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Eason Technology Ltd

Eason Technology LtdDXF決算レポート

NYSE

What changed in Eason Technology Ltd's 20-F — 2023 vs 2024

Top changes in Eason Technology Ltd's 2024 20-F

261 paragraphs added · 487 removed · 213 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

66 edited+3 added−164 removed312 unchanged
We are subject to extensive and complex state, provincial and local laws, rules and regulations with regard to our loan operations, capital structure, and allowance for loan losses, among other things. These laws, rules and regulations are issued by different central government ministries and departments, provincial and local governments while enforced by different local authorities.
We are subject to extensive and complex state, provincial and local laws, rules and regulations with regard to our operations, capital structure, and allowance for loan losses, among other things. These laws, rules and regulations are issued by different central government ministries and departments, provincial and local governments while enforced by different local authorities.
Consequently, if you engage in market trading or other activities in anticipation of and prior to settlement and delivery, you do so at the risk that settlement and delivery may not occur.
Consequently, if you engage in market trading or other activities in anticipation of and prior to settlement and delivery, you do so at the risk that settlement and delivery may not occur.
In addition, the Company’s PRC subsidiary and Chutian is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital, and each of the Company’s subsidiaries is required to further set aside a portion of its after-tax profits to fund the employee welfare fund at the discretion of its board of directors.
In addition, the Company’s PRC subsidiary is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital, and each of the Company’s subsidiaries is required to further set aside a portion of its after-tax profits to fund the employee welfare fund at the discretion of its board of directors.
Although we believe we, our PRC subsidiary and the VIE are not in violation of current PRC laws and regulations, we cannot assure you that the PRC government would agree that the Company’s contractual arrangements comply with PRC licensing, registration or other regulatory requirements, with existing policies or with requirements or policies that may be adopted in the future.
Although we believe we, our PRC subsidiary are not in violation of current PRC laws and regulations, we cannot assure you that the PRC government would agree that the Company’s contractual arrangements comply with PRC licensing, registration or other regulatory requirements, with existing policies or with requirements or policies that may be adopted in the future.
Risks Related to Doing Business in China We face risks and uncertainties relating to doing business in China in general, including, but not limited to, the following: 6 Table of Contents ● Changes in China’s economic, political or social conditions or government policies or in relations between China and the United States could have a material adverse effect on our business, financial condition and operations; and may result in our inability to sustain our growth and expansion strategies; ● There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations, which could result in a material adverse change in our operations and the value of our ADSs; ● The PRC government has increasingly strengthened oversight in offerings conducted overseas or on foreign investment in China-based issuers, which could significantly limit or completely hinder our ability to offer or continue to offer our securities to investors and could cause the value of our securities to significantly decline or become worthless; ● The approval and/or other requirements of the CSRC or other PRC governmental authorities may be required in connection with an offering under PRC rules, regulations or policies, and, if required, we cannot predict whether or how soon we will be able to obtain such approval.
Risks Related to Doing Business in China We face risks and uncertainties relating to doing business in China in general, including, but not limited to, the following: ● Changes in China’s economic, political or social conditions or government policies or in relations between China and the United States could have a material adverse effect on our business, financial condition and operations; and may result in our inability to sustain our growth and expansion strategies; ● There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations, which could result in a material adverse change in our operations and the value of our ADSs; ● The PRC government has increasingly strengthened oversight in offerings conducted overseas or on foreign investment in China-based issuers, which could significantly limit or completely hinder our ability to offer or continue to offer our securities to investors and could cause the value of our securities to significantly decline or become worthless; ● The approval and/or other requirements of the CSRC or other PRC governmental authorities may be required in connection with an offering under PRC rules, regulations or policies, and, if required, we cannot predict whether or how soon we will be able to obtain such approval.
If material weaknesses in our internal control over financial reporting are discovered or occur in the future, our consolidated financial statements may contain material misstatements and we could be required to restate our financial results, which could materially and adversely affect our business, results of operations and financial condition, restrict our ability to access the capital markets, require us to expend significant resources to correct the material weakness, subject us to fines, penalties or judgments, harm our reputation or otherwise cause a decline in investor confidence. 28 Table of Contents Our independent auditors have expressed substantial doubt about our ability to continue as a going concern.
If material weaknesses in our internal control over financial reporting are discovered or occur in the future, our consolidated financial statements may contain material misstatements and we could be required to restate our financial results, which could materially and adversely affect our business, results of operations and financial condition, restrict our ability to access the capital markets, require us to expend significant resources to correct the material weakness, subject us to fines, penalties or judgments, harm our reputation or otherwise cause a decline in investor confidence. 26 Table of Contents Our independent auditors have expressed substantial doubt about our ability to continue as a going concern.
We have historically met our cash needs through a combination of cash flows from operating activities, loans payable from third parties raised through various securities exchanges, loans from shareholders and related parties, as well as equity financing. The cash requirements are generally for operating activities and repayments of loans from third parties, related parties and shareholders.
We have historically met our cash needs through a combination of cash flows from operating activities, loans payable from third parties raised through various securities exchanges, loans from shareholders and related parties, as well as equity and debts financing. The cash requirements are generally for operating activities and repayments of loans from third parties, related parties and shareholders.
Any limitation on the ability of the Company’s subsidiaries to distribute dividends to us or on the ability of Chutian to make payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends, or otherwise fund and conduct our business.
Any limitation on the ability of the Company’s subsidiaries to distribute dividends to us or on the ability to make payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends, or otherwise fund and conduct our business.
The PRC government’s significant oversight over our business operation could result in a material adverse change in our operations and the value of our ADSs. We conduct our business in China primarily through our PRC subsidiaries and the VIE. Our operations in China are governed by PRC laws and regulations.
The PRC government’s significant oversight over our business operation could result in a material adverse change in our operations and the value of our ADSs. We conduct our business in China primarily through our PRC subsidiaries. Our operations in China are governed by PRC laws and regulations.
There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including, but not limited to, the laws and regulations governing our and the VIE’s business, or the enforcement and performance of the Company’s contractual arrangements with the VIE, and their shareholders.
There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including, but not limited to, the laws and regulations governing our business, or the enforcement and performance of the Company’s contractual arrangements with the VIE, and their shareholders.
In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States. 42 Table of Contents There is uncertainty as to whether the courts of the Cayman Islands would: · recognize or enforce judgments of courts of the United States obtained against us based on certain civil liability provisions of U.S. securities laws; and · entertain original actions brought against us predicated upon certain civil liability provisions of U.S. securities laws.
In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States. 32 Table of Contents There is uncertainty as to whether the courts of the Cayman Islands would: · recognize or enforce judgments of courts of the United States obtained against us based on certain civil liability provisions of U.S. securities laws; and · entertain original actions brought against us predicated upon certain civil liability provisions of U.S. securities laws.
If one or more of these analysts cease coverage of the Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price of our ADSs or trading volume to decline. 41 Table of Contents Our ADSs would be subject to delisting from the NYSE American if we are unable to achieve and maintain compliance with the NYSE American’s continued listing standards.
If one or more of these analysts cease coverage of the Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price of our ADSs or trading volume to decline. 31 Table of Contents Our ADSs would be subject to delisting from the NYSE American if we are unable to achieve and maintain compliance with the NYSE American’s continued listing standards.
This means that you may not be able to exercise your right to vote and you may have no legal remedy if the shares underlying your ADSs are not voted as you requested. 43 Table of Contents The depositary for our ADSs will give us a discretionary proxy to vote our ordinary shares underlying your ADSs if you do not vote at shareholders’ meetings, except in limited circumstances, which could adversely affect your interests.
This means that you may not be able to exercise your right to vote and you may have no legal remedy if the shares underlying your ADSs are not voted as you requested. 33 Table of Contents The depositary for our ADSs will give us a discretionary proxy to vote our ordinary shares underlying your ADSs if you do not vote at shareholders’ meetings, except in limited circumstances, which could adversely affect your interests.
There is no guarantee that we will be able to generate sufficient revenue from sales of such products and services to offset the costs of developing, acquiring, managing and monetizing such products and services and our business may be adversely affected. 37 Table of Contents Risks Related to Our Corporate Structure PRC laws and regulations governing our businesses and the validity of certain of the Company’s contractual arrangements are uncertain.
There is no guarantee that we will be able to generate sufficient revenue from sales of such products and services to offset the costs of developing, acquiring, managing and monetizing such products and services and our business may be adversely affected. 29 Table of Contents Risks Related to Our Corporate Structure PRC laws and regulations governing our businesses and the validity of certain of the Company’s contractual arrangements are uncertain.
In addition, to the extent borrowers’ experiences financial difficulties due to the economic slowdown, we could have difficulty collecting payment from the borrower. Any adverse changes in political policies of the PRC government could negatively impact China’s overall economic growth, which could materially adversely affect our business. Dunxin is a holding company with substantial operations in the PRC.
In addition, to the extent borrowers’ experiences financial difficulties due to the economic slowdown, we could have difficulty collecting payment from the borrower. Any adverse changes in political policies of the PRC government could negatively impact China’s overall economic growth, which could materially adversely affect our business. Eason is a holding company with substantial operations in the PRC.
In addition, an independent registered public accounting firm may audit and report on the effectiveness of a public company’s internal control over financial reporting except where the public company is a non-accelerated filer. We are currently a non-accelerated filer. Our management has concluded that our internal control over financial reporting was effective as of December 31, 2023. See “Item 15.
In addition, an independent registered public accounting firm may audit and report on the effectiveness of a public company’s internal control over financial reporting except where the public company is a non-accelerated filer. We are currently a non-accelerated filer. Our management has concluded that our internal control over financial reporting was effective as of December 31, 2024. See “Item 15.
Accordingly, our future revenues and earnings are more susceptible to fluctuations than a more diversified company. Historically, our primary business activities were offering direct loans to our customers prior to the suspension of our microfinance lending business. In 2023, we developed new business, including digital security technology services and real estate operation management, etc.
Accordingly, our future revenues and earnings are more susceptible to fluctuations than a more diversified company. Historically, our primary business activities were offering direct loans to our customers prior to the suspension of our microfinance lending business. From 2023, we developed new business, including digital security technology services and real estate operation management, etc.
The rights of Dunxin’s shareholders and the fiduciary responsibilities of Dunxin’s directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands have a less developed body of securities laws as compared to the United States.
The rights of Eason’s shareholders and the fiduciary responsibilities of Eason’s directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands have a less developed body of securities laws as compared to the United States.
For example, the depositary may determine that it is not practicable to distribute certain property through the mail, or that the value of certain distributions may be less than the cost of mailing them. In these cases, the depositary may decide not to distribute such property and you will not receive such distribution. 44 Table of Contents
For example, the depositary may determine that it is not practicable to distribute certain property through the mail, or that the value of certain distributions may be less than the cost of mailing them. In these cases, the depositary may decide not to distribute such property and you will not receive such distribution. 34 Table of Contents
In addition, implementation of industry-wide regulations directly targeting our operations could cause our securities to significantly decline in value or become worthless. Therefore, investors of Dunxin face potential uncertainty from actions taken by the PRC government affecting our business.
In addition, implementation of industry-wide regulations directly targeting our operations could cause our securities to significantly decline in value or become worthless. Therefore, investors of Eason face potential uncertainty from actions taken by the PRC government affecting our business.
You may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited, because Dunxin was incorporated under Cayman Islands law. Dunxin is an exempted company incorporated under the laws of the Cayman Islands.
You may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited, because Eason was incorporated under Cayman Islands law. Eason is an exempted company incorporated under the laws of the Cayman Islands.
PRC regulation of loans to, and direct investments in, PRC entities by offshore holding companies may delay or prevent Dunxin from using proceeds from future financing activities to make loans or additional capital contributions to its PRC operating subsidiary.
PRC regulation of loans to, and direct investments in, PRC entities by offshore holding companies may delay or prevent Eason from using proceeds from future financing activities to make loans or additional capital contributions to its PRC operating subsidiary.
Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of the PRC may render you unable to enforce a judgment against Dunxin’s assets or the assets of its directors and officers.
Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of the PRC may render you unable to enforce a judgment against Eason’s assets or the assets of its directors and officers.
We also might be subject to claims from employees due to late payment of their wages. If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud, and investor confidence and the market price of our ADSs may be adversely impacted.
We also might be subject to claims from employees due to late payment of their wages. 25 Table of Contents If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud, and investor confidence and the market price of our ADSs may be adversely impacted.
The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of Dunxin’s directors to it under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands.
The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of Eason’s directors to it under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands.
Dunxin is a Cayman Islands holding company with substantial operations in China and is subject to a legal and regulatory environment that in many respects differs from the United States.
Eason is a Cayman Islands holding company with substantial operations in China and is subject to a legal and regulatory environment that in many respects differs from the United States.
Dunxin’s corporate affairs are governed by its second amended and restated memorandum and articles of association, the Companies Act of the Cayman Islands (As Revised) (the “Companies Act”) and the common law of the Cayman Islands.
Eason’s corporate affairs are governed by its second amended and restated memorandum and articles of association, the Companies Act of the Cayman Islands (As Revised) (the “Companies Act”) and the common law of the Cayman Islands.
Due to non-payment of its obligations when due, multiple significant legal proceedings were initiated by its shareholders, service providers and others against the Company (see Note 28 of the Consolidated Financial Statements - Legal proceedings for detailed disclosure). As a result, we require additional cash resources due to changed business conditions or other future developments.
Due to non-payment of its obligations when due, multiple significant legal proceedings were initiated by its shareholders, service providers and others against the Company (see Note 32 of the Consolidated Financial Statements - Commitments and contingencies for detailed disclosure). As a result, we require additional cash resources due to changed business conditions or other future developments.
As an offshore holding company with PRC subsidiary, Dunxin may transfer funds to its PRC subsidiary or finance its operating entity by means of shareholder loans or capital contributions. Any loans to Dunxin’s PRC subsidiary, which are foreign-invested enterprises, shall be limited to within the margin between the total investment and registered capital approved by the examination and approval authorities.
As an offshore holding company with PRC subsidiary, Eason may transfer funds to its PRC subsidiary or finance its operating entity by means of shareholder loans or capital contributions. Any loans to Eason’s PRC subsidiary, which are foreign-invested enterprises, shall be limited to within the margin between the total investment and registered capital approved by the examination and approval authorities.
Investors in our ordinary shares or the ADSs thus are not purchasing equity interest in the VIE in China but instead are purchasing equity interest in a Cayman Islands holding company.
Investors in our ordinary shares or the ADSs thus are not purchasing equity interest in our subsidiaries in China but instead are purchasing equity interest in a Cayman Islands holding company.
Certain judgments obtained against us by our shareholders may not be enforceable. Dunxin is a Cayman Islands company and all of its assets are located outside of the United States. Substantially all of its current operations are conducted in the PRC. In addition, most of Dunxin’s directors and officers are nationals and residents of countries other than the United States.
Certain judgments obtained against us by our shareholders may not be enforceable. Eason is a Cayman Islands company and all of its assets are located outside of the United States. Substantially all of its current operations are conducted in the PRC. In addition, most of Eason’s directors and officers are nationals and residents of countries other than the United States.
According to the National Bureau of Statistics of China, China’s gross domestic product (GDP) growth was 5.2% in 2023. There is considerable uncertainty over the long-term effects of the monetary and fiscal policies adopted by the central banks and financial authorities of some of the world’s leading economies, including the United States and China.
According to the National Bureau of Statistics of China, China’s gross domestic product (GDP) growth was 5.0% in 2024. There is considerable uncertainty over the long-term effects of the monetary and fiscal policies adopted by the central banks and financial authorities of some of the world’s leading economies, including the United States and China.
Dunxin may rely on dividends and other distributions on equity paid by the Company’s wholly-owned subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of the Company’s subsidiaries or Chutian to make payments to us could have a material adverse effect on our ability to conduct our business.
Eason may rely on dividends and other distributions on equity paid by the Company’s wholly-owned subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of the Company’s subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business.
These reserves are not distributable as cash dividends. Furthermore, if the Company’s PRC subsidiary and Chutian incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us.
These reserves are not distributable as cash dividends. Furthermore, if the Company’s PRC subsidiary incurs debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us.
In their audit report issued in connection with our financial statements as of and for the years ended December 31, 2022 and December 31, 2023, our independent registered public accounting firm included a going concern explanatory paragraph which stated there was substantial doubt about our ability to continue as a going concern.
In their audit report issued in connection with our financial statements as of and for the year ended December 31, 2024, our independent registered public accounting firm included a going concern explanatory paragraph which stated there was substantial doubt about our ability to continue as a going concern.
Dunxin is a holding company, and it may rely on dividends from its wholly-owned subsidiaries and service, license and other fees paid to its wholly-owned subsidiary in China by Chutian for its cash requirements, including any debt it may incur.
Eason is a holding company, and it may rely on dividends from its wholly-owned subsidiaries and service, license and other fees paid to its wholly-owned subsidiary in China for its cash requirements, including any debt it may incur.
We may not be able to obtain additional capital on commercially reasonable terms, which could adversely affect our liquidity and financial position. As of December 31, 2023, we had cash balances totaled RMB2.5 million (US$0.4 million), compared to RMB295,000 (US$43,000) as of December 31, 2022.
We may not be able to obtain additional capital on commercially reasonable terms, which could adversely affect our liquidity and financial position. As of December 31, 2024, we had cash balances totaled RMB79,000 (US$11,000), compared to RMB2.5 million (US$0.4 million) as of December 31, 2023.
Any prolonged slowdown in the global or Chinese economy may have a negative impact on our business, results of operations and financial condition, and continued turbulence in the international markets may adversely affect our ability to access the capital markets to meet liquidity needs in a number of ways, including: ● we may face severe challenges, loss of customers and other operation risks during the global financial crisis and economic downturn; ● under difficult economic conditions, borrowers may seek to reduce the loan size or discontinue borrowings; and ● financing and other sources of liquidity may not be available on reasonable terms or at all.
Any prolonged slowdown in the global or Chinese economy may have a negative impact on our business, results of operations and financial condition, and continued turbulence in the international markets may adversely affect our ability to access the capital markets to meet liquidity needs in a number of ways, including: ● we may face severe challenges, loss of customers and other operation risks during the global financial crisis and economic downturn; ● financing and other sources of liquidity may not be available on reasonable terms or at all.
Dunxin was incorporated in the Cayman Islands and we conduct most of our operations in China through Chutian, the VIE in China. In addition, all of our officers and our chairman reside outside the United States and substantially all of the assets of those persons are located outside of the United States.
Eason was incorporated in the Cayman Islands and we conduct most of our operations in China through our subsidiaries. In addition, all of our officers and our chairman reside outside the United States and substantially all of the assets of those persons are located outside of the United States.
If we are unable to maintain and grow the operating revenues from our business, our future revenues and earnings are not likely to grow and could decline. Our lack of product and business diversification could inhibit the opportunities for growth of our business, revenues and profits.
If we are unable to maintain and grow the operating revenues from our business, our future revenues and earnings are not likely to grow and could decline. Our lack of product and business diversification could inhibit the opportunities for growth of our business, revenues and profits. Our business depends on the continuing efforts of our management.
Risks Related to our Ordinary Shares and ADSs We face risks and uncertainties related to our ordinary shares and ADSs, including, but not limited to, the following: ● The trading prices of our ADSs are likely to be volatile, which could result in substantial losses to investors; ● If securities or industry analysts publish negative reports about our business, the price and trading volume of our ADSs could decline; ● Our ADSs would be subject to delisting from the NYSE American if we are unable to achieve and maintain compliance with the NYSE American’s continued listing standards; ● Substantial future sales or perceived sales of our ADSs in the public market could cause the price of our ADSs to decline; 9 Table of Contents ● Our articles of association contain anti-takeover provisions that could have a material adverse effect on the rights of holders of our ADSs and ordinary shares; ● You may not receive dividends or other distributions on our ordinary shares and you may not receive any value for them, if it is illegal or impractical to make them available to you; and ● Your right to participate in any future rights offerings may be limited, which may cause dilution to your holdings and you may not receive distributions with respect to the underlying ordinary shares if it is impractical to make them available to you.
