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1、F-1/A 1 ff12022a1_planetimage.htm REGISTRATION STATEMENTAs filed with the U.S.Securities and Exchange Commission on April 17,2023.Registration No.UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549_AMENDMENT NO.1TOFORM F-1REGISTRATION STATEMENTUnderThe Securities Act of 193
2、3_Planet Image International Limited(Exact name of Registrant as specified in its charter)_Not Applicable(Translation of Registrants name into English)_Cayman Islands 3555 Not Applicable(State or otherjurisdiction of incorporation ororganization)(Primary StandardIndustrial Classification Code Number
3、)(I.R.S.Employer Identification Number)No.756 Guangfu RoadHi-tech Development ZoneXinyu City,Jiangxi ProvincePeoples Republic of China+86 (Address,including zip code,and telephone number,including area code,of Registrants principal executive offices)_Yan Tang12000 Magnolia Ave,Suite 101R
4、iverside,CA 92503+1-562-404-9315(Name,address,including zip code,and telephone number,including area code,ofagent for service)_Copies to:Ying Li,Esq.Guillaume de Sampigny,Esq.Hunter Taubman Fischer&Li LLC950 Third Avenue,19th FloorNew York,NY 10022212-530-2206 Fang Liu,Esq.VCL Law LLP1945 Old Gallow
5、s Road,Suite 630Vienna,VA 22182703-919-7285_Approximate date of commencement of proposed sale to the public:As soon as practicable after the effective date of this registrationstatement.If any of the securities being registered on this Form are to be offered on a delayed orcontinuous basis pursuant
6、to Rule 415 under the Securities Act of 1933,or the Securities Act,checkthe following box.If this Form is filed to register additional securities for an offering pursuant toRule 462(b)under the Securities Act,check the following box and list the Securities Actregistration statement number of the ear
7、lier effective registration statement for the same offering.If this Form is a post-effective amendment filed pursuant to Rule 462(c)under the SecuritiesAct,check the following box and list the Securities Act registration statement number of theearlier effective registration statement for the same of
8、fering.If this Form is a post-effective amendment filed pursuant to Rule 462(d)under the SecuritiesAct,check the following box and list the Securities Act registration statement number of theearlier effective registration statement for the same offering.Indicate by check mark whether the registrant
9、is an emerging growth company as defined inRule 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 periodfor
10、 complying with any new or revised financial accounting standards provided pursuant toSection 7(a)(2)(B)of the Securities Act.The Registrant hereby amends this registration statement on such date or dates asmay be necessary to delay its effective date until the Registrant shall file afurther amendme
11、nt which specifically states that this registration statement shallthereafter become effective in accordance with Section 8(a)of the Securities Act,asamended,or until the registration statement shall become effective on such date asthe U.S.Securities and Exchange Commission,acting pursuant to said S
12、ection 8(a)maydetermine._ The term“new or revised financial accounting standard”refers to any update issued by theFinancial Accounting Standards Board to its Accounting Standards Codification after April 5,2012.Table of ContentsThe information in this preliminary prospectus is not complete and may b
13、e changed.These securities may not be sold until the registration statement filed with theUnited States Securities and Exchange Commission is effective.This preliminaryprospectus is not an offer to sell nor does it seek an offer to buy these securitiesin any jurisdiction where the offer or sale is n
14、ot permitted.SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS DATED APRIL 17,2023_ Class A Ordinary SharesPlanet Image International LimitedThis is an initial public offering of our Class A ordinary shares.We are offering on a firmcommitment basis our Class A ordinary shares,par value HK$0.0001 per shar
15、e.Prior to this offering,there has been no public market for our Class A ordinary shares.We expect the initial publicoffering price to be in the range of$to$per Class A ordinary share.We havereserved the symbol“YIBO”for purposes of listing our ordinary shares on the Nasdaq Stock Marketunder the symb
16、ol“YIBO”.At this time,the Nasdaq Stock Market has not yet approved ourapplication to list our Class A ordinary shares.The closing of this offering is conditioned uponNasdaqs final approval of our listing application,and there is no guarantee or assurance that ourClass A ordinary shares will be appro
17、ved for listing on the Nasdaq Stock Market.Investing in our Class A ordinary shares involves a high degree of risk,including the risk of losing your entire investment.See“Risk Factors”beginning onpage 17 to read about factors you should consider before buying our Class A ordinaryshares.Our issued an
18、d outstanding share capital consists of Class A ordinary shares and Class Bordinary shares.Mr.Weidong Gu,our founder and chairman of the board of directors willbeneficially own%of our total issued and outstanding Class A ordinary shares and 100%ofour total issued and outstanding Class B ordinary sha
19、res,representing%of our total votingpower,assuming the option to purchase additional Class A ordinary shares is exercised by theunderwriter in full.As a result,we will be a“controlled company”as defined under the NasdaqStock Market Rules.As a“controlled company,”we are permitted to elect not to comp
20、ly withcertain corporate governance requirements.Holders of Class A ordinary shares and Class B ordinaryshares have the same rights except for voting,transfer and conversion rights.Each Class A ordinaryshare is entitled to one vote,and each Class B ordinary share is entitled to ten votes and isconve
21、rtible into one Class A ordinary share.Class A ordinary shares are not convertible into ClassB ordinary shares under any circumstances.We are an“emerging growth company”as defined under applicable U.S.securities laws and areeligible for reduced public company reporting requirements.Please read the d
22、isclosures beginning onpage 153 of this prospectus for more information.We face legal and operational risks associated with having the majority of our operations inChina.The government of Peoples Republic of China(“PRC”)has significant authority to exertinfluence on the ability of a China-based comp
23、any,such as us,to conduct its business.Therefore,investors of our company and our business face potential uncertainty from the PRC government.Changes in Chinas economic,political or social conditions or government policies could materiallyadversely affect our business and results of operations.These
24、 risks could result in a materialchange in our operations and/or the value of our Class A ordinary shares or could significantlylimit or completely hinder our ability to offer or continue to offer securities to investors andcause the value of such securities to significantly decline or be worthless.
25、In particular,recentstatements and regulatory actions by Chinas government,such as those related to the use ofvariable interest entities and data security or anti-monopoly concerns,as well as the ability ofPublic Company Accounting Oversight Board(United States)(the“PCAOB”)to inspect our auditors,ma
26、y impact our Companys ability to conduct our business,accept foreign investments,or be listedon a U.S.or other foreign stock exchange.See“Risk Factors Risks Relating to Doing Business inthe PRC.”On February 17,2023,the China Securities Regulatory Commission(the“CSRC”)promulgated the Trial Administra
27、tive Measures of Overseas Securities Offering and Listing byDomestic Companies,or the“Administrative Measures,”and five supporting guidelines,which cameinto effect on March 31,2023.Our submission of a listing application will fall into the scope ofoverseas offering and listing provisions in the Admi
28、nistration Measures.After the effectiveness ofthe Administration Measures,we will be required to file with the CSRC in accordance with theAdministration Measures and complete the filing before the overseas issuance and listing.If we donot comply with the filing procedures according to the Administra
29、tion Measures or if our filingmaterials contain false records,misleading statements or material omissions,the CSRC may orderrectify such non-compliance,issue a warning,and impose a fine of not less than RMB1 million andnot more than RMB10 million.These risks could completely hinder our ability to of
30、fer or continue tooffer securities to investors,or cause such securities to significantly decline in value or becomeworthless.See“Risk Factors Risks Relating to Doing Business in the PRC The Chinesegovernment exerts substantial influence over the manner in which the PRC subsidiaries must conductthei
31、r business activities and may intervene or influence their operations at any time,which couldresult in a material change in their operations and the value of our ordinary shares.”We are not a Chinese operating company but a Cayman Islands holding company with operationsconducted by our subsidiaries,
32、including subsidiaries based in China.Investors in our Class Aordinary shares thus are purchasing equity interest in a Cayman Islands holding company,and maynever hold equity interests in the Chinese operating companies.This structure involves unique risksto investors.Additionally,Chinese regulatory
33、 authorities could disallow our operating structure,which would likely result in a material change in our operations and/or a material change in thevalue of our Class A ordinary shares,and could cause the value of our Class A ordinary shares tosignificantly decline or become worthless.See“Risk Facto
34、rs Risks Relating to Doing Business inthe PRC The Chinese government exerts substantial influence over the manner in which we mustconduct our business activities and may intervene or influence our operations at any time,whichcould result in a material change in our operations and the value of our or
35、dinary shares.”As usedin this prospectus,“we,”“us,”“our company,”or“our”refers to Planet Image InternationalLimited,and,when describing Planet Image International Limiteds consolidated financialinformation,also includes its subsidiaries.We directly hold 100%equity interests in our subsidiaries,and w
36、e do not currently use avariable interest entity(“VIE”)structure.Table of ContentsCash flows have occurred between our Cayman Islands holding company and our subsidiaries.OurCayman Islands holding company,which was incorporated in August 2019,received cash in the amountof US$27,040,US$5.5 million,US
37、$1.3 million,US$0.5 million and US$0.7 million for the years endedDecember 31,2019,2020,2021 and 2022,and from January 1,2023 to the date of this prospectus,respectively,from our subsidiaries for operating activities.Our subsidiaries received cash in theamount of US$13.8 million,US$0,US$774,500,nil
38、and nil for the years ended December 31,2019,2020,2021 and 2022,and from January 1,2023 to the date of this prospectus,respectively,from ourCayman Islands holding company for operating activities.To date,no cash flows have occurredbetween our Cayman Islands holding company and our PRC subsidiaries.T
39、o date,our Cayman Islandsholding company has received cash in an aggregate amount of US$2.6 million from our subsidiaries inHong Kong for operating activities,and our subsidiaries in Hong Kong has received cash from ourCayman Islands holding company in an aggregate amount of US$14.6 million for oper
40、ating activities.Such cash transactions for the years ended December 31,2021 and 2022 were included in net cashgenerated from operating activities together with our Cayman Islands holding companys otheroperational cash transactions in its financial statements.See“Note 19 Condensed FinancialInformati
41、on of the Parent Company Condensed statements of cash flows”in our financialstatements appearing elsewhere in this prospectus.To date,our Cayman Islands holding company has not declared or paid dividends or madedistributions to its subsidiaries or to investors in the past,nor any dividends or distri
42、butionswere made by a subsidiary to the Cayman Islands holding company.Our board of directors has completediscretion on whether to distribute dividends,subject to applicable laws.We do not have anycurrent plan to declare or pay any cash dividends on our Class A ordinary shares in the foreseeablefutu
