatory uncertainty with respect to the implementation and interpretation of laws in Mainland China. We are also subject to the risks of uncertainty about any future actions the Chinese government or authorities in Hong Kong may take in this regard.

Should the PRC government choose to exercise significant oversight and discretion over the conduct of our business, they may intervene in or influence our operations. Such governmental actions:

● could result in a material change in our operations;

● could significantly limit or completely hinder our ability to continue our operations;

● could hinder our ability to continue to offer securities to investors; and

● may cause the value of our Ordinary Shares to significantly decline or be worthless.

**Implications of Being an Emerging Growth Company**

As a company with less than US$1.235 billion in revenues 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 chief executive officer 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.

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.

We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year during which we have total annual gross revenues of at least US$1.235 billion; (ii) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (iii) the date on which we have, during the preceding three-year period, issued more than US$1.0 billion in non-convertible debt; or (iv) the date on which we are deemed to be a "large accelerated filer" under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our Ordinary Shares that are held by non-affiliates exceeds US$700.0 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.

**Implications of Being a "Controlled Company"**

Upon completion of this offering, Mr. Yee Kit, CHAN, our controlling shareholder, will be the beneficial owner of an aggregate of [16,893,225] Ordinary Shares, which will represent [67.57]% of the then total issued and outstanding Ordinary Shares (or [66.28]% of the then total issued and outstanding Ordinary Shares if the underwriters exercise their option to purchase additional Ordinary Shares in full). As a result, we will remain a "controlled company" within the meaning of the Nasdaq Stock Market Rules and therefore we are eligible for, and, in the event we no longer qualify as a foreign private issuer, we intend to rely on, certain exemptions from the corporate governance listing requirements of the Nasdaq.

**Implication of Being a Foreign Private Issuer** 

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.

**Holding Foreign Companies Accountable Act**

On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the Holding Foreign Company Accountable Act, or the HFCAA. An identified issuer will be required to comply with these rules if the SEC identifies it as having a "non-inspection" year under a process to be subsequently established by the SEC. In June 2021, the Senate passed the Accelerating Holding Foreign Companies Accountable Act, which, if signed into law, would reduce the time period for the delisting of foreign companies under the HFCAA to two consecutive years instead of three years. If our auditor cannot be inspected by the Public Company Accounting Oversight Board, or the PCAOB, for two consecutive years, the trading of our securities on any U.S. national securities exchanges, as well as any over-the-counter trading in the U.S., will be prohibited. On September 22, 2021, the PCAOB adopted a final rule implementing the HFCAA, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCAA, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction. On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCAA, 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 Mainland China and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions. The PCAOB made its determinations pursuant to PCAOB Rule 6100, which provides a framework for how the PCAOB fulfills its responsibilities under the HFCA Act. The report further listed in its Appendix A and Appendix B, Registered Public Accounting Firms Subject to the Mainland China Determination and Registered Public Accounting Firms Subject to the Hong Kong Determination, respectively. On February 4, 2022, the U.S. House of Representatives passed the America Creating Opportunities for Manufacturing Pre-Eminence in Technology and Economic Strength (COMPETES) Act of 2022 (the "America COMPETES Act"). If the America COMPETES Act is enacted into law, it would amend the HFCA Act and require the SEC to prohibit an issuer's securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three.

Our auditor, WWC, P.C., the independent registered public accounting firm that issues the audit report included elsewhere in this prospectus, 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 with the last inspection in November 2021, and as of the date of this prospectus, our auditor is not subject to the determinations as to the inability to inspect or investigate registered firms completely announced by the PCAOB on December 16, 2021. However, as more stringent criteria have been imposed by the SEC and the PCAOB, recently, which would add uncertainties to our offering, and we cannot assure you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor's audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements. 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 HFCAA, and ultimately result in a determination by a securities exchange to delist the Company's securities. 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 announced that it was able to secure complete access to inspect and investigate PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong completely in 2022. The PCAOB Board vacated its previous 2021 determinations that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong. However, whether the PCAOB will continue to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong is subject to uncertainties and depends on a number of factors out of our and our auditor's control. 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 HFCAA if needed. See "Risk Factors – *The recent joint statement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and the Holding Foreign Companies Accountable 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. In the event it is later determined that the PCAOB is unable to inspect or investigate completely the Company's auditor, then such lack of inspection could cause trading in the Company's securities to be prohibited under the HFCAA, and ultimately result in a determination by a securities exchange to delist the Company's securities*" on page 22.

**Corporate Information**

Our principal executive office is located at Unit 1002, 10/F, Join-in Hang Sing Centre, No.2-16 Kwai Fung Crescent, Kwai Chung, New Territories, Hong Kong. The telephone number of our principal executive office is (852) 2754 3320. Our registered agent in the Cayman Islands is Ogier Global (Cayman) Limited. Our registered office and our registered agent's office in the Cayman Islands are both located at 89 Nexus Way, Camana Bay, Grand Cayman, KY1-9009, Cayman Islands. Our agent for service of process in the United States is Cogency Global Inc., located at 122 East 42<sup>nd</sup> Street, 18<sup>th</sup> Floor, New York, NY 10168. We maintain a website at www.profitsail.com. We do not incorporate the information on our website into this prospectus and you should not consider any information on, or that can be accessed through, our website as part of this prospectus.

**THE OFFERING**

**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 Operation" 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 in the documents referenced above 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 Related to Doing Business in the Jurisdictions in which the Operating Subsidiaries Operate**

***All of our operations are in Hong Kong. However, due to the long arm application of the current PRC laws and regulations, the PRC government may exercise significant direct oversight and discretion over the conduct of our business and may intervene or influence our operations, which could result in a material change in our operations and/or the value of our Ordinary Shares. Our Operating Subsidiaries in Hong Kong may be subject to laws and regulations of the Mainland China, which may impair our ability to operate profitably and result in a material negative impact on our operations and/or the value of our Ordinary Shares. Furthermore, the changes in the policies, regulations, rules, and the enforcement of laws of the PRC may also occur quickly with little advance notice and our assertions and beliefs of the risk imposed by the PRC legal and regulatory system cannot be certain.***

Our Operating Subsidiaries are located, and operate their business, in Hong Kong, a special administrative region of the PRC. Although some of our customers are individuals from Mainland China or companies that have shareholders and directors that are individuals from Mainland China, the Operating Subsidiaries does not have operation in Mainland China or collect, store or process any personal data of any customer in Mainland China, and is not regulated by any regulator in Mainland China. As a result, the laws and regulations of the Mainland China do not currently have any material impact on our business, financial condition and results of operation. Furthermore, except for the Basic Law of the Hong Kong Special Administrative Region of the People's Republic of China ("Basic Law"), national laws of the Mainland China do not apply in Hong Kong unless they are listed in Annex III of the Basic Law and applied locally by promulgation or local legislation. National laws that may be listed in Annex III are currently limited under the Basic Law to those which fall within the scope of defense and foreign affairs as well as other matters outside the limits of the autonomy of Hong Kong. National laws and regulations relating to data protection, cybersecurity and the anti-monopoly have not been listed in Annex III and so do not apply directly to Hong Kong.

However, due to long arm provisions under the current Mainland China laws and regulations, there remain regulatory and legal uncertainty with respect to the implementation of laws and regulations of Mainland China to Hong Kong. As a result, there is no guarantee that the PRC government may not choose to implement the laws of the Mainland China to Hong Kong and exercise significant direct influence and discretion over the operation of our Operating Subsidiaries in the future and, it will not have a material adverse impact on our business, financial condition and results of operations, due to changes in laws, political environment or other unforeseeable reasons.

In the event that we or our Hong Kong Operating Subsidiaries were to become subject to laws and regulations of Mainland China, the legal and operational risks associated in Mainland China may also apply to our operations in Hong Kong, and we face the risks and uncertainties associated with the legal system in the Mainland China, complex and evolving Mainland China laws and regulation, and as to whether and how the recent PRC government statements and regulatory developments, such as those relating to data and cyberspace security and anti-monopoly concerns, would be applicable to a companies like our Operating Subsidiaries and us, given the substantial operations of our Operating Subsidiaries in Hong Kong and the Chinese government may exercise significant oversight over the conduct of business in Hong Kong.

The laws and regulations in the Mainland China are evolving, and their enactment timetable, interpretation, enforcement, and implementation involve significant uncertainties, and may change quickly with little advance notice, along with the risk that the PRC government may intervene or influence our Operating Subsidiaries' operations at any time could result in a material change in our operations and/or the value of our securities. Moreover, there are substantial uncertainties regarding the interpretation and application of Mainland China laws and regulations including, but not limited to, the laws and regulations related to 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 laws, regulations, and other government directives in the Mainland China may also be costly to comply with, and such compliance or any associated inquiries or investigations or any other government actions may:

● delay or impede our development;

● result in negative publicity or increase our operating costs;

● require significant management time and attention;

● cause devaluation of our securities or delisting; and,

● subject us to remedies, administrative penalties and even criminal liabilities that may harm our business, including fines assessed for our current or historical operations, or demands or orders that we modify or even cease our business operations.

**Our business, financial condition and results of operations, and/or the value of our Ordinary Shares or our ability to offer or continue to offer securities to investors may be materially and adversely affected by existing or future laws and regulations of the Mainland China which may become applicable to Hong Kong and thus to company such as us.**

We are aware that recently, the Mainland China government initiated a series of regulatory actions and statements to regulate business operations in certain areas in Mainland China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over Mainland China-based companies listed overseas using a variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. In addition to these statements, laws and regulations by the Chinese government, including the Measures for Cybersecurity Review, the PRC Personal Information Protection Law and the Draft Rules on Overseas Listing published by CSRC on December 24, 2021 also have indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investments in Mainland China-based issuers.

Furthermore, on February 17, 2023, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures, and five supporting guidelines, which will come into effect on March 31, 2023. (the "Overseas Listing Regulations"). The Overseas Listing Regulations require that a PRC domestic enterprise seeking to issue and list its shares overseas shall complete the filing procedures of and submit the relevant information to CSRC, failing which we may be fined between RMB 1 million and RMB 10 million. According to the Notice on the Management Arrangements for Overseas Issuance and Listing of Domestic Enterprises issued by CSRC on the same day, if we can obtain the SEC's Notice of Effectiveness before March 31 and complete the issuance and listing before September 30, 2023, we will no longer need to submit the relevant information to CSRC for the filing procedures, otherwise we still need to complete the filing procedures with CSRC before our listing on U.S. exchanges. Should the Overseas Listing Regulations be applicable to us, we may be subject to additional compliance requirement in the future, and we cannot assure you that we will be able to get the clearance of filing procedures as required on a timely basis, or at all. Any failure of us to fully comply with new regulatory requirements may significantly limit or completely hinder our ability to offer or continue to offer our ordinary shares, cause significant disruption to our business operations, and severely damage our reputation, which would materially and adversely affect our financial condition and results of operations and cause our ordinary shares to significantly decline in value or become worthless.

We have no operations in Mainland China. Our Operating Subsidiaries are located, and operate, in Hong Kong, a special administrative region of the PRC. As of the date of this prospectus, the PRC government currently does not exert direct influence and discretion over the manner in which we conduct our business activities in Hong Kong, outside of Mainland China. We also do not expect to be materially affected by recent statements by the Chinese Government indicating an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in Mainland China-based issuers. Based on our understanding of the Mainland China laws and regulations currently in effect as of the date of this prospectus, as our Operating Subsidiaries are located in Hong Kong, we are not currently required to obtain permission from the PRC government to list on a U.S. securities exchange and consummate this offering. However, there is no guarantee that this will continue to be the case in the future in relation to the continued listing of our securities on a securities exchange outside of the PRC, or even when such permission is obtained, it will not be subsequently denied or rescinded. It remains uncertain as to the enactment, interpretation and implementation of regulatory requirements related to overseas securities offering and other capital markets activities and due to the possibility that laws, regulations, or policies in the PRC could change rapidly in the future. It remains uncertain whether the Mainland China government will adopt additional requirements or extend the existing requirements to apply to our Operating Subsidiaries located in Hong Kong It is also uncertain whether the Hong Kong government will be mandated by the Mainland China government, despite the constitutional constraints of the Basic Law, to control over offerings conducted overseas and/or foreign investment of entities in Hong Kong, including our Operating Subsidiaries. Any actions by the Mainland China government to exert more oversight and control over offerings (including of businesses whose primary operations are in Hong Kong) that are conducted overseas and/or foreign investments in Hong Kong-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless.

**The Hong Kong legal system embodies uncertainties which could limit the legal protections available to the Operating Subsidiaries**

Hong Kong is a Special Administrative Region of the PRC. Following British colonial rule from 1842 to 1997, China assumed sovereignty under the "one country, two systems" principle. The Hong Kong Special Administrative Region's constitutional document, the Basic Law, ensures that the current principles and policies regarding Hong Kong will remain unchanged for 50 years. Hong Kong has enjoyed the freedom to function with a high degree of autonomy for its affairs, including currencies, immigration and customs operations, and its independent judiciary system. On July 14, 2020, the United States signed an executive order to end the special status enjoyed by Hong Kong under the United States-Hong Kong Policy Act of 1992. This includes special treatment in areas including but not limited to customs tariffs, export controls, immigration, foreign investment, and extradition. The suspension or elimination of Hong Kong's preferential treatment and continued tension between the United States and the PRC could potentially impact Hong Kong's common law legal system and may, in turn, bring about uncertainty in, for example, the enforcement of our contractual rights. This could materially and adversely affect our business and operations. We cannot predict the effect of future developments in the Hong Kong legal system, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the pre-emption of local regulations by national laws. These uncertainties could limit the legal protections available to us, including our ability to enforce our agreements with our customers.

**Trade war or restrictions, whether in form of embargo, tariff, or otherwise, effected between two or more countries, including the risks arising from recent events between the PRC and the US, could materially and adversely affect our business, financial condition and results of operation.**

Our revenue from freight forwarding services for export shipments to the United States contributed to approximately USD 56.3 million, USD 107.7 million and USD 38.8 million for FY2020, FY2021 and 6M2022, respectively, representing approximately 81.3%, 82.8% and 78.4% of our total export revenue of the corresponding period. Also, a significant portion of our business originates from customers in Mainland China and therefore depends on the level of imports and exports to and from Mainland China. Therefore, we are subject to risks related to the changes in trade policies, tariff regulations, embargoes, or other trade restrictions adverse to our customers' business. Tariffs restrictions imposed by the U.S. on Mainland China exports intensified during 2019 which resulted in a negative impact to the international trading activities globally and have attributed to the overall decrease in the cargo shipment volume of Hong Kong. Despite an agreement having been entered into between the U.S. and China on January 15, 2020, to suspend certain planned tariff, our results of operation may be adversely affected if the trade war or restrictions further intensify, whether in the form of embargo, tariff, or otherwise, and may further affect the relationship between the U.S. and China or more countries in the future.

***Changes and the downturn in the economic, political, or social conditions of Hong Kong, Mainland China and other countries or changes to the government policies of Hong Kong and Mainland China could have a material adverse effect on our business and operations***

Our operations are located in Hong Kong. Accordingly, our business, prospects, financial condition and results of operations may be influenced to a significant degree by political, economic and social conditions in Hong Kong and Mainland China generally. Economic conditions in Hong Kong are sensitive to Mainland China and the global economic conditions. Any major changes to Hong Kong's social and political landscape will have a material impact on our business.

The Mainland China economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. While the economy in the Mainland China has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy but may have a negative effect on Hong Kong and us.

Furthermore, on July 14, 2020, the former President of the U.S., Mr. Donald Trump, signed the Hong Kong Autonomy Act and an executive order to remove the preferential trade status of Hong Kong, pursuant to § 202 of the United States-Hong Kong Policy Act of 1992. The U.S. government has determined that Hong Kong is no longer sufficiently autonomous to justify preferential treatment in relation to the PRC, especially with the issuance of the Law of the People's Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region (the "Hong Kong National Security Law") on July 1, 2020. Hong Kong will now be treated as Mainland China, in terms of visa application, academic exchange, tariffs and trading, etc. According to § 3(c) of the executive order issued on July 14, 2020, the license exception for exports and reexports to Hong Kong and transfer within the PRC is revoked, while exports of defense items are banned. On the other hand, the existing punitive tariffs the U.S. imposed on the Mainland China will also be applied to Hong Kong exports. Losing its special status, Hong Kong's competitiveness as the logistic hub may deteriorate in the future as its tax benefits as a result of preferential situation no longer exists and companies might prefer exporting through other cities. The level of activities of domestic exports and re-exports and other trading activities in Hong Kong may decline owing to the tariff being imposed on Hong Kong exports and the export restriction. In the event that Hong Kong loses its position as a logistics hub in Asia, the demand for freight forwarding services, ancillary logistics services, warehousing services, the overall business activities of the freight forwarding industries and thus our business, financial condition and results of operations, may be adversely affected.

Additionally, the recent outbreak of war in Ukraine has already affected global economic markets, and the uncertain resolution of this conflict could result in protracted and/or severe damage to the global economy. Russia's recent military interventions in Ukraine have led to, and may lead to, additional sanctions being levied by the United States, European Union and other countries against Russia. Russia's military incursion and the resulting sanctions could adversely affect global energy and financial markets and thus could affect our client's business and our business, even though we do not have any direct exposure to Russia or the adjoining geographic regions. The extent and duration of the military action, sanctions, and resulting market disruptions are impossible to predict, but could be substantial. Any such disruptions caused by Russian military action or resulting sanctions may magnify the impact of other risks described in this section. We cannot predict the progress or outcome of the situation in Ukraine, as the conflict and governmental reactions are rapidly developing and beyond their control. Prolonged unrest, intensified military activities, or more extensive sanctions impacting the region could have a material adverse effect on the global economy, and such effect could in turn have a material adverse effect on the operations, results of operations, financial condition, liquidity and business outlook of our business.

**Termination of the U.S.-Hong Kong International Shipping Agreement may have an adverse effect on our ocean freight forwarding services and results of operations.**

Changes to trade policies and treaties, or the perception that these changes could occur, could adversely affect the financial and economic conditions in the jurisdictions in which we operate, as well as our financial condition and results of operations. In response to the Hong Kong National Security Law, the U.S., amongst other sanctions aimed to eliminate certain preferential treatment of Hong Kong, announced the suspension or termination of three bilateral agreements signed between Hong Kong and the U.S. in August 2020, including the U.S.-Hong Kong International Shipping Agreement, which provided reciprocal tax exemption on income derived from the international operation of ships by the U.S. and Hong Kong residents. As a result of the termination of the U.S.-Hong Kong International Shipping Agreement, the U.S. and Hong Kong tax exemptions are no longer generally available to Hong Kong and U.S. shipping companies trading to each other's territories. Thus, when a Hong Kong company whose vessel transports goods to or from the U.S. by sea, 50% of the income generated will generally be treated as arising from U.S. sources and will be subject to U.S. tax at an effective tax rate of 4% up to 44.7%, increasing the tax exposure of Hong Kong shipping companies.

The revenue attributable to our ocean freight forwarding services amounted to approximately USD 2.6 million, USD 6.7 million and USD 3.5 million, representing approximately 3.7%, 5.1% and 7.1% of our total revenue for FY2020, FY2021 and 6M2022, respectively. The termination of the US-HK International Shipping Agreement may increase the costs of ocean freight rates when the Hong Kong shipping companies pass the new U.S. tax costs to their customers such as our Operating Subsidiaries, resulting in an increase in cost of services of our Operating Subsidiaries. If we are unable to pass on the increased costs to our customers, our results of operations would be adversely affected. If we are able to pass on the costs to our customers, the customers' demand on our ocean freight forwarding services may decrease as a result of higher ocean freight rates. Moreover, U.S. or other shipping companies trading to Mainland China or Asia may choose other port options other than Hong Kong as the new tax exposure may create financial pressure to avoid trading to Hong Kong in the future, resulting in the decrease in the customers' demand on our ocean freight forwarding services, thus adversely affecting our ocean freight forwarding business and results of operations.

**Risk Relating to our Corporate Structure**

**You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated in the Cayman Islands.**

We are an exempted company incorporated under the laws of the Cayman Islands. We conduct our operations outside the United States and substantially all of our assets are located outside the United States. In addition, substantially all of our directors and executive officers named in this prospectus reside outside the United States, and most 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 our directors or officers or to enforce judgments obtained in the United States courts against our directors and officers. For more information regarding the relevant laws of the Cayman Islands and Hong Kong, see "Regulations" on page 93.

Our corporate affairs are governed by our Memorandum and Articles of Association, the Companies Act and the common law of the Cayman Islands. The rights of shareholders to take action against our directors, actions by our minority shareholders and the fiduciary duties of our directors to us under the Cayman Islands laws are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the English common law, which has persuasive, but not binding authority, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under the Cayman Islands laws may not be as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.

We have been advised by our Cayman Islands legal counsel, Ogier, that there is uncertainty as to whether the courts of the Cayman Islands would:

● recognize or enforce against us judgments of courts of the United States based on certain civil liability provisions of U.S. securities laws; and

● entertain original actions brought in each respective jurisdiction against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.

There is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, although the courts of the Cayman Islands will in certain circumstances recognize and enforce a foreign judgment, without any re-examination or re-litigation of matters adjudicated upon, provided such judgment:

&nbsp;&nbsp;&nbsp;&nbsp;(a) is given by a foreign court of competent jurisdiction;

(b) imposes on the judgment debtor a liability to pay a liquidated sum
 for which the judgment has been given;

(c) is final;

(d) is not in respect of taxes, a fine or a penalty;

(e) was not obtained by fraud; and

(f) is not of a kind the enforcement of which is contrary to natural justice
 or the public policy of the Cayman Islands.

Subject to the above limitations, in appropriate circumstances, a Cayman Islands court may give effect in the Cayman Islands to other kinds of final foreign judgments such as declaratory orders, orders for performance of contracts and injunctions.

Shareholders of Cayman Islands companies like us have no general rights under the Cayman Islands laws to inspect corporate records, other than the Memorandum and Articles of Association and any special resolutions passed by such companies, and the registers of mortgages and charges of such companies. Our directors have discretion under our Memorandum and 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.

Certain corporate governance practices in the Cayman Islands, where our holding company was incorporated, differ significantly from requirements for companies incorporated in other jurisdictions such as the United States. Currently, we do not plan to rely on home country practice with respect to our corporate governance after we complete this offering. However, if we choose to follow the Cayman Islands' practice in the future, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.

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 our board of directors, or our Controlling Shareholder 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 and the laws applicable to companies incorporated in the United States and their shareholders, see "Description of Share Capital—Differences in Corporate Law.".

**Cayman Islands economic substance requirements may have an effect on our business and operations.** 

Pursuant to the International Tax Cooperation (Economic Substance) Act, 2018 of the Cayman Islands, or the ES Act, that came into force on January 1, 2019, a "relevant entity" is required to satisfy the economic substance test set out in the ES Act. A "relevant entity" includes an exempted company incorporated in the Cayman Islands as is our Company. Based on the current interpretation of the ES Act, we believe that our Company is a pure equity holding company since it only holds equity participation in other entities and only earns dividends and capital gains. Accordingly, for so long as our Company is a "pure equity holding company", it is only subject to the minimum substance requirements, which require us to (i) comply with all applicable filing requirements under the Companies Act; and (ii) has adequate human resources and adequate premises in the Cayman Islands for holding and managing equity participations in other entities. However, there can be no assurance that we will not be subject to more requirements under the ES Act. Uncertainties over the interpretation and implementation of the ES Act may have an adverse impact on our business and operations.

**We rely on dividends and other distributions on equity paid by the Operating Subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of the Operating Subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business.** 

PSI Group Holdings Ltd is a holding company and we rely on dividends and other distributions on equity paid by the Operating Subsidiaries for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. We do not expect to pay cash dividends in the foreseeable future. We anticipate that we will retain any earnings to support operations and to finance the growth and development of our business. If any of the Operating Subsidiaries incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us. See "Dividend Policy" for more information.

Under the current practice of the Inland Revenue Department of Hong Kong, no tax is payable in Hong Kong in respect of dividends paid by us. Any limitation on the ability of our Hong Kong 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. For more details, please see *Regulations – Hong Kong Regulations.* 

***Our controlling shareholder has substantial influence over the Company. His interests may not be aligned with the interests of our other shareholders, and it could prevent or cause a change of control or other transactions.***

Prior to this offering, Mr. Yee Kit, CHAN, our Chairman and Director, beneficially owns an aggregate of 77.67% of our issued and outstanding Ordinary Shares. Upon completion of this offering, Mr. Chan will beneficially own approximately [67.57]% of our issued and outstanding Ordinary Shares assuming the underwriters do not exercise their over-allotment option and approximately [66.28]% of our issued and outstanding Ordinary Shares if the underwriters' over-allotment option is exercised in full.

Accordingly, our controlling shareholder could control the outcome of any corporate transaction or other matter submitted to the shareholders for approval, including mergers, consolidations, the election of directors and other significant corporate actions, including the power to prevent or cause a change in control. The interests of our largest shareholder may differ from the interests of our other shareholders. Without the consent of our controlling shareholder, we may be prevented from entering into transactions that could be beneficial to us or our other shareholders. The concentration in the ownership of our shares may cause a material decline in the value of our shares. For more information regarding our principal shareholders and their affiliated entities, see "*Principal Shareholders*."

 

**Risks Related to our Ordinary Shares and this Offering** 

***The recent joint statement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and the Holding Foreign Companies Accountable 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. In the event it is later determined that the PCAOB is unable to inspect or investigate completely the Group's auditor, then such lack of inspection could cause trading in the Company's securities to be prohibited under the HFCAA, and ultimately result in a determination by a securities exchange to delist the Company's securities.***

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 minimum offering size requirement for companies primarily operating in "Restrictive Market", (ii) adopt a new requirement relating to the qualification of management or board of director 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 auditors.

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

On March 24, 2021, the SEC announced that it had adopted interim final amendments to implement congressionally mandated submission and disclosure requirements of the 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 a bill which, if passed by the U.S. House of Representatives and signed into law, would reduce the number of consecutive non-inspection years required for triggering the prohibitions under the HFCAA from three years to two.

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

On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCAA. On January 10, 2022, the final rules adopted by the SEC relating to the HFCA Act became effective. 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, SEC announced that the PCAOB designated the PRC and Hong Kong as the jurisdictions where the PCAOB is not allowed to conduct full and complete audit inspections as mandated under the HFCAA.

On February 4, 2022, the U.S. House of Representatives passed the America Creating Opportunities for Manufacturing Pre-Eminence in Technology and Economic Strength (COMPETES) Act of 2022 (the "America COMPETES Act"). If the America COMPETES Act is enacted into law, it would amend the HFCA Act and require the SEC to prohibit an issuer's securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three.

Our auditor, WWC, P.C., the independent registered public accounting firm that issues the audit report included elsewhere in this prospectus, as a firm headquartered in California and registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess our auditor's compliance with the applicable professional standards with the last inspection in November 2021, and as of the date of this prospectus, our auditor is not subject to the PCAOB determinations. However, in the event it is later determined that the PCAOB is unable to inspect or investigate completely the 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 HFCAA, and ultimately result in a determination by a securities exchange to delist the Company's securities.

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 announced that it was able to secure complete access to inspect and investigate PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong completely in 2022. The PCAOB Board vacated its previous 2021 determinations that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong. However, whether the PCAOB will continue to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong is subject to uncertainties and depends on a number of factors out of our and our auditor's control. 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 HFCAA if needed.

In addition, the recent developments would add uncertainties to our offering and we cannot assure you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor's audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements. It remains unclear what 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 U.S. companies that have significant operations in Hong Kong 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 share 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.

**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 paid, or at all.** 

Prior to this offering, there has been no public market for our Ordinary Shares. Although we have applied to have our Ordinary Shares listed on the Nasdaq Capital Market, we cannot assure you that a liquid public market for our Ordinary Shares will develop. If an active public market for our Ordinary Shares does not develop following the completion of this offering, the market price of our Ordinary Shares may decline and the liquidity of our Ordinary Shares may decrease significantly.

The initial public offering price for our Ordinary Shares will be determined by negotiation between us and the Underwriters and may vary from the market price of our Ordinary Shares following our initial public offering. We cannot assure you that the price at which the Ordinary Shares are traded after this offering will not decline below the initial public offering price. 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. As a result, investors in our Ordinary Shares may experience a significant decrease in the value of their Ordinary Shares due to insufficient or a lack of market liquidity of our Ordinary Shares.

**The trading price of our Ordinary Shares may be volatile, which could result in substantial losses to you.** 

The trading price of our Ordinary Shares is likely to be volatile and could fluctuate widely due to factors beyond our control. This may happen due to broad market and industry factors, such as performance and fluctuation in the market prices or underperformance or deteriorating financial results of other listed companies based in Hong Kong and Mainland China. The securities of some of these companies have experienced significant volatility since their initial public offerings, including, in some cases, substantial price declines in the trading price of their securities. The trading performances of other Hong Kong and Chinese companies' securities after their offerings may affect the attitudes of investors towards Hong Kong-based, U.S.-listed companies, which consequently may affect the trading performance of our Ordinary Shares, regardless of our actual operating performance. In addition, any negative news or perceptions about inadequate corporate governance practices or fraudulent accounting, corporate structure or matters of other Hong Kong and Chinese companies may also negatively affect the attitudes of investors towards Hong Kong and Chinese companies in general, including us, regardless of whether we have conducted any inappropriate activities. Furthermore, securities markets may from time to time experience significant price and volume fluctuations that are not related to our operating performance, which may have a material and adverse effect on the trading price of our Ordinary Shares.

In addition to the above factors, the price and trading volume of our Ordinary Shares may be highly volatile due to multiple factors, including the following:

● political, social and economic conditions in Mainland China and Hong Kong;

● the market reaction to the COVID-19 pandemic;

● variations in our revenues, profit, and cash flow;

● the operating and stock price performance of other companies, other industries and other events or factors beyond our control;

● fluctuations of exchange rates among Hong Kong dollar, Renminbi, and the U.S. dollar;

● general market conditions or other developments affecting us or the freight forwarding industry in which we operate;

● actual or anticipated fluctuations in our results of operations and changes or revisions of our expected results;

● changes in financial estimates or recommendations by securities research analysts;

● detrimental negative publicity about us, our services, our officers, directors, Controlling Shareholder, other beneficial owners, our business partners, or our industry;

● announcements by us or our competitors of new service offerings, acquisitions, strategic relationships, joint ventures, capital raisings or capital commitments;

● additions to or departures of our senior management;

● litigation or regulatory proceedings involving us, our officers, directors, or Controlling Shareholder;

● developments in information technology and our capability to catch up with the technology innovations in the industry;

● the realization of any of the other risk factors presented in this prospectus;

● changes in investors' perception of our Company and the investment environment generally;

● the liquidity of the market for our Ordinary Shares;

● release or expiry of lock-up or other transfer restrictions on our outstanding Ordinary Shares; and

● sales or perceived potential sales of additional Ordinary Shares.

Any of these factors may result in large and sudden changes in the volume and price at which our Ordinary Shares will be traded.

Recently, there have been instances of extreme stock price run-ups followed by rapid price declines and strong stock price volatility with a number of recent initial public offerings, especially among companies with relatively smaller public floats. As a relatively small-capitalization company with 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 up, may be unrelated to our actual or expected operating performance, 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 prices 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 shares of Ordinary Shares or other 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.

In the past, shareholders of public companies have often brought securities class action suits against those companies following periods of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount of our management's attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

**Our Ordinary Shares may be thinly traded and you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares.**

Assuming our Ordinary Shares begin trading on the Nasdaq Capital Market, our Ordinary Shares may be "thinly-traded," meaning that the number of persons interested in purchasing our Ordinary Shares at or near bid prices at any given time may be relatively small or non-existent. This situation may be attributable to a number of factors, including the fact that we are relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we come to the attention of such persons, they tend to be risk-averse and might be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. A broad or active public trading market for our Ordinary Shares may not develop or be sustained.

**If securities or industry analysts do not publish or publish inaccurate or unfavorable research about our business, or if they adversely change their recommendations regarding our Ordinary Shares, the market price for our Ordinary Shares and trading volume could decline.** 

The trading market for our Ordinary Shares will depend in part on the research and reports that securities or industry analysts publish about us or our business. If research analysts do not establish and maintain adequate research coverage or if one or more of the analysts who cover us downgrade our Ordinary Shares or publish inaccurate or unfavorable research about our business, the market price for our Ordinary Shares would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for our Ordinary Shares to decline.

**The sale or availability for sale of substantial amounts of our Ordinary Shares in the public market could adversely affect the market price of our Ordinary Shares.** 

Sales of substantial amounts of our Ordinary Shares in the public market after the completion of this offering, or the perception that these sales could occur, could adversely affect the market price of our Ordinary Shares and could materially impair our ability to raise capital through equity offerings in the future. The Ordinary Shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act of 1933, as amended, or the Securities Act, and shares held by our existing shareholders may also be sold in the public market in the future, subject to the restrictions in Rule 144 and Rule 701 under the Securities Act and the applicable lock-up agreements. There will be [ ] Ordinary Shares outstanding immediately after this offering, or [ ] Ordinary Shares if the underwriters exercise their option to purchase additional Ordinary Shares in full. In connection with this offering, we, our officers, directors, and shareholders holding 5% or more of the issued and outstanding Ordinary Shares have agreed not to sell any of our Ordinary Shares or are otherwise subject to similar lockup restrictions for 6 months after the date of this prospectus without the prior written consent of the representatives of the underwriters, subject to certain exceptions. However, the underwriters may release these securities from these restrictions at any time, subject to applicable regulations of the Financial Industry Regulatory Authority, Inc. We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of our Ordinary Shares. See "Underwriting" for a more detailed description of the restrictions on selling our securities after this offering.

**Because the amount, timing, and whether or not we distribute dividends at all is entirely at the discretion of our board of directors, you must rely on price appreciation of our Ordinary Shares for return on your investment.** 

Our board of directors has complete discretion as to whether to distribute dividends. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors. In either case, all dividends are subject to certain restrictions under the Cayman Islands law, namely that the Company may only pay dividends out of profits or share premium, and provided that under no circumstances may a dividend be paid if this would result in the Company being unable to pay its debts as they fall due in the ordinary course of business. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our Ordinary Shares will likely depend entirely upon any future price appreciation of our Ordinary Shares. We cannot assure you that our Ordinary Shares will appreciate in value after this offering or even maintain the price at which you purchased the Ordinary Shares. You may not realize a return on your investment in our Ordinary Shares and you may even lose your entire investment in our Ordinary Shares. See "Dividend Policy" section for more information.

**Exercise of options granted under the Equity Incentive Plan or issue of awarded shares under the Equity Incentive Plan may result in dilution to our Shareholders.**

Prior to the closing of this offering, we intend to adopt the Equity Incentive Plan. We do not plan to grant any options under the Equity Incentive Plan prior to the completion of this offering. Following the issuance of new Ordinary Shares upon exercise of any options that may be granted under the Equity Incentive Plan, there will be an increase in the number of issued Ordinary Shares. As such, there may be a dilution or reduction of shareholding of existing Shareholders which results in a dilution or reduction of our earnings per Ordinary Share and net asset value per Ordinary Share. In addition, the fair value of options to be granted to eligible participants under the Equity Incentive Plan will be charged to our consolidated statements of profit or loss and other comprehensive income over the vesting periods of the options. Fair value of the options shall be determined on the date of granting of the options. Accordingly, our financial results and profitability may be materially and adversely affected.

**We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies.** 

Because we qualify as a foreign private issuer under the Exchange Act, 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 will be required to file an annual report on Form 20-F within four months of the end of each fiscal year. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. 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.

**As a company incorporated in the Cayman Islands, we are permitted to adopt certain Cayman Islands' practices in relation to corporate governance matters that differ significantly from the Nasdaq Capital Market listing standards; these practices may afford less protection to shareholders than they would enjoy if we complied fully with the Nasdaq Capital Market listing standards.** 

As a Cayman Islands company to be listed on the Nasdaq Capital Market, we are subject to the Nasdaq Capital Market listing standards. However, the Nasdaq Capital Market rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the Nasdaq Capital Market listing standards. Currently, we do not plan to rely on home country practices with respect to our corporate governance after we complete this offering. However, if we choose to follow home country practices in the future, our shareholders may be afforded less protection than they would otherwise enjoy under the Nasdaq Capital Market listing standards applicable to U.S. domestic issuers.

**There can be no assurance that we will not be a passive foreign investment company, or PFIC, for United States federal income tax purposes for any taxable year, which could subject United States investors in our Ordinary Shares to significant adverse United States income tax consequences.** 

We will be classified as a passive foreign investment company, or PFIC, for any taxable year if either (i) 75% or more of our gross income for such year consists of certain types of "passive" income, or (ii) 50% or more of the value of our assets (determined on the basis of a quarterly average) during such year produce or are held for the production of passive income (the "asset test"). Based upon our current and expected income and assets, including goodwill and (taking into account the expected proceeds from this offering) the value of the assets held by our strategic investment business, the expected proceeds from this offering as well as projections as to the market price of our Ordinary Shares immediately following the completion of this offering, we do not presently expect to be classified as a PFIC for the current taxable year or the foreseeable future.

While we do not expect to be a PFIC, because the value of our assets, for purposes of the asset test, may be determined by reference to the market price of our Ordinary Shares, fluctuations in the market price of our Ordinary Shares may cause us to become a PFIC classification for the current or subsequent taxable years. The determination of whether we will be or become a PFIC will also depend, in part, on the composition and classification of our income, including the relative amounts of income generated by and the value of assets of our strategic investment business as compared to our other businesses. Because there are uncertainties in the application of the relevant rules, it is possible that the U.S. Internal Revenue Service, or IRS, may challenge our classification of certain income and assets as non-passive which may result in our being or becoming a PFIC in the current or subsequent years. In addition, the composition of our income and assets will also be affected by how, and how quickly, we use our liquid assets and the cash raised in this offering. If we determine not to deploy significant amounts of cash for active purposes, our risk of being a PFIC may substantially increase. Because there are uncertainties in the application of the relevant rules and PFIC status is a factual determination made annually after the close of each taxable year, there can be no assurance that we will not be a PFIC for the current taxable year or any future taxable year.

If we are a PFIC in any taxable year, a U.S. Holder may incur significantly increased United States income tax on gain recognized on the sale or other disposition of our Ordinary Shares and on the receipt of distributions on our Ordinary Shares to the extent such gain or distribution is treated as an "excess distribution" under the United States federal income tax rules, and such holder may be subject to burdensome reporting requirements. Further, if we are a PFIC for any year during which a U.S. Holder holds our Ordinary Shares, we will generally continue to be treated as a PFIC for all succeeding years during which such U.S. Holder holds our Ordinary Shares.

**We will incur increased costs as a result of being a public company, particularly after we cease to qualify as an emerging growth company.** 

Upon completion of this offering, we will become a public company and expect to incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act of 2002 and the rules subsequently implemented by the SEC and the Nasdaq Capital Market detailed requirements concerning corporate governance practices of public companies. As a company with less than US$1.235 billion in net revenues for our last fiscal year, we qualify as an "emerging growth company" pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2012 relating to internal controls over financial reporting.

We expect these rules and regulations to increase our legal and financial compliance costs and to make some corporate activities more time-consuming and costlier. After we are no longer an "emerging growth company," we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the other time and attention to our public company reporting obligations and other compliance matters. For example, as a result of becoming a public company, we will need to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures. We also expect that operating as a public company will make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. In addition, we will 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 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.

**We are an "emerging growth company," and the reduced disclosure requirements applicable to emerging growth companies may make our Ordinary Shares less attractive to investors.** 

We are an "emerging growth company," as defined in the JOBS Act. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include:

● being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced "Management's Discussion and Analysis of Financial Condition and Results of Operations" disclosure;

● not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting of Section 404(b) of the Sarbanes-Oxley Act;

● not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements;

● reduced disclosure obligations regarding executive compensation; and

● exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

We have taken advantage of reduced reporting burdens in this prospectus. In particular, in this prospectus, we have only provided two years of audited financial statements and have not included all the executive compensation related information that would be required if we were not an emerging growth company. In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards.

We cannot predict whether investors will find our Ordinary Shares less attractive if we rely on these exemptions. 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.

We will remain an emerging growth company until the earliest of (i) the date on which we are deemed to be a "large accelerated filer" under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our Ordinary Shares that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. (ii) the end of the fiscal year during which we have total annual gross revenues of US$1.235 billion or more, (iii) the date on which we have, during the preceding three-year period, issued more than US$1.0 billion in non-convertible debt, or (iv) the last day of our fiscal year following the fifth anniversary of the completion of this offering.

**You should read the entire prospectus carefully and we strongly caution you not to place any reliance on any information contained in press articles or other media regarding us and the listing.**

We wish to emphasize to prospective investors that we do not accept any responsibility for the accuracy or completeness of the information contained in any press articles or other media coverage regarding us or the offering, and such information that was not sourced from or authorized by us. We make no representation to the appropriateness, accuracy, completeness or reliability of any information contained in any press articles or other media coverage about our business or financial projections, share valuation or other information. Accordingly, prospective investors should not rely on any such information and should rely only on information included in this prospectus in making any decision as to whether to invest in our Ordinary Shares.

**Risks Related to our Business and Industry**

**The demand for our services is easily affected by unpredictable factors, and our results of operations are affected by changes in the global and regional economic conditions and the international trading volumes.**

A significant majority of our revenue is generated from air freight export from Hong Kong and Mainland China and organizing shipments primarily to Europe, Asia, Southeast Asia and North America. Our results of operations are thus affected by global trade volume and export volume of Hong Kong. We are sensitive to changes in regional and/or global political and economic conditions that impact customer shipping volumes, industry freight demand and demand for cargo space. The transportation industry historically has experienced cyclical fluctuations due to economic recession, level of international trade activities, downturns in business cycles of our customers, interest and currency rate fluctuations, inflation, trade restrictions, economic sanctions, trade disputes, boycotts, outbreak of wars, changes in regulatory regimes and extreme weather conditions, all of which are beyond our control and the nature, timing and degree of which are largely unpredictable. Any decrease in demand for our services due to cyclical downturns could adversely affect our business, financial condition and results of operations.

***A decrease in the level of Mainland China's export of goods could have a material adverse effect on our business.***

A significant portion of our business originates from the customers in Mainland China and therefore depends on the level of imports and exports to and from Mainland China. Any adverse economic or social developments in Mainland China could lead to a general decline in consumption and a slowdown in international trade, which could have a significant impact on our businesses. In addition, an economic slowdown around the world and the shifting of outsourced manufacturing activities away from Mainland China could have a significant impact on our international freight forwarding business.

Furthermore, the level of imports to and exports from Mainland China could be adversely affected by the changes in political, economic and social conditions or other relevant policies of the Chinese government. As Mainland China exports considerably more goods than it imports, any reduction in or hindrance to China-based exports, whether due to decreased demand from the rest of the world, an economic slowdown in Mainland China, seasonal decrease in manufacturing levels due to the Chinese New Year holiday or other factors, could have a material adverse effect on our business. In recent years, the Mainland China has experienced an increasing level of economic autonomy. The "Dual Circulation" with the emphasis on "Internal Circulation" strategy became a key priority in the Chinese Government's Fourteenth Five-Year Plan, signaling that the Mainland China wants to reduce the role of international trade in its economy and its dependence on overseas markets. The Internal Circulation strategy may have the effect of reducing the imports to Mainland China and may, in turn, result in decreased demand for cargo shipping to Mainland China. Furthermore, the Chinese government's economic policies which aimed at increasing domestic consumption of Chinese-made goods may have also the effect of reducing the supply of goods available for export and may, in turn, also result in decreased demand for export cargo shipping.

These factors could have a negative impact on the outbound activities of international freight forwarding from Mainland China. If Mainland China experiences slower growth or a decline in exports, our business, financial condition and results of operations could be materially and adversely affected.

**There can be no assurance that Hong Kong will continue to maintain its position as a significant air cargo hub in Asia.**

Our Operating Subsidiaries operate out of Hong Kong. As a significant air cargo hub in Asia, Hong Kong is well-positioned to foster a high demand for cargo space on outbound routes from Hong Kong to other destinations in Asia. There can be no assurance that Hong Kong will continue to maintain such position. For example, Shanghai, China, shares the same cargo catchment area in the Pearl River Delta region, while Singapore shares the same positioning as a regional hub for intra-Asia trade and as a logistics center. In the event that Hong Kong loses its position as a transportation hub in Asia, the demand for freight forwarding services and ancillary logistics services and the overall business activities of the industries and thus our business, financial condition and results of operations, may be adversely affected.

**Fluctuations in the price of cargo space could have adverse impact on our results of operations.**

Fluctuation in the price of cargo space will affect our total cost of revenue directly and thus the freight forwarding services fee charged to our customers as our pricing for freight forwarding services is determined on a cost-plus approach, which in turn affects our gross profit. Our results of operations are significantly affected by the air and ocean freight charges cost, which accounted for approximately 89.7%, 89.9% and 86.9% of our total cost of revenue for FY2020, FY2021 and 6M2022 respectively. Our profitability of freight forwarding services is correlated with the fluctuation of freight forwarding services fee charged to our customers. If we cannot pass on the cost of the cargo space in full to our customers, our results of operations may be materially and adversely affected.

In the course of business, we enter into certain block space arrangements and aircraft charter arrangements with the suppliers whereby we are committed to paying for the agreed cargo space irrespective of whether we can fully utilize the allotted space. There have been occasions when we have provided cargo space to customers at a rate lower than the respective freight charges cost and there is no assurance that it will not incur again in the future. Should the prevailing market rates of cargo space at the time when we charge to our customers fall below the freight charges cost, we may not be able to increase the freight forwarding services fee in full to our customers and our results of operations may be materially and adversely affected.

**Our profitability is susceptible to the volatility and uncertainties in demand and supply for cargo space.**

The freight service fee we charge our customers is based on our assessment of, among other things, the demand and supply for cargo space, prevailing market rate and air cargo space price index. Our profitability could be also negatively impacted if our pricing strategy proves to be inaccurate. If we are incorrect in our assumptions and do not accurately calculate or assess the costs to us to provide our services, we could experience lower margins than anticipated, loss of business, or be unable to offer competitive products and services.

We procure the supply of cargo space through direct booking, block space arrangements and aircraft charter arrangements, based on our estimation regarding the existing and anticipated customer demand. Pursuant to the block space arrangements and aircraft charter agreements, we are committed to paying the agreed cargo space irrespective of whether we fully utilize the allotted space. If we cannot efficiently utilize the air cargo space allocated to us under the block space agreements and aircraft charter agreements with our airline partners, we may not be able to fully recover the costs of the relevant cargo space, and our results of operations may suffer.

If we cannot fully utilize the cargo space we have sourced, i.e., when the actual customers' demand for the cargo space is less than the amount of cargo space we sourced, we have to sell excess cargo space. We cannot assure that there will not be instances where, for example, due to (a) departure timetable of the aircraft or vessel; (b) popularity of the route; or (c) seasonality factors, we are unable to fully consolidate/co-load all the excess cargo space we purchased from our suppliers. In case we cannot fully utilize the cargo space we obtained from our suppliers, we may have to bear the costs of all the excess cargo space we purchased and our business and results of operations could be adversely affected.

In the event that the actual customers' demand for the cargo space is higher than the amount of cargo space we have, we have to source the cargo space, by direct booking, from our suppliers, including airlines and other freight forwarders, at the prevailing market rates. Should the freight forwarding services fee we charge to our customers fall below the prevailing market rates of cargo space, we may not be able to increase the services fee in full to our customers and our results of operations may be materially and adversely affected. Furthermore, since cargo space offered by our suppliers through direct booking is subject to the availability of their aircrafts or vessels and normally on a first-come-first-served basis, without the guaranteed supply of cargo space by existing agreement, there is no assurance that we will be able to source sufficient cargo space to meet our customers' demand within the expected time frame and at favorable price, in particular during peak seasons. If we cannot obtain sufficient cargo space from our suppliers to meet our customers' demand, our reputation within the network of industry players and our results of operations could be adversely affected.

**Our revenue is subject to seasonal fluctuations, our results for different periods in any given financial year may not be relied upon as indicators of our performance**

Our peak season is generally from October to December which is driven by festive events and discount promotions such as Thanksgiving, Christmas and New Year's Eve. Moreover, we record relatively lower volume of shipment and thus relatively lower revenue during Lunar New Year (normally in January or February) owing to lower business activities from manufacturers and shippers in Mainland China in Lunar New Year, resulting in a decrease in the demand for freight forwarding services. Accordingly, comparison of sales and operating results from different periods in any given financial year may not be relied upon as indicators of our performance. It is widely understood in the industry that these seasonal trends are influenced by a number of factors, including weather patterns, national holidays, economic conditions, consumer demand, major product launches, as well as a number of other market forces. Since many of these forces are unforeseen there is no way for us to provide assurances that these seasonal trends will continue.

**We generally do not enter into any long-term contracts with our customers and we may not be able to maintain a stable source of revenue generated from the freight forwarding business**

We generally do not enter into long-term contracts our customers, who make bookings with us for cargo space on an as-needed basis. As a result, we cannot guarantee that our current customers will continue to utilize our services or that they will continue at the same levels. Our revenue is therefore susceptible to fluctuations in the demand for cargo space from our customers and the cancellations of existing customer contracts.

We rely on our customers to make continuous purchases of cargo space from us to maintain a stable source of revenue. Customer's demand could be affected by unpredictable factors, such as regional and global political and economic conditions. Furthermore, as we are not the exclusive freight forwarder of our customers, we cannot be certain that sales to our existing customers, including our major customers, will continue. Our existing customers are not obliged to engage us for the provision of freight forwarding services for the shipments in the future. There is no assurance that our existing customers will not engage other freight forwarders whom they perceive to offer lower prices or better services than ours. There is no certainty that we will continue to generate a stable revenue from our customers, any significant reduction of bookings from our customers could materially affect our business, financial condition and results of operations.

**We are dependent on our customers' business performance, especially our freight forwarder customer, and their continuing demand for international freight forwarding services**

Our revenue generated from our provision of freight forwarding services to other freight forwarders accounted for approximately 98.2%, 98.9% and 99.1% of our total revenue in FY2020, FY2021 and 6M2022. We are therefore dependent on other freight forwarders' business performance and developments in their markets and industries. Any material adverse change to the social and economic condition in Hong Kong may affect their business and financial performance, which may in turn affect our business and financial condition.

If the financial and business performance of other freight forwarders deteriorate, it will likely cause a corresponding decrease in demand for our freight forwarding services. Adverse changes in their demand, and if we cannot absorb their direct shipper customers, it could materially and adversely affect our business, financial condition and results of operations.

**We derive a significant portion of our revenue from few major customers with whom we do not enter into long-term contracts, the loss of one or more of which could have a material adverse effect on our business.**

Our top 5 customers collectively accounted for approximately 68.1%, 62.2% and 65.8% of our revenue for FY2020, FY2021 and 6M2022. Furthermore, we generated a significant portion of our revenues from a single largest customer, for FY2020, FY2021 and 6M2022, respectively, which accounted for 41.0%, 40.5% and 51.0% of our total revenues respectively.

Loss of business from major customers could reduce our revenues and significantly harm our business, based on a number of factors other than our performance, such as: industry trends related to e-commerce that may apply downward pricing pressures on the rates our customers can charge; the seasonality associated with the fourth quarter holiday season; business combinations and the overall growth of a customer's underlying business; and any disruptions to our customers' businesses. Furthermore, if we experience difficulties in the collection of our accounts receivables from our major customers, our results of operation may be materially and adversely affected. These customers could choose to divert all or a portion of their business with us to one of our competitors, demand pricing concessions for our services, require us to provide enhanced services that increase our costs, or develop their own shipping and distribution capabilities.

We expect that we will continue to depend on a relatively small number of customers for a significant portion of our net revenue and may continue to experience fluctuations in the distribution of the revenue among our largest customers. The volume of sale from specific customers is likely to vary from year to year, especially since we do not have long-term commitments from any of our customers to purchase our services. A major customer in one year may not provide the same level of revenues for us in any subsequent year.

***The freight forwarding industries in which we operate are susceptible to risk of changes in shipping policies which could have direct adverse impact on our business, results of operations and profits.***

Frequent accidents concerning certain types of cargo on aircrafts and vessels have called for tightened safety measures on aircrafts and vessels. In the event that changes in shipping policies of certain airlines, for instance, prohibiting consignments containing lithium batteries from loading on to passenger aircrafts, have been adopted, business activities of our customers could be directly affected. Our customers may either be forced to ship their consignments through airlines that offer cargo aircrafts or divert their domestic and inter-continental deliveries to other alternatives such as rail and road transportation. Tightened safety measures may also imply an overall burden on cargo space suppliers to raise shipping costs in order to maintain their profit margin. In the event that we are unable to source suitable alternative cargo space for our customers, or we fail to pass on our increased costs to our customers, our business, results of operations and profitability could be adversely affected.

**We face risks associated with the items we deliver and the contents of shipments and inventories handled through our service network as we may fail to identify shipments which carry goods of dangerous or illicit nature.**

We handle a large volume of shipments across our service network. In accordance with the air cargo security regime in Hong Kong and related statutory requirements of Hong Kong Civil Aviation Department (CAD), 100% of cargoes arranged by us are required to be screened by the screening equipment (such as x-ray) certified by aviation security authorities, such as the European Civil Aviation Conference (ECAC) of the European Commission, Transportation Security Administration (TSA) of the USA, Department for Transport (DofT) of the UK and Civil Aviation Administration of China (CAAC) ("Screening Equipment"). We are required shall ensure all dangerous goods are properly classified, packed, marked, labelled and documented before they are offered for air transportation. However, there is no assurance that our Screening Equipment or hand search/physical check by our screeners at piece level can successfully prevent the shipment of any illegal goods or dangerous goods.

Should we fail to identify shipments which carry goods of illicit or dangerous nature, these goods may end up being impounded by customs, where we may be subject to investigations and administrative or even criminal penalties, or if any personal injury or property damage is concurrently caused, we may be further liable for civil compensation. In such event, our reputation, business and results of operations may be materially and adversely affected. Furthermore, we face challenges with respect to the protection and control of these items when handling the shipments and inventories across our service network. Shipments and inventories in our service network may be stolen, damaged or lost for various reasons, and we, together with our service providers, may be perceived or found to be liable for such incidents.

**Any lack of requisite licenses, certificate, permits applicable to the business operation may have a material and adverse impact on our business, financial condition and results of operations.**

We have obtained various registrations, certificates, permits, and licenses in connection with our business and operations, including the certificate as an International Air Transport Association (IATA) member for easier access to space procurement for air cargo routes, license for the operation of our off-airport x-ray screening operation in our warehouses to satisfy the CAD 100% screening requirement (including Irradiating Apparatus License, Regulated Air Cargo Screening Facility License, and Regulated Agent License from Civil Aviation Department and Radiation Board of the Hong Kong Government), and the registration as a Food Import or Distributor and Textile Traders. For the details regarding the relevant licenses and permits, please see section "*Business – Licenses and Regulatory Approvals*" in this document.

Most licenses and registrations are subject to renewal. In the event that we fail to renew or obtain our relevant licenses and registrations, even if we may be able to subcontract relevant services, there is no assurance that we can locate suitable subcontractors in a timely manner or on reasonable commercial terms, and the subcontractor will at all times perform in a satisfactory level. Failure to obtain such licenses and permits may result in suspension of operation, fines or other penalties by government authorities. New laws and regulations may be enforced from time to time to require additional licenses and permits other than those we currently have. Therefore, our business, reputation, prospects, results of operations and financial condition may be materially and adversely affected.

**We are dependent on our suppliers, and any disruption, non-performance and delayed performance of these suppliers may adversely affect our operations and substantially impact our financial results.**

Our suppliers include airlines, freight forwarders and shipping liners for cargo space, and other suppliers for logistics-related services such as palletization services, warehousing services, local and overseas transportation services, and x-ray screening services.

For FY2020, FY2021 and 6M2022, our top 5 suppliers accounted for approximately 48.5%, 52.2% and 44.3% of the total cost of revenue, respectively. A loss of either of these suppliers could have a negative effect on the operations of the Company.

Disruptions in the business activities of our suppliers may have negative impacts on our business. There are operational risks inherent to the business activities of our suppliers, such as labor strikes, suspension or cancellation of flight lines due to technical failures, severe outbreaks of contagious diseases or epidemics (such as the COVID-19 pandemic), or financial difficulties which our suppliers may face. We may also encounter the risks associated with non-performance, unsatisfactory, or delayed performance by our suppliers. There is no assurance that the carriers, our business partners and other service providers will at all times perform at a satisfactory level.

Our suppliers may fail to deliver cargoes on time or cargoes may be damaged during transportation. We cannot assure that the service provided by our suppliers will always meet our customers' delivery requirement. In case there is any error or delay due to various reasons, including but not limited to weather condition, air traffic control, trade embargo and human negligence, the cargoes may not be delivered to the assigned destination within the expected schedule and condition. Freight carriers may also mistakenly deliver the cargo to other destinations. If the carriers, our freight forwarder business partners and other service providers are unable to meet our customers' standards and requirements and we are unable to find suitable alternatives promptly, our reputation within the industry and therefore our business, sales performance and results of operations could be adversely affected.

In the event of occurrence of the above, we may have to source cargo space from other suppliers for our customers within a tight time constraint. If our suppliers are unable to meet our customers' delivery requirement, or if we are unable to find suitable alternatives promptly in the event of disruptions in the business activities of our suppliers, our reputation and therefore our business, sales performance and results of operations could be adversely affected. If we are not able to maintain or expand our relationships with our major suppliers, our ability to deliver our products and services in a timely manner may be impaired and we could be required to incur additional expenses to secure alternative suppliers. The disruption in our supply or the need to find alternative suppliers could impact the costs and/or timing associated with procuring necessary products and services.

**Our business is dependent on our major operational facility. We do not own any real properties and we lease a number of properties for our business operations. Therefore, we are exposed to risks in relation to unpredictable and increasing rental costs and relocation costs.**

We do not own any real properties and manage and operate an asset-light model for our freight forwarding services through our headquarter office and additional office spaces in Kwai Chung, New Territories, Hong Kong (the "Kwai Chung Offices"). In FY2020 and FY2021, we carried out warehousing and freight-related services in our warehouse in Tsing Yi Island, Hong Kong (the "Tsing Yi Warehouse") (approximately 1,090 square meters or 11,733 square feet). In August 2022, we surrendered the lease of the Tsing Yi Warehouse so as to improve the financial flexibility by reducing fixed rental costs, and the warehousing and freight-related services are performed in our service provider's warehouse since then. In relation to our Kwai Chung Offices, respectively:

● headquarter office located at Unit 1002, 10/F, Join-in Hang Sing Centre, No.2-16 Kwai Fung Crescent, Kwai Chung, New Territories, Hong Kong, has a monthly rental of HKD 50,000.0 (USD 6,410.3) and expires on April 30, 2024, and;

● additional office space at Workshop Unit 4A, 11/F, Join-in Hang Sing Centre, 71-75 Container Port Road, Kwai Chung, New Territories, Hong Kong, has a monthly rental of HKD 29,000.0 (USD 3,717.9) and expires on April 30, 2023.

● additional office space at Unit 1001C, 10/F, Join-in Hang Sing Centre, 71-75 Container Port Road, Kwai Chung, New Territories, Hong Kong. We are using this additional office space, licensed to occupy at zero consideration by Granful Solutions Limited (a related party controlled by our director and CEO, Mr. Hok Wai Alex, KO), which leased the said property at a monthly rental of HKD 11,000.0 (USD 1,401.5), which expires on December 31, 2023. In December 2022, the lease of the said property was early terminated and we no longer used it as our additional office space.

In the event of a disruption in the Kwai Chung Offices, such as disruption in the supply of utilities like water or electricity or denial of access to such premise due to the COVID-19 lockdown measures by the Hong Kong government, our Operating Subsidiaries may be incurring additional costs, such as costs for leasing alternative warehouses and restoring access to our premises. If as a result of such disruption the Operating Subsidiaries fail to meet the service requirements of our customers, our relationship with our customers may be negatively affected.

Furthermore, in the event that our rental expenses for the Kwai Chung Offices increase, our operating expenses will increase and affect our operating cash flows, and in turn materially and adversely affect our business, results of operations and prospects. There is also no assurance that such tenancy agreement will not be terminated before its expiration. In the event that the tenancy agreement is terminated or not renewed, our business and operation may be interrupted and adversely affected as we will relocate our warehouse or offices to other sites. Such relocation will incur relocation costs, which may be substantial and in turn adversely affect our financial condition. Further, we cannot assure you that we will be able to relocate such operations to suitable alternative premises in a timely manner or at all, and any such relocation may result in disruption to our business operations. In the event that we fail to relocate our operations, our financial position, results of operations and reputation would be adversely affected.

**Our profitability may be materially adversely impacted if our investments in equipment, logistic center/warehouses, and IT infrastructure do not match customer demand for these resources or if there is a decline in the availability of funding sources for these investments.**

Although we are an asset-light company, our freight forwarding operations may require certain investments and commitment of capital in equipment, warehouse maintenance and expansion, warehousing systems such as shelving, racking, and IT system. The amount and timing of our capital investments depend on various factors, including anticipated freight volume levels and the price and availability of appropriate property for service centers.

These capital expenditures are associated with certain inherent risks. We may not have the resources to fund such investment. Even if we have sufficient funding, assets that best suit our needs may not be available at reasonable prices or at all. In addition, we are likely to incur capital expenditures earlier than all of the anticipated benefits, and the return on these investments may be lower, or may be realized more slowly, than we expected. In addition, the carrying value of the related assets may be subject to impairment, which may adversely affect our financial conditions and operating results. Furthermore, our continued investment in freight service centers, warehouses and other infrastructure may put us at a competitive disadvantage against competitors who spend less on these assets but focus more on improving other aspects of their business that are less capital heavy.

**Our net cash outflow from operating activities may affect our liquidity**

We cannot assure you that we will not experience net cash outflow from operating activities in the future. Our liquidity in the future will, to an extent, depend on our ability to maintain adequate cash inflows from operating activities primarily generated from our trade receivables for the provision of air freight forwarding, distribution and logistics and ocean freight forwarding services. In the event of any significant deterioration in the quality of our trade receivable portfolio, our liquidity and cash flows from operating activities could be materially and adversely affected.

**We may not be able to maintain our historical growth rates or gross profit margins, and our operating results may fluctuate significantly. If our results fall below market expectations, the trading price of our Ordinary Shares may be affected.**

We have experienced significant growth in our revenue and gross profit in the past two years. We cannot assure you that we will be able to maintain our revenue growth or gross profit margins at historical levels, or at all. Moreover, our operating results may fluctuate significantly as a result of numerous factors, many of which are outside of our control. These factors include, among others:

● our ability to maintain and further promote our Operating Subsidiaries as a premium brand for high-quality freight forwarder in Hong Kong;

● our ability to attract new customers, retain existing customers and expand our community;

● our ability to maintain our existing customers and attract new international customers;

● the success of our marketing and brand building efforts;

● the timing and market acceptance of new services by us or our competitors;

● our ability to develop service enhancements at a reasonable cost and in a timely manner;

● fluctuations in demand for our services as a result of changes in pricing policies by us or our competitors;

● our ability to keep our business operations without interruptions during the COVID pandemic.

● continued acceptance of the internet as a medium for commerce;

● the amount and timing of capital and other expenditures relating to the maintenance and expansion of our businesses, operations and infrastructure;

● seasonal fluctuations in the sales of our service packages; and

● general economic conditions in Mainland China and elsewhere in the world as well as those economic conditions specific to Mainland China's export industries.

**We may suffer losses from credit exposures and counterparty risks.**

We are subject to the credit risks of our customers and our liquidity is dependent on the prompt payment of our customers. We generally grant our customers a credit period of 45 days from the invoice date. As of December 31, 2020 and 2021, the account payable turnover days were approximately 45 days and 48 days, respectively, while the account receivables turnover days were approximately 44 days and 43 days of the corresponding period.

Accordingly, there are often time lags between receiving payments from our customers and making payments to our suppliers, and we are exposed to a potential risk of mismatch in our cash flow. There is no assurance that we will not experience any significant cash flow mismatch in the future. Further, there can be no assurance that our cash flow management measures will function properly or at all. If we fail to manage our cash flow properly and maintain sufficient working capital, we may suffer losses from credit exposures which may materially and adversely affect our financial position, results of operations and cash flow.

Our business is also subject to risks that customers or counterparties may delay or fail to perform their contractual obligations. There is no assurance that we will not experience any material difficulty in debt collections or potential default by customers in the future. While our finance department monitors material overdue payments closely, there is no assurance that we will be able to collect overdue payments. Any material non-payment or non-performance by customers or counterparties could adversely affect our financial position, results of operations and cash flows.

**We may be subject to litigation and regulatory investigations and proceedings and may not always be successful in defending ourselves against such claims or proceedings.**

The nature of our business exposes us to the potential for various types of claims and litigation. We may be subject to claims and litigation related to labor and employment, contractual claims, negligence claims, personal injury, vehicular accidents, cargo and other property damage, business practices, environmental liability and other matters, including with respect to claims asserted under various other theories of agency or employer liability. Claims against us may exceed the amount of insurance coverage that we have or may not be covered by insurance at all. Businesses that we will acquire also increase our exposure to litigation. Material increases in liability claims or workers' compensation claims, or the unfavorable resolution of claims, or our failure to recover, in full or in part, under indemnity provisions could materially and adversely affect our operating results. In addition, significant increases in insurance costs or the inability to purchase insurance as a result of these claims could reduce our profitability. Please see "Business – Legal Proceedings" for more details.

**Any negative publicity with respect to the Company, the Operating Subsidiaries, our directors, officers, employees, shareholders, or other beneficial owners, our peers, business partners, or our industry in general, may materially and adversely affect our reputation, business, and results of operations.**

Our reputation and brand recognition play an important role in earning and maintaining the trust and confidence of our existing and prospective customers. Our reputation and brand are vulnerable to many threats that can be difficult or impossible to control, and costly or impossible to remediate. Negative publicity about us, such as alleged misconduct, other improper activities, or negative rumors relating to our business, shareholders, or other beneficial owners, affiliates, directors, officers, or other employees, can harm our reputation, business, and results of operations, even if they are baseless or satisfactorily addressed. These allegations, even if unproven or meritless, may lead to inquiries, investigations, or other legal actions against us by any regulatory or government authorities. Any regulatory inquiries or investigations and lawsuits against us, and perceptions of conflicts of interest, inappropriate business conduct by us or perceived wrongdoing by any key member of our management team, among other things, could substantially damage our reputation regardless of their merits, and cause us to incur significant costs to defend ourselves. Moreover, any negative media publicity about the freight forwarding industry in general or service quality problems of other firms in the industry in which we operate, including our competitors, may also negatively impact our reputation and brand. If we are unable to maintain a good reputation or further enhance our brand recognition, our ability to attract and retain customers, third-party partners, and key employees could be harmed and, as a result, our business, financial position, and results of operations would be materially and adversely affected.

**Our management team lacks experience in managing a U.S. public company and complying with laws applicable to such company, the failure of which may adversely affect our business, financial condition and results of operations.**

Our current management team lacks experience in managing a U.S. publicly traded company, interacting with public company investors and complying with the increasingly complex laws pertaining to U.S. public companies. Prior to the completion of this offering, we were a private company mainly operating our businesses in Hong Kong. As a result of this offering, our company will become subject to significant regulatory oversight and reporting obligations under the federal securities laws and the scrutiny of securities analysts and investors, and our management currently has no experience in complying with such laws, regulations and obligations. Our management team may not successfully or efficiently manage our transition to becoming a U.S. public company. These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial condition and results of operations.

**We may not be able to obtain finance from time to time to fund our operations and maintain growth**

In order to fund our operations and maintain our growth or expand our business beyond the scale permitted by the net proceeds from this offering, we may need to obtain future funding including equity financing or banking facilities from our banks from time to time. However, we may face the limitation of not having sufficient amount of security or pledge to secure additional debt financing. Further, there may be occasions where we are unable to obtain financing at commercial terms favorable or acceptable to us or at all. If these circumstances arise, our business, results of operations, and growth could be compromised.

**Uncertainties relating to the growth and profitability of the e-commerce industry could adversely affect our revenues and business prospect.**

As part of our growth strategy, we plan to expand our services to customers focusing on cross-border e-commerce or its related logistics services. The long-term viability and prospects of various e-commerce business models remain relatively untested. The future results of operations of the e-commerce platforms will depend on numerous factors affecting the development of the e-commerce industry, which may be beyond our control, such as (i) the trust and confidence level of e-commerce consumers, as well as changes in customer demographics and consumer tastes and preferences; (ii) the selection, price and popularity of products as well as promotions that the e-commerce platforms offer online; (iii) whether alternative retail channels or business models that better address the needs of consumers; and (iv) the development of fulfillment, payment and other ancillary services associated with online purchases. A decline in the popularity of e-commerce may adversely affect the business prospects of our customers, such as cross-border e-commerce platforms, freight forwarders focusing on e-commerce logistics services, and thus ultimately our revenue and business prospects may be adversely affected.

**Our growth prospects may be limited if we do not successfully implement our future plans and growth strategy.**

We devise our future plans as set out in the sections headed "Business — Growth Strategies" and "Use of Proceeds" based on circumstances currently prevailing and bases and assumptions that certain circumstances will or will not occur, as well as the risks and uncertainties inherent in various stages of implementation.

Our growth is based on assumptions of future events which include (a) the continuous growing prevalence of e-commerce; (b) our ability to develop our industry network with airlines and other freight forwarders for and co-loading activities; (c) the effectiveness of our management effort in overseeing our expansion; (d) continuous growth of the U.S. freight forwarding market; and (e) our ability to retain key staff in the management and the operational departments. Furthermore, our future business plans may be hindered by other factors that are beyond our control, such as competition within the freight forwarding industries and market conditions. Therefore, there is no assurance that any of our future business plans will materialize or result in the conclusion or execution of any agreement within the planned timeframe, or that our objectives will be fully or partially accomplished.

Our prospects must be considered in light of the risks and challenges which we may encounter in various stages of the development of our business. If the assumptions which underpin our future plans prove to be incorrect, our future plans may not be effective in enhancing our growth, in which case our business, financial condition and results of operations may be adversely affected.

**We may grow, in part, through acquisitions, which involve various risks, and we may not be able to identify or acquire companies consistent with our growth strategy or successfully integrate acquired businesses into our operations.**

We may intend to pursue opportunities to expand our business by acquiring other companies in the future. Acquisitions involve risks, including those relating to:

● identification of appropriate acquisition candidates;

● negotiation of acquisitions on favorable terms and valuations;

● integration of acquired businesses and personnel;

● integration of information technology systems;

● implementation of proper business and accounting controls;

● ability to obtain financing, at favorable terms or at all;

● diversion of management attention;

● retention of employees and customers;

● non-employee driver attrition;

● unexpected liabilities;

● detrimental issues not discovered during due diligence.

Acquisitions also may affect our short-term cash flow and net income as we expend funds, potentially increase indebtedness and incur additional expenses. If we are not able to identify or acquire companies consistent with our growth strategy, or if we fail to successfully integrate any acquired companies into our operations, we may not achieve anticipated increases in revenue, cost savings and economies of scale, our operating results may actually decline and acquired goodwill and intangibles may become impaired.

**We are dependent on our senior management team and other key employees, and the loss of any such personnel could materially and adversely affect our business, operating results and financial condition.**

We believe that our performance and success is, to a certain extent, attributable to the extensive industry knowledge and experience of our key executives and personnel. Our continued success is dependent, to a large extent, on the ability to attract and retain the services of the key management team. However, competition for key personnel in our industry is intense. We may not be able to retain the services of our Directors or other key personnel, or attract and retain high-quality personnel in the future. If any of our key personnel departs from us, and we are not able to recruit a suitable replacement with comparable experience to join us on a timely basis, our business, operations and financial condition may be materially and adversely affected.

**Increasing labor cost and labor shortage in our industry may affect our business, financial conditions and results of operations.**

The economy in Hong Kong and globally has experienced general increases in inflation and labor costs in recent years. As a result, average wages in Hong Kong and certain other regions are expected to continue to increase. In addition, we are required by Hong Kong laws and regulations to pay various statutory employee benefits, including mandatory provident fund to designated government agencies for the benefit of our employees. The relevant government agencies may examine whether an employer has made adequate payments to the statutory employee benefits, and those employers who fail to make adequate payments may be subject to fines and other penalties.

Although we have not experienced any labor shortage to date, we have observed an overall tightening and increasingly competitive labor market. We have experienced, and expect to continue to experience, increases in labor costs due to increases in salary, social benefits and employee headcount. We and our network partners compete with other companies in our industry and other labor-intensive industries for labor, and we may not be able to offer competitive salaries and benefits compared to them.

According to the CIC Report, labor shortage is one of the major threats to the freight forwarding and related logistic industry. Freight forwarders need professional talents to establish an efficient and reliable operating system to consolidate cargos for air freight forwarding services. Because the freight forwarding industry is a labor-intensive industry, we cannot assure that we will not experience any labor shortage for our services or that our labor costs will not continue to increase in the future. According to the CIC report, the number of labors working in Hong Kong's transportation, storage, postal and courier services industries decreased from 223,600 in 2016 to 212,100 in 2020, representing a negative Compound Annual Growth Rate (CAGR) of 1.3%. Under such conditions, market participants in the freight forwarding industry of Hong Kong have suffered from shortage of labor and are confronted with an increase in labor costs, which tends to constrain the sustainable development of the freight forwarding industry.

Due to the decrease of number of employees in the freight forwarding industry, the average cost of labor force in Hong Kong demonstrated an upward trend between 2016 and 2020. According to the CIC Report, the average annual salary of labor force in freight forwarding industry in Hong Kong rose from approximately HKD 316,400.0 (USD 40,564.1) in 2016 to approximately HKD 380,300.0 (USD 48,756.4) in 2020, representing a CAGR of 4.7%. Pursuant to the introduction of the minimum wage legislation in Hong Kong, the current statutory minimum hourly wage is HKD 37.5 (USD 4.8). There is no assurance that the minimum wage will not be increased in future. For FY2020, FY2021 and 6M2022, our aggregate employee benefits expenses and labor cost amounted to approximately USD 2.3 million, USD 1.9 million and USD 0.9 million respectively, representing approximately 72.4%, 51.8% and 67.9% of our total operating expenses for the corresponding periods. If we fail to retain our existing labor and/or recruit sufficient staff at the expected rate in a timely manner, we may not be able to shift the extra costs to our customers. As such, the increasing labor costs and labor shortage may adversely affect our business, financial conditions and results of operations. To mitigate the inflationary pressure and the risk of increasing labor costs, we have taken measures including (i) minimizing unnecessary and non-value-added costs in our operations, such as cost of excess packaging and sealing materials; (ii) strengthening our price bargaining power and shift excess costs to our customers by raising freight charges; and (iii) maintaining harmonious and healthy working environment to reduce staff turnover and avoid extra costs to be incurred in hiring and training. We would also continue to enhance our technology infrastructure and our network with local partners to streamline our operations to lower transportation, labor and other operating costs associated with the transport of goods.

***The freight forwarding industry in which we operate is highly fragmented and competitive and there can be no assurance that we can compete successfully in the future and adequately address the downward pricing pressure.***

According to the CIC Report, the freight forwarding industry in which we operate is highly competitive, fragmented and historically have few barriers to entry. We compete with a large number of other asset-light freight forwarders, asset-based carriers, and integrated logistics companies. Our competitors range from small operators that compete within a limited geographic area to companies with substantially greater financial and other resources, including greater freight capacity. In addition, our suppliers, such as major airlines and shipping liners have also set up subsidiaries to offer freight forwarding services and logistics services and our customers could bring in-house some of the services we provide to them.

Competition from other freight forwarders within the market may adversely affect our customer base and market share. Many of our competitors periodically reduce their rates to unusually low levels in order to gain business, especially during times of economic decline. Although such predatory pricing strategy is unsustainable in the long-term, it may adversely affect our business in the short-term. Furthermore, the freight forwarding industry continues to consolidate. As a result of consolidation, our competitors may increase their market share and improve their financial capacity and may strengthen their competitive positions. Business combinations could also result in competitors providing a wider variety of services at competitive prices, which could adversely affect our financial performance. We may lose key members of our management team and experienced employees (in particular those from our sales force who have established relationships with our key customers) to our competitors.

As a result, we may not be able to compete effectively with our existing or potential competitors. The competitive pressures may cause a decrease in our volume of freight and compel us to adopt a more competitive pricing strategy by lowering our profit margin in order to maintain our customer base and market share. There can be no assurance that we can compete successfully over other industry players for customers in the future. If we are unable to maintain our customer base, our business, financial condition and results of operations could be adversely affected.

***There may be disintermediation in the freight forwarding industry in the future***

In light of the trend of digitization, huge amount of product information is available on the internet and as a result of information transparency and other innovative technologies (such as online marketplaces, electronic payments, algorithmic order-matching), manufacturers and retailers are working on reducing the number of intermediaries in the supply chain by shipping directly to end customers in order to reduce costs in the process. The trend of eliminating intermediaries creates disintermediation in our industry. Any significant decrease in demand for our freight forwarding and related logistics services due to disintermediation in our industry could adversely affect our business, financial condition and results of operations.

**If our merchant and non-freight forwarders customers are able to reduce their logistics and supply chain costs or increase utilization of their internal solutions, our business and operating results may be materially and adversely affected.**

A major driver for merchants' customers to use third-party logistics and supply chain service providers is the high cost and degree of difficulty associated with developing in-house logistics and supply chain expertise and operational efficiencies. If, however, our customers are able to develop their own logistics and supply chain solutions, increase utilization of their in-house supply chain, reduce their logistics spending, or otherwise choose to terminate our services, our logistics and supply chain management business and operating results may be materially and adversely affected.

**Volatility in fuel prices, shortages of fuel or the ineffectiveness of our fuel surcharge program can have a material adverse effect on our results of operations and profitability.**

We are subject to risks associated with the availability and price of fuel. Fuel prices have fluctuated dramatically over recent years. Future fluctuations in the availability and price of fuel could adversely affect our results of operations. Fuel availability and prices can be impacted by factors beyond our control, such as natural or man-made disasters, adverse weather conditions, political events, economic sanctions imposed against oil-producing countries or specific industry participants, disruption or failure of technology or information systems, price and supply decisions by oil producing countries and cartels, terrorist activities, armed conflict, tariffs, sanctions, other changes to trade agreements and world supply and demand imbalance. Over time we have been able to mitigate the impact of the fluctuations through our fuel surcharge programs. Our fuel surcharge revenue is the result of our fuel surcharge rates and the tonnage transiting our networks. There can be no assurance that our fuel surcharge revenue programs will be effective in the future as the fuel surcharge may not capture the entire amount of the increase in fuel prices. Additionally, decreases in fuel prices reduce the cost of transportation services and accordingly, could reduce our revenues and may reduce margins for certain lines of business. In addition to changing fuel prices, fluctuations in volumes and related load factors may subject us to volatility in our fuel surcharge revenue. Fuel shortages, changes in fuel prices and the potential volatility in fuel surcharge revenue may adversely impact our results of operations and overall profitability.

**Natural disasters, acts of God, wars, epidemics and other events may adversely affect our business operations, financial condition and results of operations**

Natural disasters, acts of God, wars, terrorist attacks, epidemics, material interruptions in service or stoppages in transportation and other events which are beyond our control may adversely affect local economies, infrastructures, airports, port facilities and international trade. They may also cause casualty to our employees, closure of ports or airports and disruptions to cargo flows, any of which could materially and adversely affect our results of operations and financial position. Harsh weather could also reduce our ability to transport freight, which could result in decreased revenues.

Any of such occurrences of natural disasters or the outbreak of avian influenza, severe acute respiratory syndrome, the influenza A (H1N1), H7N9 or another epidemic could cause severe disruption to our daily operations, and may even require a temporary closure. Such closures may disrupt our business operations and adversely affect our results of operations. If any of our employees is suspected of having contracted a contagious disease, we may be required to apply quarantines or suspend our operations. Our operation could also be disrupted if our suppliers, customers or business partners were affected by such natural disasters or health epidemics. Furthermore, any future outbreak may restrict economic activities in affected regions, resulting in reduced business volume, the temporary lack of an adequate work force, and the temporary disruption in the transport of goods to or from overseas which could prevent, delay or reduce freight volumes and could have an adverse impact on consumer spending and confidence levels, all of which could adversely affect our results of operations.

***The ongoing coronavirus pandemic and measures taken in response thereto, has and could continue to cause supply chain disruptions and could have a material adverse effect on our business, results of operations and financial condition.***

The COVID-19 pandemic has adversely impacted economic activity and conditions worldwide and created significant volatility and disruption to financial markets. Given that the spread of COVID-19 is a global concern and a number of governments globally have issued entry restrictions for foreign travelers, in the event that the COVID-19 pandemic continues to broaden and intensify, travel bans on flights may lead to a material reduction of supply of cargo space by passenger aircrafts, and thus a significant reduction of cargo space supply. Our cost of sales may be increased significantly and we may not be able to pass on the cost of the cargo space in full to our customers.

Furthermore, since some of our shipments originated from Mainland China and Hong Kong, any suspension of business or temporary closure of production facilities and manufacturing activities of our customers or shippers due to the stringent government COVID-control measures may reduce the shipment volume. Any transportation restrictions and boundary control may also lead to the disruption of our supply chain. In the event that there is border control in respect of shipments or shutdown of the airports/ports imposed by local government or governments of foreign countries, our operation will be materially disrupted. The above adverse impacts, especially if they materialize and persist for a substantial period, may significantly and adversely affect our business operation and financial performance.

The recent surge in the number of coronavirus cases in Mainland China and the resultant lockdown in some cities, including Shenzhen and Shanghai, has also begun to adversely affect supply chains and may impact our ability to provide freight forwarding services. Starting in March 2022, Mainland China has experienced a new round of regional COVID-19 outbreaks. In particular, our shipments originated from Mainland China were temporarily interrupted due to the outbreak in Shenzhen in early March 2022 and the implementation of border control and various lockdown measures which led to trucking shortages. As a result, the transportation of goods between ports and from factories to ports was temporarily interrupted and our shipment volume in the first quarter of 2022 was adversely affected. We remain cautious about continued supply chain headwinds that challenge the industry and anticipate a constrained supply chain environment to persist throughout 2022. To mitigate the adverse impact of such supply chain interruptions, we continue to monitor the development of the pandemic and communicate closely with our customers and suppliers to adjust our service planning timely. For example, we have (i) liaised with customers and assisted them in arranging delivery of products from Mainland China to Hong Kong through sea transportation during times of trucking shortage; (ii) maintained close communications with other freight forwarders on more flexible and efficient co-loading arrangement so as to optimize the utilization of cargo space on transportation vehicles; and (iii) timely communicated with customers on the latest status and flexibly arranged and prioritized the delivery schedule based on the urgency of orders. Going forward, we would continue to (i) seek alternatives to road transportation, such as sea and air freights, during times of trucking shortage; (ii) seek alternative ports for transportation to enable a timely arrangement when there is congestion in one port; (iii) maintain close communication with customers and other freight forwarders and ensure timely response to any potential supply chain disruption; (iv) stay up-to-date about the pandemic from trusted sources such as the World Health Organization, governments and health organization in Hong Kong and Mainland China; and (v) enhance our customer base to cover more geographical locations so as to increase geographic diversity and avoid over-reliance on customers located in one particular location.

