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Kaixin Holdings

Kaixin HoldingsKXIN财报

Nasdaq

Kaixin Holdings is a China-based digital entertainment and social service provider. It primarily offers casual mobile games, social interaction platforms and related value-added services targeting mass consumers in the Chinese market, focusing on younger user groups that prefer light, leisure-oriented digital content experiences.

What changed in Kaixin Holdings's 20-F — 2022 vs 2023

Top changes in Kaixin Holdings's 2023 20-F

496 paragraphs added · 773 removed · 370 edited across 6 sections

Item 2. Properties

Properties — owned and leased real estate

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ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE ​ 4 ​ ​ ​ ​ ​ ​ ​ ITEM 3. KEY INFORMATION ​ 4 ​ ​ ​ ​ ​ ​ ​ ITEM 4. INFORMATION ON THE COMPANY ​ 55 ​ ​ ​ ​ ​ ​ ​
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE . ​ 4 ​ ​ ​ ​ ​ ​ ​ ITEM 3. KEY INFORMATION . ​ 4 ​ ​ ​ ​ ​ ​ ​ ITEM 4. INFORMATION ON THE COMPANY . ​ 42 ​ ​ ​ ​ ​ ​ ​

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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These risks and challenges include our ability to, among other things: ● source, market and sell used and new automobiles in substantial volumes and on favorable terms; ● effectively manage and expand our network of Dealerships; ● facilitate automotive financing to a growing number of car buyers; ● maintain and enhance our relationships and business collaboration with dealers and financial institutions; ● improve our operational efficiency; ● attract, retain and motivate talented employees, particularly sales and marketing and technology personnel to support our business growth; ● adapt to technological changes, such as the development of autonomous vehicles, new products and services, new business models and new methods of travel; 17 Table of Contents ● enhance our technology infrastructure to support the growth of our business and maintain the security of our system and the confidentiality of the information provided and collected across our system; ● navigate economic conditions and fluctuations in the pandemic environment; ● implement our business strategies, including the offering of new services; and ● defend ourselves against legal and regulatory actions, such as actions involving intellectual property or data privacy claims.
These risks and challenges include our ability to, among other things: ● source, market and sell used and new automobiles in substantial volumes and on favorable terms; ● effectively manage and expand our network of Dealerships; 11 Table of Contents ● facilitate automotive financing to a growing number of car buyers; ● maintain and enhance our relationships and business collaboration with dealers and financial institutions; ● improve our operational efficiency; ● attract, retain and motivate talented employees, particularly sales and marketing and technology personnel to support our business growth; ● adapt to technological changes, such as the development of autonomous vehicles, new products and services, new business models and new methods of travel; ● enhance our technology infrastructure to support the growth of our business and maintain the security of our system and the confidentiality of the information provided and collected across our system; ● navigate economic conditions and fluctuations in the pandemic environment; ● implement our business strategies, including the offering of new services; and ● defend ourselves against legal and regulatory actions, such as actions involving intellectual property or data privacy claims.
To the extent cash or assets in the business are in the PRC/Hong Kong or a PRC/Hong Kong entity, funds or assets may not be available to fund operations or for other use outside of the PRC/Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of the holding company, its subsidiaries, or the consolidated VIEs by the PRC government to transfer cash or assets. o Our adjustment of corporate structure and business operations and the termination of contractual arrangements with the VIEs may not be liability-free.
To the extent cash or assets in the business are in the PRC/Hong Kong or a PRC/Hong Kong entity, funds or assets may not be available to fund operations or for other use outside of the PRC/Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of the holding company or its subsidiaries by the PRC government to transfer cash or assets. o Our adjustment of corporate structure and business operations and the termination of contractual arrangements with the VIEs may not be liability-free.
In addition, any actions by the Chinese government to exert more oversight and control over securities that are listed overseas or foreign investment in China-based issuers could significantly limit or completely hinder our ability to continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless.
Any actions by the Chinese government to exert more oversight and control over securities that are listed overseas or foreign investment in China-based issuers could significantly limit or completely hinder our ability to continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless.
Our historical financial and operating performance may not be indicative of, or comparable to, its future prospects and results of operations. Although Kaixin Auto Group (“KAG”) was formed in 2011, it has changed its business model significantly since its initial launch.
Our historical financial and operating performance may not be indicative of, or comparable to, its future prospects and results of operations. Although Kaixin Auto Group was formed in 2011, it has changed its business model significantly since its initial launch.
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 our contractual arrangements with borrowers in the event of the imposition of statutory liens, death, bankruptcy or criminal proceedings.
There are 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 our contractual arrangements with borrowers in the event of the imposition of statutory liens, death, bankruptcy or criminal proceedings.
Pursuant to these regulations, any outbound investment of PRC enterprises in the area and industry that are not sensitive is required to be filed with the MOFCOM and the NDRC or their local branches. 45 Table of Contents Any failure or inability by enterprises to comply with SAFE and outbound investment related regulations may subject the responsible officers of such enterprises to fines or legal sanctions, and may result in an adverse impact on us, such as restrictions on the ability to contribute capital and receive dividends.
Pursuant to these regulations, any outbound investment of PRC enterprises in the area and industry that are not sensitive is required to be filed with the MOFCOM and the NDRC or their local branches. 33 Table of Contents Any failure or inability by enterprises to comply with SAFE and outbound investment related regulations may subject the responsible officers of such enterprises to fines or legal sanctions, and may result in an adverse impact on us, such as restrictions on the ability to contribute capital and receive dividends.
Complying with the requirements of these regulations to complete such transactions could be time-consuming, and any required approval processes, including obtaining approvals or clearance from the MOFCOM, may delay or inhibit our ability to complete such transactions, which could affect its ability to expand its business or maintain its market share. 44 Table of Contents Any failure by us to make full contributions to various employee benefit plans as required by PRC laws may expose us to potential penalties.
Complying with the requirements of these regulations to complete such transactions could be time-consuming, and any required approval processes, including obtaining approvals or clearance from the MOFCOM, may delay or inhibit our ability to complete such transactions, which could affect its ability to expand its business or maintain its market share. 32 Table of Contents Any failure by us to make full contributions to various employee benefit plans as required by PRC laws may expose us to potential penalties.
We may become subject to more stringent requirements with respect to matters including cross-border investigation and enforcement of legal claims. 36 Table of Contents In addition, on December 28, 2021, the CAC, the National Development and Reform Commission (“NDRC”), and several other administrations jointly issued the revised Measures for Cybersecurity Review (the “Revised Review Measures”), which became effective and replaced the Measures for Cybersecurity Review on February 15, 2022.
We may become subject to more stringent requirements with respect to matters including cross-border investigation and enforcement of legal claims. 25 Table of Contents In addition, on December 28, 2021, the CAC, the National Development and Reform Commission (“NDRC”), and several other administrations jointly issued the revised Measures for Cybersecurity Review (the “Revised Review Measures”), which became effective and replaced the Measures for Cybersecurity Review on February 15, 2022.
Because we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including: ● the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC; ● the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; ● the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and 51 Table of Contents ● the selective disclosure rules by issuers of material non-public information under Regulation FD.
Because we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including: ● the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC; ● the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; ● the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and ● the selective disclosure rules by issuers of material non-public information under Regulation FD.
ITEM 3. KEY INFORMATION Our Holding Company Structure Kaixin Auto Holdings is not an operating company in China, but a Cayman Islands holding company. We conduct our operations in China through our PRC subsidiaries.
ITEM 3. KEY INFORMATION. Our Holding Company Structure Kaixin Holdings is not an operating company in China, but a Cayman Islands holding company. We conduct our operations in China through our PRC subsidiaries.
Assuming that we are the owner of our VIE (and its subsidiaries) for U.S. federal income tax purposes, and based upon our current and expected income and assets, including goodwill and other unbooked intangibles, and the market value of our ordinary shares, we do not believe that we were a PFIC for U.S. federal income tax purposes for the taxable year ended December 31, 2022 and we do not expect to be a PFIC for the current taxable year or in the foreseeable future.
Assuming that we are the owner of our VIE (and its subsidiaries) for U.S. federal income tax purposes, and based upon our current and expected income and assets, including goodwill and other unbooked intangibles, and the market value of our ordinary shares, we do not believe that we were a PFIC for U.S. federal income tax purposes for the taxable year ended December 31, 2023 and we do not expect to be a PFIC for the current taxable year or in the foreseeable future.
Any such tax may reduce the value of our ordinary shares. 46 Table of Contents We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies, and heightened scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions that we may pursue in the future.
Any such tax may reduce the value of our ordinary shares. 34 Table of Contents We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies, and heightened scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions that we may pursue in the future.
Environmental impact registration forms (required in the case of very little environmental impact) are required to be filed with the competent authority and failure to satisfy such requirement may result in the imposition of fines up to RMB50,000 (US$7,971). We do not regularly conduct construction projects in the ordinary course of our business.
Environmental impact registration forms (required in the case of very little environmental impact) are required to be filed with the competent authority and failure to satisfy such requirement may result in the imposition of fines up to RMB50,000 (US$7,042). We do not regularly conduct construction projects in the ordinary course of our business.