We may not be able to obtain additional capital on commercially reasonable terms, which could adversely affect our liquidity and financial position; ● Our current operations in China are territorially limited to the Hubei Province and Shenzhen, and we lack product and business diversification; Risks Related to our Ordinary Shares and ADSs We face risks and uncertainties related to our ordinary shares and ADSs, including, but not limited to, the following: ● The trading prices of our ADSs are likely to be volatile, which could result in substantial losses to investors; ● If securities or industry analysts publish negative reports about our business, the price and trading volume of our ADSs could decline; ● Our ADSs would be subject to delisting from the NYSE American if we are unable to achieve and maintain compliance with the NYSE American’s continued listing standards; ● Substantial future sales or perceived sales of our ADSs in the public market could cause the price of our ADSs to decline; 9 Table of Contents ● Our articles of association contain anti-takeover provisions that could have a material adverse effect on the rights of holders of our ADSs and ordinary shares; ● You may not receive dividends or other distributions on our ordinary shares and you may not receive any value for them, if it is illegal or impractical to make them available to you; and ● Your right to participate in any future rights offerings may be limited, which may cause dilution to your holdings and you may not receive distributions with respect to the underlying ordinary shares if it is impractical to make them available to you.
Our microfinance business is subject to extensive regulation and supervision by state, provincial and local government authorities, which may interfere with the way we conduct our business and may negatively impact our financial results.
Our microfinance, real estate operation management and digital security technology business is subject to extensive regulation and supervision by state, provincial and local government authorities, which may interfere with the way we conduct our business and may negatively impact our financial results.
We will continue to encounter risks and difficulties that companies at a similar stage of development frequently experience, including the potential failure to: ● obtain sufficient working capital and increase our registered and paid-up capital to support expansion of our loan portfolio; ● comply with any changes in the laws and regulations of the PRC or local province that may affect our lending operations; ● expand our borrowers base; ● maintain adequate control of default risks and expenses allowing us to realize anticipated revenue growth; ● implement our customer development, risk management and acquisition strategies and adapt and modify them as needed; ● integrate any future acquisitions; and ● anticipate and adapt to changing conditions in the Chinese lending industry resulting from changes in government regulations, mergers and acquisitions involving our competitors, and other significant competitive and market dynamics. 29 Table of Contents If we are unable to address any or all of the foregoing risks, our business and results of operations may be materially and adversely affected.
We will continue to encounter risks and difficulties that companies at a similar stage of development frequently experience, including the potential failure to: ● obtain sufficient working capital and increase our registered and paid-up capital to support expansion of our loan portfolio; ● comply with any changes in the laws and regulations of the PRC or local province that may affect our real estate operation management and digital security technology business; ● maintain adequate control of default risks and expenses allowing us to realize anticipated revenue growth; ● implement our customer development, risk management and acquisition strategies and adapt and modify them as needed; ● integrate any future acquisitions; and ● anticipate and adapt to changing conditions in the Chinese real estate operation management and digital security technology industry resulting from changes in government regulations, mergers and acquisitions involving our competitors, and other significant competitive and market dynamics.
Historically, our management identified and evaluated the control deficiencies that gave rise to the accounting errors, and concluded that those deficiencies, collectively, represented material weaknesses in our internal control over financial reporting as of December 31, 2018. These deficiencies were remediated and we did not identify material weaknesses as of December 31, 2022 and 2023.
Historically, our management identified and evaluated the control deficiencies that gave rise to the accounting errors, and concluded that those deficiencies, collectively, represented material weaknesses in our internal control over financial reporting as of December 31, 2018.
If the PRC government determines that we or the VIE do not comply with applicable law, the competent PRC regulatory authorities would have broad discretion in dealing with such violations or failures, including, without limitation: 38 Table of Contents ● revoking the business licenses and/or operating licenses of such entities; ● discontinuing or placing restrictions or onerous conditions on our operation through any transactions between our PRC subsidiary and the VIE; ● imposing fines, confiscating the income from our PRC subsidiary or the VIE, or imposing other requirements with which we or the VIE may not be able to comply; ● requiring us to restructure our ownership structure or operations, including terminating the VIE Agreements and deregistering the equity pledges of the VIE, which in turn would affect our ability to consolidate, derive economic interests from, or exert effective control over the VIE; or ● restricting or prohibiting our use of the proceeds to finance our business and operations in China.
If the PRC government determines that we do not comply with applicable law, the competent PRC regulatory authorities would have broad discretion in dealing with such violations or failures, including, without limitation: · revoking the business licenses and/or operating licenses of such entities; · discontinuing or placing restrictions or onerous conditions on our operation through any transactions between our PRC subsidiary; · imposing fines, confiscating the income from our PRC subsidiary, or imposing other requirements with which we may not be able to comply; · restricting or prohibiting our use of the proceeds to finance our business and operations in China.
China has only recently begun to adopt the management and financial reporting concepts and practices that investors in the United States are familiar with. We may have difficulty in hiring and retaining employees in China who have the experience necessary to implement the kind of management and financial controls that are required of a United States public company.
We may have difficulty in hiring and retaining employees in China who have the experience necessary to implement the kind of management and financial controls that are required of a United States public company.
We may not be able to successfully enforce any contractual rights we have with our management team, in particular in China, where all of these individuals reside and where our business is operated through our PRC subsidiaries, and Chutian through the VIE Agreements.
We may not be able to successfully enforce any contractual rights we have with our management team, in particular in China, where all of these individuals reside and where our business is operated through our PRC subsidiaries. As a result, our business may be negatively affected due to the loss of one or more members of our management.
We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. Any failure to raise additional funds on favorable terms could have a material adverse effect on our liquidity and financial condition. We rely heavily on loans to our customers in Wuhan City.
We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. Any failure to raise additional funds on favorable terms could have a material adverse effect on our liquidity and financial condition. Although we developed new business line in 2023, we still lack product and business diversification.
Foreign investors shall meet the investment conditions stipulated under the negative list for any field with investment restricted by the negative list for foreign investment access”; “In formulating normative documents concerning foreign investment, the people’s governments at all levels and their departments concerned shall comply with laws and regulations, and if there are no laws or administrative regulations to serve as the basis, they shall not impair foreign-funded enterprises’ legitimate rights and interests or increase their obligations, set any market access and exit conditions, or intervene the normal production and operation activities of any foreign-funded enterprise.” The Foreign Investment Law leaves uncertainty with respect to whether foreign investors-controlled PRC onshore variable interest entities via contractual arrangements will be recognized as “foreign investment”.
Foreign investors shall meet the investment conditions stipulated under the negative list for any field with investment restricted by the negative list for foreign investment access”; “In formulating normative documents concerning foreign investment, the people’s governments at all levels and their departments concerned shall comply with laws and regulations, and if there are no laws or administrative regulations to serve as the basis, they shall not impair foreign-funded enterprises’ legitimate rights and interests or increase their obligations, set any market access and exit conditions, or intervene the normal production and operation activities of any foreign-funded enterprise.” The PRC government exerts substantial influence over the manner in which we conduct our business activities.
The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations and liquidity. 30 Table of Contents In addition, our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties, including conditions of the market, our future results of operations, financial condition and cash flows, and PRC governmental regulation of foreign investment in microfinance service companies in China.
In addition, our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties, including conditions of the market, our future results of operations, financial condition and cash flows, and PRC governmental regulation of foreign investment in microfinance service companies in China.
Non-compliance with labor-related laws and regulations of the PRC may have an adverse impact on our financial condition and results of operation. We are subject to the PRC Labor Contract Law, which governs how and when wages are paid to our employees. Due to the severe financial constraints, we did not pay our employees on regularly scheduled payment dates.
We are subject to the PRC Labor Contract Law, which governs how and when wages are paid to our employees. Due to the severe financial constraints, we did not pay our employees on regularly scheduled payment dates.
These laws and regulations may be subject to change, and their official interpretation and enforcement may involve substantial uncertainty. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. Further, the VIE Agreements have not been tested in a court of law.
These laws and regulations may be subject to change, and their official interpretation and enforcement may involve substantial uncertainty. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively.
Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, prospects, financial condition, results of operations, cash flows and ability to pay dividends, and you may lose all or part of your investment.
Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, prospects, financial condition, results of operations, cash flows and ability to pay dividends, and you may lose all or part of your investment. 7 Table of Contents RISK FACTORS SUMMARY Our business is subject to numerous risks described in the section titled “Risk Factors” and elsewhere in this annual report.
As a result, our business may be negatively affected due to the loss of one or more members of our management. We require highly qualified personnel and if we are unable to hire or retain qualified personnel, we may not be able to grow effectively. Our future success also depends upon our ability to attract and retain highly qualified personnel.
We require highly qualified personnel and if we are unable to hire or retain qualified personnel, we may not be able to grow effectively. Our future success also depends upon our ability to attract and retain highly qualified personnel.
If we are found to be in violation, we could be subject to sanctions. In addition, changes in PRC laws and regulations or changes in interpretations thereof may materially and adversely affect our business. Current PRC laws and regulations place certain restrictions and conditions on foreign ownership of certain areas of businesses.
If we are found to be in violation, we could be subject to sanctions. In addition, changes in PRC laws and regulations or changes in interpretations thereof may materially and adversely affect our business. Eason is a Cayman Islands holding company.
The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, environmental regulations, land use rights, property and other matters.
Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, environmental regulations, land use rights, property and other matters.
RISK FACTORS SUMMARY Our business is subject to numerous risks described in the section titled “Risk Factors” and elsewhere in this annual report. The main risks set forth below and others you should consider are discussed more fully in the section entitled “Risk Factors” beginning on page 6, which you should read in its entirety.
The main risks set forth below and others you should consider are discussed more fully in the section entitled “ Item 3.D. Risk Factors” beginning on page 7, which you should read in its entirety.
All ADSs are freely transferable without restriction or additional registration under the Securities Act of 1933, as amended, or the Securities Act.
Sales of our ADSs in the public market, or the perception that these sales could occur, could cause the market price of our ADSs to decline. All ADSs are freely transferable without restriction or additional registration under the Securities Act of 1933, as amended, or the Securities Act.
The PRC government exerts substantial influence over the manner in which we conduct our business activities. The PRC government may also intervene or influence our operations at any time, which could result in a material change in our operations and our ADSs could decline in value or become worthless.
The PRC government may also intervene or influence our operations at any time, which could result in a material change in our operations and our ADSs could decline in value or become worthless. The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership.
If our current resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility.
If our current resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations and liquidity.
Due to non-payment of our obligations when due, multiple significant legal proceedings against us were initiated by our shareholders, service providers and others; ● COVID-19 pandemic has adversely affected, and may continue to adversely affect, our financial and operating performance; ● We have experienced an increase in delinquency rates on loans from borrowers since 2019, which have materially and adversely affected our business and results of operations; 7 Table of Contents ● Our failure to pay taxes may result in penalties, which may materially and adversely affect our business, financial condition and results of operation; ● Our independent auditors have expressed substantial doubt about our ability to continue as a going concern; ● If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud; ● Our limited operating history makes it difficult to evaluate our business and prospects; ● Potential dispute over ownership of our main operating company may adversely affect our business; ● We have very limited cash and we need additional capital which, if obtained, could result in dilution or significant debt service obligations.
It may be difficult for investors to enforce judgments obtained in U.S. courts based on civil liability provisions of the U.S. federal securities laws against us and our officers and directors, as none of them currently resides in the U.S. or has substantial assets in the U.S. 8 Table of Contents Risks Factors Related to Our Business Risks and uncertainties related to our business and industry include, but not limited to, the following: ● Our failure to pay taxes may result in penalties, which may materially and adversely affect our business, financial condition and results of operation; ● Our independent auditors have expressed substantial doubt about our ability to continue as a going concern; ● If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud; ● Our limited operating history makes it difficult to evaluate our business and prospects; ● We have very limited cash and we need additional capital which, if obtained, could result in dilution or significant debt service obligations.
Any of these or similar occurrences could significantly disrupt the Company’s or the VIE’s business operations or restrict the VIE from conducting a substantial portion of its business operations, which could materially and adversely affect the Company’s or the VIE’s business, financial condition and results of operations.
Any of these or similar occurrences could significantly disrupt the Company’s business operations or restrict the PRC subsidiaries from conducting a substantial portion of its business operations, which could materially and adversely affect the Company’s business, financial condition and results of operations. 30 Table of Contents Risks Related to our Ordinary Shares and ADSs The trading prices of our ADSs are likely to be volatile, which could result in substantial losses to investors.
Our revenue was RMB20.6 million($3.2 million), RMB44.8 million (US$6.6 million) and RMB11.2million (US$1.6 million) in 2021, 2022 and 2023, respectively. It is difficult to evaluate our prospects, as we may not have sufficient experience in addressing the risks to which companies operating in new and rapidly evolving markets such as the microfinance industry may be exposed.
It is difficult to evaluate our prospects, as we may not have sufficient experience in addressing the risks to which companies operating in new and rapidly evolving markets such as the real estate operation management and digital security technology business may be exposed.
The Company incurred a net loss of RMB395.8 million (US$55.8 million) and RMB30.3 million (US$4.5 million) during the year ended December 31, 2023 and 2022, respectively. There is also uncertainty related to the outcome of the lawsuits filed against the Company.
The Company recorded net negative operating cashflow of RMB9.1 million (US$1.3 million) during the year ended December 31, 2024, and net current liabilities of RMB18.2 million (US$2.5 million) and an accumulated loss of RMB535.2 million (US$73.3 million) as of December 31, 2024. There is also uncertainty related to the outcome of the lawsuits filed against the Company.
As such, Hubei Daily is still a shareholder of Chutian and Hubei Daily may continue to seek to liquidate its position in Chutian, which could adversely affect our business and operations. We have very limited cash and we need additional capital which, if obtained, could result in dilution or significant debt service obligations.
If we are unable to address any or all of the foregoing risks, our business and results of operations may be materially and adversely affected. 27 Table of Contents We have very limited cash and we need additional capital which, if obtained, could result in dilution or significant debt service obligations.
If any of the above were to occur, our business, operations and financial position would be materially and adversely affected. 27 Table of Contents Due to severe financial constraints, we have been unable to pay our employees on regularly scheduled payment dates.
Risk Factors Related to Our Business Due to severe financial constraints, we have been unable to pay our employees on regularly scheduled payment dates. Non-compliance with labor-related laws and regulations of the PRC may have an adverse impact on our financial condition and results of operation.
Removed
It may be difficult for investors to enforce judgments obtained in U.S. courts based on civil liability provisions of the U.S. federal securities laws against us and our officers and directors, as none of them currently resides in the U.S. or has substantial assets in the U.S.
Added
The Company incurred a net loss of RMB 502.1 million (US$69.8 million) during the year ended December 31, 2024.
Removed
Risks Factors Related to Our Business Risks and uncertainties related to our business and industry include, but not limited to, the following: ● Current ongoing litigation and future litigation, administrative proceedings or legal proceedings resulting from our lending business and liquidity issues have had, may continue to have, a material adverse effect on our lending business, financial conditions and operating results; ● We have experienced and continue to experience severe liquidity issues resulting from our inability to timely collect payments of loan principal and interest as well as assets and cash being frozen as a result of involvement in various litigation.
Added
Our revenue was RMB44.8 million($6.6 million), RMB11.2 million (US$1.6 million) and RMB12.3 million (US$1.7 million) in 2022, 2023 and 2024, respectively.
Removed
Our liquidity issues have further severely affected our ability to pay taxes, service providers, employees and others.
Added
This competition may make it more difficult and expensive to attract, hire and retain qualified managers and employees. 28 Table of Contents We may have difficulty in establishing adequate management and financial controls in China. China has only recently begun to adopt the management and financial reporting concepts and practices that investors in the United States are familiar with.
Removed
We may not be able to obtain additional capital on commercially reasonable terms, which could adversely affect our liquidity and financial position; ● Our microfinance business is subject to extensive regulation and supervision by state, provincial and local government authorities, and we do not strictly adhere to one of the principles under Measures for Administration of Pilot Scheme on Microfinance Companies in Hubei Province, and may be deemed not be in compliance with the provincial local regulatory policies; ● Our current operations in China are territorially limited to the Hubei Province and Shenzhen, and we lack product and business diversification; Risks Related to Our Corporate Structure We are also subject to risks and uncertainties related to our corporate structure, including, but not limited to, the following: ● Dunxin is a Cayman Islands holding company with no equity ownership in the VIE and we conduct our operations in China primarily through the VIE with which we have maintained contractual arrangements.
Removed
Investors in our ADSs thus are not purchasing equity interest in the VIE in China but instead are purchasing equity interest in a Cayman Islands holding company.
Removed
If the PRC government finds that the a series of contractual arrangements entered into among True Silver, Chutian and certain shareholders of Chutian, which consist of the Exclusive Consigned Management Service Agreement, Exclusive Purchase Option Agreement, Shareholders’ Voting Proxy Agreement, and Share Pledge Agreement (the “VIE Agreements”) that establish the structure for the VIE in China do not comply with PRC laws and regulations, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or we be forced to relinquish our interests in the VIE.
Removed
Our holding company in the Cayman Islands, our PRC subsidiary, the VIE, and investors of Dunxin face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with the VIE and, consequently, significantly affect the financial performance of the VIE and the Company as a whole; 8 Table of Contents ● We rely on contractual arrangements with the VIE and its shareholders for our business operations, and these contractual arrangements may not be as effective as direct ownership in providing control over the VIE.
Removed
We rely on the performance by the VIE and its shareholders of their obligations under the contracts to exercise control over the VIE. The shareholders of the VIE may not act in the best interests of Dunxin or may not perform their obligations under these contracts.
Removed
Such risks exist throughout the period in which we intend to operate certain portion of our business through the contractual arrangements with the VIE; ● Any failure by the VIE or its shareholders to perform their obligations under the contractual arrangements with them would have a material adverse effect on our business.
Removed
If the VIE or its shareholders fail to perform their respective obligations under the contractual arrangements, we may have to incur substantial costs and expend additional resources to enforce such arrangements.
Removed
We may also have to rely on legal remedies under PRC law, including seeking specific performance or injunctive relief, and claiming damages, which we cannot assure you will be effective under PRC law; ● The shareholders of the VIE may have actual or potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

68 edited+17 added−76 removed149 unchanged
The Opinions emphasized the need to strengthen the administration over illegal securities activities and the need to strengthen the supervision over overseas listings by Chinese companies.
The Opinions emphasized the need to strengthen the administration over illegal securities activities and the need to strengthen the supervision over overseas listings by Chinese companies.
On May 13, 2024, we entered into certain share purchase agreement (the “ Disposition SPA ”) with True Silver, Chutian HK, and Jianneng Holdings Limited, a British Virgin Islands company which is not affiliate of the Company of any of its directors or officers (the “ Purchaser ”).
On May 13, 2024, we entered into certain share purchase agreement (the “ Disposition SPA ”) with True Silver, Chutian HK, and Jianneng Holdings Limited, a British Virgin Islands company which is not affiliate of the Company of any of its directors or officers (the “ Purchaser ”).
Our technical team will focus on cutting-edge areas such as digital asset security, intellectual property security, AI computing power, etc., to develop application-level security products with proprietary intellectual property rights. Through this initiative, we aim to expand comprehensive strategic partnerships with financial institutions and smart technology enterprises, building a competitive advantage in the fintech and digital security sectors.
Our technical team will focus on cutting-edge areas such as digital asset security, intellectual property security, AI computing power, etc., to develop application-level security products with proprietary intellectual property rights. Through this initiative, we aim to expand comprehensive strategic partnerships with financial institutions and smart technology enterprises, building a competitive advantage in the fintech and digital security sectors.
Our technical team will focus on cutting-edge areas such as digital asset security, intellectual property security, AI computing power, etc., to develop application-level security products with proprietary intellectual property rights. Through this initiative, we aim to expand comprehensive strategic partnerships with financial institutions and smart technology enterprises, building a competitive advantage in the fintech and digital security sectors.
Our technical team will focus on cutting-edge areas such as digital asset security, intellectual property security, AI computing power, etc., to develop application-level security products with proprietary intellectual property rights. Through this initiative, we aim to expand comprehensive strategic partnerships with financial institutions and smart technology enterprises, building a competitive advantage in the fintech and digital security sectors.