In response to the recent surge in COVID-19 cases, the Hong Kong government may impose stringent social distancing and lockdown measures (such as closing physical workplace premises and suspending all business, social and other activities). If the communal spread of COVID-19 in Hong Kong continues to be severe, our Operating Subsidiaries may be required to suspend our operations and our business and operations may be disrupted as our services involve cargo handling and delivery, which could not be conducted merely through telecommuting from home. Furthermore, if any of our staff is issued with quarantine orders, stay-home notices or has contracted with any severe communicable diseases, we may be required to quarantine some or all of our employees or temporarily close down our offices for disinfecting our workplace and facilities used for our operations. We may be required to take extra hygiene precautions for our operations, which may result in higher administrative costs. In such events, our business and operations may be materially and adversely affected or disrupted if a significant number of our staff are unable to report to work for a prolonged period of time.

The situation surrounding COVID-19 remains fluid and may be further impacted by the government policies and the continued availability and success of the vaccine. The extent to which the COVID-19 pandemic impacts our business, results of operations and financial condition will depend on future developments of the pandemic, which are highly uncertain and cannot be predicted, including, but not limited to the effects of the outbreak on our customers and suppliers and the actions adopted by local governments, and to what extent normal economic and operating conditions can resume in the future.

We periodically evaluate factors including, but not limited to, macroeconomic conditions, changes in our industry and the markets in which we operate and our market capitalization, as well as our expected future financial performance for purposes of evaluating asset impairments, including goodwill. We cannot foresee whether the COVID-19 pandemic will be effectively contained, nor can we predict the severity and duration of its impact. If the COVID-19 pandemic is ineffectively controlled, our business operations and financial condition may be materially and adversely affected due to disruptions in the business activities of both our customers and suppliers, deteriorating market outlook and sentiments, slowdown in regional and global economic growth or other factors that we cannot foresee.

**If we fail to maintain our information technology systems, or if we fail to successfully implement new technology or enhancements, we may be at a competitive disadvantage and experience a decrease in revenues.**

Our freight forwarding services are heavily dependent on our ability to communicate and manage the information related to the operation of freight forwarding business effectively. We rely on our current freight operations and accounting system to maintain our electronic system and database. Our system allows our staff to record and review the details of customers' cargo space bookings, flight and shipping schedule and other related information of shipment. Moreover, we also rely on our warehousing management system for our provision of ancillary logistics services to manage our operation of our warehouse, including export shipment, invoicing and costing, reporting and transportation.

While we take measures to ensure the security of our IT systems, our systems are susceptible to outages from fire, floods, power loss, telecommunications failures, data leakage, human error, hacking and break-ins, cyber-attacks and similar events. The occurrence of any of these events could disrupt or damage our information technology systems and hamper our internal operations, disable our ability to handle the bookings of customers efficiently or at all, and adversely impact our customer service, volumes, and revenues and result in increased cost. In addition, we may be required to incur significant costs to protect against damage caused by the possible disruptions or security breaches in the future.

As we rely on our information technology systems to efficiently run our business, they are also the key components of our growth strategy and competitive advantage. As set out in the section headed "Business – Growth Strategy – Enhancing our information technology system" in this document, we plan to enhance our information technology system in relation to freight forwarding services to improve our efficiency and facilitate the forecast in customers' demand and planning of sourcing cargo space. We expect our customers to continue to demand more sophisticated, fully integrated information systems from their transportation providers. To keep pace with changing technologies and customer demands, we must correctly interpret and address market trends and enhance the features and functionality of our information technology systems in response to these trends, which may lead to significant ongoing software development costs. We may be unable to accurately determine the needs of our customers and the trends in the freight forwarding services industry or to design and implement the appropriate features and functionality of our information technology systems in a timely and cost-effective manner, which could put us at a competitive disadvantage and result in a decline in our efficiency, decreased demand for our services and a corresponding decrease in our revenues. In addition, we could incur software development costs for technology that is ultimately not deployed and thus, would require us to write-off these costs, which would negatively impact our financial results. Furthermore, as technology improves, our customers may be able to find alternatives to our services for matching shipments with available freight hauling capacity.

**Our business is subject to cybersecurity risks. A cyberattack may disrupt our operations and compromise the personal data of our customers.**

Our operations depend on effective and secure information technology systems. Threats to information technology systems, including as a result of cyber-attacks and cyber incidents, continue to grow. Cybersecurity risks could include, but are not limited to, malicious software, attempts to gain unauthorized access to our data and the unauthorized release, corruption or loss of our data and personal information, interruptions in communication, loss of our intellectual property or theft of our sensitive or proprietary technology, loss or damage to our data delivery systems, or other electronic security, including with our property and equipment.

These cybersecurity risks could:

● Disrupt our operations and damage our information technology systems,

● Subject us to various penalties and fees by third parties,

● Negatively impact our ability to compete,

● Enable the theft or misappropriation of funds,

● Cause the loss, corruption or misappropriation of proprietary or confidential information, expose us to litigation and

● Result in injury to our reputation, downtime, loss of revenue, and increased costs to prevent, respond to or mitigate cybersecurity events.

If a cybersecurity event occurs, it could harm our business and reputation and could result in a loss of customers. Likewise, data privacy breaches by employees and others who access our systems may pose a risk that sensitive customer or vendor data may be exposed to unauthorized persons or to the public, adversely impacting our customer service, employee relationships and our reputation.

While we continue to make efforts to evaluate and improve our systems and particularly the effectiveness of our security program, procedures and systems, it is possible that our business, financial and other systems could be compromised, which could go unnoticed for a prolonged period of time, and there can be no assurance that the actions and controls that we implement, or which we cause third-party service providers to implement, will be sufficient to protect our systems, information or other property. Additionally, customers or third parties upon whom we rely face similar threats, which could directly or indirectly impact our business and operations. The occurrence of a cyber-incident or attack could have a material adverse effect on our business, financial condition and results of operations.

***Failure to comply with cybersecurity, data privacy, data protection, or any other laws and regulations related to data may materially and adversely affect our business, financial condition, and results of operations.***

We may be subject to a variety of cybersecurity, data privacy, data protection, and other laws and regulations related to data, including those relating to the collection, use, sharing, retention, security, disclosure, and transfer of confidential and private information, such as personal information and other data. These laws and regulations, such as the Data Protection Act (As Revised) of the Cayman Islands, apply not only to third-party transactions, but also to transfers of information within our organization, which relates to our investors, employees, contractors and other counterparties. These laws and regulations may restrict our business activities and require us to incur increased costs and efforts to comply, and any breach or noncompliance may subject us to proceedings against us, damage our reputation, or result in penalties and other significant legal liabilities, and thus may materially and adversely affect our business, financial condition, and results of operations.

In some jurisdictions, including Mainland China, where we do not have material operations, the cybersecurity, data privacy, data protection, or other data-related laws and regulations are relatively new and evolving, and their interpretation and application may be uncertain, For example, on December 28, 2021, the CAC jointly with the relevant authorities formally published the Measures for Cybersecurity Review (2021) which took effect on February 15, 2022, and replace the former Measures for Cybersecurity Review (2020) issued on July 10, 2021. The Measures for Cybersecurity Review (2021) provide that operators of critical information infrastructure purchasing network products and services, and online platform operators (together with the operators of critical information infrastructure, the "Operators") carrying out data processing activities that affect or may affect national security, shall conduct a cybersecurity review, any online platform operator who controls more than one million users' personal information must go through a cybersecurity review by the cybersecurity review office if it seeks to be listed in a foreign country.

Our Operating Subsidiaries may collect and store certain data (including certain personal information) from our customers, some of whom may be individuals from Mainland China, in connection with our business and operations and for "Know Your Customers" purposes (to combat money laundering). As of the date of this prospectus, as advised by Guangdong Wesley Law Firm , our counsel with respect to PRC legal matters, the Measures for Cybersecurity Review (2021) by the CAC and the other regulations discussed in the preceding paragraph will not have an impact on our business, results of operations, or this offering, given that: (1) our Operating Subsidiaries are incorporated in Hong Kong, and we have no subsidiary, VIE structure, material operations nor maintain any office or personnel in Mainland China, (2) as of date of this prospectus, our Operating Subsidiaries have in aggregate collected and stored personal information of less than one million users, (3) all of the data our Operating Subsidiaries have collected is stored in servers located in Hong Kong, (4) as of the date of this prospectus, neither of our Operating Subsidiaries has been informed by any PRC governmental authority of any requirement that it files for a cybersecurity review or a CSRC review, and (5) pursuant to the Basic Law of the Hong Kong Special Administrative Region (the "Basic Law"), which is a national law of the PRC and the constitutional document for Hong Kong, national laws of the Mainland China shall not be applied in Hong Kong except for those listed in Annex III of the Basic Law (which is confined to laws relating to defense and foreign affairs, as well as other matters outside the autonomy of Hong Kong), while the Measures for Cybersecurity Review (2021), the PRC Personal Information Protection Law and the PRC Data Security Law do not clearly provide whether it shall be applied to a company based in Hong Kong.

However, we still face uncertainties regarding the interpretation and implementation of these laws and regulations in the future. Since these statements and regulatory actions are new, it is highly uncertain how soon the 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 of our Operating Subsidiaries is deemed to be an "Operator", or if the Measures for Cybersecurity Review (2021) or the PRC Personal Information Protection Law becomes applicable to our Operating Subsidiaries in Hong Kong, they could result in disruption in our operations, negative publicity with respect to our company, and diversion of our managerial and financial resources; we cannot assure you that our Operating Subsidiaries will be able to comply with the regulatory requirements in all respects and our current practice of collecting and processing personal information may be ordered to be rectified or terminated by regulatory authorities, which may materially and adversely affect our business, financial condition, and results of operation, hinder our ability to offer or continue to offer Ordinary Shares to investors and cause the value of our Ordinary Shares to significantly decline or be worthless.

***We cannot assure that the insurance policies we have taken out are always able to cover all losses we sustain during the course of our business operations.***

We maintain Freight Forwarder Liability (the "FFL") insurance policies against cargo transportation losses and freight forwarder errors and omissions. We also maintain insurance coverage of employee's compensation, and public liability insurance. Because of these significant self-insured exposures, insurance and claims expense may fluctuate significantly from period-to-period. Additionally, our ability to obtain and maintain adequate insurance and the cost of such insurance may be affected by significant claims and conditions in the insurance market over which we have no control.

We cannot assure that the insurance policies we have taken out are always able to cover all losses we sustain during the course of our business operations as it is not always possible to accurately predict and quantify how much loss we will suffer from potential claims. We may fail to establish sufficient insurance reserves and adequately estimate for future insurance claims. In the case of an uninsured loss or a loss in excess of insured limit, we may be required to pay for losses, damages and liabilities out of our own funds. The occurrence of an event that is not fully covered by insurance, the loss of insurance coverage or a material increase in the cost of insurance could have a material adverse effect on our business, financial condition, results of operations and cash flows.

**Fluctuations in exchange rates could result in foreign currency exchange losses, which may adversely affect our financial condition, results of operations and cash flows.**

We are exposed to certain foreign exchange risks in respect of depreciation or appreciation amongst the currencies other than our functional currency. The value of Hong Kong dollar against Renminbi and other currencies may fluctuate and is affected by, among other things, the policies of the PRC government and changes in the PRC's and international political and economic conditions. Since a significant portion of customers are from Mainland China, any future exchange rate volatility relating to Renminbi may lead to uncertainties in the value of our net assets and earnings.

It is difficult to predict how market forces or Hong Kong, Mainland China, the U.S. or other government policies may impact the exchange rate among Hong Kong dollar, Renminbi, U.S. dollar and other currencies in the future. To the extent that we need to convert U.S. dollars we receive from this offering into Hong Kong dollar for our operations, appreciation of the Hong Kong dollar against the U.S. dollar would have an adverse effect on the Hong Kong dollar amount we would receive. Moreover, fluctuation in the exchange rate will affect the relative value of earnings from and the value of any foreign currency-denominated investments our Group make in the future. Shall we face significant volatility in these foreign exchange rates and we cannot procure any specific foreign exchange control measures to mitigate such risks, our results of operations and financial performance shall be adversely affected.

**We may be affected by the currency peg system in Hong Kong.**

Since 1983, Hong Kong dollars have been pegged to the US dollars at the rate of approximately HKD 7.8 to USD 1.0. We cannot assure you that this policy will not be changed in the future. If the pegging system collapses and Hong Kong dollars suffer devaluation, the Hong Kong dollar cost of our expenditures denominated in foreign currency may increase. This would in turn adversely affect the operations and profitability of our business.

**Our business is subject to various laws and regulations around the world; failure to comply with these provisions, as well as any adverse changes in applicable laws and regulations, may restrict or prevent us from doing business in certain countries or jurisdictions, require us to incur additional costs in operating our business or otherwise materially adversely affect our business.**

The supply chain management services we provide are regulated by various governmental authorities around the world. A failure to comply with applicable laws and regulations and maintain appropriate authorizations could result in substantial fines, operational restrictions or possible revocations of authority to conduct operations, which could have a material adverse impact on our business, results of operations and financial condition. Future regulations or changes in existing regulations, or in the interpretation or enforcement of regulations, could require us or our customers to incur additional capital or operating expenses or modify business operations to achieve or maintain compliance. For example, the global responses to terrorist threats have resulted in a proliferation of cargo security regulations which have created a marked difference in the security arrangements required to move shipments around the globe, and we expect regulations to become more stringent in the future.

In addition, due to the cross-border nature of our activities and the large number of countries in which we operate, we must continually monitor our compliance with anti-corruption laws (such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act), trade control and sanctions laws and regulations (including those promulgated and enforced by the Office of Foreign Assets Controls and by other national and supranational institutions), and antitrust and competition laws. Recent years have seen a substantial increase in global enforcement of these laws, with more frequent voluntary self-disclosures by companies, industry-wide investigations and criminal and civil enforcement proceedings by U.S. and other government agencies resulting in substantial fines and penalties. We may be subject to criminal and civil penalties and other remedial measures as a result of any violation of such laws and regulations, which could have a material adverse effect on our business, results of operations and financial condition. While we have in place policies and procedures relating to compliance with these laws, there can be no assurance that our internal policies or procedures will work effectively to ensure that we comply with such laws and regulations all of the time or to protect us against liability under such laws and regulations for actions taken by our employees or by our third-party service providers (or their subcontractors) with respect to our business, which may be outside our direct control or knowledge.

**SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS**

This prospectus contains forward-looking statements. All statements contained in this prospectus other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the "Risk Factors" section. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this prospectus may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, we undertake no duty to update any of these forward-looking statements after the date of this prospectus or to conform these statements to actual results or revised expectations.

**USE OF PROCEEDS**

We estimate that the net proceeds from the sale of Ordinary Share in this offering will be approximately US$[13.4 million], after deducting the underwriting discounts, non-accountable expense allowance and estimated offering expenses payable by us, based on the assumed initial public offering price of US$[5.00] per Ordinary Share. If the underwriters exercise their over-allotment option in full, we estimate that the net proceeds to us from this offering will be approximately US$[15.7 million], after deducting the underwriting discounts, non-accountable expense allowance and estimated offering expenses payable by us.

The primary purposes of this offering are to create a public market for our Ordinary Shares for the benefit of all shareholders, retain talented employees by providing them with equity incentives and obtain additional capital for business development. We plan to use the net proceeds we will receive from this offering as follows:

● Approximately US$[4.7 million] (US$[5.5 million] if the over-allotment option is exercised in full) or 35% for further expansion of our integrated logistics and supply chain service network and potential acquisition of local warehouses and service centers in the United States:

● Approximately US$[2.0 million] (US$[2.3 million] if the over-allotment option is exercised in full) or 15% for enhancing and upgrading our technology infrastructure:

● Approximately US$[1.3 million] (US$[1.6 million] if the over-allotment option is exercised in full) or 10% on setting up regional offices and developing sales network in the United States:

● Approximately US$[1.4 million] (US$[1.6 million] if the over-allotment option is exercised in full) or 10% for the hiring of additional workforce;

● The balance of US$[4.0 million] (US$[4.7 million] if the over-allotment option is exercised in full) for general working capital and 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 some 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 imminently used for the above purposes, we intend to invest in short-term, interest-bearing bank deposits or debt instruments.

**DIVIDEND POLICY**

We have never declared or paid any cash dividends on our Ordinary Shares. We anticipate that we will retain any earnings to support operations and to finance the growth and development of our business. Therefore, we do not expect to pay cash dividends in the foreseeable future.

Our board of directors has complete discretion on whether to distribute dividends, subject to applicable laws. In addition, our shareholders may by ordinary resolution declare a dividend. Under Cayman Islands law, a Cayman Islands company may pay a dividend either out of profit or share premium account, provided that in no circumstances may a dividend be paid if the dividend payment would result in the company being unable to pay its debts as they fall due in the ordinary course of business. Even if our board of directors decides to pay dividends, the form, frequency, and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions, and other factors that the board of directors may deem relevant. Cash dividends on our Ordinary Shares, if any, will be paid in U.S. dollars.

**CAPITALIZATION** 

The following table sets forth our capitalization as of June 30, 2022 on (i) an actual basis, (ii) a proforma basis to reflect the shares to be issued to existing shareholders pro rata; and (iii) a pro forma as adjusted basis giving effect to the sale of [3,250,000] Ordinary Shares in this offering at an assumed initial public offering price of US$[5.00] per share and to reflect the application of the proceeds after deducting the underwriting discounts, non-accountable expense allowance and estimated offering expenses payable by us. You should read this table in conjunction with our financial statements and related notes appearing elsewhere in this prospectus and "Use of Proceeds" and "Description of Share Capital."

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| | | | |
|:---|:---|:---|:---|
|  | **As of <br> June 30, 2022** | **As of <br> June 30, 2022** | **As of <br> June 30, 2022** |
|  | **Actual<br> (Unaudited)** | **Pro forma<sup>(1)</sup>** | **Pro forma As Adjusted<sup>(2)</sup>** |
| Ordinary shares, par value US$0.0001 per share, 200,000,000 shares authorized; 200,000 shares issued and outstanding on an actual basis; [21,750,000] shares issued and outstanding on a proforma basis; [25,000,000] shares issued and outstanding on an as adjusted basis | $20 | [2,175] | [2,500] |
| Additional paid-in capital | 7877520 | [7,875,365] | [21,284,028] |
| Retained earnings | 4118118 | 4118118 | 4118118 |
| Accumulated other comprehensive loss | (38873) | (38873) | (38873) |
| Total shareholders' equity | 11956785 | 11956785 | [25,365,773] |
| Total capitalization | $11956785 | 11956785 | [25,365,773] |

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<sup>(1)</sup> On [ ], 2023, the Company issued [21,550,000] Ordinary Shares of a par value of US$0.0001 per share to the existing shareholders on a pro rata basis. We used the shares issued and outstanding as of the date of this prospectus, and the figures from the consolidated financial statements as of June 30, 2022 as the pro forma basis of the above calculation.

<sup>(2)</sup> Gives effect to the sale of [3,250,000] Ordinary Shares in this offering at an assumed initial public offering price of US$[5.00] per share and reflects the application of the proceeds after deducting the underwriting discounts, non-accountable expense allowance and our estimated offering expenses.

Each US$[1.00] increase (decrease) in the assumed initial public offering price of US$[5.00] per Ordinary Share would increase (decrease) the pro forma as adjusted amount of total capitalization by US$[3.0] million, assuming that the number of Ordinary Shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting underwriting discounts, non-accountable expense allowance and estimated offering expenses payable by us. An increase (decrease) of one million in the number of Ordinary Shares offered by us, as set forth on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of total capitalization by US$[4.6] million, assuming no change in the assumed initial public offering price per Ordinary Share as set forth on the cover page of this prospectus.

**DILUTION**

If you invest in our Ordinary Shares in this offering, your interest will be immediately diluted to the extent of the difference between the initial public offering price per Ordinary Share in this offering and the 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. As of June 30, 2022, we had a pro forma net tangible book value of approximately USD 11.7 million, or USD [0.54] per Ordinary Share (based on the number of shares issued and outstanding as of immediately prior to the completion of this offering). Our net tangible book value per share represents total tangible assets less total liabilities, divided by the number of Ordinary Shares outstanding on June 30, 2022.

The calculation in this section assumes that [21,750,000] Ordinary Shares were issued and outstanding as of June 30, 2022. After giving effect to the sale of Ordinary Shares in this offering at the assumed initial public offering price of US$[5.00] per Ordinary Share and after deducting the underwriting discounts, non-accountable expense allowance and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value at June 30, 2022 would have been approximately US$[25.2] million, or US$[1.01] per Ordinary Share. This represents an immediate increase in pro forma as adjusted net tangible book value of US$[0.47] per Ordinary Share to existing investors and immediate dilution of $[3.99] per Ordinary Share to new investors. The following table illustrates this dilution to new investors purchasing Ordinary Share in this offering:

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| | | |
|:---|:---|:---|
|  | **Offering without<br> Over-allotment Option** | **Offering with Full Exercise of<br> Over-allotment Option** |
| Assumed initial public offering price per Ordinary Share | $5.00 | $5.00 |
| &nbsp;&nbsp;&nbsp;Net tangible book value per Ordinary Share as of June 30, 2022 | $0.54 | $0.54 |
| Increase in pro forma as adjusted net tangible book value per Ordinary Share attributable to new investors purchasing Ordinary Shares in this offering | $0.47 | $0.53 |
| Pro forma as adjusted net tangible book value per Ordinary Share after this offering | $1.01 | $1.07 |
| Dilution per Ordinary Share to new investors in this offering | $3.99 | $3.93 |

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Each US$[1.00] increase (decrease) in the assumed initial public offering price of US$[5.00] per Ordinary Share would increase (decrease) our pro forma as adjusted net tangible book value as of June 30, 2022 after this offering by approximately US$[0.12] per Ordinary Share, and would increase (decrease) dilution to new investors by US$[0.88] per Ordinary Share, assuming that 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 underwriting discounts, non-accountable expense allowance and estimated offering expenses payable by us. An increase (decrease) of [one million] in the number of Ordinary Shares we are offering would increase (decrease) our pro forma as adjusted net tangible book value as of June 30, 2022 after this offering by approximately US$[0.13] per Ordinary Share, and would decrease (increase) dilution to new investors by approximately US$[0.13] per Ordinary Share, assuming the assumed initial public offering price per Ordinary Share, as set forth on the cover page of this prospectus remains the same, and after deducting the estimate 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.

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 US$[1.07], the increase in net tangible book value per Ordinary Share to existing shareholders would be US$[0.53], and the immediate dilution in net tangible book value per Ordinary Share to new investors in this offering would be US$[3.93].

The following table summarizes, 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 discounts to the underwriters, non-accountable expense allowance and the estimated offering expenses payable by us.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Ordinary <br> Shares purchased** | **Ordinary <br> Shares purchased** | **Total <br> consideration** | **Total <br> consideration** | |
|  | **Number** | **Percent** | **Amount** | **Percent** | **Average<br> price per<br> Ordinary**<br>**Share** |
| Existing shareholders | [21,750,000] | [87]% | $[20] | [0]% | $- |
| New investors (1) | [3,250,000] | [13]% | $[16,250,000] | [100]% | $[5] |
| Total | [25,000,000] | 100% | $[16,250,020] | 100% | $[1.54] |

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(1) Not including over-allotment
 shares.

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.

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

*You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the section headed "Selected Consolidated Financial and Operating Data" and our consolidated financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Risk Factors" and elsewhere in this prospectus.*

**Overview**

We are a long-established freight forwarding service provider headquartered in Hong Kong with networks across the globe. We conduct our operations through our subsidiaries in Hong Kong, Profit Sail Int'l Express (H.K.) Limited and Business Great Global Supply Chain Limited.

Our Operating Subsidiaries derive their revenue from air freight forwarding services and ocean freight forwarding services.

We have achieved significant growth and profitability. Our revenues increased from approximately USD 71.0 million in FY2020 to approximately USD 130.9 million in FY2021. Our net profit increased from approximately USD 3.7 million in FY2020 to approximately USD 12.6 million in FY2021. However, due to the new round of regional COVID-19 outbreaks in Shenzhen in early March, our shipments originated from Mainland China were temporarily interrupted and our shipment volume in the first quarter of 2022 was adversely affected. Also, our shipment volume has been adversely affected by the decrease in global demand for goods and commodities caused by economic downturn following the COVID-19 pandemic. As a result, our revenue decreased from approximately USD 58.5 million in 6M2021 to approximately USD 49.5 million in 6M2022, and our net profit decreased from approximately USD 6.9 million in 6M2021 to approximately USD 2.2 million in 6M2022.

Investors in our Ordinary Shares should be aware that they are purchasing equity in PSI Group Holdings Ltd, our Cayman Islands holding company, instead of shares of the Operating Subsidiaries. Please refer to the information contained in and incorporated by reference under the heading "Risk Relating to our Corporate Structure" on page 20 of this prospectus.

**General Factors Affecting Our Results of Operations.**

The Company believes the key factors affecting the financial condition and results of operations including the following:

***Economic conditions in Hong Kong and* Mainland China**

 ****

A substantial part of our operations is located in Hong Kong. Accordingly, our business, prospects, financial condition and results of operations may be influenced to a significant degree by political, economic and social conditions in Hong Kong and Mainland China generally and by continued economic growth in Hong Kong and Mainland China as a whole.

Economic conditions in Hong Kong and Mainland China are sensitive to global economic conditions. Any prolonged slowdown in the global or Chinese economy may affect potential customers' confidence in financial market as a whole and have a negative impact on our business, results of operations and financial condition.

***Trade war or restrictions***

 ****

Our revenue from freight forwarding services for export shipments to the United States contributed to approximately USD 56.3 million, USD 107.7 million and USD 38.8 million for FY2020, FY2021 and 6M2022, respectively, representing approximately 81.3%, 82.8% and 78.4% of our total export revenue of the corresponding period. Also, a significant portion of our business originates from customers in Mainland China and therefore depends on the level of imports and exports to and from Mainland China. Therefore, we are subject to risks related to the changes in trade policies, tariff regulations, embargoes, or other trade restrictions adverse to our customers' business. Tariffs restrictions imposed by the U.S. on China exports intensified during 2019 which resulted in a negative impact to the international trading activities globally and have attributed to the overall decrease in the cargo shipment volume of Hong Kong. Although an agreement has been entered into between the U.S. and China on January 15, 2020, to suspend certain planned tariff, our results of operation may be adversely affected if the trade war or restrictions further intensify, whether in the form of embargo, tariff, or otherwise, and may further affect the relationship between the U.S. and China or more countries in the future.

***Seasonality***

Our peak season is generally from October to December, which is driven by festive events and discount promotions such as Thanksgiving, Christmas and New Year's Eve. Moreover, we recorded relatively lower volume of shipment and thus relatively lower revenue during Lunar New Year (normally in January or February) owing to fewer business activities of manufacturers and shippers in Mainland China in Lunar New Year, resulting in a decrease in the demand of freight forwarding services. Accordingly, comparison of sales and operating results from different periods in any given financial year may not be relied upon as indicators of our performance. It is widely understood in the industry that these seasonal trends are influenced by a number of factors, including weather patterns, national holidays, economic conditions, consumer demand, major product launches, as well as a number of other market forces. Since many of these forces are unforeseen there is no way for us to provide assurances that these seasonal trends will continue.

 ****

***The demand for cargo space is easily affected by unpredictable factors***

 ****

A significant majority of our revenue is generated from air freight export from Hong Kong and Mainland China and organizing shipments primarily to Europe, Asia, Southeast Asia and North America. Our results of operations are thus affected by global trade volume and export volume of Hong Kong. We are sensitive to changes in regional and/or global political and economic conditions that impact customer shipping volumes, industry freight demand and demand for cargo space. The transportation industry historically has experienced cyclical fluctuations due to economic recession, level of international trade activities, downturns in business cycles of our customers, interest and currency rate fluctuations, inflation, trade restrictions, economic sanctions, trade disputes, boycotts, outbreak of wars, changes in regulatory regimes and extreme weather conditions, all of which are beyond our control and the nature, timing and degree of which are largely unpredictable. Any decrease in demand for our services due to cyclical downturns could adversely affect our business, financial condition and results of operations.

***The ongoing COVID-19 pandemic, and measures taken in response thereto, has and could continue to have a material adverse effect on our business, results of operations and financial condition.***

The COVID-19 pandemic has adversely impacted economic activity and conditions worldwide and created significant volatility and disruption to financial markets. Given that the spread of COVID-19 has become a global concern and a number of governments globally have issued entry restrictions for foreign travelers, in the event that COVID-19 continues to broaden and intensify, travel bans on flights may lead to a material reduction of supply of cargo space by passenger aircrafts, and thus a significant reduction of cargo space supply. Our cost of sales may be increased significantly and we may not be able to fully transfer the extra flight cost to our customers.

Furthermore, since some of our shipments originated from Mainland China and Hong Kong, any suspension of business or temporary closure of production facilities and manufacturing activities of our customers or shippers due to the stringent government COVID-control measures may reduce the shipment volume. Any transportation restrictions and boundary control may also lead to the disruption of our supply chain. In the event that there is border control in respect of shipments or shutdown of the airports/ports imposed by local government or governments of foreign countries, our operation will be materially disrupted. The above adverse impacts, especially if they materialize and persist for a substantial period, may significantly and adversely affect our business operation and financial performance.

 ****

The recent surge in the number of coronavirus cases in Mainland China and the resultant lockdown in some cities, including Shenzhen and Shanghai, has also begun to adversely affect supply chains and may impact our ability to provide freight forwarding services. Starting in March 2022, Mainland China has experienced a new round of regional COVID-19 outbreaks. In particular, our shipments originated from Mainland China were temporarily interrupted due to the outbreak in Shenzhen in early March and the implementation of border control and various lockdown measures which led to trucking shortages. As a result, the transportation of goods between ports and from factories to ports was temporarily interrupted and our shipment volume in the first quarter of 2022 was adversely affected. We remain cautious about continued supply chain headwinds that challenge the industry and anticipate a constrained supply chain environment to persist throughout 2022. To mitigate the adverse impact of such supply chain interruptions, we continue to monitor the development of the pandemic and communicate closely with our customers and suppliers to adjust our service planning timely. For example, we have (i) liaised with customers and assisted them in arranging delivery of products from Mainland China to Hong Kong through sea transportation during times of trucking shortage; (ii) maintained close communications with other freight forwarders on more flexible and efficient co-loading arrangement so as to optimize the utilization of cargo space on transportation vehicles; and (iii) timely communicated with customers on the latest status and flexibly arranged and prioritized the delivery schedule based on the urgency of orders. Going forward, we would continue to (i) seek alternatives to road transportation, such as sea and air freights, during times of trucking shortage; (ii) seek alternative ports for transportation to enable a timely arrangement when there is congestion in one port; (iii) maintain close communication with customers and other freight forwarders and ensure timely response to any potential supply chain disruption; (iv) stay up-to-date about the pandemic from trusted sources such as the World Health Organization, governments and health organization in Hong Kong and Mainland China; and (v) enhance our customer base to cover more geographical locations so as to increase geographic diversity and avoid over-reliance on customers located in one particular location.

**Critical Accounting Policies, Judgments and Estimates**

***Basis of Presentation and Principles of Consolidation***

The accompanying consolidated financial statements and unaudited interim condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). The consolidated financial statements include the financial statements of the Company and its majority-owned subsidiaries. All significant inter-company transactions and balances between the Company and its subsidiaries are eliminated upon consolidation.

The unaudited interim condensed consolidated financial statements do not include all the information and footnotes required by the U.S. GAAP for complete financial statements. Certain information and note disclosures normally included in the annual financial statements prepared in accordance with the U.S. GAAP have been condensed or omitted consistent with Article 10 of Regulation S-X. In the opinion of the Company's management, the unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited financial statements and include all adjustments, in normal recurring nature, as necessary for the fair statement of the Company's financial position as of June 30, 2022, and results of operations and cash flows for the six months ended June 30, 2021 and 2022. The unaudited interim condensed consolidated balance sheet as of December 31, 2021 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by the U.S. GAAP. Interim results of operations are not necessarily indicative of the results expected for the full fiscal year or for any future period. These financial statements should be read in conjunction with the audited consolidated financial statements as of and for the years ended December 31, 2020 and 2021, and related notes included in the Company's audited consolidated financial statements.

***Use of Estimates***

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. Actual results could differ from those estimates. In particular, the novel coronavirus ("COVID-19") pandemic and the resulting adverse impacts to global economic conditions, as well as our operations, may impact future estimates. Significant estimates for the years ended December 31, 2020 and 2021 and the six months ended June 30, 2021 and 2022 include allowance for expected credit loss, fair value measurements, useful life of property, plant and equipment, assumptions used in assessing impairment of long-lived assets.

<u>Allowance for expected credit loss</u>

The Company reviews its accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. A provision matrix is used to estimate the expected credit loss for accounts receivable and contract assets. The provision rates are estimated based on the age of the accounts receivable balances, historical experience, current general economic conditions, future expectations and customer specific quantitative and qualitative factors that may affect the customers' ability to pay.

The assessment of the correlation among historical observed default rates, forecast economic conditions and expected credit losses is a significant estimate. The amount of expected credit loss is sensitive to changes in circumstances and forecast economic conditions. Our historical credit loss experience and forecast of economic conditions may also not be representative of a customer's actual default in the future. As of December 31, 2020 and 2021 and June 30, 2022, the balance of allowance for expected credit loss was approximately USD 0.3 million, USD 0.6 million and USD 0.4 million, respectively.

<u>Fair value measurements</u>

The Company uses a three-tier fair value hierarchy based upon observable and non-observable inputs that prioritizes the information used to develop our assumptions regarding fair value. For details of the fair value hierarchy, please refer to relevant notes to the consolidated financial statements.

When available, the Company uses quoted market prices to determine the fair value of an asset or liability. If quoted market prices are not available, the Group will measure fair value using valuation techniques that use, when possible, current market-based or independently sourced market parameters, such as interest rates and currency rates.

 ****

The carrying value of the Company's cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and other current assets and liabilities approximate fair value because of the short-term nature of these items. The estimated fair values of short-term bank loans were not materially different from their carrying value as presented due to the short maturities and that the interest rates on the borrowing approximate those that would have been available for loans of similar remaining maturity and risk profile.

<u>Useful life of property, plant and equipment</u>

Depreciation is provided over their estimated useful lives, using the straight-line method. Estimated useful lives are as follows:

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| | |
|:---|:---|
| Leasehold improvements | life of lease |
| Machinery and equipment | 4 to 5 years |
| Motor vehicles | 3.3 years |
| Furniture and fixtures | 5 years |

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The Company estimates useful lives of the property, plant and equipment by reference to the business model, assets management policy, the industry practice, expected usage of the assets, expected repair and maintenance, technical or commercial obsolescence arising from changes or improvements in the market. Depreciation expense would be significantly affected by the useful lives of the property, plant and equipment as estimated.

<u>Impairment of long-lived assets</u>

Long-lived assets are evaluated for impairment periodically whenever events or changes in circumstances indicate that their related carrying amounts may not be recoverable in accordance with FASB ASC 360, "Property, Plant and Equipment".

When assessing whether the long-lived assets are impaired, management mainly evaluates and analyses: (1) whether events affecting asset impairment occurred; (2) whether the estimated future, undiscounted cash flows attributable to the asset are less than the carrying amount; and (3) whether the significant assumptions used in the calculation in the estimated future, undiscounted cash flows are appropriate. Relevant assumptions adopted by the Group to determine impairment, e.g. changes in assumptions on the growth rates used to calculate the future, undiscounted cash flows, may have material impact on the estimated future, undiscounted cash flows used in the impairment test, and cause changes on the impairment of the long-lived assets of the Company.

To the extent that estimated future, undiscounted cash inflows attributable to the asset, less estimated future, undiscounted cash outflows, are less than the carrying amount, an impairment loss is recognized in an amount equal to the difference between the carrying value of such asset and its fair value. There was no impairment loss recognized for the years ended December 31, 2020 and 2021 and the six months ended June 30, 2021 and 2022.

***Revenue Recognition***

The Company recognizes revenues in accordance with ASC Topic 606, "Revenue from Contracts with Customers".

The Company derives revenues primarily from the provision of air and ocean freight forwarding services by purchasing transportation services from direct (asset-based) carriers or other freight forwarders and reselling those services to its customers. The contracts with customers generally contain a single performance obligation as the distinct services provided remain substantially the same over time and possess the same pattern of transfer. The performance obligation is satisfied over the transit period when the customers simultaneously receive and consume the benefits of the delivery services. Accordingly, revenue is recognized over the transit period based on the progress towards the completion of the performance obligation.

The transit period can vary based upon the method of transport. Determining the transit period and how much of it has been completed as of the reporting date may require management to make judgments that affect the timing of revenue recognized. For air freight forwarding services, the Company uses the cost-to-cost measure of progress because it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenue is recorded proportionally as costs are incurred. The typical amount of time spent rendering air freight forwarding services is three to five days. For ocean freight forwarding services, the Company uses an output method of progress based on time-in-transit to measure the progress as the timing of costs incurred does not best depict the transfer of control to the customer. The typical amount of time spent rendering ocean freight forwarding services is approximately three to four weeks. The Company believes that the transpiring of time provides the best measurement of the rendering of services to the customer. The Company's primary output is the provision of transport products over a physical distance. Distance equals speed multiplied by time; because speed may vary over the course of the journey, measuring the rendering of service using units of time is more linearly quantifiable than speed; accordingly, the Company recognizes revenue over time. The Company believes that the methodology employed is comparable to other global logistics companies and offers faithful depiction of the transport of goods as service rendered to customers.

Pricing for the Company's services is generally a fixed amount. The Company does not have significant variable consideration in its contracts. Payments are received within 45 to 90 days upon completion of performance obligation but can vary based on the nature of the service provided and certain other factors.

The Company recognizes revenue on a gross basis as the Company controls the services. The Company is primarily responsible for fulfilling the promise, assumes risk of loss, has discretion in setting the prices for the services to its customers, and has the ability to direct the use of the services provided by third parties.

Contract assets include billed and unbilled amounts resulting from in-transit shipments, as the Company has an unconditional right to payment only once all performance obligations have been completed (e.g., shipments have been delivered). Contract assets are generally classified as current, and the full balance is converted each reporting period based on the short-term nature of the transactions. Contract assets are included within current assets in the accompanying consolidated balance sheets.

Contract liabilities are recognized when the Company receive prepayments from customers. Contract liabilities will be recognized as revenue when promised services are provided. Contract liabilities were USD 0, approximately USD 0.1 million and USD 0.2 million as at December 31, 2020 and 2021 and June 30, 2022, respectively.

The Company also provide certain value-added logistics services, such as packaging, warehousing services, small parcel, and local transportation services. The performance obligation is generally satisfied over the service period as the Company perform the obligations. Pricing for our services is established in the customer contract and is dependent upon the specific needs of the customer but may be agreed upon at a fixed fee per transaction, labor hour, or service period.

The Company has adopted ASC 606 on January 1, 2018, using the transition method of Modified-Retrospective Method ("MRM"). The adoption of ASC 606 had no impact on the Company's beginning balance of retained earnings.

***Cost of revenue***

Cost of revenue consists primarily of cargo space charged by airlines, shipping liners or other freight forwarders and ancillary logistics services fee including costs of security, local handling, x-ray screening and warehouse services.

***Income Taxes***

The Company accounts for income taxes following the liability method pursuant to FASB ASC 740 "Income Taxes". Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rate is recognized in income in the period that includes the enactment date.

The Company also follows FASB ASC 740, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of December 31, 2020 and 2021 and as of June 30, 2022, the Company did not have a liability for unrecognized tax benefits. It is the Company's policy to include penalties and interest expense related to income taxes as a component of other expense and interest expense, respectively, as necessary. The Company's historical tax years will remain open for examination by the local authorities until the statute of limitations has passed.

**Recently Issued Accounting Pronouncements**

See the discussion of the recent accounting pronouncements contained in Note 2 to the consolidated financial statements, "Summary of Significant Accounting Policies".

**<u>Explanatory Note</u>**

The Company has restated the accompanying consolidated financial statements and related disclosures for the years ended December 31, 2020 and 2021 that were previously included in Confidential draft No. 2 filed with the SEC on July 22, 2022 (the "DRS No.2") and in Confidential draft No. 3 filed with U.S. Securities and Exchange Commission (the "SEC") on September 19, 2022 (the "DRS No.3"), in order to correct errors resulting from the incorrect recognition of an acquisition of a subsidiary, Business Great Global Supply Chain Limited, as common control arrangement instead of the correct method, which is the purchase method for business combinations.

This Results of Operations and Liquidity, Capital Resources and Assets and liabilities below have been amended and restated to give effect to the restatement of our previously issued consolidated financial statements as of and for the years ended December 31, 2020 and 2021 as more fully described in the Explanatory Note above and in Note 2.1 – Restatement of Consolidated Financial Statements in our accompanying consolidated financial statements.

**Results of Operations**

The following table sets forth a summary of the consolidated results of operations of the Company for the years/periods indicated.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the years ended<br> December 31,** | **For the years ended<br> December 31,** | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** |
|  | **2020** | **2021** | **2021** | **2022** |
|  | **USD** | **USD** | **USD** | **USD** |
|  | **(Restated)** | **(Restated)** | | |
| **REVENUES** | 70196553 | 130313501 | 58170835 | 48634844 |
| **REVENUES – RELATED PARTY** | 829779 | 593711 | 279364 | 851997 |
| **REVENUES** | **71026332** | **130907212** | **58450199** | **49486841** |
| **COST OF REVENUE** | 60905368 | 105536991 | 46028542 | 42471902 |
| **COST OF REVENUE – RELATED PARTY** | 2652207 | 6797704 | 3206041 | 3327180 |
| **TOTAL COST OF REVENUE** | **63557575** | **112334695** | **49234583** | **45799082** |
| **GROSS PROFIT** | **7468757** | **18572517** | **9215616** | **3687759** |
| General and administrative expenses | 3236675 | 3638315 | 1159507 | 1337698 |
| **Total operating expenses** | $**3236675** | $**3638315** | $**1159507** | $**1337698** |
| **INCOME FROM OPERATIONS** | $**4232082** | $**14934202** | $**8056109** | $**2350061** |
| **OTHER INCOME (EXPENSE):** |  |  |  |  |
| Interest income | 6339 | 16629 | 2976 | 14007 |
| Interest expense | (74600) | (22543) | (16273) | (4585) |
| Other income | 306428 | 302294 | 296051 | 229323 |
| Other expense | (20703) | (212106) | (85584) | (7082) |
| **Total other income (expense)** | **217464** | **84274** | **197170** | **231663** |
| **INCOME BEFORE INCOME TAX** | $**4449546** | $**15018476** | $**8253279** | $**2581724** |
| **INCOME TAX** | **721146** | **2462045** | **1339242** | **367808** |
| **NET INCOME** | $**3728400** | $**12556431** | $**6914037** | $**2213916** |
| LESS: NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST | 29827 | 100451 | 55312 | 17516 |
| **NET INCOME ATTRIBUTABLE TO PSI GROUP HOLDINGS LTD** | $3698573 | $**12455980** | $**6858725** | $**2196400** |

---

***Revenues***

In FY2020, FY2021, 6M2021 and 6M2022, our revenue was principally derived from the provision of air and ocean export and import freight forwarding services. The table below sets forth the breakdown of revenue by service type for the years/periods indicated.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the years ended<br> December 31,** | **For the years ended<br> December 31,** | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** |
|  | **2020** | **2021** | **2021** | **2022** |
|  | **USD** | **USD** | **USD** | **USD** |
|  | **(Restated)** | **(Restated)** | | |
| **Freight forwarding services** |  |  |  |  |
| - Air freight | 67162137 | 123594202 | 55641311 | 45955679 |
| - Ocean freight | 2600087 | 6722891 | 2279284 | 3523140 |
| **Subtotal** | **69762224** | **130317093** | **57920595** | **49478819** |
| Ancillary logistic services | 1264108 | 590119 | 529604 | 8022 |
| **Total** | **71026332** | **130907212** | **58450199** | **49486841** |

---

Our freight forwarding services include arranging for consignment upon receipt of booking instructions from customers, cargo pick up, obtaining cargo space, preparation of freight documentation, arranging for customs clearance and cargo handling at origin and destination as well as other related logistics services such as supporting transportation for freight forwarding purposes. In FY2020, FY2021, 6M2021 and 6M2022, our revenue was principally derived from the provision of air freight forwarding services, which amounted to approximately USD 67.2 million, USD 123.6 million, USD 55.6 million and USD 46.0 million, representing approximately 94.6%, 94.4%, 95.2% and 92.9% of our total revenue, respectively.

Our ancillary logistics services involve the provision of a wide range of logistics services, such as cargo pickup, cargo handling at ports and local transportation and warehousing related services such as repackaging, labelling, palletization, preparation of shipping documentation, arrangement of customs clearance and warehousing.

Revenue from freight forwarding services is mainly derived from export shipments. The following table sets forth the breakdown of revenue from freight forwarding services for the years/periods indicated.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the years ended<br> December 31,** | **For the years ended<br> December 31,** | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** |
|  | **2020** | **2021** | **2021** | **2022** |
|  | **USD** | **USD** | **USD** | **USD** |
|  | **(Restated)** | **(Restated)** | | |
| **Export shipments** |  |  |  |  |
| - Air | 67128513 | 123586718 | 55638921 | 45940150 |
| - Ocean | 2146109 | 6436264 | 2058242 | 3497006 |
| - **Subtotal** | **67274622** | **130022982** | **57697163** | **49437156** |
| **Import shipments** |  |  |  |  |
| - Air | 33624 | 7484 | 2390 | 15529 |
| - Ocean | 453978 | 286627 | 221042 | 26134 |
| - **Subtotal** | **487602** | **294111** | **223432** | **41663** |
| **Total** | **69762224** | **130317093** | **57920595** | **49478819** |

---

In FY2020, FY2021, 6M2021 and 6M2022, we focused on export freight forwarding services, which contributed to approximately USD 67.3 million, USD 130.0 million, USD 57.7 million and USD 49.4 million, representing approximately 96.4%, 99.8%, 99.6% and 99.9% of our revenue from freight forwarding services, respectively.

In FY2020, FY2021, 6M2021 and 6M2022, our revenue was principally derived from the provision of air and ocean export freight forwarding services. The table below sets forth the breakdown of export revenue by destination for the years/periods indicated.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** |
|  | **2020** | **2020** | **2021** | **2021** | **2021** | **2021** | **2022** | **2022** |
|  | **USD** | | **USD** | | **USD** | **USD** | **USD** | **USD** |
|  | **(Restated)** | | **(Restated)** | | | | | |
| United States | 56317560 | 81.3% | 107668699 | 82.8% | 47693411 | 82.7% | 38764319 | 78.4% |
| France | 3152172 | 4.5% | 3906806 | 3.0% | 1694765 | 2.9% | 362637 | 0.7% |
| United Kingdom | 2361417 | 3.4% | 2670296 | 2.1% | 860889 | 1.5% | 2704912 | 5.5% |
| The Netherlands | 1978621 | 2.9% | 4578608 | 3.5% | 2112847 | 3.7% | 2260060 | 4.6% |
| Others *(Note)* | 5464852 | 7.9% | 11198573 | 8.6% | 5335251 | 9.2% | 5345228 | 10.8% |
| **Total export revenue** | 69274622 | **100%** | **130022982** | **100%** | **57697163** | **100%** | **49437156** | **100%** |

---

*Note: Others represent a number of countries including, among others, Luxembourg, Canada, Belgium, etc.*

In FY2020, FY2021, 6M2021 and 6M2022, we provided export forwarding services on shipments to over 90 countries, with the US being the destination contributing the majority of our export revenue. Our revenue from freight forwarding services for export shipments to the US contributed to approximately USD 56.3 million, USD 107.7 million, USD 47.7 million and USD38.8 million, representing approximately 81.3%, 82.8%, 82.7% and 78.4% of our total export revenue, respectively.

The following table sets forth the breakdown of our revenue by type of customers for the years/periods indicated:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the years ended<br> December 31,** | **For the years ended<br> December 31,** | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** |
|  | **2020** | **2021** | **2021** | **2022** |
|  | **USD** | **USD** | **USD** | **USD** |
|  | **(Restated)** | **(Restated)** | | |
| Freight forwarders | 69747250 | 129511666 | 57782237 | 49052387 |
| Direct customers | 1279082 | 1395546 | 667962 | 434454 |
| **Total** | **71026332** | **130907212** | **58450199** | **49486841** |

---

We focus on provision of freight forwarding services to freight forwarders with revenue amounting to approximately USD 69.7 million, USD 129.5 million, USD 57.8 million and USD 49.1 million, representing approximately 98.2%, 98.9%, 98.9% and 99.1% of our total revenue in FY2020, FY2021, 6M2021 and 6M2022, respectively.

***Cost of Revenue***

The table below sets forth the breakdown of cost of revenue by service type for the years/periods indicated.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the years ended<br> December 31,** | **For the years ended<br> December 31,** | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** |
|  | **2020** | **2021** | **2021** | **2022** |
|  | **USD** | **USD** | **USD** | **USD** |
|  | **(Restated)** | **(Restated)** | | |
| **Freight forwarding services** |  |  |  |  |
| - Air freight | 60515659 | 105978902 | 46803556 | 42678578 |
| - Ocean freight | 2211569 | 5866840 | 1975548 | 3119792 |
| **Subtotal** | **62727228** | **111845742** | **48779104** | **45798370** |
| Ancillary logistic services | 830347 | 488953 | 455479 | 712 |
| **Total** | **63557575** | **112334695** | **49234583** | **45799082** |

---

Our cost of revenue amounted to approximately USD 63.6 million, USD 112.3 million, USD 49.2 million and USD 45.8 million in FY2020, FY2021, 6M2021 and 6M2022, respectively. The trend of cost of revenue of each of the service types was in line with the trend of the revenue of respective service types during the year/period.

The table below sets forth the breakdown of cost of revenue by nature for the years/periods indicated.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the years ended<br> December 31,** | **For the years ended<br> December 31,** | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** |
|  | **2020** | **2021** | **2021** | **2022** |
|  | **USD** | **USD** | **USD** | **USD** |
|  | **(Restated)** | **(Restated)** | | |
| Air freight charges | 55357907 | 95547972 | 42046679 | 36812969 |
| Ocean freight charges | 1640870 | 5388210 | 1675731 | 3007752 |
| Logistics and warehousing fees | 6135133 | 10997162 | 5314704 | 5779101 |
| Depreciation of right-of-use assets | 351558 | 318435 | 161440 | 157802 |
| Depreciation of property, plant and equipment | 72107 | 82916 | 36029 | 41458 |
| **Total** | **63557575** | **112334695** | **49234583** | **45799082** |

---

Our cost of revenue mainly comprised air and ocean freight charges, and warehouse and transportation cost. Air and ocean freight charges represented costs of cargo space charged by airlines, shipping liners or other freight forwarders. Air freight charges were the major component of our cost of revenue, which accounted for approximately 87.1%, 85.1%, 85.4% and 80.4%, respectively, in FY2020, FY2021, 6M2021 and 6M2022.

Logistics and warehousing fees primarily represent costs and service fees incurred in relation to warehousing services such as x-ray screening, storage, palletizing and consolidation performed in our warehouse and costs of local trucking and transportation services. Logistics and warehousing fees represented a significant portion of our cost of revenue, which accounted for approximately 9.7%, 9.8%, 10.8% and 12.6%, respectively, in FY2020, FY2021, 6M2021 and 6M2022.

Depreciation of right-of-use assets primarily represents depreciation expenses incurred on the properties leased as our warehouse.

Depreciation of property, plant and equipment represents the depreciation of property, plant and equipment related to our warehouse such as x-ray screening equipment and forklifts.

***Gross profit***

 ****

The table below set forth the breakdown of gross profit by service type for the years/periods indicated.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **For the years ended<br> December 31,** | **For the years ended<br> December 31,** | **For the years ended<br> December 31,** | **For the years ended<br> December 31,** | **For the six months ended**<br> **June 30,** | **For the six months ended**<br> **June 30,** | **For the six months ended**<br> **June 30,** | **For the six months ended**<br> **June 30,** |
|  | **2020** | **2020** | **2021** | **2021** | **2021** | **2021** | **2022** | **2022** |
|  | **Gross Profit** | **Margin** | **Gross Profit** | **Margin** | **Gross Profit** | **Margin** | **Gross Profit** | **Margin** |
|  | **USD** | | **USD** | | **USD** | | **USD** | |
|  | **(Restated)** | | **(Restated)** | | | | | |
| **Freight forwarding services** |  |  |  |  |  |  |  |  |
| - Air freight | 6646478 | 9.9% | 17615300 | 14.3% | 8837755 | 15.9% | 3277101 | 7.1% |
| - Ocean freight | 388518 | 14.9% | 856051 | 12.7% | 303736 | 13.3% | 403348 | 11.4% |
| **Subtotal** | **7034996** | **10.1%** | **18471351** | **14.2%** | **9141491** | **15.8%** | **3680449** | **7.4%** |
| Ancillary logistic services | 433761 | 34.3% | 101166 | 17.1% | 74125 | 14.0% | 7310 | 91.1% |
| **Total** | **7468757** | **10.5%** | **18572517** | **14.2%** | **9215616** | **15.8%** | **3687759** | **7.5%** |

---

Our overall gross profit amounted to approximately USD 7.5 million, USD 18.6 million, USD 9.2 million and USD 3.7 million in FY2020, FY2021, 6M2021 and 6M2022, respectively. We recorded overall gross profit margin of approximately 10.5%, 14.2%, 15.8% and 7.5% for the corresponding years/periods. The change in overall gross profit and gross profit margin were in line with our change in our overall revenue during the years and periods. Our gross profit and gross profit margin are mainly affected by factors including, among others, (i) the freight charge per kilogram payable by our customers; and (ii) costs of revenue of which the freight charges payable to suppliers.

***General and administrative expenses***

 ****

The table below sets forth the breakdown of general and administrative expenses for the years/periods indicated.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the years ended<br> December 31,** | **For the years ended<br> December 31,** | **For the six months ended<br> June 30** | **For the six months ended<br> June 30** |
|  | **2020** | **2021** | **2021** | **2022** |
|  | **USD** | **USD** | **USD** | **USD** |
|  | **(Restated)** | **(Restated)** | | |
| Staff costs and benefits | 2341970 | 1884833 | 640518 | 898655 |
| Office expenses | 111120 | 200652 | 93298 | 53203 |
| Allowance for expected credit loss | 288110 | 216138 |  |  |
| Depreciation of right of use assets | 83437 | 83976 | 41479 | 59769 |
| Depreciation | 49755 | 90589 | 23767 | 50723 |
| Bad debt written off |  | 99975 |  |  |
| Motor vehicles expenses | 49725 | 60708 | 30540 | 10946 |
| Others *(Note)* | 312558 | 1001444 | 329905 | 264402 |
| **Total** | **3236675** | **3638315** | **1159507** | **1337698** |

---

*Note: Others mainly represented entertainment, insurance, repair and maintenance, travelling expenses and other sundry expenses for administrative purposes.*

 ****

Our general and administrative expenses were approximately USD 3.2 million, USD 3.6 million, USD 1.2 million and USD 1.3 million in FY2020, FY2021, 6M2021 and 6M2022, representing approximately 4.6%, 2.8%, 2.0% and 2.7% of the total revenue for the corresponding years/periods, respectively.

Staff costs and benefits mainly represented salaries, discretionary bonus, retirement benefit scheme contributions and employee benefits of the administrative and operational staffs.

Office expenses mainly represented property management expenses, cleaning expenses, internet and telephone charges, printing and stationery and other utilities expenses.

Depreciation of right-of-use assets primarily represents depreciation expenses incurred on the properties leased as our office.

Depreciation represents the depreciation of property, plant and equipment related to our office such as leasehold improvements and furniture and fixtures.

Bad debt written off was related to the outstanding balances with two independent customers, which we mainly provide air export freight forwarding service to.

 **

***Interest expense***

 **

Interest expenses mainly represents interest on lease liabilities and short-term bank loans.

 **

***Other income***

 **

The table below sets forth the breakdown of other income for the years/periods indicated.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the years ended<br> December 31,** | **For the years ended<br> December 31,** | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** |
|  | **2020** | **2021** | **2021** | **2022** |
|  | **USD** | **USD** | **USD** | **USD** |
|  | **(Restated)** | **(Restated)** | | |
| Government grants | 194023 | 55922 | 56203 | 29744 |
| Dividends income from investment in equity securities | 9309 | 30290 | 3788 |  |
| Management fee income | 8289 | 11695 | 27003 | 17404 |
| Management fee income from related party | 73737 | 70759 | 14234 | 20250 |
| Bad debt recovered |  | 58957 |  |  |
| Gain on forgiveness of debt |  | 67902 | 59253 |  |
| Reversal of allowance for expected credit loss, net |  |  | 131177 | 145416 |
| Miscellaneous income | 21070 | 6769 | 4393 | 16509 |
| **Total** | **306428** | **302294** | **296051** | **229323** |

---

 ****

In FY2020, FY2021, 6M2021 and 6M2022, other income amounted to approximately USD 0.3 million, USD 0.3 million, USD 0.3 million and USD 0.2 million, respectively.

Government grants represented the anti-epidemic funds received from the Hong Kong government under the Employment Support Scheme granted to companies in the freight forwarding industry.

Management fee income mainly represented the fees charged on management services such as handling and arranging shipments.

Gain on forgiveness of debt mainly represented the gain on reduction in lease liability resulting from rental reduction.

***Other expense***

 ****

The table below sets forth the breakdown of other expense for the years/periods indicated.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the years ended <br> December 31,** | **For the years ended <br> December 31,** | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** |
|  | **2020** | **2021** | **2021** | **2022** |
|  | **(Restated)** | **(Restated)** | | |
| Exchange gain/(loss) | $68162 | $(104748) | (38956) | (7082) |
| Loss on investment in equity securities | (83575) |  | (66281) |  |
| Loss on trading of equity securities | (5290) | (107358) | 19653 | - |
| **Total** | $**(20703)** | $**(212106)** | **(85584)** | **(7082)** |

---

In FY2020, FY2021, 6M2021 and 6M2022, other expense amounted to approximately USD 20,000, USD 0.2 million, USD 0.1 million and USD 7,000, respectively.

Exchange gain/(loss) mainly represented the foreign exchange differences resulting from the fluctuation of RMB against HKD.

Loss on investment in equity securities represented the change in fair value of equity securities calculated based on the quoted market price as at the end of each year/period.

Loss on trading of equity securities represented the loss realized upon disposal of equity securities.

***Income tax***

In FY2020, FY2021, 6M2021 and 6M2022, we generated substantially all of our taxable income in Hong Kong. Accordingly, tax expenses records in the Company's result of operations are almost entirely attributable to income earned in the Hong Kong.

The Hong Kong profits tax is calculated at 8.25% on the first HK$2 million of the estimated assessable profits and at 16.5% on the estimated assessable profits above HK$2 million.

The effective tax rates on income before income taxes for FY2020, FY2021, 6M2021 and 6M2022 was approximately 16.2%, 16.4%, 16.2% and 14.2%, respectively.

**Period to period Comparison of Results of Operations**

<u>FY2020 compared to FY2021</u>

***Revenue***

Our overall revenue increased by USD 59.9 million or 84.4% from approximately USD 71.0 million in FY2020 to approximately USD 130.9 million in FY2021, which was primarily due to the increase in revenue derived from air freight forwarding services from approximately USD 67.2 million in FY2020 to approximately USD 123.6 million in FY2021 due to the combined effect of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the increase in volume of export shipment from approximately
 10,008 tons in FY2020 to approximately 14,580 tons for FY2021. In particular, (a) our export shipment to the US increased from approximately
 7,718 tons in FY2020 to approximately 11,297 tons in FY2021 mainly resulting from the increase in air export freight forwarding services
 to our largest customer, which was a freight forwarder, during the year; (b) our export shipment to the Netherlands increased from
 approximately 353 tons in FY2020 to approximately 724 tons in FY2021 resulting from the increase in air export freight forwarding
 services to our largest customer, which was a freight forwarder, in FY2021; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The increase in average freight charge of shipment to the US from approximately
 USD 6.5 per kg in FY2020 to approximately USD 8.5 per kg in FY2021 which was mainly due to the shortage in supply of cargo space
 caused by the COVID-19 pandemic.

***Cost of revenue***

 ****

Our cost of revenue increased by approximately USD 48.7 million or 76.6% from approximately USD 63.6 million in FY2020 to approximately USD 112.3 million in FY2021, primarily due to the increase in freight costs payable to for the respective years resulting from (i) the increase in volume of air export shipments to the US and the Netherlands during the year; and (ii) the increase in average freight charge due to the COVID-19 pandemic.

***Gross profit and gross profit margin***

Our overall gross profit increased by approximately USD 11.1 million or 148% from approximately USD 7.5 million in FY2020 to approximately USD 18.6 million in FY2021, which was primarily due to the combined effect of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the increase in gross profit derived from air freight forwarding services
 from approximately USD 6.6 million in FY2020 to approximately USD 17.6 million in FY2021 as a result of the increase in volume of
 export shipment, in particular, to the US and the Netherlands during the year; and

 ****

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the increase in gross profit derived from ocean freight forwarding
 services from approximately USD 0.4 million in FY2020 to approximately USD 0.9 million in FY2021 as a result of the increase in volume
 of export shipment, in particular, to the US during the year.

Our overall gross profit margin increased from approximately 10.5% in FY2020 to approximately 14.2% in FY2021, which was primarily due to the increase in gross profit margin derived from freight forwarding services from approximately 10.1% in FY2020 to approximately 14.2% in FY2021, mainly due to the combined effect of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the increase in gross profit margin derived from air freight forwarding
 services from approximately 9.9% to approximately 14.3% for the respective years mainly due to the extent of increase in revenue
 from our air freight forwarding services outweighed the extent of increase in the corresponding freight cost payable to our suppliers
 resulting from the ability of the management on implementing its pricing strategies; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the decrease in gross profit margin derived from ocean freight forwarding
 services from approximately 14.9% to approximately 12.7% for the respective periods mainly due to the extent of increase in freight
 costs payable to our suppliers for our ocean freight forwarding services outweighed the extent of increase in revenue from our ocean
 freight forwarding services.

***General and administrative expenses***

Our general and administrative expenses remained relatively stable at approximately USD 3.2 million in FY2020 and approximately USD 3.6 million in FY2021.

***Interest expenses***

Our interest expenses decreased from approximately USD 75,000 in FY2020 to approximately USD 23,000 in FY2021, which was primarily due to the decrease in short-term bank loans in FY2021.

***Other income***

Our other income remained relatively stable at approximately USD 0.3 million and USD 0.3 million in FY2020 and FY2021, respectively.

**Other expense**

Our other expense increased from approximately USD 21,000 in FY2020 to approximately USD 0.2 million in FY2021, which was primarily due to (i) the turnaround from an exchange gain of approximately USD 68,000 in FY2020 to an exchange loss of approximately USD 0.1 million in FY2021 mainly due to the realised loss incurred upon settlement of RMB-denominated accounts payable resulting from the appreciation of RMB against HKD in FY2021; and (ii) the increase in loss on trading of equity securities from approximately USD 5,000 in FY2020 to approximately USD 0.1 million in FY2021 mainly due to the general decline in market price of the equity securities in FY2021 resulting from the market downturn caused by the COVID-19 pandemic.

***Income tax***

 ****

Our income tax expense increased from approximately USD 0.7 million in FY2020 to approximately USD 2.5 million in FY2021, which was in line with the increase in our net income for the year.

***Net income***

As a result of the above factors, our net income increased by approximately USD 8.9 million from approximately USD 3.7 million for the FY2020 to approximately USD 12.6 million in FY2021, our net income margin increased from approximately 5.2% in FY2020 to approximately 9.6% in FY2021.

<u>6M2021 compared to 6M2022</u>

***Revenue***

Our overall revenue decreased by USD 9.0 million or 15.4% from approximately USD 58.5 million in 6M2021 to approximately USD 49.5 million in 6M2022, which was primarily due to the decrease in revenue derived from air freight forwarding services from approximately USD 55.6 million in 6M2021 to approximately USD 46.0 million in 6M2022 due to the combined effect of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the decrease
 in volume of export shipment from approximately 7,915 tons in 6M2021 to approximately 5,994 tons for 6M2022. In particular, our export
 shipment to the US decreased from approximately 6,110 tons in 6M2021 to approximately 4,227 tons in 6M2022 mainly resulting from
 the decrease in global demand for goods and commodities caused by economic downturn following the COVID-19 pandemic; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the increase in average
 freight charge of shipment to the US from approximately USD 6.9 per kg in 6M2021 to approximately USD 7.7 per kg in 6M2022 which
 was mainly due to the shortage in supply of cargo space caused by the COVID-19 pandemic.

***Cost of revenue***

 ****

Our cost of revenue decreased by approximately USD 3.4 million or 6.9% from approximately USD 49.2 million in 6M2021 to approximately USD 45.8 million in 6M2022, primarily due to the decrease in freight costs payable to suppliers due to the combined effect of (i) the decrease in volume of air export shipments to the US during the period; and (ii) the increase in average freight charge due to the COVID-19 pandemic.

***Gross profit and gross profit margin***

Our overall gross profit decreased by approximately USD 5.5 million or 59.8% from approximately USD 9.2 million in 6M2021 to approximately USD 3.7 million in 6M2022, which was primarily due to the decrease in gross profit derived from air freight forwarding services from approximately USD 8.8 million in 6M2021 to approximately USD 3.3 million in 6M2022 as a result of the decrease in volume of export shipment, in particular, to the US during the period.

Our overall gross profit margin decreased from approximately 15.8% in 6M2021 to approximately 7.5% in 6M2022, which was primarily due to the decrease in gross profit margin derived from freight forwarding services from approximately 15.8% in 6M2021 to approximately 7.4% in 6M2022, mainly due to the decrease in gross profit margin derived from air freight forwarding services from approximately 15.9% to approximately 7.1% for the respective periods mainly due to the significant increase in the per unit freight charge payable to suppliers as a result of the supply chain disruption in 6M2022, which we cannot pass on in full to our customers.

***General and administrative expenses***

Our general and administrative expenses remained relatively stable at approximately USD 1.2 million in 6M2021 and approximately USD 1.3 million in 6M2022.

***Interest expenses***

Our interest expenses decreased from approximately USD 16,000 in 6M2021 and USD 5,000 in 6M2022, which was primarily attributable to the decrease in short-term bank loans.

***Other income***

Our other income remained relatively stable at approximately USD 0.3 million in 6M2021 and USD 0.2 million in 6M2022.

**Other expense**

Our other expense decreased from approximately USD 86,000 in 6N2021 to approximately USD 7,000 in 6M2022, which was primarily due to the absence of loss on investment in equity securities in 6M2022 as all of the equity securities were disposed of during FY2021.

***Income tax***

 ****

Our income tax expense decreased from approximately USD 1.3 million in 6M2021 to approximately USD 0.4 million in 6M2022, which was in line with the decrease in our net income for the period.

***Net income***

As a result of the above factors, our net income decreased by approximately USD 4.7 million from approximately USD 6.9 million for the 6M2021 to approximately USD 2.2 million in 6M2022, our net income margin decreased from approximately 11.8% in 6M2021 to approximately 4.5% in 6M2022.

**Liquidity and Capital Resources**

***Net current assets***

The table below sets forth a breakdown of our current assets and liabilities as of the dates indicated.

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of <br> June 30** |
|  | **2020** | **2021** | **2022** |
|  | **USD** | **USD** | **USD** |
|  | **(Restated)** | **(Restated)** | |
| **Current assets** |  |  |  |
| Cash and cash equivalents | 3432456 | 9934013 | 6840905 |
| Restricted cash | 645516 | 759718 | 2926419 |
| Accounts receivable, net | 13120420 | 16698071 | 10350054 |
| Accounts receivable – related party | 7448 | 12088 | 471783 |
| Contract asset | 3146334 | 1291368 | 779275 |
| Amounts due from related parties | 7161516 | 2179564 | 469014 |
| Prepayments and other current assets | 1072295 | 663154 | 1160584 |
| **Total Current Assets** | **28585985** | **31537976** | **22998034** |
| **Current Liabilities** |  |  |  |
| Short-term bank loans | 3026194 | 387263 | 259938 |
| Accounts payable | 12682841 | 15144307 | 7658316 |
| Accounts payable – related party | 2277918 | 5000265 | 727974 |
| Contract liabilities |  | 108974 | 224981 |
| Other payables and accrued liabilities | 445268 | 475482 | 52059 |
| Taxes payables | 707712 | 1743702 | 2215587 |
| Lease liabilities – current | 114462 | 422208 | 328124 |
| Amounts due to related parties | 435160 | 1238449 | 507940 |
| Dividend payables | 28326 | 145513 | 28154 |
| **Total current liabilities** | **19717881** | **24666163** | **12003073** |
| **Net Current Assets** | **8868104** | **6871813** | **10994961** |

---

Our current assets mainly included cash and cash equivalents, restricted cash, accounts receivable, contract asset, amounts due from related parties and prepayments and other current assets. Our current liabilities mainly included other payables and accrued liabilities, accounts payable, short-term bank loans, taxes payables, lease liabilities, amounts due to related parties and dividend payables.

Our net current assets decreased from approximately USD 8.9 million as of December 31, 2020 to approximately USD 6.9 million as of December 31, 2021, which was mainly due to the decrease in amounts due from related parties from approximately USD 7.2 million as of December 31, 2020 to approximately USD 2.2 million as of December 31, 2021; partially offset by (i) the increase in cash and cash equivalents from approximately USD 3.4 million as of December 31, 2020 to approximately USD 9.9 million as of December 31, 2021; (ii) the increase in accounts receivable from approximately USD 13.1 million as of December 31, 2020 to approximately USD 16.7 million as of December 31, 2021; and (iii) the decrease in short-term bank loans from approximately USD 3.0 million as of December 31, 2020 to approximately USD 0.4 million as of December 31, 2021.

Our net current assets increased from approximately USD 6.9 million as of December 31, 2021 to approximately USD 11.0 million as of June 30, 2022, which was mainly due to the decrease in accounts payable from approximately USD 20.1 million as of December 31, 2021 to approximately USD 8.4 million as of June 30, 2022; partially offset by (i) the decrease in accounts receivable from approximately USD 16.7 million as of December 31, 2021 to approximately USD 10.8 million as of June 30, 2022; and (ii) the decrease in amounts due from related parties from approximately USD 2.2 million as of December 31, 2021 to approximately USD 0.5 million as of June 30, 2022.

***Cash flows***

Our source of funds for operations mainly comes from cash generated from operation. The primary uses of cash are mainly to finance its operations, working capital needs and capital expenditure needs. Upon Listing, its source of funds will be satisfied using a combination of internal generated funds, bank loans and net proceeds of the offering.

The table below sets forth a summary of our cash flows for the years/periods indicated:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the years ended<br> December 31,** | **For the years ended<br> December 31,** | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** |
|  | **2020** | **2021** | **2021** | **2022** |
|  | **USD** | **USD** | **USD** | **USD** |
|  | **(Restated)** | **(Restated)** | | |
| Net cash provided by operating activities | 3544787 | 15572264 | 8867084 | 122377 |
| Net cash (used in) provided by investing activities | (547909) | (5282578) | (1424035) | 766 |
| Net cash provided by (used in) financing activities | 493895 | (3646144) | (2507482) | (1049552) |
| Net increase (decrease) in cash and cash equivalents | 3490773 | 6643542 | **4935567** | **(926409)** |

---

*Cash provided by operating activities*

Our operating cash inflow is primarily from our operating activities principally from the receipt of payments for our provision of freight forwarding services, whereas our outflow from operating activities is principally for freight charges, ancillary service fees payable to suppliers, payment of salaries and employee benefits and general and administrative expenses.

In FY2020, our net cash provided by operating activities was approximately USD 3.5 million, mainly due to (i) our net income of approximately USD 3.7 million which was primarily adjusted for depreciation of right-of-use assets of approximately USD 0.4 million, allowance for expected credit loss of approximately USD 0.3 million, depreciation of property, plant and equipment of approximately USD 0.1 million and loss on investment in equity securities of approximately USD 0.1 million; (ii) increase in accounts payable of approximately USD 12.5 million, which were in line with the increase in freight charges incurred for the year; (iii) increase in tax payables of approximately USD 0.9 million; which partially offset by (iv) increase in accounts receivable of approximately USD 10.2 million, which was in line with the increase in revenue for the year; (v) increase in contracts asset of approximately USD 2.1 million; and (vi) increase in other current assets of approximately USD 0.9 million.

In FY2021, our net cash provided by operating activities was approximately USD 15.6 million, mainly due to (i) our net income of approximately USD 12.6 million which was primarily adjusted for depreciation of right-of-use assets of approximately USD 0.4 million, depreciation of property, plant and equipment of approximately USD 0.2 million and allowance for expected credit loss of approximately USD 0.2 million; (ii) increase in accounts payable of approximately USD 4.1 million, which were in line with the increase in freight charges incurred for the year; (iii) decrease in contract asset of approximately USD 1.9 million; (iv) increase in tax payables of approximately USD 1.0 million; which partially offset by (v) increase in accounts receivable of approximately USD 3.8 million. The increase in net cash provided by operating activities from approximately USD 3.5 million in FY2020 to approximately USD 15.6 million in FY2021 was mainly due to the increase in net income, which was primarily attributable to the increase in revenues and gross profit for the year.

In 6M2022, our net cash provided by operating activities was approximately USD 0.1 million, mainly due to (i) our net income of approximately USD 2.2 million which was primarily adjusted for depreciation of right-of-use assets of approximately USD 0.2 million, allowance for expected credit loss of approximately USD 0.1 million and depreciation of property, plant and equipment of approximately USD 0.1 million; (ii) decrease in accounts receivable of approximately USD 10.3 million, which was in line with the decrease in our revenue; (ii) decrease in contract asset of approximately USD 0.5 million; which partially offset by (iii) decrease in accounts payable of approximately USD 11.8 million, which was in line with the decrease in freight charges incurred for the year; (iv) decrease in other payables and accrued liabilities of approximately USD 0.5 million; and (v) increase in other current assets of approximately USD 0.5 million.

*Cash (used in) provided by investing activities*

Our cash provided by investing activities is primarily attributable to proceeds on disposal of equity securities and repayment from related parties. Our cash used in investing activities is primarily for purchase of property, plant and equipment, purchase of equity securities and advance to related parties.

In FY2020, our net cash used in investing activities was approximately USD 0.5 million, mainly due to (i) advance to related parties of approximately USD 0.9 million; (ii) purchase of equity securities of approximately USD 0.9 million; (iii) purchase of property, plant and equipment of approximately USD 0.4 million; which partially offset by (iv) repayment from related parties of approximately USD 1.2 million; and (v) proceeds from equity securities of approximately USD 0.4 million.

In FY2021, our net cash used in investing activities was approximately USD 5.3 million, mainly due to (i) advance to related parties of approximately USD 5.5 million; (ii) purchase of equity securities of approximately USD 0.5 million; (iii) purchase of property, plant and equipment of approximately USD 0.3 million; which partially offset by (iv) proceeds from equity securities of approximately USD 1.0 million.

In 6M2022, our net cash provided by investing activities was approximately USD 800, mainly due to (i) cash from acquisition of a subsidiary of approximately USD17,000; partially offset by purchase of property, plant and equipment of approximately USD16,000.

*Cash provided by (used in) financing activities*

In FY2020, our net cash provided by financing activities was approximately USD 0.5 million, mainly due to proceeds from bank loans of approximately USD 10.5 million; which partially offset by repayment of bank loans of approximately USD 10.0 million.

In FY2021, our net cash used in financing activities was approximately USD 3.6 million, mainly due to (i) repayment of bank loans of approximately USD 2.6 million; and (ii) dividend paid of approximately USD 1.0 million.

In 6M2022, our net cash used in financing activities was approximately USD 1.0 million, mainly due to (i) repayment to a shareholder of approximately USD 0.8 million; (ii) repayment of bank loans of approximately USD 0.1 million; and (iii) dividends paid of approximately USD 0.1 million.

**Assets and liabilities**

The following table sets forth a summary of the assets and liabilities as of the date indicated.

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of<br> June 30,** |
|  | **2020** | **2021** | **2022** |
|  | **USD** | **USD** | **USD** |
|  | **(Restated)** | **(Restated)** | |
| **ASSETS** |  |  |  |
| **Current assets** |  |  |  |
| Cash and cash equivalents | 3432456 | 9934013 | 6840905 |
| Restricted cash | 645516 | 759718 | 2926419 |
| Accounts receivable, net | 13120420 | 16698071 | 10350054 |
| Accounts receivable – related party | 7448 | 12088 | 471783 |
| Contract asset, net | 3146334 | 1291368 | 779275 |
| Amounts due from related parties | 7161516 | 2179564 | 469014 |
| Prepayments and other current assets | 1072295 | 663154 | 1160584 |
| **Total Current Assets** | **28585985** | **31537976** | **22998034** |
| **Non-current asset** |  |  |  |
| Property, plant, equipment, net | 334904 | 462700 | 447556 |
| Goodwill |  |  | 294151 |
| Right-of-used assets | 318629 | 583436 | 415557 |
| Equity method investment |  |  |  |
| Investment in equity securities | 603188 |  |  |
| **Total non-current assets** | **1256721** | **1046136** | **1157264** |
| **TOTAL ASSETS** | **29842706** | **32584112** | **24155298** |
| **LIABILITIES** |  |  |  |
| **Current Liabilities** |  |  |  |
| Short-term bank loans | 3026194 | 387263 | 259938 |
| Accounts payable | 12682841 | 15144307 | 7658316 |
| Accounts payable – related party | 2277918 | 5000265 | 727974 |
| Contract liabilities |  | 108974 | 224981 |
| Other payables and accrued liabilities | 445268 | 475482 | 52059 |
| Taxes payables | 707712 | 1743702 | 2215587 |
| Lease liabilities – current | 114462 | 422208 | 328124 |
| Amount due to related parties | 435160 | 1238449 | 507940 |
| Dividend payables | 28326 | 145513 | 28154 |
| **Total current liabilities** | **19717881** | **24666163** | **12003073** |
| **Non-current liabilities** |  |  |  |
| Lease liabilities – non-current | 226042 | 192921 | 115483 |
| **Total non-current liabilities** | **226042** | **192921** | **115483** |
| **TOTAL LIABILITIES** | **19943923** | **24859084** | **12118556** |
| **COMMITMENTS AND CONTINGENCIES EQUITY** |  |  |  |
| Ordinary shares, par value US$0.0001 per share, 200,000,000 shares authorized; and 155,969, 155,969 and 200,000 shares issued and outstanding as of December 31, 2020, December 31, 2021 and June 30, 2022, respectively\* | 16 | 16 | 20 |
| Additional paid-in capital | 5826358 | 5826358 | 7877520 |
| Retained earnings | 4057233 | 1921718 | 4118118 |
| Accumulated other comprehensive loss | (17403) | (38253) | (38873) |
| **Total shareholders' equity** | **9866204** | **7709839** | **11956785** |
| Non-controlling interest | 32579 | 15189 | 79957 |
| **TOTAL EQUITY** | **9898783** | **7725028** | **12036742** |
| **TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY** | **29842706** | **32584112** | **24155298** |

---

*\** *Shares represented on a retroactive basis to reflect the restructuring.*

***Accounts receivable***

 ****

The following table sets forth the breakdown of accounts receivable as of the dates indicated:

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | |
|  | **2020** | **2021** | **As of<br> June 30,**<br>**2022** |
|  | **USD** | **USD** | **USD** |
|  | **(Restated)** | **(Restated)** | |
| Accounts receivable | $13445411 | $17270438 | 10790530 |
| Less: allowance for expected credit loss | (324991) | (572367) | (440476) |
| &nbsp;&nbsp;&nbsp;**Total** | $13120420 | $16698071 | 10350054 |

---

Accounts receivable primarily consisted of accounts receivable arising from provision of freight forwarding services to customers. Our net accounts receivable increased from approximately USD 13.1 million as at December 31, 2020 to approximately USD 16.7 million as at December 31, 2021, and decreased to approximately USD 10.4 million as at June 30, 2022, which was in line with the changes in revenue for the year/period.

 ****

The following table sets forth the average accounts receivable turnover days for the years/periods indicated:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** | **As of December 31,** | **As of <br> June 30,** | **As of <br> June 30,** |
|  | **2020** | **2020** | **2021** | **2021** | **2022** | **2022** |
|  | **(Restated)** | **(Restated)** | **(Restated)** | **(Restated)** | | |
| Average accounts receivable turnover days *(Note)* |  | 44 |  | 43 |  | 52 |

---

*Note: Average accounts receivable turnover days are calculated based on the average of the beginning and ending gross balance of accounts receivables for the year divided by the revenue for the year and multiplied by the number of days in the year.*

We generally grant a credit period of within 45 days after customers received services provided by us. The average accounts receivable turnover days remained relatively stable at 44 days and 43 days in FY2020 and FY2021, respectively, which were in line with our general credit period granted. The average accounts receivable turnover days increased to approximately 52 days as at June 30, 2022 mainly due to accounts receivable from our largest customer, which accounted for approximately 63.3% of our total accounts receivables as at period end and the majority of which were not yet past due.

 ****

***Amounts due from related parties***

Amounts due from related parties represented advances to related parties by us and general and administrative expenses paid by us on behalf of the related parties, which are non-trade, unsecured, non-interest bearing and repayable on demand.

 **

***Prepayments and other current assets***

 **

Prepayments and other current assets mainly represented rental deposits for our offices and warehouse, and deposits for utilities. Our prepayments and other current assets decreased from approximately USD 1.1 million as at December 31, 2020 to approximately USD 0.7 million as at December 31, 2021 as a deposit paid to one of our major suppliers in the second half of 2020 in relation to block space arrangement was released upon the completion of the arrangement in FY2021. The balance increased to approximately USD1.2 million as at June 30, 2022 mainly due to the prepayment of professional expenses in relation to the listing.

 **

***Property, plant, equipment, net***

 **

During the years ended December 31, 2020 and 2021 and the six months ended June 30, 2022, our property, plant, equipment mainly represented leasehold improvements, machinery and equipment, motor vehicles and furniture and fixtures. As of December 31, 2020 and 2021 and June 30, 2022, the net book value of property, plant, equipment amounted to approximately USD 0.3 million, USD 0.5 million and USD 0.4 million, respectively.

 **

***Right-of-use assets***

 **

During the years ended December 31, 2020 and 2021 and the six months ended June 30, 2022, our right-of-use assets mainly represented our leases for office space, warehouse and photocopiers. The net book value of our right-of-use assets amounted to approximately USD 0.3 million, USD 0.6 million and USD 0.4 million as of December 31, 2020 and 2021 and June 30, 2022, with corresponding lease liability of approximately USD 0.3 million, USD 0.6 million and USD 0.4 million, respectively.

 **

***Equity method investment***

 **

Our equity method investment represented the investment in 30% of the equity interest of Business Great Global Supply Chain PTE. Limited, a limited company incorporated in Singapore. As Business Great Global Supply Chain PTE. Limited became dormant in FY2020, the equity method investment was fully impaired.

 **

***Investment in equity securities***

 **

Our investment in equity securities represented the investment in equity securities listed in Hong Kong, the fair value of which were determined by reference to the public available quoted market price. All of the investment in equity securities were disposed of during FY2021.

 **

***Short-term bank loans***

 **

Our short-term bank loans primarily consisted of guaranteed bank loans and secured trade financing loans which are repayable within one year. In FY2020, FY2021 and 6M2022, the average annual interest rate was approximately 2.5%, 5.8% and 3.5%, respectively.