Although we does not have a formal cash management policy in place that dictates how funds shall be transferred between the Company, our subsidiaries and the VIEs and its subsidiaries or investors, cash transfers are made among the entities based on business needs in compliance of relevant PRC laws and regulations.
Although we does not have a formal cash management policy in place that dictates how funds shall be transferred between the Company, our subsidiaries or investors, cash transfers are made among the entities based on business needs in compliance of relevant PRC laws and regulations.
To the extent cash or assets in the business are in the PRC/Hong Kong or a PRC/Hong Kong entity, funds or assets may not be available to fund operations or for other use outside of the PRC/Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of the holding company, its subsidiaries, or the consolidated VIEs by the PRC government to transfer cash or assets.
To the extent cash or assets in the business are in the PRC/Hong Kong or a PRC/Hong Kong entity, funds or assets may not be available to fund operations or for other use outside of the PRC/Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of the holding company or its subsidiaries by the PRC government to transfer cash or assets.
Moreover, we have no operations outside PRC, and cash generated from operations in the PRC may not be available for other use outside of the PRC due to interventions in or the imposition of restrictions and limitations on the ability of us, our subsidiaries, or the consolidated VIEs by the PRC government to transfer cash.
Moreover, we have no operations outside PRC, and cash generated from operations in the PRC may not be available for other use outside of the PRC due to interventions in or the imposition of restrictions and limitations on the ability of us or our subsidiaries, by the PRC government to transfer cash.
We have no operations outside of PRC, and cash generated from operations in the PRC may not be available for other use outside of the PRC due to interventions in or the imposition of restrictions and limitations on the ability of us, our subsidiaries, or the consolidated VIEs by the PRC government to transfer cash.
We have no operations outside of PRC, and cash generated from operations in the PRC may not be available for other use outside of the PRC due to interventions in or the imposition of restrictions and limitations on the ability of us, or our subsidiaries by the PRC government to transfer cash.
In the event that we experienced a failure of our information systems, our operations and financial performance could be materially harmed, and if the information is accessed by third parties or publicized without authorization, our reputation or competitive position could suffer. The PRC regulatory and enforcement regime with regard to data security and data protection has continued to evolve.
In the event that we experienced a failure of our information systems, our operations and financial performance could be materially harmed, and if the information is accessed by third parties or publicized without authorization, our reputation or competitive position could suffer. 13 Table of Contents The PRC regulatory and enforcement regime with regard to data security and data protection has continued to evolve.
As of the date of this Annual Report, we have not received any inquiry, notice, warning, or sanctions from PRC government authorities in connection with the Opinions. 34 Table of Contents On June 10, 2021, the Standing Committee of the National People’s Congress of China (the “SCNPC”), promulgated the PRC Data Security Law, which took effect in September 2021.
As of the date of this Annual Report, we have not received any inquiry, notice, warning, or sanctions from PRC government authorities in connection with the Opinions. On June 10, 2021, the Standing Committee of the National People’s Congress of China (the “SCNPC”), promulgated the PRC Data Security Law, which took effect in September 2021.
The transfer of funds and assets among Kaixin Auto Holdings, its Hong Kong and PRC subsidiaries, and the VIEs is subject to restrictions. The PRC government imposes controls on the conversion of the RMB into foreign currencies and the remittance of currencies out of the PRC.
The transfer of funds and assets among Kaixin Holdings, its Hong Kong and PRC subsidiaries is subject to restrictions. The PRC government imposes controls on the conversion of the RMB into foreign currencies and the remittance of currencies out of the PRC.
Risk Factors — Risks Related to Doing Business in China — We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements that we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business.
Risk Factors — Risks Related to Doing Business in China — We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements that we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business.” and “Item 3.
We may need additional capital to pursue our business objectives and respond to business opportunities, challenges or unforeseen circumstances, and financing may not be available on terms acceptable to us, or at all. KAG has historically relied on Renren, our former controlling shareholder, to support its operations, the expansion of its Dealerships and the growth of its business.
We may need additional capital to pursue our business objectives and respond to business opportunities, challenges or unforeseen circumstances, and financing may not be available on terms acceptable to us, or at all. KAG historically relied on Moatable, our former controlling shareholder, to support its operations, the expansion of its Dealerships and the growth of its business.
In addition, appreciation or depreciation in the value of the Renminbi relative to U.S. dollars would affect our financial results reported in U.S. dollar terms regardless of any underlying change in its business or results of operations. Very limited hedging options are available in China to reduce our exposure to exchange rate fluctuations.
In addition, appreciation or depreciation in the value of the Renminbi relative to U.S. dollars would affect our financial results reported in U.S. dollar terms regardless of any underlying change in its business or results of operations. 31 Table of Contents Very limited hedging options are available in China to reduce our exposure to exchange rate fluctuations.
Information on the Company — B. Business Overview — Certain Legal Arrangements — Legal Arrangements with Dealerships”. 14 Table of Contents Any difficulties in identifying, consummating and integrating acquisitions, investments or alliances may expose us to potential risks and have an adverse effect on our business, results of operations or financial condition.
Information on the Company — B. Business Overview — Certain Legal Arrangements — Legal Arrangements with Dealerships”. Any difficulties in identifying, consummating and integrating acquisitions, investments or alliances may expose us to potential risks and have an adverse effect on our business, results of operations or financial condition.
Information on the Company — B. Business Overview — Regulation —Regulations Relating to Information Security”. 20 Table of Contents We also grant limited access to specified data in our information system to certain other parties, such as our Dealerships. Our Dealerships face the same challenges and risks inherent in handling and protecting large volumes of data.
Information on the Company — B. Business Overview — Regulation —Regulations Relating to Information Security”. We also grant limited access to specified data in our information system to certain other parties, such as our Dealerships. Our Dealerships face the same challenges and risks inherent in handling and protecting large volumes of data.
The failure of these systems, any service disruptions or outages, or the inability to enhance our capabilities, could have a material adverse effect on our business, sales and results of operations. Our business and reputation are dependent upon the performance, reliability, availability, integrity and efficient operation of our information systems.
We rely on information systems to run our business. The failure of these systems, any service disruptions or outages, or the inability to enhance our capabilities, could have a material adverse effect on our business, sales and results of operations. Our business and reputation are dependent upon the performance, reliability, availability, integrity and efficient operation of our information systems.
The Regulations provide, among others, that protection department of certain industry or sector shall notify the operator of the critical information infrastructure in time after the identification of certain critical information infrastructure. On August 20, 2021, the SCNPC promulgated the Personal Information Protection Law of the PRC (the “Personal Information Protection Law”), which took effect in November 2021.
The Regulations provide, among others, that protection department of certain industry or sector shall notify the operator of the critical information infrastructure in time after the identification of certain critical information infrastructure. 24 Table of Contents On August 20, 2021, the SCNPC promulgated the Personal Information Protection Law of the PRC (the “Personal Information Protection Law”), which took effect in November 2021.
As a result, our business and results of operations may be materially and adversely affected. 25 Table of Contents If we fail to implement and maintain an effective system of internal controls over financial reporting, we may be unable to accurately report our results of operations, meet our reporting obligations or prevent fraud.
As a result, our business and results of operations may be materially and adversely affected. If we fail to implement and maintain an effective system of internal controls over financial reporting, we may be unable to accurately report our results of operations, meet our reporting obligations or prevent fraud.
If that were to occur, we and our third-party payment service providers could be held liable to customers who suffer losses from the misappropriation. Our business is sensitive to changes in the prices of used and new vehicles.
If that were to occur, we and our third-party payment service providers could be held liable to customers who suffer losses from the misappropriation. 16 Table of Contents Our business is sensitive to changes in the prices of used and new vehicles.
In addition, our currency exchange losses may be magnified by the PRC exchange control regulations that restrict our ability to convert Renminbi into foreign currency. 43 Table of Contents Governmental control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of our ordinary shares.
In addition, our currency exchange losses may be magnified by the PRC exchange control regulations that restrict our ability to convert Renminbi into foreign currency. Governmental control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of our ordinary shares.
We have set up the New Energy Vehicles Department in 2021 and produced a NEV prototype in mid 2022 and delivered it to customers at the end of 2022. Our NEV business may not achieve expected results.
Our new energy vehicles (“NEV”) business may not achieve expected returns. We have set up the New Energy Vehicles Department in 2021 and produced a NEV prototype in mid 2022 and delivered it to customers at the end of 2022.
Any of the foregoing could materially and adversely affect our business, results of operations, financial condition and prospects. 23 Table of Contents Changes in international trade policies and international barriers to trade may have an adverse effect on our business and expansion plans.
Any of the foregoing could materially and adversely affect our business, results of operations, financial condition and prospects. Changes in international trade policies and international barriers to trade may have an adverse effect on our business and expansion plans.
Risks Related to Doing Business in China Risks and uncertainties related to conducting business in China include, but are not limited to, the following: o Chinese government exerts substantial influence over the manner in which we must conduct our business activities.
Risks Related to Doing Business in China Risks and uncertainties related to conducting business in China include, but are not limited to, the following: o The Chinese government may exert substantial influence over the manner in which we must conduct our business activities.
Since we are no longer an “emerging growth company” as of date of this 20-F, we expect to incur significant expenses and devote substantial management efforts towards ensuring the compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the other rules and regulations of the SEC.