Therein, where an applicant is a “beneficial owner” pursuant to the provisions of Article 3 of this Announcement, the applicant shall also provide, in addition to the tax resident identity of the applicant, the tax resident identity documents of the person who satisfies the criteria for “beneficial owner” and the person who satisfies the criteria, issued by the tax authorities in charge at the country (region) where he/she resides; where the applicant is a “beneficial owner” pursuant to the provisions of item (4) of Article 4 of this Announcement, the applicant shall also provide, in addition to the tax resident identity document of the applicant, the tax resident identity documents of the person who holds 100% of the applicant’s shares directly or indirectly and the multi-tier holders, issued by the tax authorities in charge at the country (region) for which the said person and the multi-tier holders are residents; the tax resident identity document shall prove that the person is a tax resident in the year in which the income is obtained or the preceding year. 70 Table of Contents Provisions Regarding Mergers and Acquisitions of Domestic Enterprises by Foreign Investors On August 8, 2006, six PRC regulatory agencies, including the MOFCOM, the State-owned Assets Supervision and Administration Commission of the State Council, the State Administration for Taxation, the State Administration for Industry and Commerce, the CSRC and SAFE, jointly adopted the M&A Rules, which became effective on September 8, 2006 and were amended on June 26, 2009.
Therein, where an applicant is a “beneficial owner” pursuant to the provisions of Article 3 of this Announcement, the applicant shall also provide, in addition to the tax resident identity of the applicant, the tax resident identity documents of the person who satisfies the criteria for “beneficial owner” and the person who satisfies the criteria, issued by the tax authorities in charge at the country (region) where he/she resides; where the applicant is a “beneficial owner” pursuant to the provisions of item (4) of Article 4 of this Announcement, the applicant shall also provide, in addition to the tax resident identity document of the applicant, the tax resident identity documents of the person who holds 100% of the applicant’s shares directly or indirectly and the multi-tier holders, issued by the tax authorities in charge at the country (region) for which the said person and the multi-tier holders are residents; the tax resident identity document shall prove that the person is a tax resident in the year in which the income is obtained or the preceding year. 56 Table of Contents Provisions Regarding Mergers and Acquisitions of Domestic Enterprises by Foreign Investors On August 8, 2006, six PRC regulatory agencies, including the MOFCOM, the State-owned Assets Supervision and Administration Commission of the State Council, the State Administration for Taxation, the State Administration for Industry and Commerce, the CSRC and SAFE, jointly adopted the M&A Rules, which became effective on September 8, 2006 and were amended on June 26, 2009.
Customers Real Estate Operation Management and Investment Business Shenzhen Four Divisions Global Industrial Operation Co., Ltd., our wholly owned PRC subsidiary, has entered into certain service agreement with Suqian Zhenming Enterprise Management LLC, pursuant to which we provide services including assisting in project acquisition, financing, fund management, project positioning, planning, and operational control.
Customers Real Estate Operation Management and Investment Business Shenzhen Four Divisions Global Industrial Operation Co., Ltd., our wholly owned PRC subsidiary, has entered into certain service agreement with Jiangsu Suqian Zhenming Enterprise Management LLC, pursuant to which we provide services including assisting in project acquisition, financing, fund management, project positioning, planning, and operational control.
The Cyberspace Administration of China has said that under the proposed rules companies holding data on more than 1,000,000 users must now apply for cybersecurity approval when seeking listings in other nations because of the risk that such data and personal information could be “affected, controlled, and maliciously exploited by foreign governments.” The cybersecurity review will also look into the potential national security risks from overseas IPOs. 59 Table of Contents As advised by our PRC legal counsel, the PRC governmental authorities may have wide discretion in the interpretation and enforcement of these laws, including the interpretation of the scope of “critical information infrastructure operators.
The Cyberspace Administration of China has said that under the proposed rules companies holding data on more than 1,000,000 users must now apply for cybersecurity approval when seeking listings in other nations because of the risk that such data and personal information could be “affected, controlled, and maliciously exploited by foreign governments.” The cybersecurity review will also look into the potential national security risks from overseas IPOs. 50 Table of Contents As advised by our PRC legal counsel, the PRC governmental authorities may have wide discretion in the interpretation and enforcement of these laws, including the interpretation of the scope of “critical information infrastructure operators.
Foreign exchange transactions under the capital account remain subject to limitations and require approvals from, or registration with, SAFE and other relevant Chinese governmental authorities. This could affect our ability to obtain foreign currency through debt or equity financing for our subsidiaries and the VIE.
Foreign exchange transactions under the capital account remain subject to limitations and require approvals from, or registration with, SAFE and other relevant Chinese governmental authorities. This could affect our ability to obtain foreign currency through debt or equity financing for our subsidiaries.
According to the Regulations on Occupational Injury Insurance, effective as of January 1, 2004, as subsequently amended on December 20, 2010, employers in the PRC shall pay the occupational injury insurance fees for their employees. 68 Table of Contents Foreign Exchange Registration of Offshore Investment by PRC Residents On July 4, 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, which replaced the former circular commonly known as “SAFE Circular 75” promulgated by SAFE on October 21, 2005.
According to the Regulations on Occupational Injury Insurance, effective as of January 1, 2004, as subsequently amended on December 20, 2010, employers in the PRC shall pay the occupational injury insurance fees for their employees. 54 Table of Contents Foreign Exchange Registration of Offshore Investment by PRC Residents On July 4, 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, which replaced the former circular commonly known as “SAFE Circular 75” promulgated by SAFE on October 21, 2005.
In addition, SAFE promulgated the Circular on Printing and Distributing the Provisions on Foreign Exchange Administration over Domestic Direct Investment by Foreign Investors and the Supporting Documents in May 2013 (partially Invalid on December 30, 2019), which specifies that the administration by SAFE or its local branches over direct investment by foreign investors in the PRC shall be conducted by way of registration and banks shall process foreign exchange business relating to the direct investment in the PRC based on the registration information provided by SAFE and its branches. 69 Table of Contents On February 13, 2015, SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment, or SAFE Notice 13 (partially Invalid on December 30, 2019).
In addition, SAFE promulgated the Circular on Printing and Distributing the Provisions on Foreign Exchange Administration over Domestic Direct Investment by Foreign Investors and the Supporting Documents in May 2013 (partially Invalid on December 30, 2019), which specifies that the administration by SAFE or its local branches over direct investment by foreign investors in the PRC shall be conducted by way of registration and banks shall process foreign exchange business relating to the direct investment in the PRC based on the registration information provided by SAFE and its branches. 55 Table of Contents On February 13, 2015, SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment, or SAFE Notice 13 (partially Invalid on December 30, 2019).
Upon the closing of the transaction (the “ Disposition ”) contemplated by the Disposition SPA, the Purchaser will become the sole shareholder of Chutian HK and as a result, assume all assets and liabilities of Chutian HK and subsidiaries owned or controlled by Chutian HK.
Upon the closing of the transaction contemplated by the Disposition SPA, the Purchaser will become the sole shareholder of Chutian HK and as a result, assume all assets and liabilities of Chutian, Chutian HK and all subsidiaries owned or controlled by Chutian HK.
Upon the closing of the transaction (the “ Disposition ”) contemplated by the Disposition SPA, the Purchaser will become the sole shareholder of Chutian HK and as a result, assume all assets and liabilities of Chutian HK and subsidiaries owned or controlled by Chutian HK.
Upon the closing of the transaction contemplated by the Disposition SPA, the Purchaser will become the sole shareholder of Chutian HK and as a result, assume all assets and liabilities of Chutian, Chutian HK and subsidiaries owned or controlled by Chutian HK.
Otherwise, the personal information handlers will be ordered to correct their behaviors, or suspend or terminate the provision of services, and may be subject to confiscation of illegal income, fines or other penalties. 67 Table of Contents Labor Contract Law The PRC Labor Contract Law was promulgated on June 29, 2007, as amended on December 28, 2012, became effective on July 1, 2013.
Otherwise, the personal information handlers will be ordered to correct their behaviors, or suspend or terminate the provision of services, and may be subject to confiscation of illegal income, fines or other penalties. 53 Table of Contents Labor Contract Law The PRC Labor Contract Law was promulgated on June 29, 2007, as amended on December 28, 2012, became effective on July 1, 2013.
This support enables us to more effectively reach and engage potential user groups in promoting and establishing our data science products within the market. 56 Table of Contents Growth Strategies Following market research, project evaluations, and industry consultations, our management team has established two new business lines: real estate operation management and digital security technology.
This support enables us to more effectively reach and engage potential user groups in promoting and establishing our data science products within the market. 47 Table of Contents Growth Strategies Following market research, project evaluations, and industry consultations, our management team has established two new business lines: real estate operation management and digital security technology.
Digital Security Technology Business In the digital security technology business, we will face competition from traditional market players, such as Sangfor Technologies Inc. and Qi An Xin Technology Group Inc, etc.
Digital Security Technology Business In the digital security technology business, we face competition from traditional market players, such as Sangfor Technologies Inc. and Qi An Xin Technology Group Inc, etc.
Moreover, the PRC Data Security Law provides a national security review procedure for those data activities which may affect national security and imposes export restrictions on certain data and information. 66 Table of Contents On December 28, 2021, the Cyberspace Administration of China and several other regulatory authorities in China jointly promulgated the Cybersecurity Review Measures, which came into effect on February 15, 2022.
Moreover, the PRC Data Security Law provides a national security review procedure for those data activities which may affect national security and imposes export restrictions on certain data and information. 52 Table of Contents On December 28, 2021, the Cyberspace Administration of China and several other regulatory authorities in China jointly promulgated the Cybersecurity Review Measures, which came into effect on February 15, 2022.
The equity pledge under the agreement constitutes a continuous guarantee and remains effective before fulfillment of the obligations under the Main Agreements or full repayment of the guaranteed liability. 46 Table of Contents As of the date of this annual report, we, our PRC subsidiaries and the VIE have received from PRC and BVI authorities all requisite licenses, permissions or approvals needed to engage in the businesses currently conducted in China and BVI, and no permission or approval has been denied.
The equity pledge under the agreement constitutes a continuous guarantee and remains effective before fulfillment of the obligations under the Main Agreements or full repayment of the guaranteed liability. 36 Table of Contents As of the date of this annual report, we and our PRC subsidiaries have received from PRC and BVI authorities all requisite licenses, permissions or approvals needed to engage in the businesses currently conducted in China and BVI, and no permission or approval has been denied.
At their discretion, our PRC subsidiary and the VIE may allocate a portion of their after-tax profits based on Chinese accounting standards to a discretionary reserve fund. 53 Table of Contents Renminbi is not freely convertible into other currencies.
At their discretion, our PRC subsidiary and the VIE may allocate a portion of their after-tax profits based on Chinese accounting standards to a discretionary reserve fund. 44 Table of Contents Renminbi is not freely convertible into other currencies.
Hong Kong Three Digital Technology Limited, wholly owned by True Silver, is a limited liability company incorporated on September 27, 2023, under the Companies Ordinance of Hong Kong, with 10,000 ordinary shares. ● Hong Kong Yiyou.
Hong Kong Three Digital Technology Limited, wholly owned by True Silver, is a limited liability company incorporated on September 27, 2023, under the Companies Ordinance of Hong Kong, with 10,000 ordinary shares. ● Hong Kong Yiyou. Hong Kong YiYou Digital Technology Development Co.
The Company’s registered office in the Cayman Islands is located at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. Our current website is http://hbctxed.com. The information contained on our website or any third-party websites does not constitute a part of this annual report.
The Company’s registered office in the Cayman Islands is located at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. Our current website is http://www.fdvsglobal.com. The information contained on our website or any third-party websites does not constitute a part of this annual report.
We are required under PRC law to contribute to social security plans at specified percentages of the salaries, bonuses and certain allowances of our employees up to a maximum amount specified by the local government from time to time. We had 11, 11 and 10 full-time employees as of December 31, 2021, 2022 and 2023, respectively.
We are required under PRC law to contribute to social security plans at specified percentages of the salaries, bonuses and certain allowances of our employees up to a maximum amount specified by the local government from time to time. We had 11, 10 and 14 full-time employees as of December 31, 2022, 2023 and 2024, respectively.
We are permitted under PRC laws and regulations to provide funding to our WFOE only through loans or capital contributions, and to the VIE only through loans, and only if we satisfy the applicable government registration and approval requirements.
We are permitted under PRC laws and regulations to provide funding to our subsidiaries only through loans or capital contributions, and to the VIE only through loans, and only if we satisfy the applicable government registration and approval requirements.
As result, any restriction on currency exchange may limit the ability of our PRC subsidiary and the VIE to use their potential future renminbi revenues to pay dividends to us. The Chinese government imposes controls on the convertibility of renminbi into foreign currencies and, in certain cases, the remittance of currency out of China.
As result, any restriction on currency exchange may limit the ability of our PRC subsidiaries to use their potential future renminbi revenues to pay dividends to us. The Chinese government imposes controls on the convertibility of renminbi into foreign currencies and, in certain cases, the remittance of currency out of China.
We provided loans to individuals and companies through our credit teams. Most of our borrowers are individuals and companies. Our typical size loans are around RMB 4.0 million (US$0.6 million) for individuals, and are around RMB7.0 million (US$1.1 million) for companies.
We provided loans to individuals and companies through our credit teams. Most of our borrowers were individuals and companies. Our typical size loans were around RMB 4.0 million (US$0.6 million) for individuals, and were around RMB7.0 million (US$1.1 million) for companies.
Through a series of contractual arrangements entered into among Chutian Holding, Chutian and certain shareholders of Chutian, which consist of the Exclusive Consigned Management Service Agreement, Exclusive Purchase Option Agreement, Shareholders’ Voting Proxy Agreement, and Share Pledge Agreement the (collectively, the “VIE Agreements”), Chutian Holding is deemed to be the primary beneficiary of Chutian, for accounting purposes, and therefore can consolidate 80% of Chutian’s financial results. ● Hong Kong Four Divisions.
Through a series of contractual arrangements entered into among Chutian Holding, Chutian and certain shareholders of Chutian, which consist of the Exclusive Consigned Management Service Agreement, Exclusive Purchase Option Agreement, Shareholders’ Voting Proxy Agreement, and Share Pledge Agreement the (collectively, the “VIE Agreements”), Chutian Holding is deemed to be the primary beneficiary of Chutian, for accounting purposes, and therefore can consolidate 80% of Chutian’s financial results.
Dunxin did not make any cash contributions to VIE and non-VIE subsidiaries and there was no transfer of cash among Dunxin, VIE and non-VIE subsidiaries. Dividends and Other Distributions Dunxin is a holding company incorporated in the Cayman Islands and conducts businesses in China through its PRC subsidiary and the VIE.
Eason did not make any cash contributions to its VIE and non-VIE subsidiaries and there was no transfer of cash among Eason, VIE and non-VIE subsidiaries. Dividends and Other Distributions Eason is a holding company incorporated in the Cayman Islands and conducts businesses in China through its PRC subsidiaries and the VIE.
This portion of the Company’s PRC subsidiary’s net assets is prohibited from being distributed to its shareholders as dividends. To date, there have not been any such dividends or other distributions from our PRC subsidiary or the VIE to our subsidiaries located outside of China.
This portion of the Company’s PRC subsidiaries’ net assets is prohibited from being distributed to its shareholders as dividends. To date, there have not been any such dividends or other distributions from our PRC subsidiaries or the VIE to our subsidiaries located outside of China.
Currently, our PRC subsidiary and the VIE may purchase foreign currency for settlement of “current account transactions,” including payment of dividends to us, without the approval of the SAFE by complying with certain procedural requirements. However, the relevant Chinese governmental authorities may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions.
Currently, our PRC subsidiaries may purchase foreign currency for settlement of “current account transactions,” including payment of dividends to us, without the approval of the SAFE by complying with certain procedural requirements. However, the relevant Chinese governmental authorities may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions.
Our ADSs were listed on the New York Stock Exchange on November 23, 2010 and transitioned to the NYSE American on December 28, 2017. Our current ratio of our ADS to Class A ordinary shares is 1:480.
Our ADSs were listed on the New York Stock Exchange on November 23, 2010 and transitioned to the NYSE American on December 28, 2017. Our current ratio of our ADS to Class A ordinary shares is 1:60,000.
Hong Kong YiYou Digital Technology Development Co.,Ltd., wholly owned by True Silver, is a limited liability company incorporated on August 2, 2023, under the Companies Ordinance of Hong Kong, with 100,000 ordinary shares. ● Shenzhen Four Divisions . Shenzhen Four Divisions Global Industrial Operation Co., Ltd. is a limit liability company incorporated under laws of PRC on November 1, 2023.
Ltd., wholly owned by True Silver, is a limited liability company incorporated on August 2, 2023, under the Companies Ordinance of Hong Kong, with 100,000 ordinary shares. ● Shenzhen Four Divisions. Shenzhen Four Divisions Global Industrial Operation Co., Ltd. is a limit liability company incorporated under laws of PRC on November 1, 2023.
Our Business Microfinance Lending Business We offered loan facilities to micro sized enterprises, SMEs, sole proprietors and individuals. We used our website http://hbctxed.com and our membership in certain industry associations to promote and to provide information about the Company and our products. After learning about the Company and our products, borrowers approached us to apply for their loans.
Our Business Microfinance Lending Business Historically, we offered loan facilities to micro sized enterprises, SMEs, sole proprietors and individuals. We used our website and our membership in certain industry associations to promote and to provide information about the Company and our products. After learning about the Company and our products, borrowers approached us to apply for their loans.
Pursuant to the Disposition SPA, the Purchaser agreed to purchase Chutian HK in exchange for nominal cash consideration of US$1 (the “ Purchase Price ”).
Pursuant to the Disposition SPA, the Purchaser agreed to purchase Chutian HK in exchange for nominal cash consideration of US$1.
Pursuant to the Disposition SPA, the Purchaser agreed to purchase Chutian HK in exchange for nominal cash consideration of US$1 (the “ Purchase Price ”).
Pursuant to the Disposition SPA, the Purchaser agreed to purchase Chutian HK in exchange for nominal cash consideration of US$1.
Our diversified revenue streams and strategic investments provide a stable foundation for the company's development, fostering ongoing innovation and business expansion. 57 Table of Contents Employees As of December 31, 2023, we had 10 full-time employees. Chutian has entered into written employment contracts with all of the employees in accordance with PRC Labor Law and Contract Law.
Our diversified revenue streams and strategic investments provide a stable foundation for the company's development, fostering ongoing innovation and business expansion. 48 Table of Contents Employees As of December 31, 2024, we had 10 full-time employees. We has entered into written employment contracts with all of the employees in accordance with PRC Labor Law and Contract Law.
Cash transferred of less than RMB10.0 million (US$1.6 million) must be reported to and reviewed by Dunxin’s financial department and the PRC subsidiary's and the VIE’s chief executive officer, and must be approved by the Chief Financial Officer and Chairman of Dunxin. Cash transfer in excess of RMB10 million (US$1.6 million) must be approved by board of directors of Dunxin.
Cash transferred of less than RMB10.0 million (US$1.6 million) must be reported to and reviewed by Eason’s financial department and the PRC subsidiary's and the VIE’s chief executive officer, and must be approved by the Chief Financial Officer and Chairman of Eason. Cash transfer in excess of RMB10 million (US$1.6 million) must be approved by board of directors of Eason.
Shortages in availability of foreign currency may then restrict the ability of our PRC subsidiary and the VIE to remit sufficient foreign currency to our offshore entities for our offshore entities to pay dividends or make other payments or otherwise to satisfy our foreign-currency-denominated obligations.
Shortages in availability of foreign currency may then restrict the ability of our PRC subsidiaries to remit sufficient foreign currency to our offshore entities for our offshore entities to pay dividends or make other payments or otherwise to satisfy our foreign-currency-denominated obligations.
Dunxin may rely on dividends and other distributions on equity paid by our PRC subsidiary and the VIE for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders or holders of our ADSs or to service any debt we may incur.