43、re after this offering.See“Risk Factors Risks Relating to Our Class A Ordinary Shares andThis Offering We currently do not expect to pay dividends in the foreseeable future after thisoffering and you must rely on price appreciation of our Class A ordinary shares for return on yourinvestment.”Subject
44、 to certain contractual,legal and regulatory restrictions,cash and capitalcontributions may be transferred among our Cayman Islands holding company and our subsidiaries.Ifneeded,our Cayman Islands holding company can transfer cash to our PRC subsidiaries through loansand/or capital contributions,and
45、 our PRC subsidiaries can transfer cash to our Cayman Islandsholding company through loans and/or issuing dividends or other distributions.Cash transfers fromour Cayman Islands holding company are subject to applicable PRC laws and regulations on loans anddirect investment.For details,see“Risk Facto
46、rs Risks Relating to Doing Business in the PRC PRC regulations of loans and direct investment by offshore holding companies to PRC entities maydelay or prevent us from using the proceeds of our offshore financing to make loans or additionalcapital contributions to our PRC subsidiaries,which could ma
47、terially and adversely affect ourliquidity and our ability to fund and expand our business”and“Use of Proceeds.”In addition,current PRC regulations permit our PRC subsidiaries to pay dividends to their respectiveshareholders only out of their accumulated profits,if any,determined in accordance with
48、PRCaccounting standards and regulations.For details,see“Risk Factors Risks Relating to DoingBusiness in the PRC We may rely on dividends and other distributions on equity paid by our PRCsubsidiaries to fund any cash and financing requirements we may have,and any limitation on theability of our PRC s
49、ubsidiary to make payments to us and any tax we are required to pay could have amaterial and adverse effect on our ability to conduct our business.”In addition,our Class A ordinary shares may be delisted from a national exchange orprohibited from being traded over-the-counter under the Holding Forei
50、gn Companies Accountable Act ifthe PCAOB is unable to inspect our auditor for two consecutive years.Our auditor has been inspectedby the PCAOB on a regular basis,with the last inspection conducted in September 2022,and it is notsubject to the determinations announced by the PCAOB on December 16,2021
51、.If trading in ourordinary shares is prohibited under the Holding Foreign Companies Accountable Act in the futurebecause the PCAOB determines that it cannot inspect or fully investigate our auditor at such futuretime,the Nasdaq Stock Market may determine to delist our Class A ordinary shares.On June
52、 22,2021,the U.S.Senate passed the Accelerating Holding Foreign Companies Accountable Act and on December29,2022,a legislation entitled“Consolidated Appropriations Act,2023”(the“ConsolidatedAppropriations Act”)was signed into law by President Biden,which contained,among other things,an identical pro
53、vision to Accelerating Holding Foreign Companies Accountable Act and reduced theperiod of time for foreign companies to comply with PCAOB audits to two consecutive years,insteadof three,thus reducing the time period before our securities may be prohibited from trading ordelisted.On December 15,2022,
54、the PCAOB Board determined that the PCAOB was able to securecomplete access to inspect and investigate registered public accounting firms headquartered inmainland China and Hong Kong and voted to vacate its previous determinations to the contrary.However,should PRC authorities obstruct or otherwise
55、fail to facilitate the PCAOBs access in thefuture,the PCAOB Board will consider the need to issue a new determination.Our securities may bedelisted or prohibited from trading if the PCAOB determines that it cannot inspect or investigatecompletely our auditor under the Holding Foreign Companies Accou
56、ntable Act.See“Risk Factors Risks Relating to Our Business and Industry Recent joint statement by the SEC and the PCAOBproposed rule changes submitted by Nasdaq,and the recently enacted Consolidated Appropriations Actall call for additional and more stringent criteria to be applied to emerging marke
57、t companies uponassessing the qualification of their auditors,especially the non-U.S.auditors who are notinspected by the PCAOB.These developments could add uncertainties to our offering.”Per Share TotalInitial public offering price US$US$Underwriting discounts(1)US$US$Proceeds,before expenses,to us
58、(2)US$US$_(1)See“Underwriting”in this prospectus for more information regarding our arrangements withthe underwriter.(2)We expect our total cash expenses for this offering(including cash expenses payable to ourunderwriter for its out-of-pocket expenses)to be approximately$2,011,294,exclusive of thea
59、bove discounts.In addition,we will pay additional items of value in connection with thisoffering that are viewed by the Financial Industry Regulatory Authority,or FINRA,asunderwriting compensation.These payments will further reduce proceeds available to us beforeexpenses.See“Underwriting.”This offer
60、ing is being conducted on a firm commitment basis.The underwriter is obligated totake and pay for all of the Class A ordinary shares if any such shares are taken.We have grantedthe underwriter an option for a period of 45 days after the closing of this offering to purchase upto 15%of the total numbe
61、r of the Class A ordinary shares to be offered by us pursuant to thisoffering(excluding Class A ordinary shares subject to this option),solely for the purpose ofcovering over-allotments,at the public offering price less the underwriting discounts.If theunderwriter exercises the option in full and as
62、suming that investors introduced by the underwriterwill purchase 100%of the shares offered hereby,the total underwriting discounts payable will be$based on an assumed offering price of$per Class A ordinary share,and the totalgross proceeds to us,before underwriting discounts,non-accountable expense
63、allowance,andexpenses,will be$.The underwriter expects to deliver the Class A ordinary shares against payment as set forthunder“Underwriting,”on or about ,2023.Neither the U.S.Securities and Exchange Commission nor any state securitiescommission nor any other regulatory body has approved or disappro
64、ved of thesesecurities or determined if this prospectus is truthful or complete.Anyrepresentation to the contrary is a criminal offense.US TIGER SECURITIES,Inc.Prospectus dated ,2023.Table of ContentsTABLE OF CONTENTS PagePROSPECTUS SUMMARY 1RISK FACTORS 17SPECIAL NOTE REGARDING FORWARD-LOOKING STAT
65、EMENTS 49USE OF PROCEEDS 51DIVIDEND POLICY 53CAPITALIZATION 54DILUTION 55ENFORCEABILITY OF CIVIL LIABILITIES 57CORPORATE HISTORY AND STRUCTURE 59MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS 61INDUSTRY OVERVIEW 74BUSINESS 83REGULATION 109MANAGEMENT 126PRINCIPAL
66、SHAREHOLDERS 132RELATED PARTY TRANSACTIONS 134DESCRIPTION OF SHARE CAPITAL 135SHARES ELIGIBLE FOR FUTURE SALE 143TAXATION 145UNDERWRITING 153EXPENSES RELATING TO THIS OFFERING 157LEGAL MATTERS 158EXPERTS 158WHERE YOU CAN FIND ADDITIONAL INFORMATION 158INDEX TO CONSOLIDATED FINANCIAL STATEMENTS F-1Yo
67、u should rely on the information contained in this prospectus or in any relatedfree writing prospectus.We have not authorized anyone to provide you withinformation different from that contained in this prospectus or in any related freewriting prospectus.We are offering to sell,and seeking offers to
68、buy the Class Aordinary shares,only in jurisdictions where offers and sales are permitted.Theinformation contained in this prospectus is accurate only as of the date of thisprospectus,regardless of the time of delivery of this prospectus or of any sale ofthe Class A ordinary shares.Neither we nor th
69、e underwriter has taken any action to permit a public offeringof the Class A ordinary shares outside the United States or to permit the possessionor distribution of this prospectus or any filed free-writing prospectus outside theUnited States.Persons outside the United States who come into possessio
70、n of thisprospectus or any filed free writing prospectus must inform themselves about andobserve any restrictions relating to the offering of the Class A ordinary shares andthe distribution of this prospectus or any filed free-writing prospectus outside theUnited States.Until ,2023(the 25th day afte
71、r the date of thisprospectus),all dealers that buy,sell or trade Class A ordinary shares,whether or not participating in this offering,may be required to deliver aprospectus.This is in addition to the dealers obligation to deliver aprospectus when acting as underwriters and with respect to their uns
72、oldallotments or subscriptions.iTable of ContentsPROSPECTUS SUMMARYThe following summary is qualified in its entirety by,and should be read inconjunction with,the more detailed information and financial statements appearingelsewhere in this prospectus.In addition to this summary,we urge you to read
73、theentire prospectus carefully,especially the risks of investing in our Class Aordinary shares discussed under“Risk Factors,”before deciding whether to investour Class A ordinary shares.This prospectus contains information from an industryreport which we commissioned China Insights Consultancy,a thi
74、rd-party independentresearch firm,to prepare.We refer to this report as the CIC Report.OverviewOur MissionOur mission is to deliver high-quality and cost-effective printing solutions toconsumers around the world with our proprietary technology,research anddevelopment capabilities and our integrated
75、and localized sales,logistics andservice platform.Who we areThrough the operating subsidiaries,we are a leading export-orientedmanufacturer and seller of compatible toner cartridges based in China,the U.S.andEurope.According to the CIC Report,we were the largest compatible cartridgemanufacturer in t
76、he world with a market share of approximately 11.3%in terms ofretail value in the markets worldwide,or global markets,for the year endedDecember 31,2022.We ranked first in the U.S.and Europe in terms of market sharefor the year ended December 31,2022.Through the operating subsidiaries,we primarily d
77、evelop and manufacture tonercartridges that are compatible with,and can be used in,a wide range of commonlyavailable models of laser printers from different manufacturers,or compatibletoner cartridges,on a white-label or third-party brand basis or under our self-owned brands.The operating subsidiari
78、es also sell their branded products throughonline sales channels under three brands,TrueImage,CoolToner,and AZtech.Customers of the operating subsidiaries range from wholesalers,dealers to retailcustomers.Through the operating subsidiaries,we have a wide internationalfootprint through established sa
79、les channels,with products sold to customers inover 45 countries,and sales in the U.S.and Europe representing the majority ofour revenue.Through the operating subsidiaries,we sell our products:(i)to offlineoverseas customers who own their brands on an Original Design Manufacturer(“ODM”)basis;(ii)to
80、offline overseas dealers who primarily sell our self-brandedproducts and white-label products to end consumers;and(iii)directly to customerson a retail basis under self-owned brands through online retail platforms.There isno major difference in terms of product capability between ODM products and wh
81、ite-label products,and the main difference lies in product packaging and pricing.Inrecent years,through the operating subsidiaries,benefiting from the growth in theonline compatible toner cartridge market in the U.S.and Europe,we have seen asubstantial growth in our sales to offline overseas dealers
82、 with growing onlinesales business.Through the operating subsidiaries,we have established localized salesoperations in the overseas markets to manage and maintain relationships with localcustomers and provide support to offline customer purchasing the operatingsubsidiaries self-branded products and
83、products offered by the operatingsubsidiaries on an ODM basis.So far,the operating subsidiaries have establishedsales operations in the U.S.,Italy,Germany,France and the United Kingdom.Inaddition,the operating subsidiaries maintain warehouses in California andPennsylvania in the U.S.,and in the Neth
84、erlands,the United Kingdom,France andItaly to ensure timely delivery to customers.In North America,most customers ofthe operating subsidiaries send purchase orders through an electronic datainterchange system,or EDI system,maintained by the operating subsidiaries.Theoperating subsidiaries also have