Since we are no longer an “emerging growth company” as of the date of this Annual Report, we expect to incur significant expenses and devote substantial management efforts towards ensuring the compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the other rules and regulations of the SEC.
For the years ended December 31, 2020, 2021 and 2022, no assets other than cash were transferred through our organization.
For the years ended December 31, 2021, 2022 and 2023, no assets other than cash were transferred through our organization.
The delisting of the shares may significantly reduce the liquidity of the shares, cause further declines to the market price of the shares, and make it more difficult for us to obtain adequate financing to support our continued operation. ​ 54 Table of Contents
The delisting of the shares may significantly reduce the liquidity of the shares, cause further declines to the market price of the shares, and make it more difficult for us to obtain adequate financing to support our continued operation.
Risk Factors — Risks Related to Doing Business in China — The Chinese government exerts substantial influence over the manner in which we must conduct our business activities.
Risk Factors — Risks Related to Doing Business in China — The Chinese government may exert substantial influence over the manner in which we must conduct our business activities.
The Overseas Listing Trial Measures regulate both direct and indirect overseas offering and listing by PRC domestic companies by adopting a filing-based regulatory regime. 35 Table of Contents The Overseas Listing Trial Measures provide that if the issuer both meets the following criteria, the overseas securities offering and listing conducted by such issuer will be deemed as indirect overseas offering subject to the filing procedure set forth under the Overseas Listing Trial Measures: (i) 50% or more of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent fiscal year is accounted for by the issuer’s domestic companies; and (ii) the issuer’s business activities are substantially conducted in mainland China, or its principal place of business are located in mainland China, or the senior managers in charge of its business operations and management are mostly Chinese citizens or domiciled in mainland China.
The Overseas Listing Trial Measures provide that if the issuer both meets the following criteria, the overseas securities offering and listing conducted by such issuer will be deemed as indirect overseas offering subject to the filing procedure set forth under the Overseas Listing Trial Measures: (i) 50% or more of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent fiscal year is accounted for by the issuer’s domestic companies; and (ii) the issuer’s business activities are substantially conducted in mainland China, or its principal place of business are located in mainland China, or the senior managers in charge of its business operations and management are mostly Chinese citizens or domiciled in mainland China.
As a result of all of the above, public shareholders may have more difficulties in protecting their interests in the face of actions taken by our management, our Board members or our controlling shareholders than they would as public shareholders of a company incorporated in the United States.
As a result of all of the above, public shareholders may have more difficulties in protecting their interests in the face of actions taken by our management, our Board members or our controlling shareholders than they would as public shareholders of a company incorporated in the United States. We incurred increased costs as a result of being a public company.
However, there can be no assurance that we will be able to regain compliance with the minimum bid price requirement in a timely manner. If we fail to regain compliance by September 25, 2023, or if we fail to meet the other continued listing requirements of the Nasdaq Capital Market, we may be subject to delisting.
However, there can be no assurance that we will be able to regain compliance with the minimum bid price requirement in a timely manner. If we fail to regain compliance by July 30, 2024, or if we fail to meet the other continued listing requirements of the Nasdaq Capital Market, we may be subject to delisting.
Nasdaq granted us a second period of 180 calendar days, or until September 25, 2023, to regain compliance with the minimum bid price requirement for continued listing. To regain compliance, the closing bid price per share must meet or exceed US$1.00 per share for a minimum of 10 consecutive business days on or prior to September 25, 2023.
Nasdaq granted us a second period of 180 calendar days, or until July 30, 2024, to regain compliance with the minimum bid price requirement for continued listing. To regain compliance, the closing bid price per share must meet or exceed US$1.00 per share for a minimum of 10 consecutive business days on or prior to July 30, 2024.
Risks Related to Our Ordinary Shares Risks and uncertainties related to our corporate structure include, but are not limited to, the following: ● If we fail to regain compliance with Nasdaq’s minimum bid price requirement, our ordinary shares could be subject to delisting. ● The issuance of additional shares in the future may impact the price of our ordinary shares and our ability to regain compliance with Nasdaq’s minimum bid price requirement. 12 Table of Contents The following are detailed descriptions of the risk factors.
Risks Related to Our Ordinary Shares Risks and uncertainties related to our corporate structure include, but are not limited to, the following: ● If we fail to regain compliance with Nasdaq’s minimum bid price requirement, our ordinary shares could be subject to delisting. ● The issuance of additional shares in the future may impact the price of our ordinary shares and our ability to regain compliance with Nasdaq’s minimum bid price requirement.
Risk Factors — Risks Related to Our Corporate Structure – Investing in our securities is highly speculative and involves a significant degree of risk as we are a holding company incorporated in the Cayman Islands and operate our business through VIE structure.
Risks Related to Our Corporate Structure Investing in our securities is highly speculative and involves a significant degree of risk as we are a holding company incorporated in the Cayman Islands.
As of December 31, 2022, we had 3 Dealerships. Our control over our Dealerships may not be as effective as if we fully owned these partners’ businesses, which could potentially make it difficult for us to manage them. The Dealerships and their employees directly interact with consumers and other dealerships, and their performance directly affects our reputation and brand image.
Our control over our Dealerships may not be as effective as if we fully owned these partners’ businesses, which could potentially make it difficult for us to manage them. 9 Table of Contents The Dealerships and their employees directly interact with consumers and other dealerships, and their performance directly affects our reputation and brand image.
We are required to file with the China Securities Regulatory Commission (“ CSRC”) within 3 working days after the subsequent securities offering is completed and we might face warnings or fines if we fail to fulfill related filing procedure.
We are required to file with the CSRC within 3 working days after the subsequent securities offering is completed and we might face warnings or fines if we fail to fulfill related filing procedure.
Our failure to address such other material weaknesses or control deficiencies could result in the inaccuracies of our financial statements and could also impair our ability to comply with the applicable financial reporting requirements and related regulatory filings on a timely basis. Moreover, ineffective internal control over financial reporting significantly hinders our ability to prevent fraud.
Our failure to address such other material weaknesses or control deficiencies could result in the inaccuracies of our financial statements and could also impair our ability to comply with the applicable financial reporting requirements and related regulatory filings on a timely basis.
On September 28, 2022, we received a notice from Nasdaq that we failed to comply with the minimum closing bid price requirement set forth in Rule 5450(a)(1) of the Nasdaq Listing Rules as the closing bid price per share had been below US$1.00 for a period of 30 consecutive business days.
On February 1, 2024, we received a notice from Nasdaq that we failed to comply with the minimum closing bid price requirement set forth in 5550(a)(2) of the Nasdaq Listing Rules as the closing bid price per share had been below US$1.00 for a period of 30 consecutive business days.
Our possible future acquisitions of auto dealerships, other acquisitions, investments or strategic alliances may also expose us to other potential risks, including but not limited to: ● risks associated with unforeseen or hidden liabilities which we failed to identify in our pre-acquisition due diligence; ● the diversion of resources from our existing businesses and technologies; ● our inability to generate sufficient revenues to offset the costs, expenses of acquisitions; ● we may not be able to integrate newly-acquired businesses and operations in an efficient and cost-effective manner; and ● potential loss of, or harm to, relationships with Dealerships, employees, customers as a result of our integration of new businesses.
The diversion of the attention of our management and any difficulties encountered in the integration process could have an adverse effect on our ability to manage our business. 10 Table of Contents Our possible future acquisitions of auto dealerships, other acquisitions, investments or strategic alliances may also expose us to other potential risks, including but not limited to: ● risks associated with unforeseen or hidden liabilities which we failed to identify in our pre-acquisition due diligence; ● the diversion of resources from our existing businesses and technologies; ● our inability to generate sufficient revenues to offset the costs, expenses of acquisitions; ● we may not be able to integrate newly-acquired businesses and operations in an efficient and cost-effective manner; and ● potential loss of, or harm to, relationships with Dealerships, employees, customers as a result of our integration of new businesses.
With respect to audits of companies with operations in China, such as our Company, there are uncertainties about the ability of the auditor to fully cooperate with a request by the PCAOB for audit working papers in China without the approval of Chinese authorities.
Both Onestop and Marcum Asians audit working papers related to us are located in China. With respect to audits of companies with operations in China, such as our Company, there are uncertainties about the ability of the auditor to fully cooperate with a request by the PCAOB for audit working papers in China without the approval of Chinese authorities.
Any of these risks, if realized, could adversely affect our business and results of operations. 19 Table of Contents The automotive retail industry in general and our business in particular are sensitive to economic conditions. These conditions could adversely affect our business, sales, results of operations and financial condition. We are subject to national and regional economic conditions.
The automotive retail industry in general and our business in particular are sensitive to economic conditions. These conditions could adversely affect our business, sales, results of operations and financial condition. We are subject to national and regional economic conditions.
Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties.
Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof.
In addition, we may recognize impairment losses on goodwill arising from our acquisitions. The occurrence of any of these events could have a material and adverse effect on our ability to manage our business, financial condition and results of operations. The quality of the premium used automobiles that we offer is critical to the success of our business.
In addition, we may recognize impairment losses on goodwill arising from our acquisitions. The occurrence of any of these events could have a material and adverse effect on our ability to manage our business, financial condition and results of operations.