Eason may rely on dividends and other distributions on equity paid by our PRC subsidiaries for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders or holders of our ADSs or to service any debt we may incur.
If our PRC subsidiary and the VIE incurs debt on its own behalf in the future, the instruments governing such debt may restrict their ability to pay dividends to us. The Company’s PRC subsidiary is permitted to pay dividends only out of its retained earnings.
If our PRC subsidiaries incur debt on its own behalf in the future, the instruments governing such debt may restrict their ability to pay dividends to us. The Company’s PRC subsidiary is permitted to pay dividends only out of its retained earnings.
Our agent for service of process in the United States is Puglisi & Associates, located at 850 Library Avenue, Suite 204, Newark, DE 19711. B. Business Overview Overview Dunxin is not an operating company but a Cayman Islands holding company with operations primarily conducted by its subsidiaries and through contractual arrangements with its VIE, Chutian, in China.
Our agent for service of process in the United States is Puglisi & Associates, located at 850 Library Avenue, Suite 204, Newark, DE 19711. B. Business Overview Overview Eason is not an operating company but a Cayman Islands holding company with operations primarily conducted by its subsidiaries in China.
Hong Kong Four Divisions International Limited, wholly owned by True Silver., is a limited liability company incorporated on September 27, 2023, under the Companies Ordinance of Hong Kong, with 10,000 ordinary shares. ● Hong Kong Three Entities .
The following is a brief description of each of Eason’s subsidiaries: ● Hong Kong Four Divisions. Hong Kong Four Divisions International Limited, wholly owned by True Silver., is a limited liability company incorporated on September 27, 2023, under the Companies Ordinance of Hong Kong, with 10,000 ordinary shares. ● Hong Kong Three Entities.
Shenzhen Four Divisions currently holds a business license 91440300MAD18XDH75. 45 Table of Contents The following is a brief description of the VIE Agreements entered into on August 10, 2017, among Chutian Holding, Chutian and certain shareholders of Chutian, through which we seek to control 80% equity interests of Chutian: ● Exclusive Consigned Management Service Agreement .
Shenzhen Four Divisions currently holds a business license 91440300MAD18XDH75. 35 Table of Contents The following is a brief description of the VIE entities and the VIE Agreements entered into on August 10, 2017, among Chutian Holding, Chutian and certain shareholders of Chutian, through which we seek to control 80% equity interests of Chutian.
Upon loan origination, our loans are either guaranteed or secured and have payment terms that are typically become due within twelve (12) months, subject to annual renewal of terms. However, in 2019, we began to experience defaults on our loans.
Upon loan origination, our loans were either guaranteed or secured and have payment terms that were typically become due within twelve (12) months, subject to annual renewal of terms. In 2019, we began to experience defaults and suspended offering loans to our customers.
We do not believe we are required to obtain any permission from any PRC governmental authorities to offer securities to foreign investors. We have been closely monitoring regulatory developments in China regarding any necessary approvals from the CSRC or other PRC governmental authorities required for overseas listings, including securities offerings that are conducted in the United States.
We have been closely monitoring regulatory developments in China regarding any necessary approvals from the CSRC or other PRC governmental authorities required for overseas listings, including securities offerings that are conducted in the United States.
The following table provides details of permissions held by our PRC subsidiary and the VIE.
The following table provides details of permissions held by our PRC subsidiaries.
In the tables below, the column headings correspond to the following entities in the organizational diagram. ● “parent” refers to Dunxin Financial Holdings Limited, a Cayman Islands exempted company; ● “non-VIE subsidiaries” refer to, collectively, (i) True Silver Limited, our wholly owned Cayman Island subsidiary, (ii) Chutian Financial Holdings (Hong Kong) Limited., our wholly owned Hong Kong subsidiary, (iii) Hong Kong Four Divisions International Limited., our wholly owned Hong Kong subsidiary, (iv) Hong Kong Three Entities Digital Technology Limited, our wholly owned Hong Kong subsidiary, (v) Hong Kong YiYou Digital Technology Development Co., Ltd., our wholly owned Hong Kong subsidiary,(vi) Wuhan Chutian Investment Holding Limied., a wholly owned PRC subsidiary, and (vii) Shenzhen Four Divisions Global Industrial Operation Co., Ltd., a wholly owned PRC subsidiary; ● “VIE” refers to variable interest entity, Hubei Chutian Microfinance Co., Ltd., a PRC company and the operating company of Dunxin Financial Holdings Limited; Consolidated Statements of Operations Information Year Ended December 31, 202 3 Non-VIE Parent subsidiaries VIE Eliminations Consolidations Interest income on loans - - 11,218 - 11,218 Interest expenses on loans (632 ) (363 ) (17,725 ) - (18,720 ) Business related taxes and surcharges - - (405 ) - (405 ) Total interest expense (632 ) (363 ) (18,130 ) - (19,125 ) Net interest income/(loss) (632 ) (363 ) (6,912 ) - (7,907 ) Credit impairment losses - - (373,647 ) - (373,647 ) Net interest loss after impairment loss (632 ) (363 ) (380,559 ) - (381,554 ) General and administrative (9,689 ) (79 ) (4,481 ) - (14,249 ) Total operating costs and expenses (9,689 ) (79 ) (4,481 ) - (14,249 ) Net loss (10,321 ) (442 ) (385,040 ) - (395,803 ) Year Ended December 31, 2022 Non-VIE Parent subsidiaries VIE Eliminations Consolidations Interest income on loans - - 44,797 - 44,797 Interest expenses on loans (360 ) (361 ) (20,575 ) - (21,296 ) Business related taxes and surcharges - - (405 ) - (405 ) Total interest expense (360 ) (361 ) (20,980 ) - (21,701 ) Net interest income/(loss) (360 ) (361 ) 23,817 - 23,096 Credit impairment losses - - (42,420 ) - (42,420 ) Net interest loss after impairment loss (360 ) (361 ) (18,603 ) - (19,324 ) Sales and marketing - - (514 ) - (514 ) General and administrative (5,654 ) (22 ) (4,830 ) - (10,506 ) Total operating costs and expenses (5,654 ) (22 ) (5,344 ) - (11,020 ) Net loss (6,014 ) (383 ) (23,947 ) - (30,344 ) 49 Table of Contents Year Ended December 31, 2021 Non-VIE Parent subsidiaries VIE Eliminations Consolidations Interest income on loans - - 20,627 - 20,627 Interest expenses on loans - (239 ) (21,135 ) - (21,374 ) Business related taxes and surcharges - - (452 ) - (452 ) Total interest expense - (239 ) (21,587 ) (21,826 ) Net interest loss - (239 ) (960 ) - (1,199 ) Credit impairment losses - - (119,078 ) (119,078 ) Net interest loss after impairment loss - (239 ) (120,038 ) (120,277 ) Non-interest and other income 387 - - - 387 Sales and marketing - - (293 ) - (293 ) General and administrative (2,802 ) (48 ) (5,039 ) (7,889 ) Total operating costs and expenses (2,802 ) (48 ) (5,332 ) (8,182 ) Net loss (2,415 ) (287 ) (125,370 ) (128,072 ) 50 Table of Contents Consolidated Balance Sheet Information As of December 31, 202 3 Non-VIE Parent subsidiaries VIE Eliminations Consolidations Amount due from VIE - 1,555 - (1,555 ) - Amount due from Non-VIE 44,871 350 16,297 (61,518 ) - Loans receivable, net of credit impairment losses - - 193,682 - 193,682 Current assets 51,862 2,734 209,266 (61,518 ) 202,344 Amount due to VIE (15,483 ) (813 ) - 16,296 - Amount due to Non-VIE (350 ) (44,872 ) (1,555 ) 46,777 - Investment in non-VIE subsidiaries 364 - - (364 ) - Equity in the VIE through the - VIE Agreements 1,091,544 - - (1,091,544 ) - Assets 1,143,760 47,586 245,596 (1,153,426 ) 283,516 As of December 31, 2022 Non-VIE Parent subsidiaries VIE Eliminations Consolidations Amount due from VIE - 1,558 - (1,558 ) - Amount due from Non-VIE - 353 15,097 (15,450 ) - Loans receivable, net of credit impairment losses - - 556,112 - 556,112 Current assets 3,494 2,696 571,855 (17,009 ) 561,036 Amount due to VIE (14,284 ) (813 ) - 15,097 - Amount due to Non-VIE (353 ) - (1,558 ) 1,911 - Investment in non-VIE subsidiaries 354 - - (354 ) - Equity in the VIE through the - VIE Agreements 1,060,381 - - (1,060,381 ) - Assets 1,064,219 2,705 611,088 (1,077,743 ) 600,269 51 Table of Contents Consolidated Cash Flows Information Year Ended December 31, 202 3 Non-VIE Parent subsidiaries VIE Eliminations Consolidations Total cash used in operating activities (11,017 ) - - - (11,017 ) Total cash generated by financing activities 14,785 - - - 14,785 Effect of exchange rate changes (1,530 ) - - - (1,530 ) Net increase in cash, cash equivalents and restricted cash 2,238 - - - 2,238 Year Ended December 31, 2022 Non-VIE Parent subsidiaries VIE Eliminations Consolidations Total cash used in operating activities (7,385 ) (50 ) - - (7,435 ) Total cash generated by/(used in) financing activities 6,758 (130 ) - - 6,628 Effect of exchange rate changes 706 - - - 706 Net increase/(decrease) in cash, cash equivalents and restricted cash 79 (180 ) - - (101 ) Year Ended December 31, 2021 Non-VIE Parent subsidiaries VIE Eliminations Consolidations Total cash generated by operating activities (2 ) 10,230 - - 10,228 Total cash used in financing activities - (10,000 ) - - (10,000 ) Effect of exchange rate changes 71 - - - 71 Net increase in cash, cash equivalents and restricted cash 69 230 - - 299 52 Table of Contents Transfer of Cash Through our Organization Before 2020, the sources of funds of the VIE primarily consisted of loans from security exchanges and shareholders, and cash generated from operations.
In the tables below, the column headings correspond to the following entities in the organizational diagram. ● “parent” refers to Eason Technology Limited, a Cayman Islands exempted company; ● “non-VIE subsidiaries” refer to, collectively, (i) True Silver Limited, our wholly owned Cayman Island subsidiary, (ii) Chutian Financial Holdings (Hong Kong) Limited., our wholly owned Hong Kong subsidiary, (iii) Hong Kong Four Divisions International Limited., our wholly owned Hong Kong subsidiary, (iv) Hong Kong Three Entities Digital Technology Limited, our wholly owned Hong Kong subsidiary, (v) Hong Kong YiYou Digital Technology Development Co., Ltd., our wholly owned Hong Kong subsidiary,(vi) Wuhan Chutian Investment Holding Limied., a wholly owned PRC subsidiary, and (vii) Shenzhen Four Divisions Global Industrial Operation Co., Ltd., a wholly owned PRC subsidiary; ● “VIE” refers to variable interest entity, Hubei Chutian Microfinance Co., Ltd., a PRC company and the operating company of Eason; Consolidated Statements of Operations Information Year Ended December 31, 2024 Non-VIE Parent subsidiaries VIE Eliminations Consolidations Revenue - 12,315 - - 12,315 Cost of goods sold - (2,744 ) - - (2,744 ) Gross profit - 9,571 - - 9,571 Interest income on loans - - - - - Interest expenses on loans (839 ) (17 ) - - (856 ) Net interest loss (839 ) (17 ) - - (856 ) Operating expenses General and administrative (10,915 ) (638 ) - - (11,553 ) Total operating expenses (10.915 ) (638 ) - - (11,553 ) Loss on disposal of discontinued operations and subsidiaries (497,532 ) - - - (497,523 ) Net (loss)/income before income tax (509,286 ) 8,916 - - (500,370 ) Income tax expenses - (1,711 ) - - (1,711 ) Net (loss)/income (509,286 ) 7,205 - - (502,081 ) 40 Table of Contents Year Ended December 31, 2023 Non-VIE Parent subsidiaries VIE Eliminations Consolidations Consolidated Cash Flows Information - - 11,218 - 11,218 Interest expenses on loans (632 ) (363 ) (17,725 ) - (18,720 ) Business related taxes and surcharges - - (405 ) - (405 ) Total interest expense (632 ) (363 ) (18,130 ) - (19,125 ) Net interest loss (632 ) (363 ) (6,912 ) - (7,907 ) Credit impairment losses - - (373,647 ) - (373,647 ) Net interest loss after impairment loss (632 ) (363 ) (380,559 ) - (381,554 ) General and administrative (9,689 ) (79 ) (4,481 ) - (14,249 ) Total operating costs and expenses (9,689 ) (79 ) (4,481 ) - (14,249 ) Net loss (10,321 ) (442 ) (385,040 ) - (395,803 ) Year Ended December 31, 2022 Non-VIE Parent subsidiaries VIE Eliminations Consolidations Interest income on loans - - 44,797 - 44,797 Interest expenses on loans (360 ) (361 ) (20,575 ) - (21,296 ) Business related taxes and surcharges - - (405 ) - (405 ) Total interest expense (360 ) (361 ) (20,980 ) - (21,701 ) Net interest income/(loss) (360 ) (361 ) 23,817 - 23,096 Credit impairment losses - - (42,420 ) - (42,420 ) Net interest loss after impairment loss (360 ) (361 ) (18,603 ) - (19,324 ) Sales and marketing - - (514 ) - (514 ) General and administrative (5,654 ) (22 ) (4,830 ) - (10,506 ) Total operating costs and expenses (5,654 ) (22 ) (5,344 ) - (11,020 ) Net loss (6,014 ) (383 ) (23,947 ) - (30,344 ) 41 Table of Contents Consolidated Balance Sheet Information As of December 31, 2024 Non-VIE Parent subsidiaries VIE Eliminations Consolidations Amount due from VIE - - - - - Amount due from Non-VIE 46,168 331 - (46,499 ) - Loans receivable, net of credit impairment losses - - - - - Current assets 58,117 12,945 - (46,499 ) 24,563 Amount due to VIE - - - - - Amount due to Non-VIE (331 ) (46,168 ) - 46,499 - Investment in non-VIE subsidiaries 365 9 - (374 ) - Equity in the VIE through the VIE Agreements - - - - - Assets 58,482 59,249 - (46,873 ) 70,858 As of December 31, 2023 Non-VIE Parent subsidiaries VIE Eliminations Consolidations Amount due from VIE - 1,555 - (1,555 ) - Amount due from Non-VIE 44,871 350 16,297 (61,518 ) - Loans receivable, net of credit impairment losses - - 193,682 - 193,682 Current assets 51,862 2,734 209,266 (61,518 ) 202,344 Amount due to VIE (15,483 ) (813 ) - 16,296 - Amount due to Non-VIE (350 ) (44,872 ) (1,555 ) 46,777 - Investment in non-VIE subsidiaries 364 - - (364 ) - Equity in the VIE through the - VIE Agreements 1,091,544 - - (1,091,544 ) - Assets 1,143,760 47,586 245,596 (1,153,426 ) 283,516 As of December 31, 2022 Non-VIE Parent subsidiaries VIE Eliminations Consolidations Amount due from VIE - 1,558 - (1,558 ) - Amount due from Non-VIE - 353 15,097 (15,450 ) - Loans receivable, net of credit impairment losses - - 556,112 - 556,112 Current assets 3,494 2,696 571,855 (17,009 ) 561,036 Amount due to VIE (14,284 ) (813 ) - 15,097 - Amount due to Non-VIE (353 ) - (1,558 ) 1,911 - Investment in non-VIE subsidiaries 354 - - (354 ) - Equity in the VIE through the - VIE Agreements 1,060,381 - - (1,060,381 ) - Assets 1,064,219 2,705 611,088 (1,077,743 ) 600,269 42 Table of Contents Consolidated Cash Flows Information Year Ended December 31, 2024 Non-VIE Parent subsidiaries VIE Eliminations Consolidations Total cash used in operating activities (8,929 ) (169 ) - - (9,098 ) Total cash generated by financing activities 8,272 - - - 8,272 Effect of exchange rate changes (1,628 ) - - - (1,628 ) Net decrease in cash, cash equivalents and restricted cash (2,285 ) (169 ) - - (2,454 ) Year Ended December 31, 2023 Non-VIE Parent subsidiaries VIE Eliminations Consolidations Total cash used in operating activities (11,017 ) - - - (11,017 ) Total cash generated by financing activities 14,785 - - - 14,785 Effect of exchange rate changes (1,530 ) - - - (1,530 ) Net increase in cash, cash equivalents and restricted cash 2,238 - - - 2,238 Year Ended December 31, 2022 Non-VIE Parent subsidiaries VIE Eliminations Consolidations Total cash used in operating activities (7,385 ) (50 ) - - (7,435 ) Total cash generated by/(used in) financing activities 6,758 (130 ) - - 6,628 Effect of exchange rate changes 706 - - - 706 Net increase/(decrease) in cash, cash equivalents and restricted cash 79 (180 ) - - (101 ) 43 Table of Contents Transfer of Cash Through our Organization For the years ended December 31, 2023 and 2024, due to the severe financial restraint, we suspended offering loans to our customers and we primarily relied on debt/equity funding and the financial supporting from related company.
Chutian HK is wholly owned by True Silver. ● Chutian Holding . Chutian Holding is a wholly foreign owned enterprise and a limited liability company in China established by Chutian HK on November 4, 2016. ● Chutian. Chutian is a joint stock company incorporated under laws of PRC on February 20, 2013.
We have divested the following entities in June 2024. ● Chutian Holding . Chutian Holding is a wholly foreign owned enterprise and a limited liability company in China established by Chutian HK on November 4, 2016. Chutian Holding was disposed in June 2024. ● Chutian. Chutian is a joint stock company incorporated under laws of PRC on February 20, 2013.
On February 17, 2023, the CSRC issued the Trial Administrative Measures for Overseas Securities Offering and Listing by Domestic Companies (“Announcement No. 43”), which will become effective on March 31, 2023. Under Announcement No. 43, we may be required to file with CSRC for this offering.
On February 17, 2023, the CSRC issued the Trial Administrative Measures for Overseas Securities Offering and Listing by Domestic Companies (“Announcement No. 43”), which will become effective on March 31, 2023.
The following table sets forth by function the number of our full-time employees as of December 31, 2023: Function As of December 31, 202 3 Operations 5 Loan Department 1 Risk Management 1 Finance and Administration 3 Total 10 Intellectual Property As of December 31, 2023, we did not own or have any significant intellectual property rights other than our registered domain name (http://hbctxed.com).
The following table sets forth by function the number of our full-time employees as of December 31, 2024: Function As of December 31, 202 4 Operations 2 Technical personnel 9 Finance and Administration 3 Total 14 Intellectual Property As of December 31, 2024, we did not own or have any significant intellectual property rights other than our registered domain name (http://www.fdvsglobal.com).
VIE Financial Information Set forth below is selected Consolidated Statements of Operations and cash flows for the fiscal years ended December 31, 2021, 2022 and 2023, and selected balance sheet information as of December 31, 2022 and 2023 showing financial information for Dunxin, non-VIE subsidiaries and the VIE, eliminating entries and consolidated information (RMB in thousands).
The following diagram illustrates our current corporate structure as of the date of this report: 39 Table of Contents VIE Financial Information Set forth below is selected Consolidated Statements of Operations and cash flows for the fiscal years ended December 31, 2022, 2023 and 2024, and selected balance sheet information as of December 31, 2023 and 2024 showing financial information for Eason, non-VIE subsidiaries and the VIE, eliminating entries and consolidated information (RMB in thousands).
We currently operate in the real estate operation management and investment business in the PRC, focusing on key industries such as medical and health services, commercial real estate, and emerging consumer sectors.
Upon the transaction contemplated by the Disposition SPA closed on June 12, 2024, we divested the microfinance lending business. We currently operate in the real estate operation management and investment business in the PRC, focusing on key industries such as medical and health services, commercial real estate, and emerging consumer sectors.
Any failure or perceived failure by us to comply with such filing requirements under the Trial Measures and Listing Guidelines may result in forced corrections, warnings and fines against us and could materially hinder our ability to offer or continue to offer our securities.