85、a self-developed cloud-based warehouse managementsystem which was integrated with their EDI system and third party platform tomanage the purchase orders,inventory and accounting matters.Offline customers ofthe operating subsidiaries in Europe and other markets generally place purchaseorders with the
86、 sales team of the operating subsidiaries through emails.We believe the operating subsidiaries strong design,research and developmentcapabilities represent a key strength that allows the operating subsidiaries toprovide patent-compliant products with advanced technologies to their customers.After a
87、new printer model is introduced to the market by a printer manufacturer,the experienced research and development team of the operating subsidiaries willaim to design patent compliant compatible toner1Table of Contentscartridges that can be used with this new printer model in a short period of time.A
88、ccording to the CIC Report,compatible toner cartridges for a new printer modelare generally available for sale within six to 18 months.With their efficientproduction team and sales team,the operating subsidiaries are generally able tomake their compatible toner cartridges available for sale within t
89、hree to sixmonths after the launch of a new printer model.We believe that the short time-to-market for the products of the operating subsidiaries is a key competitiveadvantage.We believe that the integrated business model of the operating subsidiaries,encompassing a value chain from research and dev
90、elopment,patented technology,manufacturing,and operating localized sales branches and online sales channelsallows the operating subsidiaries to capture industry opportunities in a timelymanner and provides us with significant growth potential.What have we accomplishedWe have experienced significant
91、growth since our inception.Our growth ispartially attributable to our comprehensive sales strategy and our highly efficientand complementary sales channels.During the fiscal years ended December 31,2021and 2022,our revenue was primarily generated from the U.S.and Europe.Our revenuegrew from US$141.5
92、 million for the year ended December 31,2021 to US$142.1 millionfor the year ended December 31,2022,representing a CAGR of 0.4%.Our net profitincreased from US$4.9 million for the year ended December 31,2021 to US$7.2million for the year ended December 31,2022,representing a CAGR of 47.1%.Competitiv
93、e Strengths The operating subsidiaries strong design,research and developmentcapabilities and extensive patent portfolio provide significantcompetitive advantages over their industry peers;The operating subsidiaries localized sales model integrating multiplechannels,including strategically located s
94、ales offices and logisticcenters in the U.S.and Europe,enable them to build a broad end usercustomer base and achieve fast product delivery;The operating subsidiaries advanced IT systems enable us to captureopportunities in the local compatible toner cartridge market and operateour sales efficiently
95、;The operating subsidiaries are dedicated to ensuring quality of theirproducts and delivering excellent customer service;and The operating subsidiaries have a strong,stable and experienced seniormanagement team.Growth Strategies Construct a comprehensive,multi-layer production center housingproducti
96、on facilities;Increase research and development efforts;Upgrade and integrate information systems to optimize the operationalefficiency of the operating subsidiaries;Further strengthen sales and logistics and expand the operatingsubsidiaries market coverage;and Continue to increase sales and deliver
97、 customer services to offlineoverseas dealers,who sells our white-label or self-branded productsthrough online channels to end customers.Summary of Risk FactorsAn investment in our Class A ordinary shares is subject to a number of risks,including risks relating to the business and industry of the op
98、eratingsubsidiaries,risks relating to doing business in China and risk relating to ourClass A ordinary shares in this offering.You should carefully consider all theinformation in this prospectus before making an investment in the Class A ordinaryshares.The following list summarizes some,but not all,
99、of these risks.Pleaseread the information in the section entitled“Risk Factors”for a more thoroughdescription of these and other risks.2Table of ContentsRisks Relating to the Business and Industry of the Operating Subsidiaries If the products of the operating subsidiaries fail to meet the demands of
100、their customers or to reflect the latest developments in the printerindustry,the operating subsidiaries may be unable to retain existingcustomers or attract new customers,and our business,financial conditionand results of operations may be materially and adversely affected.The operating subsidiaries
101、 may be exposed to risks of obsolete inventoriesbecause technological upgrades by the original-brand printer manufacturersrender their toner cartridge products obsolete or due to their failure tomanage inventories efficiently.If this occurs,the operating subsidiariesmay incur losses for their resear
102、ch and development expenses,productioncosts and marketing expenses relating to such obsolete inventories.The operating subsidiaries may not be able to maintain or increase theselling prices of their products.Raw material purchase prices are subject to fluctuation and the operatingsubsidiaries could
103、face shortage in supply of their raw materials.The business of the operating subsidiaries rely significantly on exportsales which may be adversely affected by present or future exportregulations or enforcement.The operating subsidiaries may fail to maintain an effective qualitycontrol system and may
104、 be subject to claims by their customers in respectof product quality and compliance with relevant health and safetystandards.Risks Relating to Doing Business in the PRC Adverse changes in economic,political and social conditions of the PRCgovernment could have a material adverse effect on the overa
105、ll economicgrowth of China,which could adversely affect our business.See“RiskFactors Risks Relating to Doing Business in the PRC Adverse changesin economic,political and social conditions of the PRC government couldhave a material adverse effect on the overall economic growth of China,which could ad
106、versely affect our business”on page 31.Changes to the PRC legal system could have an adverse effect on us.See“Risk Factors Risks Relating to Doing Business in the PRC Changes tothe PRC legal system could have an adverse effect on us”on page 31.The Chinese government exerts substantial influence over
107、 the manner inwhich the PRC subsidiaries must conduct their business activities and mayintervene or influence their operations at any time,which could result ina material change in their operations and the value of our ordinaryshares.See“Risk Factors Risks Relating to Doing Business in the PRC The C
108、hinese government exerts substantial influence over the manner inwhich the PRC subsidiaries must conduct their business activities and mayintervene or influence their operations at any time,which could result ina material change in their operations and the value of our ordinaryshares”on page 32.We m
109、ay rely on dividends and other distributions on equity paid by our PRCsubsidiaries to fund any cash and financing requirements we may have,andany limitation on the ability of our PRC subsidiaries to make payments tous and any tax we are required to pay could have a material and adverseeffect on our
110、ability to conduct our business.See“Risk Factors RisksRelating to Doing Business in the PRC We may rely on dividends andother distributions on equity paid by our PRC subsidiaries to fund anycash and financing requirements we may have,and any limitation on theability of our PRC subsidiaries to make p
111、ayments to us and any tax we arerequired to pay could have a material and adverse effect on our ability toconduct our business”on page 34.PRC regulations of loans and direct investment by offshore holdingcompanies to PRC entities may delay or prevent us from using the proceedsof our offshore financi
112、ng to make loans or additional capitalcontributions to our PRC subsidiaries,which could materially andadversely affect our liquidity and our ability to fund and expand ourbusiness.See“Risk Factors Risks Relating to Doing Business in thePRC PRC regulations of loans and direct investment by offshore h
113、oldingcompanies to PRC entities may delay or prevent us from using the proceedsof our offshore financing to make loans or additional capitalcontributions to our PRC subsidiaries,which could materially andadversely affect our liquidity and our ability to fund and expand ourbusiness”on page 35.3Table
114、of Contents If we are classified as a PRC resident enterprise for PRC income taxpurposes,such classification could result in unfavorable tax consequencesto us and our non-PRC shareholders.See“Risk Factors Risks Relatingto Doing Business in the PRC If we are classified as a PRC residententerprise for
115、 PRC income tax purposes,such classification could resultin unfavorable tax consequences to us and our non-PRC shareholders”onpage 40.Risks Relating to Our Class A Ordinary Shares and This Offering There is been no public market for our Class A ordinary shares prior tothis offering,and you may not b
116、e able to resell our Class A ordinaryshares at or above the price you paid,or at all.The trading price of our Class A ordinary shares is likely to be volatile,which could result in substantial losses to investors.Substantial future sales or perceived potential sales of our Class Aordinary shares in
117、the public market could cause the price of our Class Aordinary shares to decline.If we fail to establish and maintain proper internal financial reportingcontrols,our ability to produce accurate financial statements or complywith applicable regulations could be impaired.As a company incorporated in t
118、he Cayman Islands,we are permitted to adoptcertain home country practices in relation to corporate governance mattersthat differ significantly from the Nasdaq listing standards.Thesepractices may afford less protection to shareholders than they would enjoyif we complied fully with corporate governan
119、ce listing standards.We also face other challenges,risks and uncertainties that may materiallyadversely affect the operating subsidiaries business,and our financialcondition,results of operations and prospects.You should consider the risksdiscussed in“Risk Factors”and elsewhere in this prospectus be
120、fore investing inour Class A ordinary shares.We face risks arising from the legal system in China,including risks anduncertainties regarding the enforcement of laws and that rules and regulations inChina can change quickly with little advance notice.In addition,the Chinesegovernment may intervene or
121、 influence the operating subsidiaries operations atany time,or may exert more control over offerings conducted overseas and/orforeign investment in China based issuers,which could result in a material changein the operating subsidiaries operations and/or the value of our Class A ordinaryshares.Any a
122、ctions by the Chinese government to exert more oversight and controlover offerings that are conducted overseas and/or foreign investment in China-basedissuers could significantly limit or complete hinder our ability to offer orcontinue to offer our securities to investors and cause the value of such
123、securities to significantly decline or be worthless.“Risk Factors RisksRelating to Doing Business in the PRC The Chinese government exerts substantialinfluence over the manner in which the PRC subsidiaries must conduct their businessactivities and may intervene or influence their operations at any t
124、ime,which couldresult in a material change in their operations and the value of our ordinaryshares.”We are and our subsidiaries are required to obtain the following requisitelicenses and approvals for our operations in China:Company Name Scope of Business Operation GovernmentalPermission Required St
125、atus (i)production,processingand sales of laserprinters and laser tonercartridges,toner,inkjetprinters and inkcartridges,inks,computer peripherals andother printer consumablesand accessories for theabove products;(ii)electronic productresearch and development;(iii)electronic producttechnology develo