We have not regained compliance with the minimum bid price requirement as of the date of annual report. We are closely monitoring the bid price of our shares. As required by Nasdaq, we confirmed that we would implement a reverse stock split, if necessary, to regain compliance with the minimum bid price requirement.
We have not regained compliance with the minimum bid price requirement as of the date of this Annual Report. We are closely monitoring the bid price of our shares. We may implement a reverse stock split, if necessary, to regain compliance with the minimum bid price requirement.
We may become subject to more stringent requirements with respect to matters including cross-border investigation and enforcement of legal claims. o Recent regulatory initiatives implemented by the PRC competent government authorities on cyberspace data security may have introduced uncertainty in our business operations and compliance status, which could result in materially adverse impact on our business, results of operations and our listing on Nasdaq. o It may be difficult for overseas shareholders and/or regulators to conduct investigations or collect evidence within China.
We may become subject to more stringent requirements with respect to matters including cross-border investigation and enforcement of legal claims. o Recent regulatory initiatives implemented by the PRC competent government authorities on cyberspace data security may have introduced uncertainty in our business operations and compliance status, which could result in materially adverse impact on our business, results of operations and our listing on Nasdaq. o It may be difficult for overseas shareholders and/or regulators to conduct investigations or collect evidence within China. o Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our business and operations. o Uncertainties with respect to the interpretation and enforcement of PRC laws, rules and regulations could adversely affect us.
The PCAOB vacated its previous determinations issued in December 2021 accordingly. As a result, we do not expect to be identified as a “Commission-Identified Issuer” under the HFCA Act for the fiscal year ended December 31, 2022 after we file our annual report on Form 20-F for such fiscal year.
As a result, we do not expect to be identified as a “Commission-Identified Issuer” under the HFCA Act for the fiscal year ended December 31, 2022 after we file our annual report on Form 20-F for such fiscal year.
The Cyber Security Law of the PRC, issued in November 2016, requires us to take immediate remedial measures when we discover that our products or services are subject to risks, such as security defects or bugs.
The Cyber Security Law of the PRC, issued in November 2016, requires us to take immediate remedial measures when we discover that our products or services are subject to risks, such as security defects or bugs. Such remedial measures include, informing our customers of the specific risks and reporting such risks to the relevant competent departments.
Therefore, you should not rely on an investment in our ordinary shares as a source for any future dividend income. 50 Table of Contents Our board of directors (the “Board”) has complete discretion as to whether to distribute dividends, subject to our memorandum and articles of association and certain restrictions under Cayman Islands law, namely that our company may only pay dividends out of profits or share premium account, and provided that in no circumstances may a dividend be paid if this would result in our Company being unable to pay its debts as they fall due in the ordinary course of business.
Our board of directors (the “Board”) has complete discretion as to whether to distribute dividends, subject to our memorandum and articles of association and certain restrictions under Cayman Islands law, namely that our company may only pay dividends out of profits or share premium account, and provided that in no circumstances may a dividend be paid if this would result in our Company being unable to pay its debts as they fall due in the ordinary course of business.
To the extent cash or assets in the business are in the PRC/Hong Kong or a PRC/Hong Kong entity, funds or assets may not be available to fund operations or for other use outside of the PRC/Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of the holding company, its subsidiaries, or the consolidated VIEs by the PRC government to transfer cash or assets.” and “— Our adjustment of corporate structure and business operations and the termination of contractual arrangement with the VIEs may not be liability-free.” 6 Table of Contents For the years ended December 31, 2020, 2021 and 2022, no dividends or distributions were made to Kaixin by our subsidiaries.
To the extent cash or assets in the business are in the PRC/Hong Kong or a PRC/Hong Kong entity, funds or assets may not be available to fund operations or for other use outside of the PRC/Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of the holding company or its subsidiaries by the PRC government to transfer cash or assets.” For the years ended December 31, 2021, 2022 and 2023, no dividends or distributions were made to Kaixin by our subsidiaries.
We will incur increased costs as a result of being a public company, particularly after we ceased to qualify as an “emerging growth company.” After the completion of the Business Combination, we have been a stand-alone public company and expect to incur significant legal, accounting and other expenses that we did not incur as a subsidiary of another public company, including additional costs associated with our public company reporting obligations.
After the completion of the Business Combination, we have been a stand-alone public company and expect to incur significant legal, accounting and other expenses that we did not incur as a subsidiary of another public company, including additional costs associated with our public company reporting obligations.
However, since these statements and regulatory actions by China’s government are newly published, official guidance and related implementation rules have not been issued. It is highly uncertain what future impact such modified or new laws and regulations will have on our daily business operations, the ability to accept foreign investments and our continued listing on the Nasdaq Stock Market.
However, since these statements and regulatory actions are newly published, it is uncertain what future impact such modified or new laws and regulations will have on our daily business operations, the ability to accept foreign investments and our continued listing on the Nasdaq Stock Market.
The Dealership network is a foundation of our used car sales operations, and we rely on the Dealerships in providing services to car buyers and financial institutions.
We have not expanded our network since May 2018. The Dealership network is a foundation of our car sales operations, and we rely on the Dealerships in providing services to car buyers and financial institutions.
The PRC automotive retail market, including the consumer automotive finance market, is highly dynamic and is at an early stage of development. While it has undergone significant growth in the past few years, there is no assurance that it can continue to grow rapidly.
We operate in an evolving and fast-changing market. The PRC automotive retail market, including the consumer automotive finance market, is highly dynamic. While it has undergone significant growth in the past few years, there is no assurance that it can continue to grow rapidly.
On August 26, 2022, the PCAOB signed a Statement of Protocol with the CSRC and Ministry of Finance, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong completely, consistent with U.S. law. 48 Table of Contents On December 15, 2022, the PCAOB announced that it was able to conduct inspections and investigations completely of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong in 2022.
On August 26, 2022, the PCAOB signed a Statement of Protocol with the CSRC and Ministry of Finance, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong completely, consistent with U.S. law.
Any significant changes to our business model or failure to achieve the intended business results may have a material and adverse impact on our financial condition and results of operations.
Any significant changes to our business model or failure to achieve the intended business results may have a material and adverse impact on our financial condition and results of operations. Therefore, it may be difficult to effectively assess our future prospects.
In order to expand our base of car buyers, we must continue to invest significant resources in the development of new solutions and services and build our relationships with financial institutions and auto dealers.
Any of the above may materially and adversely affect our financial condition and results of operations. In order to expand our base of car buyers, we must continue to invest significant resources in the development of new solutions and services and build our relationships with financial institutions and auto dealers.
If we are unable to establish a strong and trusted brand and recover our marketing costs through the increases in customer traffic and in the number of sales transactions, or if our broad marketing campaigns are not successful or are terminated, it could have a material adverse effect on our growth, results of operations and financial condition. 18 Table of Contents Any harm to our brand or reputation or any damage to the reputation of third parties or failure to enhance our brand recognition could have a material adverse effect on its results of operations and growth prospects.
If we are unable to establish a strong and trusted brand and recover our marketing costs through the increases in customer traffic and in the number of sales transactions, or if our broad marketing campaigns are not successful or are terminated, it could have a material adverse effect on our growth, results of operations and financial condition.
The economy in China has experienced increases in inflation and labor costs in recent years. As a result, average wages in the PRC are expected to continue to increase.
Increases in labor costs in the PRC may adversely affect our business and results of operations. The economy in China has experienced increases in inflation and labor costs in recent years. As a result, average wages in the PRC are expected to continue to increase.
You should consider our business and prospects in light of the risks and challenges we encounter or may encounter given the rapidly-evolving market in which we operate and our limited operating history.
As part of our business, we offer retail auto sales of new and used vehicles You should consider our business and prospects in light of the risks and challenges we encounter or may encounter given the rapidly-evolving market in which we operate and our limited operating history.
In that case, the trading price of our capital stock could decline, and you may lose all or part of your investment. Below please find a summary of the principal risks we face, organized under the relevant headings.
If any of the following risks actually occurs, our business, prospects, financial condition or results of operations could suffer. In that case, the trading price of our capital stock could decline, and you may lose all or part of your investment. Below please find a summary of the principal risks we face, organized under the relevant headings.
We may be unable to timely complete our evaluation and any required remediations. 26 Table of Contents During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, we may identify other weaknesses and deficiencies in our internal control over financial reporting.
During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, we may identify other weaknesses and deficiencies in our internal control over financial reporting.
However, we cannot assure you that we can successfully complete the filing in a timely manner, or at all. Failure to comply with the filing requirements may subject our business to restrictions.
However, we cannot assure you that we can successfully complete the filing in a timely manner, or at all. Failure to comply with the filing requirements may subject our business to restrictions. As a result, our business and results of operations may be materially and adversely affected.
As of December 31, 2022, we had 228,250,210 ordinary shares outstanding, including 130,815,462 ordinary shares that are freely transferable without restriction or additional registration under the Securities Act. The remaining ordinary shares outstanding will be available for sale, subject to volumes and other restrictions as applicable under Rules 144 and 701 of the Securities Act.
As of December 31, 2023, we had 50,676,013 ordinary shares outstanding, including 38,824,705 ordinary shares that are freely transferable without restriction or additional registration under the Securities Act. The remaining ordinary shares outstanding will be available for sale, subject to volumes and other restrictions as applicable under Rules 144 and 701 of the Securities Act.