Any failure or perceived failure by us to comply with such filing requirements under the Trial Measures and Listing Guidelines may result in forced corrections, warnings and fines against us and could materially hinder our ability to offer or continue to offer our securities. 51 Table of Contents Regulations Related to Internet Information Security and Privacy Protection Regulations on Information Security The PRC government has enacted laws and regulations with respect to internet information security.
If our PRC subsidiary or the VIE incurs debt on its own behalf in the future, the instruments governing such debt may restrict their ability to pay dividends to us. However, as of the date of this annual report, neither we nor any of our subsidiaries and the VIE have ever paid dividends or made distributions to U.S. investors.
In addition, as of the date of this annual report, none of our subsidiaries and the VIE have ever issued any dividends or distributions to us or their respective shareholders outside of China. If our PRC subsidiaries incur debt on its own behalf in the future, the instruments governing such debt may restrict their ability to pay dividends to us.
The consultancy agreement is effective from April 1, 2024 to March 31, 2026, and may be extended by mutual consent. 58 Table of Contents GOVERNMENT REGULATIONS Recent Regulatory Developments in China Recently, the PRC government initiated a series of regulatory actions and made a number of public statements on the regulation of business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas, adopting new measures to extend the scope of cybersecurity reviews, and expanding efforts in anti-monopoly enforcement.
The development of the operations system was from November 15, 2024 to December 30, 2024, while the maintenance services extend for 12 months after the product delivery. 49 Table of Contents GOVERNMENT REGULATIONS Recent Regulatory Developments in China Recently, the PRC government initiated a series of regulatory actions and made a number of public statements on the regulation of business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas, adopting new measures to extend the scope of cybersecurity reviews, and expanding efforts in anti-monopoly enforcement.
ITEM 4. INFORMATION ON THE COMPANY A. History and Development of the Company We conduct our operations in China primarily through our PRC subsidiaries and the VIE. PRC laws and regulations restrict and impose conditions on foreign investment in microfinance lending businesses. Accordingly, we operate our microfinance lending business in China through the VIE.
We mainly engaged in microfinance lending business and conducted our operations in China primarily through our PRC subsidiaries and the VIE. PRC laws and regulations restrict and impose conditions on foreign investment in microfinance lending businesses. Accordingly, we operated our microfinance lending business in China through the VIE.
Our holding company, Dunxin Financial Holdings Limited (formerly known as China Xiniya Fashion Limited), was incorporated in the Cayman Islands as an exempted limited liability company on June 24, 2010. On December 28, 2017, we completed the Divestiture and Acquisition.
ITEM 4. INFORMATION ON THE COMPANY A. History and Development of the Company Our holding company, Eason Technology Limited (formerly known as Dunxin Financial Holdings Limited and China Xiniya Fashion Limited), was incorporated in the Cayman Islands as an exempted limited liability company on June 24, 2010.
Compan y License and Permission Issuing Authority Validity Chutian Business license Administrative Examination and Approval Bureau of Wuchang District, Wuhan Province Long-term Permission of establishment and engaging in microfinance services Administrative Examination and Approval Bureau of Wuchang District, Wuhan Province Long-term Chutian Holding Business license Administration of Bureau Industry and Commerce, Wuhan Province Long-term Chutian HK Certificate of Incorporation Registrar of Companies, Hong Kong Special Administrative Region Long-term True Silver Certificate of Incorporation BVI Financial Services Commission Long-term Hong Kong Four Divisions Certificate of Incorporation Registrar of Companies, Hong Kong Special Administrative Region Long-term Hong Kong Three Entities Certificate of Incorporation Registrar of Companies, Hong Kong Special Administrative Region Long-term Hong Kong Yiyou Certificate of Incorporation Registrar of Companies, Hong Kong Special Administrative Region Long-term Shenzhen Four Divisions Business license Market Supervision Administration of Shenzhen Long-term As of the date of this annual report, our PRC counsel, Hubei Lifeng, has advised us that neither we nor our PRC subsidiaries (1) are required to obtain permission from any of the PRC authorities to operate and issue our Ordinary Shares to foreign investors, (2) are subject to approval requirements from the CSRC, the CAC, or any other entity to approve our operations, and (3) have been denied such permissions by any PRC authorities. 47 Table of Contents In recent years, however, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the “Opinions on Severely Cracking Down on Illegal Securities Activities According to Law,” or the “Opinions,” which were made available to the public on July 6, 2021.
Company License and Permission Issuing Authority Validity True Silver Certificate of Incorporation BVI Financial Services Commission Long-term Hong Kong Four Divisions Certificate of Incorporation Registrar of Companies, Hong Kong Special Administrative Region Long-term Hong Kong Three Entities Certificate of Incorporation Registrar of Companies, Hong Kong Special Administrative Region Long-term Hong Kong Yiyou Certificate of Incorporation Registrar of Companies, Hong Kong Special Administrative Region Long-term Shenzhen Four Divisions Business license Market Supervision Administration of Shenzhen Long-term As of the date of this annual report, our PRC counsel, Hubei Lifeng, has advised us that neither we nor our PRC subsidiaries (1) are required to obtain permission from any of the PRC authorities to operate and issue our Ordinary Shares to foreign investors, (2) are subject to approval requirements from the CSRC, the CAC, or any other entity to approve our operations, and (3) have been denied such permissions by any PRC authorities.
We historically were primarily engaged in the business of providing loan facilities to micro sized enterprises, SMEs, sole proprietors and individuals in Hubei province of the People’s Republic of China. We operate our microfinance lending business through the VIE, Chutian.
Before June 2024, we were primarily engaged in the business of providing loan facilities to micro sized enterprises, SMEs, sole proprietors and individuals in Hubei province of the People’s Republic of China. Substantially all of our operations are conducted in the PRC through Chutian, which holds all the certificates, business license and other requisite licenses for the microfinance lending businesses.
Real Estate Operation Management and Investment Business In the real estate operation management sector, our competitors will be large-scale commercial property service providers and affiliate operating subsidiaries of real estate groups.
It was registered in November 2020 and will be renewed upon expiration. The Company is not materially dependent on any intellectual property. Competition Real Estate Operation Management and Investment Business In the real estate operation management sector, our competitors are commercial property service providers and affiliate operating subsidiaries of real estate groups.
In the future, cash proceeds raised from overseas financing activities may be transferred by us to our PRC subsidiary and the VIE via capital contribution or shareholder loans, as the case may be. We have maintained cash management policies which dictate the purpose, amount and procedure of cash transfers among Dunxin, the VIE and non-VIE subsidiaries.
As of the date of this annual report, neither we nor any of our subsidiaries and the VIE have ever paid dividends or made distributions to U.S. investors. In the future, cash proceeds raised from overseas financing activities may be transferred by us to our PRC subsidiaries via capital contribution or shareholder loans, as the case may be.
Substantially all of our operations are conducted in the PRC through Chutian, which holds all the certificates, business license and other requisite licenses for the microfinance lending businesses. We provided family-run businesses, farmers and individual borrowers with working capital and bridge financing support, primarily through means of short-term loans based upon their needs and qualifications.
We provided family-run businesses, farmers and individual borrowers with working capital and bridge financing support, primarily through means of short-term loans based upon their needs and qualifications. Due to the severe financial restraint, we suspended offering loans to our customers in the second half year of 2019.
Regulations Related to Internet Information Security and Privacy Protection Regulations on Information Security The PRC government has enacted laws and regulations with respect to internet information security. Internet information in China is regulated and restricted from a national security standpoint.
Internet information in China is regulated and restricted from a national security standpoint.
We historically were primarily engaged in the business of providing loan facilities to micro sized enterprises, SMEs, sole proprietors and individuals in Hubei province of the People’s Republic of China. We operated our microfinance lending business through the VIE, Chutian.
We historically were primarily engaged in the business of providing loan facilities to micro sized enterprises, SMEs, sole proprietors and individuals in Hubei province of the People’s Republic of China. 45 Table of Contents We provided family-run businesses, farmers and individual borrowers with working capital and bridge financing support, primarily through means of short-term loans based upon their needs and qualifications.
The total fee for these services is RMB1,200,000.
The total fee for these services is RMB1,800,000. The service agreement is effective from June 1, 2024 to September 1, 2024.
Due to the severe financial restraint, we have suspended offering loans to our customers since the second half year of 2019. 55 Table of Contents The following is a general description of our loan products that were offered prior to the suspension of our microfinance lending business: ☐ Consumer Loans.
In June 2024, we disposed 100% interests in VIE and divested all assets and liabilities of microfinance lending business. 46 Table of Contents The following is a general description of our loan products that were offered prior to the disposal of our microfinance lending business: ☐ Consumer Loans.
The total fee for these services is RMB1,600,000. The service agreement is effective from February 15, 2024 to February 15, 2025, and may be extended by mutual consent. Shenzhen Four Divisions has also entered into certain consultancy agreement with Hong Kong Ren Ying Investment LLC, pursuant to which we provide expertise on enterprise management projects, including planning and advising services.
On November 8, 2024, Hong Kong Three Entities entered into certain consultancy agreement with Hong Kong Ren Ying Investment LLC, pursuant to which we provide services to develop digital assets management and operations systems, including purchase of hardware and servers and maintenance services for 12 months post product delivery. The total fee for these services is RMB 1,230,000.
Our principal executive office is located at 27th Floor, Lianfa International Building, 128 Xudong Road, Wuchang District, Wuhan City, Hubei Province, People’s Republic of China 430063, which is leased by the VIE, Chutian, on June 1, 2021 for a term of five years, and has approximately 1,492 square meters of office space.
Our principal executive office is located at Room 612, 6/F, KaiYue Comm Building, No. 2C, Argyle Street, Mongkok Kowloon, Hong Kong, People’s Republic of China, which is leased by the Hong Kong Three Entities, on February 1, 2024 for a term of one year, and has approximately 152 square meters of office space.
Our ADSs were traded under the symbol “XNY” from November 23, 2010 to March 4, 2018, and on March 5, 2018, our ADSs began trading under the symbol “DXF.” The following diagram illustrates our current corporate structure: 48 Table of Contents The contractual arrangements may not be effective in providing us with control over the VIE, and we may incur substantial costs to enforce the terms of the arrangements.
Our ADSs were traded under the symbol “XNY” from November 23, 2010 to March 4, 2018, and on March 5, 2018, our ADSs began trading under the symbol “DXF.” Effective on January 10, 2025, the Company changed its name to "Eason Technology Limited" and its dual foreign name in Chinese from "敦信金融控股有限公司" to "益生科技集团".
Corporate information Our principal executive offices are currently located at 27th Floor, Lianfa International Building, 128 Xudong Road, Wuchang District, Wuhan City, Hubei Province, the People’s Republic of China. The Company’s current telephone number at this address is +86-27-87303888.
Corporate information Our principal executive offices are currently located at Room 612, 6/f, Kaiyue Comm Building, No. 2C, Argyle Street, Mongkok Kowloon, Hong Kong, the People’s Republic of China. The Company’s current telephone number is+852 92015035.
Removed
In connection with the Divestiture, we divested our wholly-owned subsidiary, Xiniya Holdings Limited, a Hong Kong company, to Qiming Investment Limited, a British Virgin Islands company, in exchange for a purchase consideration of RMB228,000,000 (US$34,588,428).
Added
Upon the transaction contemplated by the Disposition SPA closed on June 12, 2024, we divested microfinance lending business. Separately, we established the headquarters and operate our digital security technology business in Hong Kong.
Removed
In connection with the Acquisition, we purchased all of the issued and outstanding ordinary shares of True Silver for a cash payment of RMB228,000,000 (US$34,588,428) and the issuance of 772,283,308 of our ordinary shares at RMB1.00 (US$0.15) per share, and True Silver became our wholly owned subsidiary.
Added
Chutian was disposed in June 2024. ● Exclusive Consigned Management Service Agreement .
Removed
True Silver utilizes a VIE structure to operate and consolidate 80% of the financial results of Chutian. As a result of the CIB Transaction, Honest Plus and Perfect Lead, the former shareholders of True Silver, became the shareholders of the Company.
Added
In recent years, however, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the “Opinions on Severely Cracking Down on Illegal Securities Activities According to Law,” or the “Opinions,” which were made available to the public on July 6, 2021.
Removed
The CIB Transaction was accounted for as a reverse acquisition, wherein True Silver is considered the acquirer for accounting and financial reporting purposes. Accordingly, we changed our business from an apparel business to a microfinance lending business in Hubei Province, China. We currently operate our microfinance lending business through Chutian.
Added
Under Announcement No. 43, we may be required to file with CSRC for this offering. 37 Table of Contents We do not believe we are required to obtain any permission from any PRC governmental authorities to offer securities to foreign investors.
Removed
The closing of the Disposition is subject to the satisfaction or waiver of certain closing conditions including the payment of the Purchase Price, the receipt of a valuation report from an independent firm, and all consents required to be obtained from or made with any governmental authorities.
Added
The trading symbol of the Company's ADSs and the CUSIP number remain unchanged.
Removed
The following is a brief description of each of Dunxin’s subsidiaries and the VIE: ● Chutian HK . Chutian Financial Holdings (Hong Kong) Limited (“Chutian HK”) is a limited liability company incorporated on August 12, 2016, under the Companies Ordinance of Hong Kong. The total amount of paid-up share capital of Chutian HK is HKD10,000 with 100 ordinary shares.
Added
Recent Developments Closing of January 2025 PIPE The Company entered into a certain securities purchase agreement (the “SPA”) with certain investors (the “Purchasers”) on January 8, 2025, pursuant to which the Company agreed to sell 6,000,000,000 Class A ordinary shares, par value $0.00005 per share (the “Shares”), at a per share purchase price of $0.00005, for an aggregate purchase price of approximately $0.3 million (the “Offering”).

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

40 edited+20 added−21 removed71 unchanged
The loss provisions held represent the difference between the present value of the cash flows expected to be recovered, discounted at the instrument’s original effective interest rate, and the gross carrying value of the instrument prior to any credit impairment.
The loss provisions held represent the difference between the present value of the cash flows expected to be recovered, discounted at the instrument’s original effective interest rate, and the gross carrying value of the instrument prior to any credit impairment.
The allowance is based on our past loan loss history, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors.
The allowance is based on our past loan loss history, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors.
In making this assessment, we consider both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort, based on our historical experience and expert credit assessment including forward-looking information. 74 Table of Contents The quantitative information is a primary indicator of significant increase in credit risk and is based on the change in lifetime probability of default by comparing: ● the remaining lifetime probability of default at the reporting date; with ● the remaining lifetime probability of default for this point in time that was estimated based on facts and circumstances at the time of initial recognition of the exposure.
In making this assessment, we consider both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort, based on our historical experience and expert credit assessment including forward-looking information. 61 Table of Contents The quantitative information is a primary indicator of significant increase in credit risk and is based on the change in lifetime probability of default by comparing: ● the remaining lifetime probability of default at the reporting date; with ● the remaining lifetime probability of default for this point in time that was estimated based on facts and circumstances at the time of initial recognition of the exposure.
When calculating the effective interest rate, we estimate cash flows considering all contractual terms of the financial instrument but does not consider expected credit losses and includes transaction costs, premiums or discounts and fees and points paid or received that are integral to the effective interest rate, such as origination fees. 73 Table of Contents When we revise the estimates of future cash flows, the carrying amount of the respective financial assets or financial liability is adjusted to reflect the new estimate discounted using the original effective interest rate.
When calculating the effective interest rate, we estimate cash flows considering all contractual terms of the financial instrument but does not consider expected credit losses and includes transaction costs, premiums or discounts and fees and points paid or received that are integral to the effective interest rate, such as origination fees. 60 Table of Contents When we revise the estimates of future cash flows, the carrying amount of the respective financial assets or financial liability is adjusted to reflect the new estimate discounted using the original effective interest rate.
Trend Information Other than as disclosed elsewhere herein, we are not aware of any significant trends, uncertainties, demands, commitments or events for the year ended December 31, 2023 that are reasonably likely to have a material adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.
Trend Information Other than as disclosed elsewhere herein, we are not aware of any significant trends, uncertainties, demands, commitments or events for the year ended December 31, 2024 that are reasonably likely to have a material adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.
Ricky Qizhi Wei, our former chairman and chief executive officer, is the sole director of Honest Plus and Perfect Lead. 71 Table of Contents As a condition to the Share Purchase Agreement, on December 10, 2017, Xiniya entered into (1) a Share Transfer Agreement with Qiming Investment pursuant to which Xiniya sold Xiniya Holdings Limited, Xiniya’s wholly-owned subsidiary in Hong Kong, to Mr.
Ricky Qizhi Wei, our former chairman and chief executive officer, is the sole director of Honest Plus and Perfect Lead. 57 Table of Contents As a condition to the Share Purchase Agreement, on December 10, 2017, Xiniya entered into (1) a Share Transfer Agreement with Qiming Investment pursuant to which Xiniya sold Xiniya Holdings Limited, Xiniya’s wholly-owned subsidiary in Hong Kong, to Mr.
Expected credit losses continue to be determined on this basis until there is either a significant increase in the credit risk of an instrument or the instrument becomes credit-impaired. 76 Table of Contents Stage 2: If a financial asset experiences a significant increase in credit risk since initial recognition, an expected credit loss provision is recognized for default events that may occur over the lifetime of the asset.
Expected credit losses continue to be determined on this basis until there is either a significant increase in the credit risk of an instrument or the instrument becomes credit-impaired. 63 Table of Contents Stage 2: If a financial asset experiences a significant increase in credit risk since initial recognition, an expected credit loss provision is recognized for default events that may occur over the lifetime of the asset.
After our assessment of practical circumstance of the debtors and recoverability of loan, we provided 100% impairment loss for those loans with long aging and unlikely to collect in future, and it led to increase of allowance for loan losses in 2023. 79 Table of Contents Sales and marketing expenses Sales and marketing expenses decreased from RMB514,000 ($76,000) in 2022 to nil.
After our assessment of practical circumstance of the debtors and recoverability of loan, we provided 100% impairment loss for those loans with long aging and unlikely to collect in future, and it led to increase of allowance for loan losses in 2023. 67 Table of Contents Sales and marketing expenses Sales and marketing expenses decreased from RMB514,000 ($76,000) in 2022 to nil.
When reviewing our financial statements, you should take into account: ● our critical accounting policies discussed below; ● the related judgment made by our management and other uncertainties affecting the application of these policies; ● the sensitivity of our reported results to changes in prevailing facts and circumstances and our related estimates and assumptions; and ● the risks and uncertainties described under “Risk Factors.” Interest income and expense Interest income and expense for all financial instruments are recognized in “Net interest income” as “Interest income” and “Interest expense” in the Consolidated Statement of Profit and Other Comprehensive Income using the effective interest method.
When reviewing our financial statements, you should take into account: ● our critical accounting policies discussed below; ● the related judgment made by our management and other uncertainties affecting the application of these policies; ● the sensitivity of our reported results to changes in prevailing facts and circumstances and our related estimates and assumptions; and ● the risks and uncertainties described under “Risk Factors.” Interest income and expense Interest income and expense for all financial instruments are recognized in “Net interest income” as “Interest income” and “Interest expense” in the Consolidated Statements of Profit or Loss and Other Comprehensive Income (Loss) using the effective interest method.
For financial assets where concessions are contemplated but not granted the asset is deemed credit impaired when there is observable evidence of credit-impairment including meeting the definition of default. The definition of default (see below) include unlikeliness to pay indicators. 75 Table of Contents Definition of default Critical to the determination of expected credit loss is the definition of default.
For financial assets where concessions are contemplated but not granted the asset is deemed credit impaired when there is observable evidence of credit-impairment including meeting the definition of default. The definition of default (see below) include unlikeliness to pay indicators. 62 Table of Contents Definition of default Critical to the determination of expected credit loss is the definition of default.
There were no uncertain tax positions as of December 31, 2021, 2022 and 2023 and we do not believe that our unrecognized tax benefits will change over the next twelve months. 77 Table of Contents RESULTS OF OPERATIONS The following tables present our summary statements of operations for each of the years ended December 31, 2021, 2022 and 2023.