126、pment;and(iv)printer and consumablesoftware design anddevelopment Not required N/A4Table of ContentsCompany Name Scope of Business Operation GovernmentalPermission Required StatusJiangxi Yibo Filling,processing andsales of recycled laserprinter toner cartridges andinkjet cartridges Pollution Dischar
127、ge Permission Obtained Import and export of goodsand technology registrationcertificate of thecustoms declarationunit of the PRC CompletedZhongshan Yantuo(i)Sales service ofprinter consumables andrelated accessories;(ii)technicalconsultation;(iii)commodity circulationinformationconsultation;and(iv)m
128、arketing planning Not required N/AImport and export of goodsand technology registrationcertificate of thecustoms declarationunit of the PRC CompletedJiangxi Leibotai Procurement and sales ofprinter toner cartridges andtheir materials andaccessories Not required N/AImport and export of goodsand techn
129、ology registrationcertificate of thecustoms declarationunit of the PRC CompletedShenzhenDinghong This subsidiary has nobusiness operations.Not required N/AWe believe that each of our PRC subsidiaries has all requisite permissions orapprovals to conduct its business in the manner presently conducted
130、and describedin this prospectus.Other than the licenses and approvals disclosed in thisprospectus that our PRC subsidiaries have obtained for a domestic company in Chinato engage in the similar businesses,as of the date of this prospectus,neither wenor any of our PRC subsidiaries is required to obta
131、in any permission from any PRCauthorities,including,but not limited to,the Cyberspace Administration of China,to conduct its operations.If we do not receive or maintain the approvals,or weinadvertently conclude that such approvals are not required,or applicable laws,regulations,or interpretations ch
132、ange such that we are required to obtain approvalin the future,we may be subject to an investigation by competent regulators,finesor penalties,ordered to suspend our relevant business and rectify,prohibited fromengaging in relevant business,and these risks could result in a material adversechange in
133、 our operations,significantly limit or completely hinder our ability tooffer or continue to offer securities to investors,or cause such securities tosignificantly decline in value or become worthless.On February 17,2023,the China Securities Regulatory Commission(the“CSRC”)released Trial Administrati
134、ve Measures of Overseas Securities Offering and Listingby Domestic Companies(hereinafter referred to as the“Administration Measures”,which came into force on March 31,2023),five supporting guidelines,as well asNotice on Filing Management Arrangements for Overseas Listings of DomesticEnterprises(here
135、inafter referred to as the“Notice”).According to theAdministration Measures and the Notice,overseas offering and listing refers tooverseas offerings by domestic companies of equity shares,depository receipts,convertible corporate bonds,or other equity-like securities,and overseas listingof the secur
136、ities for trading.Overseas offering and listing,which is specificallydivided into direct overseas offerings and listing and indirect overseas offeringsand listing,shall be filed in accordance with the Administration Measures.According to the Notice,the domestic companies that have submitted validapp
137、lications for overseas issuance and listing but have not been approved byoverseas regulatory authorities or overseas stock exchanges at the date ofeffectiveness of the Administration Measures can reasonably arrange the timing offiling applications and should complete the filing before the overseas i
138、ssuance andlisting.Our submission of a listing application will fall into the scope ofoverseas offering and listing provisions in the Administration Measures.After theeffectiveness of the Administration Measures,we will be required to file with theCSRC in accordance with the Administration Measures
139、and complete the filing beforethe overseas issuance and listing.If we do not comply with the filing procedures5Table of Contentsaccording to the Administration Measures or if our filing materials contain falserecords,misleading statements or material omissions,the CSRC may order rectifysuch non-comp
140、liance,issue a warning,and impose a fine of not less than RMB1million and not more than RMB10 million.These risks could completely hinder ourability to offer or continue to offer securities to investors,or cause suchsecurities to significantly decline in value or become worthless.For details on the
141、above-mentioned matters,see“Risk Factors RisksRelating to Doing Business in the PRC The Chinese government exerts substantialinfluence over the manner in which the PRC subsidiaries must conduct their businessactivities and may intervene or influence their operations at any time,which couldresult in
142、a material change in their operations and the value of our ordinaryshares.”In addition,trading in our securities may be prohibited under the HoldingForeign Companies Accountable Act,or the HFCAA,if the U.S.Public CompanyAccounting Oversight Board,or the PCAOB,determines that it cannot inspect thewor
143、kpapers prepared by our auditor,and that as a result an exchange may determineto delist our securities.On June 22,2021,the U.S.Senate passed the AcceleratingHolding Foreign Companies Accountable Act and on December 29,2022,theConsolidated Appropriations Act was signed into law by President Biden,whi
144、chcontained,among other things,an identical provision to Accelerating HoldingForeign Companies Accountable Act and reduced the number of consecutive non-inspection years required for triggering the prohibitions under the Holding ForeignCompanies Accountable Act from three years to two.On December 16
145、,2021,the PCAOBissued a report on its determination that it is unable to inspect or investigatecompletely PCAOB-registered public accounting firms headquartered in China and inHong Kong because of positions taken by PRC and Hong Kong authorities in thosejurisdictions.On December 15,2022,the PCAOB Bo
146、ard determined that the PCAOB wasable to secure complete access to inspect and investigate registered publicaccounting firms headquartered in mainland China and Hong Kong and voted to vacateits previous determinations to the contrary.However,should PRC authoritiesobstruct or otherwise fail to facili
147、tate the PCAOBs access in the future,thePCAOB Board will consider the need to issue a new determination.Our securities maybe delisted or prohibited from trading if the PCAOB determines that it cannotinspect or investigate completely our auditor under the HFCAA.Our auditor,the independent registered
148、public accounting firm that issues theaudit report included elsewhere in this prospectus,as an auditor of companies thatare traded publicly in the U.S.and a firm registered with the PCAOB,is subject tolaws in the U.S.,pursuant to which the PCAOB conducts regular inspections toassess its compliance w
149、ith the applicable professional standards.Our auditor isheadquartered in Sugar Land,Texas,and has been inspected by the PCAOB on aregular basis with the last inspection in September 2022.Additionally,our auditoris not subject to the determination announced by the PCAOB on December 16,2021.See Risk F
150、actors Risks Relating to Our Business and Industry Recent jointstatement by the SEC and the PCAOB proposed rule changes submitted by Nasdaq,andthe Holding Foreign Companies Accountable Act passed by the US Senate,all call foradditional and more stringent criteria to be applied to emerging market com
151、paniesupon assessing the qualification of their auditors,especially the non-U.S.auditors who are not inspected by the PCAOB.These developments could adduncertainties to our offering.”Cash Transfer and Dividend DistributionsWe conduct our business operations in China through our PRC subsidiaries.Ifne
152、eded,our Cayman Islands holding company can transfer cash to its PRCsubsidiaries through loans and/or capital contributions,and our PRC subsidiariescan transfer cash to our Cayman Islands holding company through loans and/orissuing dividends or other distributions.Cash flows have occurred between ou
153、rCayman Islands holding company and our subsidiaries.Our Cayman Islands holdingcompany,which was incorporated in August 2019,received cash in the amount ofUS$27,040,US$5.5 million,US$1.3 million,US$0.5 million and US$0.7 million forthe years ended December 31,2019,2020,2021 and 2022,and from January
154、 1,2023 tothe date of this prospectus,respectively,from our subsidiaries for operatingactivities.Our subsidiaries received cash in the amount of US$13.8 million,US$4.7million,US$0.8 million,nil and nil for the years ended December 31,2019,2020,2021 and 2022,and from January 1,2023 to the date of thi
155、s prospectus,respectively,from our Cayman Islands holding company for operating activities.Todate,no cash flows have occurred between our Cayman Islands holding company andour PRC subsidiaries.To date,our Cayman Islands holding company has received cashin an aggregate amount of US$2.6 million from o
156、ur in Hong Kong for operatingactivities,and our subsidiaries in Hong Kong has received cash from our CaymanIslands holding company in an aggregate amount of US$14.6 million for operatingactivities.Such cash transactions for the years ended December 31,2021 and 2022were included in net cash generated
157、 from operating activities together with ourCayman Islands holding companys other operational cash transactions in itsfinancial statements.See“Note 19 Condensed Financial Information of the ParentCompany Condensed statements of cash flows”in our financial statementsappearing elsewhere in this prospe
158、ctus.6Table of ContentsCurrent PRC regulations permit our PRC subsidiaries to pay dividends to theirrespective shareholders only out of their accumulated profits,if any,determinedin accordance with PRC accounting standards and regulations.A PRC subsidiary ofour is required to set aside 10%of its aft
159、er-tax profits to fund a statutoryreserve until such reserve reaches 50%of its registered capital if it distributesits after-tax profits for the current financial year.For details,see“RiskFactors Risk Relating to Doing Business in the PRC We may rely on dividendsand other distributions on equity pai
160、d by our PRC subsidiaries to fund any cash andfinancing requirements we may have,and any limitation on the ability of our PRCsubsidiaries to make payments to us and any tax we are required to pay could have amaterial and adverse effect on our ability to conduct our business.”In addition,cash transfe
161、rs from our Cayman Islands holding company are subject to applicablePRC laws and regulations on loans and direct investment.For details,see“RiskFactors Risk Relating to Doing Business in the PRC PRC regulations of loansand direct investment by offshore holding companies to PRC entities may delay orp
162、revent us from using the proceeds of our offshore financing to make loans oradditional capital contributions to our PRC subsidiaries,which could materiallyand adversely affect our liquidity and our ability to fund and expand ourbusiness.”In addition,the PRC government imposes controls on the convert
163、ibility of theRenminbi into foreign currencies and,in certain cases,the remittance of currencyout of China.Although we receive a significant portion of our revenues in U.S.dollars,under our current corporate structure,we may still rely on dividendpayments from our PRC subsidiaries to fund any additi
164、onal cash and financingrequirements we may have.Under existing PRC foreign exchange regulations,paymentsof current account items,including profit distributions,interest payments andtrade and service-related foreign exchange transactions,can be made in foreigncurrencies without prior approval of Stat
165、e Administration of Foreign Exchange,orSAFE,by complying with certain procedural requirements.However,approval from orregistration with appropriate government authorities is required where Renminbi isto be converted into foreign currency and remitted out of China to pay capitalexpenses such as the r
166、epayment of loans denominated in foreign currencies.As aresult,we need to obtain SAFE approval to use cash generated from the operationsof our PRC subsidiaries to pay off their respective debt in a currency other thanRenminbi owed to entities outside China,or to make other capital expenditurepayment
167、s outside China in a currency other than Renminbi.If the foreign exchangecontrol system prevents us from obtaining sufficient foreign currencies to satisfyour foreign currency demands,we may not be able to pay dividends in foreigncurrencies to our shareholders,including holders of our Class A ordina