 **

***Accounts payable***

 **

Accounts payable primarily consisted of trade payables arising from the procurement of cargo space from suppliers. Our accounts payable increased from approximately USD 15.0 million as at December 31, 2020 to approximately USD 20.1 million as at December 31, 2021, and decreased to approximately USD 8.4 million as at June 30, 2022, which was in line with the changes in freight charges payable to suppliers during the year/period.

 ****

The following table sets forth the average accounts payable turnover days for the years indicated:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** | **As of December 31,** | **As at <br> June 30,** | **As at <br> June 30,** |
|  | **2020** | **2020** | **2021** | **2021** | **2022** | **2022** |
|  | **(Restated)** | **(Restated)** | **(Restated)** | **(Restated)** | | |
| Average accounts payable turnover days *(Note)* |  | 45 |  | 48 |  | 49 |

---

*Note: Average accounts payable turnover days are calculated based on the average of the beginning and ending accounts payable for the year divided by the cost of revenue for the year and multiplied by the number of days in the year.*

We were generally granted by suppliers a credit period of within 45 days. The average accounts payable turnover days remained relatively stable at 45 days, 48 days and 49 days in FY2020, FY2021 and 6M2022, respectively, which were generally in line with the general credit period granted by suppliers.

 ****

***Amounts due to related parties***

 ****

Amounts due to related parties represented general and administrative expenses paid by the related parties on behalf of us, which are non-trade, unsecured, non-interest bearing and repayable on demand.

 **

***Other payables and accrued liabilities***

 **

Other payables and accrued liabilities mainly represented the provision for staff bonus and accrued administrative expenses. Our other payables and accrued liabilities remained relatively stable at approximately USD 0.4 million and USD 0.5 million as at December 31, 2020 and 2021, respectively. The balance decreased to approximately USD 0.1 million as at June 30, 2022 as the staff bonus provided for in FY2021 were settled in 6M2022.

 ****

**Commitments and Contractual Obligations**

**(1) Pledged collateral for bank loans**

As of December 31, 2020 and 2021 and June 30, 2022, the Company pledged its fixed deposit of approximately USD 0.6 million, USD 0.8 million and USD 2.9 million for loans and trade financing secured from banks. These loans are secured by (i) guarantee issued by Hong Kong Mortgage Corporation Limited, (ii) personal guarantee of the director of the Company, and (iii) certain properties owned by the director of the Company.

**(2) Lease liabilities**

The following table sets out the breakdown of the aggregate annual lease liabilities as of June 30, 2022:

---

| | |
|:---|:---|
|  | **As of <br> June 30,<br> 2022**<br>**USD** |
| 2023 | 340369 |
| 2024 | 91651 |
| 2025 | 21138 |
| 2026 | 7047 |
| Total lease payments | $460205 |
| Less: imputed interest | (16598) |
| **Total operating lease liabilities, net of interest** | $**443607** |

---

Rent expense is recognized on a straight-line basis over the terms of the operating leases accordingly and the Company records the difference between cash rent payments and the recognition of rent expense as a deferred rent liability.

**Off-balance Sheet Commitments and Arrangements**

The Company has no off-balance sheet arrangements, including arrangements that would affect its liquidity, capital resources, market risk support, and credit risk support or other benefits.

**Industry**

**The Freight Forwarding Service Value Chain**

The value chain for the integrated freight forwarding industry includes upstream carriers, midstream freight forwarders, and downstream consigners. We operate as a midstream integrated freight forwarder, as an intermediary connecting the upstream carrier and the downstream consigners.

Upstream carriers serve to transport goods, which include airlines, ocean vessel companies, and ground transportation companies. Most of the time, carriers will directly contact and engage with midstream freight forwarders. Midstream freight forwarders' main task is to arrange for and manage shipments. In the midstream, freight forwarders serve as consigner at the origin and at the destination of the shipment throughout the entire logistics operation. Using air cargo as an example, prior to delivery, the freight forwarder will arrange flight bookings, cartage for crating and consolidation facility and delivery to airport at the origin for loading. The service continues when the cargo arrives at the cargo terminal of its destination where an agency or a partner of the freight forwarder will provide services including crate breakdown, storage, distribution and delivery to the consignee through warehousing and land freight transportation services providers. Freight forwarders book either the whole or part of the cargo space made available by carrier. A downstream consigner is a party that initiates the movement or transport of goods, such as trading companies, wholesalers, distributors and manufacturing companies. Consigners usually have no in-house means to complete shipments by themselves and entrust freight forwarders with the shipment and any other related services, such as customs clearance, storage, warehousing solutions, and door-to-door delivery to the designated intended consignee.

It is an industry norm for the freight forwarders to consolidate/co-load the shipments with other market players, by ride sharing of the freight transports which involve sharing space on the same transportation vehicle (e.g. ships or flight etc.) by one or more freight forwarders and splitting the fare of the trip. The freight forwarders are able to consolidate truckload (TL) with less-than truckload (LTL) shipments or multiple LTL shipments or TLs to make co-loaded shipments. The benefits of co-loading include the splitting of the freight charges of the trip among other freight forwarders and thus saving cost.

**Integrated Air Freight Forwarding Industry Market Overview**

The dominant majority of our revenue is derived from our integrated air freight forwarding services. Typical products transported via air freight forwarding services include high-value and time-sensitive products such as high-tech products, electronics, jewelry, pharmaceuticals, and fresh foods. According to the CIC Report, as of 2020, the total market size for the global freight forwarding industry measured in terms of overall logistics expenses was around USD 9.1 trillion. The Asia Pacific region occupied the largest proportion of the global market for logistics in 2020 (USD 3.9 trillion in 2020, accounting for approximately 42.9% of total logistics expenses worldwide), followed by North America (22.3%) and Europe (18.2%).

The total revenue of the freight forwarding industry has been on the rise. According to CIC, the total revenue for the air freight forwarding industry expanded from USD 73.7 billion to USD 133.6 billion between 2016 and 2020, representing a Compound Annual Growth Rate (CAGR) of 16.0%. It is expected that this number will continue rising, reaching USD 212.8 billion by 2025, representing a CAGR of 9.8%. The robust growth expansion of air freight forwarding service between 2016 and 2020 is mainly attributable to the rapid growth in international air freight volumes as a result of the recovery of the global economy. From 2020 to 2025, despite the ongoing COVID-19 pandemic, the total revenue for the integrated air freight forwarding industry is anticipated to follow a trend towards continued growth, which reflects the following factors: 1) freight rates have increased significantly due to a severe shortage of cargo capacity resulting from the COVID-19 pandemic; 2) a projected rising demand for cross-border e-commerce worldwide; and 3) fiscal and monetary policy support from the governments of major economies that is expected to help bolster economic growth which will therefore have a positive impact on international trade activity.

**Integrated Air Freight Forwarding Industry in Hong Kong**

Located at the center of Asia-Pacific region, Hong Kong has a long history as a logistics hub in Asia. Hong Kong has the geographic advantage of being in the center of global cargo and transport routes via land, sea, and air, making it an unparalleled supply chain destination. Hong Kong is also well regarded as a gateway between Mainland China and oversea countries, approximately 46.6% of Hong Kong's exports were of Mainland China origin and approximately 45.1% of were destined for Mainland China in 2020. Hong Kong has been benefiting from its status of a free port, which pursues a free trade policy and does not maintain barriers on trade nor charge tariff on import or export of goods, and its mature logistics value-chain.

According to a survey conducted by the World Economic Forum in 2019, Hong Kong International Airport is one of the two most efficient airports in the world based on factors such as flight frequencies, punctualities and handling charges. It was ranked the world's busiest cargo airport by Airports Council International in 2021, occupying the top spot for ten consecutive years. According to the CIC, cargo throughput of Hong Kong International Airport (HKIA) in 2021 rose by 12.5% year on year to 5.0 million tons, exceeding the 4.8 million tons recorded in 2019, the year before the outbreak of COVID-19. The number of cargo flights surged to an all-time record of 82,935 in 2021, a year-on-year increase of 19.8%. Monthly cargo throughput also reached a new monthly high in November 2021. The strong momentum of peak cargo demand in November 2021 carried into December despite flight reductions due to the emergence of the Omicron variant. In December 2021, HKIA handled 477,000 tons of cargo, representing year-on-year growth of 8.6%. The growth in cargo throughput in December was mainly attributed to 18% year-on-year growth in trans-shipments.

Between 2016 and 2020, the revenue of Hong Kong's integrated air freight forwarding industry grew from HKD 40.9 billion (USD 5.2 billion) to HKD 60.9 billion (USD 7.8 billion), representing a CAGR of 10.5%. Such growth was mainly driven by: 1) the increasing air cargo re-export volume of products manufactured in Mainland China such as electrical machinery and parts, telecommunications, sound equipment, office machines and automatic data processing machines, etc.; 2) rising import and export activity stimulated by the development of cross-border e-commerce industry globally, especially regarding the products manufactured in Mainland China mainly exported to other countries through Hong Kong by air.

Due to the COVID-19 pandemic, most airlines have suspended partly or all services, especially services for passenger flights, which subsequently caused the disruption in air transportation, short supply of cargo space and the surge in the price of air cargo space. However, the growth in price of the integrated air freight forwarding industry has significantly driven the size and revenue of the integrated air freight forwarding industry in Hong Kong. Despite the impacts of the COVID-19 pandemic, the total revenue of the Hong Kong air freight forwarding industry increased from HKD 43.6 billion (USD 5.6 billion) in 2019 to HKD 60.9 billion (USD 7.8 billion) in 2020; and the total revenue of Hong Kong air freight forwarding industry is expected to reach approximately HKD 95.9 billion (USD 12.3 billion) in 2025, representing a CAGR of around 9.5% between 2020 and 2025.

<sup>2</sup> https://www.travelnewsasia.com/news22/271-HongKongAirport.shtml

**Market size of integrated air freight forwarding industry in terms of total revenue, Hong Kong, 2016-2025E**

![](image_004.jpg)

Sources: Census and Statistic Department of the Hong Kong Government, China Insights Consultancy.

***Integrated Air Freight Forwarding Industry in the United States***

One of our growth strategies is the expansion to the United State market. According to the CIC Report, due to the recovery of global economy and the prosperity of cross-border e-commerce, the total revenue of the integrated air freight forwarding industry in the U.S. increased from USD 8.2 billion in 2016 to USD 17.0 billion in 2020.

The U.S. is the world's economic and technological center with a strong export capacity for a wide range of high-tech products, such as semiconductor chips and precision instruments. Meanwhile, consumer goods including electronic products are the main types of products are exported from the United States. According to the CIC Report, between 2016 and 2020, total revenue of the integrated air freight forwarding industry in the U.S. grew from USD 8.2 billion to USD 17.0 billion, representing a CAGR of 20.0%. The growth of the integrated air freight forwarding market size in the U.S. is mainly attributable to the following factors: 1) the recovery of global economy; 2) development of cross-border e-commerce; 3) the increasing volume of exports, especially considering the increasing demand for high-tech products, with the ongoing trend towards the reshoring of manufacturing. From 2020 to 2025, it is expected that the market size of integrated air freight forwarding services will continuously increase to USD 30.4 billion, representing a CAGR of 12.3%.

Driven by the increasing price of integrated air freight forwarding, total revenue has increased significantly, while the service cost was related to the volume of cargos, leading an increase in gross profit margin from approximately 5% in 2016 to approximately 15% in 2020.

**Market size of integrated air freight forwarding industry in terms of total revenue, the U.S., 2016-2025E**

![](image_005.jpg)

Sources: U.S. Bureau of Transportation Statistics (BTS); China Insights Consultancy.

**Market Drivers**

An increase in the international trade volume by air and continuous improvement in airport infrastructure in Hong Kong and the United States.

The air freight forwarding industry is highly dependent on the volume of cargo transported. As globalization deepens and cooperation between countries is enhanced, freight tends to travel increasingly longer distances. Rising disposable income, increasing demand for the timeliness, as well as the continued increase in the number of airports globally open to air cargo transportation have contributed to growing volumes of air freight cargo.

Hong Kong International Airport, as the prominent trans-shipment hub of Asia and Greater China, is currently under expansion. The third runway of Hong Kong International Airport was completed and plan to open in 2022, which will largely boost the capacity of cargo throughput. Combined with the opening of the Hong Kong-Zhuhai-Macao Bridge, it will further drive the development of the air freight forwarding industry in Hong Kong and enhance the trans-shipment hub status of Hong Kong International Airport. Also, according to the Construction and Mainland Affairs Bureau of Hong Kong Government, land has been reserved in the South Cargo Precinct of the Hong Kong International Airport to support the growth in trans-shipment, cross-boundary e-commerce and high value-added air cargo business, and facilitate the development of air cargo industry. The expansion works will increase the handling capacity of the express air cargo terminal by 50% in 2022. According to Hong Kong's 2020-2021 budget plan, the Hong Kong government set aside HKD 5.0 billion (USD 0.6 billion) for redevelopment of the air mail center at the Hong Kong International Airport, which aims to be completed as soon as 2024-2025. Additionally, the new plan also implements a US$44 million subsidy pilot program, allowing third-party logistics providers to receive subsidies, thus further driving the development of air freight forwarding industry in Hong Kong in the future.

Furthermore, the United States has a well-developed air infrastructure system nationwide. Five of the top 10 airports in terms of cargo throughput in 2020 were located in the U.S. Meanwhile, the U.S. had the largest-sized freight fleets in the world so far. The U.S. government has launched a series of programs under the Airport and Airway Improvement Act of 1982 to provide subsidies for improving airport infrastructure and supporting airline companies to purchase more cargo aircraft.

Global Economic Recovery and the Increase of Global Trade Volume Propel the Demand for Global Freight Forwarding Services

Due to the impacts of the China-U.S. Trade War and the COVID-19 pandemic, the global trade volume underwent a decrease between 2019 and 2020. However, given the effectiveness of pandemic control worldwide and the strong economic stimulus provided by the U.S. fiscal policy, there has been a significant expansion in overall international trade. According to CIC Report, the global trading value is expected to recover back to the level seen prior to the pandemic and continuously grow by 2025.

The tariff imposed during the China-U.S. trade war has limited effect on the export of the e-commerce goods from the PRC to the U.S. and does not materially affect the cost for downstream U.S. e-commerce retailers as the U.S. e-commerce retailers may slightly increase the selling price of the products to their customers. Given that most merchandises of international trade, especially the goods trading between China and the U.S., are serviced by the freight forwarders, the ongoing growth in worldwide trade is anticipated to continue propelling the growth of the integrated air freight forwarding industry.

*Growth of the domestic and cross-border e-commerce market globally, especially in Mainland China, Hong Kong and the United States, stimulates the demand for integrated air freight forwarding services*

In addition to the expansion of distribution networks through e-commerce platforms like Amazon and Alibaba, there have been increasing number of market players in the retail industry utilize online platforms in their sales and marketing strategy. The e-commerce platform is projected to continue growing and become one of the major global sales channels. While most online shopping is done domestically, cross-border e-commerce is growing rapidly as consumers seek out a wider selection of products and better prices. Millennials and Generation Z have also arisen to become the new growth engine for the sale of high-tech and luxury products. Their comfort with the internet has resulted in luxury brands increasingly embracing the digitalization of their retail operations.

According to CIC, online retail sales as a share of total retail sales escalated by 3% points in 2020 (from 16% in 2019 to 19% in 2020) in several countries. Between 2016 and 2020, the number of cross-border e-commerce shoppers worldwide increased from approximately 200 million to approximately 450 million, representing a CAGR of 22.5%. Although COVID-19 has caused an unprecedented negative impact on the worldwide economy in 2020, it has favored and speeded up the further growth of the e-commerce sector because lockdowns, quarantines and social distancing boost demand for online shopping and express delivery services. Moreover, this number is anticipated to increase even further to reach approximately 843 million by 2025. This rapidly growing customer base will therefore provide a solid foundation for cross-border e-commerce transactions in the years ahead. Given the nature of online retail merchandise, the transportation of online consumer goods is time sensitive, which is mostly completed by airways. The growing online shopping and cross-border e-commerce are expected to stimulate the demand for integrated air freight forwarding services.

According to the CIC, Asia Pacific's e-commerce sales are expected to reach USD 2 trillion by 2025. China dominates the Asia's increased ecommerce landscape for more than half of all e-commerce in the region. Driven by strong domestic consumption in China and the growing access to international brands to meet this demand, China has become a key growth engine of the global cross-border e-commerce market. China also has long served as a major manufacturing center for global supply chain for its export to satisfy overseas consumer market. According to CIC, the transaction value of cross-border e-commerce in China has continued to rise from 2016 to 2020, from RMB6.7 trillion to RMB12.5 trillion, representing a CAGR of 16.9%. It is expected the transaction value of cross-border e-commerce in China will reach RMB 23.4 trillion by year 2025.

<u>Hong Kong</u>

Hong Kong, as a regional hub for import and export of China, China's fast growth and strong performance of cross-border e-commerce industry are expected to further propel the demand for Hong Kong's global air freight forwarding services. Benefiting from the free trade policy, Hong Kong is a free port, which means no tariff is charged on import or export of goods. Hong Kong is also transit center of cross-border e-commerce in Asia. Hong Kong connects China and other Southeast Asia countries. More global online stores, especially the merchants in Mainland China, establish their distribution centers and purchase centers in Hong Kong. According to CIC, the online retail sales value in Hong Kong increased from HKD 17.3 billion (USD 2.2 billion) in 2016 to HKD 49.5 billion (USD 6.3 billion) in 2020, representing a CAGR of 30.1%. It is expected to sustainably expand and reach HKD 91.0 billion (USD 11.7 billion) by 2025. The Hong Kong integrated air freight industry for high-end fashion products is expected to increase to approximately HKD 7.5 billion (USD 1.0 billion) in 2024, for an average CAGR of around 1.6% between 2019 and 2024. The air freight forwarding industry in Hong Kong is expected to sustain growth with the rising online retail sales value in Hong Kong attributable to the development of e-commerce, and increasing transaction value of cross-border e-commerce in Mainland China.

<u>United States</u>

The integrated air freight forwarding industry in the U.S. has driven by the development of cross-border e-commerce, which satisfies global consumers' demand for purchasing goods made in the U.S., especially the high-tech products. The U.S. has many high-tech industries, such as semiconductor chips and medical devices. High-tech products have high requirements on the transportation environment and timeliness, and thus the high-tech products need to be shipped by air transportation. The export value of high-tech products in the U.S. increased from USD 92.9 billion in 2016 to USD 108.3 billion in 2020, representing the growing demand for products manufactured in the U.S. which stimulated the industry of integrated air freight forwarding. Due to the fact that integrated air freight forwarding is the most convenient and effective way to transport these goods of e-commerce trades, the market size of integrated air freight forwarding industry increases along with the growth of export volume of e-commerce in the United States.

Import to the U.S. through cross-border e-commerce is also driven by strong domestic consumption in the U.S. and the growing access to international brands by U.S. consumers, the U.S. consumer market has become a key growth engine of the global market. In particular, cross-border e-commerce enables closer ties between the U.S. and countries across the world. Following the prosperity of cross-border e-commerce, as the key component of multimodal transportation, the demand for air freight transportation will also increase.

Hong Kong's Free Trade Agreements (FTA) with Eight Countries and Hong Kong's significant merchandise trade with ASEAN countries.

The FTAs between Hong Kong and Mainland China and a number of other foreign countries has strengthened the trade relationship in goods and services and facilitated the long-term trade development between Hong Kong and other economies. The growing trade volume has laid a solid foundation for the development of the freight forwarding industry in Hong Kong. In March 2019, Hong Kong and Australia signed a new Free Trade Agreement (HKAFTA) and a complementary Investment Agreement (IA). Furthermore, as the FTAs with Laos, Myanmar, Singapore, Thailand and Vietnam enter into force in June 2019, Malaysia in October 2019, the Philippines in May 2020, and Indonesia in July 2020. These FTAs have been extending Hong Kong's FTA network to cover all major economies in Southeast Asia, and enhances trade flows between Hong Kong and ASEAN, and thus, further driving the development of the integrated air freight forwarding industry in Hong Kong.

The ASEAN bloc is Hong Kong's 2nd largest merchandise trade partner. The total merchandise trade between Hong Kong and ASEAN amounted to HKD1,033.9 billion (USD 132.6 billion) in 2020, representing 12.6% of Hong Kong's global merchandise trade that year, while registering an annual average growth rate of 5.5% per annum between 2016 and 2020. Southeast Asia and South Asia are playing increasingly vital roles in the integrated air freight forwarding industry. Export trade activity is expected to increase in these regions as they are establishing to become another global manufacturing hub for fashion products. The consumption power of consumers living in these regions have increased gradually over the years, showing stronger demands for high-end fashion products. Hong Kong's integrated air freight forwarding industry is likely to benefit from this development for its advantageous location as well as its high level of sophistication and maturity as a major logistics hub.

**Market Challenges**

*The Trade Frictions and Global Political and Economic Instability*

Due to the volatile macro trends around the world, freight forwarders are facing many political and uncertainties. The demand for the integrated air freight forwarding industry in the U.S. and Hong Kong is highly correlated with the global merchandise trade, which is affected by the global economy. The ongoing U.S.-China trade dispute since 2019 brings pressure to global trading activities and causes uncertainties for the global economy and the global trade landscape. Under the complex and volatile situation of the ongoing COVID-19 pandemic, the proliferation of non-tariff measures, a growing dependence on certain commodities, the uneven development of the digital economy, rising geopolitical tensions, a looming climate crisis and the ongoing WTO reform disputes, international trade has encountered a variety of challenges.

The imports and exports of impacted merchandise are expected to decrease between China and the U.S., attributable to additional tariffs imposed by both the Chinese government and the U.S. government that have increased the procurement costs of impacted merchandise. The reconfiguration of supply chains for impacted merchandise to avoid additional tariffs by transferring manufacturing bases from China to other developing countries such as Vietnam, Cambodia, etc., which may permanently shift trade flows. Meanwhile, the China-U.S. trade dispute is expected to increase the volume of shipments from China to Europe in the short term. However, the uncertainties arising from the China-U.S. trade dispute and the disruption of the global supply chain will negatively impact the outlook for the global economy and hinder the growth of the freight forwarding industry in the years ahead.

Despite the ongoing disputes over the two nations, material change of the relations between the U.S. and the PRC is not expected in the short run, given their mutual reliance in trading activities and international affairs. Moreover, most of the commodities affected under the tariffs are industrial products and industrial raw materials. The tariff has limited effect on the export of the e-commerce goods from the PRC to the U.S. and does not materially affect the cost for downstream U.S. e-commerce retailers as the U.S. e-commerce retailers may slightly increase the selling price of the products to their customers. As most of the e-commerce products imported from the PRC are targeting the mass market, it is expected that the slight increase of the price will not materially affect the sales of said products. As a result, by cost transfer to downstream customers, U.S. and China e-commerce will not be significantly affected by the trade war and increased tariff.

Decreasing Profit Margin due to the Fluctuation of Fuel Price and Currency Exchange

As the largest part of the total cost in the integrated air freight forwarding industry, the freight price is determined by fuel price. Because of the limited stock of crude oil resources but increasing demand for fuel, the price of oil is expected to continuously rise in the future. It may decrease the profit margin of freight forwarders, due to the growth of freight costs. The profit margin of freight forwarders will be less with the unfavorable fluctuation on currency exchange. Unfavorable fluctuation in the currency exchange rate is likely to cause the growth of cost and decrease of revenue. Thus, the profit margin of freight forwarders will be affected.

Insufficient Labor Forces

The integrated air freight forwarding industry is a labor-intensive industry, and therefore labor shortages represent a major threat to the integrated air freight forwarding industry. The integrated air freight forwarders need specialized personnel to build efficient and reliable operational systems to consolidate cargo for air transportation services. According to the U.S. Bureau of Economic Analysis (BEA) and the CIC Report, in the United States, the number of workers engaged in the provision of air transportation, support activities for air transportation, freight transportation management and related industries decreased from 889,000 in 2016 to 871,000 in 2020, representing a negative CAGR of 0.5%. According to the Hong Kong Census and Statistics Department (HKC&SD), the average annual salary of labor force in freight forwarding industry in Hong Kong rose from approximately HKD 316,400.0 (USD 40,564.1) in 2016 to approximately HKD 380,300.0 (USD 48,756.4) in 2020, representing a CAGR of 4.7%. Under such condition, market participants in the freight forwarding industry of Hong Kong are confronted with an increase in labor costs, which tends to constrain the sustainable development of the freight forwarding industry.

Increasing Regional Competition and the industry consolidation and integration

The growing regional economic integration stimulates the global freight forwarders to enter the integrated freight forwarding market in Hong Kong, which have capital strength and a large customer base. They will eventually produce an impact on the local players in Hong Kong's freight forwarding service market. Furthermore, the large transportation and logistics companies usually cooperate with freight forwarders to provide services to their customers. However, they are now pursuing a one-stop service strategy for the customers. In order to achieve that, they are acquiring small freight forwarders to achieve economies of scale, as well as to own the customer relationships.

**Competition Landscape**

The freight forwarding industry is highly fragmented and has low barriers to entry compared to other industries.<sup>5</sup> We compete with freight forwarders of different sizes, ranging from global leading participants having their own global network of offices and transportation fleet, to small- and medium-scaled freight forwarders like ourselves. We believe that our competitive strengths, details of which set out in the paragraph headed "Competitive Advantage" in this section, distinguish us from our competitors.

According to the CIC Report, in 2020, the integrated air freight forwarding market in Hong Kong has over 1,000 market participants. There are two tiers of freight forwarding companies in Hong Kong. Tier 1 players are the leading participants in the industry, with approximately 20 players, accounting for approximately 45.0% of total integrated air freight forwarding market in terms of revenue in Hong Kong in 2020. They are mainly multinational enterprises with global network of offices and own transportation fleets and have long-term relationships with international large carriers.

Apart from tier 1 players, tier 2 players are small- and medium-scale Hong Kong-based local enterprises like ourselves. These enterprises usually have a turnover of below HKD 1.5 billion (USD 0.2 billion) per year, but with deeper understanding of customers' business nature and have long-term relationships with customers. There were over 1,000 tier 2 players in Hong Kong in 2020. The top 10 tier 2 market participants accounting for approximately 18.2% of total revenue of tier 2 air freight forwarders in 2020. Our group ranked sixth among all tier 2 air freight forwarding companies with a market share of approximately 1.8% in 2020 in Hong Kong.

<sup>5</sup> Id.

**Impact of COVID on Freight Forwarding Market**

Impact on Global Trade

COVID-19 pandemic in 2020 was an unprecedented disruption to world trade, as production and consumption levels across the world were scaled down due to measures to reduce the spread of the disease. As a result, global trade fell by 8.9% at the height of the pandemic in 2020, the steepest drop since the global financial crisis in 2008/2009.<sup>6</sup>

Despite the impacts of the ongoing COVID-19 pandemic, the world economy has generally followed the path towards a sustained recovery. According to the United Nations UNCTAD Global Trade Update (November 2021), global economy grew by 6.0% in 2021 and projected to grow 4.9% 2022, respectively, while Mainland China's economy is meanwhile projected to grow by 8.1% and 5.7%. The global trade in goods was at a record in Q3 2021, reaching USD 5.6 trillion. 2021 has turned out to be a strong year for global trade, demonstrating the market's ability to bounce back from the downturn suffered from the pandemic in 2020. Overall, the total value of global trade has increased by about USD 5.2 trillion relative to 2020, and about USD 2.8 trillion relative to 2019, which represents an increase of 23% and 11%, respectively. Global trade in goods is set to reach an all-time high of USD 22 trillion in 2021.

Impact on Air Freight Forwarding Market

The COVID-19 pandemic leads to the growth and opportunities in the air freight forwarding industry, together with the disruptions and challenges to the freight forwarding industry in managing numerous bottlenecks caused by social distancing and labor disruptions on top of lockdowns and the border closures that restricted the flow of goods. In summary, the impact of the COVID-19 pandemic on the integrated air freight forwarding services industry mainly comprises three aspects: 1) an exponential increase in freight prices; 2) strict COVID-19 prevention and control measures; 3) continued growth of air freight industry.

<u>An Exponential Increase in Freight Prices</u>

Due to the COVID-19 pandemic, most airlines have suspended partly or all services, especially services for international passenger flights, which account for about 50% of international cargo capacity. Such significant decrease in passenger flight movements led to short supply of air cargo space and increase in air freight price.

Furthermore, due to the huge increase in demand for COVID-19 prevention and control-related materials in 2020, almost all cargo planes in the world and many "passenger-to-cargo" planes were directed to China in order to transport materials. At the later stage in the pandemic, and due to the tightening of COVID-19 prevention and control measures, some cargo planes and most "passenger-to-cargo" planes encountered problems with prevention and control at airports. This in turn resulted in a renewed shortage of capacity and space, which in turn has caused a significant increase in international air freight rates. Between 2016 and 2020, the price of global integrated air freight forwarding increased from USD 0.36 per ton/km to USD 0.56 per ton/km. According to the CIC Report, the air cargo space price index increased from 100.9 in 2016 to 153.4 in 2020, and it is expected to reach 189.6 by 2025. The peak of air cargo space price index will reach by 2022 at 208.3. The decline between 2022 and 2025 is primarily due to the increase of air cargo volume driven by the recovery of the global economy, and the COVID-19 pandemic is expected to slow down after 2022.

The price increase is also attributable to the following factors:

● Shrink in labor supply for air freight forwarding industry due to the city lockdown and quarantine policies;

● Due to the strict customs clearance, inspection and quarantine policies on cross-border goods, the efficiency of integrated freight forwarding industry had been significantly slowed down, even leading to port congestion; and

● Growing demand for vaccination and sanitation supplies, such as vaccine and personal protective equipment, increased the transportation volume of air freight and promoted the global integrated freight forwarding industry.

<sup>6</sup> Dickinson, R., & Zemaityte, G. (2021, December 13). *How has Covid Affected Global Trade?* Retrieved January 4, 2022, from https://www.bankofengland.co.uk/bank-overground/2021/how-has-covid-affected-global-trade.

**Price of integrated air freight forwarding, Global, 2016-2025E**![](image_006.jpg)

Source: China Insights Consultancy

High freight prices are conducive to the profitability of the main freight forwarding services in the short term, but in the long term will cause an imbalance between supply and demand, which is not conducive to the healthy and stable development of the industry. In the situation with unbalanced supply-demand relationship for air cargo space, the air freight forwarders that have close and stable relationships with airlines have the opportunity to purchase corresponding amount of air cargo space, thus achieving greater growth of revenue.

<u>Continued Growth of Air Freight Industry</u>

Despite the impacts of the ongoing COVID-19 pandemic, 2021 represents a year of recovery for the air freight industry. For example, global freight traffic reported a growth of 9.1% in September 2021 (compared to the freight traffic in September 2019). New opportunities have also arisen in the air cargo industry as many businesses began shifting their preferred method of transport from ocean to air to avoid long delivery times and delays. Furthermore, growing consumption and pressure on businesses to restock inventory will continue to support air cargo growth.

<u>Strict COVID-19 Prevention and Control Measures</u>

The civil aviation system in Hong Kong requires that frontline staff for international cargo strictly implement closed-loop management as well as the risk-graded management of inbound cargo, according to the different risk levels set for cargo handling, transferring, sorting, storage and other activities. These measures are effective for COVID-19 prevention and control, but at the same time they also place higher requirements on the ground security capacity of the airport, including for instance: (1) increasing the utilization rate for frontline security personnel at the airport and increasing manpower utilization; (2) introducing the need for more ground security equipment; (3) increasing the burden on hardware facilities such as international general cargo warehouses, refrigerated and frozen warehouses, and rest areas for frontline staff; and (4) necessitating improvements to the airport loading and unloading turnover rate to enhance the overall security capacity. However, whether this increased investment into personnel and equipment can adequately meet long-term development needs is presently unknown.

**BUSINESS**

**Overview**

We are a freight forwarding service provider headquartered in Hong Kong with networks across the globe. We conduct our operations through our Operating Subsidiaries in Hong Kong, Profit Sail Int'l Express (H.K.) Limited and Business Great Global Supply Chain Limited.

Our Operating Subsidiaries provide air and ocean export and import freight forwarding services with optional ancillary logistics related services (such as cargo pick up, cargo handling at ports and local transportation) and warehousing-related services (such as repackaging, labelling, palletization, preparation of shipping documentation, arrangement of customs clearance and warehousing) to meet the requirement of our customers.

Our Operating Subsidiaries derive their revenue from air freight forwarding services and ocean freight forwarding services. For FY2020 and FY2021, PSIHK's total revenue amounted to approximately USD 71.0 million and USD 130.9 million, respectively. In 6M2022, taking into account the acquisition of BGG in March 2022, our Operating Subsidiaries' total revenue amounted to approximately USD 49.5 million. Most of the revenue is generated from the air freight forwarding services, which represented 94.6%, 94.4% and 92.9% of the total revenue during FY2020, FY2021 and 6M2022 respectively as compared to 3.7%, 5.1% and 7.1% generated by the ocean freight forwarding services.

Our Operating Subsidiaries' suppliers include airlines, freight forwarders and shipping liners for cargo space and other suppliers for logistics related services such as transportation and warehousing related services. Our Operating Subsidiaries procure cargo space directly from airlines and shipping liners as well as from other freight forwarders under different arrangements, including direct booking, block space arrangements, and flight charters. Through direct booking, the Operating Subsidiaries purchase cargo space from airlines, shipping liners and other freight forwarders without entering into any fixed-term agreements. The block space arrangements and aircraft charter arrangements would enable the Operating Subsidiaries to have a secured supply of cargo space to cater for the customers' needs.

Under our block space arrangements, we are generally committed to making payments to our suppliers' agreed volume of cargo space based on gross weight and number of airline's contours (the "Minimum Dead Freight Commitment"), regardless of whether the cargo space has been utilized in full or at all. In the event we are unable to satisfy such Minimum Dead Freight Commitment within the allocation, the shortfall weight/volume shall be charged based on the agreed upon rate. As we could generally fulfil the Minimum Dead Freight Commitment or were given grace periods by suppliers to fill up the shortfall in case the Minimum Dead Freight Commitment were not met, in FY2020, FY2021 and 6M2022, the impact of the Minimum Dead Freight Commitment on our cost of revenue for FY2020, FY2021 and 6M2022 is minimal. In the event that an operator cancels the flights or delays a flight, the operator shall not be held liable for any loss incurred by us. Generally, we will be responsible for applicable terminal service charge & other local/destination charges.

During FY2020, FY2021 and 6M2022, our Operating Subsidiaries served an aggregate of more than 500 customers, including freight forwarders and direct customers (i.e. customers that are not freight forwarders who purchase cargo space from the Operating Subsidiaries and directly ship their consignments, for example, manufacturers which directly ship their products to their customers through purchasing cargo space directly from the Operating Subsidiaries, or buyers of goods which arrange shipment by themselves). Our Operating Subsidiaries are capable of securing cargo space from their suppliers to reach a wide range of destinations, offering routes to over 90 countries. The revenue of the freight forwarding services is mainly derived from air freight export shipments to regions such as North America, Europe and Asia. The following table sets forth a breakdown of the revenue derived from export freight forwarding services by regions of destination for the years indicated:

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** | **For the six months ended**<br> **June 30,** | **For the six months ended**<br> **June 30,** | **For the six months ended**<br> **June 30,** | **For the six months ended**<br> **June 30,** |
|  | **2020** | **2020** | **2021** | **2021** | **2021** | **2021** | **2022** | **2022** |
|  | **USD** | | **USD** | | **USD** | | **USD** | |
|  | **(Restated)** | | **(Restated)** | | | | | |
| United States | 56317560 | 81.3% | 107668699 | 82.8% | 47693411 | 82.7% | 38764319 | 78.4% |
| France | 3152172 | 4.5% | 3906806 | 3.0% | 1694765 | 2.9% | 362637 | 0.7% |
| United Kingdom | 2361417 | 3.4% | 2670296 | 2.1% | 860889 | 1.5% | 2704912 | 5.5% |
| The Netherlands | 1978621 | 2.9% | 4578608 | 3.5% | 2112847 | 3.7% | 2260060 | 4.6% |
| Others *(Note)* | 5464852 | 7.9% | 11198573 | 8.6% | 5335251 | 9.2% | 5345228 | 10.8% |
| **Total export revenue** | **69274622** | **100%** | 130022982 | **100%** | **57697163** | **100%** | **49437156** | **100%** |

---

*Note: Others represent a number of countries including, among others, Belgium, Canada, Singapore, etc.*

The Operating Subsidiaries operate an asset-light, structurally flexible and scalable business model. The Operating Subsidiaries do not own or operate aircraft or vessels. Instead, the Operating Subsidiaries contract asset-intensive third-party carriers to ship freight on our behalf. This setup allows us to tailor our services to the customers' needs by choosing among the various transportation methods and providers available. In addition, by not owning substantial physical assets such as planes and ships, the base fixed cost and capital expenditure requirements are limited, which allows us to scale quickly. The Operating Subsidiaries derive revenues from charging a spread over the carrier's charge to us for transporting the shipment, in addition to charges for customs brokerage and other ancillary services that we provide. Due to larger volume of freight, and our control and ability to consolidate shipments, we are generally able to obtain lower rates per kilogram or container than the shipper would be able to procure by going directly to the carrier. Due to our experience in providing these services and our understanding of the global transportation network, we are able to provide our customers with highly effective and flexible solutions.

Investors in our Ordinary Shares should be aware that they are purchasing equity in PSI Group Holdings Ltd, the Cayman Islands holding company, instead of shares of the Operating Subsidiaries. Please refer to the information contained in and incorporated by reference under the heading "Risks Related to Our Corporate Structure" on page 20 of this prospectus.

**Corporate History and Structure** 

The following diagram illustrates our corporate structure, including our significant subsidiaries and consolidated affiliated entities, as of the date of this prospectus and after the initial public offering:

![](image_007.jpg)

We commenced operation in 1993 with the establishment of PSIHK, a company incorporated under the laws of Hong Kong on May 27, 1993. Immediately before the restructuring transaction, 99.2% of PSIHK was held between Kin Yin Alfred, KWONG and Yee Kit, CHAN with the remainder 0.8% held by two independent individuals at 0.4% each. BGG was established under the laws of Hong Kong on November 11, 2016, and was acquired by us in March 2022 during the restructuring transaction. Immediately before the restructuring transaction, BGG was 100 percent owned by Kin Yin Alfred, KWONG.

On March 11, 2022, PSI (BVI) Ltd and BGG (BVI) Ltd were incorporated under the laws of the British Virgin Islands. PSI (BVI) Ltd and BGG (BVI) Ltd are both wholly owned subsidiaries of the Company. PSI (BVI) Ltd holds 99.2% of PSIHK with the remainder 0.8% held by two independent individuals at 0.4% each. BGG (BVI) Ltd owns 100 percent of BGG.

On March 7, 2022, PSI Group Holdings Ltd, our current ultimate holding company, was incorporated under the laws of the Cayman Islands as part of the restructuring transaction in contemplation of this offering. In connection with its incorporation, in March 2022, we completed a share swap transaction and issued Ordinary Shares of PSI Group Holdings Ltd to certain of the then existing shareholders of PSIHK and BGG, based on their then respective equity interests held in PSIHK and BGG. PSIHK and BGG then became our 99.2% and wholly owned subsidiaries, respectively.

**Our Services**

As a freight forwarding service provider, we arrange the transportation of shipments, and source cargo space from our suppliers (airlines, shipping liners, and other freight forwarders) under different arrangements including direct booking, block space arrangements and flight charters and resells that space to our customers (from whom we receive and forward individual, unconsolidated shipments) at a lower price than they would be able to negotiate themselves for their individual shipments. Another objective is to secure capacity for our customers during times of high demand.

Generally, our services are divided into air freight forwarding services and ocean freight forwarding service:

**Air Freight Services**

The dominant majority of our revenue is derived from the provision of air freight forwarding services. It includes both import and export of goods and principally involves arranging shipment upon receipt of booking instructions from our customers, off-airport air cargo security screening, obtaining cargo space from cargo space suppliers (including airlines and other freight forwarders) and preparing the relevant documentations (such as customs clearance from origin of consignment). We also arrange ancillary logistics services to our air freight forwarding services (such as cargo pickup, cargo handling at ports and local transportation) and warehousing related services (such as repackaging, labelling, palletization, preparation of shipping documentation, arrangement of customs clearance and warehousing) to meet our customer's requirement. Our air freight forwarding services cover export shipments to over 90 countries.

Some of the air freight services we offer include:

● Domestic, deferred, express and charter services, which gives our customers the ability to choose from a variety of options based on price and delivery speed;

● Port to Port and Door to Door shipments, which gives our customers the option of separately managing post arrival services such as delivery or clearance;

● Combination with our ocean freight services;

● Air and transload shipping services, where arriving cargo is transferred from an airline container or pallet to trucks which will complete the delivery;

● Transport of sensitive, perishable and refrigerated goods.

We engage various independent service providers for the provision of logistics services at the origin of the consignment, including cargo pickup, cargo handling at ports, x-ray screening, and the local transportation. As to the warehousing related services, including repackaging, labelling, palletization, preparation of shipping documentation, arrangement of customs clearance and warehousing, we engage third party service providers to serve as the warehouse operator to conduct the warehousing related services in the Tsing Yi Warehouse, under the supervision of our operation team. In August 2022, we surrendered the lease of the Tsing Yi Warehouse so as to improve the financial flexibility by reducing fixed rental costs, and the warehousing and freight-related services are performed in the service provider's warehouse since then.

The Tsing Yi Warehouse was also a Regulated Air Cargo Screening Facility (the "RACSF"), a facility which is able to conduct air cargo screening facility at an off-airport location. The Hong Kong Civil Aviation Department (CAD), pursuant to the International Civil Aviation Organisation (the "ICAO") policy direction announced on September 1, 2016, requires the freight forwarders to gradually increase the screening percentage of known cargoes consigned by existing known consignors, which have not been validated by CAD to 100% in phases before the deadline imposed by ICAO (June 30, 2021). In light of this policy change, CAD has formulated the RACSF Scheme on October 30, 2018 to enable and regulate air cargo screening at off-airport locations, where interested industry operators such as freight forwarders and shared warehouse operators can conduct cargo screening operations in their off-airport premises by registering with the CAD to become a RACSF.

In response to the RACSF Scheme, we invested in and installed x-ray screening facilities in the Tsing Yi Warehouse; and registered as "Regulated Agent" under the Scheme, as a freight forwarder that is able to carry out the security controls of air cargo off-airport in our own premise, the Tsing Yi Warehouse, as approved by the CAD. For cost consideration, we engaged independent third party, Aviation Security Company Limited (AVSECO), as a screening service provider to provide qualified manpower (the security screeners) to perform cargo screening using our off-airport x-ray screening machines and facilities on site in the Tsing Yi Warehouse. In August 2022, the x-ray screening facilities were moved to our warehousing services provider's warehouse and the cargo screening service is performed there under the supervision of our operation team since then.

Our x-ray screening can handle bulk or palletized cargo screening, which facilitates the handling of large quantities of goods within tight schedules and minimize the chance of errors. The capability of providing off-airport air cargo security screening service enhances our efficiency and competitiveness within the freight forwarding industry. With the x-ray screening and related services being provided by us, we have further expanded the scope of our air freight forwarding services by providing off-airport air cargo security screening service to our customer, especially other freight forwarders who does not have in-house off-airport x-ray screening capabilities.

During the FY2020, FY2021 and 6M2022, we did not enter into long term written service agreements with these service providers and we did not experience any material non-performance incident or quality dispute with our service providers causing material disruption to our operation.

**Ocean Freight Services**

Our ocean freight forwarding services involve major steps similar to those in our air freight services. We procure ocean cargo space from shipping liners and ocean freight forwarders. We provide ocean freight consolidation, direct ocean forwarding, and order management services. We do not operate the vessels by which ocean transportation is provided. Same as our air freight forwarding services, we will arrange ancillary logistics and warehousing related services if required by our customer. During FY2020, FY2021 and 6M2022, the revenue from ocean freight forwarding services amounted to approximately USD 2.6 million, USD 6.7 million and USD 3.5 million, respectively, representing 3.7%, 5.1% and 7.1% of our total revenue, respectively.

**Business Model**

The following illustrates how we source cargo space from our suppliers (such as airlines, shipping liners or freight forwarders) and sell them to our customers (such as direct customers and freight forwarders):

![](image_008.jpg)

**Business Operation and Workflow**

**The Workflow of Freight Forwarding Services**

The following workflow illustrates the general operation process of our air freight and ocean freight export shipments:

![](image_009.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;(1) Providing
 quotation upon receiving the booking instructions

Our customers send us booking instructions containing details such as shipping method, destination, type, dimension, weight and quantity of consignment and expected date of arrival. Upon receipt, we will provide customers with quotations according to the rates lists (based on weight of goods) provided by our suppliers plus a certain margin in unit of tonne.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Making
 a booking with our supplier

If our customers accept the quotations, we would make bookings with our suppliers by lodging a standardized booking form containing details of our customer's booking. We will select our cargo space suppliers for each shipment by taking into account of various factors, such as rate, delivery schedule and availability of cargo space. We arrange cargo pickup from the customers if so requested.

&nbsp;&nbsp;&nbsp;&nbsp;(3) Off-airport
 air cargo security screening

Once the shipment arrives at our Tsing Yi Warehouse or our warehousing service provider's warehouse, the cargo consignment will undergo cargo acceptance procedures (including documentation and appearance check). Upon completion of acceptance check, the cargo consignment will be screened through our x-ray screening facility.

We obtain a security screening receipt (which serves as a document proof that the cargo has been screened) from AVSECO (being the RACSF Operator) if the consignment has been cleared by security screening. The screened cargo consignment will then be further processed and secured against unauthorized access before being loaded onto trucks.

&nbsp;&nbsp;&nbsp;&nbsp;(4) Consolidation/Co-Loading/Bulk

In general, we (i) consolidate cargoes from different customers at the designated warehouse in order to optimize utilization of cargo space (ii) co-load cargo with other freight forwarders, or (iii) handle the cargo in bulk. Consolidation is the process by which a number of consignments of goods of different weights, volumes and sizes are grouped or packed together in a unit load device for carriage in order to optimize utilization of cargo space on transportation vehicles (aircrafts or vessels). Co-loading refers to the sharing of space in a unit load device by one or more freight forwarders.

Pursuant to the block space arrangements and aircraft charter agreements, we are committed to paying the agreed cargo space irrespective of whether we could fully utilize the allotted space. In case our cargo space could not be filled up by our own direct shippers before a scheduled flight or vessel departs, we shall offer cargo space in excess to other freight forwarders in order to optimize the utilization of cargo space. On the other hand, in case other freight forwarders have empty space in their container, we may co-load with other freight forwarders and purchase their cargo space at a more competitive price, which allows us to reduce our cost of services. The benefits of co-loading include the splitting of the freight charges of the trip among other freight forwarders and thus saving costs. It is therefore common for the freight forwarders to co-load the shipments with other market players.

Palletization forms part of consolidation, whereby cargoes are bundled in a unit load device before they are loaded onto an aircraft. We engage contractor for palletizing cargoes at our Tsing Yi Warehouse or our warehousing service provider's warehouse. Our operation and warehousing team are responsible for monitoring the palletization at the warehouse. After being properly packaged with tamper-evident seals (or other means of protection against unlawful interference), the palletized air cargo consignments will be loaded onto trucks for transporting to the airport.

&nbsp;&nbsp;&nbsp;&nbsp;(5) Preparation
 of Shipping Documents: Issuance of master airway bill/master bill of lading and Invoice

After a booking is acknowledged by our suppliers, our operation teams will prepare master airway bill (for shipment by air) or master bill of lading (for shipment by ocean) and cargo manifest before the shipment is loaded on board. Our operation teams will also issue an invoice and, when necessary, a house airway bill or a house bill of lading to our customer on the date when shipment is loaded on board the departing aircraft or vessel.

&nbsp;&nbsp;&nbsp;&nbsp;(6) Pre-Alert

Our operation teams will send a full set of documents (including a copy of commercial invoice between shipper and consignee, packing list, master airway bill or master bill of lading and/or house airway bill or house bill of lading and cargo manifest) to the overseas freight forwarder agents or our customers for preparation of import customs clearance and cargo release to the consignee at respective destination of the shipments.

&nbsp;&nbsp;&nbsp;&nbsp;(7) Delivery

In consistent with the market practice, it is usually the primary responsibility of our customers to prepare proper documentation for the relevant customs declaration before the cargo is delivered to or exported out of Hong Kong. However, upon request by our customers, we may assist our customers in the preparation of relevant customs declaration on their behalf. For the foreign customs clearance, it is usually for the consignee itself to perform, but we may also engage overseas freight forwarder agents to perform the customs clearance upon request of our customers.

In any case, our customers bear the primary responsibility to provide the purchase orders, commercial invoices, airway bills or bills of lading as supporting documents for the contents of the cargoes. For port-to-port shipment, upon arrival at the port of destination, our customer will arrange cargo pick up on their own. For door-to-door shipment, we will arrange transportation services for our customer through our overseas freight forwarder agents.

**Procurement of Cargo Space**

We procure cargo space directly from airlines, shipping liners or other freight forwarders suppliers under different arrangements, including (i) direct booking; (ii) block space arrangements; and (iii) aircraft charter arrangements.

During the FY2020, FY2021 and 6M2022 and up to the date of this prospectus, the routes of flights under our block space and aircraft charter arrangement mainly included the outbound flights from Hong Kong to North America and Southeast Asia. We believe that the abovementioned arrangements for the procurement of cargo space would enable us to have a secured supply of cargo space to cater our customers' needs. During the FY2020, FY2021 and 6M2022 and up to the date of this prospectus, we did not breach our block space agreements and aircraft charter agreements with our suppliers, including terms relating to the commitment of paying agreed cargo space in any material aspect.

&nbsp;&nbsp;&nbsp;&nbsp;(i) Direct
 booking

We purchase cargo space through direct booking from airlines, shipping liners and other freight forwarders without entering into any fixed-term agreements. Charges payable to airlines and other freight forwarders generally comprise freight charges, terminal handling charges, fuel surcharges, security charges and other miscellaneous items. For air cargo space sold to us, our suppliers typically charge us the chargeable weight of the cargo at prevailing market price; while for ocean cargo space sold to us, our suppliers typically charge the fixed price of a unit load device.

&nbsp;&nbsp;&nbsp;&nbsp;(ii) Block
 space arrangement

Block space arrangements refer to a fixed term agreement for continuous reservation of cargo space with airlines for regular routing flights, while aircraft charter arrangements refer to procurement of cargo space with airlines for specific unscheduled flights. The procurement of cargo space under the block space arrangements and aircraft charter arrangements would enable us to have a secured supply of cargo space to cater for our customers' needs.

We generally adopted a prudent approach in entering into block space agreements. We would enter into the block space arrangement based on our estimation on the customers' demand on the cargo space to secure cargo space at an earlier stage. The block space agreements we have entered into allow us to procure a committed amount of cargo space from our suppliers for a particular period of time at pre-agreed price.

Pursuant to the block space agreements, we are typically committed to making payments to our suppliers' agreed volume of cargo space based on gross weight and the number of airline's contours (the "Minimum Dead Freight Commitment"), regardless of whether the cargo space has been utilized in full or at all. In the event we are unable to satisfy such Minimum Dead Freight Commitment within the allocation, the shortfall weight/volume shall be charged based on the agreed upon rate. As we could generally fulfil the Minimum Dead Freight Commitment or were given grace periods by suppliers to fill up the shortfall in case the Minimum Dead Freight Commitment were not met, in FY2020, FY2021 and 6M2022, the impact of the Minimum Dead Freight Commitment on our cost of revenue is minimal.

The terms of each block space agreement entered with the suppliers may vary, but the salient terms of a typical block space agreement are shown below:

---

| | |
|:---|:---|
| Duration: | Normally ranging from months to not more than one year. |
| Tonnage and rates: | An agreed level of cargo space (in terms of tonnage and/or space allocation) for each month to certain outbound routes or for certain flight schedules at pre-determined prices. |
| Liability: | If the allotted space under the Minimum Dead Freight Commitment is not fully utilized, we are still responsible to pay for: (i) freight charges (including other surcharges such as fuel surcharge and security surcharge) based on the agreed level of cargo space; or (ii) cancellation fee (in addition to other surcharges such as fuel surcharge), based on the agreed level of cargo space. |
| Deposit: | Some suppliers may require us to make a certain amount of deposit before the flight departure date. |

---

From time to time, we would evaluate whether the pre-determined prices under the block space arrangement are more competitive than direct booking from our suppliers. If the pre-determined prices under the previous block space arrangement are found to be higher than the then freight charges through direct booking, we would not renew the block space arrangement with the suppliers or we may re-negotiate for a more competitive price.

&nbsp;&nbsp;&nbsp;&nbsp;(iii) Aircraft
 charter arrangement

In contrast to regular routing flights which may require multiple connections and layovers, charter flights are characterized by its one-off nature and flexibility in terms of scheduling, routing and ports selection. A charterer(s) may rent a full charter by itself or partial charter through a consortium and decide on the departure/arrival time and destinations. Under aircraft charter arrangements, we purchase cargo space for a charter for a specified flight schedule and route at a charter price. The procurement of cargo space under aircraft charter arrangement generally contains the following salient terms:

---

| | |
|:---|:---|
| Charter specification: | &nbsp;&nbsp;Routing, flight schedule, type or configuration of the aircraft, loading capacity/committed tonnage, charter price per chartered flight.<br>|
| Payment terms and deposit: | &nbsp;&nbsp;The charter price shall be settled in full prior to the chartered flight departure date.<br>|
| Cancellation fee: | &nbsp;&nbsp;Normally, 50% or 100% of the charter price (depending on the number of days between the cancellation date and the chartered flight departure date)<br>|

---

For FY2020, FY2021 and 6M2022, the routes of flights under our block space and aircraft charter arrangement mainly included the outbound flights from Hong Kong to North America and Southeast Asia.

**Sales and Marketing**

We have maintained close and stable business relationships with our existing customers. Our consistent business development effort, combined with the quality and reputation of our services will help us attract new customers.

Our sales team has been actively engaging prospective customers and managing existing customers, by leveraging our existing global networks and connections and local partnership which we have been cultivating since 1993. By words to mouth, our existing customer often refer new customers to us. Our Operating Subsidiaries are active members/user of Global Logistics Associates (GLA), JCtrans Network and WCAworld, three of the world's largest network of independent freight forwarders; as their member/users, our name will be published in their journals and catalogues and be visible to potential customers. We believe that by being part of such renowned network of freight forwarders and other industry participants, we are able to reach out to an extensive network of suppliers and customers, thereby potentially diversifying and enhancing our supplier and customer base. We also actively participate in various trade fairs and exhibitions such as Asian Logistics, Maritime and Aviation Conference to efficiently promote its services to customers.

**Pricing Strategy**

We take into account the following factors in determining our final freight rates we charge our customers:

● market supply of and demand in the cargo space;

● shipment figure (weight and density of cargo);

● business relationship with the customer;

● freight charges (including purchase cost for cargo space and the surcharge such as terminal charges and fuel charges);

● rates offered by our competitors;

● the possibility of consolidation of cargo space or co-loading;

● seasonality; and

● any ancillary logistics services required.

**Customer Services**

Our customer service team handles general enquiries, complaints and feedback from customers. Our Directors confirmed that during the FY2020, FY2021 and 6M2022 and up to the date of this prospectus, we did not receive any material complaint or claim from our customers in relation to our services.

**Seasonality**

Our peak season is generally from October to December, which is driven by festive events and discount promotions such as Thanksgiving, Christmas and New Year's Eve. Moreover, we recorded relatively lower volume of shipment and thus relatively lower revenue during Lunar New Year (normally in January or February) owing to fewer business activities of manufacturers and shippers in Mainland China in Lunar New Year, resulting in a decrease in the demand of freight forwarding services. Accordingly, comparison of sales and operating results from different periods in any given financial year may not be relied upon as indicators of our performance. It is widely understood in the industry that these seasonal trends are influenced by a number of factors, including weather patterns, national holidays, economic conditions, consumer demand, major product launches, as well as a number of other market forces. Since many of these forces are unforeseen there is no way for us to provide assurances that these seasonal trends will continue.

**Our Employees**

As of December 31, 2020, 2021 and 2022, our Operating Subsidiaries had a total of 30, 35 and 37 full-time employees, respectively:

---

| | | | |
|:---|:---|:---|:---|
| **Department** | **As of<br> December 31, <br> 2020** | **As of<br> December 31, <br> 2021** | **As of**<br> **December 31,**<br> **2022** |
| Accounting | 4 | 5 | 6 |
| Air Freight Operations | 13 | 14 | 13 |
| Customer Services | 2 | 2 | 2 |
| E-commerce | 1 |  |  |
| HR & Admin | 4 | 5 | 5 |
| Management | 1 | 4 | 5 |
| Sales & Marketing | 2 | 2 | 3 |
| Sea Freight Operation | 3 | 3 | 3 |
| **Total** | 30 | 35 | 37 |

---

We believe that we offer our employees competitive compensation packages and a merit-based work environment that encourages initiative, and as a result, we have generally been able to attract and retain qualified personnel and maintain a stable core management team.

Our management considers our employees as key assets which play a pivotal role in our continuous growth. We believe that we maintain a good working relationship with our employees. During the FY2020, FY2021 and 6M2022 and up to the date of this prospectus, we have not experienced any major labor disputes, nor currently involves with any major labor dispute or claim against us.

**Our Suppliers**

Our suppliers mainly include (i) airlines, shipping liners and other freight forwarders for the supply of cargo space; and (ii) other ancillary services suppliers for logistics related services, warehousing services, local and overseas transportation services, and RASCF screening services.

For FY2020, FY2021 and 6M2022, our cost of revenue attributable to our largest supplier amounted to approximately USD 8.2 million, USD 17.3 million and USD 6.2 million, respectively, representing approximately 12.8%, 15.4% and 13.6% of our total cost of revenue of the corresponding period. The top five suppliers of the FY2020, FY2021 and 6M2022 accounted for approximately 48.5%, 52.2% and 44.3% of the total cost of revenue, respectively.

We select our suppliers based on the information of booking instructions from our customers (including destination, weight and quantity of consignment and expected date of arrival), the market supply of cargo space, quotations from the suppliers and our business relationships with the suppliers. There are many alternative suppliers available which are specialized in different destinations of export shipments in the market which can supply cargo space at comparable market prices, and thus, we will not have any difficulty in purchasing cargo space from alternative suppliers.

**Other ancillary services providers**

If required by our customers, we will arrange ancillary logistics services (such as cargo pickup, cargo handling, cargo handling at ports and local transportation) and warehousing related services (such as repackaging, labelling, palletization, preparation of shipping documentation, arrangement of customs clearance and warehousing), in order to facilitate our provision of freight forwarding services.

We did not enter into any long-term written service agreements with any service providers during the FY2020 and FY2021 and we did not experience any material non-performance incident or quality dispute with our service providers causing material disruption to our operations.

**Credit period**

Our purchases of cargo space from airlines were generally with a short credit period while we provide our customers with a credit period up to 45 days. For the procurement of charter flights, we usually require full or partial payment in advance from customers. The payment for charter flights to airlines have to be made in full and in advance ranging from two to ten days before the departure of the flights. Purchases are settled with cheque and bank remittance.

**Bank Guarantees**

Depends on the amount of cargo and airline policies, freight forwarders may be required to provide bank guarantees in favor of airlines or shipping liners to secure purchases of cargo space. The requirement for bank guarantees to secure the performance of our obligations in favor of our suppliers varies across different suppliers. Bank guarantees are provided by our principal banks which would in turn require collaterals such as mortgage over properties or bank deposits to be pledged in favor of our banks.

Generally, where a bank guarantee is provided, our suppliers shall have the right from time to time by giving notice in writing to require us to increase the amount of guarantee if the cargo space purchased by us is greater than the existing guaranteed sum. Our bank guarantees are generally renewed on a yearly basis.

We have confirmed that during FY2020, FY2021 and 6M2022 and as at the date of the prospectus, no enforcement of bank guarantees was made by our suppliers against us.

**Our Customers**

Our customers include freight forwarders and direct customers (i.e. customers that are not freight forwarders and purchase cargo space from us and directly ship their consignments, for example, manufacturers which directly ship their products to their customers through purchasing cargo space directly from our Group, or buyers of goods which arrange shipment by themselves). During the FY2020, FY2021 and 6M2022, we transacted with an aggregate of over 500 customers, of which freight forwarders contributed to approximately 98.2%, 98.9% and 99.1% of our total revenue for FY2020, FY2021 and 6M2022, respectively.

In line with the industry practice, we generally do not enter into any long-term agreement with our customers for freight forwarding services.

We generally do not have any specific agreement with our customers on liability for damage of goods during transit and we maintain FFL insurance policies against cargo transportation losses and freight forwarder errors and omissions. Please see the paragraph headed "Insurance" in this section for details of our insurance coverage. During the FY2020, FY2021 and 6M2022, we did not encounter any incident relating to liability for damage of goods of a material nature.

Our top five customers, based on revenue, accounted for approximately 68.1%, 62.2% and 65.7% of our revenue for FY2020, FY2021 and 6M2022. The five major customers of FY2020, accounted for approximately 41.0%, 11.3%, 7.0%, 5.3%, and 3.5% of our total revenues, respectively. The five major customer of FY2021, accounted for 40.5%, 6.8%, 6.7%, 5.0% and 3.2% of our total revenues, respectively. The five major customer of 6M2022, accounted for approximately 51.0%, 4.8%, 3.7%, 3.2% and 3.0% of our total revenues, respectively.

Since we would purchase cargo space from other freight forwarders, and we would offer cargo space to freight forwarders in the process of co-loading, some of our suppliers and customers may overlap. For FY2020, FY2021 and 6M2022, a total of 90, 98 and 64 of our customers were also our suppliers (the "Overlapped Customers and Suppliers") respectively.

**Credit policy**

For freight forwarder customers, except for the procurement of charter flights which we usually require full or partial payment in advance from customers, we generally grant an average credit period of up to 45 days. For direct customers, we usually demand for full settlement upon issuance of invoice. Our invoices are generally settled by cheque or telegraphic transfer in HKD, RMB or USD. The length of credit period granted varies on a case-by-case basis depending on the customer's reputation and credibility, payment history and business relationship with our Group.

We periodically review the credit terms and our customer's payment record and, if necessary, revise the credit terms granted to our customers after review. We also closely monitor any outstanding overdue amounts and take measures to collect any outstanding amounts. During FY2020, FY2021 and 6M2022, we did not experience any material difficulty in collecting payment from our customers.

**Growth Strategies**

We plan to grow our business by upgrading our current operations and information technology system as well as through the development of our service targeting the cross-border e-commerce market and the expansion to the U.S. market. With (i) the de-escalation of the U.S.-China trade war from 2020 onwards, (ii) COVID-19 being effectively controlled, (iii) the continuous growth of cross border e-commerce, which is sufficiently huge to allow our Group's expansion plan. We intend to leverage our achievements in air freight forwarding services by pursuing the following business strategies:

**Enhance operational efficiency and quality**

We plan to further enhance our operational capabilities and expand our capacity in the freight forwarding business. As our network has achieved critical scale, we will continue to enhance our technology infrastructure and synergies across our platform and the network with local partners to streamline our operations to lower transportation, labor and other operating costs. We will also continue to innovate and standardize operating procedures to enhance reliability, efficiency and service quality.

We will further expand our sales and operation team. We believe that our continuous business growth is attributable to the effort of our experienced sales team. With the organic growth of service and the contemplated expansion to the United States market, we intend to further expand our sales team in order to further our global marketing effort, especially in the United States market. To expand our sales and operation team, we intend to join career fairs in order to recruit suitable candidates with at least five years freight forwarding industry experience and with strong clientele network.

We will continue to hire, train and retain the best talent to reinforce our innovative culture. We will continue to invest in research and development and strengthen our technology infrastructure to enhance scalability, service quality and operational efficiency. We will introduce new services and solution to service the cross-border e-commerce, B2C services and door to door service, as a one stop service provider to capture more business opportunities and increase customer loyalty.

**Enhancing our information technology system**

We plan to enhance our information technology system in relation to freight forwarding services to improve our productivity and efficiency, better serve our cross-border e-commerce customers, and facilitate the forecast in customers' demand and planning of sourcing cargo space.

We plan to develop a freight operations system which (i) provide integrated and real-time dynamic information; (ii) provide a user-friendly interface for our customers to log in to our system to check information of their freight bookings or cargo information; and (iii) is compatible to integrate with our warehousing system and the operation system of our customers (which shall be subject to the information technology service provider's analysis on the system used by our customers and thus the feasibility of system integration).

With the enhanced information technology system that possesses the aforesaid additional features, we can collect, store, manage and interpret data from our business activities as it provides an integrated and continuously updated view of the core business processes by utilizing the enhanced system. We believe that the enhanced information technology system can precisely analyze customer profiles and behavior (such as categorization of their shipments, seasonal demand and historical booking pattern) based on comprehensive big data that strengthen our customer management and facilitate data analysis on our procurement of cargo space and forecast of customer demand. We also believe that the upgraded system could enhance workflow efficiency of the Group and facilitate our customers to handle and check with their shipments' status, which in turn improves customer experience and encourages long-term business relationship with our customers.

**Expand our service presence in the cross-border e-commerce market**

We expect to expand our presence serving the prospering cross-border e-commerce market. Between 2016 and 2020, the number of cross-border e-commerce shoppers worldwide increased from 200 million to 450 million; and anticipated to increase even further to reach 843 million by 2025. Despite the negative impact of COVID-19 on the world economy, it has favored the further growth of the e-commerce sector because lockdowns, quarantines and social distancing boost demand for online shopping and express delivery services. Asia Pacific's e-commerce sales are expected to reach USD 2 trillion by 2025. The transaction value of cross-border e-commerce import and export in Mainland China has continued to rise from 2016 to 2020, from RMB6.7 trillion to RMB12.5 trillion; is expected to reach RMB23.4 trillion by 2025. Hong Kong, as a regional hub for import and export of China, China's fast growth and strong performance of cross-border e-commerce industry are expected to further propel the demand for Hong Kong's global air freight forwarding services. Please see "*Our Industry – Market Driver – Growth of the domestic and cross-border e-commerce market globally, especially in Mainland China, Hong Kong and the United States, stimulates the demand for integrated air freight forwarding services."* The transaction value of cross-border e-commerce in the U.S. has continued to rise from 2016 to 2020, driven by the strong domestic consumption of the U.S. consumer market and the growing demand of the high-tech products exports from the U.S. (the export value of high-tech products in the U.S. increased from USD 92.9 billion in 2016 to USD 180.3 billion in 2020). Consumer products, especially high-tech products have high requirements on the transportation environment and timeliness, and thus stimulated the integrated air freight forwarding industry.

We plan to leverage our extensive delivery network and capabilities to strengthen our presence in the cross-border e-commerce market as a one-stop logistic service provider, by: (1) acquiring/leasing different types of warehouses in Hong Kong and the US, such as overseas bonded warehouses, distribution warehouses, logistic warehouses, and palletization warehouses; (2) upgrading our existing IT system to respond to the demands of our customers; (3) developing logistical solutions to manage each step of the shipping of small parcels common in cross-border e-commerce B2C transactions; (4) expanding our network amongst local partners in our target markets to increase our route portfolio and market coverage, and enhance our door-to-door small parcel delivery capacity.

**Expanding our operation to the United States**

According to the CIC Report, the air freight forwarding industry in the United States is prospering, recorded a growth at a CAGR of 20.2% from 2016 to 2020. It is expected that the U.S. air freight forwarding logistics market will continue to grow at a CAGR of 12.3% from 2020 to 2025. This indicates a vast business opportunity for us to expand our reach to customers who require export and import service from the United States.

Our revenue from freight forwarding services for export shipments to the United States contributed to approximately USD 56.3 million, USD 107.7 million, and USD 38.8 million for FY2020, FY2021, and 6M2022, respectively, representing approximately 81.3%, 82.8%, and 78.4% of our total export revenue of the corresponding period. We intend to take advantage of our existing market presence in the United States. We plan to establish offices and warehouses in various major cities of the United States and enhance our cooperation and link-up with local postal offices, such as USPS, FedEx, and DHL, to tap into new pool of customers who require air export freight forwarding services and to provide one-stop service.

**Strengthening our market position by purchasing more cargo space in order to cater for our customers demand**

With reference to the abovementioned market growth rate and our long-established experience in the freight forwarding industry, we believe that we are able to take advantages of the market opportunity presented by the prospering cross-border e-commerce market and our market expansion. As such, we plan to strengthen our capital base to finance our additional payment obligation and for provision of bank guarantee to airlines (which is a common industry practice) to purchase more cargo space in order to seize the growth opportunity and to cater the expected growth demand of our customers. We expect that our ability to fulfill customer demand, in particular, in the situation where air cargo space supply remains constant and the cargo space demand continuously increase, will render and strengthen our market position in the industry.

***Pursue strategic alliances and select acquisition opportunities***

We aim to selectively form additional strategic alliances with overseas logistics companies and other partners that bring synergies with our business. We also plan to selectively pursue acquisitions, investments, joint ventures and partnerships that are complementary to our business and operations. We will continue to work with domestic and international partners to grow our globally coverage and broaden our service offerings in international markets. Through our Operating Subsidiaries, we target to further penetrate our existing markets by expanding our service offerings and enhancing our third-party logistics and fulfilment services, and expand into other countries and regions.

**Competitive Strength**

We believe that we can leverage our global presence and competence in air and ocean freight by collaborating with our customers to unlock value in their supply chains and together build smart and efficient end-to-end logistics solutions. Our competitive advantage include:

***We have an experienced and dedicated team with extensive experience in freight forwarding industries.***

Our management possesses extensive experience and in-depth knowledge in the freight forwarding industry and logistics industry. In particular, our Directors, Mr. Yee Kit, CHAN and Mr. Hok Wai Alex, KO, has more than 40 and 27 years of experience, respectively, in logistics and supply chain operations. Over the 30 years track record of our Group, our founder Mr. Chan has led us to adapt to the ever-changing global economy and challenges by establishing a sustainable and proven business model to position us to maintain a sustainable business and operation.

Our Directors are also supported by our senior management who has extensive industry experience in the areas including freight forwarding and logistics. With the experience and expertise of our management, we are able to maintain close relationships with our business partners and customers. Our Directors believe that this attributes to our way of success. Please refer to the section headed "Management'' in this document for the background and experience of our executive Directors and senior management members.

The industry experience and knowledge of our staff give us a competitive edge over our competitors as we are able to efficiently cater for our customers' needs and thus win our customers' confidence in our services, which we consider essential to our long-term development in the freight forwarding industry.

**We have established reputation in the industry**

We commenced operation as a freight forwarder in 1993, giving us a track record of over 30 years. Over the years, we have accumulated an extensive network of suppliers and customers along the supply chain of cargo space. Our reputation within the network of the industry players is built upon our dedication to satisfy our customers' needs.

Our quality of service has also been recognized as an accredited member of International Air Transport Association (IATA), which is a well-recognized association within the industry. It is an industry practice that airlines generally prefer offering cargo space to freight forwarders who are IATA accredited agents. In order to become an IATA accredited agent, an applicant has to, among other requirements, have at least two staff members who have attended training courses on handling dangerous goods. An applicant also has to submit its audited financial statements, insurance policies and sales reports on IATA member airlines for inspection by IATA to demonstrate that it has sufficient financial resources which is satisfactory to IATA.

Such accreditation also serves as an entry barrier to the freight forwarding industry as it takes time to build up the reputation in the industry. We also believe that by being part of such renowned network of freight forwarders and other industry participants, we are able to reach out to an extensive network of suppliers and customers, thereby potentially diversifying and enhancing our supplier and customer base.

***We have comprehensive business network and stable business relationships with our suppliers.***

We take pride in our ability to provide comprehensive routings that cater for the unique needs and requirements of our customers. Leveraging on our extensive experience in sourcing cargo space accumulated for over 30 years, we are capable of securing cargo space from airlines, shipping liners and other freight forwarders to reach a wide range of destination for over 90 countries.

During FY2020, FY2021 and 6M2022, we had stable business relationships with our suppliers who are mainly airlines and other freight forwarders. Our stable relationships with our suppliers and the extensive network with our business partner also enable us to continue to secure a stable supply of cargo space for our customers, which in turn further encourages customer loyalty, thereby strengthening our sales performance. Our diversified supplier network also minimizes the risks posed by reliance on a small number of suppliers and allows us to offer a wide portfolio of cargo routes at competitive prices for our customers and recommend the most viable route depending on their individual shipping needs. The diversified network distinguishes us from our competitors as maintaining such a network along the value chain requires years of efforts in building strong relationships with suppliers, which could be a major obstacle to new entrants.

**We have established stable relationships with our customers.**

We believe our established reputation and track record are important factors affecting customers' choice over freight forwarders. During the FY2020, FY2021 and 6M2022, we provided freight forwarding services to direct shippers and other freight forwarders. We believe that it is important to continue to expand our customer base, and at the same time, maintain long-term business relationships with our customers by understanding their changing needs and catering for their unique requirements. Therefore, our sales team continuously communicates with our major customers to ensure our provision of services satisfies their delivery plans and logistics requirements.

We have maintained business relationships our largest customers and believe that this is an indication of the customers' loyalty and recognition of our service quality. As such, we believe that even though we do not enter into fixed-term contracts with its customers, with our good reputation and track record, is able to retain existing customers and attract new customers.

In addition to our ability for the fast and accurate consolidation of the cargo from different customers to accommodate the cargo to the shipping standards of the airlines, our competence to provide tailored value-added services and customized distribution solutions, such as labelling, packing, reprocessing and local transportation, enable us to attract more customers in the high-tech products and Fast-Moving Consumer Goods ("FMCG") industries.

**Facilities and Property**

**Intellectual Property**

On October 19, 2021, we applied to register "Profit Sail" in trademark classes\*\* 16, 35, and 39; the trademark was registered on March 8, 2022. On December 14, 2021, we applied to register "PSI Group" in trademark classes\*\* 9, 16, 35, 38, 39, 41, and 42; as of the date of this prospectus, the registration is still in process. On March 2, 2022, we applied to register "PS" in trademark classes\*\* 16, 35 and 39; the trademark was registered on January 4, 2023.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Country** | **Trademark** | **Application Date** | **Application Number** | **Classes** | **Status** |
| Hong Kong | ![](image_010.jpg)![](image_011.jpg)<br>| October 19, 2021 | 305775823 | 16, 35, 39 | Registered March 8, 2022 |
| Hong Kong | ![](image_012.jpg)<br>![](image_013.jpg)<br>| March 2, 2022 | 305894407 | 16, 35, 39 | Registered January 4, 2023 |
| Hong Kong | ![](image_014.jpg)<br>![](image_015.jpg)<br> ![](image_016.jpg)<br> ![](image_017.jpg) <br>| December 14, 2021 | 305830876 | 9, 16, 35, 38, 39, 41, 42 | In Process |

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**Domain Names**

 

We maintain a website at www.profitsail.com.

**Real Property – Leases**

We lease all of our facilities and do not own any real property. Our headquarter office is located at Unit 1002, 10/F, Join-in Hang Sing Centre, No.2-16 Kwai Fung Crescent, Kwai Chung, New Territories, Hong Kong. The lease will expire on April 30, 2024. We have also leased additional office space at Workshop Unit 4A, 11/F, Join-in Hang Sing Centre, 71-75 Container Port Road, Kwai Chung, New Territories, Hong Kong. The lease of the additional office space will expire on April 30, 2023.

Some of our employees are arranged to work at Unit 1001C, 10/F, Join-in Hang Sing Centre, 71-75 Container Port Road, Kwai Chung, New Territories, Hong Kong, a premise leased by Granful Solutions Limited as the tenant to the said premise. Granful Solution Limited is a related party controlled by our director and CEO, Mr. Hok Wai Alex, KO, see "*Related Party Transactions*". We are using this additional office space at zero consideration, as the licensee to Granful Solutions Limited. The lease to Granful Solution Limited for Unit 1001C, 10/F, Join-in Hang Sing Centre will expire on December 31, 2023. In December 2022, the lease of the said property was early terminated and we no longer used it as our additional office space.

In addition, we have leased Tsing Yi Warehouse as the warehouse space in FY2020 and FY2021, located at Workshop No. A1 on the Ground Floor Tsing Yi Industrial Centre Phase I, Tsing Yi Town Lot No. 65, Tsing Yi Island, Hong Kong. In August 2022, we surrendered the lease of the Tsing Yi Warehouse.

We believe that the facilities that we currently lease are adequate to meet the needs of our current operations, and that we will be able to obtain adequate facilities to accommodate our future expansion plans.

**Equipment**

As of December 31, 2021, the total current net worth of our equipment was approximately USD 0.5 million. Our equipment consists of (i) warehouse operation machinery & tool, including two x-ray systems (Rapiscan Systems 628dv x-ray machine, Rapiscan systems 632dv x-ray machine), 4 Forklifts, and Air Cargo Pallets, and (ii) office equipment and furniture. The above two groups are used in warehouse operations, x-ray scanning, and office operation.

**Licenses and Regulatory Approvals**

A summary of the laws and regulations applicable to our business and industry is set out in the section headed "Regulation" in this prospectus. We have obtained all the necessary licenses, permits and approvals that are material to our business during the FY2020, FY2021 and 6M2022 and up to the date of this prospectus, with details set forth below:

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| | | | | |
|:---|:---|:---|:---|:---|
| **License/permit/approval** | **Holding entity** | **Issuing authority** | **Date of grant** | **Date of expiry** |
| Radio Dealer License (Unrestricted) | PSIHK | Communications Authority of Hong Kong  | August 1, 2019 | July 31, 2023 |
| Irradiating Apparatus License | PSIHK | Radiation Board | July 13, 2022 | November 14, 2023 |
| Regulated Agent | PSIHK | Civil Aviation Department | February 14, 2000 |  |
| Regulated Air Cargo Screening Facility | PSIHK | Civil Aviation Department | April 29, 2020 |  |
| Textiles Trader Registration | PSIHK | Trade and Industry Department | October 29, 2018 | October 28, 2023 |
| Transhipment Cargo Exemption Scheme | PSIHK | Trade and Industry Department | January 1, 2019 | December 31, 2023 |
| Regulated Agent | BGG | Civil Aviation Department | July 20, 2018 |  |
| Food Import or Distributor Registration | BGG | Food and Environmental Hygiene Department | January 12, 2021 | January 11, 2024 |

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**Health, Work Safety, Social and Environmental Matters**

Due to the nature of tasks in the freight forwarding industry and the logistics industry which often involve carrying heavy objects and usage of machinery, workers are constantly subjected to risks of accidents or injuries. To mitigate such risks, we have set out a series of workplace safety rules in the staff manual for our staff to follow. During the FY2020, FY2021 and 6M2022 and up to the date of this prospectus, there were no material accidents in the course of our business operation which gave rise to any claims and compensation paid to our employees. There were also no interruptions in our business which may or have had a significant effect on our financial position during the FY2020, FY2021 and 6M2022 and up to the date of this prospectus.

Due to the nature of our business, our operational activities are not subject to environmental obligations, and we did not directly incur any cost of compliance with applicable environmental protection rules and regulations. We expect that we will not directly incur significant costs for compliance with applicable environmental protection rules and regulations in the future.

**Insurance**

Pursuant to paragraph 16.1 of the Hong Kong Association of Freight Forwarding and Logistics Ltd Standard Trading Conditions (HAFFA STCs), we are not required to arrange any insurance except on express written instructions given by the customer and accepted by us in writing. We maintain Freight Forwarder Liability Insurance (also known as the Forwarder Protect Liability Insurance) policies against cargo transportation losses and freight forwarder errors and omissions. We are not liable for any damage or loss to our customers' goods unless such damage or loss is caused by our negligence. We also maintain cargo transportation liability insurance policies against loss damage liability or expense of the shipments, if so requested by our customers. Where we are liable for the damage or loss to our customers' goods, claims against us from our customers are covered by the Freight Forwarder Liability Insurance policies we maintain as described above. We also maintain insurance coverage of employee's compensation, business interruption and public liability insurance. We believe that the insurance coverage taken out by us is in line with industry norms in Hong Kong and is adequate and sufficient for our operations

**Legal Proceedings**

We may from time to time be subject to various legal or administrative claims and proceedings arising in the ordinary course of our business.

We are currently not a party to any pending any material legal or administrative proceedings and are not aware of any events that are likely to lead to any such proceedings. As of the date of this prospectus, we are not a party to, and we are not aware of any threat of, any legal proceeding that, in the opinion of our management, is likely to have a material adverse effect on our business, financial condition or operations, nor have we experienced any incident of non-compliance which, in the opinion of our directors, is likely to materially and adversely affect our business, financial condition or operations. Litigation or any other legal or administrative proceeding, regardless of the outcome, is likely to result in substantial costs and diversion of our resources, including our management's time and attention. For potential impact of legal or administrative proceedings on us, see "Risk Factors— Risks Related to Our Business and Industry—We may be subject to litigation and regulatory investigations and proceedings and may not always be successful in defending ourselves against such claims or proceedings."

**Internal Control and Risk Management**

In order to ensure compliance with applicable laws and regulations and related policies in different operational aspects, we have established and adopted an internal control system, covering areas such as, among other things (i) financial reporting; (ii) freight cost and expenditure; (iii) cash and treasury management; (iv) human resources management; (v) risk management; and (vi) conflict of interest. In addition, our Group has endorsed the staff handbook, internal control and corporate governance manual which require all Directors and employees of our Group to observe. We believe that our internal control system is sufficient and effective.

**REGULATION**

**Hong Kong Regulations**

As we conduct business in Hong Kong, our business operations are subject to various regulations and rules promulgated by the Hong Kong government. The following is a brief summary of the Hong Kong laws and regulations that currently and materially affect our business. This section does not purport to be a comprehensive summary of all present and proposed regulations and legislation relating to the industries in which we operate.

**Regulations Relating to Our Business**

Business Registration Ordinance

Business Registration Ordinance (Chapter 310 of the Laws of Hong Kong) (the "BRO") provides for the registration of businesses in Hong Kong. Business includes any form of trade, commerce, craftsmanship, profession, calling or other activity carried on for the purpose of gain and also means a club. Every company incorporated in Hong Kong or non-Hong Kong company registered under the Companies Ordinance (Chapter 622 of the Laws of Hong Kong) is deemed to be a person carrying on business and is required to be registered under the BRO. Pursuant to the BRO, every person (a company or an individual) carrying on a business in Hong Kong, other than those specifically exempted, shall make a business registration application to the Commissioner of Inland Revenue within one month of the commencement of the business and a valid business registration certificate shall be displayed at the place of business to which such certificate relates.

*Dangerous Goods (Consignment by Air) (Safety) Ordinances and Dangerous Goods (Consignment by Air) (Safety) Regulations*

The Dangerous Goods (Consignment by Air) (Safety) Ordinance (Chapter 384 of the Laws of Hong Kong) (the "DGCASO") serves to control, in the interest of safety, the preparation, packing, marking, labelling and offering of dangerous goods for carriage by air, and for matters connected therewith. Dangerous Goods (Consignment by Air) (Safety) Regulations (Chapter 384A of the Laws of Hong Kong) (the "DGCASR") was made under the DGCASO and must be complied with by consignors, which includes shippers and freight forwarders. Consignors must ensure that all dangerous goods are properly marked, packed, labelled, classified and documented before they offered for transportation by air.