Furthermore, securities markets may from time to time experience significant price and volume fluctuations that are not related to our operating performance, such as the large decline in share prices in the United States, China and other jurisdictions in late 2008, early 2009, the second half of 2011 and in 2015, which may have a material and adverse effect on the trading price of our ordinary shares. 49 Table of Contents In addition to the above factors, the price and trading volume of our ordinary shares may be highly volatile due to multiple factors, including the following: ● regulatory developments affecting us or our industry; ● announcements of studies and reports relating to the quality of our service offerings or those of our competitors; ● changes in the economic performance or market valuations of other automobile retailers; ● actual or anticipated fluctuations in our quarterly results of operations and changes or revisions of our expected results; ● changes in financial estimates by securities research analysts; ● conditions in the market for automobile retailers; ● announcements by us or our competitors of new product and service offerings, acquisitions, strategic relationships, joint ventures, capital raisings or capital commitments; ● announcements and implementation of business mergers and acquisitions, including the merger with Haitaoche Limited; ● additions to or departures of our senior management; ● fluctuations of exchange rates between the Renminbi and the U.S. dollar; and ● release or expiry of lock-up or other transfer restrictions on our outstanding shares, and sales or perceived potential sales of additional ordinary shares.
In addition to the above factors, the price and trading volume of our ordinary shares may be highly volatile due to multiple factors, including the following: ● regulatory developments affecting us or our industry; ● announcements of studies and reports relating to the quality of our service offerings or those of our competitors; ● changes in the economic performance or market valuations of other automobile retailers; ● actual or anticipated fluctuations in our quarterly results of operations and changes or revisions of our expected results; ● changes in financial estimates by securities research analysts; ● conditions in the market for automobile retailers; ● announcements by us or our competitors of new product and service offerings, acquisitions, strategic relationships, joint ventures, capital raisings or capital commitments; ● announcements and implementation of business mergers and acquisitions, including the merger with Haitaoche Limited; 37 Table of Contents ● additions to or departures of our senior management; ● fluctuations of exchange rates between the Renminbi and the U.S. dollar; and ● release or expiry of lock-up or other transfer restrictions on our outstanding shares, and sales or perceived potential sales of additional ordinary shares.
Cash and Asset Flows through Our Organization Kaixin Auto Holdings transfers cash to its wholly-owned Hong Kong subsidiaries, by making capital contributions or providing loans, and the Hong Kong subsidiaries transfer cash to the subsidiaries in China by making capital contributions or providing loans to them.
Cash and Asset Flows through Our Organization Kaixin Holdings transfers cash to its wholly-owned Hong Kong subsidiaries, by making capital contributions or providing loans, and the Hong Kong subsidiaries transfer cash to the subsidiaries in China by making capital contributions or providing loans to them. 5 Table of Contents In addition, the majority of our subsidiaries and their subsidiaries receive income in RMB.
As a result of the above, to the extent cash or assets of our business, or of the PRC Operating Entities, is in the PRC or Hong Kong, such funds or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong, due to interventions in or the imposition of restrictions and limitations by the PRC government to the transfer of cash or assets.
As a result of the above, to the extent cash or assets of our business is in the PRC or Hong Kong, such funds or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong, due to interventions in or the imposition of restrictions and limitations by the PRC government to the transfer of cash or assets. 22 Table of Contents Our adjustment of corporate structure and business operations and the termination of contractual arrangement with the VIEs may not be liability-free.
We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations. We cannot be certain that our operations or any aspects of our business does not or will not infringe upon or otherwise violate trademarks, patents, copyrights, know-how or other intellectual property rights held by third parties.
We cannot be certain that our operations or any aspects of our business does not or will not infringe upon or otherwise violate trademarks, patents, copyrights, know-how or other intellectual property rights held by third parties. We may from time to time, in the future, become subject to legal proceedings and claims relating to the intellectual property rights of others.
Our historical financial and operating performance may not be indicative of, or comparable to, its future prospects and results of operations. ● Our subsidiaries and the Dealerships conduct various aspects of their business, and they face risks associated with the Dealerships, their employees and other personnel. ● Our subsidiaries and may not be able to successfully expand or maintain our network of Dealerships. ● Our Dealerships conduct various aspects of our business, and we face risks associated with our Dealerships, their employees and other personnel. ● We may not be able to successfully expand or maintain our network of Dealerships. ● Any difficulties in identifying, consummating and integrating acquisitions, investments or alliances may expose us to potential risks and have an adverse effect on our business, results of operations or financial condition. ● The quality of the premium used automobiles that we offer is critical to the success of our business. ● Our success depends upon the continued contributions of our sales representatives. ● We may need additional capital to pursue our business objectives and respond to business opportunities, challenges or unforeseen circumstances, and financing may not be available on terms acceptable to us, or at all.
Our historical financial and operating performance may not be indicative of, or comparable to, its future prospects and results of operations. ● Our subsidiaries and the Dealerships conduct various aspects of their business, and they face risks associated with the Dealerships, their employees and other personnel. ● Our subsidiaries and may not be able to successfully expand or maintain our network of Dealerships. ● Our Dealerships conduct various aspects of our business, and we face risks associated with our Dealerships, their employees and other personnel. ● Any difficulties in identifying, consummating and integrating acquisitions, investments or alliances may expose us to potential risks and have an adverse effect on our business, results of operations or financial condition. ● Our success depends upon the continued contributions of our sales representatives. ● We may need additional capital to pursue our business objectives and respond to business opportunities, challenges or unforeseen circumstances, and financing may not be available on terms acceptable to us, or at all. 7 Table of Contents Risks Related to Our Corporate Structure Risks and uncertainties related to our corporate structure include, but are not limited to, the following: o Investing in our securities is highly speculative and involves a significant degree of risk as we are a holding company incorporated in the Cayman Islands.
In the meantime, we also seek to maintain our relationships with existing car buyers and cross-sell new solutions and services, such as insurance and wealth management products. However, there can be no assurance that we will be able to maintain or deepen such relationships.
In the meantime, we also seek to maintain our relationships with existing car buyers and cross-sell new solutions and services, such as insurance and wealth management products.
In addition, as a public company, our reporting obligations may place a significant strain on our management, operational and financial resources and systems in the foreseeable future.
In addition, as a public company, our reporting obligations may place a significant strain on our management, operational and financial resources and systems in the foreseeable future. We may be unable to timely complete our evaluation and any required remediations.
In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States. 52 Table of Contents Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records, other than the Memorandum and Articles of Association and any special resolutions passed by such companies, and the registers of mortgages and charges of such companies, or to obtain copies of lists of shareholders of these companies.
Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records, other than the Memorandum and Articles of Association, any special resolutions passed by such companies, and the registers of mortgages and charges of such companies, or to obtain copies of lists of shareholders of these companies.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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The August 2022 Agreement stipulates that KAG agrees to sell all the shares it held in Renren Finance, Inc along with its subsidiaries and VIEs and the VIEs’ subsidiaries at a consideration of $1, to Stanley Star, an independent third party company incorporated in BVI that was interested in exploring the opportunities in the non-performing assets on the books of the Disposal Group.
The August 2022 Agreement stipulates that KAG agrees to sell all the shares it held in Renren Finance, Inc along with its subsidiaries and VIEs and the VIEs’ subsidiaries at a consideration of US$1, to Stanley Star, an independent third party company incorporated in BVI that was interested in exploring the opportunities in the non-performing assets on the books of the Disposal Group.
On average, our Dealership operators have over ten years of experiences in the used car industry. We provide used car buyers in China with access to a wide selection of used vehicles across our network of Dealerships, with a focus on premium brands, such as Audi, BMW, Mercedes-Benz, Land Rover, Bentley, Rolls-Royce, and Porsche.
On average, our Dealership operators have over ten years of experiences in the car sales industry. We provide car buyers in China with access to a wide selection of used vehicles across our network of Dealerships, with a focus on premium brands, such as Audi, BMW, Mercedes-Benz, Land Rover, Bentley, Rolls-Royce, and Porsche.
In accordance with the Opinions of the Supreme People’s Court, the Supreme People’s Procurator and the Ministry of Public Security on Several Issues concerning the Application of Law in the Illegal Fund-Raising Criminal Cases promulgated on March 25, 2014, the administrative proceeding for determining the nature of illegal fund-raising activities is not a prerequisite procedure for the initiation of criminal proceeding concerning the crime of illegal fund-raising, and the administrative departments’ failure in determining the nature of illegal fund-raising activities does not affect the investigation, prosecution and trial of cases concerning the crime of illegal fundraising. 70 Table of Contents Regulations on Foreign Investment Investment activities in the PRC by foreign investors are principally governed by the Guidance Catalog of Industries for Foreign Investment promulgated and as amended from time to time by the MOFCOM and the NDRC (the “Catalog”).
In accordance with the Opinions of the Supreme People’s Court, the Supreme People’s Procurator and the Ministry of Public Security on Several Issues concerning the Application of Law in the Illegal Fund-Raising Criminal Cases promulgated on March 25, 2014, the administrative proceeding for determining the nature of illegal fund-raising activities is not a prerequisite procedure for the initiation of criminal proceeding concerning the crime of illegal fund-raising, and the administrative departments’ failure in determining the nature of illegal fund-raising activities does not affect the investigation, prosecution and trial of cases concerning the crime of illegal fundraising. 54 Table of Contents Regulations on Foreign Investment Investment activities in the PRC by foreign investors are principally governed by the Guidance Catalog of Industries for Foreign Investment promulgated and as amended from time to time by the MOFCOM and the NDRC (the “Catalog”).