168、ry shares.See“Risk Factors Risk Relating to Doing Business in the PRC Restrictions onthe remittance of Renminbi into and out of China and governmental control ofcurrency conversion may limit our ability to pay dividends and other obligations,and affect the value of your investment.”Our Cayman Island
169、s holding company has not declared or paid dividends or madedistributions to its subsidiaries or to investors in the past,nor any dividends ordistributions were made by a subsidiary to the Cayman Islands holding company.Ourboard of directors has complete discretion on whether to distribute dividends
170、,subject to applicable laws.We do not have any current plan to declare or pay anycash dividends on our Class A ordinary shares in the foreseeable future after thisoffering.See“Risk Factors Risks Relating to Our Class A Ordinary Shares andThis Offering We currently do not expect to pay dividends in t
171、he foreseeablefuture after this offering and you must rely on price appreciation of our Class Aordinary shares for return on your investment.”Subject to certain contractual,legal and regulatory restrictions,cash and capital contributions may betransferred among our Cayman Islands holding company and
172、 our subsidiaries.U.S.investors will not be subject to Cayman Islands,PRC,or Hong Kong taxation ondividend distributions,and no withholding will be required on the payment ofdividends or distributions to them,while they may be subject to U.S.federalincome tax for receiving dividends,to the extent th
173、at the distribution is paid outof our current or accumulated earnings and profits,as determined under U.S.federal income tax principles.See“Taxation.”Cash transfers from our Cayman Islands holding company are subject toapplicable PRC laws and regulations on loans and direct investment.Forrestriction
174、s and limitations on our ability to distribute earnings to our CaymanIslands holding company and the investors,see“Risk Factors Risks Relating toDoing Business in the PRC PRC regulations of loans and direct investment byoffshore holding companies to PRC entities may delay or prevent us from using th
175、eproceeds of our offshore financing to make loans or additional capitalcontributions to our PRC subsidiaries,which could materially and adversely affectour liquidity and our ability to fund and expand our business”and“Use ofProceeds.”In addition,current PRC regulations permit our PRC subsidiaries to
176、 paydividends to their respective shareholders only out of their accumulated profits,if any,determined in accordance with PRC accounting standards and regulations.Fordetails,see“Risk Factors Risks Relating to Doing Business in the PRC We mayrely on dividends and other distributions on equity paid by
177、 our PRC subsidiaries tofund any cash and financing requirements we may have,and any limitation on theability of our PRC subsidiary to make payments to us and any tax we are required topay could have a material and adverse effect on our ability to conduct ourbusiness.”7Table of ContentsCorporate His
178、tory and StructureWe commenced our operations in January 2011 as a toner cartridge manufacturerthrough Jiangxi Yibo E-tech Co.,Ltd.,or Jiangxi Yibo,a limited liability companyestablished under the laws of the PRC.In March 2011,Aster Graphics,Inc.,orAster US,was incorporated in the State of Californi
179、a.In July 2011,AsterTechnology Holland B.V.,was incorporated in the Netherlands as a limited liabilitycompany.On August 5,2019,Plant Image International Limited was incorporatedunder the laws of the Cayman Islands as an exempted company with limited liability.As a result of reorganization,Planet Ima
180、ge International Limited became theultimate holding company of our Company.The following diagram illustrates our corporate structure,including oursignificant subsidiaries,as of the date of this prospectus.For more detail on ourcorporate history,please refer to“Corporate History and Structure.”Note:T
181、hrough Aster Online Company Limited,we also directly own 100%of equityinterests of 11 limited liability companies incorporated in Hong Kong in March2020,namely Peony Trade Co.,Limited,White Poplar Co.,Limited,Joyful ProductTrade Co.,Limited,Grand Future Trade Co.,Limited,Oriental Poetry Co.,Limited,
182、Prosperity Product Trade Co.,Limited,Atlantic Marketing Co.,Limited,Pigeon KingCo.,Limited,Dragon Product Trade Co.,Limited,Plum Blossom Co.,Limited and BlueOcean Product Trade Co.,Limited.These above-mentioned 11 limited liability companies have no operations butinstead purely serve as holding comp
183、anies for the operating companies we set up invarious jurisdictions for our online shops,including seven operating companies inHong Kong,one in the Netherlands,and three in California,United States.These 11operating companies include Your Office Supplies Company Limited,Iprint EnterpriseLimited,Amst
184、ech Limited and Aztech Enterprise Limited,formed in Hong Kong in2016;Supplies4u Limited and Access Supplies Limited,formed in Hong Kong in 2017;and Dellon Technology Company Limited(formerly known as Canon H-Pixel BuildingBrother Enterprise Limited),formed in Hong Kong in 2018;Proimage B.V formed in
185、the Netherlands in 2014;Eco Imaging Inc.,Revol Trading Inc.and InterconInternational Corp.,incorporated in the State of California in 2012.Each of these11 operating companies is directly wholly-owned by one of the above-mentionedholding companies,is operated independently,maintains separate accounts
186、,andfiles taxes in accordance with applicable laws and regulations in each8Table of Contentsrelevant jurisdiction.The financial positions and results of operations of theabove-mentioned 11 holding companies and 11 operating companies have beenconsolidated into the accounts of Aster Online Company Li
187、mited and ultimatelyreflected in our Companys consolidated financial statements in accordance withU.S.GAAP.Currently,we directly hold 100%equity interests in our subsidiaries,and wedo not currently use a VIE structure.Corporate InformationOur principal executive offices are located at No.756 Guangfu
188、 Road,Hi-techDevelopment Zone,Xinyu City,Jiangxi Province,Peoples Republic of China.Ourtelephone number at this address is+86 .Our registered office in theCayman Islands is located at Conyers Trust Company(Cayman)Limited,CricketSquare,Hutchins Drive,P.O.Box 2681,Grand Cayman KY1-1111,Cay
189、man Islands,andthe phone number of our registered office is+1-345-949-1040.Investors should submit any inquiries to the address and telephone number ofour principal executive offices.Our corporate website is .Theinformation contained on our websites is not a part of this prospectus.Our agentfor serv
190、ice of process in the United States is located at 12000 Magnolia Ave Suite101,Riverside,CA 92503.Implications of Being an Emerging Growth CompanyAs a company with less than US$1.235 billion in revenue during our last fiscalyear,we qualify as an“emerging growth company”as defined in the Jumpstart Our
191、Business Startups Act of 2012,as amended,or the JOBS Act.As long as we remain anemerging growth company,we may rely on exemptions from some of the reportingrequirements applicable to public companies that are not emerging growth companies.In particular,as an emerging growth company,we:may present on
192、ly two years of audited financial statements and only twoyears of related Managements Discussion and Analysis of FinancialCondition and Results of Operations,or“MD&A;”are not required to provide a detailed narrative disclosure discussing ourcompensation principles,objectives and elements and analyzi
193、ng how thoseelements fit with our principles and objectives,which is commonlyreferred to as“compensation discussion and analysis”;are not required to obtain an attestation and report from our auditors onour managements assessment of our internal control over financialreporting pursuant to the Sarban
194、es-Oxley Act of 2002;are not required to obtain a non-binding advisory vote from ourshareholders 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 disc
195、losure provisionsrequiring a pay-for-performance graph and chief executive officer payratio disclosure;are eligible to claim longer phase-in periods for the adoption of new orrevised financial accounting standards under 107 of the JOBS Act;and will not be required to conduct an evaluation of our int
196、ernal control overfinancial reporting until our second annual report on Form 20-F followingthe effectiveness of our initial public offering.We intend to take advantage of all of these reduced reporting requirements andexemptions,including the longer phase-in periods for the adoption of new orrevised
197、 financial accounting standards under 107 of the JOBS Act.Our election touse the phase-in periods may make it difficult to compare our financial statementsto those of non-emerging growth companies and other emerging growth companies thathave opted out of the phase-in periods under 107 of the JOBS Ac
198、t.Under the JOBS Act,we may take advantage of the above-described reducedreporting requirements and exemptions until we no longer meet the definition of anemerging growth company.We will remain an emerging growth company until theearliest of(a)the last day of the fiscal year during which we have tot
199、al annualgross revenues of at least US$1.235 billion;(b)the last day of our fiscal yearfollowing the fifth anniversary of the completion of this offering;(c)the date onwhich we have,during the preceding three-year period,issued more than US$1.0billion in9Table of Contentsnon-convertible debt;or(d)th
200、e date on which we are deemed to be a“largeaccelerated filer”under the United States Securities Exchange Act of 1934,asamended,or the Exchange Act,which would occur if the market value of our Class Aordinary shares that are held by non-affiliates exceeds US$700 million as of thelast business day of
201、our most recently completed second fiscal quarter.Once wecease to be an emerging growth company,we will not be entitled to the exemptionsprovided in the JOBS Act discussed above.Foreign Private Issuer StatusWe are a foreign private issuer within the meaning of the rules under theSecurities Exchange
202、Act of 1934,as amended(the“Exchange Act”).As such,we areexempt from certain provisions applicable to United States domestic publiccompanies.For example:we are not required to provide as many Exchange Act reports,or asfrequently,as a domestic public company;for interim reporting,we are permitted to c
203、omply solely with our homecountry requirements,which are less rigorous than the rules that apply todomestic public companies;we are not required to provide the same level of disclosure on certainissues,such as executive compensation;we are exempt from provisions of Regulation FD aimed at preventing
204、issuersfrom making selective disclosures of material information;we are not required to comply with the sections of the Exchange Actregulating the solicitation of proxies,consents,or authorizations inrespect of a security registered under the Exchange Act;and we are not required to comply with Secti
205、on 16 of the Exchange Actrequiring insiders to file public reports of their share ownership andtrading activities and establishing insider liability for profits realizedfrom any“short-swing”trading transaction.Implications of Being a Controlled CompanyUpon the completion of this offering,Mr.Weidong
206、Gu,our founder and chairmanof the board of directors will continue to beneficially own%of our totalissued and outstanding Class A ordinary shares and 100%of our total issued andoutstanding Class B ordinary shares,representing%of our total votingpower,assuming the option to purchase additional Class
207、A ordinary shares isexercised by the underwriter in full.As a result,we will be a“controlledcompany”as defined under the Nasdaq Stock Market Rules because Mr.Weidong Guwill hold more than 50%of the voting power for the election of directors.As a“controlled company,”we are permitted to elect not to c
208、omply with certaincorporate governance requirements.If we rely on these exemptions,you will nothave the same protection afforded to shareholders of companies that are subject tothese corporate governance requirements.Conventions that Apply to this ProspectusUnless we indicate otherwise,references in
209、 this prospectus to:“AMC”are to Atlantic Marketing Co.,Limited,a company incorporated inHong Kong as a limited liability company on March 5,2020 and anindirectly wholly-owned subsidiary of our Company;“AML”are to Amstech Limited,a company incorporated in Hong Kong as alimited liability company on Ma