Further, under the DGCASR, a consignor of dangerous goods by air is required to provide for each consignment a shipper's declaration for dangerous goods, which must be signed by a person who completed appropriate dangerous good training within the past 24 months pursuant to Regulation 7 of the DGCASR.

The Convention of International Civil Aviation and the Aviation Security Ordinance

To safeguard aircraft against acts of unlawful interference, the International Civil Aviation Organisation (the "ICAO") has laid down standards and recommended practice in Annex 17 to the Convention on International Civil Aviation (the "CICA") on the security measures required to be implemented by contracting states. For the security of air cargo to be in line with Annex 17 to the CICA, the Hong Kong Aviation Security Programme, which is enforceable under the Aviation Security Ordinance (Chapter 494 of the Laws of Hong Kong), has adopted the regulated agent regime (the "RAR"). As a result, the Aviation Security Ordinance made provisions for the prevention and suppression of acts of violence against civil air transport and for connected purposes, it constitutes the comprehensive legislation for implementation of the conventions and agreements on aviation security promulgated by the ICAO. A cargo handling agent, a freight forwarder or a consignor of air cargo may apply for registration as a regulated agent ("RA"), who is required to comply with the requirements in respect of an RA in the Hong Kong Aviation Security Programme, in order to prevent the unauthorized carriage of explosives and incendiary devices in the consignments of cargo intended for carriage by air.

Under the RAR, an RA is obliged, among other obligations, to ensure that the appropriate security controls acceptable by the Civil Aviation Department (the "CAD") are properly implemented upon the acceptance of cargo for carriage by air unless the consignment is from a known consignor recognized by an RA and to ensure that a consignment of cargo is safeguarded against unauthorized interference after its reception and to make best endeavors to protect it from unauthorized interference until the consignment is accepted by another RA or an airline.

An RA shall also ensure that a consignment of cargo accepted from a known consignor or another RA is: (i) accompanied by a full description of the contents in the shipping documents (e.g. airway bills, cargo manifests or shipper's instructions), that the RA's registration code or the known consignor's code on the shipping documents of the consignment is checked; (ii) checked against the description in the shipping documents in respect of the quantity of cargo tendered and any sign of the package having been tampered with; (iii) declared as known cargo by checking the annotation of the tendering RA's registration code or otherwise stated as unknown cargo on shipping documents in inter-RA's handling; and (iv) safeguarded from unauthorized interference after it has been received until accepted by the next RA or an airline, or until loaded on to an aircraft. Given the Group is an RA, we have duly carried out the aforementioned obligations during our ordinary course of business.

On 1 September 2016, the ICAO has introduced a new policy direction to progressively increase the required screening percentage of known cargoes consigned by existing consignors which have not been approved by the CAD, from 1% to 100% before the deadline imposed by ICAO (30 June 2021). In order to fully implement such new policy direction, the CAD has developed a transitional arrangement for the registered agents, namely, (i) from January 2020 to April 2020, prior to the air cargo being loaded onboard, all registered agents will be required to screen 25% of their cargo tendered by consignors not approved by the CAD; (ii) from May 2020 to August 2020, the required screening percentage will be increased to 40%; (iii) from September 2020 to February 2021, the screening percentage will be increased to 70%; and (iv) from March 2021 to June 2021, the screening percentage will be further increased to 100%. In anticipation of an upsurge in screening demand, a regulated air cargo screening facilities scheme which enables and regulates air cargo screening at off-airport locations has been formulated. Any entity which intends to conduct air cargo security screening operations in their premises may apply for acceptance by the CAD to become a regulated air cargo screening facility ("RACSF"). Each RACSF must have at least two nominated persons for cargo security who have attended and completed the RACSF training program acceptable to the CAD. The relevant training certificates are valid for a period of three years, hence, the relevant RACSF should arrange for revalidation of the same by their expiry. As the Group conducts air cargo security screening operations in the Tsing Yi Warehouse in FY2020 and FY2021, the Group was required and duly registered the Tsing Yi Warehouse as the RACSF with the CAD. The Group engaged independent third party as a screening service provider to provide qualified manpower (the security screeners) to perform cargo screening using our off-airport x-ray screening machines and facilities on site in the Tsing Yi Warehouse. In August 2022, we surrendered the lease of the Tsing Yi Warehouse and the air cargo security screening is no longer performed in the Group's premise since then.

Telecommunications Ordinance

Under the Telecommunications Ordinance (Chapter 106 of the Laws of Hong Kong), companies possessing and dealing in the course of trade or business in apparatus or material for radio communications or in any component parts in Hong Kong, are required to obtain a Radio Dealers Licence (Unrestricted) from Office of the Communications Authority ("OFCA"). Under the Radio Dealers Licence (Unrestricted), the licensee is permitted to (i) deal in radiocommunications apparatus and (ii) import into or export from Hong Kong radio transmitting apparatus pursuant to section 9 of the Telecommunications Ordinance. A Radio Dealers Licence (Unrestricted) is generally valid for a period of 12 months, and is renewable on payment of the prescribed fee, at the discretion of OFCA. Given the Group provides storage services to the customers in Hong Kong, we may fall within the ambit of the Telecommunications Ordinance and have duly obtained the Radio Dealers Licence (Unrestricted) from the OFCA.

International Conventions - Carriage of Goods by Air

In relation to carriage of goods by air, the relevant international conventions are the Warsaw Convention for the Unification of Certain Rules Relating to International Carriage by Air 1929 (the "Warsaw Convention") and the Montreal Convention for the Unification of Certain Rules for International Carriage by Air 1999 (the "Montreal Convention").

<u>The Warsaw Convention</u>

The Warsaw Convention was an international convention which regulates liability for international carriage of persons, luggage or goods performed by aircraft for reward. It was originally signed in 1929 in Warsaw and was amended in 1955 by the Hague Protocol. Hong Kong still applies the Amended Warsaw Convention to international air carriages with countries that have adopted the Amended Warsaw Convention but not the Montreal Convention.

<u>The Montreal Convention and the Carriage by Air Ordinance</u>

The Montreal Convention was designed to establish worldwide uniformity in liability rules governing air carriage of person, baggage and cargo for compensation between two countries which are parties to it. Hong Kong ratified the Montreal Convention on 15 December 2006. The Montreal Convention was put into force in Hong Kong under the Carriage by Air Ordinance (Chapter 500 of the Laws of Hong Kong) (the "CAO").

The provisions of the Montreal Convention, as set out in Schedule 1A of the CAO, so far as they relate to the rights and liabilities of carriers, carriers' servants and agents, passengers, consignors, consignees and other persons, and subject to the CAO, have the force of law in relation to any carriage by air to which the Montreal Convention applies, irrespective of the nationality of the aircraft performing that carriage.

Article 18 of the Montreal Convention determines the extent of the carriers' liability during carriage of cargoes. Article 18(1) states that the carrier is liable for damage sustained in the vent of the destruction or loss of, or damage to, cargo upon condition only that the event which caused the damage so sustained took place during the carriage by air. Article 18(2) provides the following four defences to the carrier:

&nbsp;&nbsp;&nbsp;&nbsp;(a) inherent defect, quality or vice
 of that cargo;

&nbsp;&nbsp;&nbsp;&nbsp;(b) defective packing of that cargo
 performed by a person other than the carrier or its servants or agents;

&nbsp;&nbsp;&nbsp;&nbsp;(c) an act of war or an armed conflict;
 and/or

&nbsp;&nbsp;&nbsp;&nbsp;(d) an act of public authority carried
 out in connection with the entry, exit or transit of the cargo.

Radiation Ordinance

The Radiation Ordinance (Chapter 303 of the Laws of Hong Kong) (the "RO") controls the import, export, possession and use of radioactive substances and irradiating apparatus and the prospecting and mining for radioactive minerals and for purposes connected therewith. No person shall, except under and in accordance with a licence duly issued under the RO, have in his possession or use, any radioactive substance or irradiating apparatus. As the Group owns and operates certain apparatuses used for the provision of x-ray screening services to our customers, the use of which fall within the ambit of the RO, the Group is required and has duly obtained an irradiating apparatus licence in accordance with RO.

**Regulations Relating to Import and Export**

 

*Import and Export Ordinance (Chapter 60 of the Laws of Hong Kong)*

<u>Importing and exporting cargo</u>

Import and Export Ordinance (Chapter 60 of the Laws of Hong Kong) (the "IEO") provides regulation and control of the import of articles into Hong Kong, the export of articles from Hong Kong, the handling and carriage of articles within Hong Kong which have been imported into Hong Kong or which may be exported from Hong Kong, and any matter incidental to or connected with the foregoing.

Shipping companies, airlines and freight forwarders registered under the Transhipment Cargo Exemption Scheme (the "TCES") are, subject to certain conditions, exempted from import and export licensing requirements in respect of transhipment cargos handled by them. Transhipment cargos means any imported articles that (i) is consigned on a through bill of lading or a through air waybill from a place outside Hong Kong to another place outside Hong Kong; and (ii) is or is to be removed from the vessel, aircraft or vehicle in which it was imported and either returned to the same vessel, aircraft or vehicle or transferred to another vessel, aircraft or vehicle before being exported, whether it is or is to be transferred directly between such vessels, aircraft or vehicles or whether it is to be landed in Hong Kong and stored after its importation, pending exportation. Given the Group has obtained a valid certificate of exemption issued by the Trade and Industry Department under the TCES, we are exempted from licensing requirements under the IEO in respect of certain types of transhipment cargo set out in relevant circulars or letters which may be issued by the Trade and Industry Department.

<u>Import and Export (Registration) Regulations (Chapter 60E of the Laws of Hong Kong)</u>

Import and Export (Registration) Regulations (Chapter 60E of the Laws of Hong Kong) (the "IAE Registration Regulations") was made under the IEO, Regulations 4 and 5 of the IAE Registration Regulations set out that every person who imports or exports any article other than an exempted article shall lodge with the Commissioner of Customs and Excise an accurate and complete import or export declaration relating to such article using services provided by a specified body, in accordance with the requirements that the Commissioner of Customs and Excise may specify. Every declaration shall be lodged within 14 days after the importation or exportation of the article to which it relates.

**Regulations Relating to Labor, Health and Safety**

Factories and Industrial Undertakings Ordinance, Factories and Industrial Undertakings (Lifting Appliances and Lifting Gear) Regulations, Factories and Industrial Undertakings (Cargo and Container Handling) Regulations, Factories and Industrial Undertakings (Loadshifting Machinery) Regulation and Factories and Industrial Undertakings (Fire Precautions in Notifiable Workplaces) Regulations

Factories and Industrial Undertaking Ordinance (Chapter 59 of the Laws of Hong Kong) (the "FIUO") provides for the safety and health protection of workers in an industrial undertaking. Under the FIUO, (i) "industrial undertaking" includes but not limited to the loading, unloading, or handling of goods or cargo at any dock, quay, wharf, warehouse or airport; and (ii) a "proprietor" means the person for the time being having the management or control of the business carried on, in, inter alia, an industrial undertaking, or the occupier or the agent of the occupier of an industrial undertaking. Under the FIUO, there are 30 sets of subsidiary regulations covering various aspects of hazardous work activities in factories, building and engineering construction sites, catering establishments, cargo and container handling undertakings and other industrial workplaces. The subsidiary regulations prescribe detailed safety and health standards on work situations, plant and machinery, processes and substances.

Factories and Industrial Undertakings (Lifting Appliances and Lifting Gear) Regulations (Chapter 59J of the Laws of Hong Kong) (the "FIU(LALG)R") was made under the FIUO and they lay down, among others, the legal requirements for the testing, examination and inspection of lifting appliances and lifting gear used for raising or lowering or as a means of suspension in any industrial undertaking (the "Lifting Equipment"). Every employer providing Lifting Equipment for use at work, and every person having control of such use, should observe and ensure compliance with these regulations. In particular, the Lifting Equipment must be made of strong and sound material, properly maintained, and thoroughly examined by a competent examiner at least once every 12 months and certified by the competence examiner in an approved form as being in a safe working order; the Lifting Equipment should not be loaded beyond the maximum safe working load; and that no load is left suspended from a Lifting Equipment unless a competent person is in charge of the lifting appliance during the period of suspension.

Factories and Industrial Undertakings (Cargo and Container Handling) Regulations (Chapter 59K of the Laws of Hong Kong) (the "FIU(CCH)R") was made under the FIUO and they provide for the requirements on safety of workers employed in industrial undertakings of loading, unloading or handling of cargo and goods at docks, quays or wharves as well as those employed in industrial undertakings of loading, unloading, handling, stacking, unstacking, storing or maintaining (including repairing) of freight containers. In particular:

● Regulation 7 requires that the owner of a fork-lift truck shall not use or cause or permit the use of the truck for cargo or container handling unless (i) it is properly maintained; and (ii) the person operating it is trained and competent to operate it.

● Regulation 9 requires that, where cargo or goods are placed on a dock, quay or wharf (a) a clear passage leading to the means of access to any vessel which is lying at a the dock, quay or wharf shall be maintained on the dock, quay or wharf; and (b) if any space is left along the edge of the dock, quay or wharf, it shall be at least 900 millimeters wide and clear of all obstructions, other than fixed structures, plant and appliances in use.

● Regulation 10B requires the proprietor to take all reasonable steps to ensure that no person works on top of a container unless adequate precautions have been taken to prevent persons falling therefrom.

The proprietors of industrial undertakings (as defined in the FIUO) engaged in the aforementioned activities are responsible for ensuring that the regulations are observed.

Factories and Industrial Undertakings (Loadshifting Machinery) Regulation (Chapter 59AG of the Laws of Hong Kong) (the "FIU(LM)R") stipulates the responsible person of a loadshifting machine shall ensure that the machine is only operated by a person who has attained the age of 18 years and holds a valid certificate applicable to the type of loadshifting machine to which that machine belongs. Under the FIU(LM)R, loadshifting machines used in industrial undertakings refer to fork-lift trucks.

Factories and Industrial Undertakings (Fire Precautions in Notifiable Workplaces) Regulations (Chapter 59V of the Laws of Hong Kong) (the "FIU(FPNW)R") was made under the FIUO and they provide for the prevention of the outbreak of fire, the spread of fire and smoke in case of fire, the provision of fire fighting equipment and the maintenance of fire escapes in notifiable workplaces.

*Occupiers Liability Ordinance*

The Occupiers Liability Ordinance (Chapter 314 of the Laws of Hong Kong) (the "OLO") regulates the obligations of a person occupying or having control of premises on injury resulting to persons or damage caused to goods or other property lawfully on the land. The OLO imposes a common duty of care on an occupier of premises to take such care as in all the circumstances of the case is reasonable to see that the visitors will be reasonably safe in using the premises for the purposes for which he is invited or permitted by the occupier to be there.

*Motor Vehicles Insurance (Third Party Risks) Ordinance* 

Motor Vehicles Insurance (Third Party Risks) Ordinance (Chapter 272 of the Laws of Hong Kong) (the "MVI(TPR)O") provides that it shall not be lawful for any person to use, or to cause or permit any other person to use, a motor vehicle on a road unless there is in force in relation to the user of the vehicle by that person or that other person, as the case may be, such a policy of insurance or such a security in respect of third party risks as complies with the requirements of the MVI(TPR)O.

Occupational Safety and Health Ordinance

Occupational Safety and Health Ordinance (Chapter 509 of the Laws of Hong Kong) (the "OSHO") provides for the safety and health protection to employees in workplace, both industrial and non-industrial. Under section 6 of the OSHO, every employer must, so far as reasonably practicable, ensure the safety and health at work of all the employer's employees by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) providing and maintaining plant
 and systems of work that are safe and without risks to health;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) making arrangements for ensuring
 safety and absence of risks to health in connection with the use, handling, storage or transport
 of plant and substances;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) providing information, instruction,
 training and supervision as may be necessary to ensure the safety and health at work of the
 employees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) as regards any workplace under
 the employer's control, maintaining the workplace in a condition that is safe and without
 risks to health or providing or maintaining means of access to and egress from the workplace
 that are safe and without any such risks; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) providing or maintaining a working
 environment for the employees that is safe and without risks to health.

The Commissioner for Labor may serve an improvement notice on an employer against contravention of the OSHO or the FIUO, or a suspension notice against activity or condition or use of workplace or of any plant or substance located on the workplace which may create an imminent risk of death or serious bodily injury to the employees.

**Regulations Relating to Environmental Protection**

Air Pollution Control Ordinance, Air Pollution Control (Non-Road Mobile Machinery) (Emission) Regulation and Air Pollution Control (Air Pollutant Emission) (Controlled Vehicles) Regulation

Air Pollution Control (Non-Road Mobile Machinery) (Emission) Regulation (Chapter 311Z of the Laws of Hong Kong) (the "NRMM Regulation") was made under Air Pollution Control Ordinance (Chapter 311 of the Laws of Hong Kong) (the "APCO") and NRMM Regulation came into effect on 1 June 2015 to introduce regulatory control on the emissions of non-road mobile machinery ("NRMM"), including non-road vehicles and regulated machines that are subject to the NRMM Regulations (the "Regulated Machines"). Unless exempted, NRMMs which are regulated under the NRMM Regulation are required to comply with the emission standards prescribed under the NRMM Regulation. Under section 5 of the NRMM Regulation, starting from 1 December 2015, only approved or exempted NRMMs with a proper label are allowed to be used in specified activities and locations including construction sites. However, existing NRMMs which are already in Hong Kong on or before 30 November 2015 will be exempted from complying with the emission requirements pursuant to section 11 of the NRMM Regulation.

Air Pollution Control (Air Pollutant Emission) (Controlled Vehicles) Regulation (Chapter 311X of the Laws of Hong Kong) (the "APE Regulation") was made under the APCO. For the purposes of an application for a vehicle license made on or after the date specified in section 4(2) of the APE Regulation in respect of a controlled vehicle, the emission of the vehicle must conform to the emission standards applicable to the vehicle under section 5 of the APE Regulation. Under section 3 of the APE Regulation, a controlled vehicle is a designated vehicle first registered before 1 April 1995, on or after 1 February 2014, or within the period as specified in the schedule to the APE Regulation. A designated vehicle is a motor vehicle equipped with a compression ignition engine, that is a diesel commercial vehicle ("DCV"), including a goods vehicle, light bus and non-franchised bus. A vehicle license will not be issued to the relevant DCVs after certain dates (for example Euro IV DCV after 31 December 2027 if the first registration year is 2012) as specified by the Environmental Protection Department (the "EPD") of the Hong Kong government, unless such DCVs comply with the applicable emission standards as if they were first registered on the date of the vehicle license applications. Eligible registered owners of Euro IV DCVs can apply for the ex-gratia payment before the deadline, which is subject to the first registration date of Euro IV DCV. To be eligible to apply for the ex-gratia payment, the vehicle under application and the applicant must satisfy the following requirements:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the vehicle must be a DCV with
 a first registration date that falls within certain dates as specified by the EPD;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the vehicle is registered as a DCV or has applied
 for re-registration as of 1 January 2020;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the vehicle is scrapped on or after 19 October 2020
 by a vehicle scrapping company registered under the ex-gratia payment scheme;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the registration of the vehicle is cancelled and on
 or before the deadline as specified by the EPD after it is scrapped;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) the vehicle has had a valid vehicle license on or
 after 1 January 2020;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) the applicant for the ex-gratia payment is the registered
 owner of the vehicle when its registration is cancelled; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) The vehicle is a DCV on the day of cancellation of
 its registration.

**Regulations Relating to Trade Description**

*Trade Descriptions Ordinance*

Trade Descriptions Ordinance (Chapter 362 of the Laws of Hong Kong) (the "TDO"), which came into full effect in Hong Kong on 1 April 1981 aims to prohibit false or misleading trade description and statements to goods and services provided to the customers during or after a commercial transaction. Pursuant to the TDO, any person in the course of any trade or business applies a false trade description to any goods or supplies or offers to supply them commits an offence and a person also commits the same offence if he/she is in possession for sale or for any purpose of trade or manufacture of any goods with a false description. The TDO also provides that traders may commit an offence if they engage in a commercial practice that has a misleading omission of material information of the goods, an aggressive commercial practice, involves bait advertising, bait and switch or wrong acceptance of payment.

**Regulations Relating to Trademark**

*Trade Marks Ordinance* 

Trade Marks Ordinance (Chapter 559 of the Laws of Hong Kong) (the "TMO"), which came into full effect in Hong Kong on 4 April 2003 provides the framework for the Hong Kong's system of registration of trademarks and sets out the rights attached to a registered trade mark, including logo and a brand name. The TMO restricts unauthorized use of a sign which is identical or similar to the registered mark for identical and/or similar goods and/or services for which the mark was registered, where such use is likely to cause confusion on the part of the public. The TMO provides that a person may also commit a criminal offence if that person fraudulently uses a trade mark, including selling and importing goods bearing a forged trade mark, or possessing or using equipment for the purpose of forging a trade mark.

**Regulations Relating to Competition**

*Competition Ordinance*

Competition Ordinance (Chapter 619 of the Laws of Hong Kong) (the "Competition Ordinance"), which came into full effect in Hong Kong on December 14, 2015 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. The key prohibitions include (i) prohibition of agreements between businesses which have the object or effect of preventing, restricting or distorting competition in Hong Kong; and (ii) prohibiting companies with a substantial degree of market power from abusing their power by engaging in conduct that has the object or effect of preventing, restricting or distorting competition in Hong Kong. The penalties for breaches of the Competition Ordinance include, but are not limited to, financial penalties of up to 10% of the total gross revenues obtained in Hong Kong for each year of infringement, up to a maximum of three years in which the contravention occurs.

**Regulations Relating to Employment**

*Employment Ordinance* 

Pursuant to Employment Ordinance (Chapter 57 of the Laws of Hong Kong) (the "EO"), which came into full effect in Hong Kong on September 27, 1968, all employees covered by the EO are entitled to basic protection under the EO including but not limited to payment of wages, restrictions on wages deductions and the granting of statutory holidays.

*Mandatory Provident Fund Schemes Ordinance*

Pursuant to Mandatory Provident Fund Schemes Ordinance (Chapter 485 of the Laws of Hong Kong) (the "MPFSO"), which came into full effect in Hong Kong on December 1, 2000, every employer must take all practicable steps to ensure that the employee becomes a member of a Mandatory Provident Fund scheme. An employer who fails to comply with such a requirement may face a fine and imprisonment. The MPFSO provides that an employer who is employing a relevant employee must, for each contribution period, from the employer's own funds, contribute to the relevant Mandatory Provident Fund scheme the amount determined in accordance with the MPFSO.

*Employees' Compensation Ordinance*

Pursuant to Employees' Compensation Ordinance (Chapter 282 of the Laws of Hong Kong) (the "ECO"), which came into full effect in Hong Kong on December 1, 1953, all employers are required to take out insurance policies to cover their liabilities under the ECO and at common law for injuries at work in respect of all of their employees. The ECO establishes a no-fault and noncontributory employee compensation system for work injuries, and lays down the rights and obligations of employers and employees in respect of injuries or death caused by accidents arising out of and in the course of employment, or by prescribed occupational diseases under the ECO. Under the ECO, if an employee sustains an injury or dies as a result of an accident arising out of and in the course of his employment, his employer is in general liable to pay compensation even if the employee might have committed acts of faults or negligence when the accident occurred. An employee who suffers incapacity arising from an occupational disease is entitled to receive the same compensation as that payable to an employee injured in an accident arising out of and in the course of employment, if the disease is one due to the nature of any occupation in which he was employed at any time within the prescribed period immediately preceding the incapacity caused.

*Minimum Wage Ordinance* 

Minimum Wage Ordinance (Chapter 608 of the Laws of Hong Kong) (the "MWO") provides for a prescribed minimum wage at an hourly wage rate during the wage period for certain employees. Every employee engaged under a contract of employment under the EO (except those specified under section 7 of the MWO). Any provision of employment contract which purports to extinguish or reduce the right, benefit or protection conferred on the employee under the MWO is void.

**Regulations Relating to Personal Data Collection**

Personal Data (Privacy) Ordinance

Personal Data (Privacy) Ordinance (Chapter 486 of the Laws of Hong Kong) (the "PDPO") imposes a statutory duty on data users to comply with the requirements of the six data protection principles (the "Data Protection Principles") contained in Schedule 1 to the PDPO. The PDPO provides that a data user shall not do an act, or engage in a practice, that contravenes a Data Protection Principle unless the act or practice, as the case may be, is required or permitted under the PDPO. The six Data Protection Principles are:

● Principle 1 — purpose and manner of collection of personal data;

● Principle 2 — accuracy and duration of retention of personal data;

● Principle 3 — use of personal data;

● Principle 4 — security of personal data;

● Principle 5 — information to be generally available; and

● Principle 6 — access to personal data.

Non-compliance with a Data Protection Principle may lead to a complaint to the Privacy Commissioner for Personal Data (the "Privacy Commissioner"). The Privacy Commissioner may serve an enforcement notice to direct the data user to remedy the contravention and/ or instigate prosecution actions. A data user who contravenes an enforcement notice commits an offense which may lead to a fine and imprisonment.

The PDPO also gives data subjects certain rights, inter alia:

● the right to be informed by a data user whether the data user holds personal data of which the individual is the data subject;

● if the data user holds such data, to be supplied with a copy of such data; and

● the right to request correction of any data they consider to be inaccurate.

The PDPO criminalizes, including but not limited to, the misuse or inappropriate use of personal data in direct marketing activities, non-compliance with a data access request and the unauthorized disclosure of personal data obtained without the relevant data user's consent. An individual who suffers damage, including injured feelings, by reason of a contravention of the PDPO in relation to his or her personal data may seek compensation from the data user concerned.

**Cayman Islands Data Protection**

We have certain duties under 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 (collectively the "DPA"), based on internationally accepted principles of data privacy.

Privacy Notice

This privacy notice explains the manner in which the company collects, processes and maintains personal data about investors of the company pursuant to the DPA.

The company is committed to processing personal data in accordance with the DPA. In its use of personal data, the company will be characterized under the DPA as a "data controller", whilst certain of the company's 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 the company.

This privacy notice puts our shareholders on notice that, by virtue of making an investment in the company, the company and certain of the company's 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 the company 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 the company is subject or (c) where the processing is for the purposes of legitimate interests pursued by the company 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 the company's 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 the 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.

The company will only transfer personal data in accordance with the requirements of the DPA, and will apply appropriate technical and organizational information security measures designed to protect against unauthorized or unlawful processing of the personal data and against the accidental loss, destruction or damage to the personal data.

If you are a natural person, this will affect you directly. If you are a corporate investor (including, for these purposes, legal arrangements such as trusts or exempted limited partnerships) that provides us with personal data on individuals connected to you for any reason in relation to your investment into the 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 fulfills the Company's 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 the company's 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.

**MANAGEMENT**

**Executive Officers and Directors**

Set forth below is information concerning our directors, director nominees, executive officers and other key employees

---

| | | |
|:---|:---|:---|
| **Name** | **Age** | **Position(s)** |
| Yee Kit, CHAN | 64 | Chairman and Director |
| Hok Wai Alex, KO | 50 | Chief Executive Officer and Director |
| Chun Kit, TSUI | 45 | Chief Financial Officer |
| Eric Jackson, CHANG \* | 42 | Independent Director Nominee, Chair of Audit Committee |
| Chun Pong Raymond, SIU \* | 42 | Independent Director Nominee, Chair of Compensation Committee |
| Lo Chanii, Kam\* | 41 | Independent Director Nominee, Chair of Nominating Committee |

---

 ****

\* We intend to appoint these individuals as independent directors, effective upon the SEC's declaration of effectiveness of our registration statement on Form F-1, of which this prospectus is a part.

Yee Kit, CHAN, *Chairman and Director*

Mr. Yee Kit, CHAN, is the founder of PSI Group Holdings Ltd. Mr. Chan serves as Director and the Chairman of our board of directors. Mr. Chan serves as a director of Profit Sail Int'l Express (H.K.) Limited and Business Great Global Supply Chain Limited, the Operating Subsidiaries of our Group. Mr. Chan has over 40 years of experience in logistic and supply chain operations. He commenced his career at JET Freight International (H.K.) Limited in 1980. From 1981 to 1982, Mr. Chan worked as a manager at DAS Express (HK) Limited. Prior to the founding of PSIHK in 1993, Mr. Chan worked at "K" Line Air Service (Hong Kong) Limited (formerly also known as "K" Line Air Service Fast Forwarders Limited and Fast Forwarder Limited) from 1985 to 1993 with various positions including assistant sales manager, sales manager, the sales manager of Asia Pacific region and the general manager of China region. Mr. Chan obtained a high school diploma in 1978.

Hok Wai Alex, KO, *Chief Executive Officer and Director*

Mr. Hok Wai Alex, KO, is our Director and Chief Executive Officer. Mr. Ko has over 27 years of experience in logistics and supply chain operations. From 1995 to 2007, Mr. Ko worked at United Airlines holding various positions in airport operations and the sales department. From May 2007 to July 2015, Mr. Ko worked as a sales director at Profit Sail International Express (H.K.) Limited, one of our Operating Subsidiaries. Prior to re-joining the Company in February 2022, Mr. Ko founded Trans Orient Logistics (HK) Limited in Sep 2015 and served as its director. Mr. Ko obtained a Diploma in Management Studies jointly awarded by Lingnan University and the Hong Kong Management Association in December 2006. Mr. Ko obtained a Diploma in Hotel Management from I.H.M.E.S. International Hotel School in September 1992 and was awarded a Hospitality Management Diploma from the Educational Institute of the American Hotel and Motel Association in October 1992. Mr. Ko was also awarded BTEC First Diploma in Hotel and Catering, BTEC National Diploma in Hotel, Catering and Institutional Operations from Business and Technology Education Council (the "BTEC") in December 1991 and April 1994, respectively.

Chun Kit, TSUI, *Chief Financial Officer*

Mr. Chun Kit, TSUI has been our Chief Financial Officer since March 2022 and is primarily responsible for our accounting, financial reporting, internal control and compliance functions. He has over 20 years of experience in audit, accounting and finance. Mr. Tsui commenced his career at Lawrence Cheung C.P.A. Company Limited from June 2000 to January 2004 as an audit senior. He then joined BDO McCabe Lo Limited from February 2004 to February 2005 as an audit senior associate. From February 2005 to August 2006, Mr. Tsui was a lecturer at Hong Kong Institute of Vocational Education. From October 2006 to July 2013, he joined PricewaterhouseCoopers Hong Kong, where he provided audit assurance and accounting consulting services to customers in various industries, and his last position was a manager. From August 2013 to August 2020, he served as the general finance manager of Beijing Energy International Holding Co., Ltd. (formerly known as Panda Green Energy Group Limited)(stock code: 00686.HK). Prior to joining our Group, Mr. Tsui served as the finance director of Aceso Life Science Group Limited (stock code: 00474.HK) from August 2020 to March 2022. Mr. Tsui obtained a Bachelor degree in Accountancy from Hong Kong Polytechnic University in November 2000 and a Master degree in Professional Accountancy from University of London in August 2018. He has been a fellow member of the Association of Chartered Certified Accountants and the Hong Kong Institute of Certified Public Accountants since August 2008 and December 2010, respectively.

Eric Jackson, CHANG, *Independent Director Nominee*

Mr. Eric Jackson, CHANG, will be appointed as an independent Director and will be the chairman of the audit committee and a member of the compensation committee and nominating committee. Mr. Chang has over 20 years of experience in audit, accounting and finance, and has extensive experience in Hong Kong and US listed companies handling capital market transactions such as IPO, debt offerings, investor relations, acquisitions and disposals. He joined the audit assurance department of PricewaterhouseCoopers Hong Kong from September 2002 to September 2013 and his last position was senior manager. In October 2013, Mr. Chang joined Zensun Enterprises Limited as the CFO and company secretary, during which he has participated in acquisition of Zensun Group Holdings Limited (stock code: 00185.HK) ("Zensun Group") and spin-off listing of Global Medical Real Estate Reits (stock code: GMRE.NYSE). From July 2015 to March 2017, Mr. Chang was an executive director for Zensun Group. Mr. Chang joined China Tangshang Holdings Limited (stock code: 00674.HK) as the CFO and company secretary from April 2017 to August 2019. From September 2019 to December 2021, Mr. Chang had assisted the IPO of Sanxun Holdings Group Limited (stock code: 06611.HK) and acted as its CFO and company secretary. Mr. Chang served as an independent non-executive director of Centenary United Holdings Limited (stock code: 01959.HK) from September 2019 to May 2020, and served as a non-executive director of Sino Vision Worldwide Holdings Limited (stock code: 08086.HK) from May 2017 to July 2018. He has also served as an independent non-executive director of Transmit Entertainment Limited (stock code: 01326.HK) and DL Holdings Group Limited (stock code: 01709.HK) since December 2017 and May 2018, respectively, and served as the company secretary for Leader Education Limited (stock code: 01449.HK) since February 2020. Mr. Chang is a member of the American Institutes of Certified Public Accountants ("AICPA") and HKICPA. Mr. Chang obtained a Bachelor of Commerce degree from the University of British Columbia in Canada in May 2002.

Chun Pong Raymond, SIU, *Independent Director Nominee*

Mr. Chun Pong Raymond, SIU, will be appointed as an independent Director and will be the chairman of the compensation committee and a member of the audit committee and nominating committee. Mr. Siu has been a practicing solicitor of The High Court of Hong Kong since December 2005 and has over 16 years of experience in law with practical experience in corporate finance and regulatory compliance. Mr. Siu was a partner of F. Zimmern & Co., Solicitors & Notaries from July 2012 to August 2017. In September 2017, Mr. Siu established his own law firm, Raymond Siu & Lawyers and is now the senior partner of the firm. Mr. Siu has been the company secretary of EC Healthcare (stock code: 02138.HK) since September 2017, UTS Marketing Solutions Holdings Limited (stock code: 06113.HK) since February 2018, Allied Sustainability and Environmental Consultants Group Limited (stock code: 08320.HK) since June 2019, Aceso Life Science Group Limited (stock code: 00474.HK) since August 2022, and Hao Tian International Construction Investment Group Limited (stock code: 01341.HK) since August 2022. Since September 2021, Mr. Siu has also served as an independent non-executive director of China Wantian Holdings Limited (stock code: 01854.HK). Mr. Siu obtained a Master degree of Laws from University College London and Bachelor degree of Laws from The University of Hong Kong.

Lo Chanii, KAM, *Independent Director Nominee*

Ms. Lo Chanii, KAM, will be appointed as an independent Director and will be the chairman of the nominating committee and a member of the audit committee and compensation committee. Ms. Kam has over 15 years of experience in executive search, public relations, investor relations and strategic development. From January 2006 to July 2017, Ms. Kam worked for a number of well-established senior recruitment companies in Hong Kong where she has recruited all levels of senior management mainly for financial institutions such as investment banks, corporate banks, private banks, asset management firms, funds, and insurance companies. Ms. Kam joined China Harmony New Energy Auto Holding Limited (currently named as China Harmony Auto Holding Limited) (stock code: 03836.HK) as a Director of Public Relations and Chairman's assistant from July 2017 to June 2020, and rejoined the company in October 2022. Ms. Kam served as a Strategic Development Director of iClick Interactive Asia Group Limited (stock code: ICLK.NASDAQ) from June 2020 to March 2021. Ms. Kam obtained a Bachelor of Business Administration degree from the University of Central Oklahoma in December 2003.

None of the events listed in Item 401(f) of Regulation S-K has occurred during the past ten years that is material to the evaluation of the ability or integrity of any of our directors, director nominees or executive officers.

**Family Relationships**

There are no family relationships among any of our directors, director nominees or executive officers as defined in Item 401 of Regulation S-K.

**Employment Agreements and Director Offer Letters** 

We have entered into employment agreements with each of our executive officers pursuant to which such individuals agreed to serve as our executive officers. Pursuant to these agreements, we are entitled to terminate an executive officer's employment for cause at any time. Each executive officer agreed not to, directly or indirectly, provide the same or substantially the same services that he/she provides to the Company to any other business in certain area.

We also plan to enter into director offer letters with each of our independent director nominees which agreements set forth the terms and provisions of their engagement.

**Election of Officers**

Our executive officers are appointed by, and serve at the discretion of, our board of directors.

**Board of Directors**

We expect our board of directors to consist of five directors, three of whom will be independent as such term is defined by the Nasdaq Capital Market. We expect that all current directors will continue to serve after this offering.

The directors will be up for re-election at our annual general meeting of shareholders.

A director may vote in respect of any contract or transaction in which he is interested, provided, however that the nature of the interest of any director in any such contract or transaction shall be disclosed by him at or prior to its consideration and any vote on that matter. A general notice or disclosure to the directors or otherwise contained in the minutes of a meeting or a written resolution of the directors or any committee thereof of the nature of a director's interest shall be sufficient disclosure and after such general notice it shall not be necessary to give special notice relating to any particular transaction. A director may be counted for a quorum upon a motion in respect of any contract or arrangement which he shall make with our company, or in which he is so interested and may vote on such motion.

**Board Committees**

We plan to establish three committees under the board of directors: an audit committee, a compensation committee and a nominating committee. We plan to adopt a charter for each of the three committees. Copies of our committee charters will be posted on our corporate investor relations website prior to our listing on the Nasdaq Capital Market.

Each committee's members and functions are described below.

*Audit Committee**.*** Our audit committee will consist of Mr. Eric Jackson, CHANG, Mr. Chun Pong Raymond, SIU, and Ms. Lo Chanii, KAM, upon the effectiveness of their appointments. Mr. Eric Jackson, CHANG will be the chair of our audit committee. 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 Mr. Eric Jackson, CHANG, Mr. Chun Pong Raymond, SIU, and Ms. Lo Chanii, KAM, upon the effectiveness of their appointments. Mr. Chun Pong Raymond, SIU will be the chair of our compensation committee. The compensation committee will be responsible for, among other things:

● reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers;

● reviewing and recommending to the shareholders for determination with respect to the compensation of our directors;

● reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and

● selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person's independence from management.

 

*Nominating Committee**.*** Our nominating committee will consist of Mr. Eric Jackson, CHANG, Mr. Chun Pong Raymond, SIU, and Ms. Lo Chanii, KAM, upon the effectiveness of their appointments. Ms. Lo Chanii, KAM will be the chair of our nominating committee. We have determined that Mr. Eric Jackson, CHANG, Mr. Chun Pong Raymond, SIU, and Ms. Lo Chanii, KAM satisfy the "independence" requirements under NASDAQ Rule 5605. The nominating 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 committee will be responsible for, among other things

● selecting and recommending to the board nominees for election by the shareholders or appointment by the board;

● reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity;

● making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and

● advising the board periodically with regards 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 the board on all matters of corporate governance and on any remedial action to be taken.

**Duties of Directors**

Under Cayman Islands law, our board of directors has 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 and extraordinary 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 our company and mortgaging the property of our company; and

● approving the transfer of shares in our company, including the registration of such shares in our share register.

Under Cayman Islands law, directors owe the following fiduciary duties: (i) duty to act in good faith in what the director believes to be in the best interests of the company as a whole; (ii) duty to exercise powers for the purposes for which those powers were conferred and not for a collateral purpose; (iii) directors should not improperly fetter the exercise of future discretion; (iv) duty not to put themselves in a position in which there is a conflict between their duty to the company and their personal interests; and (v) duty to exercise independent judgment. In addition to the above, directors also owe a duty to act with skill, care and diligence. This duty has been defined as a requirement to act as a reasonably diligent person having both the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company and the general knowledge skill and experience which that director has. As set out above, directors have a duty not to put themselves in a position of conflict and this includes a duty not to engage in self-dealing, or to otherwise benefit as a result of their position. However, in some instances what would otherwise be a breach of this duty can be forgiven and/or authorized in advance by the shareholders provided that there is full disclosure by the directors. This can be done by way of permission granted in our Memorandum and Articles of Association or alternatively by shareholder approval at general meetings. You should refer to "Description of Share Capital — Differences in Corporate Law" for additional information on our standard of corporate governance under Cayman Islands law.

**Interested Transactions**

A director may vote, attend a board meeting or sign a document on our behalf with respect to any contract or transaction in which he or she is interested. A director must promptly disclose the interest to all other directors after becoming aware of the fact that he or she is interested in a transaction we have entered into or are to enter into. A general notice or disclosure to the board or otherwise contained in the minutes of a meeting or a written resolution of the board or any committee of the board that a director is a shareholder, director, officer or trustee of any specified firm or company and is to be regarded as interested in any transaction with such firm or company will be sufficient disclosure, and, after such general notice, it will not be necessary to give special notice relating to any particular transaction.

**Foreign Private Issuer Exemption**

We are a "foreign private issuer," as defined by the SEC. As a result, in accordance with the rules and regulations of Nasdaq, we may choose to comply with home country governance requirements and certain exemptions thereunder rather than complying with Nasdaq corporate governance standards. We may choose to take advantage of the following exemptions afforded to foreign private issuers:

● Exemption from filing quarterly reports on Form 10-Q, from filing proxy solicitation materials on Schedule 14A or 14C in connection with annual or special meetings of shareholders, from providing current reports on Form 8-K disclosing significant events within four days of their occurrence, and from the disclosure requirements of Regulation FD.

● Exemption from Section 16 rules regarding sales of Ordinary Shares by insiders, which will provide less data in this regard than shareholders of U.S. companies that are subject to the Exchange Act.

● Exemption from the Nasdaq rules applicable to domestic issuers requiring disclosure within four business days of any determination to grant a waiver of the code of business conduct and ethics to directors and officers. Although we will require board approval of any such waiver, we may choose not to disclose the waiver in the manner set forth in the Nasdaq rules, as permitted by the foreign private issuer exemption.

● Exemption from the requirement that our board of directors have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities.

● Exemption from the requirements that director nominees are selected, or recommended for selection by our board of directors, either by (1) independent directors constituting a majority of our board of directors' independent directors in a vote in which only independent directors participate, or (2) a committee comprised solely of independent directors, and that a formal written charter or board resolution, as applicable, addressing the nominations process is adopted.

Furthermore, Nasdaq Rule 5615(a)(3) provides that a foreign private issuer, such as us, may rely on our home country corporate governance practices in lieu of certain of the rules in the Nasdaq Rule 5600 Series and Rule 5250(d), provided that we nevertheless comply with Nasdaq's Notification of Noncompliance requirement (Rule 5625), the Voting Rights requirement (Rule 5640) and that we have an audit committee that satisfies Rule 5605(c)(3), consisting of committee members that meet the independence requirements of Rule 5605(c)(2)(A)(ii). If we rely on our home country corporate governance practices in lieu of certain of the rules of Nasdaq, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq. If we choose to do so, we may utilize these exemptions for as long as we continue to qualify as a foreign private issuer.

Although we are permitted to follow certain corporate governance rules that conform to Cayman Islands requirements in lieu of many of the Nasdaq corporate governance rules, we intend to comply with the Nasdaq corporate governance rules applicable to foreign private issuers.

**Other Corporate Governance Matters**

The Sarbanes-Oxley Act of 2002, as well as related rules subsequently implemented by the SEC, requires foreign private issuers, including us, to comply with various corporate governance practices. In addition, Nasdaq rules provide that foreign private issuers may follow home country practices in lieu of the Nasdaq corporate governance standards, subject to certain exceptions and except to the extent that such exemptions would be contrary to U.S. federal securities laws.

Because we are a foreign private issuer, our members of our board of directors, executive board members and senior management are not subject to short-swing profit and insider trading reporting obligations under section 16 of the Exchange Act. They will, however, be subject to the obligations to report changes in share ownership under section 13 of the Exchange Act and related SEC rules.

**Remuneration and Borrowing**

The directors may receive such remuneration as our board of directors may determine from time to time. Each director is entitled to be repaid or prepaid all traveling, hotel and incidental expenses reasonably incurred or expected to be incurred in attending meetings of our board of directors or committees of our board of directors or shareholder meetings or otherwise in connection with the discharge of his or her duties as a director. The compensation committee will assist the directors in reviewing and approving the compensation structure for the directors. Our board of directors may exercise all the powers of the company to borrow money and to mortgage or charge our undertakings and property or any part thereof, to issue debentures, debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of the company or of any third party.

**Qualification**

There are no membership qualifications for directors. Further, there are no share ownership qualifications for directors unless so fixed by us in a general meeting. There are no other arrangements or understandings pursuant to which our directors are selected or nominated.

**Director Compensation**

All directors hold office until the next annual meeting of shareholders at which their respective class of directors is re-elected and until their successors have been duly elected and qualified. Officers are elected by and serve at the discretion of the Board of Directors. Employee directors do not receive any compensation for their services. Non-employee directors are entitled to receive an as-yet undetermined cash fee for serving as directors and may receive option grants from our company. In addition, non-employee directors are entitled to receive compensation for their actual travel expenses for each Board of Directors meeting attended.

**Involvement in Certain Legal Proceedings**

To the best of our knowledge, none of our directors or officers has been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, nor has any been a party to any judicial or administrative proceeding during the past five years that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws, except for matters that were dismissed without sanction or settlement. Except as set forth in our discussion below in "Related Party Transactions," our directors and officers have not been involved in any transactions with us or any of our affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.

**Code of Business Conduct and Ethics**

We intend to adopt a code of business conduct and ethics that will be applicable to all of our directors, executive officers and employees.

**DIRECTOR AND EXECUTIVE COMPENSATION**

We currently do not have a compensation committee approving our salary and benefit policies. Our board of directors determined the compensation to be paid to our executive officers based on our financial and operating performance and prospects, and contributions made by the officers to our success. Each of the named officers will be measured by a series of performance criteria by the board of directors, or the compensation committee on a yearly basis. Such criteria will be set forth based on certain objective parameters such as job characteristics, required professionalism, management skills, interpersonal skills, related experience, personal performance and overall corporate performance.

Our board of directors has not adopted or established a formal policy or procedure for determining the amount of compensation paid to our executive officers. The board of directors will make an independent evaluation of appropriate compensation to key employees, with input from management. The board of directors has oversight of executive compensation plans, policies and programs.

**Elements of Compensation**

The compensation paid to Named Executive Officers in any year consists of two primary components:

&nbsp;&nbsp;&nbsp;&nbsp;(a) base salary;
 and

&nbsp;&nbsp;&nbsp;&nbsp;(b) long-term incentives
 in the form of stock options.

The key features of these two primary components of compensation are discussed below:

<u>Base Salary</u>

Base salary recognizes the value of an individual to our company based on his or her role, skill, performance, contributions, leadership and potential. It is critical in attracting and retaining executive talent in the markets in which we compete for talent. Base salaries for the Named Executive Officers are intended to be reviewed annually. Any change in base salary of a Named Executive Officer is generally determined by an assessment of such executive's performance, a consideration of competitive compensation levels in companies similar to our company and a review of our performance as a whole and the role such executive officer played in such corporate performance.

<u>Stock Option Awards</u>

We intend to provide long-term incentives to Named Executive Officers in the form of stock options as part of our overall executive compensation strategy. Our Board of Directors acting as the Compensation Committee believes that stock option grants serve our executive compensation philosophy in several ways: firstly, it helps attract, retain, and motivate talent; secondly, it aligns the interests of the Named Executive Officers with those of the shareholders by linking a specific portion of the officer's total pay opportunity to the share price; and finally, it provides long-term accountability for Named Executive Officers.

**Agreements with Named Executive Officers**

Our employment agreements with our officers generally provide for employment for a specific term and payments of annual salary, health insurance, pension insurance, and paid vacation and family leave time. The agreements may be terminated by either party as permitted by law. In the event of a breach or termination of the agreement by our company, we may be obligated to pay the employee twice the ordinary statutory rate. In the event of a breach or termination causing loss to our company by the employee, the employee may be required to indemnify us against loss. PSI Group Holdings Ltd have entered into employment agreements with our executive officers as follows:

Executive Compensation Agreements

We plan to enter into employment agreements with our senior executive officers. Pursuant to these agreements, we are entitled to terminate a senior executive officer's employment for cause at any time without remuneration for certain acts of the officer, such as being convicted of any criminal conduct, any act of gross or willful misconduct or any serious, willful, grossly negligent or persistent breach of any employment agreement provision or engaging in any conduct which may make the continued employment of such officer detrimental to our company. Each executive officer agrees that we shall own all the intellectual property developed by such officer during his or her employment.

Equity Incentive Plan

Prior to the closing of this offering, we intend to adopt our Equity Incentive Plan (the "Plan"). Under the Plan, we are authorized to issue equity incentives in the form of incentive stock option, nonqualified stock option, stock appreciation right, restricted stock, restricted stock unit, stock bonus award and performance compensation award under separate award agreements. Under the Plan, the aggregate number of shares underlying awards that we could issue cannot exceed 2,000,000 ordinary shares.

**Compensation of Directors and Executive Officers**

For the year ended December 31, 2022, we paid an aggregate of HKD 5,706,448.4 (USD 731,595.9) as compensation to our directors and executive officers as well as an aggregate of HKD 58,500.0 (USD 7,500.0) contributions to the Mandatory Provident Fund ("MPF"), a statutory retirement scheme introduced after the enactment of the Mandatory Provident Fund Schemes Ordinance in Hong Kong.

As the appointments of our independent directors will only become effective upon the effectiveness of the registration statement of which this prospectus forma a part, for FY2020, FY2021 and the year ended December 31, 2022, we did not have any non-executive directors and therefore have not paid any compensation to any non-executive directors.

Except our contribution to the MPF, we have not set aside or accrued any amount to provide pension, retirement, or other similar benefits to our directors and executive officers. We do not have any equity incentive plan in place as of the date of this prospectus.

**RELATED PARTY TRANSACTIONS**

In the ordinary course of business, from time to time, we carry out transactions and enter into arrangements with related parties. Our policy is to enter into transactions with related parties on terms that, on the whole, are no more favorable, or no less favorable, than those available from unaffiliated third parties. Based on our experience in the business sectors in which we operate and the terms of our transactions with unaffiliated third parties, we believe that all of the transactions described below met this policy standard at the time they occurred. The following is a description of material transactions, or series of related material transactions, to which we were or will be a party and in which the other parties included or will include our directors, director nominees, executive officers, holders of more than 5% of our voting securities, or any member of the immediate family of any of the foregoing persons.

The table below sets forth the major related party transactions and their relationships with the Company in FY2020, FY2021 and 6M2022:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | | **Year ended <br> December 31** | **Year ended <br> December 31** | |
|  | | | **2020** | **2021** | **Six months ended <br> June 30**<br>**2022** |
|  | <br>**Relationship** | <br>**Nature** | **USD** | **USD** | **USD** |
| Profit Sail International Express (SZX) Company Limited | Controlled by the spouse of director and shareholder, Mr. Yee Kit, CHAN | Service fee from the related party | $556690 | $590581 | $291919 |
| Profit Sail International Express (SZX) Company Limited | Controlled by the spouse of director and shareholder, Mr. Yee Kit, CHAN | Freight charges and handling fee charged by the related party | $2075367 | $5804739 | $2293421 |
| Profit Sail International Express (SZX) Company Limited | Controlled by the spouse of director and shareholder, Mr. Yee Kit, CHAN | Management fee income from the related party | $28474 | $27145 | $12981 |
| Business Great Global Supply Chain Limited | Controlled by shareholder, Mr. Kin Yin Alfred, KWONG | Service fee from the related party | $273089 | $- | $N/A *(Note*) |
| Business Great Global Supply Chain Limited | Controlled by shareholder, Mr. Kin Yin Alfred, KWONG | Management fee income from the related party | $45263 | $43614 | $N/A *(Note*) |
| Top Star E-Commerce Logistics Limited | Controlled by the spouse of shareholder, Mr. Kin Yin Alfred, KWONG | Freight charges and handling fee charged by the related party | $576840 | $992965 | $1033065 |
| Rich Fame International Limited | Controlled by the spouse of director and shareholder, Mr. Yee Kit, CHAN | IT maintenance fee charged by the related party | $158591 | $289231 | $- |
| Granful Solutions Limited | Controlled by director, Mr. Hok Wai Alex, KO; One director of Granful Solutions Limited is the spouse of shareholder, Mr. Kin Yin Alfred, KWONG | Service fee from the related party | $- | $3130 | $554578 |

---

*Note: Business Great Global Supply Chain Limited became our indirectly wholly owned subsidiary since March 2022 and was no longer accounted for as a related party.*

The Company records transactions with various related parties. These related party balances as of December 31, 2020 and 2021 and June 30, 2022 are identified as follows:

**Related Party Balances**

As of December 31, 2020 and 2021 and June 30, 2022, the balances resulting from normal course of business with related parties were as follows:

Major amounts due to the related parties consist of the following:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **As of December 31** | **As of December 31** | |
|  | | **2020** | **2021** | **As of <br> June 30**<br>**2022** |
|  | <br>**Relationship** | **USD** | **USD** | **USD** |
| Mr. Chan Yee Kit | Director and shareholder | $- | $804888 | $- |
| Rich Fame International Limited | Controlled by the spouse of director and shareholder, Mr. Yee Kit, CHAN | $2317 | $- | $- |
| Profit Sail International Express (SZX) Company Limited | Controlled by the spouse of director and shareholder, Mr. Yee Kit, CHAN | $432843 | $269946 | $507812 |
| Top Star E-Commerce Logistics Limited | Controlled by the spouse of shareholder, Mr. Kin Yin Alfred, KWONG | $- | $163615 | $128 |

---

The amounts due to related parties are unsecured, interest free with no specific repayment terms. The amounts are of non-trade nature.

Major accounts payable to related parties consist of the following:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **As of December 31** | **As of December 31** | |
|  | | **2020** | **2021** | **As of <br> June 30**<br>**2022** |
|  | <br>**Relationship** | **USD** | **USD** | **USD** |
| Profit Sail International Express (SZX) Company Limited | Controlled by the spouse of director and shareholder, Mr. Yee Kit, CHAN | $136906 | $645661 | $487177 |
| Top Star E-Commerce Logistics Limited | Controlled by the spouse of shareholder, Mr. Kin Yin Alfred, KWONG | $374428 | $147786 | $240797 |
| Business Great Global Supply Chain Limited | Controlled by shareholder, Mr. Kin Yin Alfred, KWONG | $1766584 | $4206818 | N/A *(Note)* |

---

*Note:* Business Great Global Supply Chain Limited became our indirectly wholly owned subsidiary since March 2022 and was no longer accounted for as a related party.

The accounts payable to related parties represented freight fee and other handling charges payable to related parties. The amounts are unsecured, interest free, repayable within 45 days and of trade nature.

Major amounts due from related parties consist of the following:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **As of December 31** | **As of December 31** | |
|  | | **2020** | **2021** | **As of** <br> **June 30**<br>**2022** |
|  | <br>**Relationship** | **USD** | **USD** | **USD** |
| Mr. Yee Kit, CHAN | Director and shareholder | $5541261 | $- | $- |
| Mr. Kin Yin Alfred, KWONG | Shareholder | $767956 | $- | $- |
| Rich Fame International Limited | Controlled by the spouse of director and shareholder, Mr. Yee Kit, CHAN | $- | $37332 | $192383 |
| Profit Sail International Express (SZX) Company Limited | Controlled by the spouse of director and shareholder, Mr. Yee Kit, CHAN | $4287 | $54880 | $36643 |
| Business Great Global Supply Chain Limited | Controlled by shareholder, Mr. Kin Yin Alfred, KWONG | $844760 | $1955163 | N/A *(Note)* |
| Granful Solutions Limited | Controlled by director, Mr. Hok Wai Alex, KO; One director of Granful Solutions Limited is the spouse of shareholder, Mr. Kin Yin Alfred, KWONG | $- | $129670 | $192000 |

---

*Note*: Business Great Global Supply Chain Limited became our indirectly wholly owned subsidiary since March 2022 and was no longer accounted for as a related party.

The amounts due from related parties are unsecured, interest free with no specific repayment terms. The amounts are of non-trade nature.

Major accounts receivable from related parties consist of the following:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **As of December 31** | **As of December 31** | |
|  | | **2020** | **2021** | **As of <br> June 30**<br>**2022** |
|  | <br>**Relationship** | **USD** | **USD** | **USD** |
| Granful Solutions Limited | Controlled by director, Mr. Hok Wai Alex, KO; One director of Granful Solutions Limited is the spouse of shareholder, Mr. Kin Yin Alfred, KWONG | $- | $3130 | $433853 |

---

The accounts receivable from related parties represented service fee income from related parties. The amounts are unsecured, interest free, repayable within 45 days and of trade nature.

**PRINCIPAL SHAREHOLDERS**

The following table sets forth information regarding the beneficial ownership of our Ordinary Shares as of the date of this prospectus by our officers, directors, and 5% or greater beneficial owners of Ordinary Shares. There is no other person or group of affiliated persons known by us to beneficially own more than 5% of our Ordinary Shares. The following table assumes that none of our officers, directors or 5% or greater beneficial owners of our Ordinary Shares will purchase shares in this offering. In addition, the following table assumes that the over-allotment option has not been exercised. Holders of our Ordinary Shares are entitled to one (1) vote per share and vote on all matters submitted to a vote of our shareholders, except as may otherwise be required by law.

We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Unless otherwise indicated, the person identified in this table has sole voting and investment power with respect to all shares shown as beneficially owned by him, subject to applicable community property laws.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Ordinary Shares beneficially <br> owned prior to this offering** | **Ordinary Shares beneficially <br> owned prior to this offering** | **Ordinary Shares beneficially <br> held immediately after this offering** | **Ordinary Shares beneficially <br> held immediately after this offering** |
| <br>**Name of Beneficial Owner** | **Number of <br> Ordinary <br> Shares** | **Approximate <br> percentage of <br> outstanding <br> Ordinary Shares** | **Number of <br> Ordinary <br> Shares** | **Approximate <br> percentage of <br> outstanding <br> Ordinary Shares** |
| **Directors, Director Nominees and Named Executive Officers:** |  |  |  |  |
| Mr. Yee Kit, CHAN (1) | [16,893,226] | 77.67% | [16,893,226] | [67.57]% |
| **5% or Greater Shareholders:** |  |  |  |  |
| Grand Pro Development Limited (1) | [14,718,225] | 67.67% | [14,718,225] | [58.87]% |
| Profit Sail SAS Holdings Company Limited (1) | [2,175,000] | 10.00% | [2,175,000] | [8.70]% |
| Active Move Group Holdings Limited (2) | [1,957,500] | 9.00% | [1,957,500] | [7.83]% |

---

(1) Mr. Yee Kit, CHAN controls 100% of each of Grand Pro Development Limited and Profit Sail SAS Holdings Company Limited. Mr. Yee Kit Chan may be deemed the beneficial owner of the shares held by Grand Pro Development Limited and Profit Sail SAS Holdings Company Limited.

(2) Mr. Kin Yin Alfred, KWONG controls 100% of Active Move Group Holdings Limited. Mr. Kin Yin Alfred, KWONG may be deemed the beneficial owner of the shares held Active Move Group Holdings Limited.

**DESCRIPTION OF SHARE CAPITAL**

We are an exempted company with limited liability incorporated under the law of the Cayman Islands and our affairs are governed by our Memorandum and Articles of Association, as amended from time to time and the Companies Act, and the common law of the Cayman Islands.

At incorporation, our authorized share capital was US$20,000 divided into 200,000,000 ordinary shares with US$0.0001 par value per share. There are [21,750,000] Ordinary Shares issued and outstanding as of the date of this prospectus.

Neither our Articles nor Memorandum of Association, as amended, provides for the director's power, in the absence of a quorum, to vote compensation to themselves. All decisions about director compensation will be recommended by the compensation committee, upon its formation, and approved by the Board of Directors as a whole, both acting only when a quorum of members is present.

The following are summaries of the material provisions of our Memorandum and Articles of Association that will be in force at the time of the closing of this offering and the laws of the Cayman Islands, insofar as they relate to the material terms of our Ordinary Shares. The form of our Memorandum and Articles of Association is filed as exhibits to the registration statement of which this prospectus is a part. As a convenience to potential investors, we provide the below description of Cayman Islands and our Memorandum and Articles of Association together with a comparison to similar features under Delaware law.

**Ordinary Shares**

**General**

All of our issued Ordinary Shares are fully paid and non-assessable. Certificates representing the Ordinary Shares are issued in registered form. Our shareholders who are non-residents of the Cayman Islands may freely hold and transfer their Ordinary Shares in accordance with our Memorandum and Articles of Association.

At the completion of this offering, there will be [25,000,000] Ordinary Shares issued and outstanding.

Any Shareholder receiving a certificate shall indemnify the Company and its directors and officers of any wrongful or fraudulent use or representation made by any person by virtue of the possession thereof. If a certificate for Shares is worn out or lost it may be renewed on production of the worn out certificate or on satisfactory proof of its loss together with such indemnity as may be required by resolution of Directors.

**Listing**

We have applied to list our Ordinary Shares on the Nasdaq Capital Market under the symbol "PSIG." We cannot guarantee that we will be successful in listing on Nasdaq; however, we will not complete this offering unless we receive conditional approval letter.

**Transfer Agent and Registrar**

The transfer agent and registrar for the Ordinary Shares is VStock Transfer, LLC. The transfer agent and registrar's address is 18 Lafayette Place, Woodmere, NY 11598.

**Dividends/Distribution**

The holders of our Ordinary Shares are entitled to such dividends as may be declared by our board of directors, subject to the Companies Act. Our articles of association provide that the directors may from time to time declare dividends (including interim dividends) and other distributions on shares of the Company in issue and authorize payment of the same out of the funds of the Company lawfully available therefor. No dividend shall be paid otherwise than out of profits or, subject to the restrictions of the Companies Act, the share premium account.

**Voting rights**

At each general meeting, each shareholder who is present in person or by proxy (or, in the case of a shareholder being a corporation, by its duly authorized representative) will have one (1) vote for each Ordinary Share.

An ordinary resolution to be passed by the shareholders requires the affirmative vote of a simple majority of the votes attached to the Ordinary Shares cast by those shareholders entitled to vote who are present in person or by proxy (or, in the case of corporations, by their duly authorized representatives) at a general meeting, while a special resolution requires the affirmative vote of a majority of not less than two-thirds of the votes attached to the Ordinary Shares cast by those shareholders who are present in person or by proxy (or, in the case of corporations, by their duly authorized representatives) at a general meeting. Actions that may be taken at a general meeting also may be taken by a resolution in writing by simple majority of the shareholders in writing entitled to vote in respect of an ordinary resolution, or a unanimous resolution of all the shareholders in writing in respect of a special resolution. A special resolution will be required for important matters such as a change of name or making changes to our Memorandum and Articles of Association.

**Cumulative Voting**

Delaware law permits cumulative voting for the election of directors only if expressly authorized in the certificate of incorporation. There are no prohibitions in relation to cumulative voting under the laws of the Cayman Islands but our Memorandum and Articles of Association do not provide for cumulative voting.

**Pre-emptive Rights**

There are no pre-emptive rights applicable to the issue by us of Ordinary Shares under our Memorandum and Articles of Association.

**Our Memorandum and Articles of Association** 

The following are summaries of the material provisions of our Memorandum and Articles of Association and the Companies Act, insofar as they relate to the material terms of our Ordinary Shares. They do not purport to be complete. Reference is made to our Memorandum and Articles of Association, a copy of which is 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").

**Meetings of Shareholders**

The directors may convene a meeting of shareholders whenever they think necessary or desirable. We must provide an advance notice of at least 7 clear days, counting from the general meeting is deemed to take place, stating the place, the date and the hour of the general meeting and, in the case of special business, the general nature of that business, and if a resolution is proposed as a special resolution, the text of that resolution, to such persons who are entitled to receive such notices from the Company in accordance with the Company's articles of association. Our board of directors must convene a general meeting upon the written requisition of one or more shareholders who together hold not less than 10% of the rights to vote at such general meeting in respect to the matter for which the meeting is requested.

No business may be transacted at any general meeting unless a quorum is present at the time the meeting proceeds to business. Upon listing of the Company, one or more shareholders present in person or by proxy holding in aggregate not less than one-third of the outstanding shares of the Company carrying the right to vote at such general meeting shall be a quorum. If, within fifteen minutes of the time appointed for the meeting, or if at any time during the meeting, a quorum is not present, the meeting, if convened upon the requisition of shareholders, shall be cancelled. In any other case, it shall stand adjourned to the same day seven days hence, at the same time and place, or to such other time or place as is determined by the directors and if, at the adjourned meeting, a quorum is not present within fifteen minutes of the time appointed for the meeting, the shareholders present in person or by proxy shall be a quorum. At every meeting, the chairman of a general meeting shall be the chairman of the Board or such other director as the directors have nominated to chair Board meetings in the absence of the chairman of the Board. Absent any such person being present within fifteen minutes of the time appointed for the meeting, the directors present shall elect one of their number to chair the meeting.

A corporation that is a shareholder shall be deemed for the purpose of our Memorandum and Articles of Association to be present at a general meeting in person if represented by its duly authorized representative. A corporate shareholder wishing to act by a duly authorized representative must identify that person to the Company by notice in writing, This duly authorized representative shall be entitled to exercise the same powers on behalf of the corporation which he represents as that corporation could exercise if it were our individual shareholder.

**Meetings of Directors**

The business of our company is managed by the directors who may for that purpose exercise all the powers of our Company. Our directors are free to meet at such times and in such manner and places within or outside the Cayman Islands as the directors determine to be necessary or desirable. The quorum necessary for the transaction of the business of the directors may be fixed by the directors, and unless so fixed, if there be more than a single director shall be two, and if the Board is comprised of a single director only, then the quorum shall be one. An action that may be taken by the directors at a meeting may also be taken by a resolution of directors consented to in writing by all of the directors.

**Transfer of Ordinary Shares**

Subject to the restrictions in our Memorandum and Articles of Association and applicable securities laws, any of our shareholders may transfer all or any of his or her ordinary shares by an instrument of transfer in the usual or common form or any other form approved by our board of directors. Our board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share whether or not it is fully paid up without assigning any reason for doing so. If our directors refuse to register a transfer they shall, within three months after the date on which the instrument of transfer was lodged, send to each of the transferor and the transferee notice of such refusal. The registration of transfers may, on 14 days' notice being given by advertisement in such one or more newspapers or by electronic means, be suspended and the register closed at such times and for such periods as our board of directors may from time to time determine, provided, however, that the registration of transfers shall not be suspended nor the register closed for more than 30 days in any year as our board may determine.

**Dissolution; Winding Up**

If we are wound up and the assets available for distribution among our shareholders are more than sufficient to repay the whole of the paid up capital at the commencement of the winding up, the excess shall be distributable among those shareholders in proportion to the capital paid up at the commencement of the winding up on the shares held by them respectively. If we are wound up and the assets available for distribution among the shareholders as such are insufficient to repay the whole of the paid up capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the shareholders in proportion to the capital paid up at the commencement of the winding up on the shares held by them, respectively. If we are wound up, the liquidator may with the sanction of a special resolution and any other sanction required by the Companies Act, divide among our shareholders in specie or kind the whole or any part of our assets (whether they shall consist of property of the same kind or not), and may, for such purpose, to value any assets and to determine how such division shall be carried out as between the shareholders or different classes of shareholders.

The liquidator may also vest the whole or any part of these assets in trustees for the benefit of the shareholders as those liable to contribute to the winding up.

**Calls on Ordinary Shares and forfeiture of Ordinary Shares**

Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their Ordinary Shares in a notice served to such shareholders at least 14 clear days' prior to the specified time of payment. The Ordinary Shares that have been called upon and remain unpaid are subject to forfeiture.

**Redemption, Repurchase and Surrender of Ordinary Shares**

We may issue shares on terms that such shares are subject to redemption, at our option, on such terms and in such manner as may be determined, before the issue of such shares, by our board of directors or by a special resolution of our shareholders holding shares of a particular class.

The Companies Act and our Memorandum and Articles of Association permits us to purchase our own shares, subject to certain restrictions and requirements. Subject to the Companies Act, our Memorandum and Articles of Association and to any applicable requirements imposed from time to time by the Nasdaq, the Securities and Exchange Commission, or by any other recognized stock exchange on which our securities are listed, we may purchase our own shares (including any redeemable shares) on such terms and in such manner as been approved by the directors or by an ordinary resolution of our shareholders. Under the Companies Act, the repurchase of any share may be paid out of our Company's profits, or out of the share premium account, or out of the proceeds of a fresh issue of shares made for the purpose of such repurchase, or out of capital. If the repurchase proceeds are paid out of our Company's capital, our Company must, immediately following such payment, be able to pay its debts as they fall due in the ordinary course of business. In addition, under the Companies Act, no such share may be repurchased (1) unless it is fully paid up, and (2) if such repurchase would result in there being no shares outstanding other than shares held as treasury shares. The repurchase of shares may be effected in such manner and upon such terms as may be authorized by or pursuant to the Company's articles of association. If the articles do not authorize the manner and terms of the purchase, a company shall not repurchase any of its own shares unless the manner and terms of purchase have first been authorized by a resolution of the company. In addition, under the Companies Act and our Memorandum and Articles of Association, our Company may accept the surrender of any fully paid share for no consideration unless, as a result of the surrender, the surrender would result in there being no shares outstanding (other than shares held as treasury shares).

**Variations of Rights of Shares**

If at any time, our share capital is divided into different classes of shares, all or any of the rights attached to any class of our shares may (unless otherwise provided by the terms of issue of the shares of that class) be varied 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 by the holders of shares of that class as may be present in person or by proxy at a separate general meeting.

**Rights of non-resident or foreign shareholders**

There are no limitations imposed by our Memorandum and Articles of Association on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our Memorandum and Articles of Association governing the ownership threshold above which shareholder ownership must be disclosed.

**Inspection of Books and Records** 

Holders of our ordinary shares have no general right under our articles of association to inspect or obtain copies of our list of shareholders or our corporate records. However, we will provide our shareholders with annual audited financial statements.

**Issuance of additional Ordinary Shares**

Our Memorandum and Articles of Association authorizes our board of directors to issue additional Ordinary Shares from authorized but unissued shares to the extent available, from time to time as our board of directors shall determine. Issuance of these shares may dilute the voting power of holders of ordinary shares.

**Anti-Takeover Provisions**

Some provisions of our Memorandum and Articles of Association may discourage, delay or prevent a change of control of our company or management that shareholders may consider favorable. Our authorized, but unissued ordinary shares are available for future issuance without shareholders' approval and could be utilized for a variety of corporate purposes, including future offerings to raise addition capital, acquisitions and employee benefit plans. The existence of authorized but unissued and unreserved ordinary shares could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.

**Exempted Company**

We are an exempted company with limited liability under the Companies Act of the Cayman Islands. The Companies Act in the Cayman Islands 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 for the exemptions and privileges listed below:

● an exempted company does not have to file an annual return of its shareholders with the Registrar of Companies;

● an exempted company's register of members is not open to inspection;

● an exempted company does not have to hold an annual general meeting;

● an exempted company may not issue negotiable or bearer shares, but may issue shares with no par value;

● an exempted company may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance);

● an exempted company may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;

● an exempted company may register as a limited duration company; and

● an exempted company 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. Upon the closing of this offering, we will be subject to reporting and other informational requirements of the Exchange Act, as applicable to foreign private issuers. We currently intend to comply with the Nasdaq Marketplace Rules in lieu of home country practices after the closing of this offering.

**Differences in Corporate Law**

The Companies Act and the laws of the Cayman Islands affecting Cayman Islands companies like us and our shareholders differ from laws applicable to U.S. corporations and their shareholders. Set forth below is a summary of the material differences between the provisions of the laws of the Cayman Islands applicable to us and the laws applicable to companies incorporated in the United States and their shareholders. Set forth below is a summary of certain significant differences between the provisions of the 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, directors of Cayman Islands companies owe fiduciary duties to their respective companies to, amongst other things, act in good faith in their dealings with or on behalf of the company and exercise their powers and fulfill the duties of their office honestly. Core duties are:<br>● a duty to act in good faith in what the directors bona fide consider to be the best interests of the company (and in this regard, it should be noted that the duty is owed to the company and not to associate companies, subsidiaries or holding companies);<br>● a duty not to personally profit from opportunities that arise from the office of director;<br>● a duty of trusteeship of the company's assets;<br>● a duty not to put himself in a position where the structures of a company conflict of his or her personal interest on his or her duty to a third party to avoid conflicts of interest; and<br>● a duty to exercise powers for the purpose for which such powers were conferred.<br>A director of a Cayman Islands company also owes the company a duty to act with skill, care and diligence. A director need not exhibit in the performance of his or her duties a greater degree of skill than may be reasonably expected from a person of his or her knowledge and experience. |
| Limitations on Personal Liability of Directors | Subject to the limitations described below, a certificate of incorporation may provide for the elimination or limitation of the personal liability of a director to the corporation or its shareholders for monetary damages for a breach of fiduciary duty as a director. Such provision cannot limit liability for breach of loyalty, bad faith, intentional misconduct, unlawful payment of dividends or unlawful share purchase or redemption. In addition, the certificate of incorporation cannot limit liability for any act or omission occurring prior to the date when such provision becomes effective. | The Cayman Islands law does not limit the extent to which a company's articles of association may provide for indemnification of Officers and directors. 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. | Cayman Islands law does not limit the extent to which a company's Memorandum and Articles of Association may provide for indemnification of directors and officers, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against the consequences of committing a crime, or against the indemnified person's own fraud or dishonesty.<br>Our articles of association provide to the extent permitted by law, we shall indemnify each existing or former secretary, director (including alternate director), and any of our other officers (including an investment adviser or an administrator or liquidator) and their personal representatives against: (a) all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by the existing or former director (including alternate director), secretary or officer in or about the conduct of our business or affairs or in the execution or discharge of the existing or former director (including alternate director), secretary's or officer's duties, powers, authorities or discretions; and (b) without limitation to paragraph (a) above, all costs, expenses, losses or liabilities incurred by the existing or former director (including alternate director), secretary or officer in defending (whether successfully or otherwise) any civil, criminal, administrative or investigative proceedings (whether threatened, pending or completed) concerning us or our affairs in any court or tribunal, whether in the Cayman Islands or elsewhere.<br>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.<br>To the extent permitted by law, we may make a payment, or agree to make a payment, whether by way of advance, loan or otherwise, for any legal costs incurred by an existing or former director (including alternate director), secretary or any of our officers in respect of any matter identified in above on condition that the director (including alternate director), secretary or officer must repay the amount paid by us to the extent that it is ultimately found not liable to indemnify the director (including alternate director), the secretary or that officer for those legal costs. |

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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. |
| 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.<br>|
| Voting for election of 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. | Directors are appointed in accordance with the terms of the Memorandum and Articles of Association of the company. |
| 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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| Mergers and Similar Arrangements | Under Delaware law, with certain exceptions, a merger, consolidation, exchange or sale of all or substantially all the assets of a corporation must be approved by the board of directors and a majority of the outstanding shares entitled to vote thereon. Under Delaware law, a shareholder of a corporation participating in certain major corporate transactions may, under certain circumstances, be entitled to appraisal rights pursuant to which such shareholder may receive cash in the amount of the fair value of the shares held by such shareholder (as determined by a court) in lieu of the consideration such shareholder would otherwise receive in the transaction.<br>Delaware law also provides that a parent corporation, by resolution of its board of directors, may merge with any subsidiary, of which it owns at least 90% of each class of capital stock without a vote by shareholders of such subsidiary. Upon any such merger, dissenting shareholders of the subsidiary would have appraisal rights. | The Companies Act permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies. For these purposes, (a) "merger" means the merging of two or more constituent companies and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company, and (b) a "consolidation" means the combination of two or more constituent companies into a consolidated company and the vesting of the undertaking, property and liabilities of such companies to the consolidated company. In order to effect such a merger or consolidation, the directors of each constituent company must approve a written plan of merger or consolidation, which must then be authorized by (a) a special resolution of the shareholders of each constituent company, and (b) such other authorization, if any, as may be specified in such constituent company's articles of association. The plan must be filed with the Registrar of Companies together with a declaration as to the solvency of the consolidated or surviving company, a list of the assets and liabilities of each constituent company and an undertaking that a copy of the certificate of merger or consolidation will be given to the shareholders and creditors of each constituent company and that notification of the merger or consolidation will be published in the Cayman Islands Gazette. Court approval is not required for a merger or consolidation which is effected in compliance with these statutory procedures.<br>A merger between a Cayman Islands parent company and its Cayman Islands subsidiary or subsidiaries does not require authorization by a resolution of shareholders if a copy of the plan of merger is given to every member of that Cayman subsidiary to be merged unless that member agrees otherwise. For this purpose a subsidiary is a company of which at least 90% of the votes are owned by the parent company.<br>The consent of each holder of a fixed or floating security interest of a constituent company is required unless this requirement is waived by a court in the Cayman Islands.<br>|

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Except in certain limited circumstances, a dissenting shareholder of a Cayman Islands constituent company is entitled to payment of the fair value of his or her shares upon dissenting from a merger or consolidation. The exercise of such dissenter rights will preclude the exercise by the dissenting shareholder of any other rights to which he or she might otherwise be entitled by virtue of holding shares, except for the right to seek relief on the grounds that the merger or consolidation is void or unlawful. <br>In addition, there are statutory provisions that facilitate the reconstruction and amalgamation of companies, provided that the arrangement is approved by seventy-five percent (75%) in value of the shareholders or class of shareholders, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that:<br>- the statutory provisions as to the required majority vote have been met;<br>- the shareholders have been fairly represented at the meeting in question;<br>- the arrangement is such that an intelligent and honest man of that class acting in respect of his interest would reasonably approve; and<br>the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act <br>When a takeover offer is made and accepted by holders of not less than 90.0% of the shares affected within four months, the offeror may, within a two-month period commencing on the expiration of such four month period, give notice to require the holders of the remaining shares to transfer such shares on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands by a dissenting shareholder within one month from the date on which the notice was given but this is unlikely to succeed unless there is evidence of fraud, bad faith or collusion. <br>If an arrangement and reconstruction is thus approved, the dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive payment in cash for the judicially determined value of the shares.<br>

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| Shareholder Suits | Class actions and derivative actions generally are available to shareholders under Delaware law for, among other things, breach of fiduciary duty, corporate waste and actions not taken in accordance with applicable law. In such actions, the court generally has discretion to permit the winning party to recover attorneys' fees incurred in connection with such action. | &nbsp;&nbsp;&nbsp;&nbsp;In principle, we will normally be the proper plaintiff and as a general rule a derivative action may not be brought by a minority shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, there are exceptions to the foregoing principle, including when:<br>&nbsp;&nbsp;&nbsp;&nbsp;● a company acts or proposes to act illegally or ultra vires;<br>&nbsp;&nbsp;&nbsp;&nbsp;● the act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has not been obtained; and<br>&nbsp;&nbsp;&nbsp;&nbsp;● those who control the company are perpetrating a "fraud on the minority." |
| Inspection of Corporate Records | Under Delaware law, shareholders of a Delaware corporation have the right during normal business hours to inspect for any proper purpose, and to obtain copies of list(s) of shareholders and other books and records of the corporation and its subsidiaries, if any, to the extent the books and records of such subsidiaries are available to the corporation. | Shareholders of a Cayman Islands exempted company have no general right under Cayman Islands law to inspect or obtain copies of a list of shareholders or other corporate records (other than the copies of Memorandum and Articles of Association and any special resolutions passed by such companies, and the registers of mortgages and charges of such companies) of the company. However, these rights may be provided in the company's Memorandum and Articles of Association. |

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| Shareholder Proposals | Unless provided in the corporation's certificate of incorporation or bylaws, Delaware law does not include a provision restricting the manner in which shareholders may bring business before a meeting. | The Companies Act does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company's articles of association. Our articles provide that general meetings shall be convened on the written requisition of one or more of the shareholders entitled to attend and vote at our general meetings who (together) hold not less than 10 percent of the rights to vote at such general meeting in accordance with the notice provisions in the articles, specifying the purpose of the meeting and signed by each of the shareholders making the requisition. If the directors do not convene such meeting for a date not later than twenty-one clear days' after the date of receipt of the written requisition, those shareholders who requested the meeting may convene the general meeting themselves within three months after the end of such period of twenty-one clear days in which case reasonable expenses incurred by them as a result of the directors failing to convene a meeting shall be reimbursed by us. Our articles provide no other right to put any proposals before annual general meetings or extraordinary general meetings. |
| Approval of Corporate Matters by Written Consent | Delaware law permits shareholders to take action by written consent signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting of shareholders. | The Companies Act allows a special resolution to be passed in writing if signed by all the voting shareholders (if authorized by the Memorandum and Articles of Association). |
| Calling of Special Shareholders Meetings | Delaware law permits the board of directors or any person who is authorized under a corporation's certificate of incorporation or bylaws to call a special meeting of shareholders. | The Companies Act does not have provisions governing the proceedings of shareholders meetings which are usually provided in the Memorandum and Articles of Association. |
| Dissolution; Winding Up | Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporation's outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board of directors. | Under the Companies Act and our articles, the Company may be wound up by a special resolution of our shareholders, or if the winding up is initiated by our board of directors, by either a special resolution of our members or, if our company is unable to pay its debts as they fall due, by an ordinary resolution of our members. In addition, a company may be wound up by an order of the courts of the Cayman Islands. The court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable to do so. |

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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 some cases the directors may be satisfied that no further information is required since an exemption applies under the Anti-Money Laundering Regulations (Revised) of the Cayman Islands, as amended and revised from time to time (the "Regulations") or any other applicable law. Depending on the circumstances of each application, a detailed verification of identity might not be required where:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the subscriber makes the payment for their investment from an account
 held in the subscriber's name at a recognized financial institution; or

(b) the subscriber is regulated by a recognized regulatory authority and
 is based or incorporated in, or formed under the law of, a recognized jurisdiction; or

(c) the application is made through an intermediary which is regulated
 by a recognized regulatory authority and is based in or incorporated in, or formed under the law of a recognized jurisdiction and
 an assurance is provided in relation to the procedures undertaken on the underlying investors.

For the purposes of these exceptions, recognition of a financial institution, regulatory authority or jurisdiction will be determined in accordance with the Regulations by reference to those jurisdictions recognized by the Cayman Islands Monetary Authority as having equivalent anti-money laundering regulations.

In the event of delay or failure on the part of the subscriber in producing any information required for verification purposes, we may refuse to accept the application, in which case any funds received will be returned without interest to the account from which they were originally debited.

We also reserve the right to refuse to make any payment to a shareholder if our directors or officers suspect or are advised that the payment 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 in the Cayman Islands knows or suspects or has reasonable grounds for knowing or suspecting that another person is engaged in criminal conduct or money laundering or is involved with terrorism or terrorist financing and property and the information for that knowledge or suspicion came to their attention in the course of 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) the Financial Reporting Authority ("FRA") of the Cayman Islands, pursuant to the Proceeds of Crime Act (Revised) of the Cayman Islands if the disclosure relates to criminal conduct or money laundering, or (ii) a police officer of the rank of constable or higher, or the FRA, pursuant to the Terrorism Act (Revised) of the Cayman Islands, if the disclosure relates to involvement with terrorism or terrorist financing and 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.

**SHARES ELIGIBLE FOR FUTURE SALE**

Before this offering, there has not been a public market for our Ordinary Shares, and while we plan to list our Ordinary Shares on Nasdaq, we cannot assure you that a significant public market for the Ordinary Shares will develop or be sustained after this offering. Future sales of substantial amounts of our Ordinary Shares in the public markets after this offering, or the perception that such sales may occur, could adversely affect market prices prevailing from time to time. As described below, only a limited number of our Ordinary Shares currently outstanding will be available for sale immediately after this offering due to contractual and legal restrictions on resale. Nevertheless, after these restrictions lapse, future sales of substantial amounts of our Ordinary Share, including Ordinary Share issued upon exercise of outstanding options, in the public market in the United States, or the possibility of such sales, could negatively affect the market price in the United States of our Ordinary Share and our ability to raise equity capital in the future

Upon the closing of the offering, we will have outstanding [25,000,000] Ordinary Shares, assuming no exercise of the underwriters' over-allotment option.