In April 2017, the equity interests of Renren Finance, Inc., a subsidiary of Renren, were transferred to KAG for nil consideration. Renren Finance Inc. and its subsidiary were mainly engaged in the provision of internet-based financing to used car dealerships. ● Transfer of Equity Interests and Reorganization of Qianxiang Changda.
In April 2017, the equity interests of Renren Finance, Inc., a subsidiary of Moatable, were transferred to KAG for nil consideration. Renren Finance Inc. and its subsidiary were mainly engaged in the provision of internet-based financing to used car dealerships. ● Transfer of Equity Interests and Reorganization of Qianxiang Changda.
An additional 4.7 million ordinary shares of our Company were reserved for issuance under an equity incentive plan in exchange for outstanding options in KAG, which were cancelled at the closing of the Business Combination. Additionally, 19.5 million earnout shares were to be issued and held in escrow. Renren may be entitled to receive earnout shares under certain prequalification conditions.
An additional 4.7 million ordinary shares of our Company were reserved for issuance under an equity incentive plan in exchange for outstanding options in KAG, which were cancelled at the closing of the Business Combination. Additionally, 19.5 million earnout shares were to be issued and held in escrow. Moatable may be entitled to receive earnout shares under certain prequalification conditions.
However, trademark registrations in other categories related but less crucial to our business, including automobile maintenance, have not been obtained by us or an affiliate of Renren. Therefore, for such business, we are unable to prevent any third party from using the Kaixin brand for business that is the same or similar to ours.
However, trademark registrations in other categories related but less crucial to our business, including automobile maintenance, have not been obtained by us or an affiliate of Moatable. Therefore, for such business, we are unable to prevent any third party from using the Kaixin brand for business that is the same or similar to ours.
The PBOC and other governmental authorities issued a series of administrative rules and regulations to specify the anti-money laundering obligations of financial institutions and certain non-financial institutions, such as payment institutions. 69 Table of Contents The General Office of the State Council promulgated the Opinions on Improving Anti-Money Laundering, Anti-Terrorism Financing and Anti-Tax Evasion Regulatory Systems and Mechanisms on August 29, 2017.
The PBOC and other governmental authorities issued a series of administrative rules and regulations to specify the anti-money laundering obligations of financial institutions and certain non-financial institutions, such as payment institutions. 53 Table of Contents The General Office of the State Council promulgated the Opinions on Improving Anti-Money Laundering, Anti-Terrorism Financing and Anti-Tax Evasion Regulatory Systems and Mechanisms on August 29, 2017.
In connection with the Business Combination, we entered into amendment agreements with Dealership operators in January 2019 pursuant to which it was confirmed that the Business Combination qualifies as an initial public offering, that shares payable to the Dealership operators as consideration shall be adjusted to reflect the earnout and indemnification arrangements in the Business Combination, and that Renren will be responsible for settling contingent obligations to Dealership operators.
In connection with the Business Combination, we entered into amendment agreements with Dealership operators in January 2019 pursuant to which it was confirmed that the Business Combination qualifies as an initial public offering, that shares payable to the Dealership operators as consideration shall be adjusted to reflect the earnout and indemnification arrangements in the Business Combination, and that Moatable will be responsible for settling contingent obligations to Dealership operators.
In May 2017, Qianxiang Changda, which was formerly a subsidiary of a consolidated variable interest entity of Renren, was transferred to Mr. James Jian Liu and Ms. Jing Yang for a consideration of RMB50 million, which was equal to the paid-in-capital of Qianxiang Changda. Mr. Liu and Ms. Yang were nominee shareholders designated by KAG.
In May 2017, Qianxiang Changda, which was formerly a subsidiary of a consolidated variable interest entity of Moatable, was transferred to Mr. James Jian Liu and Ms. Jing Yang for a consideration of RMB50 million, which was equal to the paid-in-capital of Qianxiang Changda. Mr. Liu and Ms. Yang were nominee shareholders designated by KAG.
In connection with the Business Combination, KAG had transferred the equity interest and assets of its Ji’nan Dealership to Renren in December 2018. Upon the closing of the Business Combination, we acquired 100% of the issued and outstanding securities of KAG, in exchange for approximately 28.3 million ordinary shares of our company.
In connection with the Business Combination, KAG had transferred the equity interest and assets of its Ji’nan Dealership to Moatable in December 2018. Upon the closing of the Business Combination, we acquired 100% of the issued and outstanding securities of KAG, in exchange for approximately 28.3 million ordinary shares of our company.
On April 30, 2019, we consummated the Business Combination as contemplated by the share exchange agreement (the “Share Exchange Agreement”) dated as of November 2, 2018 by and among CM Seven Star, KAG and Renren, pursuant to which we acquired 100% of the equity interests of KAG from Renren.
On April 30, 2019, we consummated the Business Combination as contemplated by the share exchange agreement (the “Share Exchange Agreement”) dated as of November 2, 2018 by and among CM Seven Star, KAG and Moatable, pursuant to which we acquired 100% of the equity interests of KAG from Moatable.
In our scoring system, we consider a number of factors in the area served, including: ● location, nature and quality; ● population density; ● age distribution and average disposable income of consumers; ● spending patterns, dining habits and frequency of consumers; ● locations of other car dealerships; ● estimated customer traffic; ● structure of the dealership, including availability of showroom and parking space; and ● rental costs, lease economics and estimated return on investments.
In our scoring system, we consider a number of factors in the area served, including: ● location, nature and quality; ● population density; ● age distribution and average disposable income of consumers; ● spending patterns, dining habits and frequency of consumers; ● locations of other car dealerships; ● estimated customer traffic; 46 Table of Contents ● structure of the dealership, including availability of showroom and parking space; and ● rental costs, lease economics and estimated return on investments.
If an ICP operator violates these measures, the PRC government may revoke its ICP license and shut down its websites. 73 Table of Contents In November 2016, the Standing Committee of the National People’s Congress issued the Cyber Security Law, which came into effect on June 1, 2017. This is the first Chinese law that focuses exclusively on cyber security.
If an ICP operator violates these measures, the PRC government may revoke its ICP license and shut down its websites. In November 2016, the Standing Committee of the National People’s Congress issued the Cyber Security Law, which came into effect on June 1, 2017. This is the first Chinese law that focuses exclusively on cyber security.
Pursuant to the agreement among the owner of a used car as seller, the Jieying Legal Representative as purchaser, and a Dealership employee, as registered owner: o The Jieying Legal Representative is to purchase the used car and register it in the name of a designated employee of the relevant Dealership. 61 Table of Contents o Anhui Xin Jieying provides technology consulting services and operational management system services to the Jieying Legal Representative, who in turn pays service fees to Anhui Xin Jieying. ● Used Car Agency Services Agreement.
Pursuant to the agreement among the owner of a used car as seller, the Jieying Legal Representative as purchaser, and a Dealership employee, as registered owner: o The Jieying Legal Representative is to purchase the used car and register it in the name of a designated employee of the relevant Dealership. o Anhui Xin Jieying provides technology consulting services and operational management system services to the Jieying Legal Representative, who in turn pays service fees to Anhui Xin Jieying. ● Used Car Agency Services Agreement .
Shortly after that, Anhui Xin Jieying and its nominee shareholders entered into a series of contractual arrangements with a subsidiary of KAG, Beijing Jiexun Shiji Technology Development Co., Ltd., or Beijing Jiexun, which enabled Beijing Jiexun to be the primary beneficiary of Anhui Xin Jieying. 55 Table of Contents ● Transfer of Equity Interests of Renren Finance and its subsidiary.
Shortly after that, Anhui Xin Jieying and its nominee shareholders entered into a series of contractual arrangements with a subsidiary of KAG, Beijing Jiexun Shiji Technology Development Co., Ltd., or Beijing Jiexun, which enabled Beijing Jiexun to be the primary beneficiary of Anhui Xin Jieying. ● Transfer of Equity Interests of Renren Finance and its subsidiary.
And overseas investment as stipulated in the Overseas Investment Rules shall mean activities where an PRC enterprise, directly or through an overseas enterprise controlled by it, acquires any ownership, right of control, right of business management, or other relevant rights and interests overseas, by contributing assets or rights and interests, providing financing and/or guarantees, or any other means. 82 Table of Contents C.
And overseas investment as stipulated in the Overseas Investment Rules shall mean activities where an PRC enterprise, directly or through an overseas enterprise controlled by it, acquires any ownership, right of control, right of business management, or other relevant rights and interests overseas, by contributing assets or rights and interests, providing financing and/or guarantees, or any other means. C.
Immediately after the Business Combination, Renren owned approximately 56% of our issued and outstanding ordinary shares without taking into account the indemnity shares and the earnout shares in escrow account as discussed above.
Immediately after the Business Combination, Moatable owned approximately 56% of our issued and outstanding ordinary shares without taking into account the indemnity shares and the earnout shares in escrow account as discussed above.