210、y 25,2016 and an indirectly wholly-ownedsubsidiary of our Company;“ASL”are to Access Supplies Limited,a company incorporated in HongKong as a limited liability company on March 31,2017 and an indirectlywholly-owned subsidiary of our Company;“Aster BVI”are to Aster Graphics Company Limited,a companyi
211、ncorporated in the BVI as a limited liability company on February 25,2011 and a directly wholly-owned subsidiary of our Company;“Aster Excellent”are to Aster Excellent Limited,a company incorporatedin the BVI as a limited liability company on August 2,2019;10Table of Contents “Aster France”are to As
212、ter Technology France,a company incorporated inFrance as a simplified joint-stock company on April 3,2019 and anindirectly wholly-owned subsidiary of our Company;“Aster Germany”are to Aster Supplies GmbH,a company incorporated inGermany as a limited liability company on September 25,2018 and anindir
213、ectly wholly-owned subsidiary of our Company;“Aster HK”are to Aster Graphics Company Limited,formerly known asAster Industry Company Limited,a company incorporated in Hong Kong aslimited liability company on August 16,2019 and an indirectly wholly-owned subsidiary of our Company;“Aster Industrial”ar
214、e to Aster Industrial Limited,a companyincorporated in the BVI as a limited liability company on August 8,2019and a directly wholly-owned subsidiary of our Company;“Aster Italy”are to Aster Technology Italia S.R.L.,a companyincorporated in Italy as a limited liability company on May 7,2018 and anind
215、irectly wholly-owned subsidiary of our Company;“Aster NL”are to Aster Technology Holland B.V.,a company incorporatedin the Netherlands as a limited liability company on July 8,2011 and anindirectly wholly-owned subsidiary of our Company;“Aster Online”are to Aster Online Company Limited,a companyinco
216、rporated in Hong Kong as a limited liability company on August 15,2019 and an indirectly wholly-owned subsidiary of our Company;“Aster UK”are to Aster Technology UK Ltd,a company incorporated in theUnited Kingdom as a limited liability company on January 21,2019 and anindirectly wholly-owned subsidi
217、ary of our Company;“Aster US”are to Aster Graphics,Inc.,a company incorporated in theState of California,the United States as a limited liability company onMarch 1,2011 and an indirectly wholly-owned subsidiary of our Company;“AZEL”are to Aztech Enterprise Limited,a company incorporated in HongKong
218、as a limited liability company on May 25,2016 and an indirectlywholly owned subsidiary of our Company;“BOPTC”are to Blue Ocean Product Trade Co.,Limited,a companyincorporated in Hong Kong as a limited liability company on March 9,2020and an indirectly wholly-owned subsidiary of our Company;“BVI”are
219、to the British Virgin Islands;“B2B”are to a form of commercial transaction between one businessentity to another business entity;“B2C”are to a form of commercial transaction between one businessentity to end-consumers;“cartridge chips”are to PCBA with firmware installed,the principalfunctions of whi
220、ch include facilitating communications between a cartridgeand the printer on which it is installed and monitoring cartridge usage;China”and the“PRC”are to the Peoples Republic of China,excluding,for the purposes of this prospectus only,Taiwan;“Class A ordinary shares”are to our Class A ordinary shar
221、es,par valueHK$0.0001 per share;“Class B ordinary shares”are to our Class B ordinary shares,par valueHK$0.0001 per share;“Companies Act”are to the Companies Act(2022 Revision)of the CaymanIslands,as amended and revised;“compatible toner cartridges”are to toner cartridges designed andmanufactured by
222、third-party toner cartridge manufacturers,instead ofprinter companies,which are compatible for a single or multiple original-brand printer models;“DDP”are to“delivered duty paid,”meaning that the seller assumesall of the responsibility,risks and costs associated with transportinggoods until the buye
223、r received and transfers them at the destination port;“doctor blade”are to a mechanical device used to remove excess tonerfrom a printer cylinder;“DPTC”are to Dragon Product Trade Co.,Ltd.,a company incorporated inHong Kong as a limited liability company on March 9,2020 and anindirectly wholly-owned
224、 subsidiary of our Company;11Table of Contents DTCL”are to Dellon Technology Company Limited,a company incorporated inHon g Kong as a limited liability company on February 7,2018 and anindirectly subsidiary of our Company;“drop ship”are to a supply chain management method in which the dealerdoes not
225、 keep goods in stock but instead transfers its customers ordersand shipment details to either the manufacturer,another dealer,or awholesaler,who then ships the goods directly to the customer;“EDI”are to electronic data interchange,which is the electronicinterchange of business information using a st
226、andardized format.It allowsone company to send information to another company electronically;“EII”are to Eco Imaging Inc.,a company incorporated in the state ofCalifornia,the United states as a limited liability company on February23,2012 and an indirectly wholly-owned subsidiary of our Company;“ERP
227、”are to enterprise resource planning,which is the integratedmanagement of main business processes,often in real time and mediated bysoftware and technology;“FOB”are to free on board,or delivery of goods on board the vessel atthe named port of origin(loading)at the sellers expense.The buyer isrespons
228、ible for main carriage/freight,cargo insurance and other costs andrisks;“HK$”and“Hong Kong dollars”are to the legal currency of Hong Kong;“Hong Kong”or“HK”are to the Hong Kong Special Administrative Regionof the PRC;“IEL”are to Iprint Enterprise Limited,a company incorporated in HongKong as a limite
229、d liability company on June 14,2016 and an indirectlywholly-owned subsidiary of our Company;“IIC”are to Intercon International Corp.,a company incorporate in thestate of California,the United States as a limited liability company onNovemebr 14,2012 and an indirectly wholly-owned subsidiary of ourCom
230、pany;“ISO”are to a series of quality management and quality assurancestandards published by International Organization for standardization,anon-government organization based in Geneva,Switzerland,for assessingthe quality systems of business organizations;“IT”are to information technology;“Jiangxi Le
231、ibotai”are to“Jiangxi Leibotai E-Tech Co.,Ltd.,a limitedliability company established in the PRC on June 26,2012 and anindirectly wholly-owned subsidiary of our Company;“Jiangxi Yibo”are to Jiangxi Yibo E-Tech Co.,Ltd.,a limited liabilitycompany established in the PRC on January 12,2011 and an indir
232、ectlywholly-owned subsidiary of our Company;“JPTC”are to Joyful Product Trade Co.,Limited,a company incorporatedin Hong Kong as a limited liability company on March 9,2020 and anindirectly wholly-owned subsidiary of our Company;“ODM”are to original design manufacturing,where a manufacturer designsan
233、d manufactures a product with its own technologies and specifications,but such manufacturer is still required to obtain brand authorization andbrand name label for such products;“OPC drums”are to aluminum cylinders coated with a layer of non-toxic,organic-photo conductive material,a key component in
234、 toner cartridge;“OPCL”are to Oriental Poetry Co.,Limited,a company incorporated inHong Kong as a limited liability company on March 5,2020 and anindirectly wholly-owned subsidiary of our Company;“original-brand printer companies”are to original-brand printercompanies design and sell printers and co
235、rresponding ink/toner cartridges;“original-brand toner cartridges”are to toner cartridge designed andsold by original-brand printer companies for specific printer model;12Table of Contents “page yield”are to a quantitative indicator that measures the productlife of toner cartridge,which usually refe
236、rs to a maximum page countassuming 5%toner coverage rat on A4 sized page;“PBC”are to Plum Blossom Co.,Limited,a company incorporated in HongKong as a limited liability company on March 9,2020 and an indirectlywholly-owned subsidiary of our Company;“PCBA”are to printed circuit board assembly,a chip s
237、et with integratedcircuit,printed circuit board and other components assembled with nofirmware installed;“primary charge roller”are to a device that applies a uniform,high-voltage negative charge on the OPC drum to level out any remaining chargeafter one printing image and set the OPC drum ready for
238、 new printer image;“private labeling services”are to special requested services that themanufacturers will design labels that contain logo,name,order number andcontact information of customers purchasing our white-label products andstick to the packaging boxes;“Peony Trade Co.,Ltd.,a company incorpo
239、rated in Hong Kong as a limitedliability company on March 9,2020 and an indirectly wholly-ownedsubsidiary of our Company;“remanufactured toner cartridges”are to toner cartridges producedthrough refurbishing empty cartridges,refilling the toner and replacingany broken parts;“RMB”and“Renminbi”are to t
240、he legal currency of China;“search engine optimization”are to the process of increasing thequality and quantity of website traffic by increasing the visibility of awebsite or web page to users of a web search engine;“shares,”“Shares,”or“ordinary shares”are to the ordinary sharesof the Company,par va
241、lue HK$0.0001 per share,which include our Class Aordinary shares and Class B ordinary shares,par value HK$0.0001 pershare;“sponsored advertisements”are to a cost-per-click advertising solutionto reach customers who are interested in certain products with keyword,product and interest targeting in ord
242、er to help sellers on online sellingplatforms to grow customers and boost sales;“operating subsidiaries”are to those subsidiaries of Planet ImageInternational Limited that have active business operations;“toner cartridges”are to consumables for use by laser printers,whichare composed of chips,toner,
243、rollers and drums;“toner powder/toner supply”are to imaging material used by laserprinters;usually categorized into black toner powder and color tonerpowder;“UK”are to the United Kingdom,made up of England,Scotland,Wales andNorthern Ireland;“U.S.”,“US”or“United States”are to United States of America
244、,itsterritories,its possessions and all areas subject to its jurisdiction;“US$,”“$”and“U.S.dollars”are to the legal currency of the UnitedStates;“we,”“us,”“our company,”“our”or“Planet Image”are to PlanetImage International Limited,our Cayman Islands holding company,and itspredecessor entity and its
245、subsidiaries,consolidated affiliated entitiesas the context requires;“wipe blade”are to a mechanical device used to scrape any exceed toneroff the surface of the toner cartridge,the printer paper and transferbelt;“World Intellectual Property Organization”are to one of the 15specialized agencies of t
246、he United Nations created in 1967 to encouragecreative activity,to promote the protection of intellectual propertythroughout the world;13Table of Contents “WPC”are to White Poplar Co.,Limited,a company incorporated in HongKong as a limited liability company on March 9,2020 and an indirectlywholly-ow
247、ned subsidiary of our Company;“YOSC”are to Your Office Supplies Company Limited,a companyincorporated in Hong Kong as a limited liability company on June 23,2016and an indirectly wholly-owned subsidiary of our Company;and “Zhongshan Yantuo”are to Zhongshan Yantuo Printing Device Co.,Ltd.,alimited li
248、ability company established in the PRC on April 8,2013 and anindirectly wholly-owned subsidiary of our Company.Unless the context indicates otherwise,all information in this prospectusassumes no exercise by the underwriter of its options to purchase additional ClassA ordinary shares.We have made rou
249、nding adjustments to reach some of the figures included in thisprospectus.Consequently,numerical figures shown as totals in some tables may notbe arithmetic aggregations of the figures that precede them.Unless otherwise noted,all translations from Renminbi to U.S.dollars and fromU.S.dollars to Renmi
250、nbi in this prospectus are made as follows:December 31,2021 December 31,2022 Year-end spot rate Average rate Year-end spot rate Average rateUS$against RMB US$1=RMB6.3816 US$1=RMB6.4558 US$1=RMB6.9493 US$1=RMB6.7069US$against EUR US$1=EUR0.8850 US$1=EUR0.8454 US$1=EUR0.9346 US$1=EUR0.9456US$against G