Of that amount, [3,250,000] Ordinary Shares will be publicly held by investors participating in this offering, and [21,750,000] Ordinary Shares will be held by our existing shareholders, some of whom may be our "affiliates" as that term is defined in Rule 144 under the Securities Act. As defined in Rule 144, an "affiliate" of an issuer is a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the issuer.

All of the Ordinary Share sold in the offering by the Company will be freely transferable by persons other than our "affiliates" in the United States without restriction or further registration under the Securities Act. Ordinary shares purchased by one of our "affiliates" may not be resold, except pursuant to an effective registration statement or an exemption from registration, including an exemption under Rule 144 under the Securities Act described below.

The Ordinary Share held by existing shareholders are "restricted securities," as that term is defined in Rule 144 under the Securities Act. These restricted securities may be sold in the United States only if they are registered or if they qualify for an exemption from registration under Rule 144 or Rule 701 under the Securities Act. These rules are described below.

**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 Share or otherwise, which will equal approximately shares immediately after this offering; or

● the average weekly trading volume of the Ordinary Shares on Nasdaq during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.

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 or option plan or other written agreement relating to compensation is eligible to resell such Ordinary Shares 90 days after we became a reporting company under the Exchange Act in reliance on Rule 144, but without compliance with some of the restrictions, including the holding period, contained in Rule 144.

**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.

**Lock-up Agreements**

Our directors, executive officers and shareholders holding 5% or more of the issued and outstanding Ordinary Shares have agreed, subject to limited exceptions, not to offer, pledge, announce the intention to sell, 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 or otherwise dispose of, directly or indirectly, or enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of our Ordinary Shares or such other securities for a period of six months after the date of this prospectus, without the prior written consent of the representative. See "Underwriting."

**MATERIAL TAX CONSEQUENCES APPLICABLE TO U.S. HOLDERS<br> OF OUR ORDINARY SHARES** 

The following sets forth the material Cayman Islands, Hong Kong and U.S. federal income tax consequences related to an investment in 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 an investment in our Ordinary Shares, such as the tax consequences under state, local and other tax laws.

The following brief description applies only to U.S. Holders (defined below) that hold Ordinary Shares as capital assets and that have the U.S. dollar as their functional currency. This brief description is based on the 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. Unless otherwise noted in the following discussion, this section is the opinion of Ortoli Rosenstadt LLP, our U.S. counsel, insofar as it relates to legal conclusions with respect to matters of U.S. federal income tax law, of Ogier, insofar as it relates to legal conclusions with respect to matters of Cayman Islands tax law and of Stevenson & Wong, our Hong Kong counsel, insofar as it relates to legal conclusions with respect to matters of Hong Kong tax law.

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 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.

WE URGE POTENTIAL PURCHASERS OF OUR SHARES TO CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL, STATE, LOCAL AND NON-U.S. TAX CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF OUR SHARES.

**Generally**

PSI Group Holdings Ltd is an exempted Cayman Islands company limited by shares. PSIHK and BGG are Hong Kong limited companies and are subject to Hong Kong law.

**Cayman Islands Taxation**

The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to investors levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or, after execution, brought within the jurisdiction of the Cayman Islands. The Cayman Islands is a party to a double tax treaty entered with the United Kingdom in 2010 but is otherwise is not party to any double tax treaties which are applicable to any payments made to or by our company. 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 under Cayman Islands laws on the payment of a dividend or capital to any holder of the ordinary shares, nor will gains derived from the disposal of the ordinary shares be subject to Cayman Islands income or corporation tax.

No stamp duty is payable in the Cayman Islands in respect of the issue of our ordinary shares or on an instrument of transfer in respect of our ordinary shares except those which hold interests in land in the Cayman Islands.

**Hong Kong Taxation**

The taxation of income and capital gains of holders of Ordinary Shares is subject to the laws and practices of Hong Kong and of jurisdictions in which holders of Ordinary Shares are resident or otherwise subject to tax. The following summary of certain relevant taxation provisions under Hong Kong law is based on current law and practice, is subject to changes therein and does not constitute legal or tax advice. The discussion does not deal with all possible tax consequences relating to an investment in the Ordinary Shares. Accordingly, each prospective investor (particularly those subject to special tax rules, such as banks, dealers, insurance companies, tax-exempt entities and holders of 10% or more of our voting capital stock) should consult its own tax advisor regarding the tax consequences of an investment in the Ordinary Shares. The discussion is based upon laws and relevant interpretations thereof in effect as of the date of this prospectus, all of which are subject to change. There is no reciprocal tax treaty in effect between Hong Kong and the United States.

**Tax on Dividends**

Under the current practices of the Hong Kong Inland Revenue Department, no tax is payable in Hong Kong in respect of dividends paid by us as a company incorporated in Cayman Islands.

**Profits Tax**

No tax is imposed in Hong Kong in respect of capital gains from the sale of property (such as the Ordinary Shares). Trading gains from the sale of property by persons carrying on a trade, profession or business in Hong Kong where such gains are derived from or arise in Hong Kong from such trade, profession or business will be chargeable to Hong Kong profits tax, which is currently imposed at the rate of 16.5% and 15% on corporations and unincorporated businesses, respectively, and at a maximum rate of 15% on individuals. Liability for Hong Kong profits tax may thus arise in respect of trading gains from sales of Ordinary Shares realized by persons carrying on a business or trading or dealing in securities in Hong Kong.

**Stamp Duty**

Hong Kong stamp duty, currently charged at the rate of HKD 1.3 (USD 0.2) per HKD 1,000.0 (USD 128.2) or part thereof on the higher of the consideration for or the value of the Ordinary Shares, will be payable by the purchaser on every purchase and by the seller on every sale of Ordinary Shares (i.e., a total of HKD 2.6 (USD 0.3) per HKD 1,000.0 (USD 128.2) or part thereof is currently payable on a typical sale and purchase transaction involving Ordinary Shares). In addition, a fixed duty of HKD 5.0 (USD 0.6) is currently payable on any instrument of transfer of Ordinary Shares. If one of the parties to the sale is a non-Hong Kong resident and does not pay the required stamp duty, the duty not paid will be assessed on the instrument of transfer (if any) and the transferee will be liable for payment of such duty. No Hong Kong stamp duty is payable upon the transfer of Ordinary Shares outside Hong Kong.

**Estate Duty**

The Revenue (Abolition of Estate Duty) Ordinance 2005 came into effect on February 11, 2006 in Hong Kong. No Hong Kong estate duty is payable and no estate duty clearance papers are needed for an application for a grant of representation in respect of holders of Ordinary Shares whose death occurs on or after February 11, 2006.

**United States Federal Income Tax Considerations** 

The following discussion is a summary of United States federal income tax considerations relating to the ownership and disposition of our Ordinary Shares by a U.S. holder (as defined below) that holds our Ordinary Shares as "capital assets" (generally, property held for investment) under the United States Internal Revenue Code of 1986, as amended (the "Code"). This discussion is based upon existing United States federal income tax law, which is subject to differing interpretations and may be changed, possibly with retroactive effect. No ruling has been sought from the Internal Revenue Service (the "IRS") with respect to any United States federal income tax consequences described below, and there can be no assurance that the IRS or a court will not take a contrary position. This discussion does not address all aspects of United States federal income taxation that may be important to particular investors in light of their individual circumstances, including investors subject to special tax rules (for example, banks or other financial institutions, insurance companies, broker-dealers, pension plans, cooperatives, traders in securities that have elected the mark-to-market method of accounting for their securities, partnerships and their partners, regulated investment companies, real estate investment trusts, and tax-exempt organizations (including private foundations)), holders who are not U.S. holders, holders who own (directly, indirectly, or constructively) 10% or more of our voting shares, holders who will hold their Ordinary Shares as part of a straddle, hedge, conversion, constructive sale, or other integrated transaction for United States federal income tax purposes, or investors that have a functional currency other than the United States dollar, all of whom may be subject to tax rules that differ significantly from those summarized below. In addition, this discussion does not discuss any non-United States, alternative minimum tax, state, or local tax considerations, or the Medicare tax on net investment income. Each U.S. holder is urged to consult its tax advisors regarding the United States federal, state, local, and non-United States income and other tax considerations with respect to the ownership and disposition of our Ordinary Shares.

**General**

For purposes of this discussion, a "U.S. holder" is a beneficial owner of our Ordinary Shares that is, for United States federal income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity treated as a corporation for United States federal income tax purposes) created in, or organized under the laws of, the United States or any state thereof or the District of Columbia, (iii) an estate the income of which is subject to United States federal income taxation regardless of its source, or (iv) a trust (A) the administration of which is subject to the primary supervision of a United States court and which has one or more United States persons who have the authority to control all substantial decisions of the trust or (B) that has otherwise elected to be treated as a United States person under applicable United States Treasury regulations.

If a partnership (or other entity 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 generally depend upon the status of the partner and the activities of the partnership. Partnerships holding our Ordinary Shares and partners in such partnerships are urged to consult their tax advisors as to the particular United States federal income tax consequences of an investment in our r Ordinary Shares.

**Passive Foreign Investment Company Considerations**

A non-United States corporation, such as our company, will be a "passive foreign investment company," or "PFIC," for United States federal income tax purposes, if, in any particular taxable year, either (i) 75% or more of its gross income for such year consists of certain types of "passive" income or (ii) 50% or more of the average quarterly value of its assets (as determined on the basis of fair market value) during such year produce or are held for the production of passive income. For this purpose, cash is categorized as a passive asset and the company's unbooked intangibles associated with active business activities may generally be classified as active assets. Passive income generally includes, among other things, dividends, interest, rents, royalties, and gains from the disposition of passive assets. We will be treated as owning a proportionate share of the assets and earning a proportionate share of the income of any other corporation in which we own, directly or indirectly, at least 25% (by value) of the stock.

The discussion below under "Dividends" and "Sale or Other Disposition of Ordinary Shares" is written on the basis that we will not be or become a PFIC for United States federal income tax purposes. The United States federal income tax rules that apply if we are a PFIC for the current taxable year or any subsequent taxable year are generally discussed below under "Passive Foreign Investment Company Rules."

**Dividends**

Subject to the PFIC rules discussed below, any cash distributions (including the amount of any tax withheld) paid on our Ordinary Shares out of our current or accumulated earnings and profits, as determined under United States federal income tax principles, will generally be includible in the gross income of a U.S. holder as dividend income on the day actually or constructively received by the U.S. holder. Because we do not intend to determine our earnings and profits on the basis of United States federal income tax principles, any distribution paid will generally be reported as a "dividend" for United States federal income tax purposes. A non-corporate recipient of dividend income will generally be subject to tax on dividend income from a "qualified foreign corporation" at a reduced United States federal tax rate rather than the marginal tax rates generally applicable to ordinary income provided that certain holding period requirements are met.

A non-United States corporation (other than a corporation that is a PFIC for the taxable year in which the dividend is paid or the preceding taxable year) will generally be considered to be a qualified foreign corporation (a) if it is eligible for the benefits of a comprehensive tax treaty with the United States which the Secretary of Treasury of the United States determines is satisfactory for purposes of this provision and which includes an exchange of information program, or (b) with respect to any dividend it pays on stock which is readily tradable on an established securities market in the United States. In the event we are deemed to be a resident enterprise under the PRC Enterprise Income Tax Law, we may be eligible for the benefits of the United States-PRC income tax treaty (which the U.S. Treasury Department has determined is satisfactory for this purpose) and in that case we would be treated as a qualified foreign corporation with respect to dividends paid on our Ordinary Shares. Each non-corporate U.S. holder is advised to consult its tax advisors regarding the availability of the reduced tax rate applicable to qualified dividend income for any dividends we pay with respect to our Ordinary Shares. Dividends received on the Ordinary Shares will not be eligible for the dividends received deduction allowed to corporations.

Dividends will generally be treated as income from foreign sources for United States foreign tax credit purposes and will generally constitute passive category income. In the event that we are deemed to be a PRC "resident enterprise" under the Enterprise Income Tax Law, a U.S. holder may be subject to PRC withholding taxes on dividends paid on our Ordinary Shares. In that case, a U.S. holder may be eligible, subject to a number of complex limitations, to claim a foreign tax credit in respect of any foreign withholding taxes imposed on dividends received on Ordinary Shares. A U.S. holder who does not elect to claim a foreign tax credit for foreign tax withheld may instead claim a deduction, for United States federal income tax purposes, in respect of such withholdings, but only for a year in which such U.S. holder elects to do so for all creditable foreign income taxes. The rules governing the foreign tax credit are complex. U.S. holders are advised to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

**Sale or Other Disposition of Ordinary Shares**

Subject to the PFIC rules discussed below, a U.S. holder will generally recognize capital gain or loss upon the sale or other disposition of Ordinary Shares in an amount equal to the difference between the amount realized upon the disposition and the U.S. holder's adjusted tax basis in such Ordinary Shares. Any capital gain or loss will be long-term if the Ordinary Shares have been held for more than one year and will generally be United States source gain or loss for United States foreign tax credit purposes. Long-term capital gain of non-corporate U.S. holders is generally eligible for a reduced rate of taxation. The deductibility of a capital loss may be subject to limitations. In the event that we are treated as a PRC "resident enterprise" under the Enterprise Income Tax Law and gain from the disposition of the Ordinary Shares is subject to tax in the PRC, a U.S. holder that is eligible for the benefits of the income tax treaty between the United States and the PRC may elect to treat the gain as PRC source income. U.S. holders are advised to consult its tax advisors regarding the tax consequences if a foreign tax is imposed on a disposition of our Ordinary Shares, including the availability of the foreign tax credit under their particular circumstances and the election to treat any gain as PRC source.

**Passive Foreign Investment Company Rules**

If we are a PFIC for any taxable year during which a U.S. holder holds our Ordinary Shares, and unless the U.S. holder makes a mark-to-market election (as described below), the U.S. holder will generally be subject to special tax rules that have a penalizing effect, regardless of whether we remain a PFIC, for subsequent taxable years, on (i) any excess distribution that we make to the U.S. holder (which generally means any distribution paid during a taxable year to a U.S. holder that is greater than 125% of the average annual distributions paid in the three preceding taxable years or, if shorter, the U.S. holder's holding period for the Ordinary Shares), and (ii) any gain realized on the sale or other disposition, including, under certain circumstances, a pledge, of Ordinary Shares. Under the PFIC rules:

such excess distribution and/or gain will be allocated ratably over the U.S. holder's holding period for the Ordinary Shares;

such amount allocated to the current taxable year and any taxable years in the U.S. holder's holding period prior to the first taxable year in which we are a PFIC, or pre-PFIC year, will be taxable as ordinary income;

such amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect for that year; and an interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each prior taxable year, other than a pre-PFIC year.

If we are a PFIC for any taxable year during which a U.S. holder holds our Ordinary Shares and any of our non-United States subsidiaries is also a PFIC, such U.S. holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of these rules. U.S. holders are advised to consult their tax advisors regarding the application of the PFIC rules to any of our subsidiaries.

As an alternative to the foregoing rules, a U.S. holder of "marketable stock" in a PFIC may make a mark-to-market election. Since we plan to have our Ordinary Shares listed on the Nasdaq, and provided that the Ordinary Shares will be regularly traded on the Nasdaq, a U.S. holder holds Ordinary Shares will be eligible to make a mark-to-market election if we are or were to become a PFIC. If a mark-to-market election is made, the U.S. holder will generally (i) include as ordinary income for each taxable year that we are a PFIC the excess, if any, of the fair market value of Ordinary Shares held at the end of the taxable year over the adjusted tax basis of such Ordinary Shares and (ii) deduct as an ordinary loss the excess, if any, of the adjusted tax basis of the Ordinary Shares over the fair market value of such Ordinary Shares held at the end of the taxable year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. The U.S. holder's adjusted tax basis in the Ordinary Shares would be adjusted to reflect any income or loss resulting from the mark-to-market election. If a U.S. holder makes an effective mark-to-market election, in each year that we are a PFIC any gain recognized upon the sale or other disposition of the Ordinary Shares will be treated as ordinary income and loss will be treated as ordinary loss, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. If a U.S. holder makes a mark-to-market election it will be effective for the taxable year for which the election is made and all subsequent taxable years unless the Ordinary Shares are no longer regularly traded on a qualified exchange or the Internal Revenue Service consents to the revocation of the election.

If a U.S. holder makes a mark-to-market election in respect of a PFIC and such corporation ceases to be a PFIC, the U.S. holder will not be required to take into account the mark-to-market gain or loss described above during any period that such corporation is not a PFIC.

Because a mark-to-market election cannot be made for any lower-tier PFICs that a PFIC may own, a U.S. holder who makes a mark-to-market election with respect to our Ordinary Shares may continue to be subject to the general PFIC rules with respect to such U.S. holder's indirect interest in any of our non-United States subsidiaries if any of them is a PFIC.

We do not intend to provide information necessary for U.S. holders to make qualified electing fund elections, which, if available, would result in tax treatment different from the general tax treatment for PFICs described above.

As discussed above under "Dividends," dividends that we pay on our Ordinary Shares will not be eligible for the reduced tax rate that applies to qualified dividend income if we are a PFIC for the taxable year in which the dividend is paid or the preceding taxable year. In addition, if a U.S. holder owns our Ordinary Shares during any taxable year that we are a PFIC, such holder would generally be required to file an annual IRS Form 8621. Each U.S. holder is advised to consult its tax advisors regarding the potential tax consequences to such holder if we are or become a PFIC, including the possibility of making a mark-to-market election.

**Information Reporting**

Certain U.S. holders may be required to report information to the IRS relating to an interest in "specified foreign financial assets," including shares issued by a non-United States corporation, for any year in which the aggregate value of all specified foreign financial assets exceeds US$50,000 (or a higher dollar amount prescribed by the IRS), subject to certain exceptions (including an exception for shares held in custodial accounts maintained with a United States financial institution). These rules also impose penalties if a U.S. holder is required to submit such information to the IRS and fails to do so.

In addition, U.S. holders may be subject to information reporting to the IRS with respect to dividends on and proceeds from the sale or other disposition of our Ordinary Shares. Each U.S. holder is advised to consult with its tax advisor regarding the application of the United States information reporting rules to their particular circumstances.

**ENFORCEABILITY OF CIVIL LIABILITIES**

We are an exempted company with limited liability incorporated under the laws of the Cayman Islands. We are incorporated in the Cayman Islands because of certain benefits associated with being a Cayman Islands corporation, such as political and economic stability, an effective judicial system, a favorable tax system, the absence of exchange control or currency restrictions and the availability of professional and support services. However, the Cayman Islands has a less developed body of securities laws as compared to the United States and provides protections for investors to a lesser extent. In addition, Cayman Islands companies may not have standing to sue before the federal courts of the United States.

Substantially all of our assets are located outside the United States. In addition, all of our directors and officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons' 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 such persons or to enforce judgments obtained in United States courts against them or against us, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof.

We have appointed Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, NY 10168, as our agent to receive service of process with respect to any action brought against us in the United States under the federal securities laws of the United States or of any State of the United States.

**Hong Kong**

Stevenson Wong & Co., our counsel as to Hong Kong law, has advised us that there is uncertainty as to whether the courts of Hong Kong would (1) recognize or enforce judgments of United States courts obtained against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state thereof, or (2) be competent to hear original actions brought in each respective jurisdiction, against us or such persons predicated upon the securities laws of the United States or any state thereof.

Stevenson Wong & Co. has advised us that the recognition and enforcement of foreign judgments are provided for under the Hong Kong Civil Procedure Law. Hong Kong courts may recognize and enforce foreign judgments in accordance with the requirements of the Hong Kong Civil Procedure Law based either on treaties between Hong Kong and the country where the judgment is made or in reciprocity between jurisdictions. Hong Kong does not have any treaties or other agreements with Cayman Islands or the United States that provide for the reciprocal recognition and enforcement of foreign judgments. As a result, it is uncertain whether a Hong Kong court would enforce a judgment rendered by a court in either of these two jurisdictions.

**Cayman Islands**

We have been advised by Ogier, our counsel as to Cayman Islands, that it is uncertain whether the courts of the Cayman Islands will allow shareholders of our company to originate actions in the Cayman Islands based upon securities laws of the United States. In addition, there is uncertainty with regard to Cayman Islands law related to whether a judgment obtained from the U.S. courts under civil liability provisions of U.S. securities laws will be determined by the courts of the Cayman Islands as penal or punitive in nature. If such determination is made, the courts of the Cayman Islands will not recognize or enforce the judgment against a Cayman Islands company, such as our company. As the courts of the Cayman Islands have yet to rule on making such a determination in relation to judgments obtained from U.S. courts under civil liability provisions of U.S. securities laws, it is uncertain whether such judgments would be enforceable in the Cayman Islands. We have been further advised that although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, a judgment obtained in such jurisdiction will be recognized and enforced in the courts of the Cayman Islands at common law, without any re- examination of 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:

&nbsp;&nbsp;&nbsp;&nbsp;(a) is given by a foreign court of competent jurisdiction;

&nbsp;&nbsp;&nbsp;&nbsp;(b) imposes on the judgment debtor a liability
 to pay a liquidated sum for which the judgment has been given;

(c) is final;

&nbsp;&nbsp;&nbsp;&nbsp;(d) is not in respect of taxes, a fine or a penalty; and

&nbsp;&nbsp;&nbsp;&nbsp;(e) was not obtained in a manner and is not of a kind the enforcement of
 which is contrary to natural justice or the public policy of the Cayman Islands.

Ogier has informed us that although there is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments), a judgment in personam obtained in such jurisdiction will be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination of 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 (a) is given by a competent foreign court with jurisdiction to give the judgment, (b) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given, (c) is final, (d) is not in respect of taxes, a fine or a penalty; and (e) was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands. However, the Cayman Islands courts are unlikely to enforce a judgment obtained from the U.S. courts under civil liability provisions of the U.S. federal securities law if such judgment is determined by the courts of the Cayman Islands to give rise to obligations to make payments that are penal or punitive in nature. Because such a determination has not yet been made by a court of the Cayman Islands, it is uncertain whether such civil liability judgments from U.S. courts would be enforceable in the Cayman Islands.

**British Virgin Islands**

There is no statutory registration regime in the British Virgin Islands for judgments of the courts of the United States (the "Courts"). However, any final and conclusive monetary judgment for a definite sum obtained against a British Virgin Islands' Guarantor (the "BVI Guarantor") in the Courts would be recognized as a valid judgment and treated by the courts of the British Virgin Islands as a cause of action in itself and sued upon as a debt at common law with a view to proceeding with the claim by way of summary judgment so that no retrial of the issues would be necessary provided that:

● the Courts had jurisdiction in the matter and the BVI Guarantor either submitted to such jurisdiction or was resident or carrying on business within such jurisdiction and was duly served with process;

● the judgment given by the Courts was not in respect of penalties, taxes, fines or similar fiscal or revenue obligations;

● the judgment was not procured by fraud;

● recognition or enforcement of the judgment in the British Virgin Islands would not be contrary to public policy;

● the proceedings pursuant to which judgment was obtained were not contrary to natural justice;

● no new admissible evidence relevant to the matter was submitted prior to the rendering of the judgment by the courts of the British Virgin Islands; and

● all procedures relevant to the matter under the laws of the British Virgin Islands were duly complied with.

The British Virgin Islands would follow the general position under English common law that a court will not enforce a foreign penal law, either directly or indirectly. A judgment awarding monetary damages under the U.S. federal securities laws would constitute a penalty (and therefore not be enforced) if it is recoverable only at the instance of: (i) a U.S. state; (ii) a U.S. public official or agency; or (iii) a member of the public in the character of a common informer who pursues an action in the interest of the whole community.

*Original action in the British Virgin Islands based upon the U.S. federal securities laws*

 ****

If an action is capable of amounting to a cause of action under common law and thus capable of being sustained as a cause of action in itself under English law then it may be possible for such action to be brought in the British Virgin Islands. For example, if the action to be brought in the British Virgin Islands is based on a provision within the U.S. federal securities laws which prohibits fraud, deceit or misrepresentation in the sale of securities, an investor may be able to bring an original action in the British Virgin Islands if the facts and circumstances of their case amount to an action for fraud, misrepresentation or deceit based solely on the common law without reference to or independent of the U.S. federal securities laws.

However, where such action can only be based on a particular provision within the U.S. federal securities laws, for example, such action that may relate to strict reporting or registration requirements to particular bodies established under or recognized by such law (such as the SEC); it is very unlikely that such action would have extra-territorial effect unless specifically stated within that law and recognized as having such effect under British Virgin Islands law. Consequently, an investor would not be able to bring such an action in the British Virgin Islands in those circumstances.

**UNDERWRITING**

We will enter into an underwriting agreement with Univest Securities, LLC, to act as the representative of the underwriters named below. Subject to the terms and conditions of the underwriting agreement, the underwriters named below have agreed to purchase, and we have agreed to sell to them, the number of our Ordinary Shares at the initial public offering price, less the underwriting discounts, as set forth on the cover page of this prospectus and as indicated below:

---

| | |
|:---|:---|
| **Name** | **Number of<br> Ordinary Shares** |
| Univest Securities, LLC |  |
| [ ] |  |
| Total |  |

---

The underwriters are offering the shares subject to their acceptance of the shares from us and subject to prior sale. The underwriting agreement provides that the obligations of the underwriters to pay for and accept delivery of the shares offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the shares offered by this prospectus if any such shares are taken. However, the underwriters are not required to take or pay for the shares covered by the underwriters' over-allotment option described below.

We have granted to the underwriters an option, exercisable for 45 days from the closing of this offering, to purchase up to an additional [487,500] Ordinary Shares at the initial public offering price listed on the cover page of this prospectus, less underwriting discounts. The option may be exercised in whole or in part, and may be exercised more than once, during the 45-day option period. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering contemplated by this prospectus. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase the same percentage of the additional shares as the number listed next to the underwriter's name in the preceding table bears to the total number of shares listed next to the names of all underwriters in the preceding table.

The underwriters will offer the shares to the public at the initial public offering price set forth on the cover page of this prospectus and to certain dealers at that price less a concession not in excess of US$[ ] per share.

**Discounts and Expenses**

The underwriting discounts are equal to 7% of the initial public offering price.

The following table shows the price per share and total initial public offering price, underwriting discounts, proceeds before expenses to us. The total amounts are shown assuming both no exercise and full exercise of the underwriters' over-allotment option.

---

| | | | |
|:---|:---|:---|:---|
|  | **Per Share** | **Total<br> No Exercise of <br> Over-allotment <br> Option** | **Full <br> Exercise of <br> Over-allotment <br> Option** |
| Initial public offering price | $5.00 | $16250000 | $18687500 |
| Underwriting discounts to be paid by us | $0.35 | $1137500 | $1308125 |
| Proceeds to us, before expenses | $4.65 | $15112500 | $17379375 |

---

We will also pay to the Underwriter by deduction from the net proceeds of the offering contemplated herein, a non-accountable expense allowance equal to 1% of the gross proceeds received by us from the sale of the shares, including any shares issued pursuant to the exercise of the Underwriter's over-allotment option.

We have agreed to reimburse the representative for its out-of-pocket accountable expenses (including legal fees), up to a maximum amount of US$200,000. As of the date of this prospectus, we have paid US$30,000 to the representative as an advance against out-of-pocket accountable expenses. Any advance will be returned to us to the extent the representative's out-of-pocket accountable expenses are not actually incurred in accordance with FINRA Rule 5110(g)(4)(A).

We estimate that the total expenses of the offering payable by us, excluding the underwriting discounts and non-accountable expense allowance, will be approximately US$[1,541,012].

**Right of First Refusal**

We have agreed to grant the representative, for the 12-month period following the closing of this offering, a right of first refusal to provide investment banking services to the Company on an exclusive basis in all matters for which investment banking services are sought by the Company (such right, the "Right of First Refusal"), which right is exercisable in the representative's sole discretion but is non-assignable. For these purposes, investment banking services shall include, without limitation, (a) acting as lead manager for any underwritten public offering; (b) acting as exclusive placement agent, initial purchaser or financial advisor in connection with any private offering of securities of the Company; and (c) acting as financial advisor in connection with any sale or other transfer by the Company, directly or indirectly, of a majority or controlling portion of its capital stock or assets to another entity, any purchase or other transfer by another entity, directly or indirectly, of a majority or controlling portion of the capital stock or assets of the Company, and any merger or consolidation of the Company with another entity. The Right of First Refusal may be terminated by the Company for cause.

**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 of those liabilities.

**Lock-Up Agreements**

Our officers, directors, and shareholders holding 5% or more of the issued and outstanding Ordinary Shares have agreed, subject to certain exceptions, to a 6-month lock-up period from the date of this prospectus, with respect to the Ordinary Shares that they beneficially own, including the issuance of shares upon the exercise of convertible securities and options that may be currently outstanding or which may be issued. This means that, for a period of six months following the date of this prospectus, such persons may not offer, sell, pledge or otherwise dispose of these securities without the prior written consent of the Underwriter or as otherwise agreed.

The representative has no present intention to waive or shorten the lock-up period; however, the terms of the lock-up agreements may be waived at its discretion. In determining whether to waive the terms of the lock-up agreements, the representative may base its decision on its assessment of the relative strengths of the securities markets and companies similar to ours in general, and the trading pattern of, and demand for, our securities in general.

**Listing**

We have applied to list our Ordinary Shares on the Nasdaq Capital Market under the symbol "PSIG." We make no representation that such application will be approved or that our Ordinary Shares will trade on such market either now or at any time in the future. However, we will not complete this offering unless we are so listed.

**Electronic Offer, Sale and Distribution**

A prospectus in electronic format may be made available on websites or through other online services maintained by the underwriters or selling group members, if any, or by their affiliates, and the underwriters may distribute prospectus electronically. The underwriters may agree to allocate a number of Ordinary Shares to selling group members for sale to their online brokerage account holders. The Ordinary Shares to be sold pursuant to internet distributions will be allocated on the same basis as other allocations. Other than the prospectus in electronic format, the information on, or that can be accessed through, these websites and any information contained in any other website maintained by these entities is not part of, and is not incorporated by reference into, 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, and should not be relied upon by investors.

In connection with this offering, certain of the underwriters or securities dealers may distribute prospectuses by electronic means, such as e-mail.

**Passive Market Making**

Any underwriter who is a qualified market maker on Nasdaq may engage in passive market making transactions on Nasdaq, in accordance with Rule 103 of Regulation M under the Exchange Act, during a period before the commencement of offers or sales of the shares and extending through the completion of the distribution. Passive market makers must comply with applicable volume and price limitations and must be identified as a passive market maker. In general, a passive market maker must display its bid at a price not in excess of the highest independent bid for such security. If all independent bids are lowered below the passive market maker's bid, however, the passive market maker's bid must then be lowered when certain purchase limits are exceeded.

**Pricing of this Offering**

Prior to this offering, there has been no public market for our Ordinary Shares. The initial public offering price for our Ordinary Shares will be determined through negotiations between us and the Underwriter. Among the factors to be considered in these negotiations will be prevailing market conditions, our financial information, market valuations of other companies that we and the Underwriter believe to be comparable to us, estimate of our business potential and earning prospects, the present state of our development and other factors deemed relevant. The initial public offering price of our Ordinary Shares in this offering does not necessarily bear any direct relationship to the assets, operations, book or other established criteria of value of our company.

**Potential Conflicts of Interest**

The underwriters and their affiliates may, from time to time, engage in transactions with and perform services for us in the ordinary course of their business for which they may receive customary fees and reimbursement of expenses. In the ordinary course of their various business activities, the underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own accounts and for the accounts of their customers and such investment and securities activities may involve securities and/or instruments of our Company. The underwriters and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to customers that they acquire, long and/or short positions in such securities and instruments.

**Selling Restrictions**

Other than in the United States, no action may be taken, and no action has been taken, by us or the underwriters that would permit a public offering of the Ordinary Shares offered by, or the possession, circulation or distribution of, this prospectus in any jurisdiction where action for that purpose is required. The Ordinary Shares offered by this prospectus may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such shares be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any Ordinary Shares offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.

In addition to the offering of the Ordinary Shares in the United States, the underwriters may, subject to applicable foreign laws, also offer the Ordinary Shares in certain countries.

**Price Stabilization, Short Positions and Penalty Bids**

Until the distribution of the Ordinary Shares offered by this prospectus is completed, rules of the SEC may limit the ability of the underwriters to bid for and to purchase our Ordinary Shares. As an exception to these rules, the underwriters may engage in transactions effected in accordance with Regulation M under the Exchange Act that are intended to stabilize, maintain or otherwise affect the price of our Ordinary Shares. The underwriters may engage in over-allotment sales, syndicate covering transactions, stabilizing transactions and penalty bids in accordance with Regulation M.

● Stabilizing transactions consist of bids or purchases made by the managing underwriter for the purpose of preventing or slowing a decline in the market price of our securities while this offering is in progress.

● Short sales and over-allotments occur when the managing underwriter, on behalf of the underwriting syndicate, sells more of our shares than they purchase from us in this offering. In order to cover the resulting short position, the managing underwriter may exercise the over-allotment option described above and/or may engage in syndicate covering transactions. There is no contractual limit on the size of any syndicate covering transaction. The underwriters will deliver a prospectus in connection with any such short sales. Purchasers of shares sold short by the underwriters are entitled to the same remedies under the federal securities laws as any other purchaser of units covered by the registration statement.

● Syndicate covering transactions are bids for or purchases of our securities on the open market by the managing underwriter on behalf of the underwriters in order to reduce a short position incurred by the managing underwriter on behalf of the underwriters.

● A penalty bid is an arrangement permitting the managing underwriter to reclaim the selling concession that would otherwise accrue to an underwriter if the Ordinary Shares originally sold by the underwriter were later repurchased by the managing underwriter and therefore were not effectively sold to the public by such underwriter.

Stabilization, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our Ordinary Shares or preventing or delaying a decline in the market price of our Ordinary Shares. As a result, the price of our Ordinary Shares may be higher than the price that might otherwise exist in the open market.

Neither we nor the underwriters make any representation or prediction as to the effect that the transactions described above may have on the prices of our Ordinary Shares. These transactions may occur on Nasdaq or on any trading market. If any of these transactions are commenced, they may be discontinued without notice at any time.

**Notice to Prospective Investors in Hong Kong**

The contents of this prospectus have not been reviewed by any regulatory authority in Hong Kong. You are advised to exercise caution in relation to the offer. If you are in any doubt about any of the contents of this prospectus, you should obtain independent professional advice. Please note that (i) our shares may not be offered or sold in Hong Kong, by means of this prospectus or any document other than to "professional investors" within the meaning of Part I of Schedule 1 of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the "SFO") and any rules made thereunder, or in other circumstances which do not result in the document being a "prospectus" within the meaning of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong) (the "C(WUMP)O") or which do not constitute an offer or invitation to the public for the purpose of the C(WUMP)O or the SFO, and (ii) no advertisement, invitation or document relating to our shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to the shares which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the SFO and any rules made thereunder.

**Notice to Prospective Investors in the Mainland China**

This prospectus may not be circulated or distributed in Mainland China and the shares may not be offered or sold, and will not offer or sell to any person for re-offering or resale directly or indirectly to any resident of Mainland China except pursuant to applicable laws, rules and regulations of Mainland China.

**Notice to Prospective Investors in Taiwan, the Republic of China**

The Ordinary Shares have not been and will not be registered with the Financial Supervisory Commission of Taiwan, the Republic of China, pursuant to relevant securities laws and regulations and may not be offered or sold in Taiwan through a public offering or in any manner which would constitute an offer within the meaning of the Securities and Exchange Act of Taiwan or would otherwise require registration with or the approval of the Financial Supervisory Commission of Taiwan.

**EXPENSES RELATING TO THIS OFFERING**

Set forth below is an itemization of the total expenses, excluding the underwriting discounts and non-accountable expense allowance, 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 listing fee, all amounts are estimates.

---

| | |
|:---|:---|
| Securities and Exchange Commission Registration Fee | $2059 |
| The Nasdaq Capital Market Listing Fee | 75000 |
| FINRA Filing Fee | 3303 |
| Legal Fees and Expenses | 405000 |
| Accounting Fees and Expenses | 300000 |
| Printing and Engraving Expenses | 24000 |
| Miscellaneous Expenses | 731650 |
| Total Expenses | $1541012 |

---

These expenses will be borne by us. Underwriting discounts and non-accountable expense allowance will be borne by us in proportion to the numbers of Ordinary Shares sold in this offering.

**LEGAL MATTERS**

The validity of the Ordinary Shares offered hereby and certain legal matters as to Cayman Islands law will be passed upon for us by Ogier. Ortoli Rosenstadt LLP is acting as counsel to our company regarding U.S. securities law matters. Certain legal matters as to Hong Kong law will be passed upon for us by Stevenson, Wong & Co. Certain legal matters as to PRC law will be passed upon for us by Guangdong Wesley Law Firm. Ortoli Rosenstadt LLP may rely upon Stevenson, Wong, & Co. and Guangdong Wesley Law Firm with respect to matters governed by Hong Kong law and PRC law, respectively. Hunter Taubman Fischer& Li LLC is acting as U.S. securities counsel for the underwriter in connection with this offering. Han Kun Law Offices LLP is acting as the Hong Kong counsel for the underwriter.

**EXPERTS**

The consolidated financial statements as of and for the years ended December 31, 2020 and 2021 as set forth in this prospectus and elsewhere in the registration statement have been so included in reliance on the report of WWC, P.C., an independent registered public accounting firm, given on their authority as experts in accounting and auditing. The current address of WWC, P.C. is 2010 Pioneer Court, San Mateo, CA 94403.

**WHERE YOU CAN FIND ADDITIONAL INFORMATION**

We have filed with the SEC a registration statement on Form F-1 (including amendments and exhibits to the registration statement) under the Securities Act with respect to the Ordinary Shares offered hereby. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits filed therewith. For further information about us and the Ordinary Shares offered hereby, reference is made to the registration statement and the exhibits filed therewith. Statements contained in this prospectus regarding the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and in each instance we refer you to the copy of such contract or other document filed as an exhibit to the registration statement. However, statements in the prospectus contain the material provisions of such contracts, agreements and other documents. We currently do not file periodic reports with the SEC. Upon the closing of our initial public offering, we will be required to file periodic reports and other information with the SEC pursuant to the Exchange Act, as applicable to foreign private issuers. As we are a foreign private issuer, we are exempt from some of the Exchange Act reporting requirements, the rules prescribing the furnishing and content of proxy statements to shareholders, and Section 16 short swing profit reporting for our officers and directors and for holders of more than 10% of our shares. 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 U.S. companies whose securities are registered under the Exchange Act. The SEC also maintains a website that contains reports, information statements and other information regarding registrants that file electronically with the SEC. The address of the website is *www.sec.gov*.

We maintain a website at www.profitsail.com. Information contained on, or that can be accessed through, our website is not a part of, and shall not be incorporated by reference into, this prospectus.

**PSI GROUP HOLDINGS LTD**

**CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2020 and 2021**

INDEX

---

| | |
|:---|:---|
| [Reports of Independent Registered Public Accounting Firms](#finn_001) | F-2 |
| [Consolidated Balance Sheets](#finn_002) | F-3 |
| [Consolidated Statements of Income and Comprehensive Income](#finn_003) | F-5 |
| [Consolidated Statements of Shareholders' Equity](#finn_004) | F-6 |
| [Consolidated Statements of Cash Flows](#finn_005) | F-7 |
| [Notes to the Consolidated Financial Statements](#finn_006) | F-9 |

---

![](image_018.jpg)

**REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS**

To: The Board of Directors and Shareholders of

PSI Group Holdings Ltd

**Opinion on the Financial Statements**

We have audited the accompanying consolidated balance sheets of PSI Group Holdings Ltd and its subsidiaries (collectively the "Company") as of December 31, 2020 and 2021, and the related consolidated statements of income and comprehensive income, shareholders' equity, 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 "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2021, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

**Emphasis of Matter - Restatement of 2020 and 2021 Financial Statements**

As discussed in Note 2.1 to the consolidated financial statements, the 2020 and 2021 consolidated financial statements have been restated to correct a misstatement related to the initial recognition of a business combination that occurred subsequent to December 31, 2021. The business combination was previously accounted for as a merger of entities under common control based on the assumption that there was common ownership in both operating entities whereby the consolidated financial statements included the accounts of both operating entities from the first period presented; however, a more in-depth assessment of the transaction conducted by the Company revealed that the economics of the merger resulted in an outcome where both parties did NOT maintain the same beneficial ownership before and after the merger; therefore, the restated financial statements for the years ended December 31, 2020 and 2021 excludes one of the operating entities, and the business combination will be accounted from the date of acquisition forward. The correction of the error resulted in restatement of the consolidated financial statements, and the changes were pervasive to entire the accompanying consolidated financial statements as a whole.

**Basis for Opinion**

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ WWC, P.C.

WWC, P.C.

Certified Public Accountants

PCAOB ID: 1171

We have served as the Company's auditor since 2021

San Mateo, California

November 1, 2022

![](image_019.jpg)

**PSI GROUP HOLDINGS LTD**

**CONSOLIDATED BALANCE SHEETS**

**AS OF DECEMBER 31, 2020 AND 2021**

**(IN U.S. DOLLARS)**

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2020** | **December 31,**<br>**2021** |
|  | **(Restated)** | **(Restated)** |
| **ASSETS** |  |  |
| **Current assets** |  |  |
| Cash and cash equivalents | $3432456 | $9934013 |
| Restricted cash | 645516 | 759718 |
| Accounts receivable, net | 13120420 | 16698071 |
| Accounts receivable – related party | 7448 | 12088 |
| Contract asset, net | 3146334 | 1291368 |
| Amounts due from related parties | 7161516 | 2179564 |
| Prepayments and other current assets | 1072295 | 663154 |
| **Total Current Assets** | $**28585985** | $**31537976** |
| **Non-current asset** |  |  |
| Property, plant, equipment, net | 334904 | 462700 |
| Right-of-use assets | 318629 | 583436 |
| Investment in equity securities | 603188 |  |
| **Total non-current assets** | $**1256721** | $**1046136** |
| **TOTAL ASSETS** | $**29842706** | $**32584112** |

---

**PSI GROUP HOLDINGS LTD**

**CONSOLIDATED BALANCE SHEETS (Continued)**

**AS OF DECEMBER 31, 2020 AND 2021** 

**(IN U.S. DOLLARS)**

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2020** | **December 31,**<br>**2021** |
|  | **(Restated)** | **(Restated)** |
| **Current Liabilities** |  |  |
| Short-term bank loans | $3026194 | $387263 |
| Accounts payable | 12682841 | 15144307 |
| Accounts payable – related party | 2277918 | 5000265 |
| Contract liabilities |  | 108974 |
| Other payables and accrued liabilities | 445268 | 475482 |
| Taxes payables | 707712 | 1743702 |
| Lease liabilities - current | 114462 | 422208 |
| Amounts due to related parties | 435160 | 1238449 |
| Dividend payables | 28326 | 145513 |
| **Total current liabilities** | $**19717881** | $**24666163** |
| **Non-current liabilities** |  |  |
| Lease liabilities – non-current | 226042 | 192921 |
| **Total non-current liabilities** | $**226042** | $**192921** |
| **TOTAL LIABILITIES** | $**19943923** | $**24859084** |
| **COMMITMENTS AND CONTINGENCIES** |  |  |
| **EQUITY** |  |  |
| Ordinary shares, par value US$0.0001 per share, 200,000,000 shares authorized; 155,969 and 155,969 shares issued and outstanding as of December 31, 2020 and 2021, respectively\* | 16 | 16 |
| Additional paid-in capital | 5826358 | 5826358 |
| Retained earnings | 4057233 | 1921718 |
| Accumulated other comprehensive loss | (17403) | (38253) |
| **Total shareholders' equity** | $**9866204** | $**7709839** |
| Non-controlling interest | 32579 | 15189 |
| **TOTAL EQUITY** | $**9898783** | $**7725028** |
| **TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY** | $**29842706** | $**32584112** |

---

*\** *Shares presented on a retroactive basis to reflect the restructuring.*

See accompanying notes to the consolidated financial statements.

**PSI GROUP HOLDINGS LTD**

**CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME**

**FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2021** 

**(IN U.S. DOLLARS)**

---

| | | |
|:---|:---|:---|
|  | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** |
|  | **2020** | **2021** |
|  | **(Restated)** | **(Restated)** |
| **REVENUES** | $**70196553** | $**130313501** |
| **REVENUES – RELATED PARTY** | **829779** | **593711** |
| **TOTAL REVENUE** | **71026332** | **130907212** |
| **COST OF REVENUE** | **60905368** | **105536991** |
| **COST OF REVENUE – RELATED PARTY** | **2652207** | **6797704** |
| **TOTAL COST OF REVENUE** | **63557575** | **112334695** |
| **GROSS PROFIT** | 7468757 | 18572517 |
| General and administrative expenses | 3236675 | 3638315 |
| **Total operating expenses** | $**3236675** | $**3638315** |
| **INCOME FROM OPERATIONS** | $**4232082** | $**14934202** |
| **OTHER INCOME (EXPENSE):** |  |  |
| Interest income | 6339 | 16629 |
| Interest expense | (74600) | (22543) |
| Other income | 306428 | 302294 |
| Other expense | (20703) | (212106) |
| **Total other income (expense)** | **217464** | **84274** |
| **INCOME BEFORE INCOME TAX** | $**4449546** | $**15018476** |
| **INCOME TAX** | **721146** | **2462045** |
| **NET INCOME** | $**3728400** | $**12556431** |
| LESS: NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST | 29827 | 100451 |
| &nbsp;&nbsp;&nbsp;**NET INCOME ATTRIBUTABLE TO PSI GROUP HOLDINGS LTD** | $**3698573** | $**12455980** |
| **OTHER COMPREHENSIVE INCOME (LOSS):** |  |  |
| Foreign currency translation adjustment of PSI GROUP HOLDINGS LTD | 28842 | (20850) |
| **Comprehensive income** | $**3727415** | $**12435130** |
| **WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING\*:** |  |  |
| Basic and diluted | 155969 | 155969 |
| **NET INCOME PER ORDINARY SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY:** |  |  |
| Basic and diluted | $23.71 | $79.86 |

---

*\** *Shares presented on a retroactive basis to reflect the reorganization.*

See accompanying notes to the consolidated financial statements.

**PSI GROUP HOLDINGS LTD**

**CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY**

**FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2021** 

**(IN U.S. DOLLARS)**

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Ordinary<br> Shares\*** | **Par<br> Value<br> Amount\*** | **Additional<br> paid-in<br> capital** | **Retained<br> Earnings** | **Accumulated<br> Other<br> Comprehensive<br> Income/(Loss)** | **Total<br> Shareholders'<br> Equity** | **Non-<br> Controlling<br> Interest** | **Total<br> Equity** |
| Balance as of December 31, 2019 **(Restated)** | 155969 | $16 | $5826358 | $358660 | $(46245) | $6138789 | $2519 | $6141308 |
| Net income |  |  |  | 3698573 |  | 3698573 | 29827 | 3728400 |
| Foreign currency translation adjustment | - | - | - | - | 28842 | 28842 | 233 | 29075 |
| Balance as of December 31, 2020 **(Restated)** | 155969 | $16 | $5826358 | 4057233 | $(17403) | $9866204 | $32579 | $9898783 |
| Net income |  |  |  | 12455980 |  | 12455980 | 100451 | 12556431 |
| Foreign currency translation adjustment |  |  |  |  | (20850) | (20850) | (168) | (21018) |
| Dividends |  |  |  | (14591495) | - | (14591495) | (117673) | (14709168) |
| Balance as of December 31, 2021 **(Restated)** | 155969 | $16 | $5826358 | 1921718 | $(38253) | $7709839 | $15189 | $7725028 |

---

*\** *Shares presented on a retroactive basis to reflect the reorganization.*

See accompanying notes to the consolidated financial statements.

**PSI GROUP HOLDINGS LTD**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2021** 

**(IN U.S. DOLLARS)**

---

| | | |
|:---|:---|:---|
|  | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** |
|  | **2020** | **2021** |
|  | **(Restated)** | **(Restated)** |
| **CASH FLOWS FROM OPERATING ACTIVITIES:** |  |  |
| **Net income** | $**3728400** | $**12556431** |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation of property, plant and equipment | 121862 | 173504 |
| &nbsp;&nbsp;&nbsp;Gain on termination of right-of-used assets | (1254) | (1108) |
| &nbsp;&nbsp;&nbsp;Depreciation of right-of-used assets | 434995 | 402411 |
| &nbsp;&nbsp;&nbsp;Bad debts recovered |  | (58957) |
| &nbsp;&nbsp;&nbsp;Loss on trading of equity securities | 5290 | 107358 |
| &nbsp;&nbsp;&nbsp;Loss on investment in equity securities | 83575 |  |
| &nbsp;&nbsp;&nbsp;Allowance for expected credit loss | 285771 | 216139 |
| &nbsp;&nbsp;&nbsp;**Changes in operating assets and liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(Increase) Decrease In:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | (10239273) | (3767469) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable – related party | 12077 | (4640) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contract asset | (2090227) | 1888184 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amounts due from related parties | (764289) | (1327265) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other current assets | (948071) | 409141 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Increase (Decrease) In:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 10428531 | 2461466 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable – related party | 2060838 | 1597628 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amounts due to related parties | (305688) | 131331 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tax payables | 876995 | 1040300 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other payables and accrued liabilities | 237561 | 30214 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contract liabilities |  | 108974 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease liabilities | (382306) | (391378) |
| **NET CASH PROVIDED BY OPERATING ACTIVITIES** | $**3544787** | $**15572264** |

---

See accompanying notes to the consolidated financial statements.

**PSI GROUP HOLDINGS LTD**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2021 (Continued)**

**(IN U.S. DOLLARS)**

---

| | | |
|:---|:---|:---|
|  | **For the year ended<br> December 31** | **For the year ended<br> December 31** |
|  | **2020** | **2021** |
|  | **(Restated)** | **(Restated)** |
| **CASH FLOWS FROM INVESTING ACTIVITIES:** |  |  |
| Purchases of property, plant and equipment | $(370873) | $(303340) |
| Purchase of equity securities | (862945) | (484135) |
| Proceeds from equity securities | 410274 | 976292 |
| Advances to related party | (947782) | (5471395) |
| Repayment from related party | 1223417 | - |
| **NET CASH USED IN INVESTING ACTIVITES** | $**(547909)** | $**(5282578)** |
| **CASH FLOWS FROM FINANCING ACTIVITIES:** |  |  |
| Dividends paid | $- | $(1025641) |
| Proceeds from bank loans | 10486849 |  |
| Repayments of bank loans | (9992954) | (2620503) |
| **NET CASH PROVIDED BY/(USED) IN FINANCING ACTIVITES** | $**493895** | $**(3646144)** |
| **NET INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH** | $**3490773** | $**6643542** |
| Effect of exchange rate changes on cash | 10760 | (27783) |
| CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR | 576439 | 4077972 |
| **CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF YEAR** | $**4077972** | $**10693731** |
| Cash and cash equivalents at end of year | 3432456 | 9934013 |
| Restricted cash at end of year | 645616 | 759718 |
|  | $**4077972** | $**10693731** |
| **Supplemental Disclosure of Cash Flow Information** |  |  |
| Interest received | 6339 | 16629 |
| Interest paid | 74600 | 22543 |
| Income tax refunded | 178254 |  |
| Income tax paid |  | 1421745 |
| **Non-cash investing and financing activities** |  |  |
| Dividends offset with amount due from related parties |  | 13566168 |
| Right-of-use assets obtained in exchange for lease obligations | 53517 | 708781 |
| Forgiveness of debts | 48812 |  |
| Debts transferred from related company to offset with amount due to a director |  | 1124655 |

---

See accompanying notes to the consolidated financial statements.

**PSI GROUP HOLDINGS LTD**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES**

&nbsp;&nbsp;&nbsp;&nbsp;(a) Organization

PSI Group Holdings LTD ("PSI", or the "Company") was incorporated under the laws of the Cayman Islands on March 7, 2022. PSI is a company formed for the purposes of consolidating a group of operating business in the freight and logistics industry under one parent to maximize operational and financial synergies. Immediately after the Company's inception, the Company issued 67,670 ordinary shares to Grand Pro Development Limited for which Mr. Chan Yee Kit is the sole beneficial owner, and the Company issued 10,000 ordinary shares to Profit Sail SAS Holdings Limited for which Mr. Chan Yee Kit is also the sole beneficial owner; as a result, Mr. Chan Yee Kit owned 77,670 of the Company' shares.

On March 11, 2022, PSI (BVI) Ltd. and BGG (BVI) Ltd were incorporated under the laws of the British Virgin Islands. PSI (BVI) Ltd. and BGG (BVI) Ltd are both wholly owned subsidiaries of the Company. Both of these entities were incorporated for the purposes of acting as intermediary holding companies of the Company's operating entities.

Profit Sail Int'l Express (H.K.) Limited ("PSIHK"), was incorporated under laws of Hong Kong and commenced its operations on May 27, 1993. PSIHK is engaged in the provision of logistics and freight handling services. Up to the point of the reorganization in March of 2022, 98.8% and 0.4% equity interests of PSIHK were held by Mr. Chan Yee Kit and Mr. Kwong Kin Yin, respectively; the remaining 0.8% ownership interests were held by two independent individuals with each holding equal ownerships of 0.4% each. In March 2022, the Company completed a share swap transaction with Mr. Chan Yee Kit and Mr. Kwong Kin Yin and issued the total of 78,299 ordinary shares, of which 77,670 ordinary shares and 629 ordinary shares were issued to Mr. Chan and Mr. Kwong's designated entities in exchange for their equity interests in PSIHK. After the restructuring, the Company became the 99.2% equity interest owner in PSIHK. The 0.8% interest held by two parties was not included in the share swap transaction; accordingly, the Company accounts for that interest in PSIHK as a non-controlling interest.

The restructuring and share swaps transactions has been accounted for as a transfer of assets among entities under common control as the beneficial interest of each shareholder prior to and after the execution of the restructuring remained unchanged. Mr. Chan Yee Kit was the controlling shareholder both before and after the restructuring transactions. The consolidation of the Company and its subsidiaries have been accounted for using a historical cost basis and presented assuming that the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying consolidated financial statements. Results of operations for the periods presented comprise those of the previously separate entities combined from the beginning of the period to the end of the period, eliminating the effects of intra-entity transactions.

&nbsp;&nbsp;&nbsp;&nbsp;(b) Principal activities

The Company is a freight forwarding service provider with networks across the globe. The Company conduct its operations through its subsidiaries in Hong Kong and PSIHK (collectively the "operating subsidiaries").

The operating subsidiaries provide air and ocean export and import freight forwarding services with optional ancillary logistics related services (such as cargo pick up, cargo handling at ports and local transportation) and warehousing related services (such as repackaging, labelling, palletization, preparation of shipping documentation, arrangement of customs clearance and warehousing) to meet the requirement of the customers.

Generally, the Company's services are divided into air freight forwarding services and ocean freight forwarding service.

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**Basis of Presentation and Principles of Consolidation**

The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). The consolidated financial statements include the financial statements of the Company and its majority-owned subsidiaries. All significant inter-company transactions and balances between the Company and its subsidiaries are eliminated upon consolidation.

**Use of Estimates**

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. Actual results could differ from those estimates. In particular, the novel coronavirus ("COVID-19") pandemic and the resulting adverse impacts to global economic conditions, as well as our operations, may impact future estimates Significant estimates for the years ended December 31, 2020 and 2021, include allowance for expected credit loss, fair value measurements, useful life of property, plant and equipment, assumptions used in assessing impairment of long-lived assets.

**PSI GROUP HOLDINGS LTD**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

**Foreign Currency Translation**

The accompanying consolidated financial statements are presented in United States dollars ("US$" or "$"). The functional currency of the Company is Hong Kong Dollar ("HKD"). Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of transaction. Any differences between the initially recorded amount and the settlement amount are recorded as a gain or loss on foreign currency transaction in the consolidated statements of operations.

---

| | | |
|:---|:---|:---|
|  | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** |
|  | **2020** | **2021** |
| Year end HKD: US$ exchange rate | 7.7525 | 7.8000 |
| Year average HKD: US$ exchange rate | 7.7558 | 7.8000 |

---

**Cash and Cash Equivalents**

For financial reporting purposes, the Company considers all highly liquid investments purchased with original maturity of three months or less to be cash equivalents. The Company maintains no bank account in the United States of America. The Company maintains its bank accounts in Hong Kong Special Administrative Region ("SAR"). Balances at financial institutions within Hong Kong SAR are not covered by insurance.

**Restricted Cash**

Restricted cash represents amounts held by a bank as security for short-term borrowing and therefore is not available for the Company's use until such time as the bank acceptance notes and bank loans have been fulfilled or expired, normally within a twelve-month period.

**Investment** 

Investment in equity securities measured at fair value through profit and loss consist primarily of investments in equity securities listed in stock market and are carried at fair value in accordance with ASC 320, Investments-Debt and Equity Securities ("ASC 320"), and Topic 321, Investments-Equity Securities ("ASC 321"). These securities are marked to market based on the respective publicly quoted market prices of the equity securities. These securities transactions are recorded on a trade date basis. Any unrealized appreciation or depreciation on investment securities is reported in the Consolidated Statement of Income within other expense.

**Fair Value of Financial Instruments**

The Company applies the provisions of ASC 820, *Fair Value Measurements and Disclosures*, to the financial instruments that are required to be carried at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company uses a three-tier fair value hierarchy based upon observable and non-observable inputs that prioritizes the information used to develop our assumptions regarding fair value. Fair value measurements are separately disclosed by level within the fair value hierarchy.

● Level 1—defined as observable inputs such as quoted prices in active markets for identical assets or liabilities;

● Level 2—defined as inputs other than quoted prices in active markets, that are either directly or indirectly observable; and

● Level 3—defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The Company's financial instruments primarily consist of investment securities, cash and cash equivalents, restricted cash, accounts receivable, contract assets, accounts payable, other payables and accrued liabilities, short-term bank loans, notes payable and amount due from/to related parties.

**PSI GROUP HOLDINGS LTD**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

The carrying value of cash and cash equivalents, restricted cash, accounts receivable, amount due from/to related parties, accounts payable, and other current assets and liabilities approximate fair value because of the short-term nature of these items. The estimated fair values of short-term bank loans were not materially different from their carrying value as presented due to the short maturities and that the interest rates on the borrowing approximate those that would have been available for loans of similar remaining maturity and risk profile. As the carrying amounts are reasonable estimates of the fair value, these financial instruments are classified within Level 1 of the fair value hierarchy.

**Accounts Receivable**

Accounts receivables are carried at net realizable value. The Company reviews its accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, customer's historical payment history, its current creditworthiness and current or future economic trends. Accounts are written off after exhaustive efforts at collection. The Company only grants credit terms to established customers who are deemed to be financially responsible. Credit periods to customers are normally within 45 days after customers received services provided by the Company. If accounts receivables are to be provided for, or written off, they would be recognized in the consolidated statement of operations within operating expenses. Balance of allowance for expected credit loss was $324,991 **(Restated)** and $572,367 **(Restated)** as of December 31, 2020 and December 31, 2021, respectively.

**Property, Plant, and Equipment** 

Property, plant, and equipment are stated at cost less accumulated depreciation, and include expenditure that substantially increases the useful lives of existing assets. Expenditures for repairs and maintenance, which do not extend the useful life of the assets, are expensed as incurred, whereas significant renewals and betterments are capitalized.

Depreciation is provided over their estimated useful lives, using the straight-line method. Estimated useful lives are as follows:

---

| | |
|:---|:---|
| Leasehold improvements | life of lease |
| Machinery and equipment | 4 to 5 years |
| Motor vehicles | 3.3 years |
| Furniture and fixtures | 5 years |

---

When assets are sold or retired, their costs and accumulated depreciation are eliminated from the consolidated financial statements and any gain or loss resulting from their disposal is recognized in the period of disposition as an element of other income.

**PSI GROUP HOLDINGS LTD**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

**Impairment of Long-Lived Assets**

Long-lived assets are evaluated for impairment periodically whenever events or changes in circumstances indicate that their related carrying amounts may not be recoverable in accordance with FASB ASC 360, "Property, Plant and Equipment".

In evaluating long-lived assets for recoverability, the Company uses its best estimate of future cash flows expected to result from the use of the asset and eventual disposition in accordance with FASB ASC 360-10-15. To the extent that estimated future, undiscounted cash inflows attributable to the asset, less estimated future, undiscounted cash outflows, are less than the carrying amount, an impairment loss is recognized in an amount equal to the difference between the carrying value of such asset and its fair value. Assets to be disposed of and for which there is a committed plan of disposal, whether through sale or abandonment, are reported at the lower of carrying value or fair value less costs to sell.

There was no impairment loss recognized for the years ended December 31, 2020 and 2021.

**Lease**

ASC 842 supersedes the lease requirements in ASC 840 "Leases", and generally requires lessees to recognize operating and finance lease liabilities and corresponding right-of-use assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. Leases that transfer substantially all of the benefits and risks incidental to the ownership of assets are accounted for as finance leases as if there was an acquisition of an asset and incurrence of an obligation at the inception of the lease. All other leases are accounted for as operating leases.

We determine if an arrangement is a lease at inception. On our balance sheet, our office lease is included in Operating lease right-of-use (ROU) asset, Current portion of operating lease liability and Operating lease liability, net of current portion.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. For leases that do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Significant judgment may be required when determining whether a contract contains a lease, the length of the lease term, the allocation of the consideration in a contract between lease and non-lease components, and the determination of the discount rate included in our office lease. We review the underlying objective of each contract, the terms of the contract, and consider our current and future business conditions when making these judgments.

**Related parties**

The Company adopted ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.

**PSI GROUP HOLDINGS LTD**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

**Revenue Recognition**

The Company recognizes revenues in accordance with ASC Topic 606, "Revenue from Contracts with Customers".

The Company derives revenues primarily from the provision of air and ocean freight forwarding services by purchasing transportation services from direct (asset-based) carriers or other freight forwarders and reselling those services to its customers. The contracts with customers generally contain a single performance obligation as the distinct services provided remain substantially the same over time and possess the same pattern of transfer. The performance obligation is satisfied over the transit period when the customers simultaneously receive and consume the benefits of the delivery services. Accordingly, revenue is recognized over the transit period based on the progress towards the completion of the performance obligation.

The transit period can vary based upon the method of transport. Determining the transit period and how much of it has been completed as of the reporting date may require management to make judgments that affect the timing of revenue recognized. For air freight forwarding services, the Company uses the cost-to-cost measure of progress because it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenue is recorded proportionally as costs are incurred. The typical amount of time spent rendering air freight forwarding services is three to five days. For ocean freight forwarding services, the Company uses an output method of progress based on time-in-transit to measure the progress as the timing of costs incurred does not best depict the transfer of control to the customer. The typical amount of time spent rendering ocean freight forwarding services is approximately three to four weeks. The Company believes that the transpiring of time provides the best measurement of the rendering of services to the customer. The Company's primary output is the provision of transport products over a physical distance. Distance equals speed multiplied by time; because speed may vary over the course of the journey, measuring the rendering of service using units of time is more linearly quantifiable than speed; accordingly, the Company recognizes revenue over time. The Company believes that the methodology employed is comparable to other global logistics companies and offers faithful depiction of the transport of goods as service rendered to customers.

Pricing for the Company's services is generally a fixed amount. The Company does not have significant variable consideration in its contracts. Payments are received within 45 to 90 days upon completion of performance obligation but can vary based on the nature of the service provided and certain other factors.

The Company recognizes revenue on a gross basis as the Company controls the services. The Company is primarily responsible for fulfilling the promise, assumes risk of loss, has discretion in setting the prices for the services to its customers, and has the ability to direct the use of the services provided by third parties.

Contract assets include billed and unbilled amounts resulting from in-transit shipments, as the Company has an unconditional right to payment only once all performance obligations have been completed (e.g., shipments have been delivered). Contract assets are generally classified as current, and the full balance is converted each reporting period based on the short-term nature of the transactions. Gross contract assets related to in-transit shipments totaled $3,224,224 **(Restated)** and $1,335,565 **(Restated)** at December 31, 2020 and 2021, respectively. Contract assets are included within current assets in the accompanying consolidated balance sheets.

**PSI GROUP HOLDINGS LTD**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

Contract liabilities are recognized when the Company receives prepayments from customers. Contract liabilities will be recognized as revenue when promised services are provided. Contract liabilities were $0 and $108,974 at December 31, 2020 and 2021, respectively.

The Company also provide certain value-added logistics services, such as packaging, warehousing services, small parcel, and local transportation services. The performance obligation is generally satisfied over the service period as the Company perform the obligations. Pricing for our services is established in the customer contract and is dependent upon the specific needs of the customer but may be agreed upon at a fixed fee per transaction, labor hour, or service period.

The Company has adopted ASC 606 on January 1, 2018, using the transition method of Modified-Retrospective Method ("MRM"). The adoption of ASC 606 had no impact on the Company's beginning balance of retained earnings.

**Cost of revenue**

Cost of revenue consists primarily of cargo space charged by airlines, shipping liners or other freight forwarders and ancillary logistics services fee including costs of security, local handling and x-ray screening and warehouse services.

**General and Administrative Expenses**

General and administrative expenses include management and office salaries and employee benefits, depreciation for office facility and office equipment, travel and entertainment, legal and accounting, consulting fees and other office expenses.

**Income Taxes**

The Company accounts for income taxes following the liability method pursuant to FASB ASC 740 "Income Taxes". Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rate is recognized in income in the period that includes the enactment date.

The Company also follows FASB ASC 740, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of December 31, 2020 and 2021, the Company did not have a liability for unrecognized tax benefits. It is the Company's policy to include penalties and interest expense related to income taxes as a component of other expense and interest expense, respectively, as necessary. The Company's historical tax years will remain open for examination by the local authorities until the statute of limitations has passed.

**PSI GROUP HOLDINGS LTD**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

**Comprehensive Income**

Comprehensive income is defined as the change in equity during the year from transactions and other events, excluding the changes resulting from investments by owners and distributions to owners, and is not included in the computation of income tax expense or benefit. Accumulated comprehensive income consists of foreign currency translation. The Company presents comprehensive income (loss) in accordance with ASC Topic 220, "Comprehensive Income".

**Earnings per share**

The Company calculates earnings per share in accordance with ASC Topic 260 "Earnings per Share." Basic earnings per share is computed by dividing the net income by the weighted average number of common shares outstanding during the year. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential ordinary shares equivalents had been issued and if the additional common shares were dilutive. As of December 31, 2020 and 2021, there were no dilution impact.

**Commitments and contingencies**

In the normal course of business, the Company is subject to contingencies, including legal proceedings and environmental claims arising out of the normal course of businesses that relate to a wide range of matters, including among others, contracts breach liability. The Company records accruals for such contingencies based upon the assessment of the probability of occurrence and, where determinable, an estimate of the liability. Management may consider many factors in making these assessments including past history, scientific evidence and the specifics of each matter. The Company's management has evaluated all such proceedings and claims that existed as of December 31, 2020 and 2021. Normal course of businesses that relate to a wide range of matters, including among others, contracts breach liability. The Company records accruals for such contingencies based upon the assessment of the probability of occurrence and, where determinable, an estimate of the liability. Management may consider many factors in making these assessments including past history, scientific evidence and the specifics of each matter. The Company's management has evaluated all such proceedings and claims that existed as of December 31, 2020 and 2021.

**Non-controlling interests**

Non-controlling interests are recognized to reflect the portion of their equity that is not attributable, directly or indirectly, to the Company as the controlling shareholder. For the Company's consolidated subsidiaries, non-controlling interests represent a minority shareholder's 0.8% ownership interest in PSIHK.

Non-controlling interests are presented as a separate line item in the equity section of the Company's Consolidated Balance Sheets and have been separately disclosed in the Company's Consolidated Statements of Income and Comprehensive Income to distinguish the interests from that of the Company.

**PSI GROUP HOLDINGS LTD**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

**Segment Reporting**

ASC 280, "Segment Reporting", establishes standards for reporting information about operating segments on a basis consistent with the Company's internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for detailing the Company's business segments.

The Company's chief operating decision maker is the Chief Executive Officer, who reviews the financial information of each separate operating segment when making decisions about allocating resources and assessing the performance of the segment. The Company has determined that it has a single operating segment for purposes of allocating resources and evaluating financial performance; accordingly, the Company does not provide additional segment reporting in these accompanying notes.

**Related Party** 

In general, related parties exist when there is a relationship that offers the potential for transactions at less than arm's-length, favorable treatment, or the ability to influence the outcome of events different from that which might result in the absence of that relationship. A related party may be any of the following: a) an affiliate, which is a party that directly or indirectly controls, is controlled by, or is under common control with another party; b) a principle owner, owner of record or known beneficial owner of more than 10% of the voting interest of an entity; c) management, which are persons having responsibility for achieving objectives of the entity and requisite authority to make decision; d) immediate family of management or principal owners; e) a parent Company and its subsidiaries; and f) other parties that have ability to significant influence the management or operating policies of the entity. The Company discloses all significant related party transactions.

**Economic and Political Risks**

The Company's operations are conducted in the Hong Kong. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political, economic and legal environment in the Hong Kong, and by the general state of the Hong Kong economy.

The Company's operations in the Hong Kong are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political and social conditions in the Hong Kong, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. All of the Company's cash is maintained with banks in Hong Kong, and none of these deposits are covered by insurance. The Company has not experienced any losses in such accounts. A portion of the Company's sales are credit sales which are primarily to customers whose abilities to pay are dependent upon the industry economics prevailing in these areas; however, concentrations of credit risk with respect to trade accounts receivables is LTD due to generally short payment terms. The Company also performs ongoing credit evaluations of its customers to help further reduce credit risk.

**Exchange Risk**

The reporting currency of the Company is U.S. Dollar. To date the majority of the revenues and costs are denominated in Hong Kong Dollar and a significant portion of the assets and liabilities are denominated in Hong Kong Dollars. There was no significant exposure to foreign exchange rate fluctuations and the Company has not maintained any hedging policy against foreign currency risk. The management will consider hedging significant currency exposure should the need arise.

**PSI GROUP HOLDINGS LTD**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

**Recently Issued Accounting Pronouncements**

Recent accounting pronouncements that the Company has adopted or may be required to adopt in the future are summarized below:

In June 2016, the FASB issued ASU 2016-13,"Measurement of Credit Losses on Financial Instruments", to require financial assets carried at amortized cost to be presented at the net amount expected to be collected based on historical experience, current conditions and forecasts. Subsequently, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, in April 2019. To clarify that receivables arising from operating leases are within the scope of lease accounting standards. In October 2019, the FASB issued ASU 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842), which defers the effective date for public filers that are considered small reporting companies as defined by the Securities and Exchange Commission to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Since the Company is a smaller reporting company, implementation is not needed until January 1, 2023. Adoption of the standard requires using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective date to align existing credit loss methodology with the new standard. The Company adopted this standard on January 1, 2019.

In August 2018, the FASB issued ASU 2018-13 Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds, and modifies certain disclosure requirements for fair value measurements under ASC 820. This ASU is to be applied on a prospective basis for certain modified or new disclosure requirements, and all other amendments in the standard are to be applied on a retrospective basis. The new standard is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted. The Company adopted Topic 820 on January 1, 2020. The adoption of the ASU 2018-13 did not have a material impact on the Company's consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes" (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 will simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company does not expect that the requirements of ASU 2019-12 will have a material impact on its consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional practical expedients to simplify accounting for reference rate reform. Amongst other practical expedients, the update allows for contract modifications due to reference rate reform for certain receivables and debt contracts to be accounted for by prospectively adjusting the effective interest rate. The amendments in this ASU are effective for all entities beginning on March 12, 2020, and companies may elect to apply the amendments prospectively through December 31, 2022. The Company is currently evaluating the effects that adoption of this guidance will have on our consolidated financial statements.

**PSI GROUP HOLDINGS LTD**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2.1 – RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS**

The Company has restated the accompanying consolidated financial statements and related disclosures for the years ended December 31, 2020 and 2021 that were previously included in Confidential draft No. 2 filed with the SEC on July 22, 2022 (the "DRS No.2") and in Confidential draft No. 3 filed with U.S. Securities and Exchange Commission (the "SEC") on September 19, 2022 (the "DRS No.3"), in order to correct errors resulting from the incorrect recognition of an acquisition of a subsidiary, Business Great Global Supply Chain Limited, as common control arrangement instead of the correct method, which is the purchase method for business combinations.

The following tables reflect the impact of the restatement adjustments to the specific line items presented in the Company's previously reported consolidated financial statements for the years ended December 31, 2020 and 2021. The amounts as previously reported were derived from the Company's DRS No.2 (in U.S. dollars, except share and per share data).

**CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2020**

---

| | | | |
|:---|:---|:---|:---|
|  | **Previously**<br>**Reported** | **Restatement**<br>**Impacts** | <br>**Restated** |
| Cash and cash equivalents |  |  |  |
| Accounts receivable, net |  |  |  |
| Contract asset, net |  |  |  |
| Amounts due from related parties |  |  |  |
| Prepayments and other current assets |  |  |  |
| Total Current Assets |  |  |  |
| Property, plant, equipment, net |  |  |  |
| Right-of-use assets |  |  |  |
| Total non-current assets |  |  |  |
| TOTAL ASSETS |  |  |  |
| Accounts payable |  |  |  |
| Account payable – related party |  |  |  |
| Other payables and accrued liabilities |  |  |  |
| Taxes payables |  |  |  |
| Lease liabilities - current |  |  |  |
| Amounts due to related parties |  |  |  |
| Total current liabilities |  |  |  |
| TOTAL LIABILITIES |  |  |  |
| Ordinary shares |  |  |  |
| Additional paid-in capital |  |  |  |
| Retained earnings |  |  |  |
| Accumulated other comprehensive loss |  |  |  |
| Total shareholders' equity |  |  |  |
| TOTAL EQUITY |  |  |  |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |  |

---

**PSI GROUP HOLDINGS LTD**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2.1 – RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2021**

---

| | | | |
|:---|:---|:---|:---|
|  | **Previously**<br>**Reported** | **Restatement**<br>**Impacts** |<br>**Restated** |
| Cash and cash equivalents) |  |  |  |
| Accounts receivable, net) |  |  |  |
| Contract asset, net) |  |  |  |
| Amounts due from related parties |  |  |  |
| Prepayments and other current assets) |  |  |  |
| Total Current Assets |  |  |  |
| Property, plant, equipment, net) |  |  |  |
| Right-of-use assets) |  |  |  |
| Total non-current assets) |  |  |  |
| TOTAL ASSETS |  |  |  |
| Accounts payable) |  |  |  |
| Account payable – related party |  |  |  |
| Other payables and accrued liabilities) |  |  |  |
| Taxes payables) |  |  |  |
| Lease liabilities - current) |  |  |  |
| Amounts due to related parties) |  |  |  |
| Total current liabilities |  |  |  |
| Lease liabilities – non-current) |  |  |  |
| Total non-current liabilities) |  |  |  |
| TOTAL LIABILITIES |  |  |  |
| Ordinary shares) |  |  |  |
| Additional paid-in capital) |  |  |  |
| Retained earnings) |  |  |  |
| Accumulated other comprehensive loss) |  |  |  |
| Total shareholders' equity) |  |  |  |
| TOTAL EQUITY) |  |  |  |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |  |

---

**PSI GROUP HOLDINGS LTD**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2.1 – RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2020**

---

| | | | |
|:---|:---|:---|:---|
|  | **Previously**<br>**Reported** | **Restatement**<br>**Impacts** |<br> **Restated** |
| REVENUES) |  |  |  |
| REVENUES – RELATED PARTY |  |  |  |
| TOTAL REVENUE) |  |  |  |
| COST OF REVENUE) |  |  |  |
| COST OF REVENUE – RELATED PARTY) |  |  |  |
| TOTAL COST OF REVENUE) |  |  |  |
| GROSS PROFIT) |  |  |  |
| General and administrative expenses) |  |  |  |
| Total operating expenses) |  |  |  |
| INCOME FROM OPERATIONS) |  |  |  |
| Other income) |  |  |  |
| Other expense) |  |  |  |
| Total other income (expense) |  |  |  |
| INCOME BEFORE INCOME TAX) |  |  |  |
| INCOME TAX) |  |  |  |
| NET INCOME) |  |  |  |
| NET INCOME ATTRIBUTABLE TO PSI GROUP HOLDINGS LTD) |  |  |  |
| Foreign currency translation adjustment of PSI GROUP HOLDINGS LTD) |  |  |  |
| Comprehensive income) |  |  |  |
| WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING: |  |  |  |
| Basic and diluted) |  |  |  |
| NET INCOME PER ORDINARY SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY: |  |  |  |
| Basic and diluted |  |  |  |

---

**CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2021**

---

| | | | |
|:---|:---|:---|:---|
|  | **Previously**<br>**Reported** | **Restatement**<br>**Impacts** |<br>**Restated** |
| REVENUES) |  |  |  |
| REVENUES – RELATED PARTY) |  |  |  |
| TOTAL REVENUE) |  |  |  |
| COST OF REVENUE) |  |  |  |
| COST OF REVENUE – RELATED PARTY) |  |  |  |
| TOTAL COST OF REVENUE) |  |  |  |
| GROSS PROFIT) |  |  |  |
| General and administrative expenses) |  |  |  |
| Total operating expenses) |  |  |  |
| INCOME FROM OPERATIONS) |  |  |  |
| Other income |  |  |  |
| Other expense) |  |  |  |
| Total other income (expense) |  |  |  |
| INCOME BEFORE INCOME TAX) |  |  |  |
| INCOME TAX) |  |  |  |
| NET INCOME) |  |  |  |
| NET INCOME ATTRIBUTABLE TO PSI GROUP HOLDINGS LTD) |  |  |  |
| Foreign currency translation adjustment of PSI GROUP HOLDINGS LTD) |  |  |  |
| Comprehensive income) |  |  |  |
| WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING: |  |  |  |
| Basic and diluted) |  |  |  |
| NET INCOME PER ORDINARY SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY: |  |  |  |
| Basic and diluted |  |  |  |

---

**PSI GROUP HOLDINGS LTD**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2.1 – RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2020**

---

| | | | |
|:---|:---|:---|:---|
|  | **Previously**<br>**Reported** | **Restatement**<br>**Impacts** |<br>**Restated** |
| Net income) |  |  |  |
| Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |
| Depreciation of property, plant and equipment) |  |  |  |
| Gain on termination of right-of-used assets) |  |  |  |
| (Loss) gain on disposal of property, plant and equipment |  |  |  |
| Depreciation of right-of-used assets) |  |  |  |
| Loss on investment in equity securities) |  |  |  |
| Impairment loss on equity method investment) |  |  |  |
| Changes in operating assets and liabilities: |  |  |  |
| Increase (Decrease) In: |  |  |  |
| Accounts receivable) |  |  |  |
| Accounts receivable – related party) |  |  |  |
| Contract asset) |  |  |  |
| Amounts due from related parties) |  |  |  |
| Amounts due from equity investment) |  |  |  |
| Other current assets) |  |  |  |
| Accounts payable |  |  |  |
| Accounts payables – related party |  |  |  |
| Amounts due to related parties) |  |  |  |
| Tax payables) |  |  |  |
| Other payables and accrued liabilities) |  |  |  |
| Lease liabilities) |  |  |  |
| NET CASH PROVIDED BY OPERATING ACTIVITIES) |  |  |  |
| Purchases of property, plant and equipment) |  |  |  |
| Advances to related party) |  |  |  |
| Repayment from related party) |  |  |  |
| NET CASH USED IN INVESTING ACTIVITES) |  |  |  |
| NET INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH |  |  |  |
| Effect of exchange rate changes on cash |  |  |  |
| CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR) |  |  |  |
| CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF YEAR) |  |  |  |
| Cash and cash equivalents at end of year) |  |  |  |
| **Non-cash investing and financing activities** |  |  |  |
| Right-of-use assets obtained in exchange for lease obligations |  |  |  |
| Forgiveness of debts) |  |  |  |

---

**PSI GROUP HOLDINGS LTD**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2.1 – RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2021**

---

| | | | |
|:---|:---|:---|:---|
|  | **Previously**<br>**Reported** | **Restatement**<br>**Impacts** | <br>**Restated** |
| Net income |  |  |  |
| Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |
| Depreciation of property, plant and equipment |  |  |  |
| Gain on termination of right-of-used assets |  |  |  |
| (Loss) gain on disposal of property, plant and equipment |  |  |  |
| Depreciation of right-of-used assets |  |  |  |
| Allowance for expected credit loss |  |  |  |
| Changes in operating assets and liabilities: |  |  |  |
| Increase (Decrease) In: |  |  |  |
| Accounts receivable |  |  |  |
| Contract asset |  |  |  |
| Amounts due from related parties |  |  |  |
| Other current assets |  |  |  |
| Accounts payable |  |  |  |
| Accounts payables – related party |  |  |  |
| Amounts due to related parties |  |  |  |
| Tax payables |  |  |  |
| Other payables and accrued liabilities |  |  |  |
| Lease receivables |  |  |  |
| Lease liabilities |  |  |  |
| NET CASH PROVIDED BY OPERATING ACTIVITIES |  |  |  |
| Purchases of property, plant and equipment |  |  |  |
| Proceeds from property, plant and equipment |  |  |  |
| Advances to related party |  |  |  |
| Repayment from related party |  |  |  |
| NET CASH USED IN INVESTING ACTIVITES |  |  |  |
| NET INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH |  |  |  |
| Effect of exchange rate changes on cash |  |  |  |
| CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR |  |  |  |
| CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF YEAR |  |  |  |
| Cash and cash equivalents at end of year |  |  |  |
| **Non-cash investing and financing activities** |  |  |  |
| Dividends offset with amount due from related parties |  |  |  |
| Right-of-use assets obtained in exchange for lease obligations |  |  |  |
| Debts transferred from related company to offset with amount due to a director |  |  |  |

---

**PSI GROUP HOLDINGS LTD**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 3 – CONCENTRATION OF REVENUES AND COST OF GOODS SOLD**

Concentration of major customers and suppliers:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the year ended December 31,** | **For the year ended December 31,** | **For the year ended December 31,** | **For the year ended December 31,** |
|  | **2020** | | **2021** | |
|  | **(Restated)** | | **(Restated)** | |
| Major customers representing more than 10% of the Company's revenues |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Customer A | $29118125 | 41.00% | $52989307 | 40.48% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Customer B | 8039064 | 11.32% | - |  |
| &nbsp;&nbsp;&nbsp;**Total Revenues** | $37157189 | 52.32% | $52989307 | 40.48% |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  | **2020** | | **2021** | |
|  | **(Restated)** | | **(Restated)** | |
| Major customers of the Company's accounts receivable, net |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Company A | $5956139 | 45.37% | $7759873 | 46.44% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Company B | $1782466 | 13.58% | - |  |
| &nbsp;&nbsp;&nbsp;**Total** | $7738605 | 58.95% | $7759873 | 46.44% |

---

Accounts receivable from the Company's major customers accounted for 58.95% and 46.44% of total accounts receivable balances as of December 31, 2020 and December 31, 2021, respectively.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the year ended December 31,** | **For the year ended December 31,** | **For the year ended December 31,** | **For the year ended December 31,** |
|  | **2020** | | **2021** | |
|  | **(Restated)** | | **(Restated)** | |
| Major suppliers representing more than 10% of the Company's cost of revenue |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Supplier A | $8155113 | 12.83% | $16255162 | 14.47% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Supplier B | 6546147 | 10.16% |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Supplier C | 6794870 | 10.69% | 14209183 | 12.65% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Supplier D | 6461858 | 10.17% | 17339529 | 15.44% |
| &nbsp;&nbsp;&nbsp;**Total Cost of Revenue** | $27867988 | 43.85% | $47803874 | 42.56% |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  | **2020** | | **2021** | |
|  | **(Restated)** | | **(Restated)** | |
| Major suppliers of the Company's accounts payables, net |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Supplier A | $3096480 | 20.70% | $5955280 | 29.56% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Supplier B | 210165 | 1.40% | 126047 | 0.63% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Supplier C | 776201 | 5.19% | 1216411 | 6.04% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Supplier D | 239939 | 1.60% | - |  |
| &nbsp;&nbsp;&nbsp;Total | $4322785 | 28.89% | $7297738 | 36.23% |

---

Accounts payables from the Company's major suppliers accounted for 8.20% and 6.66% of total accounts payables balances as of December 31, 2020 and December 31, 2021, respectively.