Following the consummation of the Haitaoche Acquisition in June 2021, our used car sales business gradually resumed operations in the majority of the Dealership locations, which complement the new car sales in the Haitaoche business unit. During 2022, the Company terminated cooperation with several dealerships that underperformed against our expectations and downsized our dealerships network to 3 dealerships.
Following the consummation of the Haitaoche Acquisition in June 2021, our car sales business gradually resumed operations in the majority of the Dealership locations, which complement the new car sales in the Haitaoche business unit. During 2022, the Company terminated cooperation with several dealerships that underperformed against our expectations and downsized our dealerships network to three dealerships.
We are committed to providing a superior car purchase and ownership experiences to our customers. Our passion and professionalism build trust and long-term customer loyalty. We are a leading premium used auto dealership group in China. As of December 31, 2022, we had three used car Dealerships covering three cities in China.
We are committed to providing a superior car purchase and ownership experiences to our customers. Our passion and professionalism build trust and long-term customer loyalty. We are a leading premium auto dealership group in China. As of December 31, 2023, we had three Dealerships covering three cities in China.
To further implement this decision and the relevant rules, MIIT issued the Regulation of Protection of Telecommunication and Internet User Information in 2013. 74 Table of Contents In November 2016, the Standing Committee of the National People’s Congress issued the Cyber Security Law, which came into effect on June 1, 2017.
To further implement this decision and the relevant rules, MIIT issued the Regulation of Protection of Telecommunication and Internet User Information in 2013. In November 2016, the Standing Committee of the National People’s Congress issued the Cyber Security Law, which came into effect on June 1, 2017.
In 2016 and 2017, Qianxiang Changda terminated and/or transferred to Renren certain parts of its financing services business, including wealth management services, credit financing to college students and apartment rental financing.
In 2016 and 2017, Qianxiang Changda terminated and/or transferred to Moatable certain parts of its financing services business, including wealth management services, credit financing to college students and apartment rental financing.
Violation of these regulations may result in penalties, including fines, confiscation of the advertising incomes, termination of advertising operations and even suspension of the provider’s business license. 75 Table of Contents In July 2016, the SAIC issued the Interim Measures for the Administration of Internet Advertising, which became effective on September 1, 2016.
Violation of these regulations may result in penalties, including fines, confiscation of the advertising incomes, termination of advertising operations and even suspension of the provider’s business license. In July 2016, the SAIC issued the Interim Measures for the Administration of Internet Advertising, which became effective on September 1, 2016.
They agreed to act in concert in key issues related to the operations and corporate governance of Kaixin. 56 Table of Contents Following the completion of the reverse acquisition, KAH is the consolidated parent of Haitaoche and the resulting company operates under the KAH corporate name. Haitaoche’s historical financial statements became the historical financial statements of the Company.
They agreed to act in concert in key issues related to the operations and corporate governance of Kaixin. Following the completion of the reverse acquisition, KAH is the consolidated parent of Haitaoche and the resulting company operates under the KAH corporate name. Haitaoche’s historical financial statements became the historical financial statements of the Company.
Pursuant to the agreement between the Jieying Legal Representative, as borrower, and Anhui Xin Jieying, as lender: o Anhui Xin Jieying provides loans to the Jieying Legal Representative for purchasing used cars. o Proceeds from the used cars sold by the Jieying Legal Representative on behalf of Anhui Xin Jieying are used in their entirety to repay the loan.
Pursuant to the agreement between the Jieying Legal Representative, as borrower, and Anhui Xin Jieying, as lender: o Anhui Xin Jieying provides loans to the Jieying Legal Representative for purchasing used cars. 48 Table of Contents o Proceeds from the used cars sold by the Jieying Legal Representative on behalf of Anhui Xin Jieying are used in their entirety to repay the loan.
We released our new energy vehicle strategic plan on December 1, 2021, and we target to quickly expand our new energy vehicle team and start with developing commercial new energy vehicles for intra-city and inter-city logistics applications in the initial stage. In addition, we have reached into a strategic partnership with Beijing Bujia Technology Co., Ltd.
We released our new energy vehicle strategic plan on December 1, 2021, and we target to quickly expand our new energy vehicle team and start with developing commercial new energy vehicles for intra-city and inter-city logistics applications in the initial stage. 45 Table of Contents In addition, we have reached into a strategic partnership with Beijing Bujia Technology Co., Ltd.
In addition, there is a voluntary registration system administered by the China Copyright Protection Center. The amended Copyright Law also requires the registration of a copyright pledge. 76 Table of Contents Software products In China, holders of computer software copyrights enjoy protections under the Copyright Law.
In addition, there is a voluntary registration system administered by the China Copyright Protection Center. The amended Copyright Law also requires the registration of a copyright pledge. Software products In China, holders of computer software copyrights enjoy protections under the Copyright Law.
Information on the Company - C. Corporate Structure.” As a result, there is no VIE entity in the corporate structure of the Company and as of the date of this Annual Report, we conduct our operations exclusively through our wholly-owned subsidiaries. B. Business Overview The Company is primarily engaged in the sales of domestic and imported automobiles in the PRC.
As a result, there is no VIE entity in the corporate structure of the Company and as of the date of this Annual Report, we conduct our operations exclusively through our wholly-owned subsidiaries. B. Business Overview The Company is primarily engaged in the sales of domestic and imported automobiles in the PRC.
Pursuant to the agreement among Anhui Xin Jieying and the noncontrolling shareholders of relevant Dealership: ○ Anhui Xin Jieying commits to furnish the noncontrolling shareholders a certain number of the Company’s ordinary shares following a schedule tied to the noncontrolling shareholders’ performance of settlement payment duties as specified in the Amendments to Used Car Agency Services Agreement . ○ The number of the Company’s ordinary shares include shares in the First Payment and Subsequent Payments as specified in the Equity Purchase Agreement, plus certain extra bonus shares.
Pursuant to the agreement among Anhui Xin Jieying and the noncontrolling shareholders of relevant Dealership: 49 Table of Contents ● Anhui Xin Jieying commits to furnish the noncontrolling shareholders a certain number of the Company’s ordinary shares following a schedule tied to the noncontrolling shareholders’ performance of settlement payment duties as specified in the Amendments to Used Car Agency Services Agreement. ● The number of the Company’s ordinary shares include shares in the First Payment and Subsequent Payments as specified in the Equity Purchase Agreement, plus certain extra bonus shares. ● Financial Leasing Settlement Agreement .
The sale of Disposal Group and the ownership transfer were completed on October 27, 2022, on which date the net book value of the Disposal Group was net liabilities was approximately $24.6 million.
The sale of the Disposal Group and the ownership transfer were completed on October 27, 2022 (the “Disposal Completion Date”), on which date the net book value of the Disposal Group was net liabilities was approximately $24.6 million.
Reference is made to the Form 6-K which the Company filed with SEC on August 26, 2021, the Company has reached a binding term sheet to acquire 100% equity of Henan Yujie Times Automobile Co., Ltd. (“ Yujie ”) through new share issuance. Yujie is a Chinese electronic vehicles (“ EV ”) manufacturer specialized in small size multi-function EVs.
Reference is made to the Form 6-K which the Company filed with SEC on August 26, 2021, the Company has reached a binding term sheet to acquire 100% equity interest of Yujie through new share issuance. Yujie is a Chinese electronic vehicles (“ EV ”) manufacturer specialized in small size multi-function EVs.
When a used car is sold, the Jieying Legal Representative transfers the legal ownership to the purchaser, while the Dealership employee completes the registration transfer from his or her name to the name of the purchaser.
When a used car is sold, the Jieying Legal Representative transfers the legal ownership to the purchaser, while the Dealership employee completes the registration transfer from his or her name to the name of the purchaser. The proceeds are remitted to Anhui Xin Jieying.
Such filing forms must be filed at the time the parallel-import automobiles enter the border, and such forms shall be marked “parallel-import automobiles”. 67 Table of Contents On August 19, 2019, the Ministry of Commerce, the MIIT, the Ministry of Public Security, the Ministry of Ecology and Environment, the Ministry of Transport, the General Administration of Customs and the State Administration for Market Regulation jointly issued the Opinions of Seven Authorities Including the Ministry of Commerce on Further Boosting the Development of the Parallel Import of Automobiles: (1) allowing the exploration of ways to set up the standard compliance rectification venues for the parallel import of automobiles; (2) further improving the trade facilitation level of the parallel import of automobiles; (3) strengthening the quality control of automobiles under parallel import; (4) standardizing the registration management of automobiles under parallel import; (5) promoting the normalization and institutionalization of the parallel import of automobiles; (6) strengthening the supervision and management of pilot enterprises; and (7) strengthening the practical organizational implementation.
On August 19, 2019, the Ministry of Commerce, the MIIT, the Ministry of Public Security, the Ministry of Ecology and Environment, the Ministry of Transport, the General Administration of Customs and the State Administration for Market Regulation jointly issued the Opinions of Seven Authorities Including the Ministry of Commerce on Further Boosting the Development of the Parallel Import of Automobiles: (1) allowing the exploration of ways to set up the standard compliance rectification venues for the parallel import of automobiles; (2) further improving the trade facilitation level of the parallel import of automobiles; (3) strengthening the quality control of automobiles under parallel import; (4) standardizing the registration management of automobiles under parallel import; (5) promoting the normalization and institutionalization of the parallel import of automobiles; (6) strengthening the supervision and management of pilot enterprises; and (7) strengthening the practical organizational implementation.