251、BP US$1=GBP0.7407 US$1=GBP0.7260 US$1=GBP0.8264 US$1=GBP0.8070We make no representation that any Renminbi or U.S.dollar amounts could havebeen,or could be,converted into U.S.dollars or Renminbi,as the case may be,atany particular rate,or at all.On April 7,2023,the noon buying rate for Renminbiwas RM
252、B6.875 to US$1.00.This prospectus contains information derived from various public sources andcertain information from an industry report commissioned by us and prepared byChina Insights Consultancy Limited,or CIC,a third-party industry research firm,to provide information regarding our industry and
253、 market position.Such informationinvolves a number of assumptions and limitations,and you are cautioned not to giveundue weight to these estimates.We have not independently verified the accuracy orcompleteness of the data contained in these industry publications and reports.Theindustry in which we o
254、perate is subject to a high degree of uncertainty and riskdue to variety of factors,including those described in the“Risk Factors”section.These and other factors could cause results to differ materially fromthose expressed in these publications and reports.14Table of ContentsTHE OFFERINGOffering Pri
255、ce We currently estimate that the initial publicoffering price will be between US$and US$per Class A ordinary share.Class A Ordinary Shares offeredby us Class A ordinary shares(or Class Aordinary shares if the underwriter exercises infull the over-allotment option).Ordinary Shares outstanding priort
256、o the completion of thisoffering 52,631,600 ordinary shares(including 26,315,800Class A ordinary shares and 26,315,800 Class Bordinary shares)Class A Ordinary Sharesoutstanding immediately afterthis offering Class A ordinary shares excluding Class A ordinary shares underlying theunderwriter warrants
257、(or Class A ordinaryshares if the underwriter exercises in full theover-allotment option)and 26,315,800 Class Bordinary shares.Over-Allotment Option We have granted to the underwriter an option,exercisable within 45 days from the date of thisprospectus,to purchase up to an aggregate of 15%additional
258、 Class A ordinary shares at the initialpublic offering price,less underwritingdiscounts.Underwriter Warrants We have agreed to sell to the underwriterwarrants(the“Underwriter Warrants”)topurchase up to a total of Class A ordinaryshares(equal to 3%of the aggregate number ofClass A ordinary shares sol
259、d in the offering,including shares issued pursuant to the exerciseof the over-allotment option)at a price equal to125%of the price of our Class A ordinary sharesoffered hereby.The underwriter will receiveUnderwriter Warrants for the portion of theoffering pursuant to the over-allotment option.Use of
260、 Proceeds We estimate that we will receive net proceeds ofapproximately US$million(or US$million if the underwriter exercises its optionsto purchase additional Class A ordinary shares infull)from this offering,assuming an initialpublic offering price of US$per Class Aordinary share,which is the mid-
261、point of theestimated range of the initial public offeringprice,and assuming that investors introduced bythe underwriter will purchase 100%of the sharesoffered by this prospectus,after deductingestimated underwriting discounts,non-accountableexpense allowance and estimated offering expensespayable b
262、y us.We anticipate using the net proceeds of thisoffering primarily for(i)constructing acomprehensive,multi-layer production center,(ii)research and development,(iii)updating thesoftware systems of our own websites,(iv)setting up additional warehouses in overseaslocations,and(v)general corporate pur
263、poses.See“Use of Proceeds”for more information.Lock-up We,our directors and executive officers,and ourexisting beneficial owners of 5%or more of ouroutstanding Class A ordinary shares have agreedwith the underwriter,subject to certainexceptions,not to sell,transfer or otherwisedispose of any Class A
264、 ordinary shares or similarsecurities or any securities convertible into orexchangeable or exercisable for our Class Aordinary shares,for a period of six(6)monthsafter the date of this prospectus.See“SharesEligible for Future Sale”and“Underwriting.”15Table of ContentsListing We have applied to have
265、our Class A ordinaryshares listed on the Nasdaq Stock Market underthe symbol“YIBO.”At this time,the NasdaqStock Market has not yet approved our applicationto list our Class A ordinary shares.The closingof this offering is conditioned upon Nasdaqsfinal approval of our listing application,andthere is
266、no guarantee or assurance that our ClassA ordinary shares will be approved for listing onthe Nasdaq Stock Market.Payment and settlement The underwriter expects to deliver the Class Aordinary shares against payment on ,2023,through the facilities of The Depository TrustCompany,or DTC.Risk Factors See
267、“Risk Factors”and other informationincluded in this prospectus for a discussion ofrisks you should carefully consider beforeinvesting in our Class A ordinary shares.Capital Structure and VotingRights Our authorized share capital is HK$380,000divided into 3,800,000,000 shares of a nominal orpar value
268、 of HK$0.0001 each,comprising of(i)2,000,000,000 Class A ordinary shares of anominal or par value of HK$0.0001 each,(ii)1,000,000,000 Class B ordinary shares of anominal or par value of HK$0.0001 each,and(iii)800,000,000 preferred shares of a nominal or parvalue of HK$0.0001 each.Holders of Class A
269、ordinary shares are entitledto one vote per one Class A Ordinary Share.Holders of Class B ordinary shares are entitledto 10 votes per one Class B Ordinary Share.Holders of our Class A ordinary shares and ClassB ordinary shares will generally vote together asa single class,unless otherwise required b
270、y law.See“Description of Share Capital.”Mr.Weidong Gu,our founder and chairman of theboard of directors will beneficially own%of our total issued and outstandingClass A ordinary shares and 100%of our totalissued and outstanding Class B ordinary sharesupon the completion of this offering,representing
271、%of our total voting power,assuming the option to purchase additional ClassA ordinary shares is exercised by the underwriterin full.16Table of ContentsRISK FACTORSInvestment in our securities involves a high degree of risk.You should carefullyconsider the risks described below together with all of t
272、he other informationincluded in this prospectus before making an investment decision.The risks anduncertainties described below represent our known material risks to our business.Ifany of the following risks actually occurs,our business,financial condition orresults of operations could suffer.In tha
273、t case,you may lose all or part of yourinvestment.You should not invest in this offering unless you can afford to lose yourentire investment.Risks Relating to the Business and Industry of the Operating SubsidiariesIf the operating subsidiaries products fail to meet the demands of theircustomers or t
274、o reflect the latest developments in the compatible tonercartridge market,the operating subsidiaries may be unable to retainexisting customers or attract new customers,and our business,financialcondition and results of operations may be materially and adverselyaffected.The compatible toner cartridge
275、 market is characterized by rapid technologicaldevelopment and continual introduction of new models.As a specialized manufacturerof toner cartridges,our future success depends largely on(i)the ability tocontinually update and launch new products that can be used in updated or new printermodels that
276、come to the market from time to time,(ii)the number of customers usingproducts offered by the operating subsidiaries,and(iii)the price that they arewilling to pay for those products.If the operating subsidiaries products fail tomeet customer demands in terms of product quality and functionality or t
277、o respond tothe latest developments in the compatible toner cartridge market,the operatingsubsidiaries may not be able to maintain their existing customer base or attract newcustomers.In addition,the operating subsidiaries may not be able to maintain thecurrent selling prices of their products.Some
278、factors that may affect the ability ofthe operating subsidiaries to meet customer demands and to attract customers include:their ability to(i)develop or acquire the necessary technical know-how to designand manufacture new products and enhance or adapt existing products to respond tochanges in print
279、er technologies,market trends and customer demands;(ii)managetheir growth while maintaining the consistency of their product quality,promotetheir products to a broader base of prospective customers;and(iii)providesatisfactory customer support and after-sale services in a timely manner.If theoperatin
280、g subsidiaries are unable to retain existing customers and continue toattract new customers to use those products offered by the operating subsidiaries andto increase new customers spending with the operating subsidiaries,our business,financial condition and results of operations may be materially a
281、nd adverselyaffected.The operating subsidiaries ability to compete effectively may be hamperedif their intellectual property rights are infringed on by third-parties or,on the other hand,if they are alleged or found to have infringed on theintellectual property rights of others.In their business ope
282、rations,the operating subsidiaries have developedtrademarks,patents,copyrights,industry know-how,product formulas,productionprocesses,technologies and other intellectual property rights that we believe are ofsignificant value to the operating subsidiaries operations.As of December 31,2022,through th
283、e operating subsidiaries,we owned 388 registered patents in theU.S.,Europe,and China,and a total of 34 trademarks registered in the U.S.,Europe,the PRC and Hong Kong.In addition,through the operating subsidiaries,we are in theprocess of applying for 86 patents worldwide.See“Business IntellectualProp
284、erty”for details.It may be possible for third parties to obtain and use products,know-how andtechnologies under intellectual property rights owned by the operating subsidiarieswithout authorization,or for third parties to copy or imitate products,know-how andtechnologies under the operating subsidia
285、ries intellectual property rights,therebycausing confusion and mislead end-users to believe the counterfeit products,whichare usually of poor quality,are products of the operating subsidiaries.This mayadversely affect the sales,damage the reputation,and tarnish the brand of theoperating subsidiaries
286、,and increase any administrative costs to be incurred by theoperating subsidiaries in respect of detection,investigation and initiation of thelegal proceedings of the infringement.We cannot assure you that the operatingsubsidiaries intellectual property rights will not be misappropriated by thirdpar
287、ties and,if such misappropriations do occur,that we will be able to detect andaddress them timely and effectively.17Table of ContentsOn the other hand,we cannot assure you that the operating subsidiariesintellectual property rights will not be challenged by third parties,whether with orwithout merit
288、.Certain unrelated third parties may own intellectual property rightswhich may be considered to be similar to those of the operating subsidiaries.Wecould face difficulty and incur material expenses during our future expansion becauseof the existence of any similar patents owned by unrelated third pa
289、rties.We and the operating subsidiaries may from time to time be required to instituteor be involved in litigation,arbitration or other forms of proceedings,includingsettlements,to enforce or defend the operating subsidiaries intellectual propertyrights,which would likely be time-consuming and expen
290、sive and may divert ourmanagements time and attention regardless of their outcome.If we and/or theoperating subsidiaries fail the defend against such litigations,we and/or theoperating subsidiaries may be ordered to pay a material amount as penalty,refrainfrom using such patents,know-hows or license
291、s,require pre-approvals of futuredesigned products and stop selling our products that are related to them inparticular regions or countries.For the years ended December 31,2021 and 2022,thetotal patent registration and patent litigation cost we incurred amounted to US$0.31million and US$0.21 million
292、,respectively.If any third party infringes on the intellectual property rights of the operatingsubsidiaries or if we or the operating subsidiaries are alleged or found to haveinfringed on the intellectual property rights of others,it may materially andadversely affect our business,financial conditio