**PSI GROUP HOLDINGS LTD**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 4 – OTHER INCOME**

---

| | | |
|:---|:---|:---|
|  | **For the year ended**<br> **December 31,** | **For the year ended**<br> **December 31,** |
|  | **2020** | **2021** |
|  | **(Restated)** | **(Restated)** |
| Government grants | $194023 | $55922 |
| Dividends income from investment in equity securities | 9309 | 30290 |
| Management fee income | 8289 | 11695 |
| Management fee income from related parties | 73737 | 70759 |
| Bad debt recovered |  | 58957 |
| Gain on forgiveness of debt |  | 67902 |
| Miscellaneous income | 21070 | 6769 |
| **Total** | $306428 | $302294 |

---

**NOTE 5 – OTHER EXPENSE**

---

| | | |
|:---|:---|:---|
|  | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** |
|  | **2020** | **2021** |
|  | **(Restated)** | **(Restated)** |
| Exchange gain/(loss) | $68162 | $(104748) |
| Loss on investment in equity securities | (83575) |  |
| Loss on trading of equity securities | (5290) | (107358) |
| **Total** | $(20703) | $(212106) |

---

**NOTE 6 – ACCOUNTS RECEIVABLE**

Accounts receivable is presented net of allowance for credit loss:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2020** | **2021** |
|  | **(Restated)** | **(Restated)** |
| Accounts receivable | $13445411 | $17270438 |
| Less: allowance for expected credit loss | (324991) | (572367) |
| **Total** | $13120420 | $16698071 |

---

The movement of allowances for credit loss is as follow:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2020** | **2021** |
|  | **(Restated)** | **(Restated)** |
| Balance at beginning of the year | $(85796) | $(324991) |
| Provision | (239195) | (247376) |
| **Total** | $(324991) | $(572367) |

---

**PSI GROUP HOLDINGS LTD**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 7 – CONTRACT ASSETS, NET AND LIABILITIES**

Contract asset is presented net of allowance for expected credit loss.

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2020** | **2021** |
|  | **(Restated)** | **(Restated)** |
| Contract assets | $3224224 | $1335565 |
| Less: allowance for expected credit loss | (77890) | (44197) |
| **Total** | $3146334 | $1291368 |

---

The movement of allowances for credit loss is as follow:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2020** | **2021** |
|  | **(Restated)** | **(Restated)** |
| Balance at beginning of the year | $(28340) | $(77890) |
| Provision | (49550) |  |
| Reversal | - | 33693 |
| **Total** | $(77890) | $(44197) |

---

Contract liabilities are recognized when the Company received prepayments from customers. Contract liabilities will be recognized as revenue when promised services are provided. Contract liabilities were Nil and $108,974 as of December 31, 2020 and 2021, respectively.

**NOTE 8 – PROPERTY, PLANT AND EQUIPMENT, NET**

As of December 31, 2020 and 2021, property, plant and equipment, net consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2020** | **2021** |
|  | **(Restated)** | **(Restated)** |
| Leasehold improvement | $75413 | $80518 |
| Machinery and equipment | 372553 | 450114 |
| Motor vehicles | 142128 | 354408 |
| Furniture and fixture | 71330 | 75697 |
| Total property plant and equipment, at cost | 661424 | 960737 |
| Less: accumulated depreciation | (326520) | (498037) |
| **Total property, plant and equipment, net** | $334904 | $462700 |

---

Depreciation expense for the years ended December 31, 2020 and 2021 were $121,862 (Restated) and $173,504 (Restated), respectively.

**NOTE 9 – INVESTMENTS IN EQUITY SECURITIES**

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Balance as at December 31, 2020 (Restated)** | **Cost Basis** | **Net<br> Unrealized <br> Loss** | **Exchange<br> alignment** | **Fair Value** |
| Equity securities listed in the Hong Kong Stock Exchange | $1165039 | $(563250) | $(1399) | $603188 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Balance as at December 31, 2021 (Restated)** | **Cost Basis** | **Net<br> Unrealized<br> Loss** | **Exchange<br> alignment** | **Fair Value** |
| Equity securities listed in the Hong Kong Stock Exchange | $- | $- | $- | $- |

---

The equity securities were issued by listed companies in Hong Kong. The fair value of the equity securities is determined by reference to the quoted market price available on Hong Kong Stock Exchange.

All equity securities were sold for the year ended December 31, 2021.

**PSI GROUP HOLDINGS LTD**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 10 – LEASES**

The Company has various operating leases for office space, warehouse and photocopiers. On January 1, 2019, the Company adopted Leases (Topic 842), using the modified-retrospective approach, and as a result recognized a right-of-use asset of $381,938 at the date of adoption, and a lease liability of $381,938. No cumulative-effect adjustment to retained earnings was required upon adoption of Topic 842. The lease agreements do not specify an explicit interest rate. The Company's management believes that the Hong Kong Dollar Best Lending Rate ("BLR") was the most indicative rate of the Company's borrowing cost for the calculation of the present value of the lease payments; the rate used by the Company as quoted by the BLR was 5.0%.

As of December 31, 2020 and 2021, the right-of-use assets totaled $318,629 (Restated), and $583,436 (Restated), respectively.

As of December 31, 2020 and 2021, lease liabilities consist of the following:

---

| | | |
|:---|:---|:---|
|  | **As of<br> December 31,** | **As of<br> December 31,** |
|  | **2020** | **2021** |
|  | **(Restated)** | **(Restated)** |
| Lease liabilities - current portion | $114462 | $422208 |
| Lease liabilities - non-current portion | $226042 | $192921 |
| **Total** | $340504 | $615129 |

---

During the years ended December 31, 2020 and 2021, the Company incurred total operating lease expenses of $462,581 (Restated) and $435,812 (Restated), respectively.

Other lease information is as follows:

---

| | | |
|:---|:---|:---|
|  | **As of<br> December 31,** | **As of<br> December 31,** |
|  | **2020** | **2021** |
| Weighted-average remaining lease term - operating leases | 3.2 years | 1.9 years |
| Weighted-average discount rate - operating leases | 5% | 5% |

---

The following is a schedule of future minimum payments under operating leases as of December 31, 2021:

---

| | |
|:---|:---|
|  | **As of<br> December 31,**<br>**2021** |
|  | **(Restated)** |
| 2022 | $442933 |
| 2023 | 133959 |
| 2024 | 49344 |
| 2025 | 17615 |
| Total lease payments | 643851 |
| Less: imputed interest | (28722) |
| Total operating lease liabilities, net of interest | $615129 |

---

**PSI GROUP HOLDINGS LTD**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 11 – OTHER PAYABLES AND ACCRUED LIABILITIES**

Other payables and accrued liabilities are summarized as follow:

---

| | | |
|:---|:---|:---|
|  | **As of<br> December 31,** | **As of<br> December 31,** |
|  | **2020** | **2021** |
|  | **(Restated)** | **(Restated)** |
| Provision for staff bonus | $265210 | $411679 |
| Accrued staff salaries | 3364 | 3879 |
| Accrued administrative expenses | 171881 | 50586 |
| Other payables | 4813 | 9338 |
| **Total** | $445268 | $475482 |

---

**NOTE 12 – ACCOUNTS PAYABLE** 

Accounts payable are summarized as follow:

---

| | | |
|:---|:---|:---|
|  | **As of<br> December 31,** | **As of<br> December 31,** |
|  | **2020** | **2021** |
|  | **(Restated)** | **(Restated)** |
| Freight fee and other handling charges | $12682841 | $15144307 |
| Freight fee and other handling charges – related party | 2277918 | 5000265 |
| **Total** | $14960759 | $20144572 |

---

**NOTE 13– SHORT TERM BANK LOANS** 

Short-term loans are summarized as follow:

---

| | | |
|:---|:---|:---|
|  | **As of<br> December 31,** | **As of<br> December 31,** |
|  | **2020** | **2021** |
|  | **(Restated)** | **(Restated)** |
| Guaranteed bank loans | $3026194 | $387263 |

---

As of December 31, 2020 and 2021, the Company pledged its fixed deposit of $645,516 and $759,718 for loans and trade financing secured from DBS Bank (Hong Kong) Limited. These loans are secured by (i) guarantee issued by Hong Kong Mortgage Corporation Limited, (ii) personal guarantee of the director of the Company, and (iii) the certain properties owned by the director of the Company.

Short-term loans as of December 31, 2021 are as follow:

As of December 31, 2020 and 2021, all bank loans were repayable within one year with effective interest rate of approximately 2.47% and 5.82%, respectively. These bank loans were carried at amortized cost, and the Company believes amortized cost approximates fair value.

As of December 31, 2020 and 2021, the Company was compliant with the financial covenants set forth in the loan agreements.

**NOTE 14 – SHAREHOLDERS' EQUITY**

  ****

At incorporation, the company's authorized share capital was $20,000 divided into 200,000,000 ordinary shares with a US$0.0001 par value per share.

**PSI GROUP HOLDINGS LTD**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 15 – DISAGREGATED REVENUE**

Information for the Company's breakdown of revenue by service type for the years ended December 31, 2020 and 2021 are as follows:

---

| | | |
|:---|:---|:---|
|  | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** |
|  | **2020** | **2021** |
|  | **USD** | **USD** |
|  | **(Restated)** | **(Restated)** |
| **Freight forwarding services** |  |  |
| - Air freight | 67162137 | 123594202 |
| - Ocean freight | 2600087 | 6722891 |
| **Subtotal** | **69762224** | **130317093** |
| Ancillary logistic services | 1264108 | 590119 |
| **Total** | **71026332** | **130907212** |

---

Information for the Company's breakdown of revenue from freight forwarding services for the years ended December 31, 2020 and 2021 are as follows:

---

| | | |
|:---|:---|:---|
|  | **For the year ended <br> December 31,** | **For the year ended <br> December 31,** |
|  | **2020** | **2021** |
|  | **USD** | **USD** |
|  | **(Restated)** | **(Restated)** |
| **Export shipments** |  |  |
| - Air | 67128513 | 123586718 |
| - Ocean | 2146109 | 6436264 |
| - **Subtotal** | **69274622** | **130022982** |
| **Import shipments** |  |  |
| - Air | 33624 | 7484 |
| - Ocean | 453978 | 286627 |
| - **Subtotal** | **487602** | 294111 |
| **Total** | **69762224** | **130317093** |

---

Information for the Company's breakdown of export revenue destination for the years ended December 31, 2020 and 2021 are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** | |
|  | **2020** | | **2021** | |
|  | **USD** | | **USD** | |
|  | **(Restated)** | | **(Restated)** | |
| United States | 56317560 | 81.30% | 107668699 | 82.81% |
| France | 3152172 | 4.55% | 3906806 | 3.00% |
| United Kingdom | 2361417 | 3.41% | 2670296 | 2.05% |
| The Netherlands | 1978621 | 2.86% | 4578608 | 3.52% |
| Others *(Note)* | 5464852 | 7.88% | 11198573 | 8.62% |
| **Total export revenue** | 69274622 | **100%** | 130022982 | **100%** |

---

*Note: Others represent a number of countries including, among others, Luxembourg,, Canada, Belgium, etc.*

Information for the Company's breakdown of revenue by types of customers for the years ended December 31, 2020 and 2021 are as follows:

---

| | | |
|:---|:---|:---|
|  | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** |
|  | **2020** | **2021** |
|  | **USD** | **USD** |
|  | **(Restated)** | **(Restated)** |
| Freight forwarders | 69747250 | 129511666 |
| Direct customers | 1279082 | 1395546 |
| **Total** | **71026332** | **130907212** |

---

**PSI GROUP HOLDINGS LTD**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 16 – INCOME TAXES**

*Cayman Islands and British Virgin Islands ("BVI")*

The Company is incorporated in the Cayman Islands and several of its wholly-own subsidiaries are incorporated in BVI. Under the current laws of the Cayman Islands and the BVI, these entities are not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholdings tax in the Cayman Islands and the BVI.

*Hong Kong*

On March 21, 2018, the Hong Kong Legislative Council passed The Inland Revenue (Amendment) (No. 7) Bill 2017 (the "Bill") which introduces the two-tiered profits tax rates regime. The Bill was signed into law on March 28, 2018 and was gazetted on the following day. Under the two-tiered profits tax rates regime, the first HK$2 million of profits of the qualifying group entity will be taxed at 8.25%, and profits above HK$2 million will be taxed at 16.5%. The profits of group entities not qualifying for the two-tiered profits tax rates regime will continue to be taxed at a flat rate of 16.5%.

For the years ended December 31, 2020 and 2021, the Company generated substantially all of its taxable income in the Hong Kong. The tax expenses records in the Company's result of operations are almost entirely attributable to income earned in the Hong Kong. Should the Company's operations expand or change in the future, where the Company generates taxable income in other jurisdictions, the Company's effective tax rates may substantially change.

Significant components of the provision for income taxes are as follows:

---

| | | |
|:---|:---|:---|
|  | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** |
|  | **2020** | **2021** |
|  | **(Restated)** | **(Restated)** |
| Hong Kong profit tax: |  |  |
| &nbsp;&nbsp;&nbsp;- Current year | $722437 | $2463327 |
| &nbsp;&nbsp;&nbsp;- Tax Concession | (1290) | (1282) |
| &nbsp;&nbsp;&nbsp;- Over-provision for the prior year | (1) | - |
| **Income tax expenses** | $**721146** | $**2462045** |

---

The effective tax rates on income before income taxes for the years ended December 31, 2020 and 2021 was 16.21% and 16.30%, respectively.

No provision for deferred taxation has been made as there were no material temporary difference at reporting date.

The following table reconciles statutory rate to effective tax rate:

---

| | | |
|:---|:---|:---|
|  | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** |
|  | **2020** | **2021** |
|  | **(Restated)** | **(Restated)** |
| Hong Kong statutory income tax rate | 16.50% | 16.50% |
| &nbsp;&nbsp;&nbsp;- Non-taxable income | (0.75)% | (0.11)% |
| &nbsp;&nbsp;&nbsp;- Non-deductible expenses | 1.6% | 0.24% |
| &nbsp;&nbsp;&nbsp;- Deductible temporary difference not recognized | (0.61)% | (0.08)% |
| &nbsp;&nbsp;&nbsp;- Tax reduction | (0.03)% | (0.02)% |
| &nbsp;&nbsp;&nbsp;- Income tax at concessionary rate | (0.96)% | (0.28)% |
| &nbsp;&nbsp;&nbsp;- Others | 0.46% | 0.08% |
| **Effective tax rate** | **16.21%** | **16.33%** |

---

**PSI GROUP HOLDINGS LTD**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 17 – RELATED PARTY TRANSACTIONS**

**(a) Names and Relationship of Related Parties:**

---

| | |
|:---|:---|
|  | **Existing Relationship with the Company** |
| Active Move Group Holdings Limited | Sole director and sole shareholder is one of the shareholders Mr. Kwong Kin Yin, Alfred |
| GNET Logistic Limited | Shareholder is of one of the directors, Mr. Chan Yee Kit. |
| Grand Pro Development Limited | Sole director and sole shareholder is one of the directors Mr. Chan Yee Kit. |
| Kong Ming International Express Agency Limited | Significant controlled by one of the shareholders, Kwong Kin Yin. |
| Rich Fame International Limited | One of the directors is Mr. Chan Yee Kit<br> 100% fully owned by Hao Jingyu a spouse of Mr. Chan Yee Kit. |
| Top Star E-Commerce Logistics Limited | Director and shareholder is Leung Sau Fong, a spouse of one of the shareholders, Mr. Kwong Kin Yin Alfred |
| Business Great Group Limited | Sole director and sole shareholder is one of the shareholders Mr. Kwong Kin Yin, Alfred |
| Business Great Global Supply Chain Limited | Sole director and sole shareholder is one of the shareholders Mr. Kwong Kin Yin, Alfred |
| Business Great Global Supply Chain PTE. Limited | 30% equity interest held by the Company with significant influence |
| Business Great Global Supply Chain (Guangzhou) Company Limited | One of the shareholders of Mr Chan Yee Kit. |
| Business Great Global Supply Chain (Shenzhen) Company Limited | Sole director and sole shareholder is one of the directors Mr. Chan Yee Kit. |
| Profit Sail International Express (SZX) Company Limited | One of the shareholders and sole director is Hao Jingyu, a spouse of one of the directors, Mr. Chan Yee Kit. |
| Granful Solutions Limited | One of directors, is Leung Sau Fong, a spouse of one of the shareholders, Mr. Kwong Kin Yin Alfred. |

---

**PSI GROUP HOLDINGS LTD**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 17 – RELATED PARTY TRANSACTIONS (CONTINUED)**

**(b) Summary of Balances with Related Parties:**

---

| | | | |
|:---|:---|:---|:---|
| **Amounts due to related parties:** | **Note** | **As of December 31,** | **As of December 31,** |
|  |  | **2020** | **2021** |
|  |  | **(Restated)** | **(Restated)** |
| Mr. Chan Yee Kit | (1) | $- | $804888 |
| Profit Sail International Express (SZX) Company Limited | (1) | $432843 | $269946 |
| Rich Fame International Limited | (1) | 2317 |  |
| Top Star E-Commerce Logistics Limited | (1) | - | 163615 |
| **Total** |  | $435160 | $1238449 |

---

Note:

---

| | |
|:---|:---|
| 1 | General and administrative expenses paid by the related parties on behalf of the Company. Amounts due to related parties are non-trade, unsecured, non-interest bearing and repayable on demand. |

---

---

| | | | |
|:---|:---|:---|:---|
| **Amounts due from related parties:** | **Note** | **As of December 31,** | **As of December 31,** |
|  |  | **2020** | **2021** |
|  |  | **(Restated)** | **(Restated)** |
| Mr. Chan Yee Kit | (1) | $5541261 | $- |
| Mr. Kwong Kin Yin Alfred | (1) | 767956 |  |
| Active Move Group Holdings Limited | (2) | 1436 |  |
| Business Great Global Supply Chain Limited | (2) | 844760 | 1955163 |
| Business Great Group Limited | (2) | 1242 | 2519 |
| GNET Logistic Limited | (2) | 84 |  |
| Granful Solutions Limited | (2) |  | 129670 |
| Profit Sail International Express (SZX) Company Limited | (2) | 4287 | 54880 |
| Rich Fame International Limited | (2) |  | 37332 |
| Top Star E-Commence Logistic Limited | (2) | 490 | - |
| **Total** |  | $7161516 | $2179564 |

---

Note:

&nbsp;&nbsp;&nbsp;&nbsp;1. Advances to related parties by the Company. Amounts due from related
 parties are non-trade, unsecured, non-interest bearing and repayable on demand. These balances are settled on June 30, 2021.

&nbsp;&nbsp;&nbsp;&nbsp;2. General and administrative expenses paid by the Company on behalf of
 the related parties. Amounts due from related parties are non-trade, unsecured, non-interest bearing and repayable on demand.

**PSI GROUP HOLDINGS LTD**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 17 – RELATED PARTY TRANSACTIONS (CONTINUED)**

**(c) Summary of Related Party Transactions:**

A summary of trade transactions with related parties for years ended December 31, 2020 and 2021 are listed below:

---

| | | |
|:---|:---|:---|
| **Services fee income from related parties:** | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** |
|  | **2020** | **2021** |
|  | **(Restated)** | **(Restated)** |
| Business Great Global Supply Chain Limited | $273089 | $- |
| Granful Solutions Limited |  | 3130 |
| Profit Sail International Express (SZX) Company Limited | 556690 | 590581 |
| **Total** | $82977 9 | $593711 |

---

---

| | | |
|:---|:---|:---|
| **Freight charges and handling fee charged by related parties:** | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** |
|  | **2020** | **2021** |
|  | **(Restated)** | **(Restated)** |
| Profit Sail International Express (SZX) Company Limited | $2075367 | $5804739 |
| Top Star E-Commerce Logistics Limited | 576840 | 992965 |
| **Total** | $2652207 | $6797704 |

---

---

| | | |
|:---|:---|:---|
| **Other income - management fee income from related parties:** | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** |
|  | **2020** | **2021** |
|  | **(Restated)** | **(Restated)** |
| Business Great Global Supply Chain Limited | 45263 | 43614 |
| Profit Sail International Express (SZX) Company Limited | $28474 | $27145 |
| **Total** | $73737 | $70759 |

---

---

| | | |
|:---|:---|:---|
| **IT maintenance fee charged by related party:** | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** |
|  | **2020** | **2021** |
|  | **(Restated)** | **(Restated)** |
| Rich Fame International Limited | $158591 | $289231 |
| **Total** | $158591 | $289231 |

---

**NOTE 18 – SUBSEQUENT EVENTS**

Management has evaluated subsequent events through the date that the financial statements were available to be issued, which is November 1, 2022. All subsequent events requiring recognition after December 31, 2021 and up through November 1, 2022 have been incorporated into these financial statements and there are no other subsequent events that require disclosure in accordance with FASB ASC Topic 855, "Subsequent Events" other than disclosed below.

On March 16, 2022, the Company, through its subsidiary, BGG (BVI) acquired the entire equity interest of Business Great Global Supply Chain Limited ("BGG"), a logistics and freight business, which was incorporated as a limited company on November 11, 2016, and was owned and controlled by Mr. Kwong Kin Yin. The Company gained control of BGG via a share a share swap arrangement with Mr. Kwong where his assignees were issued an aggregate of 44,031 ordinary shares (fair value of the consideration transferred is approximately US$2,097,777) of the Company for his shares in BGG. After the share swap, BGG became an indirectly wholly owned subsidiary of the Company. The acquisition of BGG was not considered material to the Company for the years presented, and therefore, pro forma information has not been presented.

**PSI GROUP HOLDINGS LTD**

**CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2021 and June 30, 2022**

INDEX

---

| | |
|:---|:---|
| [Reports of Independent Registered Public Accounting Firms](#fin2_001) | F-34 |
| [Unaudited Interim Condensed Consolidated Balance Sheets as of December 31, 2021 and June 30, 2022](#fin2_002) | F-35 |
| [Unaudited Interim Condensed Consolidated Statements of Income and Comprehensive Income for the Six Months Ended June 30, 2021 and 2022](#fin2_004) | F-37 |
| [Unaudited Interim Condensed Consolidated Statements of Shareholders' Equity for the Six Months Ended June 30, 2021 and 2022](#fin2_005) | F-38 |
| [Unaudited Interim Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2021 and 2022](#fin2_006) | F-39 |
| [Notes to the Unaudited Interim Condensed Consolidated Financial Statements](#fin2_007) | F-41 |

---

![](image_018.jpg)

**REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To: The Board of Directors and Shareholders of

PSI Group Holdings Ltd

**Results of Review Interim Financial Statements**

We have reviewed the accompanying condensed consolidated balance sheets of PSI Group Holdings Ltd and its subsidiaries (collectively the "Company") as of June 30, 2022, and the related condensed consolidated statements of income and comprehensive income, statements of shareholders' equity, and statements of cash flows for six-month periods ended June 30, 2021 and 2022, and the related notes (collectively referred to as the "interim financial statements"). Based on our reviews, we are not aware of any material modification that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2021, and the related statements of income and comprehensive income, shareholders' equity and cash flows for the year then ended (not presented herein); and in our report dated November 1, 2022, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2021, is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived.

**Basis for Review Results**

These interim financial statements are the responsibility of the Company's management. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

/s/ WWC, P.C.

WWC, P.C.

Certified Public Accountants

PCAOB ID: 1171

We have served as the Company's auditor since 2021

San Mateo, California

November 1, 2022

![](image_019.jpg)

**PSI GROUP HOLDINGS LTD**

**UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS**

**AS OF DECEMBER 31, 2021 AND JUNE 30, 2022**

**(IN U.S. DOLLARS)**

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2021** | **June 30,**<br>**2022** |
|  | **(Restated)** | |
| **ASSETS** |  |  |
| **Current assets** |  |  |
| Cash and cash equivalents | $9934013 | $6840905 |
| Restricted cash | 759718 | 2926419 |
| Accounts receivable, net | 16698071 | 10350054 |
| Accounts receivable – related party | 12088 | 471783 |
| Contract asset, net | 1291368 | 779275 |
| Amounts due from related parties | 2179564 | 469014 |
| Prepayments and other current assets | 663154 | 1160584 |
| **Total Current Assets** | $**31537976** | $**22998034** |
| **Non-current assets** |  |  |
| Property, plant, equipment, net | 462700 | 447556 |
| Goodwill |  | 294151 |
| Right-of-use assets | 583436 | 415557 |
| Equity method investment | - | - |
| **Total non-current assets** | $**1046136** | $**1157264** |
| **TOTAL ASSETS** | $**32584112** | $**24155298** |

---

**PSI GROUP HOLDINGS LTD**

**UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)**

**AS OF DECEMBER 31, 2021 AND JUNE 30, 2022** 

**(IN U.S. DOLLARS)**

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2021** | **June 30,**<br>**2022** |
|  | **(Restated)** | |
| **Current Liabilities** |  |  |
| Short-term bank loans | $387263 | $259938 |
| Accounts payable | 15144307 | 7658316 |
| Accounts payable – related party | 5000265 | 727974 |
| Contract liabilities | 108974 | 224981 |
| Other payables and accrued liabilities | 475482 | 52059 |
| Taxes payables | 1743702 | 2215587 |
| Lease liabilities - current | 422208 | 328124 |
| Amounts due to related parties | 1238449 | 507940 |
| Dividend payables | 145513 | 28154 |
| **Total current liabilities** | $**24666163** | $**12003073** |
| **Non-current liabilities** |  |  |
| Lease liabilities – non-current | 192921 | 115483 |
| **Total non-current liabilities** | $**192921** | $**115483** |
| **TOTAL LIABILITIES** | $**24859084** | $**12118556** |
| **COMMITMENTS AND CONTINGENCIES** |  |  |
| **EQUITY** |  |  |
| Ordinary shares, par value US$0.0001 per share, 200,000,000 shares authorized; 155,969 and 200,000 shares issued and outstanding as of December 31, 2021 and June 30, 2022, respectively\* | 16 | 20 |
| Additional paid-in capital | 5826358 | 7877520 |
| Retained earnings | 1921718 | 4118118 |
| Accumulated other comprehensive loss | (38253) | (38873) |
| **Total shareholders' equity** | $**7709839** | $**11956785** |
| Non-controlling interest | 15189 | 79957 |
| **TOTAL EQUITY** | $**7725028** | $**12036742** |
| **TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY** | $**32584112** | $**24155298** |

---

*\** *Shares presented on a retroactive basis to reflect the restructuring.*

See accompanying notes to the consolidated financial statements.

**PSI GROUP HOLDINGS LTD**

**UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME**

**FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022**

**(IN U.S. DOLLARS)**

---

| | | |
|:---|:---|:---|
|  | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** |
|  | **2021** | **2022** |
| **REVENUES** | $**58170835** | $**48634844** |
| **REVENUES – RELATED PARTY** | **279364** | **851997** |
| **TOTAL REVENUE** | **58450199** | **49486841** |
| **COST OF REVENUE** | **46028542** | **42471902** |
| **COST OF REVENUE – RELATED PARTY** | **3206041** | **3327180** |
| **TOTAL COST OF REVENUE** | **49234583** | **45799082** |
| **GROSS PROFIT** | 9215616 | 3687759 |
| General and administrative expenses | 1159507 | 1337698 |
| **Total operating expenses** | $**1159507** | $1337698 |
| **INCOME FROM OPERATIONS** | $**8056109** | $**2350061** |
| **OTHER INCOME (EXPENSE):** |  |  |
| Interest income | 2976 | 14007 |
| Interest expense | (16273) | (4585) |
| Other income | 296051 | 229323 |
| Other expense | (85584) | (7082) |
| **Total other income (expense)** | **197170** | **231663** |
| **INCOME BEFORE INCOME TAX** | $**8253279** | $**2581724** |
| **INCOME TAX** | **1339242** | **367808** |
| **NET INCOME** | $**6914037** | $**2213916** |
| LESS: NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST | 55312 | 17516 |
| &nbsp;&nbsp;&nbsp;**NET INCOME ATTRIBUTABLE TO PSI GROUP HOLDINGS LTD** | $**6858725** | $**2196400** |
| **OTHER COMPREHENSIVE INCOME (LOSS):** |  |  |
| Foreign currency translation adjustment of PSI GROUP HOLDINGS LTD | (19341) | (620) |
| **Comprehensive income** | $**6839384** | $**2195780** |
| **WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING\*:** |  |  |
| Basic and diluted | 155969 | 200000 |
| **NET INCOME PER ORDINARY SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY:** |  |  |
| Basic and diluted | $43.97 | $10.98 |

---

*\** *Shares presented on a retroactive basis to reflect the reorganization.*

See accompanying notes to the consolidated financial statements.

**PSI GROUP HOLDINGS LTD**

**UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY**

**FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022** 

**(IN U.S. DOLLARS)**

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Ordinary<br> Shares\*** | **Par<br> Value<br> Amount\*** | **Additional<br> paid-in<br> capital** | **Retained<br> Earnings** | **Accumulated<br> Other<br> Comprehensive<br> Income/(Loss)** | **Total<br> Shareholders'<br> Equity** | **Non-<br> Controlling<br> Interest** | **Total<br> Equity** |
| Balance as of December 31, 2021 **(Restated)** | 155969 | $16 | $5826358 | $1921718 | $(38253) | $7709839 | $15189 | $7725028 |
| Adjustments arising from the group reorganization | 44031 | 4 | 2051162 |  |  | 2051166 | 46611 | 2097777 |
| Net income |  |  |  | 2196400 |  | 2196400 | 17516 | 2213916 |
| Foreign currency translation adjustment | - | - | - | - | (620) | (620) | 641 | 21 |
| Balance as of June 30, 2022 | 200000 | $20 | $7877520 | 4118118 | $(38873) | $11956785 | $79957 | $12036742 |

---

*\** *Shares presented on a retroactive basis to reflect the reorganization.*

See accompanying notes to the consolidated financial statements.

**PSI GROUP HOLDINGS LTD**

**UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022**

**(IN U.S. DOLLARS)**

---

| | | |
|:---|:---|:---|
|  | **For the six-months ended<br> June 30,** | **For the six-months ended<br> June 30,** |
|  | **2021** | **2022** |
| **CASH FLOWS FROM OPERATING ACTIVITIES:** |  |  |
| **Net income** | $**6914037** | $**2213916** |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation of property, plant and equipment | 59797 | 92180 |
| &nbsp;&nbsp;&nbsp;Depreciation of right-of-used assets | 202919 | 217572 |
| &nbsp;&nbsp;&nbsp;Bad debts recovered | (59253) |  |
| &nbsp;&nbsp;&nbsp;Gain on trading of equity securities | (19653) |  |
| &nbsp;&nbsp;&nbsp;Loss on investment in equity securities | 66281 |  |
| &nbsp;&nbsp;&nbsp;Reversal of allowance for expected credit loss, net | (131177) | (145416) |
| &nbsp;&nbsp;&nbsp;**Changes in operating assets and liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(Increase) Decrease In:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | 2703640 | 10758137 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable – related party | (62230) | (459695) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contract asset, net | 532152 | 526957 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amounts due from related parties | (1350342) | (199144) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other current assets | (58721) | (488943) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Increase (Decrease) In:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | (2546626) | (7501194) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable – related party | 1601204 | (4272291) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amounts due to related parties | 130842 | (56414) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taxes payables | 1339242 | 69294 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other payables and accrued liabilities | (258261) | (526571) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contract liabilities |  | 116007 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease liabilities | (196767) | (222018) |
| **NET CASH PROVIDED BY OPERATING ACTIVITIES** | $**8867084** | $**122377** |

---

See accompanying notes to the consolidated financial statements.

**PSI GROUP HOLDINGS LTD**

**UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022**

**(Continued)**

**(IN U.S. DOLLARS)**

---

| | | |
|:---|:---|:---|
|  | **For the six-months ended<br> June 30** | **For the six-months ended<br> June 30** |
|  | **2021** | **2022** |
| **CASH FLOWS FROM INVESTING ACTIVITIES:** |  |  |
| Purchases of property, plant and equipment | $(23016) | $(15978) |
| Acquisition of a subsidiary |  | 16744 |
| Purchase of equity securities | (291895) |  |
| Proceeds from equity securities | 222737 |  |
| Advances to related party | (1331861) | - |
| **NET CASH (USED IN)/PROVIDED BY IN INVESTING ACTIVITES** | $**(1424035)** | $**766** |
| **CASH FLOWS FROM FINANCING ACTIVITIES:** |  |  |
| Dividends paid | $- | $(117359) |
| Advance from a director |  | 2796 |
| Repayment to a shareholder |  | (807684) |
| Proceeds from issuance of ordinary shares |  | 20 |
| Repayments of bank loans | (2507482) | (127325) |
| **NET CASH USED IN FINANCING ACTIVITES** | $**(2507482)** | $**(1049552)** |
| **NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH** | $**4935567** | $**(926409)** |
| Effect of exchange rate changes on cash | (11525) | 2 |
| CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR | 4077972 | 10693731 |
| **CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF YEAR** | $**9002014** | $**9767324** |
| Cash and cash equivalents at end of year | 8251241 | 6840905 |
| Restricted cash at end of year | 750773 | 2926419 |
|  | $**9002014** | $**9767324** |
| **Supplemental Disclosure of Cash Flow Information** |  |  |
| Interest received | 2976 | 14007 |
| Interest paid | (16273) | (4585) |
| Income tax paid |  | (298514) |
| **Non-cash investing and financing activities** |  |  |
| Fair value of issued shares for acquisition of subsidiary |  | 2097777 |
| Dividends offset with amount due from related parties | 8750000 |  |
| Right-of-use assets obtained in exchange for lease obligations | 634383 |  |
| Forgiveness of debts | 1159 |  |
| Debts transferred from related company to offset with amount due to a director | 1124665 |  |

---

See accompanying notes to the consolidated financial statements.

**PSI GROUP HOLDINGS LTD**

**NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES**

&nbsp;&nbsp;&nbsp;&nbsp;(a) Organization

PSI Group Holdings LTD ("PSI", or the "Company") was incorporated under the laws of the Cayman Islands on March 7, 2022. PSI is a company formed for the purposes of consolidating a group of operating business in the freight and logistics industry under one parent to maximize operational and financial synergies. Immediately after the Company's inception, the Company issued 67,670 ordinary shares to Grand Pro Development Limited for which Mr. Chan Yee Kit ("Mr. Chan") is the sole beneficial owner, and the Company issued 10,000 ordinary shares to Profit Sail SAS Holdings Limited for which Mr. Chan is also the sole beneficial owner; as a result, Mr. Chan owned 77,670 of the Company' shares.

On March 11, 2022, PSI (BVI) Ltd. and BGG (BVI) Ltd were incorporated under the laws of the British Virgin Islands. PSI (BVI) Ltd. and BGG (BVI) Ltd are both wholly owned subsidiaries of the Company. Both of these entities were incorporated for the purposes of acting as intermediary holding companies of the Company's operating entities.

Profit Sail Int'l Express (H.K.) Limited ("PSIHK"), was incorporated under laws of Hong Kong and commenced its operations on May 27, 1993. PSIHK is engaged in the provision of logistics and freight handling services. Up to the point of the reorganization in March of 2022, 98.8% and 0.4% equity interests of PSIHK were held by Mr. Chan and Mr. Kwong Kin Yin ("Mr. Kwong"), respectively; the remaining 0.8% ownership interests were held by two independent individuals with each holding equal ownerships of 0.4% each. In March 2022, the Company completed a share swap transaction with Mr. Chan and Mr. Kwong and issued the total of 78,299 ordinary shares, of which 77,670 ordinary shares and 629 ordinary shares were issued to Mr. Chan and Mr. Kwong's designated entities in exchange for their equity interests in PSIHK. After the restructuring, the Company became the 99.2% equity interest owner in PSIHK. The 0.8% interest held by two parties was not included in the share swap transaction; accordingly, the Company accounts for that interest in PSIHK as a non-controlling interest.

The restructuring and share swaps transactions has been accounted for as a transfer of assets among entities under common control as the beneficial interest of each shareholder prior to and after the execution of the restructuring remained unchanged. Mr. Chan was the controlling shareholder both before and after the restructuring transactions. The consolidation of the Company and its subsidiaries have been accounted for using a historical cost basis and presented assuming that the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying consolidated financial statements. Results of operations for the periods presented comprise those of the previously separate entities combined from the beginning of the period to the end of the period, eliminating the effects of intra-entity transactions.

On March 16, 2022, the Company, through its subsidiary, BGG (BVI) Ltd. entered into a Share Exchange Agreement with Mr. Kwong to acquire the entire equity interest of Business Great Global Supply Chain Limited ("BGG"), which was incorporated as a limited company on November 11, 2016. Pursuant to the Share Exchange Agreement, the Company issued an aggregate of 44,031 ordinary shares of the Company for the entire equity interest held by Mr. Kwong in BGG. After the share exchange, BGG became an indirectly wholly owned subsidiary of the Company. BGG is engaging in logistics and freight business. On the same date, Mr. Kwong entered into three separate Assignment Agreements with three independent individuals and pursuant to which, Mr. Kwong assigned an aggregate of 26,660 ordinary shares, among 44,031 ordinary shares received, to the three independent individuals. Shares assigned are ranking *pari passu* with such existing class of shares.

**PSI GROUP HOLDINGS LTD**

**NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)** 

&nbsp;&nbsp;&nbsp;&nbsp;(b) Principal
 activities

The Company is a freight forwarding service provider with networks across the globe. The Company conduct its operations through its subsidiaries in Hong Kong and PSIHK and BGG (collectively the "operating subsidiaries").

The operating subsidiaries provide air and ocean export and import freight forwarding services with optional ancillary logistics related services (such as cargo pick up, cargo handling at ports and local transportation) and warehousing related services (such as repackaging, labelling, palletization, preparation of shipping documentation, arrangement of customs clearance and warehousing) to meet the requirement of the customers.

Generally, the Company's services are divided into air freight forwarding services and ocean freight forwarding service.

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**Basis of Presentation and Principles of Consolidation**

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"), and include the assets, liabilities, revenues, expenses and cash flows of all subsidiaries. All significant inter-company transactions and balances between the Company and its subsidiaries are eliminated upon consolidation.

The unaudited interim condensed consolidated financial statements do not include all the information and footnotes required by the U.S. GAAP for complete financial statements. Certain information and note disclosures normally included in the annual financial statements prepared in accordance with the U.S. GAAP have been condensed or omitted consistent with Article 10 of Regulation S-X. In the opinion of the Company's management, the unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited financial statements and include all adjustments, in normal recurring nature, as necessary for the fair statement of the Company's financial position as of June 30, 2022, and results of operations and cash flows for the six months ended June 30, 2021 and 2022. The unaudited interim condensed consolidated balance sheet as of December 31, 2021 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by the U.S. GAAP. Interim results of operations are not necessarily indicative of the results expected for the full fiscal year or for any future period. These financial statements should be read in conjunction with the audited consolidated financial statements as of and for the years ended December 31, 2020 and 2021, and related notes included in the Company's audited consolidated financial statements.

**Use of Estimates**

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. Actual results could differ from those estimates. In particular, the novel coronavirus ("COVID-19") pandemic and the resulting adverse impacts to global economic conditions, as well as our operations, may impact future estimates Significant estimates for the period ended June 30, 2021 and 2022, include allowance for expected credit loss, fair value measurements, useful life of property, plant and equipment, goodwill, assumptions used in assessing impairment of long-lived assets.

**Equity method investment**

The Company applies the equity method of accounting to investment when it has significant influence, but not controlling interest, in the investee. The Company's equity method investment is reported at cost and adjusted each period for the Company's share of the investee's income or loss and dividend paid, if any.

The Company assesses equity method investment for impairment whenever events or changes in circumstances indicate that the carrying value of an investment may not be recoverable. Management reviewed the underlying net assets of the investment and considered that the investment was fully impaired in prior year.

**PSI GROUP HOLDINGS LTD**

**NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

**Foreign Currency Translation**

The accompanying consolidated financial statements are presented in United States dollars ("US$" or "$"). The functional currency of the Company is Hong Kong Dollar ("HKD"). Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of transaction. Any differences between the initially recorded amount and the settlement amount are recorded as a gain or loss on foreign currency transaction in the consolidated statements of operations.

---

| | | |
|:---|:---|:---|
|  | **For the <br> six-months <br> ended<br> June 30,** | **For the <br> six-months <br> ended<br> June 30,** |
|  | **2021** | **2022** |
| Year end HKD: US$ exchange rate | 7.7650 | 7.8000 |
| Year average HKD: US$ exchange rate | 7.7610 | 7.8000 |

---

**Cash and Cash Equivalents**

For financial reporting purposes, the Company considers all highly liquid investments purchased with original maturity of three months or less to be cash equivalents. The Company maintains no bank account in the United States of America. The Company maintains its bank accounts in Hong Kong Special Administrative Region ("SAR"). Balances at financial institutions within Hong Kong SAR are not covered by insurance.

**Restricted Cash**

Restricted cash represents amounts held by a bank as security for short-term borrowing and therefore is not available for the Company's use until such time as the bank acceptance notes and bank loans have been fulfilled or expired, normally within a twelve-month period.

**Investment in Equity Securities**

Investment in equity securities measured at fair value through profit and loss consist primarily of investments in equity securities listed in stock market and are carried at fair value in accordance with ASC 320, Investments-Debt and Equity Securities ("ASC 320"), and Topic 321, Investments-Equity Securities ("ASC 321"). These securities are marked to market based on the respective publicly quoted market prices of the equity securities. These securities transactions are recorded on a trade date basis. Any unrealized appreciation or depreciation on investment securities is reported in the Unaudited Interim Condensed Consolidated Statement of Income within other expense.

**PSI GROUP HOLDINGS LTD**

**NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

**Fair Value of Financial Instruments**

The Company applies the provisions of ASC 820, *Fair Value Measurements and Disclosures*, to the financial instruments that are required to be carried at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company uses a three-tier fair value hierarchy based upon observable and non-observable inputs that prioritizes the information used to develop our assumptions regarding fair value. Fair value measurements are separately disclosed by level within the fair value hierarchy.

● Level 1—defined as observable inputs such as quoted prices in active markets for identical assets or liabilities;

● Level 2—defined as inputs other than quoted prices in active markets, that are either directly or indirectly observable; and

● Level 3—defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The Company's financial instruments primarily consist of investment securities, cash and cash equivalents, restricted cash, accounts receivable, contract assets, accounts payable, other payables and accrued liabilities, short-term bank loans, notes payable and amount due from/to related parties.

The carrying value of cash and cash equivalents, restricted cash, accounts receivable, amount due from/to related parties, accounts payable, and other current assets and liabilities approximate fair value because of the short-term nature of these items. The estimated fair values of short-term bank loans were not materially different from their carrying value as presented due to the short maturities and that the interest rates on the borrowing approximate those that would have been available for loans of similar remaining maturity and risk profile. As the carrying amounts are reasonable estimates of the fair value, these financial instruments are classified within Level 1 of the fair value hierarchy.

**Business Combinations**

The Company allocates the fair value of purchase consideration to the tangible assets acquired and liabilities assumed acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions.

**Goodwill** 

Goodwill represents the excess of the cost of acquired businesses over the net of the fair value of identifiable tangible assets and identifiable intangible assets purchased and liabilities assumed.

Goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired.

**PSI GROUP HOLDINGS LTD**

**NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

**Accounts Receivable**

Accounts receivables are carried at net realizable value. The Company reviews its accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, customer's historical payment history, its current creditworthiness and current or future economic trends. Accounts are written off after exhaustive efforts at collection. The Company only grants credit terms to established customers who are deemed to be financially responsible. Credit periods to customers are normally within 45 days after customers received services provided by the Company. If accounts receivables are to be provided for, or written off, they would be recognized in the consolidated statement of operations within operating expenses. Balance of allowance for expected credit loss was $572,367 and $440,476 as of December 31, 2021 and June 30, 2022, respectively.

**Property, Plant, and Equipment** 

Property, plant, and equipment are stated at cost less accumulated depreciation, and include expenditure that substantially increases the useful lives of existing assets. Expenditures for repairs and maintenance, which do not extend the useful life of the assets, are expensed as incurred, whereas significant renewals and betterments are capitalized.

Depreciation is provided over their estimated useful lives, using the straight-line method. Estimated useful lives are as follows:

---

| | |
|:---|:---|
| Leasehold improvements | life of lease |
| Machinery and equipment | 4 to 5 years |
| Motor vehicles | 3.3 years |
| Furniture and fixtures | 5 years |

---

When assets are sold or retired, their costs and accumulated depreciation are eliminated from the consolidated financial statements and any gain or loss resulting from their disposal is recognized in the period of disposition as an element of other income.

**PSI GROUP HOLDINGS LTD**

**NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

**Impairment of Long-Lived Assets**

Long-lived assets are evaluated for impairment periodically whenever events or changes in circumstances indicate that their related carrying amounts may not be recoverable in accordance with FASB ASC 360, "Property, Plant and Equipment".

In evaluating long-lived assets for recoverability, the Company uses its best estimate of future cash flows expected to result from the use of the asset and eventual disposition in accordance with FASB ASC 360-10-15. To the extent that estimated future, undiscounted cash inflows attributable to the asset, less estimated future, undiscounted cash outflows, are less than the carrying amount, an impairment loss is recognized in an amount equal to the difference between the carrying value of such asset and its fair value. Assets to be disposed of and for which there is a committed plan of disposal, whether through sale or abandonment, are reported at the lower of carrying value or fair value less costs to sell.

There was no impairment loss recognized for the six months ended June 30, 2021 and 2022.

**Lease**

ASC 842 supersedes the lease requirements in ASC 840 "Leases", and generally requires lessees to recognize operating and finance lease liabilities and corresponding right-of-use assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. Leases that transfer substantially all of the benefits and risks incidental to the ownership of assets are accounted for as finance leases as if there was an acquisition of an asset and incurrence of an obligation at the inception of the lease. All other leases are accounted for as operating leases.

We determine if an arrangement is a lease at inception. On our balance sheet, our office lease is included in Operating lease right-of-use (ROU) asset, Current portion of operating lease liability and Operating lease liability, net of current portion.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. For leases that do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Significant judgment may be required when determining whether a contract contains a lease, the length of the lease term, the allocation of the consideration in a contract between lease and non-lease components, and the determination of the discount rate included in our office lease. We review the underlying objective of each contract, the terms of the contract, and consider our current and future business conditions when making these judgments.

**Related parties**

The Company adopted ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.

**PSI GROUP HOLDINGS LTD**

**NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

**Revenue Recognition**

The Company recognizes revenues in accordance with ASC Topic 606, "Revenue from Contracts with Customers".

The Company derives revenues primarily from the provision of air and ocean freight forwarding services by purchasing transportation services from direct (asset-based) carriers or other freight forwarders and reselling those services to its customers. The contracts with customers generally contain a single performance obligation as the distinct services provided remain substantially the same over time and possess the same pattern of transfer. The performance obligation is satisfied over the transit period when the customers simultaneously receive and consume the benefits of the delivery services. Accordingly, revenue is recognized over the transit period based on the progress towards the completion of the performance obligation.

The transit period can vary based upon the method of transport. Determining the transit period and how much of it has been completed as of the reporting date may require management to make judgments that affect the timing of revenue recognized. For air freight forwarding services, the Company uses the cost-to-cost measure of progress because it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenue is recorded proportionally as costs are incurred. The typical amount of time spent rendering air freight forwarding services is three to five days. For ocean freight forwarding services, the Company uses an output method of progress based on time-in-transit to measure the progress as the timing of costs incurred does not best depict the transfer of control to the customer. The typical amount of time spent rendering ocean freight forwarding services is approximately three to four weeks. The Company believes that the transpiring of time provides the best measurement of the rendering of services to the customer. The Company's primary output is the provision of transport products over a physical distance. Distance equals speed multiplied by time; because speed may vary over the course of the journey, measuring the rendering of service using units of time is more linearly quantifiable than speed; accordingly, the Company recognizes revenue over time. The Company believes that the methodology employed is comparable to other global logistics companies and offers faithful depiction of the transport of goods as service rendered to customers.

Pricing for the Company's services is generally a fixed amount. The Company does not have significant variable consideration in its contracts. Payments are received within 45 to 90 days upon completion of performance obligation but can vary based on the nature of the service provided and certain other factors.

The Company recognizes revenue on a gross basis as the Company controls the services. The Company is primarily responsible for fulfilling the promise, assumes risk of loss, has discretion in setting the prices for the services to its customers, and has the ability to direct the use of the services provided by third parties.

Contract assets include billed and unbilled amounts resulting from in-transit shipments, as the Company has an unconditional right to payment only once all performance obligations have been completed (e.g., shipments have been delivered). Contract assets are generally classified as current, and the full balance is converted each reporting period based on the short-term nature of the transactions. Gross contract assets related to in-transit shipments totaled $1,335,565 and $811,096 at December 31, 2021 and June 30, 2022, respectively. Contract assets are included within current assets in the accompanying consolidated balance sheets.

**PSI GROUP HOLDINGS LTD**

**NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

Contract liabilities are recognized when the Company receives prepayments from customers. Contract liabilities will be recognized as revenue when promised services are provided. Contract liabilities were $108,974 and $224,981 at December 31, 2021 and June 30, 2022, respectively.

The Company also provide certain value-added logistics services, such as packaging, warehousing services, small parcel, and local transportation services. The performance obligation is generally satisfied over the service period as the Company perform the obligations. Pricing for our services is established in the customer contract and is dependent upon the specific needs of the customer but may be agreed upon at a fixed fee per transaction, labor hour, or service period.

The Company has adopted ASC 606 on January 1, 2018, using the transition method of Modified-Retrospective Method ("MRM"). The adoption of ASC 606 had no impact on the Company's beginning balance of retained earnings.

**Cost of revenue**

Cost of revenue consists primarily of cargo space charged by airlines, shipping liners or other freight forwarders and ancillary logistics services fee including costs of security, local handling and x-ray screening and warehouse services .

**General and Administrative Expenses**

General and administrative expenses include management and office salaries and employee benefits, depreciation for office facility and office equipment, travel and entertainment, legal and accounting, consulting fees and other office expenses.

**Income Taxes**

The Company accounts for income taxes following the liability method pursuant to FASB ASC 740 "Income Taxes". Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rate is recognized in income in the period that includes the enactment date.

The Company also follows FASB ASC 740, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of December 31, 2021 and June 30, 2022, the Company did not have a liability for unrecognized tax benefits. It is the Company's policy to include penalties and interest expense related to income taxes as a component of other expense and interest expense, respectively, as necessary. The Company's historical tax years will remain open for examination by the local authorities until the statute of limitations has passed.

**PSI GROUP HOLDINGS LTD**

**NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

**Comprehensive Income**

Comprehensive income is defined as the change in equity during the year from transactions and other events, excluding the changes resulting from investments by owners and distributions to owners, and is not included in the computation of income tax expense or benefit. Accumulated comprehensive income consists of foreign currency translation. The Company presents comprehensive income (loss) in accordance with ASC Topic 220, "Comprehensive Income".

**Earnings per share**

The Company calculates earnings per share in accordance with ASC Topic 260 "Earnings per Share." Basic earnings per share is computed by dividing the net income by the weighted average number of common shares outstanding during the year. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential ordinary shares equivalents had been issued and if the additional common shares were dilutive. During the six months ended June 30, 2021 and 2022, there were no dilution impact.

**Commitments and contingencies**

In the normal course of business, the Company is subject to contingencies, including legal proceedings and environmental claims arising out of the normal course of businesses that relate to a wide range of matters, including among others, contracts breach liability. The Company records accruals for such contingencies based upon the assessment of the probability of occurrence and, where determinable, an estimate of the liability. Management may consider many factors in making these assessments including past history, scientific evidence and the specifics of each matter. The Company's management has evaluated all such proceedings and claims that existed as of December 31, 2021 and June 30, 2022. Normal course of businesses that relate to a wide range of matters, including among others, contracts breach liability. The Company records accruals for such contingencies based upon the assessment of the probability of occurrence and, where determinable, an estimate of the liability. Management may consider many factors in making these assessments including past history, scientific evidence and the specifics of each matter. The Company's management has evaluated all such proceedings and claims that existed as of December 31, 2021 and June 30, 2022.

**Non-controlling interests**

Non-controlling interests are recognized to reflect the portion of their equity that is not attributable, directly or indirectly, to the Company as the controlling shareholder. For the Company's consolidated subsidiaries, non-controlling interests represent a minority shareholder's 0.8% ownership interest in PSIHK.

Non-controlling interests are presented as a separate line item in the equity section of the Company's Consolidated Balance Sheets and have been separately disclosed in the Company's Consolidated Statements of Income and Comprehensive Income to distinguish the interests from that of the Company.

**PSI GROUP HOLDINGS LTD**

**NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

**Segment Reporting**

ASC 280, "Segment Reporting", establishes standards for reporting information about operating segments on a basis consistent with the Company's internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for detailing the Company's business segments.

The Company's chief operating decision maker is the Chief Executive Officer, who reviews the financial information of each separate operating segment when making decisions about allocating resources and assessing the performance of the segment. The Company has determined that it has a single operating segment for purposes of allocating resources and evaluating financial performance; accordingly, the Company does not provide additional segment reporting in these accompanying notes.

**Related Party** 

In general, related parties exist when there is a relationship that offers the potential for transactions at less than arm's-length, favorable treatment, or the ability to influence the outcome of events different from that which might result in the absence of that relationship. A related party may be any of the following: a) an affiliate, which is a party that directly or indirectly controls, is controlled by, or is under common control with another party; b) a principle owner, owner of record or known beneficial owner of more than 10% of the voting interest of an entity; c) management, which are persons having responsibility for achieving objectives of the entity and requisite authority to make decision; d) immediate family of management or principal owners; e) a parent Company and its subsidiaries; and f) other parties that have ability to significant influence the management or operating policies of the entity. The Company discloses all significant related party transactions.

**Economic and Political Risks**

The Company's operations are conducted in the Hong Kong. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political, economic and legal environment in the Hong Kong, and by the general state of the Hong Kong economy.

The Company's operations in the Hong Kong are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political and social conditions in the Hong Kong, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. All of the Company's cash is maintained with banks in Hong Kong, and none of these deposits are covered by insurance. The Company has not experienced any losses in such accounts. A portion of the Company's sales are credit sales which are primarily to customers whose abilities to pay are dependent upon the industry economics prevailing in these areas; however, concentrations of credit risk with respect to trade accounts receivables is LTD due to generally short payment terms. The Company also performs ongoing credit evaluations of its customers to help further reduce credit risk.

**Exchange Risk**

The reporting currency of the Company is U.S. Dollar. To date the majority of the revenues and costs are denominated in Hong Kong Dollar and a significant portion of the assets and liabilities are denominated in Hong Kong Dollars. There was no significant exposure to foreign exchange rate fluctuations and the Company has not maintained any hedging policy against foreign currency risk. The management will consider hedging significant currency exposure should the need arise.

**PSI GROUP HOLDINGS LTD**

**NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

**Recently Issued Accounting Pronouncements**

Recent accounting pronouncements that the Company has adopted or may be required to adopt in the future are summarized below:

In October 2021, the FASB issued Accounting Standards Update ("ASU 2021-08") "Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers" and is effective for fiscal years beginning after December 15, 2022. This amendment requires that an entity (acquirer) recognize, and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. The Company is currently evaluating the effects that adoption of this guidance will have on our condensed consolidated financial statements.

Codification improvements to subtopic 310-20: In October 2020, the FASB issued Accounting Standards Update ("ASU 2020-08") "Codification Improvements to Subtopic 310 – 20, Receivables – Non-refundable Fees and Other Costs" and is effective for fiscal years beginning after December 15, 2021. The amendments clarify the Board's intent that an entity should revaluate whether a callable debt security that has multiple call dates is within the scope of paragraph 310-20-35-33 for each reporting period. The adoption of the ASU 2020-08 did not have a material impact on the Company's condensed consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13,"Measurement of Credit Losses on Financial Instruments", to require financial assets carried at amortized cost to be presented at the net amount expected to be collected based on historical experience, current conditions and forecasts. Subsequently, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, in April 2019. To clarify that receivables arising from operating leases are within the scope of lease accounting standards. In October 2019, the FASB issued ASU 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842), which defers the effective date for public filers that are considered small reporting companies as defined by the Securities and Exchange Commission to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Adoption of the standard requires using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective date to align existing credit loss methodology with the new standard. The Company adopted this standard on January 1, 2019.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350), simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates Step 2 of the goodwill impairment test, which required a hypothetical purchase price allocation. Goodwill impairment will now be the amount by which the reporting unit's carrying amount exceeds its fair value, limited to the carrying amount of the goodwill. ASU 2017-04 is effective for us beginning January 1, 2022. The adoption of the ASU 2017-04 did not have a material impact on the Company's condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13 Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds, and modifies certain disclosure requirements for fair value measurements under ASC 820. This ASU is to be applied on a prospective basis for certain modified or new disclosure requirements, and all other amendments in the standard are to be applied on a retrospective basis. The new standard is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted. The Company adopted Topic 820 on January 1, 2020. The adoption of the ASU 2018-13 did not have a material impact on the Company's condensed consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes" (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 will simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company does not expect that the requirements of ASU 2019-12 will have a material impact on its condensed consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional practical expedients to simplify accounting for reference rate reform. Amongst other practical expedients, the update allows for contract modifications due to reference rate reform for certain receivables and debt contracts to be accounted for by prospectively adjusting the effective interest rate. The amendments in this ASU are effective for all entities beginning on March 12, 2020, and companies may elect to apply the amendments prospectively through December 31, 2022. The Company is currently evaluating the effects that adoption of this guidance will have on our condensed consolidated financial statements.

The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company's condensed consolidated financial statements.

**NOTE 2.1 – RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS**

The Company has restated the accompanying consolidated financial statements and related disclosures for the year ended December 31, 2021 that were previously included in Confidential draft No. 2 filed with the SEC on July 22, 2022 and in Confidential draft No. 3 filed with U.S. Securities and Exchange Commission (the "SEC") on September 19, 2022, in order to correct errors resulting from the incorrect recognition of an acquisition of a subsidiary, Business Great Global Supply Chain Limited, as common control arrangement instead of the correct method, which is the purchase method for business combination.

**PSI GROUP HOLDINGS LTD**

**NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 3 – CONCENTRATION OF REVENUES AND COST OF REVENUE**

Concentration of major customers and suppliers:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **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,** |
|  | **2021** | **2021** | **2022** | **2022** |
| Major customers representing more than 10% of the Company's revenues | Major customers representing more than 10% of the Company's revenues |  |  |  |
| &nbsp;&nbsp;&nbsp;Customer A | $26936275 | 44.96% | 25248281 | 51.02% |
| &nbsp;&nbsp;&nbsp;**Total Revenues** | $26936275 | 44.96% | $25248281 | 51.02% |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of June 30,** | **As of June 30,** |
|  | **2021** | **2021** | **2022** | **2022** |
| Major customers of the Company's accounts receivable, net |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Company A | $7759873 | 46.44% | $6846382 | 63.26% |
| &nbsp;&nbsp;&nbsp;**Total** | $7759873 | 46.44% | $6846382 | 63.26% |

---

Accounts receivable from the Company's major customers accounted for 46.44% and 63.26% of total accounts receivable balances as of December 31, 2021 and June 30, 2022, respectively.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **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,** |
|  | **2021** | **2021** | **2022** | **2022** |
| Major suppliers representing more than 10% of the Company's cost of revenue |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Supplier A | $- | -% | $6169278 | 13.56% |
| &nbsp;&nbsp;&nbsp;Supplier C | 5028070 | 10.21% | 5623773 | 12.36% |
| &nbsp;&nbsp;&nbsp;Supplier D | 10119311 | 20.55% | -% |  |
| &nbsp;&nbsp;&nbsp;**Total Cost of Revenue** | $15147381 | 30.76% | $11793051 | 25.92% |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of June 30,** | **As of June 30,** |
|  | **2021** | **2021** | **2022** | **2022** |
| Major suppliers of the Company's accounts payables, net |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Supplier A | $5955280 | 29.56% | $2251929 | 26.85% |
| &nbsp;&nbsp;&nbsp;Supplier C | 1216411 | 6.04% | 970434 | 11.57% |
| &nbsp;&nbsp;&nbsp;Total | $7171691 | 35.60% | $3222363 | 38.42% |

---

Accounts payables from the Company's major suppliers accounted for 35.60% and 38.42% of total accounts payables balances as of December 31, 2021 and June 30, 2022, respectively.

**PSI GROUP HOLDINGS LTD**

**NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 4 – OTHER INCOME**

---

| | | |
|:---|:---|:---|
|  | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** |
|  | **2021** | **2022** |
| Government grants | $56203 | $29744 |
| Dividends income from investment in equity securities | 3788 |  |
| Management fee income | 27003 | 17404 |
| Management fee income from related parties | 14234 | 20250 |
| Bad debt recovered | 59253 |  |
| Reversal of allowance for expected credit loss, net | 131177 | 145416 |
| Miscellaneous income | 4393 | 16509 |
| **Total** | $296051 | $229323 |

---

**NOTE 5 – OTHER EXPENSE**

---

| | | |
|:---|:---|:---|
|  | **For the six months ended<br> June 30** | **For the six months ended<br> June 30** |
|  | **2021** | **2022** |
| Exchange loss | $(38956) | $(7082) |
| Loss on investment in equity securities | (66281) |  |
| Gain on trading of equity securities | 19653 | - |
| **Total** | $(85584) | $(7082) |

---

**NOTE 6 – ACCOUNTS RECEIVABLE**

Accounts receivable is presented net of allowance for credit loss:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,**<br>**2021** | **As of <br> June 30,**<br>**2022** |
|  | **(Restated)** | |
| Accounts receivable | $17270438 | $10790530 |
| Less: allowance for expected credit loss | (572367) | (440476) |
| **Total** | $16698071 | $10350054 |

---

The movement of allowances for credit loss is as follow:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,**<br>**2021** | **As of <br> June 30,**<br>**2022** |
|  | **(Restated)** | |
| Balance at beginning of the year | $(324991) | $(572367) |
| Acquisition of subsidiary |  | (1066) |
| Provision | (247376) |  |
| Reversal | - | 132957 |
| **Total** | $(572367) | $(440476) |

---

**PSI GROUP HOLDINGS LTD**

**NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 7 – CONTRACT ASSETS, NET AND CONTRACT LIABILITIES**

Contract asset is presented net of allowance for expected credit loss.

---

| | | |
|:---|:---|:---|
|  | **As of December 31,**<br>**2021** | **As of<br> June 30,**<br>**2022** |
|  | **(Restated)** | |
| Contract assets | $1335565 | $811096 |
| Less: allowance for expected credit loss | (44197) | (31821) |
| **Total** | $1291368 | $779275 |

---

The movement of allowances for credit loss is as follow:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,**<br>**2021** | **As of <br> June 30,**<br>**2022** |
|  | **(Restated)** | |
| Balance at beginning of the year | $(77890) | $(44197) |
| Acquisition of subsidiary |  | (83) |
| Reversal | 33693 | 12459 |
| **Total** | $(44197) | $(31821) |

---

Contract liabilities are recognized when the Company received prepayments from customers. Contract liabilities will be recognized as revenue when promised services are provided. Contract liabilities were $108,974 and $224,981 as of December 31, 2021 and June 30, 2022, respectively.

**NOTE 8 – PROPERTY, PLANT AND EQUIPMENT, NET**

As of December 31, 2021 and June 30, 2022, property, plant and equipment, net consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,**<br>**2021** | **As of <br> June 30,**<br>**2022** |
|  | **(Restated)** | |
| Leasehold improvement | $80518 | $116729 |
| Machinery and equipment | 450114 | 473925 |
| Motor vehicles | 354408 | 354408 |
| Furniture and fixture | 75697 | 92711 |
| Total property plant and equipment, at cost | 960737 | 1037773 |
| Less: accumulated depreciation | (498037) | (590217) |
| **Total property, plant and equipment, net** | $462700 | $447556 |

---

Depreciation expense for the six-months ended June 30, 2021 and 2022 were $59,797 and $92,180, respectively.

**PSI GROUP HOLDINGS LTD**

**NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 9 – EQUITY METHOD INVESTMENT** 

Particulars of the investment held by the Company as of December 31, 2020 and 2021 are as follows:

---

| | | | |
|:---|:---|:---|:---|
| **Name of the investee** | **Place of <br> incorporation** | **Percentage <br> of <br> ownership** | **Nature of<br> business** |
| Business Great Global Supply Chain PTE. Limited ("BGG SC PTE") | Singapore | 30% | Acting as a freight agent |

---

BGG SC PTE became dormant during the year ended December 31, 2020. The Company has determined that the recoverability of its investments in BGG SC PTE . Taking into account the facts and circumstances, the equity method investment was fully impaired for the year ended December 31, 2020.

**NOTE 10 – ACQUISITION**

On March 16, 2022 ("the acquisition date"), the Company, through its subsidiary, BGG (BVI) Ltd. entered into a Share Exchange Agreement with Mr. Kwong to acquire the entire equity interest of BGG. Pursuant to the Share Exchange Agreement, the Company issued an aggregate of 44,031 ordinary shares of the Company for his entire equity interest in BGG. After the share exchange, BGG became an indirectly wholly owned subsidiary of the Company.

The following table summarizes the consideration paid for BGG and the fair value of the assets acquired, and liabilities assumed on the acquisition date.

---

| | |
|:---|:---|
|  | **For the six<br> months ended <br> June 30, 2022** |
| Consideration: |  |
| &nbsp;&nbsp;&nbsp;Issue of 44,031 ordinary shares of the Company | $2097777 |
| &nbsp;&nbsp;&nbsp;Fair value of consideration | 2097777 |
| Recognized amounts of identifiable assets acquired and liabilities assumed: |  |
| &nbsp;&nbsp;&nbsp;Other non-current assets | 110751 |
| &nbsp;&nbsp;&nbsp;Trade and other receivables | 4285650 |
| &nbsp;&nbsp;&nbsp;Other current assets | 47874 |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | 16744 |
| &nbsp;&nbsp;&nbsp;Other current liabilities | (168846) |
| &nbsp;&nbsp;&nbsp;Amounts due from related parties | (2085956) |
| &nbsp;&nbsp;&nbsp;Tax liabilities | (402591) |
| &nbsp;&nbsp;&nbsp;Total identifiable net assets assumed | $1803626 |
| Goodwill | 294151 |
| Total | 2097777 |

---

The goodwill of $294,151 arising from the acquisition related to certain expected synergies. No impairment of goodwill was recognized during the six months ended June 30, 2022.

The acquisition of BGG was not considered material to the Company for the year/period presented, and therefore, pro forma information has not been presented.

**PSI GROUP HOLDINGS LTD**

**NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 11 – LEASES**

The Company has various operating leases for office space, warehouse and photocopiers. On January 1, 2019, the Company adopted Leases (Topic 842), using the modified-retrospective approach, and as a result recognized a right-of-use asset of $381,938 at the date of adoption, and a lease liability of $381,938. No cumulative-effect adjustment to retained earnings was required upon adoption of Topic 842. The lease agreements do not specify an explicit interest rate. The Company's management believes that the Hong Kong Dollar Best Lending Rate ("BLR") was the most indicative rate of the Company's borrowing cost for the calculation of the present value of the lease payments; the rate used by the Company as quoted by the BLR was 5.0%.

As of December 31, 2021 and June 30, 2022, the right-of-use assets totaled $583,436, and $415,557, respectively.

As of December 31, 2021 and June 30, 2022, lease liabilities consist of the following:

---

| | | |
|:---|:---|:---|
|  | **As of<br> December 31,**<br>**2021** | **As of<br> June 30,**<br>**2022** |
|  | **(Restated)** | |
| Lease liabilities - current portion | $422208 | $328124 |
| Lease liabilities - non-current portion | $192921 | $115483 |
| **Total** | $615129 | $443607 |

---

During the year ended December 31, 2021 and six months ended June 30, 2022, the Company incurred total operating lease expenses of $435,812 and $231,251, respectively.

Other lease information is as follows:

---

| | | |
|:---|:---|:---|
|  | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** |
|  | **2021** | **2022** |
| Weighted-average remaining lease term - operating leases | 1.9 years | 1.5 years |
| Weighted-average discount rate - operating leases | 5% | 5% |

---

The following is a schedule of future minimum payments under operating leases as of June 30, 2022:

---

| | |
|:---|:---|
|  | **As of<br> June 30,**<br>**2022** |
| 2023 | $340369 |
| 2024 | 91651 |
| 2025 | 21138 |
| 2026 | 7047 |
| Total lease payments | 460205 |
| Less: imputed interest | (16598) |
| Total operating lease liabilities, net of interest | $443607 |

---

**PSI GROUP HOLDINGS LTD**

**NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 12 – OTHER PAYABLES AND ACCRUED LIABILITIES**

Other payables and accrued liabilities are summarized as follow:

---

| | | |
|:---|:---|:---|
|  | **As of<br> December 31,**<br>**2021** | **As of<br> June 30**<br>**2022** |
|  | **(Restated)** | |
| Provision for staff bonus | $411679 | $- |
| Accrued staff salaries | 3879 | 3124 |
| Accrued administrative expenses | 50586 | 43343 |
| Other payables | 9338 | 5592 |
| **Total** | $475482 | $52059 |

---

**NOTE 13 – ACCOUNTS PAYABLE** 

Accounts payable are summarized as follow:

---

| | | |
|:---|:---|:---|
|  | **As of<br> December 31,**<br>**2021** | **As of<br> June 30**<br>**2022** |
|  | **(Restated)** | |
| Freight fee and other handling charges | $15144307 | $7658316 |
| Freight fee and other handling charges – related party | 5000265 | 727974 |
| **Total** | $20144572 | $8386290 |

---

**NOTE 14– SHORT TERM BANK LOANS** 

Short-term loans are summarized as follow:

---

| | | |
|:---|:---|:---|
|  | **As of<br> December 31,**<br>**2021** | **As of<br> June 30**<br>**2022** |
|  | **(Restated)** | |
| Guaranteed bank loans | $387263 | $259938 |

---

As of December 31, 20201 and June 30, 2022, the Company pledged its fixed deposit of $759,718 and $2,926,419 for loans and trade financing secured from banks. The loan is secured by (i) guarantee issued by Hong Kong Mortgage Corporation Limited, (ii) personal guarantee of the director of the Company.

Short-term loans as of June 30, 2022 are as follow:

As of December 31, 2021 and June 30, 2022, all bank loans were repayable within one year with effective interest rate of approximately 5.82% and 3.53%, respectively. These bank loans were carried at amortized cost, and the Company believes amortized cost approximates fair value.

As of December 31, 2021 and June 30, 2022, the Company was compliant with the financial covenants set forth in the loan agreements.

**NOTE 15 – SHAREHOLDERS' EQUITY**

 ****

At incorporation, the company's authorized share capital was $20,000 divided into 200,000,000 ordinary shares with a US$0.0001 par value per share.

**PSI GROUP HOLDINGS LTD**

**NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 16 – DISAGGREGATED REVENUE**

Information for the Company's breakdown of revenue by service type for the six months ended June 30, 2021 and 2022 are as follows:

---

| | | |
|:---|:---|:---|
|  | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** |
|  | **2021** | **2022** |
|  | **USD** | **USD** |
| **Freight forwarding services** |  |  |
| - Air freight | 55641311 | 45955679 |
| - Ocean freight | 2279284 | 3523140 |
| **Subtotal** | **57920595** | **49478819** |
| Ancillary logistic services | 529604 | 8022 |
| **Total** | **58450199** | **49486841** |

---

Information for the Company's breakdown of revenue from freight forwarding services for the six months ended June 30, 2021 and 2022 are as follows:

---

| | | |
|:---|:---|:---|
|  | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** |
|  | **2021** | **2022** |
|  | **USD** | **USD** |
| **Export shipments** |  |  |
| - Air | 55638921 | 45940150 |
| - Ocean | 2058242 | 3497006 |
| - **Subtotal** | **57697163** | **49437156** |
| **Import shipments** |  |  |
| - Air | 2390 | 15529 |
| - Ocean | 221042 | 26134 |
| - **Subtotal** | **223432** | **41663** |
| **Total** | **57920595** | **49478819** |

---

Information for the Company's breakdown of export revenue destination for the six months ended June 30, 2021 and 2022 are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** |
|  | **2021** | **2021** | **2022** | **2022** |
|  | **USD** | | **USD** | |
| United States | 47693411 | 82.66% | 38764319 | 78.41% |
| France | 1694765 | 2.94% | 362637 | 0.73% |
| United Kingdom | 860889 | 1.49% | 2704912 | 5.47% |
| The Netherlands | 2112847 | 3.66% | 2260060 | 4.57% |
| Others *(Note)* | 5335251 | 9.25% | 5345228 | 10.82% |
| **Total export revenue** | 57697163 | **100%** | 49437156 | **100%** |

---

*Note: Others represent a number of countries including, among others, Luxembourg, Canada, Belgium, etc.*

Information for the Company's breakdown of revenue by types of customers for the six months ended June 30, 2021 and 2022 are as follows:

---

| | | |
|:---|:---|:---|
|  | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** |
|  | **2021** | **2022** |
|  | **USD** | **USD** |
| Freight forwarders | 57782237 | 49052387 |
| Direct customers | 667962 | 434454 |
| **Total** | **58450199** | **49486841** |

---

**PSI GROUP HOLDINGS LTD**

**NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 17 – INCOME TAXES**

*Cayman Islands and British Virgin Islands ("BVI")*

The Company is incorporated in the Cayman Islands and several of its wholly-owned subsidiaries are incorporated in BVI. Under the current laws of the Cayman Islands and the BVI, these entities are not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholdings tax in the Cayman Islands and the BVI.

*Hong Kong*

On March 21, 2018, the Hong Kong Legislative Council passed The Inland Revenue (Amendment) (No. 7) Bill 2017 (the "Bill") which introduces the two-tiered profits tax rates regime. The Bill was signed into law on March 28, 2018 and was gazetted on the following day. Under the two-tiered profits tax rates regime, the first HK$2 million of profits of the qualifying group entity will be taxed at 8.25%, and profits above HK$2 million will be taxed at 16.5%. The profits of group entities not qualifying for the two-tiered profits tax rates regime will continue to be taxed at a flat rate of 16.5%.

For the six months ended June 30, 2021 and 2022, the Company generated substantially all of its taxable income in the Hong Kong. The tax expenses records in the Company's result of operations are almost entirely attributable to income earned in the Hong Kong. Should the Company's operations expand or change in the future, where the Company generates taxable income in other jurisdictions, the Company's effective tax rates may substantially change.

Significant components of the provision for income taxes are as follows:

---

| | | |
|:---|:---|:---|
|  | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** |
|  | **2021** | **2022** |
| Hong Kong profit tax: |  |  |
| &nbsp;&nbsp;&nbsp;- Current year | $1340531 | $370372 |
| &nbsp;&nbsp;&nbsp;- Tax Concession | (1289) | (2564) |
| **Income tax expenses** | $**1339242** | $**367808** |

---

The effective tax rates on income before income taxes for the six months ended June 30, 2021 and 2022 was 16.23% and 14.25 %, respectively.

No provision for deferred taxation has been made as there were no material temporary difference at reporting date.

The following table reconciles statutory rate to effective tax rate:

---

| | | |
|:---|:---|:---|
|  | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** |
|  | **2021** | **2022** |
| Hong Kong statutory income tax rate | 16.50% | 16.50% |
| &nbsp;&nbsp;&nbsp;- Non-taxable income | (0.21)% | (1.20)% |
| &nbsp;&nbsp;&nbsp;- Non-deductible expenses | 0.43% | -% |
| &nbsp;&nbsp;&nbsp;- Deductible temporary difference not recognized | (0.15)% | 0.21% |
| &nbsp;&nbsp;&nbsp;- Tax reduction | (0.02)% | (0.10)% |
| &nbsp;&nbsp;&nbsp;- Income tax at concessionary rate | (0.26)% | (1.64)% |
| &nbsp;&nbsp;&nbsp;- Others | (0.06)% | 0.48% |
| **Effective tax rate** | **16.23%** | **14.25%** |

---

**PSI GROUP HOLDINGS LTD**

**NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 18 – RELATED PARTY TRANSACTIONS**

**(a) Names and Relationship of Related Parties:**

---

| | |
|:---|:---|
|  | **Existing Relationship with the Company** |
| Active Move Group Holdings Limited | Sole director and sole shareholder is one of the shareholders Mr. Kwong Kin Yin, Alfred |
| GNET Logistic Limited | Shareholder is of one of the directors, Mr. Chan Yee Kit. |
| Grand Pro Development Limited | Sole director and sole shareholder is one of the directors Mr. Chan Yee Kit. |
| Kong Ming International Express Agency Limited | Significant controlled by one of the shareholders, Kwong Kin Yin, Alfred. |
| Rich Fame International Limited | One of the directors is Mr. Chan Yee Kit <br>100% fully owned by Hao Jingyu a spouse of Mr. Chan Yee Kit. |
| Top Star E-Commerce Logistics Limited | Director and shareholder is Leung Sau Fong, a spouse of one of the shareholders, Mr. Kwong Kin Yin, Alfred. |
| Business Great Group Limited | Sole director and sole shareholder is one of the shareholders Mr. Kwong Kin Yin, Alfred. |
| Business Great Global Supply Chain Limited | Sole director and sole shareholder is one of the shareholders Mr. Kwong Kin Yin, Alfred. It became a wholly owned subsidiary of the Company via share exchange arrangement on March 16, 2022. |
| Business Great Global Supply Chain PTE. Limited | 30% equity interest held by the Company with significant influence. |
| Business Great Global Supply Chain (Guangzhou) Company Limited | One of the shareholders of Mr Chan Yee Kit. |
| Business Great Global Supply Chain (Shenzhen) Company Limited | Sole director and sole shareholder is one of the directors Mr. Chan Yee Kit. |
| Profit Sail International Express (SZX) Company Limited | One of the shareholders and sole director is Hao Jingyu, a spouse of one of the directors, Mr. Chan Yee Kit. |
| Granful Solutions Limited | One of directors, is Leung Sau Fong, a spouse of one of the shareholders, Mr. Kwong Kin Yin, Alfred. |

---

**PSI GROUP HOLDINGS LTD**

**NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 18 – RELATED PARTY TRANSACTIONS (CONTINUED)**

**(b) Summary of Balances with Related Parties:**

---

| | | | |
|:---|:---|:---|:---|
| <br>**Amounts due to related parties:** |<br>**Note** | **As of<br> December 31,**<br>**2021** | **As of <br> June 30,**<br>**2022** |
|  |  | **(Restated)** |  |
| Mr. Chan Yee Kit | (1) | $804888 | $- |
| Profit Sail International Express (SZX) Company Limited | (2) | $269946 | $507812 |
| Top Star E-Commerce Logistics Limited | (2) | 163615 | 128 |
| **Total** |  | $1238449 | $507940 |

---

---

| | | | |
|:---|:---|:---|:---|
| <br>**Amounts due from related parties:** | <br>**Note** | **As of<br> December 31,**<br>**2021** | **As of <br> June 30,**<br>**2022** |
|  |  | **(Restated)** |  |
| Business Great Global Supply Chain Limited | (3) | $1955163 | $- |
| Business Great Global Supply Chain (Shenzhen) Company Limited | (4) |  | 45469 |
| Business Great Group Limited | (4) | 2519 | 2519 |
| Granful Solutions Limited | (4) | 129670 | 192000 |
| Profit Sail International Express (SZX) Company Limited | (4) | 54880 | 36643 |
| Rich Fame International Limited | (4) | 37332 | 192383 |
| **Total** |  | $2179564 | $469014 |

---

Notes:

1. Advances from Mr.
 Chan Yee Kit to the Company. Amounts due to Mr. Chan Yee Kit is non-trade, unsecured, non-interest
 bearing and repayable on demand. The balance is fully settled on June 30, 2022.

2. Advances from related
 parties to the Company and general and administrative expenses paid by the related parties
 on behalf of the Company. Amounts due to related parties are non-trade, unsecured, non-interest
 bearing and repayable on demand.

3. Business Great
 Global Supply Chain Limited became a wholly owned subsidiary via a share exchange
 arrangement on March 16, 2022. The balance was eliminated after acquisition in consolidated
 balance sheet on June 30, 2022. The balance in prior
 year was non-trade, unsecured, non-interest bearing and repayable on demand.

4. General
 and administrative expenses paid by the Company on behalf of the related parties. Amounts
 due from related parties are non-trade, unsecured, non-interest bearing and repayable on
 demand.

**PSI GROUP HOLDINGS LTD**

**NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 18 – RELATED PARTY TRANSACTIONS (CONTINUED)**

**(c) Summary of Related Party Transactions:**

A summary of trade transactions with related parties for the six months ended June 30, 2021 and 2022 are listed below:

---

| | | |
|:---|:---|:---|
| | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** |
| <br>**Services fee income from related parties:** | **2021** | **2022** |
| Granful Solutions Limited | $- | $554578 |
| Profit Sail International Express (SZX) Company Limited | 279364 | 291919 |
| Top Star E-Commerce Logistics Limited | - | 5500 |
| **Total** | $279364 | $851997 |

---

---

| | | |
|:---|:---|:---|
| | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** |
| <br>**Freight charges and handling fee charged by related parties:** | **2021** | **2022** |
| Granful Solutions Limited | $- | $694 |
| Profit Sail International Express (SZX) Company Limited | 2705389 | 2293421 |
| Top Star E-Commerce Logistics Limited | 550652 | 1033065 |
| **Total** | $3206041 | $3327180 |

---

---

| | | |
|:---|:---|:---|
| | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** |
| <br>**Other income - management fee income from related parties:** | **2021** | **2022** |
| Business Great Global Supply Chain Limited | $- | $7269 |
| Profit Sail International Express (SZX) Company Limited | $14234 | $12981 |
| **Total** | $14234 | $20250 |

---

---

| | | |
|:---|:---|:---|
| | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** |
| <br>**IT maintenance fee charged by related party:** | **2021** | **2022** |
| Rich Fame International Limited | $201392 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- |
| **Total** | $201392 | $- |

---

**NOTE 19 – SUBSEQUENT EVENTS**

Management has evaluated subsequent events through the date that the financial statements were available to be issued, which is November 1, 2022. All subsequent events requiring recognition after June 30, 2022 and up through November 1, 2022 have been incorporated into these financial statements and there are no other subsequent events that require disclosure in accordance with FASB ASC Topic 855, "Subsequent Events" other than disclosed below.