There were no uncertain tax positions as of December 31, 2022, 2023 and 2024 and we do not believe that our unrecognized tax benefits will change over the next twelve months. 64 Table of Contents RESULTS OF OPERATIONS The following tables present our summary statements of operations for each of the years ended December 31, 2022, 2023 and 2024.
Liquidity and Capital Resources Liquidity Our ongoing cash requirements include development of new business, payments of our employees’ salaries and benefits, office expenses, lending to our customers, repayments of our borrowings, taxes and other operational expenses.
Liquidity and Capital Resources Liquidity Our ongoing cash requirements include development of new business, payments of our employees’ salaries and benefits, office expenses, repayments of our borrowings, taxes and other operational expenses.
We provided family-run businesses, farmers and individual borrowers with working capital and bridge financing support, primarily through means of short-term loans based upon their needs and qualifications.
For microfinance lending business, we provided family-run businesses, farmers and individual borrowers with working capital and bridge financing support, primarily through means of short-term loans based upon their needs and qualifications.
Cash flow generated by/(used in) operating activities Our net cash generated by operating activities primarily consists of profit/loss before income tax, as adjusted by depreciation of property and equipment, amortization of intangible asset, credit impairment losses, and changes in assets and liabilities, which include loan receivables, prepaid expenses, salary and benefit payable, business and other taxes payable, interest payable, and other payable.
Cash flow used in operating activities Our net cash used in operating activities primarily consists of net loss, as adjusted by depreciation of property, plant and equipment, amortization of intangible asset and rights-of-use assets, credit impairment losses, and changes in assets and liabilities, which include loan receivables, prepaid expenses, salary and benefit payable, business and other taxes payable, interest payable, and other payable.
Our net cash used in operating activities for the year ended December 31, 2022 was RMB7.4 million ($1.1 million), which mainly consisted of (i) loss before income tax of RMB30.3 million ($4.5 million) adjusted by credit impairment losses for loans of RMB42.4 million ($6.3 million), (ii) increase in interest payable of RMB18.1 million ($2.7 million) due to non-payment.
Our net cash used in operating activities for the year ended December 31, 2022 was RMB7.4 million ($1.1 million), which mainly consisted of (i) loss before income tax of RMB30.3 million ($4.5 million) adjusted by credit impairment losses for loans of RMB42.4 million ($6.3 million), (ii) increase in interest payable of RMB18.1 million ($2.7 million) due to non-payment. 70 Table of Contents Cash flow used in investing activities There was no cash used in investing activities for the year ended December 31, 2022, 2023 and 2024.
Net (loss) As a result of the foregoing, our net loss increase by RMB365.5 million ($51.3 million) or 1204.4% from RMB30.3 million ($4.5 million) in 2022 to RMB395.8 million ($55.8 million) in 2023.
Net (loss) As a result of the foregoing, our net loss increased by RMB365.5 million ($51.3 million) or 1,204.4% from RMB30.3 million ($4.5 million) in 2022 to RMB395.8 million ($55.8 million) in 2023. B.
We fund working capital and other capital requirements primarily by equity contribution from shareholders, cash flow from operations and equity financing. 81 Table of Contents We had positive cash flows of RMB3.8 million ($0.5 million) for the year ended December 31, 2023, and negative cash flows of RMB807,000 ($119,000) and positive cash flows RMB228,000 ($36,000) for the years ended December 31, 2022 and 2021, respectively.
We fund working capital and other capital requirements primarily by cash flow from operations and equity/debts financing. 68 Table of Contents We had negative cash flows of RMB0.8 million ($0.1 million) for the year ended December 31, 2024, and positive cash flows of RMB3.8 million ($0.5 million) and negative cash flows RMB807,000 ($119,000) for the years ended December 31, 2023 and 2022, respectively.
Credit impairment losses We maintain allowance for loan losses, as presented in our financial statements, at a level we consider to be reasonable by management to absorb probable losses inherent in the loan portfolio as of each balance sheet date. Our management evaluates the adequacy of the allowance for loan losses on a regular basis or more often as necessary.
Credit impairment losses Historically, we maintain allowance for loan losses, as presented in our financial statements, at a level we consider to be reasonable by management to absorb probable losses inherent in the loan portfolio as of each balance sheet date.
Due to the severe financial restraint, we suspended offering loans to our customers in the second half year of 2019 and we entered into business of digital security technology and real estate operation management and investment in 2023. On May 13, 2024, we entered into certain share purchase agreement for the disposition of Chutian HK.
Due to the severe financial restraint, we suspended offering loans to our customers in the second half year of 2019 and we entered into business of digital security technology and real estate operation management and investment in 2023.
The liquidity issue of the Company has further severely affected its ability to pay its taxes, service providers, employees and others. Due to non-payment of its obligations when due, multiple significant legal proceedings were initiated by its shareholders, service providers and others against the Company (see Note 28 of the Consolidated Financial Statements - Legal proceedings for detailed disclosure).
Due to non-payment of its obligations when due, multiple significant legal proceedings were initiated by its shareholders, service providers and others against the Company (see Note 32 of the Consolidated Financial Statements - Commitments and contingencies for detailed disclosure).
Our net cash of RMB6.6 million ($1.0 million) generated by financing activities for the year ended December 31, 2022 was mainly due to the issuance of convertible note. Our net cash of RMB10 million ($1.6 million) used in financing activities for the year ended December 31, 2021 was mainly due to repayment of loans.
Our net cash of RMB14.8 million ($2.1 million) generated by financing activities for the year ended December 31, 2023 was mainly due to issuance of shares and convertible notes. Our net cash of RMB6.6 million ($1.0 million) generated by financing activities for the year ended December 31, 2022 was mainly due to the issuance of convertible note.
For the Years Ended December 31 202 1 202 2 202 3 202 3 RMB RMB RMB $ (amount in thousands) Total borrowings 161,569 161,439 161,439 22,738 Effective interest rate 12.7 % 12.7 % 12.7 % Average duration of borrowings 365 days 365 days 365 days 82 Table of Contents The following table sets forth a summary of our cash flows for the periods indicated: For the Years Ended December 31 202 1 202 2 202 3 202 3 RMB RMB RMB $ (amount in thousands) Net cash generated by/(used in) operating activities 10,288 (7,435 ) (11,017 ) (1,554 ) Net cash (used in) / generated by financing activities (10,000 ) 6,628 14,785 2,085 Net (decrease)/increase/ in cash, cash equivalents and restricted cash 228 (807 ) 3,768 531 Cash, cash equivalents and restricted cash at beginning of the year 97 396 295 43 Exchange losses on cash, cash equivalents and restricted cash 71 706 (1,530 ) (217 ) Cash, cash equivalents and restricted cash at end of the year 396 295 2,533 357 As of December 31, 2023, our cash, cash equivalents and restricted cash amounted to RMB2.5 million ($0.4 million).
For the Years Ended December 31 2022 2023 2024 2023 RMB RMB RMB $ (amount in thousands) Total borrowings 161,569 161,439 - - Effective interest rate 12.7 % 12.7 % - Average duration of borrowings 365 days 365 days - 69 Table of Contents The following table sets forth a summary of our cash flows for the periods indicated: For the Years Ended December 31 2023 2024 2024 RMB RMB $ Net cash used in operating activities (11,017 ) (9,098 ) (1,264 ) Net cash generated by financing activities 14,785 8,272 1,150 Net increase/(decrease) in cash, cash equivalents and restricted cash 3,768 (826 ) (114 ) Cash, cash equivalents and restricted cash at beginning of the year 295 2,533 357 Exchange losses on cash, cash equivalents and restricted cash (1,530 ) (1,628 ) (227 ) Cash, cash equivalents and restricted cash at end of the year 2,533 79 16 As of December 31, 2024, our cash, cash equivalents and restricted cash amounted to RMB79,000 ($11,000 million).
As of December 31, 2023, we had total cash balances of RMB2.5 million ($0.4 million). We have historically met our cash needs through a combination of cash flows from operating activities, loans payable from third parties raised through various securities exchanges, loans from shareholders and related parties, as well as issuance of convertible notes and shares.
We have historically met our cash needs through a combination of cash flows from operating activities, loans payable from third parties raised through various securities exchanges, loans from shareholders and related parties, as well as issuance of convertible notes and shares. The cash requirements are generally for operating activities and repayments of loans from third parties, related parties and shareholders.
Unless the context otherwise indicates, references to “we,” “our,” “us” and the “Company” in Item 5 refer to the post-CIB Transaction combined company, its subsidiaries and the VIE on a consolidated basis. A.
Unless the context otherwise indicates, references to “we,” “our,” “us” and the “Company” in Item 5 refer to the post-CIB Transaction combined company, its subsidiaries and the VIE on a consolidated basis. A. Operating Results Overview Eason is not an operating company but a Cayman Islands holding company with operations primarily conducted by its subsidiaries in China.
For the Year Ended December 31, 202 1 RMB 202 2 RMB 202 3 RMB 202 3 $ (amount in thousands) Interest income on loans 20,627 44,797 11,218 1,582 Interest expenses on loans (21,374 ) (21,296 ) (18,720 ) (2,640 ) Business related taxes and surcharges (452 ) (405 ) (405 ) (57 ) Total interest expense (21,826 ) (21,701 ) (19,125 ) (2,697 ) Net interest income/(loss) (1,199 ) 23,096 (7,907 ) (1,115 ) Credit impairment losses (119,078 ) (42,420 ) (373,647 ) (52,686 ) Net interest income / (loss) after credit impairment losses (120,277 ) (19,324 ) (381,554 ) (53,801 ) Non-interest and other income 387 - - - Operating costs and expenses Sales and marketing (293 ) (514 ) - - General and administrative (7,889 ) (10,506 ) (14,249 ) (2,009 ) Total operating costs and expenses (8,182 ) (11,020 ) (14,249 ) (2,009 ) Loss before income taxes (128,072 ) (30,344 ) (395,803 ) (55,810 ) Income tax expense - - - - Net loss (128,072 ) (30,344 ) (395,803 ) (55,810 ) L oss attributable to: Equity holders of the Company (102,458 ) (24,275 ) (316,642 ) (44,648 ) Non-controlling interest (25,614 ) (6,069 ) (79,161 ) (11,162 ) Net loss (128,072 ) (30,344 ) (95,803 ) (55,810 ) Profit attributable to owners of the Company and Non-controlling interests Profit attributable to owners of the company represents 80% controlling interest of Chutian by us through the VIE arrangement.
For the Year Ended December 31, 2022 RMB 2023 RMB 2024 RMB 2024 $ (amount in thousands) Revenue - - 12,315 1,712 Cost of revenue - - (2,744 ) (381 ) Gross profit - - 9,571 1,331 Interest income on loans 44,797 11,218 - - Interest expense Interest expenses on loans (21,296 ) (18,720 ) (856 ) (119 ) Business related taxes and surcharges (405 ) (405 ) - - Total interest expense (21,701 ) (19,125 ) (856 ) (119 ) Net interest income/(loss) 23,096 (7,907 ) (856 ) (119 ) Credit impairment losses (42,420 ) (373,647 ) - - Net interest loss after credit impairment losses (19,324 ) (381,554 ) (856 ) (119 ) Operating expenses Sales and marketing (514 ) - - - General and administrative (10,506 ) (14,249 ) (11,553 ) (1,606 ) Total operating expenses (11,020 ) (14,249 ) (11,553 ) (1,606 ) Loss on disposal of discontinued operations and subsidiaries - - (497,532 ) (69,165 ) Loss before tax (30,344 ) (395,803 ) (500,370 ) (69,559 ) Income tax expense - - (1,711 ) (238 ) Net loss (30,344 ) (395,803 ) (502,081 ) (69,797 ) Loss attributable to: Equity holders of the Company (24,275 ) (316,642 ) (502,081 ) (69,797 ) Non-controlling interest (6,069 ) (79,161 ) - - Net loss (30,344 ) (395,803 ) (502,081 ) (69,797 ) Loss attributable to owners of the Company and Non-controlling interests Before we disposed 100% interest in VIE and subsidiaries in June 2024, profit/loss attributable to owners of the company represents 80% controlling interest of Chutian by us through the VIE arrangement.
Our technical team will focus on cutting-edge areas such as digital asset security, intellectual property security, AI computing power, etc., to develop application-level security products with proprietary intellectual property rights. Through this initiative, we aim to expand comprehensive strategic partnerships with financial institutions and smart technology enterprises, building a competitive advantage in the fintech and digital security sectors.
Our technical team will focus on cutting-edge areas such as digital asset security, intellectual property security, AI computing power, etc., to develop application-level security products with proprietary intellectual property rights.
COVID-19 discussed in Note 29 Subsequent Event of the Consolidated Financial Statements has further exacerbated the liquidity issue of the Company. The Company has taken an intensive review of operations and expenditures, including intensifying loan and interest collection initiative and monetizing collaterals of loans receivable. The Company has also acquired the financial support letter from Mr.
The Company has taken an intensive review of operations and expenditures, including intensifying loan and interest collection initiative and monetizing collaterals of loans receivable. The Company has also acquired the financial support letter from Mr. Hao Xu, director of the Company, who has expressed the willingness and intention to provide the necessary financial support to the Company.
The cash requirements are generally for operating activities and repayments of loans from third parties, related parties and shareholders. Ever since, securities exchanges have ceased offering any form of financing to us through their platforms as well as loans receivable were credit-impaired, the Company ran into severe liquidity issue.
Ever since, securities exchanges have ceased offering any form of financing to us through their platforms as well as loans receivable were credit-impaired, the Company ran into severe liquidity issue. In the beginning of 2019, the Company began to default on certain loans payable, even though certain loans payable were negotiated for revised repayment terms.
Accrued interest is the present value of the estimated future cash flows of credit-impaired loans expected to be recovered, discounted at the loan’s original effective interest rate. Interest income on loans decreased by RMB33.6 million ($4.7 million) or 75.0% from RMB44.8 million ($6.6 million) in 2022 to RMB11.2 million ($1.6 million) in 2023.
Interest income on loans decreased by RMB33.6 million ($4.7 million) or 75.0% from RMB44.8 million ($6.6 million) in 2022 to RMB11.2 million ($1.6 million) in 2023.
Interest expenses on loans Interest expenses on loans decreased by RMB78,000 ($12,000) or 0.4% in the year ended December 31, 2022, as compared to the year ended December 31, 2021. The decrease was primarily attributable to the decrease of loan payable.
Interest expenses on loans Interest expenses on loans decreased by RMB17.9 million ($0.2.5 million) in the year ended December 31, 2024, as compared to the year ended December 31, 2023. The decrease was primarily attributable to the divesture of microfinance business in 2024.
We are deemed to control 80% of Chutian and have rights to consolidate only 80% of Chutian’s audited financial results, the remaining 20% non-controlling interests relates to 20% interest held by Hubei Daily. 78 Table of Contents Comparison of results of operations for the years ended December 31, 202 3 and 202 2 Interest income on loans Interest income on loans primarily consists of the accrued interest of Stage 3 credit-impaired loans.
We are deemed to control 80% of Chutian and have rights to consolidate only 80% of Chutian’s audited financial results, the remaining 20% non-controlling interests relates to 20% interest held by Hubei Daily. 65 Table of Contents Comparison of results of operations for the years ended December 31, 2024 and 2023 Revenue In 2024, our new business streams, digital security technology and real estate operation management, commenced to generate revenue and amounting to RMB9.0 million ($1.2 million) and RMB3.3 million ($0.5 million) respectively.
Comparison of results of operations for the years ended December 31, 202 2 and 202 1 Interest income on loans Interest income on loans primarily consists of the accrued interest of Stage 3 credit-impaired loans.
Comparison of results of operations for the years ended December 31, 2023 and 2022 Interest income on loans Interest income on loans primarily consists of the accrued interest of Stage 3 credit-impaired loans. Accrued interest is the present value of the estimated future cash flows of credit-impaired loans expected to be recovered, discounted at the loan’s original effective interest rate.
Loans payable are all overdue and have a weighted average annual interest rate of 12.7%. 84 Table of Contents C. Research and Development We have not made significant expenditures on research and development in recent years but consider to invest in this aspect for our new business. D.
Capital Resources We financed or operation primarily through issuance of convertible notes and share in 2023 and 2024. 71 Table of Contents C. Research and Development We have not made significant expenditures on research and development in recent years but consider to invest in this aspect for our new business. D.
Accrued interest is the present value of the estimated future cash flows of credit-impaired loans expected to be recovered, discounted at the loan’s original effective interest rate. Interest income on loans increased by RMB24.2 million ($3.6 million) or 117.5% from RMB20.6 million in 2021 to RMB44.8 million ($6.6 million) in 2022.
Accrued interest is the present value of the estimated future cash flows of credit-impaired loans expected to be recovered, discounted at the loan’s original effective interest rate. In 2024, the Company divested the microfinance business by selling off the VIE and relevant subsidiaries to third party.
Operating Results Overview Dunxin is not an operating company but a Cayman Islands holding company with operations primarily conducted by its subsidiaries and the VIE, Chutian, in China. We were primarily engaged in the business of providing loan facilities to micro sized enterprises, SMEs, sole proprietors and individuals in Hubei province of the People’s Republic of China.
Historically, we were primarily engaged in the business of providing loan facilities to micro sized enterprises, SMEs, sole proprietors and individuals in Hubei province of the People’s Republic of China. After we disposed 100% interests in VIE in June 2024, we focus on real estate management and digital technology business.
Net profit/(loss) As a result of the foregoing, our net loss decrease by RMB97.7 million ($14.5 million) or 76.3.0% from RMB128.1 million in 2021 to RMB30.3 million ($4.5 million) in 2022. B.
Net loss As a result of the foregoing, our net loss increased by RMB106.3 million ($14.8 million) or 26.9% from RMB395.8 million ($55.8 million) in 2023 to RMB502.1 million ($69.8 million) in 2024.
Our net cash generated in operating activities for the year ended December 31, 2021 was RMB10.3 million ($1.6 million), which mainly consisted of (i) loss before income tax of RMB128.1 million ($20.1 million) adjusted by credit impairment losses for loans of RMB119.1 million ($18.5 million), (ii) increase in interest payable of RMB18.6 million ($2.9 million) due to non-payment.. 83 Table of Contents Cash flow used in investing activities There was no cash used in investing activities for the year ended December 31, 2021, 2022 and 2023 Net cash (used in)/generated by financing activities Our net cash of RMB14.8 million ($2.1 million) generated by financing activities for the year ended December 31, 2023 was mainly due to issuance of shares and convertible notes.
Our net cash used in operating activities for the year ended December 31, 2024 was RMB9.1 million ($1.3 million), which mainly consisted of (i) net loss of RMB502.1 million ($69.8 million) adjusted by loss from disposal of discontinued operation of RMB497.5 million ($69.2 million), (ii) increase in trade receivable of RMB12.6 million ($1.7 million) due to non-payment.
This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available. Allowance for loan losses decreased by RMB76.7 million ($11.4 million) or 64.4% from RMB119.1 million ($18.7 million) in 2021 to RMB42.4 million ($6.3 million) in 2022. The economic and business environment in 2021 for SMEs remained very challenging.
This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available. Credit impairment losses was nil and RMB373.6 million ($52.7 million) in 2024 and 2023 respectively. Such decline was attributable to the divesture of microfinance business in 2024.
The increase was primarily attributable to the increase of salary to retain quality employees. General and administrative expenses General and administrative expenses increased by RMB2.6 million ($0.4 million) or 32.9% from RMB7.9 million in 2021 to RMB10.5 million ($1.6 million) in 2022.
General and administrative expenses General and administrative expenses decreased by RMB2.7 million ($0.4 million) or 188.9% from RMB14.2 million ($2.0 million) in 2023 to RMB11.5 million ($1.6 million) in 2024. The decrease was primarily attributable to the disposal VIE and subsidiaries for spinning off the microfinance business.
In the beginning of 2019, the Company began to default on certain loans payable, even though certain loans payable were negotiated for revised repayment terms. With loans receivables continued to be further credit-impaired, all obligations of loans payable were defaulted.
With loans receivables continued to be further credit-impaired, all obligations of loans payable were defaulted. The liquidity issue of the Company has further severely affected its ability to pay its taxes, service providers, employees and others.