293、n and results of operations.The operating subsidiaries may be exposed to risks of obsolete inventoriesbecause technological upgrades by the original-brand printer manufacturersrender their toner cartridge products obsolete or due to their failure tomanage inventories efficiently.If this occurs,we ma
294、y incur losses for ourresearch and development expenses,production costs and marketing expensesrelating to such obsolete inventories.Generally,through the operating subsidiaries,we begin to research,design anddevelop a compatible toner cartridge after a new printer model is introduced to themarket.A
295、s each printer typically has a unique hardware and software system,acompatible toner cartridge usually only works with specific printer models for whichthey are designed.As such,there exists a risk that during the period while theoperating subsidiaries compatible toner cartridge is under development
296、 or sometimeafter they began selling the compatible toner cartridge,the original-brand printermanufacturer may conduct an upgrade of its printer which renders the operatingsubsidiaries toner cartridge not compatible with it anymore.If this occurs,we maynot be able to recover the research and develop
297、ment expenses,production costs andmarketing expenses we incurred in connection with the toner cartridge product.Inaddition,the operating subsidiaries may receive requests from customers for productreturn or exchange due to upgrades by original-brand printer manufacturers whichrendered such products
298、not compatible anymore.Upgrades by original-brand printermanufacturers are beyond our control.If such upgrades are frequent and substantial,it may result in more product returns and exchanges for the operating subsidiaries,as well as losses for research and development expenses,production costs andm
299、arketing expenses,and our business,financial condition and results of operationsmay be materially and adversely affected.Our inventories consist of raw materials,work-in-progress and finished goods.For branded products and white-label products,the operating subsidiaries sales andmarketing department
300、,based on their understanding of historical sales and perceivedmarket trends,formulates annual sales targets at our Companys level and at theregional level.The operating subsidiaries manufacture their ODM products on a made-to-order basis.See“Business Logistics and Warehousing Inventory control.”Web
301、elieve that maintaining an appropriate level of inventories helps the operatingsubsidiaries deliver their products to meet the market demands in a timely manner.For the years ended December 31,2021 and 2022,the operating subsidiaries balanceof inventories amounted to approximately US$24.4 million an
302、d US$21.1 million,respectively,and the operating subsidiaries inventory turnover days were 109.7days and 103.8 days,respectively.We cannot assure you that the operatingsubsidiaries will not experience any slow movement of inventories or that theoperating subsidiaries inventories will not become obso
303、lete,which may be caused bythe reduced sales of the operating subsidiaries due to change in consumer demand orpreferences,change of marketing strategy by the operating subsidiaries customersor incorrect estimation of the market demand for their products.If the operatingsubsidiaries fail to manage th
304、eir inventories effectively or are unable to sell theirexcess inventories,the operating subsidiaries may face a risk of inventoryobsolescence and/or significant inventory write-downs,which may impose pressure onour operating cash flow,and materially and adversely affect our business,financialconditi
305、on and results of operations.18Table of ContentsThe operating subsidiaries may not be able to maintain or increase theselling prices of their products.Our results of operations are affected by the pricing of the operatingsubsidiaries products.For ODM products and white-label products,the operatingsu
306、bsidiaries generally price their products on the basis of a cost-plus calculationof the costs involved in manufacturing,and with reference to the prevailing marketprices.For new ODM products,the operating subsidiaries generally review and adjustthe price list every month.The ability of the operating
307、 subsidiaries to offercompetitive prices and launch new patented products quickly after the original-brandproducts are being released are critical factors,among other factors,in securingorders from their customers.The operating subsidiaries are generally able tomaintain current pricing strategies fo
308、r their products as a result of our localizedoperation and ancillary services provided to offline customers including drop shipservice,private labeling and customized packing services.For the operatingsubsidiaries branded products sold on an online e-commerce selling platform,theoperating subsidiari
309、es generally set the retail price based on the base sellingprices,marketing expenses,fees paid to the online selling platform,different brandpositioning and prices of competing products.If for any reason market perception ofthe operating subsidiaries should change for the worse,the operating subsidi
310、ariesmay not be able to maintain or increase the selling prices of their products,whichwould have a material and adverse effect on our business,financial condition andresults of operations.With more competitors are able to catch up industry leaders byproviding products of latest printer models,overa
311、ll export price has shown adecreasing trend to reflect the intense competition.In addition,if the operatingsubsidiaries suppliers raise their prices and the operating subsidiaries are unableto pass it on to their customers,our profit margins will be reduced and ourfinancial condition and results of
312、operations would be negatively affected.Raw material purchase prices are subject to fluctuation and the operatingsubsidiaries could face shortage in supply of their raw materials.Our cost of inventory sold mainly consists of the raw materials used in theproduction of toner cartridges,such as OPC dru
313、m,toner and chips.Our cost ofinventory sold accounted for 74.7%and 77.3%,respectively,of our total cost ofsales for the years ended December 31,2021 and 2022.Depending on the market supplyand demand conditions,prices of raw materials for the operating subsidiariesfluctuate and are influenced by the
314、economic growth in the PRC,the prevailing pricesof the global market and the availability of such raw materials,all of which arebeyond our control.A significant volatility in the price levels of raw materialscould increase our cost of sales and adversely affect our profit margin.We and theoperating
315、subsidiaries have not hedged against changes in commodity prices,and weand the operating subsidiaries do not intend to enter into such hedges in the future.According to the CIC Report,the average price for compatible toner cartridge chipsin China is expected to increase from RMB6.9 per piece in 2022
316、 to RMB8.9 per piece in2027 at a CAGR of 5.2%which are expected to grow due to more new printers withexpected more complicated controls and design will be launched.We expect that rawmaterials prices will continue to fluctuate and be affected by the factors statedabove in the future.As such,an increa
317、se in the prices of raw materials,inabilityto pass on or delay in passing on any increase in our costs of raw materials toconsumers or inability to identify and source from alternative suppliers may have asignificant impact on our profit margin and our profitability.The operatingsubsidiaries do not
318、have long-term contractual arrangements with their suppliers.Ifall or a significant number of the suppliers for any particular raw material and/orpackaging material are unable or unwilling to meet the operating subsidiariesproduction requirements,or if the operating subsidiaries are unable to obtain
319、 rawmaterials in quantities and of the quality the operating subsidiaries require atcommercially reasonable prices,the production volume,product quality or ourprofitability may deteriorate and we could suffer shortages or significant costincreases which in turn may have a material adverse impact on
320、our business,financialcondition and results of operations.Any interruption in the normal operations of the operating subsidiarieswarehouses may have an adverse impact on the operating subsidiariesability to fulfill orders from their customers and business operations.The operating subsidiaries abilit
321、y to fulfill customer orders on a timely basisis critical to their business operations and depends on the smooth operation of theoperating subsidiaries warehouses.If the operating subsidiaries do not operatetheir warehouses well,it could result in delay in fulfilling customer orders,excessor insuffi
322、cient fulfillment capacity,an increase in costs,decrease in gross profitmargin,or harm the operating subsidiaries reputation and relationships with theircustomers.19Table of ContentsIn addition,the operating subsidiaries warehouses may be vulnerable to damagecaused by fire,floods,power outages,telec
323、ommunication failures,break-ins,earthquakes,human error and other events.The operating subsidiaries cloud-basedwarehouse management system could also be subject to errors or flaws,which couldadversely impact the normal operation of the warehouses and the ability of theoperating subsidiaries to recor
324、d inventory or fulfill orders on an accurate andefficient manner.Any occurrence of the foregoing risks could have a material adverseimpact on our business,financial conditions and results of operations.The operating subsidiaries rely significantly on the North American andEuropean market.Any changes
325、 in the economic and regulatory conditions orglobal trade policy of the U.S.or Europe or changes in the businessstrategies of U.S.customers or Europe customers may have an adverse effecton our business.For each of years ended December 31,2021 and 2022,our revenue mainly derivedfrom U.S.and Europe.Ou
326、r financial performance depends significantly on generaleconomic conditions in U.S.and Europe and their impact on consumer confidence anddiscretionary consumer spending.Further,economic factors in U.S.or Europe such asa reduction in the availability of credit,increased unemployment levels,risinginte
327、rest rates,financial market volatility,recession,reduced consumer confidence,and other factors affecting consumer spending behavior such as acts of terrorism ormajor epidemics could reduce demand for the operating subsidiaries products.On theother hand,any change in U.S.or the European global trade
328、policy,includingtightening regulatory restrictions,industry-specific quotas,tariffs,non-tariffbarriers and taxes,may have the effect of limiting the operating subsidiariesproducts exported from the PRC and,hence,an adverse effect on our business.If there is any change in the management or control of
329、 the U.S.or Europeancustomers of the operating subsidiaries,then such U.S.or European customers may inturn change their business strategy,which may cause their demand for compatibletoner cartridges to decrease.This in turn may have a material and adverse effect onour business performance,financial c
330、ondition,results of operations and prospects.A potential serious downturn in the overall economy of U.S.or Europe or in U.S.or European compatible toner cartridge industry,or policies unfavorable to theimport of goods into U.S.or Europe may cause the financial conditions and purchasingpowers of the
331、operating subsidiaries customers in U.S.or Europe to deteriorate.The operating subsidiaries customers are not under contractual obligations to placeorders with them,so order quantities may fluctuate depending on the profitability ofcustomers businesses and the spending power of the consumers.An econ
332、omic downturnin U.S.or Europe or continued uncertainties regarding future prospects that affectconsumer spending habits in the U.S.or Europe may have an adverse effect on theplacing of orders by the operating subsidiaries customers.We can offer noassurance that the operating subsidiaries will be abl
333、e to respond quickly to anyeconomic,market or regulatory changes in the U.S.or European market,and anyfailure to do so may result in an adverse effect on our business performance,financial condition and results of operations.The operating subsidiaries may be unable to maintain their relationshipwith the customers and they may fail to engage new customers.The operating subsidiaries do not enter int