[3,250,000] Ordinary Shares

**PSI Group Holdings Ltd**

**PROSPECTUS**

**Univest Securities, LLC**![](image_001.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2023

Until and including , 2023 (the 25<sup>th</sup> day after the date of this prospectus), all dealers that buy, sell or trade our Ordinary Shares, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

**PART II — INFORMATION NOT REQUIRED IN THE PROSPECTUS**

**Item 6. Indemnification of Directors and Officers**

Cayman Islands law does not limit the extent to which a company's articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime.

Our Memorandum and Articles of Association empowers us to indemnify our directors and officers against certain liabilities they incur by reason of their being a director or officer of our company.

The underwriting agreement, the form of which will be filed as Exhibit 1.1 to this registration statement, provides for indemnification by the underwriters of us and our officers and directors for certain liabilities, including liabilities arising under the Securities Act, but only to the extent that such liabilities are caused by information relating to the underwriters furnished to us in writing expressly for use in this registration statement and certain other disclosure documents.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

**Item 7. Recent Sales of Unregistered Securities** 

During the past three years, we have issued the following securities which were not registered under the Securities Act. We believe that each of the following issuances was exempt from registration under the Securities Act in reliance on Regulation D under the Securities Act or pursuant to Section 4(2) of the Securities Act regarding transactions not involving a public offering or in reliance on Regulation S under the Securities Act regarding sales by an issuer in offshore transactions. No underwriters were involved in these issuances of securities.

● Upon incorporation on March 7, 2022, the Company issued, at par value per ordinary share, 67,670 Ordinary Shares as the founder shares to Grand Pro Development Limited, 10,000 Ordinary Shares to Profit Sail SAS Holdings Limited, both of which are beneficially owned by Mr. Yee Kit, CHAN.

● On March 16, 2022, the Company completed a share swap transaction with Mr. Yee Kit, CHAN and Mr. Kin Yin Alfred, KWONG and issued the total of 78,299 ordinary shares, of which 77,670 ordinary shares and 629 ordinary shares were issued to Mr. Chan 's and Mr. Kwong's designated entities in exchange for their equity interest in Profit Sail Int'l Express (H.K.) Limited (" PSIHK") on a pro-rata basis .

● On March 16, 2022, the Company, through its subsidiary, BGG (BVI), acquired the entire equity interest of Business Great Global Supply Chain Limited ("BGG"). The Company gained control of BGG via a share exchange arrangement with Mr. Kwong where his assignees were issued an aggregate of 44,031 ordinary shares of the Company for the entire equity interest of Mr. Kwong in BGG. After the share exchange, BGG became an indirectly wholly owned subsidiary of the Company .

● On [ ], 2023, the Company issued [21,550,000] Ordinary Shares of a par value of US$0.0001 per share to the existing shareholders on a pro rata basis.

**Item 8. Exhibits and Financial Statement Schedules**

(a) Exhibits.

---

| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| 1.1\* | [Form of Underwriting Agreement](ea174119ex1-1_psigroup.htm) |
| 3.1\* | [Memorandum and Articles of Association](ea174119ex3-1_psigroup.htm) |
| 3.2\*\* | Form of Amended and Restated Memorandum and Articles of Association |
| 4.1\*\* | Specimen Ordinary Share Certificate |
| 5.1\*\* | Opinion of Ogier regarding the validity of the securities being registered |
| 8.1\*\* | Opinion of Stevenson Wong & Co regarding Hong Kong tax matters (included in Exhibit 99.1) |
| 10.1\* | [Employment Agreement by and between Yee Kit, CHAN and the Registrant, dated as of March 17, 2022](ea174119ex10-1_psigroup.htm) |
| 10.2\* | [Employment Agreement by and between Hok Wai Alex, KO and the Registrant, dated as of March 17, 2022](ea174119ex10-2_psigroup.htm) |
| 10.3\* | [Employment Agreement by and between Chun Kit, TSUI and the Registrant, dated as of March 7, 2022](ea174119ex10-3_psigroup.htm) |
| 10.4\* | [Lease Agreement of Head Office, at Unit 1002, 10/F, Join-in Hang Sing Centre, No.2-16 Kwai Fung Crescent, Kwai Chung, New Territories, Hong Kong](ea174119ex10-4_psigroup.htm) |
| 10.5\* | [Lease Agreement of additional office space, at Unit 4A, 11/F, Join-in Hang Sing Centre, 71-75 Container Port Road, Kwai Chung, New Territories, Hong Kong](ea174119ex10-5_psigroup.htm) |
| 10.6\* | [Lease Agreement of Warehouse, at Workshop No. A1 on the Ground Floor Tsing Yi Industrial Centre Phase I, Tsing Yi Town Lot No. 65, Tsing Yi Island, Hong Kong](ea174119ex10-6_psigroup.htm) |
| 14.1\* | [Code of Business Conduct and Ethics of the Registrant](ea174119ex14-1_psigroup.htm) |
| 15.1\* | [Letter in Lieu of Consent of WWC, P.C.](ea174119ex15-1_psigroup.htm) |
| 21.1\* | [List of Subsidiaries](ea174119ex21-1_psigroup.htm) |
| 23.1\* | [Consent of WWC, P.C.](ea174119ex23-1_psigroup.htm) |
| 23.2\*\* | Consent of Ogier (included in Exhibit 5.1) |
| 23.3\*\* | Consent of Stevenson, Wong & Co., Hong Kong counsel to the Registrant (included in Exhibit 8.1 and 99.1) |
| 23.4\* | [Consent of Guangdong Wesley Law Firm, PRC counsel to the Registrant](ea174119ex23-4_psigroup.htm) |
| 99.1\*\* | Opinion of Stevenson, Wong & Co., Hong Kong counsel to the Registrant, regarding certain Hong Kong law matters |
| 99.2\*\* | Opinion of Guangdong Wesley Law Firm, PRC counsel to the Registrant, regarding certain PRC law matters |
| 99.3\* | [Audit Committee Charter](ea174119ex99-3_psigroup.htm) |
| 99.4\* | [Compensation Committee Charter](ea174119ex99-4_psigroup.htm) |
| 99.5\* | [Nominating Committee Charter](ea174119ex99-5_psigroup.htm) |
| 99.6\* | [Consent of China Insight Consultancy](ea174119ex99-6_psigroup.htm) |
| 99.7\*\* | Consent of Eric Jackson, CHANG, Independent Director Nominee |
| 99.8\*\* | Consent of Chun Pong Raymond, SIU, Independent Director Nominee |
| 99.9\*\* | Consent of Lo Chanii, Kam, Independent Director Nominee |
| 99.10\* | [Request for Waiver and Representation under Item 8.A.4 of Form 20-F](ea174119ex99-10_psigroup.htm) |
| 107\* | [Filing Fee Table](ea174119ex-fee_psigroup.htm) |

---

\* Filed herein <br> \*\* To be filed via amendment

(b) Financial Statement Schedules. All financial statement schedules are omitted because they are not applicable or the information is included in the registrant's consolidated financial statements or related notes thereto.

**Item 9. Undertakings.**

(a) The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment hereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated firm commitment offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and

(iii) To include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement;

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:

(i) If the Registrant is relying on Rule 430B (§230.430B of this chapter):

(A) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

(B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or

(ii) If the Registrant is subject to Rule 430C, 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.

(5) That, for the purpose of determining liability of the Registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned Registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424;

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant;

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser

(6) To file a post-effective amendment to the registration statement to include any financial statements required by item 8.A. of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Act need not be furnished, provided, that the Registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements.

(7) For purposes of determining any liability under the Securities Act of 1933, 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.

(8) For the purpose of determining any liability under the Securities Act of 1933, 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.

(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in such Act and will be governed by the final adjudication of such issue.

**SIGNATURES**

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Hong Kong on March 1, 2023.

---

| | |
|:---|:---|
| **PSI GROUP HOLDINGS LTD** | **PSI GROUP HOLDINGS LTD** |
| By: | */s/ Hok Wai Alex, KO* |
|  | Hok Wai Alex, KO |
|  | Chief Executive Officer |
|  | (Principal Executive Officer) |

---

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

---

| | | |
|:---|:---|:---|
| **Name** | **Title** | **Date** |
| */s/ Yee Kit, CHAN* | Chairman and Director | March 1, 2023 |
| Yee Kit, CHAN |  |  |
| */s/ Hok Wai Alex, KO* | Chief Executive Officer and Director | March 1, 2023 |
| Hok Wai Alex, KO | (Principal Executive Officer) |  |
| */s/ Chun Kit, TSUI* | Chief Financial Officer | March 1, 2023 |
| Chun Kit, TSUI | (Principal Financial and Accounting Officer) |  |

---

**SIGNATURE OF AUTHORIZED AGENT IN THE UNITED STATES**

Pursuant to the Securities Act of 1933 as amended, the undersigned, the duly authorized agent in the United States of America, has signed this registration statement thereto in New York, NY on March 1, 2023.

---

| | |
|:---|:---|
| Cogency Global Inc. | Cogency Global Inc. |
| By: | /s/ Colleen A. De Vries |
| Name: | Colleen A. De Vries |
| Title: | Senior Vice President, Cogency Global Inc. |

---

## Exhibit 1.1

**Exhibit 1.1**

**PSI GROUP HOLDINGS LTD**

**UNDERWRITING AGREEMENT**

**[●], 2023**

**Univest Securities, LLC**

75 Rockefeller Plaza, Suite 18C

New York, NY 10019

 

*As Representative of the Underwriters*

*named on <u>Schedule A</u> hereto*

Ladies and Gentlemen:

The undersigned, **PSI Group Holdings Ltd**, a Cayman Islands exempted company (collectively with its subsidiaries and affiliates, including, without limitation, all entities disclosed or described in the Registration Statement (as hereinafter defined) as being subsidiaries or affiliates of the Company, the "**Company**"), hereby confirms its agreement (this "**Agreement**") with several underwriters (such underwriters, including the Representative (as defined below), the "**Underwriters**" and each an "**Underwriter**") named in <u>Schedule A</u> hereto for which Univest Securities, LLC is acting as the representative (in such capacity, the "**Representative**") to issue and sell an aggregate of [●] ordinary shares ("**Firm Shares**"), par value $0.0001 per share ("**Ordinary Shares**"). The Company has also granted to the several Underwriters an option to purchase up to [●] additional Ordinary Shares, on the terms and for the purposes set forth in <u>Section 2(c)</u> hereof (the "**Additional Shares**"). The Firm Shares and any Additional Shares purchased pursuant to this Agreement are herein collectively referred to as the "**Offered Securities**." The offering and sale of the Offered Securities contemplated by this Agreement is referred to herein as the "**Offering**."

The Company confirms its agreement with the Underwriters as follows:

SECTION 1. *Representations and Warranties of the Company*.

The Company represents and warrants to the Underwriters as follows with the understanding that the same may be relied upon by the Underwriters in this offering, as of the date hereof and as of the Closing Date (as defined below) and each Option Closing Date (as defined below), if any:

&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) *Filing of the Registration Statement*. The Company has prepared and filed with the U.S. Securities and Exchange Commission (the "**Commission**") a registration statement on Form F-1 (File No. ●), which contains a form of prospectus to be used in connection with the public offering and sale of the Offered Securities. Such registration statement, as amended, including the financial statements, exhibits and schedules thereto contained in the registration statement at the time such registration statement became effective, in the form in which it was declared effective by the Commission under the Securities Act of 1933, as amended (the "**Securities Act**"), and the rules and regulations promulgated thereunder (the "**Securities Act Regulations**"), and including any required information deemed to be a part thereof at the time of effectiveness pursuant to Rule 430A under the Securities Act, or pursuant to the Securities Exchange Act of 1934, as amended (collectively, the "**Exchange Act**") and the rules and regulations promulgated thereunder (the "**Exchange Act Regulations**"), is called the "**Registration Statement**." Any registration statement filed by the Company pursuant to Rule 462(b) under the Securities Act is called the "**Rule 462(b) Registration Statement**," and from and after the date and time of filing of the Rule 462(b) Registration Statement, the term "**Registration Statement**" shall include the Rule 462(b) Registration Statement. Such prospectus, in the form first filed pursuant to Rule 424(b) under the Securities Act after the date and time that this Agreement is executed and delivered by the parties hereto, or, if no filing pursuant to Rule 424(b) under the Securities Act is required, the form of final prospectus relating to the Offered Securities included in the Registration Statement at the effective date of the Registration Statement ("**Effective Date**"), is called the "**Prospectus**." All references in this Agreement to the Registration Statement, the Rule 462(b) Registration Statement, the preliminary prospectus included in the Registration Statement (each, a "**preliminary prospectus**"), the Prospectus, or any amendments or supplements to any of the foregoing, shall include any copy thereof filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval System ("**EDGAR**"). The preliminary prospectus that was included in the Registration Statement immediately prior to the Applicable Time (as defined below) is hereinafter called the "**Pricing Prospectus**." Any reference to the "most recent preliminary prospectus" shall be deemed to refer to the latest preliminary prospectus included in the registration statement. Any reference herein to any preliminary prospectus or the Prospectus or any supplement or amendment to either thereof shall be deemed to refer to and include any documents incorporated by reference therein as of the date of such reference.

&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) "**Applicable Time**" means [●] p.m., Eastern Time, on the date of 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;(c) *Compliance with Registration Requirements*. The Registration Statement has been declared effective by the Commission under the Securities Act and the Securities Act Regulations on [●], 2023. The Company has complied, to the Commission's satisfaction, with all requests of the Commission for additional or supplemental information. No stop order preventing or suspending the effectiveness of the Registration Statement or any Rule 462(b) Registration Statement is in effect and no proceedings for such purpose have been instituted or are pending or, to the best knowledge of the Company, are contemplated or threatened by the Commission.

Each preliminary prospectus and the Prospectus when filed complied or will comply in all material respects with the Securities Act and, if filed by electronic transmission pursuant to EDGAR (except as may be permitted by Regulation S-T under the Securities Act), was identical in content to the copy thereof delivered to the Underwriters for use in connection with the offer and sale of the Offered Securities, other than with respect to any artwork and graphics that were not filed. Each of the Registration Statement, any Rule 462(b) Registration Statement, and any post-effective amendment to either the Registration Statement or the Rule 462(b) Registration Statement, at the time it became effective and at all subsequent times until the expiration of the prospectus delivery period required under Section 4(3) of the Securities Act, complied and will comply in all material respects with the Securities Act and the Securities Act Regulations and did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Prospectus, as amended or supplemented, as of its date and at all subsequent times until the Underwriters have completed the placement of the offering of the Offered Securities, did not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The representations and warranties set forth in the two immediately preceding sentences do not apply to statements in or omissions from the Registration Statement or any Rule 462(b) Registration Statement, or any post-effective amendment to either the Registration Statement or the Rule 462(b) Registration Statement, or in the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, made in reliance upon and in conformity with information relating to the Underwriters furnished to the Company in writing expressly for use therein, it being understood and agreed that the only such information furnished on behalf of any of the Underwriters consists of (i) the name of the Underwriters contained on the cover page of the Pricing Prospectus and Prospectus and (ii) the sub-sections titled "Electronic Offer, Sale, and Distribution" and "Price Stabilization, Short Positions and Penalty Bids" in each case under the caption "Underwriting" in the Prospectus (the "**Underwriter Information**"). There are no contracts or other documents required to be described in the Pricing Prospectus or the Prospectus or to be filed as exhibits to the Registration Statement that have not been fairly and accurately described in all material respects or filed as required.

&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) *Disclosure Package*. The term "**Disclosure Package**" shall mean (i) the Pricing Prospectus, as amended or supplemented, (ii) each issuer free writing prospectus, as defined in Rule 433 under the Securities Act (each, an "**Issuer Free Writing Prospectus**"), if any, identified in <u>Schedule B</u> hereto, (iii) the pricing terms set forth in <u>Schedule C</u> to this Agreement, and (iv) any other free writing prospectus that the parties hereto shall hereafter expressly agree in writing to treat as part of the Disclosure Package. As of the Applicable Time, the Disclosure Package did not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The preceding sentence does not apply to statements in or omissions from the Disclosure Package based upon and in conformity with the Underwriter Information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) *Company Not Ineligible Issuer*. (i) At the time of filing the Registration Statement and (ii) as of the date of the execution and delivery of this Agreement, the Company was not and is not an Ineligible Issuer (as defined in Rule 405 under the Securities Act), without taking account any determination by the Commission pursuant to Rule 405 under the Securities Act that it is not necessary that the Company be considered an Ineligible Issuer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) *Issuer Free Writing Prospectuses*. No Issuer Free Writing Prospectus includes any information that conflicts with the information contained in the Registration Statement, including any document incorporated by reference therein that has not been superseded or modified. The foregoing sentence does not apply to statements in or omissions from any Issuer Free Writing Prospectus based upon and in conformity with the Underwriter Information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) *Offering Materials Furnished to the Underwriters*. The Company has delivered to the Underwriters copies of the Registration Statement and of each consent and certificate of experts filed as a part thereof, and each preliminary prospectus and the Prospectus, as amended or supplemented, in such quantities and at such places as the Underwriters have reasonably requested in writing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) *Distribution of Offering Material by the Company*. The Company has not distributed or authorized the distribution of, and will not distribute, prior to the completion of the Underwriters' purchase of the Offered Securities, any offering material in connection with the offering and sale of the Offered Securities other than a preliminary prospectus, the Pricing Prospectus, the Prospectus, any Issuer Free Writing Prospectus reviewed and consented to by the Underwriters, and the Registration Statement.

&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) *The Underwriting Agreement*. This Agreement has been duly authorized, executed and delivered by, and is a valid and binding agreement of, the Company, enforceable in accordance with its terms, except as rights to indemnification hereunder may be limited by applicable law and except as the enforcement hereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) *Authorization of the Offered Securities*. The Offered Securities to be sold by the Company through the Underwriters have been duly and validly authorized by all required corporate action and have been reserved for issuance and sale pursuant to this Agreement and, when so issued and delivered by the Company, will be validly issued, fully paid and non-assessable, free and clear of all Liens (as defined in sub-section (r)) imposed by the Company. The Company has sufficient Ordinary Shares for the issuance of the maximum number of Offered Securities issuable pursuant to the Offering as described in the Prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) *No Applicable Registration or Other Similar Rights*. There are no persons with registration or other similar rights to have any securities of the Company registered for sale under the Registration Statement and included in the Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) *No Material Adverse Change*. Except as otherwise disclosed in the Disclosure Package, subsequent to the respective dates as of which information is given in the Disclosure Package: (i) there has been no material adverse change, or any development that could reasonably be expected to result in a material adverse change, in the condition, financial or otherwise, or in the earnings, business, prospects or operations, whether or not arising from transactions in the ordinary course of business, of the Company (any such change, a "**Material Adverse Change**" and any resulting effect, a "**Material Adverse Effect**"); (ii) the Company has not incurred any material liability or obligation, indirect, direct or contingent, not in the ordinary course of business nor entered into any material transaction or agreement not in the ordinary course of business; and (iii) there has been no dividend or distribution of any kind declared, paid or made by the Company in respect of its shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) *Independent Accountant*. WWC, P.C. (the "**Accountant**"), which has expressed its opinions with respect to the audited financial statements (which term as used in this Agreement includes the related notes thereto) of the Company filed with the Commission as a part of the Registration Statement and included in the Disclosure Package and the Prospectus, is an independent registered public accounting firm as required by the Securities Act and the Exchange Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) *Preparation of the Financial Statements*. Each of the historical financial statements of the Company, respectively, filed with the Commission as a part of the Registration Statement and included in the Disclosure Package and the Prospectus, presents fairly the information provided as of and at the dates and for the periods indicated. Such financial statements comply as to form with the applicable accounting requirements of the Securities Act and the Securities Act Regulations and have been prepared in conformity with generally accepted accounting principles applied on a consistent basis throughout the periods involved, except as may be expressly stated in the related notes thereto. No other financial statements or supporting schedules are required to be included or incorporated by reference in the Registration Statement. Each item of historical financial data relating to the operations, assets or liabilities of the Company set forth in summary form in each of the preliminary prospectuses and the Prospectus fairly presents such information on a basis consistent with that of the complete financial statements contained in the Registration Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) *Incorporation and Good Standing*. The Company has been duly incorporated or formed and is validly existing and in good standing as a company limited by shares under the laws of the jurisdiction of its formation and has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement, the Disclosure Package and the Prospectus and to enter into and perform its obligations under this Agreement. As of the Closing Date, the Company does not own or control, directly or indirectly, any corporation, association or other entity that is not otherwise disclosed in the Registration Statement, the Disclosure Package or the Prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) *Capitalization and Other Share Capital Matters*. The authorized, issued and outstanding share capital of the Company is as set forth in each of the Disclosure Package and the Prospectus (other than for subsequent issuances, if any, pursuant to employee benefit plans described in each of the Disclosure Package and the Prospectus or upon exercise of outstanding options or warrants described in the Disclosure Package and Prospectus, as the case may be). The Ordinary Shares conform, and, when issued and delivered as provided in this Agreement, the Offered Securities will conform, in all material respects to the description thereof contained in each of the Disclosure Package and Prospectus. All of the issued and outstanding Ordinary Shares have been duly authorized and validly issued, are fully paid and non-assessable and have been issued in compliance with applicable laws. None of the outstanding Ordinary Shares were issued in violation of any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase securities of the Company. There are no authorized or outstanding options, warrants, preemptive rights, rights of first refusal or other rights to purchase, or equity or debt securities convertible into or exchangeable or exercisable for, any shares of the Company other than those described in the Disclosure Package and the Prospectus. The description of the Company's share option and other share plans or arrangements, and the options or other rights granted thereunder, set forth in the Disclosure Package and the Prospectus accurately and fairly presents the information required to be shown with respect to such plans, arrangements, options and rights. No further approval from Nasdaq or authorization of any shareholder, the Board of Directors or others is required for the issuance and sale of the Offered Securities. Except as set forth in the Registration Statement, the Disclosure Package and the Prospectus, there are no shareholders agreements, voting agreements or other similar agreements with respect to the Company's Ordinary Shares to which the Company is a party or, to the knowledge of the Company, between or among any of the Company's shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) *Non-Contravention of Existing Instruments; No Further Authorizations or Approvals Required*. The Company is not in violation of its amended and restated memorandum and articles of association or in default (or, with the giving of notice or lapse of time, would be in default) ("**Default**") under any indenture, mortgage, loan or credit agreement, note, contract, franchise, lease or other instrument to which it is a party or by which it may be bound (including, without limitation, any agreement or contract filed as an exhibit to the Registration Statement or to which any of the property or assets of the Company are subject (each, an "**Existing Instrument**")), except for such Defaults as would not, individually or in the aggregate, result in a Material Adverse Change. The Company's execution, delivery and performance of this Agreement and consummation of the transactions contemplated hereby and by the Disclosure Package and the Prospectus (i) have been duly authorized by all necessary corporate action and will not result in any violation of the provisions of the memorandum and articles of association of the Company, as amended and restated, (ii) will not conflict with or constitute a breach of, or Default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant to, or require the consent of any other party to, any Existing Instrument and (iii) will not result in any violation of any law, administrative regulation or administrative or court decree applicable to the Company, except in the case of each of clauses (ii) and (iii), to the extent such conflict, breach Default or violation could not reasonably be expected to result in a Material Adverse Effect. No consent, approval, authorization or other order of, or registration or filing with, any court or other governmental or regulatory authority or agency, is required for the Company's execution, delivery and performance of this Agreement and consummation of the transactions contemplated hereby and by the Disclosure Package and the Prospectus, except the registration or qualification of the Offered Securities under the Securities Act and applicable state securities or blue sky laws and from the Financial Industry Regulatory Authority ("**FINRA**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) *Subsidiaries.* Each of the Company's direct and indirect subsidiaries (each a "**Subsidiary**" and collectively, the "**Subsidiaries**") has been identified on <u>Schedule E</u> hereto. Each of the Subsidiaries has been duly formed, is validly existing under the laws of the British Virgin Islands or Hong Kong, as the case may be, and in good standing under the laws of the jurisdiction of its incorporation, has full power and authority (corporate or otherwise) to own its property and to conduct its business as described in the Registration Statement, the Disclosure Package, the Prospectus, and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not result in a Material Adverse Change on the Company and its Subsidiaries, taken as a whole. Except as otherwise disclosed in the Registration Statement, the Disclosure Package and the Prospectus, all of the equity interests of each Subsidiary have been duly and validly authorized and issued, are owned directly or indirectly by the Company, are fully paid in accordance with its articles of association, memorandum of association or charter documents and non-assessable and are free and clear of all liens, encumbrances, equities or claims ("**Liens**"). None of the outstanding share capital or equity interest in any Subsidiary was issued in violation of preemptive or similar rights of any security holder of such Subsidiary. All of the constitutive or organizational documents of each of the Subsidiaries comply with the requirements of applicable laws of its jurisdiction of incorporation or organization and are in full force and effect. Apart from the Subsidiaries, the Company has no direct or indirect subsidiaries or any other company over which it has direct or indirect effective control. Other than the Subsidiaries, the Company does not directly or indirectly control any entity through contractual arrangements or otherwise such that the entity would be deemed a consolidated affiliated entity whose financial results would be consolidated under U.S. GAAP with the financial results of the Company on the consolidated financial statements of the Company, regardless of whether the Company directly or indirectly owns less than a majority of the equity interests of such person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) *No Material Actions or Proceedings*. Except as otherwise disclosed in the Disclosure Package and the Prospectus, there are no material legal, governmental or regulatory investigations, actions, demands, claims, suits, arbitrations, inquiries or proceedings (collectively, "**Actions**") pending or threatened (i) against the Company or any of its Subsidiaries, (ii) to the Company's knowledge, which have as the subject thereof any officer or director (in such capacities) of, or property owned or leased by, the Company or any of its Subsidiaries, where in any such case (A) there is a reasonable possibility that such Action might be determined adverse to the Company and (B) any such Action, if so determined adversely, would reasonably be expected to result in a Material Adverse Change or adversely affect the consummation of the transactions contemplated by this Agreement. Except as otherwise disclosed in the Disclosure Package and the Prospectus, no material labor dispute with the employees of the Company exists or, to the Company's knowledge, is threatened or imminent. None of the Company's or its Subsidiaries' employees is a member of a union that relates to such employee's relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. No executive officer, to the knowledge of the Company, is in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any material liability with respect to any of the foregoing matters. Except as otherwise disclosed in the Disclosure Package and the Prospectus, the Company and its Subsidiaries are in compliance with all applicable laws and regulations relating to employment and employment practices, terms and conditions of employment, and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change. Neither the Company or any Subsidiary, nor any director or officer thereof, is or has within the last 10 years been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of 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;(t) *Intellectual Property Rights*. The Company owns, possesses or licenses, and otherwise has legally enforceable rights to use all patents, patent applications, trademarks, trade names, copyrights, domain names, licenses, approvals and trade secrets (collectively, "**Intellectual Property Rights**") necessary to conduct its business as now conducted or, otherwise, as disclosed in the Registration Statement, the Disclosure Package and the Prospectus, except to the extent such failure to own, possess or have other rights to use such Intellectual Property would not be expected to result in a Material Adverse Change. Except as otherwise disclosed in the Registration Statement, the Disclosure Package and the Prospectus: (i) the Company has not received any written notice of infringement or conflict with asserted Intellectual Property Rights of others; (ii) the Company is not a party to or bound by any options, licenses or agreements with respect to the Intellectual Property Rights of any other person or entity that are required to be set forth in the Registration Statement, Disclosure Package and the Prospectus and are not described in all material respects; (iii) none of the technology employed by the Company has been obtained or is being used by the Company in violation of any contractual obligation binding on the Company or, to the Company's knowledge, in violation of the rights of any persons; and (iv) the Company is not subject to any judgment, order, writ, injunction or decree of any court or any governmental department, commission, board, bureau, agency or instrumentality, or any arbitrator, nor has it entered into nor is it a party to any agreement made in settlement of any pending or threatened litigation, which materially restricts or impairs its use of any Intellectual Property Rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) *All Necessary Permits, etc*. Except as otherwise disclosed in the Disclosure Package and the Prospectus, each of the Company and its Subsidiaries possesses such valid and current certificates, authorizations or permits issued by the applicable regulatory agencies or bodies necessary to conduct its business, and has made all declarations and filings with, the appropriate national, regional, local or other governmental or regulatory authorities that are necessary for the ownership or lease of their respective properties or assets or the conduct of their respective business as described in the Registration Statement, the Disclosure Package and the Prospectus, except where lack of the licenses would not reasonably be expected to have, individually or in aggregate, a Material Adverse Effect, and has not received any notice of proceedings relating to the revocation or modification of, or non-compliance with, any such licenses and, to the knowledge of the Company, the Company has no reason to believe that such licenses will not be renewed in the ordinary course of their respective business that, if determined adversely to the Company, would individually or in the aggregate have a Material Adverse Effect. Such licenses are valid and in full force and effect and contain no materially burdensome restrictions or conditions not described in the Registration Statement, the Disclosure Package or the Prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) *Title to Properties*. Except as otherwise disclosed in the Disclosure Package and the Prospectus, the Company has good and marketable title to all the properties and assets reflected as owned by it in the financial statements referred to in <u>Section 1(n)</u> above (or elsewhere in the Disclosure Package and the Prospectus), in each case free and clear of any security interest, mortgage, lien, encumbrance, equity, adverse claim or other defect, except such as do not materially and adversely affect the value of such property and do not materially interfere with the use made or proposed to be made of such property by the Company. The real property, improvements, equipment and personal property held under lease by the Company are held under valid and enforceable leases, with such exceptions as are not material and do not materially interfere with the use made or proposed to be made of such real property, improvements, equipment or personal property by 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;(w) *Tax Law Compliance*. (i) The Company and its Subsidiaries have each filed all federal, state, local and foreign income tax returns required to be filed as of the date of this Agreement or have timely and properly filed requested extensions thereof and have paid all taxes required to be paid by them and, if due and payable, any related or similar assessment, fine or penalty levied against any of them in all material respects; (ii) No tax deficiency has been determined adversely to the Company or any of its Subsidiaries that has had (nor does the Company nor any of its Subsidiaries have any notice or knowledge of any tax deficiency which could reasonably be expected to be determined adversely to the Company or its Subsidiaries and which could reasonably be expected to have) a Material Adverse Effect; (iii) The Company has made adequate charges, accruals and reserves in the applicable financial statements referred to in <u>Section 1(n)</u> above in respect of all federal, state and foreign income and franchise taxes for all periods as to which the tax liability of the Company has not been finally determined; and (iv) All Hong Kong governmental tax credit, exemptions, waivers, financial subsidies, and Hong Kong tax relief, concessions and preferential treatment enjoyed by the Company or any of the Subsidiaries as disclosed in the Registration Statement, the Disclosure Package and the Prospectus and the Prospectus are valid, binding and enforceable and do not violate any laws, regulations, rules, orders, decrees, guidelines, judicial interpretations, notices or other legislation of Hong Kong.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) *Company Not an "Investment Company."* The Company is not, and after giving effect to payment for the Offered Securities and the application of the proceeds as contemplated under the caption "Use of Proceeds" in each of the Disclosure Package and the Prospectus will not be, required to register as an "investment company" within the meaning of the Investment Company Act of 1940, as amended (the "**Investment Company Act**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y) *FINRA Affiliation*. No officer, director or any beneficial owner of 10% or more of the Company's unregistered securities has any direct or indirect affiliation or association with any Participating Member (as defined under FINRA rules). The Company will advise the Representative and Hunter Taubman Fischer & Li LLC if it learns that any officer, director or owner of 10% or more of the Company's outstanding Ordinary Shares is or becomes an affiliate or registered person of a Participating Member.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z) *No Price Stabilization or Manipulation*. The Company has not taken and will not take, directly or indirectly, any action designed to, or that might be reasonably expected to cause or result in, stabilization or manipulation of the price of any securities of the Company to facilitate the sale or resale of the Offered Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa) *Related Party Transactions*. There are no business relationships or related-party transactions, directly or indirectly, involving the Company or its Subsidiaries with any related person required to be described or filed in the Registration Statement, or described in the Disclosure Package or the Prospectus, that have not been as set forth in the Registration Statement, the Prospectus and the Pricing Prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bb) *Disclosure Controls and Procedures*. To the extent required, the Company has established and maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) of the Exchange Act Regulations) designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. Except as otherwise disclosed in the Registration Statement, the Disclosure Package and the Prospectus, the Company is not aware of (a) any significant deficiency in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize and report financial data or any material weaknesses in internal controls or (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(cc) *Company's Accounting System*. Except as otherwise disclosed in the Disclosure Package and the Prospectus, the Company maintains a system of accounting controls designed to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(dd) *Money Laundering Law Compliance*. The operations of the Company are and have been conducted at all times in material compliance with all applicable financial recordkeeping and reporting requirements, including those of the United States Bank Secrecy Act, as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), and the applicable anti-money laundering statutes of jurisdictions where the Company conducts business, and the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any competent governmental agency (collectively, the "**Anti-Money Laundering Laws**"), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company with respect to any Anti-Money Laundering Laws is pending or, to the knowledge of the Company, threatened.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ee) *OFAC*. (i) Neither the Company, any of its Subsidiaries, nor, to the knowledge of the Company, any director, officer, employee, or affiliate of the Company or any Subsidiary, of any other person authorized to act on behalf of the Company, is an individual or entity of any kind ("**Person**") that is, or is owned or controlled by a Person that is:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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. the subject of any sanctions administered or enforced by the U.S. Department of Treasury's Office of Foreign Assets Control ("**OFAC**"), the United Nations Security Council ("**UNSC**"), the European Union ("**EU**"), His Majesty's Treasury ("**HMT**"), or other relevant sanctions authority (collectively, "**Sanctions**"), nor

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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. located, organized or resident in a country or territory that is the subject of Sanctions (including, without limitation, Burma/Myanmar, Cuba, Iran, Libya, North Korea, Sudan and Syria).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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) The Company will not, directly or indirectly, use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any Subsidiary or affiliated entity, joint venture partner or other Person:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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. to fund or facilitate any activities or business of or with any Person or in any country or territory that, at the time of such funding or facilitation, is the subject of Sanctions; 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;&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. in any other manner that will result in a violation of Sanctions by any Person (including any Person participating in the offering, whether as underwriter, advisor, investor or otherwise).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ff) *Foreign Corrupt Practices Act.* Neither the Company nor any of its Subsidiaries, to the best of the Company's knowledge, any director, officer, employee or affiliate of the Company, any Subsidiary or any other person authorized to act on behalf of the Company has, directly or indirectly, taken any action that (i) would result in a violation by such persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the "**FCPA**") or otherwise subject the Company to any damage or penalty in any civil, criminal or governmental litigation or proceeding; (ii) if done in the past, might reasonably be expected to have a Material Adverse Effect or (iii) if continued in the future, might reasonably be expected to materially and adversely affect the assets, business, or operations of the Company. The foregoing includes, without limitation, giving or agreeing to give any money, gift or similar benefit (other than legal price concessions to customers in the ordinary course of business) to any customer, supplier, employee or agent of a customer or supplier, or official or employee of any governmental agency or instrumentality of any government (domestic or foreign) or any political party or candidate for office (domestic or foreign) or other person who was, is, or may be in a position to help or hinder the business of the Company (or assist it in connection with any actual or proposed transaction) that might subject the Company to any damage or penalty in any civil, criminal or governmental litigation or proceeding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(gg) *Internal Control and Compliance with Sarbanes-Oxley Act of 2002*. The Company is in full compliance with any provision applicable to it of the Sarbanes-Oxley Act of 2002 (the "**Sarbanes-Oxley Act**") and the rules and regulations promulgated in connection therewith, including, without limitation, Section 402 related to loans and Sections 302 and 906 related to certifications of the Sarbanes-Oxley Act and all applicable rule of the listing exchanges. The Company maintains a system of internal controls, including, but not limited to, disclosure controls and procedures, internal controls over accounting matters and financial reporting, an internal audit function and legal and regulatory compliance controls that comply with all applicable laws and regulations including without limitation the Securities Act, the Exchange Act, the Sarbanes-Oxley Act, the rules and regulations of the Commission, and the rules of the listing exchanges.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(hh) *Exchange Act Filing*. A registration statement in respect of the Ordinary Shares has been filed on Form 8-A pursuant to Section 12(b) of the Exchange Act, which registration statement complies in all material respects with the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Ordinary Shares under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration.

&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) *Earning Statements*. The Company will make generally available (which includes filings pursuant to the Exchange Act made publicly through the EDGAR system) to its security holders as soon as practicable, but in any event not later than 16 months after the end of the Company's current fiscal year, an earnings statement (which need not be audited) covering a 12-month period that shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 of the Rules and Regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(jj) *Periodic Reporting Obligations*. During the Prospectus Delivery Period, the Company shall file, on a timely basis, with the Commission all reports and documents required to be filed under the Exchange Act. Additionally, the Company shall report the use of proceeds from the issuance of the Firm Shares as may be required under Rule 463 under the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(kk) *Valid Title*. Except as otherwise disclosed in the Disclosure Package and the Prospectus, the Company has legal and valid title to all of its properties and assets, free and clear of all liens, charges, encumbrances, equities, claims, options and restrictions except such as do not materially and adversely affect the value of such property and do not materially interfere with the use made or proposed to be made of such property by such entity; each lease agreement to which it is a party is duly executed and legally binding; its leasehold interests are set forth in and governed by the terms of any lease agreements, and, to the best of the Company's knowledge such agreements are valid, binding and enforceable in accordance with their respective terms; and the Company does not own, operate, manage or have any other right or interest in any other material real property of any kind, except as described in the Prospectus or the Disclosure Package.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ll) *Foreign Tax Compliance*. Except as otherwise disclosed in the Disclosure Package and the Prospectus, no transaction, stamp, capital or other issuance, registration, transaction, transfer or withholding taxes or duties are payable in the People's Republic of China (the "**PRC**"), Hong Kong, the British Virgin Islands or the Cayman Islands to any PRC, Hong Kong, British Virgin Islands or Cayman Islands taxing authority in connection with the issuance, sale and delivery of the Offered Securities, and the delivery of the Offered Securities to or for the account of the Underwriters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(mm) *Compliance with PRC Oversea Investment and Listing Rules and Regulations*. Except as otherwise disclosed in Disclosure Package and the Prospectus, the Company and its Subsidiaries have complied, and have taken reasonable steps to cause the Company's principal shareholders, directors and officers that is, or directly or indirectly controlled by, a PRC resident or citizen, to comply with any applicable rules and regulations of relevant PRC government agencies (including but not limited to the Ministry of Commerce, the National Development and Reform Commission, the China Securities Regulatory Commission ("**CSRC**") , and the State Administration of Foreign Exchange ("**SAFE**") relating to overseas investment by PRC residents and citizens (collectively, the "**PRC Oversea Investment and Listing Rules and Regulations**"), including, without limitation, taking reasonable steps to require each such person that is, or is directly or indirectly owned or controlled by, a PRC resident or citizen to complete any registration, to timely report material changes, and other procedures required under any applicable PRC Oversea Investment and Listing Rules and Regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(nn) *Reserved.* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(oo) *D&O Questionnaires*. To the Company's knowledge, all information contained in the questionnaires (the "**Questionnaires**") completed by each of the Company's directors and officers prior to the Offering (the "**Insiders**") as well as in the Lock-Up Agreement in the form attached hereto as <u>Exhibit A</u> provided to the Representative is true and correct in all respects and the Company has not become aware of any information which would cause the information disclosed in the Questionnaires completed by each Insider to become inaccurate and incorrect.

Any certificate signed by an officer of the Company and delivered to the Representative or to counsel for the Representative shall be deemed to be a representation and warranty by the Company to the Underwriters as to the matters set forth therein. The Company acknowledges that the Underwriters and, for purposes of the opinions to be delivered pursuant to Section 5 hereof, counsel to the Company, will rely upon the accuracy and truthfulness of the foregoing representations and hereby consents to such reliance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(pp) *Solvency*. Based on the consolidated financial condition of the Company as of each Closing Date, after giving effect to the receipt by the Company of the proceeds from the sale of the Offered Securities hereunder, the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, are sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). Except as set forth in the Registration Statement and the Prospectus, the Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from each Closing Date. The Registration Statement and the Prospectus set forth as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of this Agreement, "**Indebtedness**" means (x) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company's consolidated balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (z) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with U.S. GAAP. Except as set forth in the Registration Statement and the Prospectus, neither the Company nor any Subsidiary is in default with respect to any Indebtedness.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(qq) *Regulation M Compliance*. The Company has not, and to its knowledge no one authorized to act on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Offered Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Offered Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Underwriter in connection with the Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(rr) *EGC Status and Testing the Waters Communications*. From the time of initial confidential submission of the Registration Statement to the Commission (or, if earlier, the first date on which the Company engaged directly or through any person authorized to act on its behalf in any Test the Waters Communication) through the date hereof, the Company has been and is an "emerging growth company", as defined in Section 2(a) of the Act ("**Emerging Growth Company**"). "Testing the Waters Communication" means any oral or written communication with potential investors undertaken in reliance on Section 5(d) of the Act. The Company (a) has not alone engaged in any Testing-the-Waters Communication other than Testing-the-Waters Communications with the consent of the Underwriters with entities that are qualified institutional buyers within the meaning of Rule 144A under the Securities Act or institutions that are accredited investors within the meaning of Rule 501 under the Securities Act and (b) has not authorized anyone other than the Underwriters to engage in Testing-the-Waters Communications. The Company reconfirms that the Underwriters have been authorized to act on its behalf in undertaking Testing-the-Waters Communications. The Company has not distributed any Written Testing-the-Waters Communications.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ss) *Bank Holding Company Act*. Neither the Company nor any of its Subsidiaries is subject to the Bank Holding Company Act of 1956, as amended (the "**BHCA**") and to regulation by the Board of Governors of the Federal Reserve System (the "**Federal Reserve**"). Neither the Company nor any of its Subsidiaries owns or controls, directly or indirectly, five percent or more of the outstanding shares of any class of voting securities or 25% or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(tt) *U.S. Real Property Holding Corporation*. The Company is not and has never been a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon the Underwriters' request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(uu) *Margin Securities*. The Company owns no "margin securities" as that term is defined in Regulation U of the Board of Governors of the Federal Reserve System (the "**Federal Reserve Board**"), and none of the proceeds of Offering will be used, directly or indirectly, for the purpose of purchasing or carrying any margin security, for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry any margin security or for any other purpose which might cause any of the Offered Securities to be considered a "purpose credit" within the meanings of Regulation T, U or X of the Federal Reserve Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vv) *Integration*. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause the Offering to be integrated with prior offerings by the Company for purposes of the Securities Act that would require the registration of any such securities under the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ww) *No Fiduciary Duties*. The Company acknowledges and agrees that the Underwriters' responsibility to the Company is solely contractual in nature and that none of the Underwriters or their affiliates or any selling agent shall be deemed to be acting in a fiduciary capacity, or otherwise owes any fiduciary duty to the Company or any of its affiliates in connection with the Offering and the other transactions contemplated by this Agreement. Notwithstanding anything in this Agreement to the contrary, the Company acknowledges that the Underwriters may have financial interests in the success of the Offering that are not limited to the difference between the price to the public and the purchase price paid to the Company by the Underwriters for the Offered Securities and the Underwriters have no obligation to disclose, or account to the Company for, any of such additional financial interests. The Company hereby waives and releases, to the fullest extent permitted by law, any claims that the Company may have against the Underwriters with respect to any breach or alleged breach of fiduciary duty.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xx) *No Accounting Issues.* The Company has not received any notice, oral or written, from its Board of Directors or Audit Committee stating that it is reviewing or investigating, and neither the Company's independent auditors nor its internal auditors have recommended that the Board of Directors or Audit Committee review or investigate, (i) adding to, deleting, changing the application of, or changing the Company's disclosure with respect to, any of the Company's material accounting policies; or (ii) any matter which could result in a restatement of the Company's financial statements for any annual or interim period during the current or prior two fiscal years.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(yy) *Forward-looking Statements*. No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) contained in the Registration Statement, the Disclosure Package, the Prospectus, or shall be contain in any amendments and supplements thereof, has been made or reaffirmed, or will be made, without a reasonable basis, or has been disclosed or will be disclosed other than in good faith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(zz) *Insurance*. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which they are engaged; neither the Company nor any of its Subsidiaries has been refused any insurance coverage sought or applied for; and neither the Company nor any of its Subsidiaries has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aaa) *No Finder's Fee*. There are no contracts, agreements, or understandings between the Company or its Subsidiaries and any other person that would give rise to a valid claim against the Company or its Subsidiaries or any Underwriter for a brokerage commission, finder's fee or other like payment in connection with this Offering, or any other arrangements, agreements, understandings, payments, or issuance with respect to the Company, or its Subsidiaries, or any of their respective officers, directors, shareholders, partners, employees or related parties that may affect the Underwriters' compensation as determined by FINRA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bbb) *Operating and Other Data*. All operating and other data pertaining to the Disclosure Package and the Prospectus are true and accurate in all materials respects.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ccc) *Third-party Data*. Any statistical, industry-related and market-related data included in the Disclosure Package and the Prospectus is based on or derived from sources that the Company reasonably and in good faith believes to be reliable and accurate, and such data agrees with the sources from which it is derived, and the Company has obtained the written consent for the use of such data from such sources to the extent required.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ddd) *Compliance with Environmental Laws*. The Company and its subsidiaries are (a) in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("**Environmental Laws**"), (b) have received and are in compliance with all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (c) have not received notice of any actual or potential liability for the investigation or remediation of any disposal or release of hazardous or toxic substances or wastes, pollutants or contaminants, except where such non-compliance with Environmental Laws, failure to receive required permits, licenses or other approvals, or liability would not have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(eee) *Compliance with Law, Constitutive Documents and Contracts*. Neither the Company nor any of the Subsidiaries is (a) in breach or violation of any provision of applicable law (including, but not limited to, any applicable law concerning information collection and user privacy protection) or (b) in breach or violation of its respective constitutive documents, or (c) in default under (nor has any event occurred that, with notice, lapse of time or both, would result in any breach or violation of, constitute a default under or give the holder of any indebtedness (or a person acting on such holder's behalf) the right to require the repurchase, redemption or repayment of all or a part of such indebtedness under) any agreement or other instrument that is binding upon the Company or any of the Subsidiaries, or any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company or any of the Subsidiaries, except in the cases of (a) and (c) above, where any such breach, violation or default would not have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(fff) *No Unlawful Influence*. The Company has not offered, or caused the Underwriters to offer, shares to any person or entity with the intention of unlawfully influencing: (a) a customer or supplier of the Company or any affiliate of the Company to alter the customer's or supplier's level or type of business with the Company or such affiliate or (b) a journalist or publication to write or publish favorable information about the Company or any such affiliate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ggg) The Company acknowledges that the Underwriters and, for purposes of the opinions to be delivered pursuant to Section 6 hereof, counsel to the Company, will rely upon the accuracy and truthfulness of the foregoing representations and hereby consents to such reliance.

SECTION 2. *Firm Shares and Additional Shares.*

&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) *Purchase of Firm Shares*. On the basis of the representations and warranties herein contained, but subject to the terms and conditions herein set forth, the Company agrees to issue and sell to the Underwriters an aggregate of [●] Ordinary Shares (the "**Firm Shares**") at a purchase price (net of discounts)<sup>1</sup> of $[●] per Share. The Underwriters agree to purchase from the Company the Firm Shares.

&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) *Delivery of and Payment for Firm Shares*. Delivery of and payment for the Firm Shares shall be made at 10:00 A.M., Eastern time, on the third (3<sup>rd</sup>) Business Day following the Applicable Time, or at such time as shall be agreed upon by the Underwriters and the Company, at the offices of the Representative's counsel or at such other place as shall be agreed upon by the Underwriters and the Company. The hour and date of delivery of and payment for the Firm Shares is called the "**Closing Date**." The closing of the payment of the purchase price for is referred to herein as the "**Closing**." Payment for the Firm Shares shall be made on the Closing Date by wire transfer in Federal (same day) funds upon delivery to the Underwriters of certificates (in form and substance reasonably satisfactory to the Underwriters) representing the Firm Shares (or if uncertificated through the full fast transfer facilities of the Depository Trust Company (the "**DTC**")) for the account of the Underwriters. The Firm Shares shall be registered in such names and in such denominations as the Underwriters may request in writing at least two Business Days prior to the Closing Date. If certificated, the Company will permit the Underwriters to examine and package the Firm Shares for delivery at least one full Business Day prior to the Closing Date. The Company shall not be obligated to sell or deliver the Firm Shares except upon tender of payment by the Underwriters for all the Firm Shares.

<sup>1</sup> 7.0%

&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) *Additional Shares*. The Company hereby grants to the Underwriters an option (the "**Over-allotment Option**") to purchase up to an additional [●]<sup>2</sup> Ordinary Shares (the "**Additional Shares**"), in each case solely for the purpose of covering over-allotments of such securities, if any. The Over-allotment Option is, at the Underwriters' sole discretion, for Additional Shares.

&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) *Exercise of Over-allotment Option*. The Over-allotment Option granted pursuant to <u>Section 2(c)</u> hereof may be exercised by the Representative within 45 days of the Closing Date. The purchase price to be paid per Additional Shares shall be equal to the price per Firm Share in <u>Section 2(a)</u>. The Underwriters shall not be under any obligation to purchase any Additional Shares prior to the exercise of the Over-allotment Option. The Over-allotment Option granted hereby may be exercised by the giving of oral notice to the Company from the Underwriters, which shall be confirmed in writing via overnight mail or facsimile or other electronic transmission, setting forth the number of Additional Shares to be purchased and the date and time for delivery of and payment for the Additional Shares (the "**Option Closing Date**"), which shall not be later than five (5) full Business Days after the date of the notice or such other time as shall be agreed upon by the Company and the Underwriters, at the offices of the Representative's counsel or at such other place (including remotely by facsimile or other electronic transmission) as shall be agreed upon by the Company and the Underwriters. If such delivery and payment for the Additional Shares does not occur on the Closing Date, the Option Closing Date will be as set forth in the notice. Upon exercise of the Over-allotment Option with respect to all or any portion of the Additional Shares, subject to the terms and conditions set forth herein, (i) the Company shall become obligated to sell to the Underwriters the number of Additional Shares specified in such notice and (ii) the Underwriters shall purchase that portion of the total number of Additional Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) *Delivery and Payment of Additional Shares*. Payment for the Additional Shares shall be made on the Option Closing Date by wire transfer in Federal (same day) funds, upon delivery to the Underwriters of certificates (in form and substance satisfactory to the Underwriters) representing the Additional Shares (or through the facilities of DTC) for the account of the Underwriters. The Additional Shares shall be registered in such name or names and in such authorized denominations as the Underwriters may request in writing at least two (2) full Business Days prior to the Option Closing Date. The Company shall not be obligated to sell or deliver the Additional Shares except upon tender of payment by the Underwriters for applicable Additional Shares. The Option Closing Date may be simultaneous with, but not earlier than, the Closing Date; and in the event that such time and date are simultaneous with the Closing Date, the term "**Closing Date**" shall refer to the time and date of delivery of the Firm Shares and Additional Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) *Underwriting Discount*. In consideration of the services to be provided for hereunder, the Underwriters shall receive a seven percent (7.0%) underwriting discount.

SECTION 3. *Covenants of the Company*.

The Company covenants and agrees with the Underwriters as follows:

&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) *Underwriters' Review of Proposed Amendments and Supplements*. During the period beginning at the Applicable Time and ending on the later of the Closing Date or such date as, in the opinion of Representative's counsel, the Prospectus is no longer required by law to be delivered in connection with sales by the Underwriters or selected dealers, including under circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act (the "**Prospectus Delivery Period**"), prior to amending or supplementing the Registration Statement or the Prospectus, including any amendment or supplement through incorporation by reference of any report filed under the Exchange Act, the Company shall furnish to the Underwriters for review a copy of each such proposed amendment or supplement, and the Company shall not file any such proposed amendment or supplement to which the Underwriters reasonably objects.

<sup>2</sup> 15% of the Firm Shares

&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) *Securities Act Compliance*. After the date of this Agreement, during the Prospectus Delivery Period, the Company shall promptly advise the Underwriters in writing (i) of the receipt of any comments of, or requests for additional or supplemental information from, the Commission, (ii) of the time and date of any filing of any post-effective amendment to the Registration Statement or any amendment or supplement to the Pricing Prospectus or the Prospectus, (iii) of the time and date that any post-effective amendment to the Registration Statement becomes effective and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto or of any order or notice preventing or suspending the use of the Registration Statement, the Pricing Prospectus or the Prospectus, or of any proceedings to remove, suspend or terminate from listing or quotation the Offered Securities from any securities exchange upon which they are listed for trading or included or designated for quotation, or of the threatening or initiation of any proceedings for any of such purposes. If the Commission shall enter any such stop order or order or notice of prevention or suspension at any time, the Company will use its best efforts to obtain the lifting of such order at the earliest possible moment, or will file a new registration statement and use its best efforts to have such new registration statement declared effective as soon as practicable. Additionally, the Company agrees that it shall comply with the provisions of Rules 424(b) and 430A, as applicable, under the Securities Act, including with respect to the timely filing of documents thereunder and will confirm that any filings made by the Company under such Rule 424(b) were received in a timely manner by the Commission.

&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) *Exchange Act Compliance*. During the Prospectus Delivery Period, to the extent the Company becomes subject to reporting obligation under the Exchange Act, the Company will file all documents required to be filed with the Commission pursuant to Sections 13, 14 or 15 of the Exchange Act in the manner and within the time periods required by the Exchange Act.

&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) *Amendments and Supplements to the Registration Statement, Prospectus and Other Securities Act Matters*. If, during the Prospectus Delivery Period, any event or development shall occur or condition exist as a result of which the Disclosure Package or the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein in light of the circumstances under which they were made, as the case may be, not misleading, or if it shall be necessary to amend or supplement the Disclosure Package or the Prospectus, in order to make the statements therein, in the light of the circumstances under which they were made, as the case may be, not misleading, or if in the opinion of the Underwriters it is otherwise necessary to amend or supplement the Registration Statement, the Disclosure Package or the Prospectus, or to file a new registration statement containing the Prospectus, in order to comply with law, including in connection with the delivery of the Prospectus, the Company agrees to (i) notify the Underwriters of any such event or condition (unless such event or condition was previously brought to the Company's attention by the Underwriters during the Prospectus Delivery Period) and (ii) promptly prepare (subject to <u>Section 3(a)</u> and <u>Section 3(f)</u> hereof), file with the Commission (and use its best efforts to have any amendment to the Registration Statement or any new registration statement to be declared effective) and furnish at its own expense to the Underwriters and to dealers, amendments or supplements to the Registration Statement, the Disclosure Package or the Prospectus, or any new registration statement, necessary in order to make the statements in the Disclosure Package or the Prospectus as so amended or supplemented, in light of the circumstances under which they were made, as the case may be, not misleading or so that the Registration Statement, the Disclosure Package or the Prospectus, as amended or supplemented, will comply with law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) *Permitted Free Writing Prospectuses*. The Company represents that it has not made, and agrees that, unless it obtains the prior written consent of the Underwriters, it will not make, any offer relating to the Offered Securities that would constitute an Issuer Free Writing Prospectus or that would otherwise constitute a "**free writing prospectus**" (as defined in Rule 405 under the Securities Act) required to be filed by the Company with the Commission or retained by the Company under Rule 433 under the Securities Act; provided that the prior written consent of the Underwriters hereto shall be deemed to have been given in respect of each free writing prospectuses listed on <u>Schedule B</u> hereto. Any such free writing prospectus consented to by the Underwriters is hereinafter referred to as a "**Permitted Free Writing Prospectus**." The Company agrees that (i) it has treated and will treat, as the case may be, each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus, and (ii) has complied and will comply, as the case may be, with the requirements of Rules 164 and 433 under the Securities Act applicable to any Permitted Free Writing Prospectus, including in respect of timely filing with the Commission, legending and record keeping.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) *Copies of any Amendments and Supplements to the Prospectus*. The Company agrees to furnish the Underwriters, without charge, during the Prospectus Delivery Period, as many copies of each of the preliminary prospectuses, the Prospectus and the Disclosure Package and any amendments and supplements thereto (including any documents incorporated or deemed incorporated by reference therein) as the Underwriters may reasonably request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) *Use of Proceeds*. The Company shall apply the net proceeds from the sale of the Offered Securities sold by it in the manner described under the caption "Use of Proceeds" in the Disclosure Package and the Prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) *Transfer Agent*. The Company shall engage and maintain, at its expense, a registrar and transfer agent for the Offered Securities.

&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) *Internal Controls*. The Company will maintain a system of internal accounting controls designed to provide reasonable assurances that: (i) transactions are executed in accordance with management's general or specific authorization; (ii) transactions are recorded as necessary in order to permit preparation of financial statements in accordance with U.S. GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The internal controls, upon consummation of the offering of the Offered Securities, will be, overseen by the Audit Committee (the "**Audit Committee**") of the Board in accordance with the rules of the Nasdaq Stock Market ("**Nasdaq**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) *Exchange Listing*. The Ordinary Shares have been duly authorized for listing on the Nasdaq Capital Market, subject to official notice of issuance. The Company is in material compliance with the provisions of the rules and regulations promulgated by Nasdaq and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements (to the extent applicable to the Company as of the date hereof, the Closing Date or the Option Closing Date; and subject to all exemptions and exceptions from the requirements thereof as are set forth therein, to the extent applicable to the Company). Without limiting the generality of the foregoing and subject to the qualifications above: (i) all members of the Company's board of directors who are required to be "independent" (as that term is defined under applicable laws, rules and regulations), including, without limitation, all members of each of the audit committee, compensation committee and nominating and corporate governance committee of the Company's board of directors, meet the qualifications of independence as set forth under such laws, rules and regulations, (ii) the audit committee of the Company's board of directors has at least one member who is an "audit committee financial expert" (as that term is defined under such laws, rules and regulations), and (iii) that, based on discussions with Nasdaq, the Company meets all requirements for listing on the Nasdaq Capital Market.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) *Future Reports to the Underwriters*. For one year after the date of this Agreement, the Company will furnish, if not otherwise available on EDGAR, to the Representative at 75 Rockefeller Plaza, Suite 18C, New York, NY 10019, Attention: Edric Guo, CEO: (i) as soon as practicable after the end of each fiscal year, copies of the Annual Report of the Company containing the balance sheet of the Company as of the close of such fiscal year and statements of income, shareholders' equity and cash flows for the year then ended and the opinion thereon of the Company's independent public or certified public accountants; (ii) as soon as practicable after the filing thereof, copies of each proxy statement, Annual Report on Form 20-F, quarterly financial statements using a Form 6-K or other report filed by the Company with the Commission; and (iii) as soon as available, copies of any report or communication of the Company mailed generally to holders of its shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) *No Manipulation of Price*. The Company will not take, directly or indirectly, any action designed to cause or result in, or that has constituted or might reasonably be expected to constitute, the stabilization or manipulation of the price of any securities of 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;(m) *Existing Lock-Up Agreements*. Except as described in the Registration Statement, the Disclosure Package and the Prospectus, there are no existing agreements between the Company and its security holders that prohibit the sale, transfer, assignment, pledge or hypothecation of any of the Company's securities. The Company will direct the transfer agent to place stop transfer restrictions upon the securities of the Company that are bound by such "lock-up" agreements for the duration of the periods contemplated therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) *Company Lock-up.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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) The Company will not, without the prior written consent of the Representative, for a period of six months from the Effective Date (the "**Lock-Up Period**"), (i) offer, pledge, announce the intention to sell, 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 or otherwise transfer or dispose of, directly or indirectly, or file with the Commission a registration statement under the Securities Act relating to, any Ordinary Shares or any securities convertible into or exercisable or exchangeable for Ordinary Shares, or (ii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Ordinary Shares or any such other securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Ordinary Shares or such other securities, in cash or otherwise, except to the Underwriters pursuant to this Agreement. The Company agrees not to accelerate the vesting of any option or warrant or the lapse of any repurchase right prior to the expiration of the Lock-Up Period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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) The restrictions contained in <u>Section 3(n)(i)</u> hereof shall not apply to: (A) the Offered Securities, (B) any Ordinary Shares issued under Company share plans or warrants issued by the Company, in each case, described as outstanding in the Registration Statement, the Disclosure Package or the Prospectus, (C) any options and other awards granted under a Company share plan or Ordinary Shares issued pursuant to an employee share purchase plan, in each case, as described in the Registration Statement, the Disclosure Package or the Prospectus, and (D) Ordinary Shares or other securities issued in connection with a transaction with an unaffiliated third party that includes a bona fide commercial relationship (including joint ventures, marketing or distribution arrangements, collaboration agreements or intellectual property license agreements) or any acquisition of assets or acquisition of not less than a majority or controlling portion of the equity of another entity; provided that (x) the aggregate number of Ordinary Shares issued pursuant to clause (D) shall not exceed five percent (5%) of the total number of outstanding Ordinary Shares immediately following the issuance and sale of the Offered Securities pursuant hereto and (y) the recipient of any such Ordinary Shares or other securities issued or granted pursuant to clause (D) during the Lock-Up Period shall enter into an agreement substantially in the form of <u>Exhibit A</u> hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) *Restriction on Continuous Offerings*. Notwithstanding the restrictions contained in <u>Section 3(n),</u> the Company, on behalf of itself and any successor entity, agrees that, without the prior written consent of the Underwriters, it will not, for a period of six months from the commencement of the Company's first day of trading, directly or indirectly in any "at-the-market" or continuous equity transaction, offer to sell, sell, contract to sell, grant any option to sell or otherwise dispose of shares of the Company or any securities convertible into or exercisable or exchangeable for shares of 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;(p) *Right of First Refusal*. The Company and the Representative agree that for a period of twelve (12) months from the Closing Date, whether or not the engagement contemplated under this Agreement is terminated (other than termination for Cause, as defined below), the Company grants the Representative the right (provided the Offering is completed) to provide investment banking services to the Company on an exclusive basis in all matters for which investment banking services are sought by the Company (such right, the "**Right of First Refusal**"), which right is exercisable in the Representative's sole discretion. For these purposes, investment banking services shall include, without limitation, (a) acting as lead manager for any underwritten public offering; (b) acting as exclusive placement agent, initial purchaser or financial advisor in connection with any private offering of securities of the Company; and (c) acting as financial advisor in connection with any sale or other transfer by the Company, directly or indirectly, of a majority or controlling portion of its share capital or assets to another entity, any purchase or other transfer by another entity, directly or indirectly, of a majority or controlling portion of the share capital or assets of the Company, and any merger or consolidation of the Company with another entity. The Representative shall notify the Company of its intention to exercise the Right of First Refusal within 15 business days following notice in writing by the Company. Any decision by the Representative to act in any such capacity shall be contained in separate agreements, which agreements would contain, among other matters, provisions for customary fees for transactions of similar size and nature, as may be mutually agreed upon, and indemnification of the Representative and shall be subject to general market conditions. If the Representative declines to exercise the Right of First Refusal, the Company shall have the right to retain any other person or persons to provide such services on terms and conditions which are not more favorable to such other person or persons than the terms declined by the Representative. The Right of First Refusal granted hereunder may be terminated by the Company for "Cause," which shall mean a material breach by the Representative of this Agreement. The services provided by the Representative is solely for the benefit of the Company and are not intended to confer any rights upon any persons or entities not a party hereto (including without limitation, securityholders, employees or creditors of the Company) as against the Representative or its directors, officers, agents and employees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) *Absence of Further Requirements*. No consent, approval, authorization, or order of, or filing or registration with, any person (including any governmental or regulatory agency or body or any court) is required to be obtained or made by the Company for the consummation of the transactions contemplated by this Agreement, and issuance and sale of the Offered Securities, except such as have been obtained, or made on or prior to the Closing Date, and are, or on the Closing Date will be, in full force and effect. No authorization, consent, approval, license, qualification or order of, or filing or registration with any person (including any governmental agency or body or any court) in any foreign jurisdiction is required for the consummation of the transactions contemplated by this Agreement in connection with the Offering, issuance and sale of the Offered Securities under the laws and regulations of such jurisdiction except such as have been obtained or made.

SECTION 4. *Payment of Fees and Expenses*. Whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, the Company agrees to pay all costs, fees and expenses incurred in connection with the transactions contemplated hereby, including without limitation (i) all of the reasonable and documented out-of-pocket expenses (including, but not limited to, travel, due diligence expenses, reasonable fees and expenses of its legal counsel, roadshow and background check on the Company's principals) incurred by the Representative in an aggregate amount not to exceed $200,000 (inclusive of the Advance), provided that any expense over $5,000 shall require prior written or email approval of the Company, (ii) all expenses incident to the issuance and delivery of the Offered Securities (including all printing and engraving costs, if any), (iii) all fees and expenses of the clearing firm, registrar and transfer agent of the Offered Securities, (iv) all necessary issue, transfer and other stamp taxes in connection with the issuance and sale of the Offered Securities, (v) all fees and expenses of the Company's counsel, independent public or certified public accountants and other advisors, (vi) all costs and expenses incurred in connection with the preparation, printing, filing, shipping and distribution of the Registration Statement (including financial statements, exhibits, schedules, consents and certificates of experts), each Issuer Free Writing Prospectus, each preliminary prospectus and the Prospectus, and all amendments and supplements thereto, and this Agreement, and (vii) all filing fees, attorneys' fees and expenses incurred by the Company, or the Representative, in connection with qualifying or registering (or obtaining exemptions from the qualification or registration of) all or any part of the Offered Securities for offer and sale under the state securities or blue sky laws, and, if requested by the Representative, preparing and printing a "Blue Sky Survey" or memorandum, and any supplements thereto, advising the Representative of such qualifications, registrations and exemptions. The Company has advanced $30,000 to the Representative to cover its out-of-pocket expenses (the "**Advance**"). The Advance will be returned to the Company to the extent such out-of-pocket accountable expenses are not actually incurred in accordance with FINRA Rule 5110(g). The Company also agrees to pay to the Representative a non-accountable expense allowance of one percent (1.0%) of the gross proceeds of the Offering.

SECTION 5. *Conditions of the Obligations of the Underwriters*. The obligations of the Underwriters to purchase the Offered Securities as provided herein on the Closing Date or the Option Closing Date shall be subject to (1) the accuracy of the representations and warranties on the part of the Company set forth in <u>Section 1</u> hereof as of the date hereof and as of the Closing Date or the Option Closing Date as though then made; (2) the timely performance by the Company of its covenants and other obligations hereunder; and (3) each of the following additional conditions:

&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) *Accountant's Comfort Letter*. On the date hereof, the Representative shall have received from the Accountant, a letter dated the date hereof addressed to the Representative, in form and substance satisfactory to the Representative, containing statements and information of the type ordinarily included in accountants' "comfort letters" to the Representative, delivered according to Statement of Auditing Standards No. 72 (or any successor bulletin), with respect to the audited and unaudited financial statements and certain financial information contained in the Registration Statement and the Prospectus.

&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) *Effectiveness of Registration Statement; Compliance with Registration Requirements; No Stop Order*. During the period from and after the execution of this Agreement to and including the Closing Date or the Option Closing Date, as applicable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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) the Company shall have filed the Prospectus with the Commission (including the information required by Rule 430A under the Securities Act) in the manner and within the time period required by Rule 424(b) under the Securities Act; or the Company shall have filed a post-effective amendment to the Registration Statement containing the information required by such Rule 430A, and such post-effective amendment shall have become effective; 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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) no stop order suspending the effectiveness of the Registration Statement, or any post-effective amendment to the Registration Statement, shall be in effect and no proceedings for such purpose shall have been instituted or threatened by the Commission.

&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) *No Material Adverse Change*. For the period from and after the date of this Agreement to and including the Closing Date or the Option Closing Date, in the reasonable judgment of the Representative there shall not have occurred any Material Adverse Change.

&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) *CFO Certificate*. On the Closing Date and/or the Option Closing Date, the Representative shall have received a written certificate executed by the Chief Financial Officer of the Company, dated as of such date, on behalf of the Company, with respect to certain financial data contained in the Registration Statement, Disclosure Package and the Prospectus, providing "management comfort" with respect to such information, in form and substance reasonably satisfactory to the Underwriters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) *Officers' Certificate*. On the Closing Date and/or the Option Closing Date, the Representative shall have received a written certificate executed by the Chief Executive Officer and the Chief Financial Officer of the Company, dated as of such date, to the effect that the signers of such certificate have reviewed the Registration Statement, the Disclosure Package and the Prospectus and any amendment or supplement thereto, each Issuer Free Writing Prospectus and this Agreement, to the effect that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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) The representations and warranties of the Company in this Agreement are true and correct, as if made on and as of such Closing Date, and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to such Closing Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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) No stop order suspending the effectiveness of the Registration Statement or the use of the Prospectus has been issued and no proceedings for that purpose have been instituted or are pending or, to the Company's knowledge, threatened under the Securities Act; no order having the effect of ceasing or suspending the distribution of the Offered Securities or any other securities of the Company has been issued by any securities commission, securities regulatory authority or stock exchange in the United States and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Company, contemplated by any securities commission, securities regulatory authority or stock exchange in the United States; 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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, there has not been: (a) any Material Adverse Change; (b) any transaction that is material to the Company and the Subsidiaries taken as a whole, except transactions entered into in the ordinary course of business; (c) any obligation, direct or contingent, that is material to the Company and the Subsidiaries taken as a whole, incurred by the Company or any Subsidiary, except obligations incurred in the ordinary course of business; (d) any material change in the share capital (except changes thereto resulting from the exercise of outstanding options or warrants or conversion of outstanding indebtedness into Ordinary Shares of the Company) or outstanding indebtedness of the Company or any Subsidiary (except for the conversion of such indebtedness into Ordinary Shares of the Company); (e) any dividend or distribution of any kind declared, paid or made on Ordinary Shares of the Company; or (f) any loss or damage (whether or not insured) to the property of the Company or any Subsidiary which has been sustained or will have been sustained which has a Material Adverse Effect

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) *Secretary's Certificate*. On the Closing Date and/or the Option Closing Date, the Representative shall have received a certificate of the Company signed by the Secretary of the Company, dated such Closing Date, certifying: (i) that each of the Company's certificate of incorporation and memorandum and articles of association to such certificate is true and complete, has not been modified and is in full force and effect; (ii) that each of the Subsidiaries articles of association, memorandum of association or charter documents attached to such certificate is true and complete, has not been modified and is in full force and effect; (iii) that the resolutions of the Company's Board of Directors relating to the Offering attached to such certificate are in full force and effect and have not been modified; and (iv) the good standing of the Company and each of the Subsidiaries (except in such jurisdictions where the concept of good standing is not applicable). The documents referred to in such certificate shall be attached to such certificate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) *Bring-down Comfort Letter*. On the Closing Date and/or the Option Closing Date, the Representative shall have received from the Accountant, a letter dated such date, in form and substance satisfactory to the Representative, to the effect that the Accountant reaffirms the statements made in the letter furnished by it pursuant to subsection (a) of this <u>Section 5</u>, except that the specified date referred to therein for the carrying out of procedures shall be no more than three business days prior to the Closing Date and/or the Option Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) *Lock-Up Agreement from Certain Securityholders of the Company*. On or prior to the date hereof, the Company shall have furnished to the Representative an agreement substantially in the form of <u>Exhibit A</u> hereto from each of the Company's officers, directors, security holders of 5% or more of the Ordinary Shares or securities convertible into or exercisable for Ordinary Shares listed on <u>Schedule D</u> hereto.

&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) *Exchange Listing*. The Offered Securities to be delivered on the Closing Date and/or the Option Closing Date shall have been approved for listing on the Nasdaq Capital Market, subject to official notice of issuance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) *Company Counsel Opinions*. On the Closing Date and/or the Option Closing Date, the Representative shall have received

&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) the favorable opinion of Ortoli Rosenstadt LLP, U.S. counsel
to the Company, including, without limitation, a negative assurance letter, addressed to the Underwriters, in form and substance reasonably
satisfactory to the Representative;

&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) the favorable opinion of Stevenson, Wong & Co., Hong
Kong counsel to the Company, addressed to the Underwriters, in form and substance reasonably satisfactory to the Representative;

&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 favorable opinion of Ogier, BVI counsel to the Company,
addressed to the Underwriters, in form and substance reasonably satisfactory to the Representative; 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) the favorable opinion of Ogier, Cayman Islands counsel to
the Company, addressed to the Underwriters, in form and substance reasonably satisfactory to the Representative.

The Underwriters shall rely on the opinions of (i) the Company's Cayman Islands counsel, Ogier, filed as Exhibit 5.1 to the Registration Statement, as to the due incorporation, validity of the Offered Securities and due authorization, execution and delivery of the Agreement and (ii) the Company's Hong Kong counsel, Stevenson, Wong & Co., filed as Exhibit 8.1 to the Registration Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) *Additional Documents*. On or before the Closing Date and/or the Option Closing Date, the Representative and counsel for the Representative shall have received such information, documents and opinions as they may reasonably require for the purposes of enabling them to pass upon the issuance and sale of the Offered Securities as contemplated herein, or in order to evidence the accuracy of any of the representations and warranties, or the satisfaction of any of the conditions or agreements, herein contained.

If any condition specified in this <u>Section 5</u> is not satisfied when and as required to be satisfied, this Agreement may be terminated by the Representative by written notice to the Company at any time on or prior to the Closing Date and/or the Option Closing Date, which termination shall be without liability on the part of any party to any other party, except that <u>Section 4</u> (with respect to the reimbursement of out-of-pocket accountable, bona fide expenses actually incurred by the Representative) and <u>Section 7</u> shall at all times be effective and shall survive such termination.

SECTION 6. *Effectiveness of this Agreement*. This Agreement shall not become effective until the later of (i) the execution of this Agreement by the parties hereto and (ii) notification (including by way of oral notification from the reviewer at the Commission) by the Commission to the Company of the effectiveness of the Registration Statement under the Securities Act.

SECTION 7. *Indemnification*.

&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) *Indemnification by the Company*. The Company shall indemnify and hold harmless the Underwriters, their respective affiliates and each of their respective directors, officers, members, employees and agents and each person, if any, who controls such Underwriters within the meaning of Section 15 of the Securities Act of or Section 20 of the Exchange Act (collectively the "**Underwriter Indemnified Parties**," and each a "**Underwriter Indemnified Party**") from and against any losses, claims, damages or liabilities (including in settlement of any litigation if such settlement is effected with the prior written consent of the Company) arising out of (i) an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, including the information deemed to be a part of the Registration Statement at the time of effectiveness and at any subsequent time pursuant to Rules 430A and 430B of the Securities Act Regulations, or arise out of or are based upon the omission from the Registration Statement, or alleged omission to state therein, a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; or (ii) an untrue statement or alleged untrue statement of a material fact contained in the Prospectus, or any amendment or supplement thereto, or in any other materials used in connection with the Offering, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and shall reimburse such Underwriter Indemnified Party for any legal or other expenses reasonably incurred by it in connection with evaluating, investigating or defending against such loss, claim, damage, liability or action; *provided, however*, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, expense or liability arises out of or is based upon an untrue statement in, or omission from any preliminary prospectus, any Registration Statement or the Prospectus, or any such amendment or supplement thereto, or any Issuer Free Writing Prospectus or in any other materials used in connection with the Offering made in reliance upon and in conformity with the Underwriter Information. The indemnification obligations under this <u>Section 7(a)</u> are not exclusive and will be in addition to any liability, which the Underwriters might otherwise have and shall not limit any rights or remedies which may otherwise be available at law or in equity to each Underwriter Indemnified Party.

&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) *Indemnification by the Underwriters*. The Underwriters shall indemnify and hold harmless the Company and the Company's affiliates and each of their respective directors, officers, employees, agents and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively the "**Company Indemnified Parties**" and each a "**Company Indemnified Party**") from and against any losses, claims, damages or liabilities (including in settlement of any litigation if such settlement is effected with the prior written consent of the Underwriters) arising out (i) any untrue statement of a material fact contained in any preliminary prospectus, any Issuer Free Writing Prospectus, any "issuer information" filed or required to be filed pursuant to Rule 433(d) of the Securities Act Regulations, any Registration Statement or the Prospectus, or in any amendment or supplement thereto, or (ii) the omission to state in any preliminary prospectus, any Issuer Free Writing Prospectus, any "issuer information" filed or required to be filed pursuant to Rule 433(d) of the Securities Act Regulations, any Registration Statement or the Prospectus, or in any amendment or supplement thereto, a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, but in each case only to the extent that the untrue statement or omission was made in reliance upon and in conformity with the Underwriters Information and shall reimburse the Company for any legal or other expenses reasonably incurred by such party in connection with investigating or preparing to defend or defending against or appearing as third party witness in connection with any such loss, claim, damage, liability, action, investigation or proceeding, as such fees and expenses are incurred. Notwithstanding the provisions of this <u>Section 7(b)</u>, in no event shall any indemnity by the Underwriters under <u>this Section 7(b)</u> exceed the total discounts received by the Underwriters in connection with the Offering. The indemnification obligations under this <u>Section 7(b)</u> are not exclusive and will be in addition to any liability, which the Company might otherwise have and shall not limit any rights or remedies which may otherwise be available at law or in equity to each Company Indemnified Party.

&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) *Procedure*. Promptly after receipt by an indemnified party under this <u>Section 7</u> of notice of the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party under this <u>Section 7</u>, notify such indemnifying party in writing of the commencement of that action; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this Section 7 except to the extent it has been materially adversely prejudiced by such failure; and, provided, further, that the failure to notify an indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this <u>Section 7</u>. If any such action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense of such action with counsel reasonably satisfactory to the indemnified party (which counsel shall not, except with the written consent of the indemnified party, be counsel to the indemnifying party). After notice from the indemnifying party to the indemnified party of its election to assume the defense of such action, except as provided herein, the indemnifying party shall not be liable to the indemnified party under <u>Section 7(a)</u> or <u>7(b)</u>, as applicable, for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense of such action other than reasonable costs of investigation; *provided, however*, that any indemnified party shall have the right to employ separate counsel in any such action and to participate in the defense of such action but the fees and expenses of such counsel (other than reasonable costs of investigation) shall be at the expense of such indemnified party unless (i) the employment thereof has been specifically authorized in writing by the Company in the case of a claim for indemnification under <u>Section 7(a)</u>, (ii) such indemnified party shall have been advised by its counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the indemnifying party, or (iii) the indemnifying party has failed to assume the defense of such action and employ counsel reasonably satisfactory to the indemnified party within a reasonable period of time after notice of the commencement of the action or the indemnifying party does not diligently defend the action after assumption of the defense, in which case, if such indemnified party notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of (or, in the case of a failure to diligently defend the action after assumption of the defense, to continue to defend) such action on behalf of such indemnified party and the indemnifying party shall be responsible for legal or other expenses subsequently incurred by such indemnified party in connection with the defense of such action; *provided, however,* that the indemnifying party shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys at any time any such indemnified party (in addition to any local counsel), which firm shall be designated in writing by the Underwriters if the indemnified party under this <u>Section 7</u> is an Underwriter Indemnified Party or by the Company if an indemnified party under this <u>Section 7</u> is a Company Indemnified Party. Subject to this <u>Section 7(c)</u>, the amount payable by an indemnifying party under <u>Section 7</u> shall include, but not be limited to, (x) reasonable legal fees and expenses of counsel to the indemnified party and any other expenses in investigating, or preparing to defend or defending against, or appearing as a third party witness in respect of, or otherwise incurred in connection with, any action, investigation, proceeding or claim, and (y) all amounts paid in settlement of any of the foregoing. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of judgment with respect to any pending or threatened action or any claim whatsoever, in respect of which indemnification or contribution could be sought under this <u>Section 7</u> (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party in form and substance reasonably satisfactory to such indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. Subject to the provisions of the following sentence, no indemnifying party shall be liable for settlement of any pending or threatened action or any claim whatsoever that is effected without its written consent (which consent shall not be unreasonably withheld or delayed), but if settled with its written consent, if its consent has been unreasonably withheld or delayed or if there be a judgment for the plaintiff in any such matter, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. In addition, if at any time an indemnified party shall have requested that an indemnifying party reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated herein effected without its written consent if (i) such settlement is entered into more than forty-five (45) days after receipt by such indemnifying party of the request for reimbursement, (ii) such indemnifying party shall have received notice of the terms of such settlement at least thirty (30) days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement.

&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) *Contribution*. If the indemnification provided for in this <u>Section 7</u> is unavailable or insufficient to hold harmless an indemnified party under <u>Section 7(a)</u> or <u>Section 7(b)</u>, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid, payable or otherwise incurred by such indemnified party as a result of such loss, claim, damage, expense or liability (or any action, investigation or proceeding in respect thereof), as incurred, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the indemnifying party or parties on the one hand and the indemnified parry or parties on the other hand from the offering of the Offered Securities, or (ii) if the allocation provided by clause (i) of this <u>Section 7(d)</u> is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) of this <u>Section 7(d)</u> but also the relative fault of the indemnifying party or parties on the one hand and the indemnified party or parties on the other with respect to the statements, omissions, acts or failures to act which resulted in such loss, claim, damage, expense or liability (or any action, investigation or proceeding in respect thereof) as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other with respect to such offering shall be deemed to be in the same proportion as the total proceeds from the offering of the Offered Securities purchased by investors as contemplated by this Agreement (before deducting expenses) received by the Company bear to the total underwriting discounts received by the Underwriters in connection with the Offering, in each case as set forth in the table on the cover page of the Prospectus. The relative fault of the Company on the one hand and the Underwriters on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or the Underwriters on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement, omission, act or failure to act; provided that the parties hereto agree that the written information furnished to the Company by the Underwriters for use in any preliminary prospectus, any Registration Statement or the Prospectus, or in any amendment or supplement thereto, consists solely of the Underwriters' Information. The Company and the Underwriters agree that it would not be just and equitable if contributions pursuant to this <u>Section 7(d)</u> be determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage, expense, liability, action, investigation or proceeding referred to above in this <u>Section 7(d)</u> shall be deemed to include, for purposes of this <u>Section 7(d)</u>, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating, preparing to defend or defending against or appearing as a third party witness in respect of, or otherwise incurred in connection with, any such loss, claim, damage, expense, liability, action, investigation or proceeding. Notwithstanding the provisions of this <u>Section 7(d)</u>, the Underwriters shall not be required to contribute any amount in excess of the total discounts received in cash by the Underwriters in connection with the Offering less the amount of any damages that the Underwriters have otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement, omission or alleged omission, act or alleged act or failure to act or alleged failure to act by the Underwriters. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

SECTION 8. *Termination of this Agreement*. Prior to the Closing Date, whether before or after notification by the Commission to the Company of the effectiveness of the Registration Statement under the Securities Act, this Agreement may be terminated by the Underwriters by written notice given to the Company if at any time (i) trading or quotation in any of the Company's securities shall have been suspended or limited by the Commission or by Nasdaq; (ii) a general banking moratorium shall have been declared by any U.S. federal or Cayman Islands authorities; (iii) there shall have occurred any outbreak or escalation of national or international hostilities or any crisis or calamity, or any change in the United States or international financial markets, or any substantial change or development involving a prospective substantial change in United States' or international political, financial or economic conditions that, in the reasonable judgment of the Underwriters, is material and adverse and makes it impracticable to market the Offered Securities in the manner and on the terms described in the Prospectus or to enforce contracts for the sale of securities, (iv) if the Company shall have sustained a material loss by fire, flood, accident, hurricane, earthquake, theft, sabotage or other calamity or malicious act which, whether or not such loss shall have been insured, will, in the Representative's opinion, make it inadvisable to proceed with the delivery of the Offered Securities, (v) if the Company is in material breach of any of its representations, warranties or covenants hereunder, or (vi) if the Representative shall have become aware after the date hereof of such a material adverse change in the conditions or prospects of the Company, or such adverse material change in general market conditions as in the Representative's judgment would make it impracticable to proceed with the offering, sale and/or delivery of the Securities or to enforce contracts made by the Underwriters for the sale of the Offered Securities. Any termination pursuant to this <u>Section 8</u> shall be without liability on the part of (a) the Company to any of the Underwriters, except that the Company shall be, subject to demand by the Underwriters, obligated to reimburse the Underwriters for only those out-of-pocket expenses (including the reasonable fees and expenses of their counsel, and expenses associated with a due diligence report), actually incurred by the Underwriters in connection herewith as allowed under FINRA Rule 5110, less any amounts previously paid by the Company; *provided, however,* that all such expenses shall not exceed $200,000 in the aggregate, (b) the Underwriters to the Company, or (c) of any party hereto to any other party except that the provisions of <u>Section 4</u> (with respect to the reimbursement of out-of-pocket accountable, bona fide expenses actually incurred by the Underwriters) and <u>Section 7</u> shall at all times be effective and shall survive such termination.