Removed
Upon the closing of the disposition, the purchaser will become the sole shareholder of Chutian HK and as a result, assume all assets and liabilities of Chutian HK and subsidiaries owned or controlled by Chutian HK.
Added
Through this initiative, we aim to expand comprehensive strategic partnerships with financial institutions and smart technology enterprises, building a competitive advantage in the fintech and digital security sectors. 58 Table of Contents Recent Developments Closing of January 2025 PIPE The Company entered into a certain securities purchase agreement (the “SPA”) with certain investors (the “Purchasers”) on January 8, 2025, pursuant to which the Company agreed to sell 6,000,000,000 Class A ordinary shares, par value $0.00005 per share (the “Shares”), at a per share purchase price of $0.00005, for an aggregate purchase price of approximately $0.3 million (the “Offering”).
Removed
The closing of the Disposition is subject to the satisfaction or waiver of certain closing conditions including the payment of the Purchase Price, the receipt of a valuation report from an independent firm, and all consents required to be obtained from or made with any governmental authorities.
Added
On January 14, 2025, the transaction contemplated by the SPA consummated when all the closing conditions of the SPA have been satisfied and the Company issued the Shares to the Purchasers pursuant to the SPA. Entry into a Real Property Purchase Agreement On January 14, 2025, the Company and Shenzhen Four Divisions Global Industrial Operations Co. Ltd.
Removed
Recent Developments On May 13, 2024, we entered into certain share purchase agreement (the “ Disposition SPA ”) with True Silver, Chutian HK, and Jianneng Holdings Limited, a British Virgin Islands company which is not affiliate of the Company of any of its directors or officers (the “ Purchaser ”).
Added
(“Shenzhen Four Divisions”), a subsidiary of the Company, entered into certain real property purchase agreement (the “Purchase Agreement”) with Hubei Fuxin Real Estate Co., Ltd.
Removed
Pursuant to the Disposition SPA, the Purchaser agreed to purchase Chutian HK in exchange for nominal cash consideration of US$1 (the “ Purchase Price ”).
Added
(the “Seller”), to acquire from the Seller a property located in Yunmeng County, Xiaogan City, Hubei, China (the “Property”), with a construction area of 1,487 square meters and a transaction value of RMB 8,532,700 (approximately USD 1.17 million) according to a real property appraisal report.
Removed
Upon the closing of the transaction (the “ Disposition ”) contemplated by the Disposition SPA, the Purchaser will become the sole shareholder of Chutian HK and as a result, assume all assets and liabilities of Chutian HK and subsidiaries owned or controlled by Chutian HK.
Added
Pursuant to the Purchase Agreement, the Company agreed to issue a total of 36,000,000,000 restricted Class A ordinary shares, par value $0.00005 each, as consideration to Seller for the property (the “Property Acquisition”). The Purchase Agreement contains customary representations and warranties from both parties, and the closing of the Property Acquisition is subject to various closing conditions set forth therein.
Removed
The closing of the Disposition is subject to the satisfaction or waiver of certain closing conditions including the payment of the Purchase Price, the receipt of a valuation report from an independent firm, and all consents required to be obtained from or made with any governmental authorities. 72 Table of Contents Key factors that affect operating results Our operations and assets are located in China.
Added
On January 16, 2025, the Company consummated the Property Acquisition upon the satisfaction or waiver of all closing conditions set forth in the Purchase Agreement. The Company plans to commence operations in its real estate leasing business and associated management services, which focuses on acquiring and leasing properties to generate stable revenue streams while providing supplementary management services to tenants.
Removed
Particularly, as a company headquartered in Wuhan with substantially all operating activities, revenues and workforce in China, our results of operations and financial outlook have been materially and adversely affected by the COVID-19 pandemic. Our collection activities were significantly limited due to various temporary measures.
Added
The Company’s strategy includes acquiring commercial center assets and industrial park properties, which are then leased to tenants such as medical institutions. This strategy will help the Company generate income through fixed rental agreements and, in certain cases, operational and management service fees based on tenant profitability.
Removed
Moreover, some micro sized enterprises, SMEs, sole proprietors and individuals, who are vulnerable in the face of economic downturn, encountered operational and financial difficulties, which led to the defaults of our loan receivables.
Added
Entry into a Lease Agreement On January 16, 2025, Shenzhen Four Divisions entered into certain Lease Agreement (the “Lease Agreement”) with Hubei Zongyang Hospital Co., Ltd. (the “Tenant”) to lease the Property to the Tenant for the operation of a traditional Chinese medicine hospital.
Removed
Although the government has fully lift the pandemic control measures and local government implemented the incentive policies to boost the economy, the consequence for COVID-19 remains fluid and its long-term implications on our business and results of operations are uncertain. Unfavorable changes could affect demand for services that we provide and could materially and adversely affect our results of operations.
Added
Pursuant to the terms of the Lease Agreement, the Tenant shall pay a monthly rent of RMB 42,000, payable in six-month intervals, with a security deposit equivalent to three months' rent. Shenzhen Four Divisions is responsible for any major repairs, while the Tenant covers utilities and must adhere to approved property use.
Removed
Although we have generally benefited from China’s economic growth, we are also affected by the complexity, uncertainties and changes in the Chinese economic conditions and regulations governing the non- banking financial industry.
Added
Renewals of the Lease Agreement shall require two months' prior notice, and unauthorized subleasing or misuse can result in penalties or termination. Any disputes between Shenzhen Four Division and the Tenant shall be resolved through negotiation or local courts.
Removed
Our results of operations are also affected by the provision for loan losses which are a noncash item and represent an assessment of the risk of future loan losses. The amount of provisions or allowances has been recorded based on management’s assessment.
Added
Entry into a Material Agreement On February 16, 2025, the Company acquired Hongkong Starlux Intelligent Technology, a blockchain technology company focused on blockchain security and the application of blockchain technology.
Removed
We may increase or decrease the allowance for loan based on any such change of economic conditions and the change of management’s assessment. Any change in the allowance for loan losses would have an effect on our financial condition and results of operation.
Added
As of the date of this report, this acquisition was not consummated yet. 59 Table of Contents Key factors that affect operating results Our operations and assets are located in China.
Removed
Business related taxes and surcharges Business related taxes and surcharges remained stable and slightly decreased by RMB47,000 ($7,000) or 10.3% from RMB452,000 in 2021 to RMB405,000 ($60,000) in 2022.
Added
No revenue was achieved from these two sectors in 2023. Cost of sales In 2024, cost of sales for real estate operation management and digital security technology business was RMB 2.7 million ($0.4 million). Cost of sales mainly consisted of salary and cost paid for third party services. No cost was occurred for these two sectors in 2023.
Removed
We assessed credit loss allowance on these credit-impaired loans based on an assessment of the recoverable cash flows under a range of scenarios, including the realization of any collateral held where appropriate.
Added
Gross profit In 2024, gross profit from real estate operation management and digital security technology business was RMB9.6 million ($1.3 million) respectively and gross margin reaches 77.7%. Interest income on loans Interest income on loans primarily consists of the accrued interest of Stage 3 credit-impaired loans.
Removed
The loss provisions held represent the difference between the present value of the cash flows expected to be recovered, discounted at the instrument’s original effective interest rate, and the gross carrying value of the instrument prior to any credit impairment.
Added
Our management evaluates the adequacy of the allowance for loan losses on a regular basis or more often as necessary.
Removed
Other interest and other income Other interest and other income decreased to less than RMB1,000 compared to RMB387,000 ($60,000) in 2021.
Added
Loss on disposal of discontinued operations and subsidiaries In June 2024, the Company divested the microfinance business by selling off VIE and subsidiaries to third party in exchange for nominal cash consideration of $1.
Removed
The main reason was primarily attributable to the fact that in 2021 the company reversed the over-accrued expense which accrued in prior years. 80 Table of Contents Sales and marketing expenses Sales and marketing expenses increased by RMB221,000 ($32,000) from RMB293,000 in 2021 to RMB514,000 ($76,000) in 2022.
Added
The Company recorded a loss amounting to RMB497.5 million ($69.2 million) arising from the transaction. 66 Table of Contents Business related taxes and surcharges Business related taxes and surcharges remained decreased from RMB0.4 million ($57,000) in 2023 to nil in 2024. It was mainly attributable to the disposal of microfinance business in 2024.
Removed
The increase was primarily attributable to increase of legal and other professional services fee, as well as the cost incurred for issuance of convertible notes. Income tax expenses Our income tax expense was nil in 2021 and 2022, primarily due to the fact that accrued interest of Stage 3 credit-impaired loans are not taxable income for tax purposes.
Added
In 2023, the general and administrative expenses incurred by VIE was RMB4.5 million ($0.6 million). Income tax expenses Our income tax expense was nil and RMB1.7 million ($0.2 million) in 2023 and 2024. In 2024, both digital security technology and real estate operation management contributed positive profit margins and income tax expenses were provided accordingly.
Removed
Hao Xu, director of the Company, who has expressed the willingness and intention to provide the necessary financial support to the Company.
Added
We incurred a net loss of RMB 502.1 million (US$69.8 million) and RMB395.8 million (US$55.8 million) during the years ended December 31, 2024 and 2023, respectively. The cash balance, net current liabilities and accumulated loss was RMB79,000 (US$11,000), RMB18.2 million (US$2.5 million) and RMB535.2 million (US$73.3 million) respectively as of December 31, 2024.
Removed
Capital Resources We financed or operation primarily through issuance of convertible notes and share in 2022 and 2023. Tabular Disclosure of Contractual Obligations The following table sets forth our contractual obligations as of December 31, 2023.
Added
Net cash generated by financing activities Our net cash of RMB8.3 million ($1.2 million) generated by financing activities for the year ended December 31, 2024 was mainly due to issuance of convertible notes.

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Our memorandum and articles of association provide for indemnification of directors and officers for actions, costs, charges, losses, damages and expenses incurred or sustained in the execution of their duty in their capacities as such, except by reasons of their own dishonesty, gross negligence, willful misconduct, or fraud, including, among other things, costs, expenses, losses or liabilities incurred by such directors and officers in defending (whether successfully or otherwise) any civil proceedings concerning the Company or our affairs in any court whether in the Cayman Islands or elsewhere. 90 Table of Contents Employment Agreements We have entered into employment agreements with all of our executive officers.
Our memorandum and articles of association provide for indemnification of directors and officers for actions, costs, charges, losses, damages and expenses incurred or sustained in the execution of their duty in their capacities as such, except by reasons of their own dishonesty, gross negligence, willful misconduct, or fraud, including, among other things, costs, expenses, losses or liabilities incurred by such directors and officers in defending (whether successfully or otherwise) any civil proceedings concerning the Company or our affairs in any court whether in the Cayman Islands or elsewhere. 77 Table of Contents Employment Agreements We have entered into employment agreements with all of our executive officers.
Eligibility We may grant awards to our employees, directors, and consultants, including any prospective employees, directors, or consultants who has accepted an offer of employment or service and will be employees, directors, or consultants after the commencement of their service. 87 Table of Contents Vesting schedule The plan administrator sets vesting criteria in its discretion, which, depending on the extent to which the criteria are met, will determine the number of RSUs that will be paid out to the plan participant.
Eligibility We may grant awards to our employees, directors, and consultants, including any prospective employees, directors, or consultants who has accepted an offer of employment or service and will be employees, directors, or consultants after the commencement of their service. 74 Table of Contents Vesting schedule The plan administrator sets vesting criteria in its discretion, which, depending on the extent to which the criteria are met, will determine the number of RSUs that will be paid out to the plan participant.
The audit committee is responsible for, among other things: 88 Table of Contents ● appointing our independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by our independent auditors; ● reviewing with our independent auditors any audit issues and management’s response; ● reviewing and approving all proposed related party transactions; ● discussing the annual audited financial statements with management and our independent auditors; ● reviewing major issues as to the adequacy of our internal controls and any special audit steps adopted in light of our current material weaknesses in internal control; ● annually reviewing and reassessing the adequacy of our audit committee charter; ● such other matters that are specifically delegated to our audit committee by our Board of Directors from time to time; ● meeting separately and periodically with management and our internal and independent auditors; and ● reporting regularly to the full Board of Directors.
The audit committee is responsible for, among other things: ● appointing our independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by our independent auditors; ● reviewing with our independent auditors any audit issues and management’s response; ● reviewing and approving all proposed related party transactions; ● discussing the annual audited financial statements with management and our independent auditors; ● reviewing major issues as to the adequacy of our internal controls and any special audit steps adopted in light of our current material weaknesses in internal control; ● annually reviewing and reassessing the adequacy of our audit committee charter; ● such other matters that are specifically delegated to our audit committee by our Board of Directors from time to time; ● meeting separately and periodically with management and our internal and independent auditors; and ● reporting regularly to the full Board of Directors.
Wei is (i) the sole director of Honest Plus and Perfect Lead, (ii) the sole shareholder of Perfect Lead, (iii) an indirect controlling shareholder of Honest Plus and (iv) has the sole power to vote or to direct the vote of Hesperus Investments. F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation. Not applicable. 91 Table of Contents
Wei is (i) the sole director of Honest Plus and Perfect Lead, (ii) the sole shareholder of Perfect Lead, (iii) an indirect controlling shareholder of Honest Plus and (iv) has the sole power to vote or to direct the vote of Hesperus Investments. F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation. Not applicable. 79 Table of Contents
Award agreement Each award granted under the 2022 Plan shall be evidenced by an award agreement that sets forth terms, conditions, and restrictions, as the plan administrator may from time to time approve; provided, however, that in the event of any conflict between the provisions of the 2022 Plan and any such award agreements, the provisions of the 2022 Plan shall prevail.
Award agreement Each award granted under the 2025 Plan shall be evidenced by an award agreement that sets forth terms, conditions, and restrictions, as the plan administrator may from time to time approve; provided, however, that in the event of any conflict between the provisions of the 2025 Plan and any such award agreements, the provisions of the 2025 Plan shall prevail.
Plan administration The 2022 Plan is administered by a committee of at least one member of the board of directors (the “Board”) of the Company as the Board may appoint or, if no such committee has been appointed by the Board, the Board.
Plan administration The 2025 Plan is administered by a committee of at least one member of the board of directors (the “Board”) of the Company as the Board may appoint or, if no such committee has been appointed by the Board, the Board.
The business address of each of our directors and executive officers is c/o Dunxin Financial Holdings Limited, 27 Floor, Lianfa International Building, 128 Xudong Road, Wuchang District, Wuhan City, Hubei Province, the People’s Republic of China.
The business address of each of our directors and executive officers is c/o Eason Technology Limited, 27 Floor, Lianfa International Building, 128 Xudong Road, Wuchang District, Wuhan City, Hubei Province, the People’s Republic of China.
From August 2002 to February 2011, Mr. Zhou has served as Audit Manager of Shu Lun Pan CPAs (BDO China). Mr. Zhou holds a Bachelor’s degree in Finance from Shanghai University and a Master’s degree in Accounting from University of Macquarie. 86 Table of Contents B.
Zhou has served as Vice President of Halter Finance Group. From August 2002 to February 2011, Mr. Zhou has served as Audit Manager of Shu Lun Pan CPAs (BDO China). Mr. Zhou holds a Bachelor’s degree in Finance from Shanghai University and a Master’s degree in Accounting from University of Macquarie. 73 Table of Contents B.
The compensation committee is responsible for, among other things: ● approving and overseeing the compensation package for our executive officers; ● reviewing and making recommendations to the board with respect to the compensation of our directors; ● reviewing and approving corporate goals and objectives relevant to the compensation of our chief executive officer, evaluating the performance of our chief executive officer in light of those goals and objectives and setting the compensation level of our chief executive officer based on this evaluation; and ● reviewing periodically and making recommendations to the board regarding any long-term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans. 89 Table of Contents Nominating and Corporate Governance Committee Our nominating and corporate governance committee consists of Hao Xu, Longwen He and Ai (Kosten) Mei, and is chaired by Ai (Kosten) Mei.
The compensation committee is responsible for, among other things: ● approving and overseeing the compensation package for our executive officers; ● reviewing and making recommendations to the board with respect to the compensation of our directors; ● reviewing and approving corporate goals and objectives relevant to the compensation of our chief executive officer, evaluating the performance of our chief executive officer in light of those goals and objectives and setting the compensation level of our chief executive officer based on this evaluation; and ● reviewing periodically and making recommendations to the board regarding any long-term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans. 76 Table of Contents Nominating and Corporate Governance Committee Our nominating and corporate governance committee consists of Halen Fu, Siyuan Xu and Stephen Liao, and is chaired by Halen Fu.
Exercise of options Any option granted hereunder will be exercisable according to the terms of the 2022 Plan and at such times and under such conditions as determined by the plan administrator and set forth in the award agreement. C. Board Practices Board of Directors Mr.
Exercise of options Any option granted hereunder will be exercisable according to the terms of the 2025 Plan and at such times and under such conditions as determined by the plan administrator and set forth in the award agreement. C.
Zhou served as Secretary of the Board of Shandong Xinlv Food Corporation Limited, a food processing company. From October 2014 to June 2016, Mr. Zhou has served as CFO of American Lorain Corporation (NYSE American: PLAG), a food processing company. From March 2011 to February 2014, Mr. Zhou has served as Vice President of Halter Finance Group.
From July 2016 to August 2017, Mr. Zhou served as Secretary of the Board of Shandong Xinlv Food Corporation Limited, a food processing company. From October 2014 to June 2016, Mr. Zhou has served as CFO of American Lorain Corporation (NYSE American: PLAG), a food processing company. From March 2011 to February 2014, Mr.
(1) For each person and group included in this column, percentage ownership is calculated by dividing the number of Class A and Class B ordinary shares beneficially owned by such person or group by the sum of the total number of Class A and Class B ordinary shares outstanding, which is 11,778,412,360 ordinary shares (including 11,266,180,123 Class A ordinary shares and 512,232,237 Class B ordinary shares) as of the date of this annual report, plus the number of Class A and Class B ordinary shares such person or group has the right to acquire upon the exercise of options, warrants or other rights within 60 days after the date of this annual report.
(1) For each person and group included in this column, percentage ownership is calculated by dividing the number of Class A and Class B ordinary shares beneficially owned by such person or group by the sum of the total number of Class A and Class B ordinary shares outstanding, which is 83,276,688,040 ordinary shares (including 82,764,455,803 Class A ordinary shares and 512,232,237 Class B ordinary shares) as of the date of this annual report, plus the number of Class A and Class B ordinary shares such person or group has the right to acquire upon the exercise of options, warrants or other rights within 60 days after the date of this annual report.
Compensation Compensation of Directors and Executive Officers For the fiscal year ended December 31, 2023, we incurred an aggregate of approximately RMB957,000 ($135,000) in compensation to our executive officers and our non-executive directors.
Compensation Compensation of Directors and Executive Officers For the fiscal year ended December 31, 2024, we incurred an aggregate of approximately RMB1,287,000 ($179,000) in compensation to our executive officers and our non-executive directors.
Other than the above-mentioned statutory contributions mandated by applicable PRC law, we have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our executive officers and directors. 2022 Equity Incentive Plan Our board of directors adopted the 2022 Equity Incentive Plan in July, effective as of July 8, 2022, to attract and retain the best available personnel, provide additional incentives to employees, directors and consultants and promote the success of our business.
Other than the above-mentioned statutory contributions mandated by applicable PRC law, we have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our executive officers and directors. 202 5 Equity Incentive Plan Our board of directors adopted and the shareholders approved the 2025 Equity Incentive Plan (“2025 Plan”), effective on December 13, 2024, to attract and retain the best available personnel, provide additional incentives to employees, directors and consultants and promote the success of our business.
The following describes the principal terms of the 2022 Plan. Types of awards The 2022 Plan permits the grant of Options, Share Appreciation Rights, Restricted Shares, Restricted Share Units, and Other Share Based Awards.
Types of awards The 2025 Plan permits the grant of Options, Share Appreciation Rights, Restricted Shares, Restricted Share Units, and Other Share Based Awards.
He has served as the director of investment and mergers of Zhongliang Holdings Group Co., Ltd. since August 2021. From March 2018 to June 2021, Mr. He served as the director of investment and financing of Shenzhen Baoneng Investment Group Co., Ltd. Between July 2014 and February 2018, Mr.