SECTION 9. *No Advisory or Fiduciary Responsibility*. The Company hereby acknowledges that the Underwriters are acting solely as underwriters in connection with the offering of the Offered Securities. The Company further acknowledges that the Underwriters are acting pursuant to a contractual relationship created solely by this Agreement entered into on an arm's-length basis and in no event do the parties intend that the Underwriters act or be responsible as a fiduciary to the Company, its management, shareholders, creditors or any other person in connection with any activity that the Underwriters may undertake or have undertaken in furtherance of the offering of the Offered Securities, either before or after the date hereof. The Underwriters hereby expressly disclaim any fiduciary or similar obligations to the Company, either in connection with the transactions contemplated by this Agreement or any matters leading up to such transactions, and the Company hereby confirms its understanding and agreement to that effect. The Company hereby further confirms its understanding that no Underwriter has assumed an advisory or fiduciary responsibility in favor of the Company with respect to the Offering contemplated hereby or the process leading thereto, including, without limitation, any negotiation related to the pricing of the Offered Securities; and the Company has consulted its own legal and financial advisors to the extent it has deemed appropriate in connection with this Agreement and the Offering. The Company and the Underwriters agree that they are each responsible for making their own independent judgments with respect to any such transactions, and that any opinions or views expressed by the Underwriters to the Company regarding such transactions, including but not limited to any opinions or views with respect to the price or market for the Company's securities, do not constitute advice or recommendations to the Company. The Company hereby waives and releases, to the fullest extent permitted by law, any claims that the Company may have against the Underwriters with respect to any breach or alleged breach of any fiduciary or similar duty to the Company in connection with the transactions contemplated by this Agreement or any matters leading up to such transactions.

SECTION 10. *Representations and Indemnities to Survive Delivery*. The respective indemnities, agreements, representations, warranties and other statements of the Company, of its officers, and of the Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Underwriters or the Company or any of its or their partners, officers or directors or any controlling person, as the case may be, and will survive delivery of and payment for the Offered Securities sold hereunder and any termination of this Agreement.

SECTION 11. *Taxes*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If any sum payable by the Company under this Agreement is subject to tax in the hands of an Underwriter or Representative (each a "**Taxable Entity**") or taken into account as a receipt in computing the taxable income of that Taxable Entity (excluding net income taxes on underwriting commissions payable hereunder), the Company shall pay such additional amount as will ensure that the Taxable Entities shall be left with the sum it would have had in the absence of such tax.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) All sums payable by the Company under this Agreement shall be paid free and clear of and without deductions or withholdings of any present or future taxes or duties, unless the deduction or withholding is required by law, in which case the Company shall pay such additional amount as will result in the receipt by each Taxable Entity of the full amount that would have been received had no deduction or withholding been made.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) All sums payable to a Taxable Entity shall be considered exclusive of any value added or similar taxes. Where the Company is obliged to pay value added or similar tax on any amount payable hereunder to a Taxable Entity, the Company shall in addition to the sum payable hereunder pay an amount equal to any applicable value added or similar tax.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Without prejudice to the generality of the foregoing, if a Taxable Entity is required by any Hong Kong government authority to pay any taxes imposed by the Hong Kong government or any administrative subdivision or taxing authority thereof or therein ("**HK Taxes**") as a result of this Agreement, the Company will pay an additional amount to such Taxable Entity so that the full amount of such payments as agreed herein to be paid to such Taxable Entity is received by such Taxable Entity and will further, if requested by such Taxable Entity, use commercially reasonable efforts to give such assistance as such Taxable Entity may reasonably request to assist such Taxable Entity in discharging its obligations in respect of such HK Taxes, including by making filings and submissions on such basis and such terms as such Taxable Entity may reasonably request, promptly making available to such Taxable Entity notices received from any Hong Kong governmental authority and, subject to the receipt of funds from such Taxable Entity, by making payment of such funds on behalf of such Taxable Entity to the relevant Hong Kong government authority in settlement of such HK Taxes. In the event the Company must pay any such HK Taxes to a relevant taxing authority, the Company shall forward to such Taxable Entity an official receipt or a copy of the official receipt issued by the taxing authority or other document evidencing such payment.

SECTION 12. *Notices*. All communications hereunder shall be in writing and shall be mailed, hand delivered or emailed to the parties hereto as follows:

**If to the Underwriters:**

Univest Securities, LLC

75 Rockefeller Plaza, Suite 18C

New York, NY 10019

Attn: Mr. Edric Guo, CEO

Email: yguo@univest.us

**With a copy (*which shall not constitute notice*) to:**

Hunter Taubman Fischer & Li LLC

950 Third Avennue, 19<sup>th</sup> Floor<br> New York, NY 10022

Attn: Ying Li, Esq.<br> Guillaume de Sampigny, Esq.

Email: yli@htflawyers.com; gdesampigny@htflawyers.com

**If to the Company:**

PSI Group Holdings Ltd

Unit 1002, 10/F, Join-in Hang Sing Centre

No.2-16 Kwai Fung Crescent, Kwai Chung

New Territories, Hong Kong

Attn: Hok Wai Alex, KO

Email: alex@profitsail.com

**With a copy (*which shall not constitute notice*) to:**

Ortoli Rosenstadt LLP

366 Madison Avenue, 3rd Floor

New York, NY 10017

Attn: William S. Rosenstadt, Esq.<br> Mengyi "Jason" Ye, Esq.

Email: wsr@orllp.legal<br> jye@orllp.legal

Any party hereto may change the address for receipt of communications by giving written notice to the others.

SECTION 13. *Successors*. This Agreement will inure to the benefit of and be binding upon the parties hereto and to the benefit of the employees, officers and directors and controlling persons referred to in <u>Section 7</u>, and in each case their respective successors, and no other person will have any right or obligation hereunder. The term "**successors**" shall not include any purchaser of the Offered Securities as such merely by reason of such purchase.

SECTION 14. *Partial Unenforceability*. The invalidity or unenforceability of any Section, paragraph or provision of this Agreement shall not affect the validity or enforceability of any other Section, paragraph or provision hereof. If any Section, paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable.

SECTION 15. *Governing Law Provisions*. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to conflict of laws principles thereof.

SECTION 16. *Consent to Jurisdiction*. No legal suit, action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby (each, a "**Related Proceeding**") may be commenced, prosecuted or continued in any court other than the courts of the State of New York located in the City and County of New York or in the United States District Court for the Southern District of New York, which courts (collectively, the "**Specified Courts**") shall have jurisdiction over the adjudication of any Related Proceeding, and the parties to this Agreement hereby irrevocably consent to the exclusive jurisdiction the Specified Courts and personal service of process with respect thereto. The parties to this Agreement hereby irrevocably waive any objection to the laying of venue of any Related Proceeding in the Specified Courts and irrevocably waive and agree not to plead or claim in any Specified Court that any Related Proceeding brought in any Specified Court has been brought in an inconvenient forum.

SECTION 17. *General Provisions*. This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the Offering, except for those specific provisions of the Engagement Letter between the Company and the Representative, dated as of February 16, 2022 (the "**Engagement Letter**") that are not related to the Offering, each of which provisions shall remain in full force and effect for the term of the Engagement Letter. This Agreement may be executed in two or more counterparts, each one of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement may not be amended or modified unless in writing by all of the parties hereto, and no condition herein (express or implied) may be waived unless waived in writing by each party whom the condition is meant to benefit. The section headings herein are for the convenience of the parties only and shall not affect the construction or interpretation of this Agreement.

Each of the parties hereto acknowledges that it is a sophisticated business person who was adequately represented by counsel during negotiations regarding the provisions hereof, including, without limitation, the indemnification and contribution provisions of <u>Section 7</u>, and is fully informed regarding said provisions. Each of the parties hereto further acknowledges that the provisions of <u>Section 7</u> hereto fairly allocate the risks in light of the ability of the parties to investigate the Company, its affairs and its business in order to assure that adequate disclosure has been made in the Registration Statement, any preliminary prospectus and the Prospectus (and any amendments and supplements thereto), as required by the Securities Act and the Exchange Act.

The respective indemnities, contribution agreements, representations, warranties and other statements of the Company and the Underwriters set forth in or made pursuant to this Agreement shall remain operative and in full force and effect, regardless of (i) any investigation, or statement as to the results thereof, made by or on behalf of the Underwriters, the officers or employees of the Underwriters, any person controlling any of the Underwriters, the Company, the officers or employees of the Company, or any person controlling the Company, (ii) acceptance of the Offered Securities and payment for them as contemplated hereby and (iii) termination of this Agreement.

Except as otherwise provided, this Agreement has been and is made solely for the benefit of and shall be binding upon the Company, the Underwriters, the Underwriters' officers and employees, any controlling persons referred to herein, the Company's directors and the Company's officers who sign the Registration Statement and their respective successors and assigns, all as and to the extent provided in this Agreement, and no other person shall acquire or have any right under or by virtue of this Agreement. The term "**successors and assigns**" shall not include a purchaser of any of the Offered Securities from the Underwriters merely because of such purchase.

[*Signature Page Follows*]

If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to the Company the enclosed copies hereof, whereupon this instrument, along with all counterparts hereof, shall become a binding agreement in accordance with its terms.

---

| | | |
|:---|:---|:---|
| Very truly yours, | Very truly yours, | Very truly yours, |
| **PSI Group Holdings Ltd** | **PSI Group Holdings Ltd** | **PSI Group Holdings Ltd** |
| By: |  |  |
|  | Name: | Hok Wai Alex, KO |
|  | Title: | CEO |

---

The foregoing Underwriting Agreement is hereby confirmed and accepted by the Underwriters as of the date first above written.

---

| | | |
|:---|:---|:---|
| For itself and on behalf of the several | For itself and on behalf of the several | For itself and on behalf of the several |
| Underwriters listed on Schedule A hereto | Underwriters listed on Schedule A hereto | Underwriters listed on Schedule A hereto |
| **UNIVEST SECURITIES, LLC** | **UNIVEST SECURITIES, LLC** | **UNIVEST SECURITIES, LLC** |
| By: |  |  |
|  | Name: | Edric Guo |
|  | Title: | CEO |

---

**SCHEDULE A**

---

| | |
|:---|:---|
| **Underwriter** | **Number of<br> Firm Shares** |
| Univest Securities, LLC | [●] |
| [●] | [●] |
| **Total** | **[●]** |

---

**SCHEDULE B**

**<u>Issuer Free Writing Prospectus(es)</u>**

[●]

**SCHEDULE C**

**Pricing Information**

Number of Firm Shares:

Number of Additional Shares:

Public Offering Price per one Share: $

Underwriting Discount per one Share: $

Proceeds to Company per one Share (before expenses): $

**SCHEDULE D**

**Lock-Up Parties**

---

| |
|:---|
| **Name** |
| Yee Kit, CHAN |
| Hok Wai Alex, KO |
| Chun Kit, TSUI |
| Eric Jackson, CHANG |
| Chun Pong Raymond, SIU |
| Lo Chanii, Kam |
| Grand Pro Development Limited |
| Profit Sail SAS Holdings Company Limited |
| Active Move Group Holdings Limited |

---

**SCHEDULE E**

**Subsidiaries**

---

| | |
|:---|:---|
| Name of Subsidiary | Jurisdiction of Incorporation or Organization |
| PSI (BVI) Ltd. | British Virgin Islands |
| BGG (BVI) Ltd. | British Virgin Islands |
| Profit Sail Int'l Express (H.K.) Limited | Hong Kong |
| Business Great Global Supply Chain Limited | Hong Kong |

---

**EXHIBIT A**

**Form of Lock-Up Agreement**

As attached.

## Exhibit 3.1

**Exhibit 3.1**

![](ex3-1_001.jpg)

## Exhibit 10.1

**Exhibit 10.1**

**EMPLOYMENT AGREEMENT**

This Employment Agreement (the "AGREEMENT") is made and entered into on March 17, 2020, by and between Mr. Yee Kit, Chan (the "EXECUTIVE") and PSI Group Holdings Ltd, a Cayman Islands company (the "COMPANY").

WHEREAS, the Executive has been the Director and Chairman of the Company since the inception of the Company (the "EFFECTIVE DATE").

WHEREAS, the Company and the Executive desire to enter into this Agreement to memorialize the terms and conditions of the Executive's employment with the Company starting on the date hereof.

NOW, THEREFORE, in consideration of the premises, the mutual covenants and representations contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

**<u>Article I. Employment; Responsibilities; Compensation</u>**

**Section 1.01 Employment. The Company hereby agrees to employ Executive, and Executive hereby agrees to be employed by the Company, pursuant to the terms of this Agreement beginning as of the Effective Date and continuing for the period of time until ending on the date of termination pursuant to Article III, subject to the terms and conditions of this Agreement.** 

**Section 1.02 Responsibilities; Loyalty**

(a) Subject to the terms of this Agreement, Executive is employed in the position of Director and Chairman of the Company, and shall perform the functions and responsibilities of that position. Additional or different duties may be assigned by the Company from time to time. Executive's position, job descriptions, duties and responsibilities maybe modified from time to time in the sole discretion of the Company.

(b) Executive shall devote the whole of Executive's professional time, attention and energies to the performance of Executive's work. Executive agrees to comply with all policies of the Company, if any, in effect from time to time, and to comply with all laws, rules and regulations, including those applicable to the Company.

**Section 1.03 Compensation. The Company will pay Executive base salary at a rate of HK$240,000 per annum (the "Base Salary"), payable monthly at a rate of HK$20,000 and in accordance with the Company's regular payroll policy for salaried employees. If the Employment Period is terminated "For Cause" pursuant to Article III hereof or is otherwise shorter than a full contract year, then the Base Salary for any partial year will be prorated and paid through the date of termination based on the number of days elapsed in such year during which services were actually performed by Employee, and the Company shall have no further obligation to pay the Executive's Base Salary following the date of termination. Notwithstanding anything herein to the contrary, the Company shall not be obligated to pay Executive the Base Salary during any period in which Executive has exhausted Executive's paid time off and is either (a) receiving short-term or long-term disability benefits under any policy or program maintained by the Company, (b) on family or medical leave, or (c) is unable to perform Employee's essential job duties by reason of a physical or Family mental incapacity or disability with or without a reasonable accommodation. The Compensation shall also be subject to the approval of Company's Board of Directors and/or Compensation Committees.**

**Section 1.04 Business Expenses. The Company shall reimburse Executive for all business expenses that are reasonable and necessary and incurred by Executive while performing his duties under this Agreement, upon presentation of expense statements, receipts and/or vouchers or such other information and documentation as the Company may reasonably require.** 

**<u>Article II. Confidential Information; Post-Employment Obligations; Company Property</u>**

**Section 2.01 Company Property. As used in this Article II, the term the "Company" refers to the Company and each of its direct and indirect subsidiaries. All written materials, records, data and other documents relating to Company business, products or services prepared or possessed by Executive during Executive's employment by the Company are the Company's property. All information, ideas, concepts, improvements, discoveries and inventions that are conceived, made, developed or acquired by Executive individually or in conjunction with others during Executive's employment (whether during business hours and whether on Company's premises or otherwise) that relate to Company business, products or services are the Company's sole and exclusive property. All memoranda, notes, records, files, correspondence, drawings, manuals, models, specifications, computer programs, maps and all other documents, data or materials of any type embodying such information, ideas, concepts, improvements, discoveries and inventions are Company property. At the termination of Executive's employment with the Company for any reason, Executive shall return all of the Company's documents, data or other Company property to the Company.** 

**Section 2.02 Confidential Information; Non-Disclosure.**

(a) Executive acknowledges that the business of the Company is highly competitive and that the Company will provide Executive with access to Confidential Information. Executive acknowledges that this Confidential Information constitutes a valuable, special and unique asset used by the Company in its business to obtain a competitive advantage over competitors. Executive further acknowledges that protection of such Confidential Information against unauthorized disclosure and use is of critical importance to the Company in maintaining its competitive position. Executive agrees that Executive will not, at any time during or after Executive's employment with the Company, make any unauthorized disclosure of any Confidential Information of the Company, or make any use thereof, except in the carrying out of Executive's employment responsibilities to the Company. Executive also agrees to preserve and protect the confidentiality of third-party Confidential Information to the same extent, and on the same basis, as the Company's Confidential Information.

(b) For purposes hereof, "CONFIDENTIAL INFORMATION" includes all non-public information regarding the Company's business operations and methods, existing and proposed investments and investment strategies, seismic, well-log and other geologic and oil and gas operating and exploratory data, financial performance, compensation arrangements and amounts (whether relating to the Company or to any of its employees), contractual relationships, business partners and relationships (including customers and suppliers), strategies, business plans and other confidential information that is used in the operation, technology and business dealings of the Company, regardless of the medium in which any of the foregoing information is contained, so long as such information is actually confidential and proprietary to the Company.

**<u>Article III. Termination of Employment</u>**

**Section 3.01 Termination of Employment.**

(a) Executive's employment with the Company shall be terminated (i) immediately upon the death of Executive without further action by the Company, (ii) upon Executive's Permanent Disability without further action by the Company, (iii) by the Company for Cause, (iv) by Executive without Good Reason, (v) by the Company without Cause or by Executive for Good Reason, including by the Company without Cause or by Executive for Good Reason within 12 months following a Change of Control, <u>provided</u> that, in the case of clause (v), the terminating party must give at least 30 days' advance written notice of such termination. For purposes of this ARTICLE III, "date of termination" means the date of Executive's death, the date of Executive's Permanent Disability, or the date of Executive's separation from service with the Company, as applicable.

(b) For purposes hereof:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) "CAUSE" shall include (A) continued failure by Executive to perform substantially Executive's duties and responsibilities (other than a failure resulting from Permanent Disability) that is materially injurious to the Company and that remains uncorrected for 10 days after receipt of appropriate written notice from the Board; (B) engagement in willful, reckless or grossly negligent misconduct that is materially injurious to Company or any of its affiliates, monetarily or otherwise; (C) except as provided by (D), the indictment of Executive with a crime involving moral turpitude or a felony; (D) the indictment of Executive for an act of criminal fraud, misappropriation or personal dishonesty; or (E) a material breach by Executive of any provision of this Agreement that is materially injurious to the Company and that remains uncorrected for 10 days following written notice of such breach by the Company to Executive identifying the provision of this Agreement that Company determined has been breached. For purposes of (C) and (D), if the criminal charge is subsequently dismissed with prejudice or the Executive is acquitted at trial or on appeal then the Executive will be deemed to have been terminated without Cause.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) "CHANGE OF CONTROL" means the occurrence of any one or more of the following events that occurs after the Effective Date:

1) Any "person" (as such term is used in sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")) becomes a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than 50% of the voting power of the then outstanding securities of the Company; provided that a Change of Control shall not be deemed to occur as a result of a transaction in which the Company becomes a subsidiary of another corporation and in which the stockholders of the Company, immediately prior to the transaction, will beneficially own, immediately after the transaction, shares entitling such stockholders to more than 50% of all votes to which all stockholders of the parent corporation would be entitled in the election of directors; or

2) The consummation of (A) a merger or consolidation of the Company with another corporation where the stockholders of the Company, immediately prior to the merger or consolidation, will not beneficially own, immediately after the merger or consolidation, shares entitling such stockholders to more than 50% of all votes to which all stockholders of the surviving corporation would be entitled in the election of directors, (B) a sale or other disposition of all or substantially all of the assets of the Company, or (C) a liquidation or dissolution of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) "GOOD REASON" shall mean one or more of the following conditions arising not more than six months before Executive's termination date without Executive's consent: (A) a material breach by the Company of any provision of this Agreement; (B) assignment by the Board or a duly authorized committee thereof to Executive of any duties that materially and adversely alter the nature or status of Executive's position, job descriptions, duties, title or responsibilities from those of a President and Chief Executive Officer, or eligibility for Company compensation plans; (C) requirement by the Company for Executive to relocate to a primary place of business which is more than [50] miles away from the Executive's primary place of business as of the Effective Date of this Agreement; or (D) a material reduction in Executive's Base Salary in effect at the relevant time. Notwithstanding anything herein to the contrary, Good Reason will exist only if Executive provides notice to the Company of the existence of the condition otherwise constituting Good Reason within 90 days of the initial existence of the condition, and the Company fails to remedy the condition on or before the 30th day following its receipt of such notice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) "PERMANENT DISABILITY" shall mean Executive's inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months. Executive will be deemed permanently disabled if determined to be totally disabled by the Social Security Administration or if determined to be disabled in accordance with a disability insurance program that applies a definition of disability that complies with the requirements of this paragraph.

(c) If Executive's employment is terminated under any of the foregoing circumstances, all future compensation to which Executive is otherwise entitled and all future benefits for which Executive is eligible, other than those already earned but which is unpaid, shall cease and terminate as of the date of termination, except as specifically provided in this ARTICLE III.

**<u>Article IV. Miscellaneous</u>**

**Section 4.01 Notices. All notices and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if delivered personally, mailed by certified mail (return receipt requested) or sent by overnight delivery service, or electronic mail, or facsimile transmission.**

**Section 4.02 Severability and Reformation. If any one or more of the terms, provisions, covenants or restrictions of this Agreement shall be determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions shall remain in full force and effect, and the invalid, void or unenforceable provisions shall be deemed severable. Moreover, if any one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, it shall be reformed by limiting and reducing it to the minimum extent necessary, so as to be enforceable to the extent compatible with the applicable law as it shall then appear.** 

**Section 4.03 Assignment. This Agreement shall be binding upon and inure to the benefit of the heirs and legal representatives of Executive and the permitted assigns and successors of the Company, but neither this Agreement nor any rights or obligations hereunder shall be assignable or otherwise subject to hypothecation by Executive (except by will or by operation of the laws of intestate succession) or by the Company, except that the Company may assign this Agreement to any successor (whether by merger, purchase or otherwise), if such successor expressly agrees to assume the obligations of the Company hereunder.**

**Section 4.04 Amendment. This Agreement may be amended only by writing signed by Executive and by the Company.** 

**Section 4.05 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED AND GOVERNED IN ACCORDANCE WITH THE LAWS OF HONG KONG SAR.** 

**Section 4.06 Jurisdiction. Except as expressly provided otherwise in this Agreement, the courts of Hong Kong SAR are to have exclusive jurisdiction to settle any disputes (including claims for set-off and counterclaims) which may arise in connection with this Agreement.**

**Section 4.07 Entire Agreement. This Agreement contains the entire understanding between the parties hereto with respect to the subject matter hereof and supersedes in all respects any prior or other agreement or understanding, written or oral, between the Company or any affiliate of the Company and Executive with respect to such subject matter, including the Employment Agreement.** 

**Section 4.08 Counterparts; No Electronic Signatures. This Agreement may be executed in two or more counterparts, each of which will be deemed an original. For purposes of determining whether a party has signed this Agreement or any document contemplated hereby or any amendment or waiver hereof, only a handwritten signature on a paper document or a facsimile transmission of a handwritten original signature will constitute a signature, notwithstanding any law relating to or enabling the creation, execution or delivery of any contract or signature by electronic means.** 

**Section 4.09 Construction. The headings and captions of this Agreement are provided for convenience only and are intended to have no effect in construing or interpreting this Agreement. The language in all parts of this Agreement shall be in all cases construed in accordance to its fair meaning and not strictly for or against the Company or Executive. The words "include," "includes," and "including" will be deemed to be followed by "without limitation."** 

[signature page follows]

**IN WITNESS WHEREOF**, the parties hereto have executed this Agreement on the date first written above:

---

| | |
|:---|:---|
| PSI Group Holdings Ltd | PSI Group Holdings Ltd |
| /s/ Hok Wai Alex, Ko | /s/ Hok Wai Alex, Ko |
| Name: | Hok Wai Alex, Ko |
| Title: | Chief Executive Officer |
| Executive | Executive |
| /s/ Yee Kit, Chan | /s/ Yee Kit, Chan |
| Name: | Yee Kit, Chan |

---

## Exhibit 10.2

**Exhibit 10.2**

**EMPLOYMENT AGREEMENT**

This Employment Agreement (the "AGREEMENT") is made and entered into on March 17, 2022, by and between Mr. Hok Wai Alex, Ko (the "EXECUTIVE") and PSI Group Holdings Ltd, a Cayman Islands company (the "COMPANY").

WHEREAS, the Executive has been the Chief Executive Officer and Director of the Company since the inception of the Company (the "EFFECTIVE DATE").

WHEREAS, the Company and the Executive desire to enter into this Agreement to memorialize the terms and conditions of the Executive's employment with the Company starting on the date hereof.

NOW, THEREFORE, in consideration of the premises, the mutual covenants and representations contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

**<u>Article I. Employment; Responsibilities; Compensation</u>**

**Section 1.01 Employment. The Company hereby agrees to employ Executive, and Executive hereby agrees to be employed by the Company, pursuant to the terms of this Agreement beginning as of the Effective Date and continuing for the period of time until ending on the date of termination pursuant to Article III, subject to the terms and conditions of this Agreement.** 

**Section 1.02 Responsibilities; Loyalty**

(a) Subject to the terms of this Agreement, Executive is employed in the position of Chief Executive Officer and Director of the Company, and shall perform the functions and responsibilities of that position. Additional or different duties may be assigned by the Company from time to time. Executive's position, job descriptions, duties and responsibilities maybe modified from time to time in the sole discretion of the Company.

(b) Executive shall devote the whole of Executive's professional time, attention and energies to the performance of Executive's work. Executive agrees to comply with all policies of the Company, if any, in effect from time to time, and to comply with all laws, rules and regulations, including those applicable to the Company.

**Section 1.03 Compensation. The Company will pay Executive base salary at a rate of HK$240,000 per annum (the "Base Salary"), payable monthly at a rate of HK$20,000 and in accordance with the Company's regular payroll policy for salaried employees. If the Employment Period is terminated "For Cause" pursuant to Article III hereof or is otherwise shorter than a full contract year, then the Base Salary for any partial year will be prorated and paid through the date of termination based on the number of days elapsed in such year during which services were actually performed by Employee, and the Company shall have no further obligation to pay the Executive's Base Salary following the date of termination. Notwithstanding anything herein to the contrary, the Company shall not be obligated to pay Executive the Base Salary during any period in which Executive has exhausted Executive's paid time off and is either (a) receiving short-term or long-term disability benefits under any policy or program maintained by the Company, (b) on family or medical leave, or (c) is unable to perform Employee's essential job duties by reason of a physical or Family mental incapacity or disability with or without a reasonable accommodation. The Compensation shall also be subject to the approval of Company's Board of Directors and/or Compensation Committees.**

**Section 1.04 Business Expenses. The Company shall reimburse Executive for all business expenses that are reasonable and necessary and incurred by Executive while performing his duties under this Agreement, upon presentation of expense statements, receipts and/or vouchers or such other information and documentation as the Company may reasonably require.** 

**<u>Article II. Confidential Information; Post-Employment Obligations; Company Property</u>**

**Section 2.01 Company Property. As used in this Article II, the term the "Company" refers to the Company and each of its direct and indirect subsidiaries. All written materials, records, data and other documents relating to Company business, products or services prepared or possessed by Executive during Executive's employment by the Company are the Company's property. All information, ideas, concepts, improvements, discoveries and inventions that are conceived, made, developed or acquired by Executive individually or in conjunction with others during Executive's employment (whether during business hours and whether on Company's premises or otherwise) that relate to Company business, products or services are the Company's sole and exclusive property. All memoranda, notes, records, files, correspondence, drawings, manuals, models, specifications, computer programs, maps and all other documents, data or materials of any type embodying such information, ideas, concepts, improvements, discoveries and inventions are Company property. At the termination of Executive's employment with the Company for any reason, Executive shall return all of the Company's documents, data or other Company property to the Company.** 

**Section 2.02 Confidential Information; Non-Disclosure.**

(a) Executive acknowledges that the business of the Company is highly competitive and that the Company will provide Executive with access to Confidential Information. Executive acknowledges that this Confidential Information constitutes a valuable, special and unique asset used by the Company in its business to obtain a competitive advantage over competitors. Executive further acknowledges that protection of such Confidential Information against unauthorized disclosure and use is of critical importance to the Company in maintaining its competitive position. Executive agrees that Executive will not, at any time during or after Executive's employment with the Company, make any unauthorized disclosure of any Confidential Information of the Company, or make any use thereof, except in the carrying out of Executive's employment responsibilities to the Company. Executive also agrees to preserve and protect the confidentiality of third-party Confidential Information to the same extent, and on the same basis, as the Company's Confidential Information.

(b) For purposes hereof, "CONFIDENTIAL INFORMATION" includes all non-public information regarding the Company's business operations and methods, existing and proposed investments and investment strategies, seismic, well-log and other geologic and oil and gas operating and exploratory data, financial performance, compensation arrangements and amounts (whether relating to the Company or to any of its employees), contractual relationships, business partners and relationships (including customers and suppliers), strategies, business plans and other confidential information that is used in the operation, technology and business dealings of the Company, regardless of the medium in which any of the foregoing information is contained, so long as such information is actually confidential and proprietary to the Company.

**<u>Article III. Termination of Employment</u>**

**Section 3.01 Termination of Employment.**

(a) Executive's employment with the Company shall be terminated (i) immediately upon the death of Executive without further action by the Company, (ii) upon Executive's Permanent Disability without further action by the Company, (iii) by the Company for Cause, (iv) by Executive without Good Reason, (v) by the Company without Cause or by Executive for Good Reason, including by the Company without Cause or by Executive for Good Reason within 12 months following a Change of Control, <u>provided</u> that, in the case of clause (v), the terminating party must give at least 30 days' advance written notice of such termination. For purposes of this ARTICLE III, "date of termination" means the date of Executive's death, the date of Executive's Permanent Disability, or the date of Executive's separation from service with the Company, as applicable.

(b) For purposes hereof:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) "CAUSE" shall include (A) continued failure by Executive to perform substantially Executive's duties and responsibilities (other than a failure resulting from Permanent Disability) that is materially injurious to the Company and that remains uncorrected for 10 days after receipt of appropriate written notice from the Board; (B) engagement in willful, reckless or grossly negligent misconduct that is materially injurious to Company or any of its affiliates, monetarily or otherwise; (C) except as provided by (D), the indictment of Executive with a crime involving moral turpitude or a felony; (D) the indictment of Executive for an act of criminal fraud, misappropriation or personal dishonesty; or (E) a material breach by Executive of any provision of this Agreement that is materially injurious to the Company and that remains uncorrected for 10 days following written notice of such breach by the Company to Executive identifying the provision of this Agreement that Company determined has been breached. For purposes of (C) and (D), if the criminal charge is subsequently dismissed with prejudice or the Executive is acquitted at trial or on appeal then the Executive will be deemed to have been terminated without Cause.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) "CHANGE OF CONTROL" means the occurrence of any one or more of the following events that occurs after the Effective Date:

1) Any "person" (as such term is used in sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")) becomes a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than 50% of the voting power of the then outstanding securities of the Company; provided that a Change of Control shall not be deemed to occur as a result of a transaction in which the Company becomes a subsidiary of another corporation and in which the stockholders of the Company, immediately prior to the transaction, will beneficially own, immediately after the transaction, shares entitling such stockholders to more than 50% of all votes to which all stockholders of the parent corporation would be entitled in the election of directors; or

2) The consummation of (A) a merger or consolidation of the Company with another corporation where the stockholders of the Company, immediately prior to the merger or consolidation, will not beneficially own, immediately after the merger or consolidation, shares entitling such stockholders to more than 50% of all votes to which all stockholders of the surviving corporation would be entitled in the election of directors, (B) a sale or other disposition of all or substantially all of the assets of the Company, or (C) a liquidation or dissolution of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) "GOOD REASON" shall mean one or more of the following conditions arising not more than six months before Executive's termination date without Executive's consent: (A) a material breach by the Company of any provision of this Agreement; (B) assignment by the Board or a duly authorized committee thereof to Executive of any duties that materially and adversely alter the nature or status of Executive's position, job descriptions, duties, title or responsibilities from those of a President and Chief Executive Officer, or eligibility for Company compensation plans; (C) requirement by the Company for Executive to relocate to a primary place of business which is more than [50] miles away from the Executive's primary place of business as of the Effective Date of this Agreement; or (D) a material reduction in Executive's Base Salary in effect at the relevant time. Notwithstanding anything herein to the contrary, Good Reason will exist only if Executive provides notice to the Company of the existence of the condition otherwise constituting Good Reason within 90 days of the initial existence of the condition, and the Company fails to remedy the condition on or before the 30th day following its receipt of such notice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) "PERMANENT DISABILITY" shall mean Executive's inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months. Executive will be deemed permanently disabled if determined to be totally disabled by the Social Security Administration or if determined to be disabled in accordance with a disability insurance program that applies a definition of disability that complies with the requirements of this paragraph.

(c) If Executive's employment is terminated under any of the foregoing circumstances, all future compensation to which Executive is otherwise entitled and all future benefits for which Executive is eligible, other than those already earned but which is unpaid, shall cease and terminate as of the date of termination, except as specifically provided in this ARTICLE III.

**<u>Article IV. Miscellaneous</u>**

**Section 4.01 Notices. All notices and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if delivered personally, mailed by certified mail (return receipt requested) or sent by overnight delivery service, or electronic mail, or facsimile transmission.**

**Section 4.02 Severability and Reformation. If any one or more of the terms, provisions, covenants or restrictions of this Agreement shall be determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions shall remain in full force and effect, and the invalid, void or unenforceable provisions shall be deemed severable. Moreover, if any one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, it shall be reformed by limiting and reducing it to the minimum extent necessary, so as to be enforceable to the extent compatible with the applicable law as it shall then appear.** 

**Section 4.03 Assignment. This Agreement shall be binding upon and inure to the benefit of the heirs and legal representatives of Executive and the permitted assigns and successors of the Company, but neither this Agreement nor any rights or obligations hereunder shall be assignable or otherwise subject to hypothecation by Executive (except by will or by operation of the laws of intestate succession) or by the Company, except that the Company may assign this Agreement to any successor (whether by merger, purchase or otherwise), if such successor expressly agrees to assume the obligations of the Company hereunder.**

**Section 4.04 Amendment. This Agreement may be amended only by writing signed by Executive and by the Company.** 

**Section 4.05 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED AND GOVERNED IN ACCORDANCE WITH THE LAWS OF HONG KONG.** 

**Section 4.06 Jurisdiction. Except as expressly provided otherwise in this Agreement, the courts of Hong Kong are to have exclusive jurisdiction to settle any disputes (including claims for set-off and counterclaims) which may arise in connection with this Agreement.** 

**Section 4.07 Entire Agreement. This Agreement contains the entire understanding between the parties hereto with respect to the subject matter hereof and supersedes in all respects any prior or other agreement or understanding, written or oral, between the Company or any affiliate of the Company and Executive with respect to such subject matter, including the Employment Agreement.** 

**Section 4.08 Counterparts; No Electronic Signatures. This Agreement may be executed in two or more counterparts, each of which will be deemed an original. For purposes of determining whether a party has signed this Agreement or any document contemplated hereby or any amendment or waiver hereof, only a handwritten signature on a paper document or a facsimile transmission of a handwritten original signature will constitute a signature, notwithstanding any law relating to or enabling the creation, execution or delivery of any contract or signature by electronic means.** 

**Section 4.09 Construction. The headings and captions of this Agreement are provided for convenience only and are intended to have no effect in construing or interpreting this Agreement. The language in all parts of this Agreement shall be in all cases construed in accordance to its fair meaning and not strictly for or against the Company or Executive. The words "include," "includes," and "including" will be deemed to be followed by "without limitation."** 

[signature page follows]

**IN WITNESS WHEREOF**, the parties hereto have executed this Agreement on the date first written above:

---

| |
|:---|
| PSI Group Holdings Ltd |
| Name: Yee Kit, Chan |
| Title: Chairman |
| Executive |
| Name: Hok Wai Alex, Ko |

---

## Exhibit 10.3

**Exhibit 10.3**

![](ex10-3_001.jpg)

**CONTRACT OF EMPLOYMENT**

Between

PROFIT SAIL Int'l Express (H.K.) Ltd. (the Company)

And

Tsui Chun Kit (the Employee)

IT IS HEREBY AGREED that this Contract supersedes all previous agreements, verbal or written, made between the Employee and the Company. The Company shall employ the Employee and the Employee shall serve the Company as <u>Chief Financial Officer</u> subject to following terms and conditions.

1. <u>Terms of Employment</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 The employment of the Employee shall commence on <u>07 March 2022</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2 The employment of the Employee may be terminated:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.21 by either party giving <u>one month notice</u> after employment

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.22 by either party's payment in lieu of notice as indicated
in sub-clause 2 and 3 above.

2 <u>Remuneration</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 A fixed salary of HK$ <u>85,000</u> per month will be payable
on the second last (working) day of each month.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 The annual bonus (so-called 13th month or year-end bonus in Hong
Kong), if any, is discretionary and performance-related. It is solely at the discretion of the management of the Company if and when
the bonus would be given.

---

| | | |
|:---|:---|:---|
| **1** page of **4** | Employee's Signature | /s/ Tsui Chun Kit |

---

![](ex10-3_001.jpg)

3 <u>Other Benefits</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 After completion of one full year service, the Employee will be
entitled to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. An annual leave of 12 work days per year, and Saturday is counted
as one day in this connection. Accumulation of the leave is not allowed. The employee will not be entitled to enjoy the annual leave
if the employee resigns during the probation period. If the employee resigns during the time he has worked for a period of less than
12 months, he will be entitled to have a pro rata annual leave based on 7 work days;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Hospitalization benefits (refer to the relevant insurance policy
for details of the coverage); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Medical reimbursement of eighty percent of (outpatient) medical
costs payable or HK$160 whichever is lower. The maximum reimbursement of the aforementioned medical costs is limited to 12 x HK$160
each year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 The Company will enroll the Employee in Mandatory Provident Fund
scheme as statutorily obliged.

4 <u>Working Hour</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 Monday to Friday: 0900 – 1300 / 1400 – 1800 hours

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 The Employee shall not without prior consent of the Company in
writing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) engage in any other business, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) be concerned or interested in any other business of a similar
nature to or competitive with that carried on by the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) bring in one's own software to office and download on PCs.
Strong disciplinary action to the extent of summary dismissal will be taken against anyone who goes against the aforementioned stipulations.

5 <u>Job Assignment</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 The Employee might be required to work in other capacity, with
different duties and responsibilities from the current post on temporary or permanent basis, in the sole discretion of the Company subject
to formal notification of same being provided to the Employee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 The Company may request the Employee to carry out such duties,
as it deems appropriate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3 The Company may second the Employee to work in such place, as
it deems appropriate and may even second them to a place abroad for a period not exceeding two months.

---

| | | |
|:---|:---|:---|
| **2** page of **4** | Employee's Signature | /s/ Tsui Chun Kit |

---

![](ex10-3_001.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.4 The Company may request the Employee to work overtime.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.5 The Company may require the Employee to travel overseas for training,
or other business purposes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.6 The Employee shall not, without the prior written approval of
the Company, disclose to any person, firm or corporation, any of the secrets or any other information concerning the Company which he/she
may receive or obtain in relation to the affairs of the Company or to the working of any designs, process, system or invention which
is carried on or used by the Company or which he/she may make or discover during his/her appointment and shall not use for his/her own
purposes nor for any purposes other than those of the Company any information or knowledge of a confidential nature which he/she may
from time to time acquire in relation to the Company. The obligation contained in this clause 5.6 shall apply during and at all times
following termination of this contract of employment for whatever reason. If the Employee shall fail to comply with this clause 5.6,
it constitutes a ground for summary dismissal.

6 <u>Absenteeism Policy</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1 The Employee who fails to properly notify the company of his/her
absence for three consecutive working days will be considered to have voluntarily terminated his/her employment with the company.

7 <u>Non-Competition</u>

The Employee shall not at any time during the period of six months from the termination of his appoint with the company:-

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) either on his own account or for any other person, firm or corporation
directly or indirectly be engaged in any business in Hong Kong or mainland China which is or is likely to be in competition with the
business of the Company or any holding, subsidiary or associate company of the Company or any firm or person associated with the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) solicit or entice or endeavor to solicit or entice away any director,
manager or servant of the Company or any of its subsidiaries or associated companies in Hong Kong or mainland China, whether or not such
person would commit any breach of his contract of employment by reason of leaving the service of such company;

---

| | | |
|:---|:---|:---|
| **3** page of **4** | Employee's Signature | /s/ Tsui Chun Kit |

---

![](ex10-3_001.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) employ any person who, during the currency of the Employee's
appointment, has been a director, manager, servant of or consultant to the Company or any of its subsidiaries or associated companies
in Hong Kong or mainland China and who by reason of such employment is or secrets relating to the Company's business or the business
of the customers of the Company; and solicit business from any person, firm, company or organization which at any time during the currency
of this Agreement has dealt with or was a customer or local/overseas agent of the Company or any of its subsidiaries or associated companies.

8. <u>Unauthorized Use of Computer</u> 

The Employee shall not use the computers installed in the Company in other manners which are not permitted by the Company.

9. <u>Miscellaneous</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1 This contract shall be governed by and construed in accordance
with the laws of Hong Kong. If any clause or provision of this contract shall be held to be illegal or unenforceable, in whole or in
part, under any enactment or rule of law, such clause or provision or part shall to that extent be deemed not to form part of this contract
but the enforceability of the remainder of this contract shall not be affected.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2 Having this employment contract signed and returned to the Company
by the Employee shall construe as the employee's total understanding and agreement to the terms and conditions stipulated in this
contract.

---

| | |
|:---|:---|
| For and on behalf of | Appointment & terms accepted by |
| Profit Sail Int'l Express (H.K.) Ltd |  |
| /s/ Alex Ko | /s/ Tsui Chun Kit |
| Alex Ko | Tsui Chun Kit |
| CEO |  |

---

---

| | | |
|:---|:---|:---|
| **4** page of **4** | Employee's Signature | /s/ Tsui Chun Kit |

---

## Exhibit 10.4

**Exhibit 10.4**

![](ex10-4_001.jpg)

![](ex10-4_002.jpg)

![](ex10-4_003.jpg)

![](ex10-4_004.jpg)

![](ex10-4_005.jpg)

## Exhibit 10.5

**Exhibit 10.5**

![](ex10-5_001.jpg)

![](ex10-5_002.jpg)

![](ex10-5_003.jpg)

![](ex10-5_004.jpg)

![](ex10-5_005.jpg)

![](ex10-5_006.jpg)

![](ex10-5_007.jpg)

![](ex10-5_008.jpg)

![](ex10-5_009.jpg)

![](ex10-5_010.jpg)

![](ex10-5_011.jpg)

![](ex10-5_012.jpg)

![](ex10-5_013.jpg)

## Exhibit 10.6

**Exhibit 10.6**

![](ex10-6_001.jpg)

![](ex10-6_002.jpg)

![](ex10-6_003.jpg)

![](ex10-6_004.jpg)

![](ex10-6_005.jpg)

![](ex10-6_006.jpg)

![](ex10-6_007.jpg)

![](ex10-6_008.jpg)

![](ex10-6_009.jpg)

![](ex10-6_010.jpg)

![](ex10-6_011.jpg)

![](ex10-6_012.jpg)

## Exhibit 14.1

**Exhibit 14.1**

**PSI GROUP HOLDINGS LTD**

**Code of Ethics and Business Conduct**

1. <u>Introduction</u>.

1.1 The Board of Directors (the "**Board**") of PSI Group Holdings Ltd (the "**Company**") has adopted this Code of Ethics and Business Conduct (the "**Code**") in order to: (a) promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest; (b) promote full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with, or submits to, the Securities and Exchange Commission (the "**SEC**") and in other public communications made by the Company; (c) promote compliance with applicable governmental laws, rules and regulations; (d) promote the protection of Company assets, including corporate opportunities and confidential information; (e) promote fair dealing practices; (f) deter wrongdoing; and (g) ensure accountability for adherence to the Code.

1.2 All directors, officers and employees are required to be familiar with the Code, comply with its provisions and report any suspected violations as described below in Section 10, Reporting and Enforcement.

2. <u>Honest and Ethical Conduct</u>.

2.1 The Company's policy is to promote high standards of integrity by conducting its affairs honestly and ethically.

2.2 Each director, officer and employee must act with integrity and observe the highest ethical standards of business conduct in his or her dealings with the Company's customers, suppliers, partners, service providers, competitors, employees and anyone else with whom he or she has contact in the course of performing his or her job.

3. <u>Conflicts of Interest</u>.

3.1 A conflict of interest occurs when an individual's private interest (or the interest of a member of his or her family) interferes, or even appears to interfere, with the interests of the Company as a whole. A conflict of interest can arise when an employee, officer or director (or a member of his or her family) takes actions or has interests that may make it difficult to perform his or her work for the Company objectively and effectively. Conflicts of interest also arise when an employee, officer or director (or a member of his or her family) receives improper personal benefits as a result of his or her position in the Company.

3.2 Loans by the Company to, or guarantees by the Company of obligations of, employees or their family members are of special concern and could constitute improper personal benefits to the recipients of such loans or guarantees, depending on the facts and circumstances. Loans by the Company to, or guarantees by the Company of obligations of, any director or executive officer or their family members are expressly prohibited.

3.3 Whether or not a conflict of interest exists or will exist can be unclear. Conflicts of interest should be avoided unless specifically authorized as described in Section 3.4.

3.4 Persons other than directors and executive officers who have questions about a potential conflict of interest or who become aware of an actual or potential conflict should discuss the matter with, and seek a determination and prior authorization or approval from, their supervisor or the Chief Financial Officer. A supervisor may not authorize or approve conflict of interest matters or make determinations as to whether a problematic conflict of interest exists without first providing the Chief Financial Officer with a written description of the activity and seeking the Chief Financial Officer's written approval. If the supervisor is himself involved in the potential or actual conflict, the matter should instead be discussed directly with the Chief Financial Officer.

3.5 Directors and executive officers must seek determinations and prior authorizations or approvals of potential conflicts of interest exclusively from the Audit Committee.

4. <u>Compliance</u>.

4.1 Employees, officers and directors should comply, both in letter and spirit, with all applicable laws, rules and regulations in the cities, states and countries in which the Company operates.

4.2 Although not all employees, officers and directors are expected to know the details of all applicable laws, rules and regulations, it is important to know enough to determine when to seek advice from appropriate personnel. Questions about compliance should be addressed to the Legal Department.

4.3 No director, officer or employee may purchase or sell any Company securities while in possession of material nonpublic information regarding the Company, nor may any director, officer or employee purchase or sell another company's securities while in possession of material nonpublic information regarding that company. It is against Company policies and illegal for any director, officer or employee to use material nonpublic information regarding the Company or any other company to: (a) obtain profit for himself or herself; or (b) directly or indirectly "tip" others who might make an investment decision on the basis of that information.

5. <u>Disclosure</u>.

5.1 The Company's periodic reports and other documents filed with the SEC, including all financial statements and other financial information, must comply with applicable federal securities laws and SEC rules.

5.2 Each director, officer and employee who contributes in any way to the preparation or verification of the Company's financial statements and other financial information must ensure that the Company's books, records and accounts are accurately maintained. Each director, officer and employee must cooperate fully with the Company's accounting and internal audit departments, as well as the Company's independent public accountants and counsel.

5.3 Each director, officer and employee who is involved in the Company's disclosure process must:

(a) be familiar with and comply with the Company's disclosure controls and procedures and its internal control over financial reporting; and

(b) take all necessary steps to ensure that all filings with the SEC and all other public communications about the financial and business condition of the Company provide full, fair, accurate, timely and understandable disclosure.

6. <u>Protection and Proper Use of Company Assets</u>.

6.1 All directors, officers and employees should protect the Company's assets and ensure their efficient use. Theft, carelessness and waste have a direct impact on the Company's profitability and are prohibited.

6.2 All Company assets should be used only for legitimate business purposes. Any suspected incident of fraud or theft should be reported for investigation immediately.

6.3 The obligation to protect Company assets includes the Company's proprietary information. Proprietary information includes intellectual property such as trade secrets, patents, trademarks, and copyrights, as well as business and marketing plans, engineering and manufacturing ideas, designs, databases, records and any nonpublic financial data or reports. Unauthorized use or distribution of this information is prohibited and could also be illegal and result in civil or criminal penalties.

7. <u>Corporate Opportunities</u>. All directors, officers and employees owe a duty to the Company to advance its interests when the opportunity arises. Directors, officers and employees are prohibited from taking for themselves personally (or for the benefit of friends or family members) opportunities that are discovered through the use of Company assets, property, information or position. Directors, officers and employees may not use Company assets, property, information or position for personal gain (including gain of friends or family members). In addition, no director, officer or employee may compete with the Company.

8. <u>Confidentiality</u>. Directors, officers and employees should maintain the confidentiality of information entrusted to them by the Company or by its customers, suppliers or partners, except when disclosure is expressly authorized or is required or permitted by law. Confidential information includes all nonpublic information (regardless of its source) that might be of use to the Company's competitors or harmful to the Company or its customers, suppliers or partners if disclosed.

9. <u>Fair Dealing</u>. Each director, officer and employee must deal fairly with the Company's customers, suppliers, partners, service providers, competitors, employees and anyone else with whom he or she has contact in the course of performing his or her job. No director, officer or employee may take unfair advantage of anyone through manipulation, concealment, abuse or privileged information, misrepresentation of facts or any other unfair dealing practice.

10. <u>Reporting and Enforcement</u>.

10.1 Reporting and Investigation of Violations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Actions prohibited by this Code involving directors or executive officers must be reported to the Audit Committee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Actions prohibited by this Code involving anyone other than a director or executive officer must be reported to the reporting person's supervisor or the Chief Financial Officer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) After receiving a report of an alleged prohibited action, the Audit Committee, the relevant supervisor or the Chief Financial Officer must promptly take all appropriate actions necessary to investigate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) All directors, officers and employees are expected to cooperate in any internal investigation of misconduct.

10.2 Enforcement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company must ensure prompt and consistent action against violations of this Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If, after investigating a report of an alleged prohibited action by a director or executive officer, the Audit Committee determines that a violation of this Code has occurred, the Audit Committee will report such determination to the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If, after investigating a report of an alleged prohibited action by any other person, the relevant supervisor or the Chief Financial Officer determines that a violation of this Code has occurred, the supervisor or the Chief Financial Officer will report such determination to the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Upon receipt of a determination that there has been a violation of this Code, the Board will take such preventative or disciplinary action as it deems appropriate, including, but not limited to, reassignment, demotion, dismissal and, in the event of criminal conduct or other serious violations of the law, notification of appropriate governmental authorities.

10.3 Waivers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Board may, in its discretion, waive any violation of this Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any waiver for a director or an executive officer shall be disclosed as required by SEC and Nasdaq rules.

10.4 Prohibition on Retaliation.

The Company does not tolerate acts of retaliation against any director, officer or employee who makes a good faith report of known or suspected acts of misconduct or other violations of this Code.

## Exhibit 15.1

**Exhibit 15.1**

![](ex15-1_001.jpg)

March 1, 2023

To the Board of Directors and Shareholders of

PSI Group Holdings Ltd

**LETTER IN LIEU OF CONSENT FOR REVIEW REPORT**

We have reviewed, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the unaudited interim financial information of PSI Group Holdings Ltd and its subsidiaries for the six months ended June 30, 2021 and 2022, as indicated in our report dated November 1, 2022; because we did not perform an audit, we expressed no opinion on that information.

We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act.

---

| | |
|:---|:---|
|  | ![](ex15-1_002.jpg) |
|  | /s/ WWC, P.C. |
| San Mateo, California | WWC, P.C. |
| March 1, 2023 | Certified Public Accountants |

---

## Exhibit 21.1

**Exhibit 21.1**

**SUBSIDIARIES OF PSI GROUP HOLDINGS LTD.**

---

| | | | |
|:---|:---|:---|:---|
| **Subsidiaries** | **Place of Incorporation** | **Incorporation Time** | **Percentage Ownership** |
| PSI (BVI) Ltd. | British Virgin Islands | March 11, 2022 | 100% |
| BGG (BVI) Ltd. | British Virgin Islands | March 11, 2022 | 100% |
| Profit Sail Int'l Express (HK) Limited | Hong Kong SAR | May 27, 1993 | 99.2% |
| Business Great Global Supply Chain Limited | Hong Kong SAR | November 11, 2016 | 100% |

---

## Exhibit 23.1

**Exhibit 23.1**

![](ex23-1_001.jpg)

<u>Consent of Independent Registered Public Accounting Firm</u>

We hereby consent to the incorporation of our report dated November 1, 2022 in the Registration Statement on Form F-1, under the Securities Act of 1933 (File No. 333-) with respect to the consolidated balance sheets of PSI Group Holdings Ltd and its subsidiaries (collectively the "Company") as of December 31, 2020 and 2021, and the related consolidated statements of income and comprehensive income, shareholders' equity, and cash flows for each of the years in the two-year period ended December 31, 2021, and the related notes included herein.

<u>We also consent to the reference to our firm under the heading "Experts" in the Registration Statement.</u>

---

| | |
|:---|:---|
|  | ![](ex23-1_002.jpg) |
|  | /s/ WWC, P.C. |
| San Mateo, California | WWC, P.C. |
| March 1, 2023 | Certified Public Accountants |
|  | PCAOB ID: 1171 |

---

![](ex23-1_003.jpg)

## Exhibit 23.4

**Exhibit 23.4**

![](ex23-4_001.jpg)

**Consent Form**

We are a qualified law firm and lawyers in the People's Republic of China *(*"PRC"*).* and we have been engaged by PSI Group Holdings Ltd, a company incorporated in the Cayman Islands (the "Company"), to advise on certain legal matters related to the PRC laws and regulations.

We hereby consent to the use of this consent as an exhibit to the Registration Statement on Form F-1, as amended (the "Registration Statement"), to be filed with the U.S. Securities and Exchange Commission. We further consent to the use of our name and to all references made to us in the Registration Statement and in the prospectus forming a part thereof.

![](ex23-4_002.jpg)

![](ex23-4_003.jpg)

## Exhibit 99.3

**Exhibit 99.3**

**PSI GROUP HOLDINGS LTD.**

**CHARTER OF THE AUDIT COMMITTEE**

**OF THE BOARD OF DIRECTORS**

**Effective September 9, 2022**

&nbsp;&nbsp;&nbsp;&nbsp;**1.** **STATUS** 

The Audit Committee (the "**Committee**") is a committee of the Board of Directors (the "**Board**") of PSI Group Holdings Ltd. (the "**Company**").

&nbsp;&nbsp;&nbsp;&nbsp;**2.** **PURPOSE** 

The Committee is appointed by the Board for the primary purposes of:

● Performing the Board's oversight responsibilities as they relate to the Company's accounting policies and internal controls, financial reporting practices and legal and regulatory compliance, including, among other things:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o the quality and integrity of the Company's financial statements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o the Company's compliance with legal and regulatory requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o review of the independent auditors' qualifications and independence; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o the performance of the Company's internal audit function and the Company's independent auditors;

Maintaining, through regularly scheduled meetings, a line of communication between the Board and the Company's financial management, internal auditors and independent auditors, and

● Preparing the report to be included in the Company's annual proxy statement, as required by the Securities and Exchange Commission's ()"**SEC**") rules.

&nbsp;&nbsp;&nbsp;&nbsp;**3.** **COMPOSITION AND QUALIFICATIONS** 

The Committee shall be appointed by the Board and shall be comprised of three or more Directors (as determined from time to time by the Board), each of whom shall meet the independence requirements of the Sarbanes-Oxley Act of 2002 (the "**Act**"), the Nasdaq Stock Market LLC and all other applicable laws.

Each member of the Committee shall be financially literate and at least one member of the Committee shall have past employment experience in finance or accounting, requisite professional certification in accounting or any other comparable experience or background which results in the individual's financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities, as each such qualification is interpreted by the Board in its business judgment. In addition, at least one member of the Committee shall be an "audit committee financial expert" as such term is defined by the SEC.

&nbsp;&nbsp;&nbsp;&nbsp;**4.** **RESPONSIBILITIES** 

The Committee will:

1) Review and discuss the annual audited financial statements and the Company's disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations" with management and the independent auditors. In connection with such review, the Committee will:

● Discuss with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 380 (as may be modified or supplemented) and the matters in the written disclosures required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant's communications with the audit committee concerning independence;

● Review significant changes in accounting or auditing policies;

● Review with the independent auditors any problems or difficulties encountered in the course of their audit, including any change in the scope of the planned audit work and any restrictions placed on the scope of such work and management's response to such problems or difficulties;

● Review with the independent auditors, management and the senior internal auditing executive the adequacy of the Company's internal controls, and any significant findings and recommendations with respect to such controls;

● Review reports required to be submitted by the independent auditor concerning: (a) all critical accounting policies and practices used; (b) all alternative treatments of financial information within generally accepted accounting principles ("GAAP") that have been discussed with management, the ramifications of such alternatives, and the accounting treatment preferred by the independent auditors; and (c) any other material written communications with management;

● Review (a) major issues regarding accounting principles and financial statement presentations, including any significant changes in the Company's selection or application of accounting principles, and major issues as to the adequacy of the Company's internal controls and any special audit steps adopted in light of material control deficiencies; and (b) analyses prepared by management and/or the independent auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analysis of the effects of alternative GAAP methods on the financial statements and the effects of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the Company; and

● Discuss policies and procedures concerning earnings press releases and review the type and presentation of information to be included in earnings press releases (paying particular attention to any use of "pro forma" or "adjusted" non-GAAP information), as well as financial information and earnings guidance provided to analysts and rating agencies.

2) Oversee the external audit coverage. The Company's independent auditors are ultimately accountable to the Committee, which has the direct authority and responsibility to appoint, retain, compensate, terminate, select, evaluate and, where appropriate, replace the independent auditors. In connection with its oversight of the external audit coverage, the Committee will have authority to:

● Appoint and replace (subject to shareholder approval, if deemed advisable by the Board) the independent auditors;

● Approve the engagement letter and the fees to be paid to the independent auditors;

● Pre-approve all audit and non-audit services to be performed by the independent auditors or any other registered public accounting firm engaged by the Company and the related fees for such services other than prohibited non-auditing services as promulgated under rules and regulations of the SEC (subject to the inadvertent de minimus exceptions set forth in the Act and the SEC rules);

● Monitor and obtain confirmation and assurance as to the independent auditors' independence, including ensuring that they submit on a periodic basis (not less than annually) to the Committee a formal written statement delineating all relationships between the independent auditors and the Company. The Committee is responsible for actively engaging in a dialogue with the independent auditors with respect to any disclosed relationships or services that may impact the objectivity and independence of the independent auditors and for taking appropriate action in response to the independent auditors' report to satisfy itself of their independence;

● At least annually, obtain and review a report by the independent auditors describing: the firm's internal quality-control procedures; any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues; and to assess the independent auditors' independence, all relationships between the independent auditors and the Company;

● Meet with the independent auditors prior to the annual audit to discuss planning and staffing of the audit;

● Review and evaluate the performance of the independent auditors, as the basis for a decision to reappoint or replace the independent auditors;

● Set clear hiring policies for employees or former employees of the independent auditors, including but not limited to, as required by all applicable laws and listing rules; and

● Assure regular rotation of the lead (or coordinating) audit partner by setting clear policies for audit partner rotation and by having primary responsibility for the audit and the audit partner responsible for reviewing the audit, as required by the Act, and consider whether rotation of the independent auditor is required to ensure independence.

3) Oversee internal audit coverage. In connection with its oversight responsibilities, the Committee will:

● Review the appointment or replacement of the senior internal auditing executive;

● Review, in consultation with management, the independent auditors and the senior internal auditing executive, the plan and scope of internal audit activities;

● Review internal audit activities, budget and staffing; and

● Review significant reports to management prepared by the internal auditing department and management's responses to such reports.

4) Review, with the independent auditors and the senior internal auditing executive, the adequacy of the Company's internal controls, and any significant findings and recommendations with respect to such controls.

5) Assist board oversight of (1) the integrity of the Company's financial statements, (2) the Company's compliance with legal and regulatory requirements, (3) the Company's independent auditor's qualifications and independence and (4) the performance of the Company's internal audit function and independent auditors;

6) Resolve any differences in financial reporting between management and the independent auditors.

7) Establish procedures for (i) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and (ii) the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.

8) Discuss policies and guidelines to govern the process by which risk assessment and risk management is undertaken.

9) Meet periodically and at least twice per year with management to review and assess the Company's major financial risk exposures and the manner in which such risks are being monitored and controlled.

10) Meet periodically (not less than annually) in separate executive session with each of the chief financial officer, the senior internal auditing executive, and the independent auditors.

11) Review and approve all "related party transactions" requiring disclosure under SEC Regulation S-K, Item 404, in accordance with the policy set forth in Section 6 below.

12) Review periodically with the Company's management, independent auditors and outside legal counsel (i) legal and regulatory matters which may have a material effect on the financial statements, and (ii) corporate compliance policies or codes of conduct, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding the Company's financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities.

13) As it determines necessary to carry out its duties, engage and obtain advice and assistance from outside legal, accounting or other advisers.

14) Report regularly to the Board with respect to Committee activities.

15) Prepare the report of the Committee required by the rules of the SEC to be included in the proxy statement for each annual meeting.

16) Review and reassess annually the adequacy of this Charter and recommend any proposed changes to the Board.

17) Monitor compliance, on a regularly scheduled basis, with the terms of the Company's initial public offering (the "**Offering**") and, if any noncompliance is identified, promptly take all action necessary to rectify such noncompliance or otherwise cause the Company to come into compliance with the terms of the Offering.

18) Inquire and discuss with management the Company's compliance with applicable laws and regulations.

19) Determine the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditors regarding financial reporting) for the purpose of preparing or issuing an audit report or related work.

20) Review and approve all reimbursements and payments made to PSI Group Holdings Ltd., or the Company's officers or directors and their and the Company's respective affiliates.

21) Evaluate the Committee's own performance and report that it has done so to the Board.

&nbsp;&nbsp;&nbsp;&nbsp;**5.** **PROCEDURES** 

*1).* *Action*.

A majority of the members of the entire Committee shall constitute a quorum. The Committee shall act on the affirmative vote a majority of members present at a meeting at which a quorum is present. Without a meeting, the Committee may act by unanimous written consent of all members. However, the Committee may delegate to one or more of its members the authority to grant pre- approvals of audit and non-audit services, provided the decision is reported to the full Committee at its next scheduled meeting.

*2).* *Fees*.

The Company shall provide for appropriate funding, as determined by the Committee, for payment of compensation: (a) to outside legal, accounting or other advisors employed by the Committee; and (b) for ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.

*3).* *Limitations*.

While the Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Committee to plan or conduct audits or to determine that the Company's financial statements are complete and accurate and are in accordance with GAAP. This is the responsibility of management and the independent auditors.

&nbsp;&nbsp;&nbsp;&nbsp;**6.** **RELATED PARTY TRANSACTIONS POLICY** 

*1).* *Definitions.*

 

A "Related Party Transaction" is any transaction directly or indirectly involving any Related Party that would need to be disclosed under Item 404(a) of Regulation S-K. Under Item 404(a), the Company is required to disclose any transaction occurring since the beginning of the Company's last fiscal year, or any currently proposed transaction, involving the Company where the amount involved exceeds $120,000, and in which any related person had or will have a direct or indirect material interest. "Related Party Transaction" also includes any material amendment or modification to an existing Related Party Transaction.

"Related Party" means any of the following:

● a director (which term when used herein includes any director nominee);

● an executive officer;

● a person known by the Company to be the beneficial owner of more than 5% of the Company's common stock (a "5% shareholder"); or

● a person known by the Company to be an immediate family member of any of the foregoing.

"Immediate family member" means a child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of such director, executive officer, nominee for director or beneficial owner, and any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee for director or beneficial owner.

*2).* *Identification of Potential Related Party Transactions.*

 

Related Party Transactions will be brought to management's and the Board's attention in a number of ways. Each of the Company's directors and executive officers shall inform the Chairperson of the Committee of any potential Related Party Transactions. In addition, each such director and executive officer shall complete a questionnaire on an annual basis designed to elicit information about any potential Related Party Transactions.

Any potential Related Party Transactions that are brought to the Committee's attention shall be analyzed by the Committee, in consultation with outside counsel or members of management, as appropriate, to determine whether the transaction or relationship does, in fact, constitute a Related Party Transaction requiring compliance with this Policy.

 

 

*3).* *Review and Approval of Related Party Transactions.*

 

At each of its meetings, the Committee shall be provided with the details of each new, existing or proposed Related Party Transaction, including the terms of the transaction, any contractual restrictions that the Company has already committed to, the business purpose of the transaction, and the benefits to the Company and to the relevant Related Party. In determining whether to approve a Related Party Transaction, the Committee shall consider, among other factors, the following factors to the extent relevant to the Related Party Transaction:

● whether the terms of the Related Party Transaction are fair to the Company and on the same basis as would apply if the transaction did not involve a Related Party;

● whether there are business reasons for the Company to enter into the Related Party Transaction;

● whether the Related Party Transaction would impair the independence of an outside director;

● whether the Related Party Transaction would present an improper conflict of interests for any director or executive officer of the Company, taking into account the size of the transaction, the overall financial position of the director, executive officer or Related Party, the direct or indirect nature of the director's, executive officer's or Related Party's interest in the transaction and the ongoing nature of any proposed relationship, and any other factors the Committee deems relevant; and

● any pre-existing contractual obligations.

Any member of the Committee who has an interest in the transaction under discussion shall abstain from voting on the approval of the Related Party Transaction, but may, if so requested by the Chairperson of the Committee, participate in some or all of the Committee's discussions of the Related Party Transaction. Upon completion of its review of the transaction, the Committee may determine to permit or to prohibit the Related Party Transaction.

A Related Party Transaction entered into without pre-approval of the Committee shall not be deemed to violate this Policy, or be invalid or unenforceable, so long as the transaction is brought to the Committee as promptly as reasonably practical after it is entered into or after it becomes reasonably apparent that the transaction is covered by this Policy.

A Related Party Transaction entered into prior to the effective date of this Charter shall not be required to be reapproved by the Committee.

&nbsp;&nbsp;&nbsp;&nbsp;**7.** **DISCLOSURE** 

If required by the rules of the SEC or any of any exchange or national listing market system upon which the Company's securities are listed or quoted for trading, this Charter, as amended from time to time, shall be made available to the public on the Company's website or filed with the SEC.

## Exhibit 99.4

**Exhibit 99.4**

**CHARTER OF THE COMPENSATION COMMITTEE OF** 

**PSI GROUP HOLDINGS LTD**

**<u>Membership</u>**

The Compensation Committee (the "**Committee**") of the board of directors (the "**Board**") of PSI Group Holdings Ltd (the "**Company**") shall consist of three or more directors. Each member of the Committee shall be independent in accordance with the rules of the Nasdaq Stock Market.

Each member of the Committee must qualify as "non-employee directors" for the purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "**Exchange Act**").

The members of the Committee shall be appointed by the Board based on recommendations from the nominating and corporate governance committee of the Board. The members of the Committee shall serve for such term or terms as the Board may determine or until earlier resignation or death. The Board may remove any member from the Committee at any time with or without cause.

**<u>Purpose</u>**

The purpose of the Committee is to carry out the responsibilities delegated by the Board relating to the review and determination of executive compensation.

**<u>Duties and Responsibilities</u>**

The Committee shall have the following authority and responsibilities:

To review and approve annually the corporate goals and objectives applicable to the compensation of the chief executive officer ("**CEO**"), evaluate at least annually the CEO's performance in light of those goals and objectives, and recommend to the Board for approval the CEO's compensation level based on this evaluation. The CEO cannot be present during any voting or deliberations by the Committee on his or her compensation.

To review and make recommendations to the Board regarding the compensation of all other executive officers.

To review, and make recommendations to the Board regarding, incentive compensation plans and equity-based plans, and where appropriate or required, recommend for approval by the shareholders of the Company, which includes the ability to adopt, amend and terminate such plans. The Committee shall also have the authority to administer the Company's incentive compensation plans and equity-based plans, including designation of the employees to whom the awards are to be granted, the amount of the award or equity to be granted and the terms and conditions applicable to each award or grant, subject to the provisions of each plan.

To review, and make recommendations to the Board regarding, any employment agreements and any severance arrangements or plans, including any benefits to be provided in connection with a change in control, for the CEO and other executive officers, which includes the ability to adopt, amend and terminate such agreements, arrangements or plans.

To review all director compensation and benefits for service on the Board and Board committees at least once a year and to recommend any changes to the Board as necessary.

To oversee, in conjunction with the Board, engagement with shareholders and proxy advisory firms on executive compensation matters.

**<u>Outside Advisors</u>**

The Committee shall have the authority, in its sole discretion, to select, retain and obtain the advice of a compensation consultant as necessary to assist with the execution of its duties and responsibilities as set forth in this Charter. The Committee shall set the compensation, and oversee the work, of the compensation consultant. The Committee shall have the authority, in its sole discretion, to retain and obtain the advice and assistance of outside legal counsel and such other advisors as it deems necessary to fulfill its duties and responsibilities under this Charter. The Committee shall set the compensation, and oversee the work, of its outside legal counsel and other advisors. The Committee shall receive appropriate funding from the Company, as determined by the Committee in its capacity as a committee of the Board, for the payment of compensation to its compensation consultants, outside legal counsel and any other advisors. However, the Committee shall not be required to implement or act consistently with the advice or recommendations of its compensation consultant, legal counsel or other advisor to the compensation committee, and the authority granted in this Charter shall not affect the ability or obligation of the Committee to exercise its own judgment in fulfillment of its duties under this Charter.

In retaining or seeking advice from compensation consultants, outside counsel and other advisors (other than the Company's in-house counsel), the Committee must take into consideration the factors specified in Nasdaq Listing Rule 5605(d)(1)(D). The Committee may retain, or receive advice from, any compensation advisor they prefer, including ones that are not independent, after considering the specified factors. The Committee is not required to assess the independence of any compensation consultant or other advisor that acts in a role limited to consulting on any broad-based plan that does not discriminate in scope, terms or operation in favor of executive officers or directors and that is generally available to all salaried employees or providing information that is not customized for a particular company or that is customized based on parameters that are not developed by the consultant or advisor, and about which the consultant or advisor does not provide advice.

The Committee shall evaluate whether any compensation consultant retained or to be retained by it has any conflict of interest in accordance with Item 407(e)(3)(iv) of Regulation S-K. Any compensation consultant retained by the Committee to assist with its responsibilities relating to executive compensation or director compensation shall not be retained by the Company for any compensation or other human resource matters.

**<u>Structure and Operations</u>**

The Board shall designate a member of the Committee as the chairperson. The Committee shall meet at least two times a year at such times and places as it deems necessary to fulfill its responsibilities. The Committee shall report regularly to the Board regarding its actions and make recommendations to the Board as appropriate. The Committee is governed by the same rules regarding meetings (including meetings in person or by telephone or other similar communications equipment), action without meetings, notice, waiver of notice, and quorum and voting requirements as are applicable to the Board.

The Committee may invite such members of management to its meetings as it deems appropriate. However, the Committee shall meet regularly without such members present, and in all cases the CEO and any other such officers shall not be present at meetings at which their compensation or performance is discussed or determined.

The Committee shall review this Charter at least annually and recommend any proposed changes to the Board for approval.

**<u>Delegation of Authority</u>**

The Committee shall have the authority to delegate any of its responsibilities, along with the authority to take action in relation to such responsibilities, to one or more subcommittees as the Committee may deem appropriate in its sole discretion.

**<u>Performance Evaluation</u>**

The Committee shall conduct an annual evaluation of the performance of its duties under this charter and shall present the results of the evaluation to the Board. The Committee shall conduct this evaluation in such manner as it deems appropriate.

## Exhibit 99.5

**Exhibit 99.5**

**PSI GROUP HOLDINGS LTD.** 

**CHARTER OF THE NOMINATING COMMITTEE OF**

**THE BOARD OF DIRECTOR**

**Effective September 9, 2022**

**<u>Membership</u>**

The Nominating Committee (the "**Committee**") of the board of directors (the "**Board**") of PSI Group Holdings Ltd. (the "**Company**") shall consist of three or more directors. Each member of the Committee shall be independent in accordance with the rules of the Nasdaq Stock Market.

The members of the Committee shall serve for such term or terms as the Board may determine or until earlier resignation or death. The Board may remove any member from the Committee at any time with or without cause.

**<u>Purpose</u>**

The purpose of the Committee is to carry out the responsibilities delegated by the Board relating to the Company's director nominations process and procedures, developing and maintaining the Company's corporate governance policies and any related matters required by the federal securities laws.

**<u>Duties and Responsibilities</u>**

The Committee shall have the following authority and responsibilities:

To identify and screen individuals qualified to become members of the Board, consistent with criteria approved by the Board. The Committee shall consider any director candidates recommended by the Company's shareholders pursuant to the procedures set forth in the Company's described in the Company's proxy statement.

To make recommendations to the Board regarding the selection and approval of the nominees for director to be submitted to a shareholder vote at the annual meeting of shareholders.

To oversee the Company's corporate governance practices and procedures, including identifying best practices and reviewing and recommending to the Board for approval any changes to the documents, policies and procedures in the Company's corporate governance framework, including its certificate of incorporation and by-laws.

To review the Board's committee structure and composition and to make recommendations to the Board regarding the appointment of directors to serve as members of each committee and committee chairperson annually.

If a vacancy on the Board and/or any Board committee occurs, to identify and make recommendations to the Board regarding the selection and approval of candidates to fill such vacancy either by election by shareholders or appointment by the Board.

To develop and recommend to the Board for approval standards for determining whether a director has a relationship with the Company that would impair its independence.

To review and discuss with management disclosure of the Company's corporate governance practices, including information regarding the operations of the Committee and other Board committees, director independence and the director nominations process, and to recommend that this disclosure be, included in the Company's proxy statement or annual report on Form 20-F, as applicable.

To develop and recommend to the Board for approval a Company Code of Business Conduct and Ethics (the "**Code**"), to monitor compliance with the Company's Code, to investigate any alleged breach or violation of the Code, to enforce the provisions of the Code and to review the Code periodically and recommend any changes to the Board.

**<u>Outside Advisors</u>**

The Committee shall have the authority, in its sole discretion, to select, retain and obtain the advice of a director search firm as necessary to assist with the execution of its duties and responsibilities as set forth in this Charter. The Committee shall set the compensation and oversee the work of the director search firm. The Committee shall have the authority, in its sole discretion, to retain and obtain the advice and assistance of outside counsel, an executive search firm and such other advisors as it deems necessary to fulfill its duties and responsibilities under this Charter. The Committee shall set the compensation and oversee the work of its outside counsel, the executive search firm and any other advisors. The Committee shall receive appropriate funding from the Company, as determined by the Committee in its capacity as a committee of the Board, for the payment of compensation to its search consultants, outside counsel and any other advisors.

**<u>Structure and Operations</u>**

The Board shall designate a member of the Committee as the chairperson. The Committee shall meet at least two times a year at such times and places as it deems necessary to fulfill its responsibilities. The Committee shall report regularly to the Board regarding its actions and make recommendations to the Board as appropriate. The Committee is governed by the same rules regarding meetings (including meetings in person or by telephone or other similar communications equipment), action without meetings, notice, waiver of notice, and quorum and voting requirements as are applicable to the Board.

The Committee shall review this Charter at least annually and recommend any proposed changes to the Board for approval.

**<u>Delegation of Authority</u>**

The Committee shall have the authority to delegate any of its responsibilities, along with the authority to take action in relation to such responsibilities, to one or more subcommittees as the Committee may deem appropriate in its sole discretion.

**<u>Performance Evaluation</u>**

The Committee shall conduct an annual evaluation of the performance of its duties under this charter and shall present the results of the evaluation to the Board. The Committee shall conduct this evaluation in such manner as it deems appropriate.

## Exhibit 99.6

**Exhibit 99.6**

---

| | |
|:---|:---|
| ![](ex99-5_001.jpg) | ![](ex99-5_002.jpg) |

---

Date: March 17, 2022

**PSI Group Holding Ltd.** 

Unit 1002, 10/F, Join-in Hang Sing Centre

No.2-16 Kwai Fung Crescent, Kwai Chung

New Territories, Hong Kong

**<u>Re: PSI Group Holding Ltd.</u>**

Ladies and Gentlemen,

We understand that PSI Group Holding Ltd. (the "Company") plans to file a registration statement on Form F-1 (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 (collectively, the "Reports"), and any subsequent amendments to the Reports, as well as the citation of our research reports and amendments thereto, in the Registration Statement and any amendments thereto, in any other future filings with the SEC by the Company, including, without limitation, filings on Form 20-F or Form 6-K or other SEC filings (collectively, the "SEC Filings"), on the websites of the Company and its subsidiaries and affiliates, 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.

![](ex99-5_003.jpg)

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| | |
|:---|:---|
| ![](ex99-5_001.jpg) | ![](ex99-5_002.jpg) |

---

Yours faithfully,

For and on behalf of

**China Insights Industry Consultancy Limited**

---

| | |
|:---|:---|
| /s/ Leon Zhao | /s/ Leon Zhao |
| Name: Leon Zhao | Name: Leon Zhao |
| Title/Position: | Partner |

---

![](ex99-5_003.jpg)

## Exhibit 99.10

**Exhibit 99.10**

March 1, 2023

**<u>VIA EDGAR</u>**

Division of Corporation Finance

U.S. Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

---

| | |
|:---|:---|
| **Re:** | **PSI Group Holdings, Ltd. – Registration Statement on Form F-1** |

---

**Request for Waiver and Representation Under Item 8.A.4 of Form 20-F**

Ladies and Gentlemen:

The undersigned, PSI Group Holdings, Ltd., a foreign private issuer organized under the laws of the Cayman Islands (the "Company"), is submitting this letter via EDGAR to the U.S. Securities and Exchange Commission (the "Commission") in connection with the Company's filing on the date hereof of its registration statement on Form F-1 (the "Registration Statement") relating to the initial public offering ("IPO") of the Company's ordinary shares. This letter respectfully requests a waiver of the requirements of Item 8.A.4 of Form 20-F ("Item 8.A.4").<br>

The Registration Statement contains audited consolidated financial statements for the two years ended December 31, 2020 and December 31, 2021, in each case prepared in accordance with accounting principles generally accepted in the United States of America, and unaudited interim financial statements for the six months ended June 30, 2022.

Item 8. A.4 of Form 20-F states that in the case of a company's initial public offering, the registration statement on Form F-1 must contain audited financial statements as of a date not older than 12 months from the date of the offering unless a representation is made pursuant to Instruction 2 to Item 8.A.4. The Company is making this representation pursuant to Instruction 2 to Item 8.A.4, as amended and in effect as of the date hereof, which provides that a company may instead comply with the 15-month requirement "if the company is able to represent that it is not required to comply with the 12-month requirement in any other jurisdiction outside the United States and that complying with the 12-month requirement is impracticable or involves undue hardship."

The Company hereby represents that:

&nbsp;&nbsp;&nbsp;&nbsp;1. The Company is not currently a public reporting company in any jurisdiction.

&nbsp;&nbsp;&nbsp;&nbsp;2. The Company is not required by any jurisdiction outside the United States to prepare, and has not prepared,
financial statements audited under any generally accepted auditing standards for any interim period subsequent to June 30, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;3. Compliance with Item 8.A.4 at present is impracticable and involves undue hardship for
the Company.

&nbsp;&nbsp;&nbsp;&nbsp;4. The Company does not anticipate that its audited financial statements for the fiscal year ended December
31, 2022 will be available until April 1, 2023

&nbsp;&nbsp;&nbsp;&nbsp;5. In no event will the Company seek effectiveness of its Registration Statement if its audited financial
statements are older than 15 months at the time of the offering.

The Company is filing this representation as an exhibit to the Registration Statement pursuant to Instruction 2 to Item 8.A.4.

---

| |
|:---|
| Sincerely, |
| */s/ Hok Wai Alex, KO* |
| Hok Wai Alex, KO<br> Chief Executive Officer |

---

## Ex-Filing

**Exhibit 107**

**Calculation of Filing Fee Tables**

(Form Type)

PSI Group Holdings Ltd..

(Exact Name of Registrant as Specified in its Charter)

<u>Table 1: Newly Registered and Carry Forward Securities</u>

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Security<br> Type** | **Fee<br> Calculation<br> or Carry<br> Forward Rule** | **Amount<br> Registered** | **Proposed<br> Maximum<br> Offering<br> Price Per<br> Unit<sup>(1)</sup>** | **Maximum<br> Aggregate<br> Offering<br> Price<sup>(1)</sup>** | **Fee<br> Rate** | **Amount of<br> Registration<br> Fee** | **Carry<br> Forward<br> Form<br> Type** | **Carry<br> Forward<br> File<br> Number** | **Carry<br> Forward<br> Initial<br> effective<br> date** | **Filing Fee<br> Previously<br> Paid In<br> Connection<br> with<br> Unsold<br> Securities<br> to be<br> Carried<br> Forward** |
| **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** |
| Fees to Be Paid | Equity Common stock, par value $0.0001 per share<sup>(2)</sup> | 457(o) | 3737500 | $5.00 | $18687500 | 0.00011020 | $2059.36 |  |  |  |  |
| **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** |
| Carry<br> Forward<br> Securities |  |  |  |  |  |  |  |  |  |  |  |
|  | **Total Offering Amounts** | **Total Offering Amounts** | **Total Offering Amounts** |  | $18687500 |  | $2059.36 |  |  |  |  |
|  | **Total Fees Previously Paid** | **Total Fees Previously Paid** | **Total Fees Previously Paid** |  |  |  |  |  |  |  |  |
|  | **Total Fee Offsets** | **Total Fee Offsets** | **Total Fee Offsets** |  |  |  |  |  |  |  |  |
|  | **Net Fee Due** | **Net Fee Due** | **Net Fee Due** |  |  |  | $2059.36 |  |  |  |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) The registration fee for securities is based on an estimate of the Proposed Maximum Aggregate Offering Price of the securities, assuming the sale of the maximum number of shares at the highest expected offering price, and such estimate is solely for the purpose of calculating the registration fee pursuant to Rule 457(o). Includes the offering price attributable to additional shares that the underwriter has the option to purchase to cover over-allotments, if any.

(2) In accordance with Rule 416(a), the Registrant is also registering an indeterminate number of additional common stocks that shall be issuable pursuant to Rule 416 to prevent dilution resulting from share splits, share dividends or similar transactions.