He was appointed as director of the Company on October 16, 2023. Mr. He has served as the director of investment and mergers of Zhongliang Holdings Group Co., Ltd. since August 2021. From March 2018 to June 2021, Mr. He served as the director of investment and financing of Shenzhen Baoneng Investment Group Co., Ltd.
Our board of directors currently consists of six (6) directors, three (3) of whom are independent directors. We maintain a nominating and corporate governance committee and a compensation committee comprised solely of the independent director.
Board Practices Board of Directors Our board of directors currently consists of seven (7) directors, four (4) of whom are independent directors. We maintain a nominating and corporate governance committee and a compensation committee comprised solely of the independent director.
Zhou served as Vice General Manager of Neveen Assets Management Co., Ltd. from January to December 2020. From September 2017 to January 2020, Mr. Zhou served as Partner and CFO of Fengying Assets Management Co., Ltd., an assets management company. From July 2016 to August 2017, Mr.
Xiang (Johnny) Zhou , Chief Financial Officer. Mr. Zhou joined the Company as chief financial officer in March 2021. Mr. Zhou served as Vice General Manager of Neveen Assets Management Co., Ltd. from January to December 2020. From September 2017 to January 2020, Mr. Zhou served as Partner and CFO of Fengying Assets Management Co., Ltd., an assets management company.
These requirements differ from the Companies Act. As described below, our audit committee, compensation committee and nominating and corporate governance committees are composed of three (3) members, one of whom is an independent directors. Audit Committee Our audit committee consists of Hao Xu, Longwen He and Ai (Kosten) Mei and is chaired by Hao Xu.
These requirements differ from the Companies Act. As described below, our audit committee, compensation committee and nominating and corporate governance committees are composed of at least three(3) members, most of whom are independent directors. 75 Table of Contents Audit Committee Our audit committee consists of Hao Xu, Siyuan Xu, Halen Fu and Stephen Liao and is chaired by Hao Xu.
Gao served as the investment director at Wuhan Jiupai Investment Management Ltd. Mr. Gao obtained his bachelor’s degree in business and finance from University of Wales Trinity Saint David in 2015 and obtained his master’s degree in “China and Globalization” from King’s College London in 2016. . Weidong Xu, Director. Mr.
Gao obtained his bachelor’s degree in business and finance from University of Wales Trinity Saint David in 2015 and obtained his master’s degree in “China and Globalization” from King’s College London in 2016. . Hao Xu, Director . Mr. Xu was appointed as director of the Company on October 16, 2023. Mr.
Under the 2022 Equity Incentive Plan, or 2022 Plan, the maximum aggregate number of shares that may be issued pursuant to all awards shall be 384,000,000 Class A ordinary shares. As of the date of this annual report, we have granted an aggregate of 384,000,000 Class A ordinary shares to qualified persons under the 2022 Plan.
Under the 2025 Plan, the maximum aggregate number of shares that may be issued pursuant to all awards shall be 2,000,000,000 Class A ordinary shares. As of the date of this annual report, we have not granted any Class A ordinary shares under the 2025 Plan. The following describes the principal terms of the 2025 Plan.
He served as a corporate business manager at the Agricultural Bank of China, Shenzhen Branch. Mr. He received his bachelor’s degree in economics from Chongqing Technology and Business University and his master’s degree in economics from South China Normal University. Xiang (Johnny) Zhou , Chief Financial Officer. Mr. Zhou joined the Company as chief financial officer in March 2021. Mr.
Between July 2014 and February 2018, Mr. He served as a corporate business manager at the Agricultural Bank of China, Shenzhen Branch. Mr. He received his bachelor’s degree in economics from Chongqing Technology and Business University and his master’s degree in economics from South China Normal University. Yuan Gao, Director. Mr.
Yuan Gao , Director. Mr. Gao, our former CEO, has extensive experience in equity investment, investment banking, mergers and acquisitions, and asset reorganization, and maintains a keen interest in company operation, strategic planning and business administration. Mr.
Gao, our former CEO, has extensive experience in equity investment, investment banking, mergers and acquisitions, and asset reorganization, and maintains a keen interest in company operation, strategic planning and business administration. Mr. Gao was awarded the Hubei Venture Capital Investment Outstanding Contribution Award, and also serves as an expert adjudicator in the China Innovation & Entrepreneurship Competition.
Share Ownership The following table sets forth information with respect to the beneficial ownership, within the meaning of Rule 13(d)(3) of the Exchange Act, based on 11,778,412,360 of our ordinary shares (including 11,266,180,123 Class A ordinary shares, par value $0.00005 per share and 512,232,237 Class B ordinary shares, par value US$0.00005 each) outstanding as of the date of this report, by: ● each of our directors and executive officers; and ● each person known to us to own beneficially more than 5% of our ordinary shares.
Share Ownership The following table sets forth information with respect to the beneficial ownership, within the meaning of Rule 13(d)(3) of the Exchange Act, based on 82,764,455,803 of our ordinary shares (including 82,764,455,803 Class A ordinary shares, par value $0.00005 per share and 512,232,237 Class B ordinary shares, par value US$0.00005 each) outstanding as of the date of this report, by: ● each of our directors and executive officers; and ● each person known to us to own beneficially more than 5% of our ordinary shares. 78 Table of Contents Ordinary shares beneficially owned Class A ordinary shares Class B ordinary shares Total ordinary shares on as-converted basis % of total ordinary shares on as-converted basis (1) % of aggregate voting power (2) Directors and Executive Officers: Longwen (Stanley) He — — — * * Yuan Gao — — — — — Hao Xu — — — * * Siyuan Xu — — — — — Jun Hu — — — — — Stephan Liao — — — — — Halen Fu — — — — — Xiang (Johnny) Zhou 8,640,000 — 8,640,000 * * All directors and executive officers as a group (8 persons) 8,640,000 — 8,640,000 * * Principal Shareholders: Ricky Qizhi Wei (3) — 512,232,237 512,232,237 * * Less than 1%.
Ai (Kosten) Mei as the new Chief Executive Officer and Chairman . 85 Table of Contents The following table sets forth information regarding our directors and executive officers as of the date of this annual report.
Jun Hu, Mr. Stephen Liao and Mr. Halen Fu as independent directors of the Board. 72 Table of Contents The following table sets forth information regarding our directors and executive officers as of the date of this annual report.
The compensation committee assists the board in reviewing and approving the compensation structure of the directors and executive officers, including all forms of compensation to be provided to our directors and executive officers. Members of the compensation committee are not prohibited from direct involvement in determining their own compensation.
Compensation Committee Our compensation committee consists of Stephen Liao, Halen Fu and Siyuan Xu and is chaired by Stephen Liao. The compensation committee assists the board in reviewing and approving the compensation structure of the directors and executive officers, including all forms of compensation to be provided to our directors and executive officers.
Gao was awarded the Hubei Venture Capital Investment Outstanding Contribution Award, and also serves as an expert adjudicator in the China Innovation & Entrepreneurship Competition. From November 2020 to April 2023, Mr. Gao served as the managing director at Wuhan Zhiyuanjunhe Medical Technology Ltd. From October 2017 to October 2020, Mr.
From November 2020 to April 2023, Mr. Gao served as the managing director at Wuhan Zhiyuanjunhe Medical Technology Ltd. From October 2017 to October 2020, Mr. Gao served as the investment director at Wuhan Jiupai Investment Management Ltd. Mr.
Longwen (Stanley) He as directors of the Board . On October 24, 2023, Mr. Yuan Gao resigned from his position as the Chief Executive Officer of the Company and Chairman of the Board. Mr. Gao will remain as a director of the Board. On October 24, 2023, the Board appointed Mr.
Longwen (Stanley) He, a current director of the Board, as the new Chief Executive Officer and the Chairman of the Board, and Mr. Siyuan Xu as a director of the Board. On March 14, 2025, Mr. Weidong Xu resigned from his positions as a director of the Board. On March 26, 2025, the Board ratified and appointed Mr.
Name Age Position Ai (Kosten) Mei 46 Director (Chairman); Chief Executive Officer Yuan Gao 31 Director Weidong Xu 55 Director Qi Chen 31 Independent Director Hao Xu 35 Director Longwen (Stanley) He 36 Independent Director Xiang (Johnny) Zhou 48 Chief Financial Officer Ai (Kosten) Mei, CEO and Chairman of the Board , was appointed as the CEO and Chairman on October 24, 2023.
Name Age Position Longwen (Stanley) He 37 Director (Chairman); Chief Executive Officer Yuan Gao 32 Director Hao Xu 36 Director Siyuan Xu 32 Independent director Jun Hu 35 Independent director Stephan Liao 40 Independent director Halen Fu 51 Independent director Xiang (Johnny) Zhou 49 Chief Financial Officer Longwen (Stanley) He, CEO and Chairman of the Board . Mr.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A. Directors and Senior Management On February 8, 2023, Mr. Weitao Liang tendered his resignation as a director, effectively immediately. On May 4, 2023, Mr. Ricky Qizhi Wei resigned from his position as the Chief Executive Officer and Chairman. On May 4, 2023, the Board appointed Mr.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A. Directors and Senior Management On September 23, 2024, Mr. Ai (Kosten) Mei resigned from his positions as the Chief Executive Officer and Chairman of the board of directors of the Company. Mr. Qi Chen resigned from his position as a director of the Board. On the same date, the Board appointed Mr.
Xu received his bachelor’s degree in business administration from Wuhan University, and his bachelor’s degree in economics from Zhongnan University of Economics and Law. Longwen (Stanley) He, Director . Mr. He was appointed as director of the Company on October 16, 2023. Mr.
Xu received his bachelor’s degree in business administration from Wuhan University, and his bachelor’s degree in economics from Zhongnan University of Economics and Law. Siyuan Xu, Independent director . Mr. Xu has served as the president of Xinnuohan Investment Holding Shenzhen Co., Ltd. since August 2022, where he is responsible for the overall management of the company.
Removed
Yuan Gao as the Chief Executive Officer and the Chairman of the Board, and Messrs. Lei Fu and Yong Wang as directors of the Board. On October 16, 2023, Messrs. Lei Fu and Yong Wang tendered his resignation as a director . The board appoin t ed of Mr. Hao Xu and Mr.
Added
From May 2020 to September 2024, he was the president of Guangdong Nuohan Non-performing Assets Disposal Co., Ltd., overseeing its daily operations. Before that, he held the position of vice president at Guangdong Nuohan Non-performing Assets Disposal Co., Ltd. from July 2019 to May 2020. Mr.
Removed
Mr. Mei served as the chief executive officer of Yoshan Investment Co., Ltd. from November 2015 to November 2019. Between October 2009 to October 2015, Mr. Mei served as the chief executive officer of Hong Kong Duyuan Technology Development Co., Ltd. Mr. Mei received his bachelor’s degree in international financial and trade from Zhongnan University of Finance and Economics.
Added
Xu earned a bachelor's degree in marketing from Guangdong University of Finance in July 2016. Jun Hu, Independent director . Mr. Hu is working as the president in TK Health Technology Co., Ltd., a pharmaceutical chain company, responsible for strategy and operational management from February 2024 until present. From October 2019 to January 2024, Mr.
Removed
Xu became a director in October 2020 and joined Chutian in 2015. He is currently responsible for the overall operation strategy and business planning, and is also a member of the Chutian’s Risk Management Committee and Innovation Credit Products Team. Mr.
Added
Jun He worked as a director in Stone Energy Technology Co., Ltd., responsible for business development and mergers and acquisitions business. Mr. Hu received his bachelor’s degree of economics in accounting from Hubei University in 2013. Stepphan Liao, Independent director Mr.
Removed
Xu graduated from Zhongnan University of Economics and Law with a major in finance and has more than 20 years of financial experience in credit risk management. He is familiar with corporate guarantee, pawn broking, micro-credit and other debt business review management, and has a strong knowhow and practical experience in the due diligence, risk review and post-loan management.
Added
Liao is working as the vice president of the South China Region in iSoftStone Information Technology (Group) Co., Ltd., a company in the software and information technology services industry, responsible for software development and digital technology service team management, key customer service and market expansion, from April 2014 until present. Mr.
Removed
Qi Chen , Director . Mr. Chen has served as an independent director of the Company since August 26, 2021. Mr.
Added
Liao obtained his bachelor’s degree in computer science and technology from Jiangxi Normal University in 2008. Halen Fu, Independent director Mr. Fu is working as the vice president of Zhengda Medical Group Co., Ltd. from February 2022 until present, responsible for risk and compliance management. Mr.
Removed
Chen has served as a senior manager of Baker Tilly China Certified Public Accountants since March 2019, primarily responsible for organizing and leading the project implementation and project process management, and providing consultation services about internal control and risk management systems. Since Mr.
Added
Fu worked as the compliance director in Dezhao Capital Management Co., Ltd. from October 2017 to January 2022, responsible for project and investment review. Mr. Fu obtained his bachelor’s degree of economics in finance from Hunan University of Finance and Economics in 1996, and his master’s degree of business administration from Wuhan University in 2005.
Removed
Chen’s joining Baker Tilly China Certified Public Accountants in December 2016, he consecutively served as a consultant of Enterprise Management Consulting Division from December 2016 to September 2017 and a senior consultant from September 2017 to March 2019, primarily responsible for evaluating the internal control systems of and providing risk and financial management consulting services for more than 30 enterprises.
Added
Members of the compensation committee are not prohibited from direct involvement in determining their own compensation.
Removed
Mr. Qi Chen received his bachelor’s degree in Business and Financial Management from University of Hull, and master’s degree in International Business from University of Birmingham. He is a Certified Management Accountant (U.S.). Hao Xu, Director . Mr. Xu was appointed as director of the Company on October 16, 2023. Mr.
Removed
Ricky Qizhi Wei beneficially owns more than 50% of voting power for the election of directors and therefore we are a “controlled company” as defined in Section 801 of the Company Guide.
Removed
As a result, we are exempt from certain of the Company Guide corporate governance requirements, including the requirement that a majority of the board of directors be independent, the requirement applicable to the nomination process of directors and the requirements applicable to the determination or recommendation of executive compensation by a committee comprised of independent directors or by a majority of the independent directors and the additional requirements concerning compensation committee independence, compensation advisor engagement and independence.
Removed
Compensation Committee Our compensation committee consists of Hao Xu, Longwen He and Ai (Kosten) Mei and is chaired by Longwen He. Longwen He satisfies the “independence” requirements of the Company Guide.
Removed
The Chief Executive Officer may not be present at any committee meeting during which his or her compensation is deliberated.
Removed
Ordinary shares beneficially owned Class A ordinary shares Class B ordinary shares Total ordinary shares on as-converted basis % of total ordinary shares on as-converted basis (1) % of aggregate voting power (2) Directors and Executive Officers: Ai (Kosten) Mei 155,040,000 — 155,040,000 1.32 % * Yuan Gao — — — * * Weidong Xu 5,760,000 — 5,760,000 * * Qi Chen — — — * * Hao Xu 84,720,000 — 84,720,000 * * Longwen (Stanley) He 112,560,000 — 112,560,000 * * Xiang (Johnny) Zhou 5,760,000 — 5,760,000 * * All directors and executive officers as a group (7 persons) 363,840,000 — 363,840,000 3.09 % * Principal Shareholders: Ricky Qizhi Wei (3) — 512,232,237 512,232,237 4.35 % 69.45 % * Less than 1%.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

8 edited+1 added−0 removed29 unchanged
The interest expenses were RMB0.7 million ($0.1 million), RMB118,000 ($17,000) and RMB107,000 ($15,000) in 2021, 2022 and 2023, respectively. 92 Table of Contents As of December 31, 2022 and 2023, loans payable were RMB0.9 million ($0.1 million) and RMB0.9 million ($0.1 million), and the related interest payable was RMB1.8 million ($0.3 million) and RMB1.9 million ($0.3 million), respectively. 2.
The interest expenses were RMB0.7 million ($0.1 million), RMB118,000 ($17,000) and RMB107,000 ($15,000) in 2021, 2022 and 2023, respectively. 80 Table of Contents As of December 31, 2022 and 2023, loans payable were RMB0.9 million ($0.1 million) and RMB0.9 million ($0.1 million), and the related interest payable was RMB1.8 million ($0.3 million) and RMB1.9 million ($0.3 million), respectively. 2.
On May 20, 2020, due to the failure of Chutian to fulfil its obligation to repay the principal amount determined above, the court issued a consumer restriction order against Mr. Wei to restrict high consumption and high expenditure behaviors.
On May 20, 2020, due to the failure of Chutian to fulfill its obligation to repay the principal amount determined above, the court issued a consumer restriction order against Mr. Wei to restrict high consumption and high expenditure behaviors.
The loan was guaranteed by Ms. Jing Liang, a shareholder who owned 4.3% of the VIE. As of December 31, 2022 and 2023, this loan was overdue. 94 Table of Contents C. Interests of Experts and Counsel Not applicable.
The loan was guaranteed by Ms. Jing Liang, a shareholder who owned 4.3% of the VIE. As of December 31, 2022 and 2023, this loan was overdue. 82 Table of Contents C. Interests of Experts and Counsel Not applicable.
For a description of these VIE Agreements, see “Item 4.A. History and Development of the Company.” 1. Loans payable to related parties 1.1 In 2018, loans payable of RMB60.0 million ($9.4 million) were borrowed from a related party, Hubei Shanyin Wealth Management Co., Ltd, a company that is 69.5% owned by the former Chairman and the Chief Executive Officer, Mr.
Loans payable to related parties 1.1 In 2018, loans payable of RMB60.0 million ($9.4 million) were borrowed from a related party, Hubei Shanyin Wealth Management Co., Ltd, a company that is 69.5% owned by the former Chairman and the Chief Executive Officer, Mr.
Set forth below is a description of all of our material related party transactions since the beginning of 2020 up to the date of this annual report. Contractual Arrangements with the VIE and its Shareholders We currently engage and operate our microfinance business through Chutian, the VIE, through the VIE Agreements.
Set forth below is a description of all of our material related party transactions since the beginning of 2022 up to the date of this annual report. Contractual Arrangements with the VIE and its Shareholders Before we disposed our 100% interests in VIE, we historically engaged and operate in microfinance business.
Share Ownership.” As of the date of this annual report, we had 11,266,180,123 Class A ordinary shares and 512,232,237 Class B issued and outstanding, and Deutsche Bank Trust Company Americas, as the depositary of our ADS facility, was the only record holder of our ordinary shares in the United States, holding 2,238,197,689 ordinary shares or 4,662,912 ADSs or approximately 19.0% of our total outstanding ordinary shares.
Share Ownership.” As of the date of this annual report, we had 82,764,455,803 Class A ordinary shares and 512,232,237 Class B issued and outstanding, and Deutsche Bank Trust Company Americas, as the depositary of our ADS facility, was the only record holder of our ordinary shares in the United States, holding 82,732,153,360 ordinary shares or 1,378,869 ADSs or approximately 99.3% of our total outstanding ordinary shares.
Violation of this order carries the imposition of fines and detention, and in circumstances sufficiently serious to constitute a crime, pursuit of criminal liability according to law.
Violation of this order carries the imposition of fines and detention, and in circumstances sufficiently serious to constitute a crime, pursuit of criminal liability according to law. On July 27, 2020, the court terminated the enforcement proceeding and will recommence the enforcement proceeding if enforceable assets are located and meet the enforcement requirements.
On July 27, 2020, the court terminated the enforcement proceeding and will recommence the enforcement proceeding if enforceable assets are located and meet the enforcement requirements. 93 Table of Contents As a result of the court ruling mentioned above, the interest expense on these loans was RMB 2.0 million ($0.3 million) in 2022 and 2023 respectively.
No further process as of this reporting date. 81 Table of Contents As a result of the court ruling mentioned above, the interest expense on these loans was RMB 2.0 million ($0.3 million) in 2022 and 2023 respectively.
Added
For a description of these VIE Agreements, see “Item 4.A. History and Development of the Company.” Following were the related party transactions occurred before 20224 and there were no related party transaction occurred in 2024. 1.

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