Haitaoche is a holding company incorporated under the laws of the Cayman Islands on January 13, 2015. Haitaoche conducts operations through its variable interest entities in the People’s Republic of China. The Company is mainly engaged in sales of imported automobiles in PRC.
Haitaoche is a holding company incorporated under the laws of the Cayman Islands on January 13, 2015. Haitaoche conducts operations through its variable interest entities in the People’s Republic of China. The Company is mainly engaged in sales of imported automobiles in PRC. The Company was renamed Kaixin Holdings, effective on April 10, 2024.
As consideration for the Acquisition, the Company will issue ordinary shares of Kaixin to the shareholders of Morning Star with market value of 100 million as determined by the average of the closing prices of last five trading days before the entering date of Share Purchase Agreement, conditional on Morning Star acquiring 100% equity of Yujie before October 31, 2022.
As consideration for the Wuxi Morning Star Acquisition, the Company will issue ordinary shares of Kaixin to the shareholders of Wuxi Morning Star Morning Star with market value of 100 million as determined by the average of the closing prices of last five trading days before the entering date of Share Purchase Agreement.
These rules require, among other things, that the Ministry of Commerce be notified in advance of any change-of-control transaction in which a foreign investor will take control of a PRC domestic enterprise or a foreign company with substantial PRC operations, if certain thresholds under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings issued by the State Council in 2008 and amended on September 18, 2018 are triggered.
These rules require, among other things, that the Ministry of Commerce be notified in advance of any change-of-control transaction in which a foreign investor will take control of a PRC domestic enterprise or a foreign company with substantial PRC operations, if certain thresholds under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings issued by the State Council in 2008 and amended on September 18, 2018 are triggered. 64 Table of Contents Regulations on Overseas Direct Investment In September 2014, MOFCOM promulgated the Measures for the Administration of Overseas Investment (the “Overseas Investment Measures”).
On March 24, 2023, KAG and Stanley Star entered into an amendment to the supplement agreement, the Company entered into a the Series F Agreement with Stanley Star, pursuant to which the Company agreed to issue to Stanley Star an aggregate of 50,000 Series F Convertible Preferred Shares, each of which is convertible into 1,000 ordinary share of the Company.
On March 24, 2023, KAG and Stanley Star entered into an amendment to the supplement agreement, the Company entered into a securities purchase agreement (the “Series F Agreement”) with Stanley Star, pursuant to which, the Company subsequently issued to Stanley Star an aggregate of 50,000 Series F Convertible Preferred Shares, each of which is convertible into 1,000 ordinary share of the Company in connection with the disposal.
Furthermore, failure to comply with the various SAFE registration requirements described above could result in liabilities under the PRC law for evasion of foreign exchange controls. 79 Table of Contents Regulations on Employee Stock Options Plans In 2007, SAFE issued implementing rules for the Administrative Measures of Foreign Exchange Matters for Individuals, which, among other things, specified approval requirements for certain capital account transactions, such as a PRC citizen’s participation in employee stock ownership plans or share option plans of an overseas publicly listed company, and it was further amended on May 29, 2016.
Regulations on Employee Stock Options Plans In 2007, SAFE issued implementing rules for the Administrative Measures of Foreign Exchange Matters for Individuals, which, among other things, specified approval requirements for certain capital account transactions, such as a PRC citizen’s participation in employee stock ownership plans or share option plans of an overseas publicly listed company, and it was further amended on May 29, 2016.
Regulations on Overseas Direct Investment In September 2014, MOFCOM promulgated the Measures for the Administration of Overseas Investment (the “Overseas Investment Measures”). The Overseas Investment Measures define “overseas investment” as activities that an PRC enterprise obtains any ownership, right of control, right of business management, or other relevant rights and interests by formation, merger or any other means.
The Overseas Investment Measures define “overseas investment” as activities that an PRC enterprise obtains any ownership, right of control, right of business management, or other relevant rights and interests by formation, merger or any other means.
To mitigate the uncertainties in our corporate structure and exert full control on our operating entities, we transferred operations in the VIEs to our wholly-owned entities and disposed of Renren Finance, Inc, which was our wholly-owned subsidiary that contractually controls the VIEs.
To mitigate the uncertainties in our corporate structure and exert full control on our operating entities, we transferred operations in the VIEs to our wholly-owned entities and disposed of Renren Finance, Inc, which was our wholly-owned subsidiary that contractually controls the VIEs. As a result, all VIEs were disposed as of October 27, 2022. D. Property, Plants and Equipment.
In July 2021, State Council issued Security Protection Regulations for Critical Information Infrastructure, which provides that the State gives priority to the protection of critical information infrastructure, takes measures to monitor, defends against and deal with cyber security risks and threats from both within and outside the territory of the PRC, protects critical information infrastructure from attacks, intrusions, interference and damage, and punishes illegal and criminal activities endangering the security of critical information infrastructure in accordance with the law.
In July 2021, State Council issued Security Protection Regulations for Critical Information Infrastructure, which provides that the State gives priority to the protection of critical information infrastructure, takes measures to monitor, defends against and deal with cyber security risks and threats from both within and outside the territory of the PRC, protects critical information infrastructure from attacks, intrusions, interference and damage, and punishes illegal and criminal activities endangering the security of critical information infrastructure in accordance with the law. 56 Table of Contents Regulations on Internet Privacy In recent years, the PRC governmental authorities have enacted legislations on internet use to protect personal information from any unauthorized disclosure.
In February 2017, Anhui Xin Jieying was established in the PRC by Mr. Thomas Jintao Ren. In April 2017, Mr. Ren transferred 1% of the equity interests he held in Anhui Xin Jieying to Ms. Rui Yi. Both Mr. Ren and Ms. Yi were nominee shareholders designated by Renren.
Ren transferred 1% of the equity interests he held in Anhui Xin Jieying to Ms. Rui Yi. Both Mr. Ren and Ms. Yi were nominee shareholders designated by Moatable.
Our relationships with our Dealerships are described in further details below under “—Certain Legal Arrangements — Legal Arrangements with Dealerships”. 59 Table of Contents Planned Entry into the NEV Market By integrating the operations and resources of Haitaoche with the used car dealership business, we are currently engaged in the sales of both new and used, domestic and imported automobiles and will be actively looking for opportunities to expand into the business area of electronic vehicles.
Entry into the NEV Market By integrating the operations and resources of Haitaoche with the used car dealership business, we are currently engaged in the sales of both new and used, domestic and imported automobiles and will be actively looking for opportunities to expand into the business area of electronic vehicles.
Patent The standing committee of the National People’s Congress adopted the Patent Law in 1984 and was subsequently amended in 1992, 2000, 2008 and 2020. The State Council promulgated Implementation Regulation for the Paten Law in 2001, which was amended in 2010. To be patentable, invention or utility models must meet three conditions: novelty, inventiveness and practical applicability.
The State Council promulgated Implementation Regulation for the Paten Law in 2001, which was amended in 2010. To be patentable, invention or utility models must meet three conditions: novelty, inventiveness and practical applicability.
We have set up the New Energy Vehicles Department in 2021 and delivered the new NEV prototype to our customer at the end of 2022.
We are actively looking for opportunities to expand into the business area of electronic vehicles. We have set up the New Energy Vehicles Department in 2021 and delivered the new NEV prototype to our customer at the end of 2022.
In November 2020, the Board of the Company resolved to waive the satisfaction of prequalification conditions for the earnout shares discussed above and release and transfer the 19.5 million earnout shares to Renren. Renren received a total of 22.8 million shares including the 3.3 million indemnity shares and the 19.5 million earnout shares in November 2021.
In November 2020, the Board of the Company resolved to waive the satisfaction of prequalification conditions for the earnout shares discussed above and release and transfer the 19.5 million earnout shares to Moatable.
Dividend Withholding Tax Pursuant to the EIT Law and its implementation rules, dividends generated after January 1, 2008 and payable by a foreign-invested enterprise in China to its foreign enterprise investors are subject to a 10% withholding tax, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement.
As of the date of this Annual Report, our PRC subsidiaries and consolidated affiliated entities are generally subject to 0%, 3%, or 6% VAT rate. 63 Table of Contents Dividend Withholding Tax Pursuant to the EIT Law and its implementation rules, dividends generated after January 1, 2008 and payable by a foreign-invested enterprise in China to its foreign enterprise investors are subject to a 10% withholding tax, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement.
We believe that we will be able to obtain adequate facilities, principally through leasing, to accommodate our future expansion plans. ​ ITEM 4A. UNRESOLVED STAFF COMMENTS Not applicable. ​
The hosting services agreements typically have terms of six months to one year. We believe that we will be able to obtain adequate facilities, principally through leasing, to accommodate our future expansion plans. ​ ITEM 4A. UNRESOLVED STAFF COMMENTS. Not applicable. ​
It was stated that from January 1, 2023, if a natural person sells three or more used cars that have been held for less than one year in a calendar year, auto sales companies, used car trading markets, auction companies, etc. shall not issue the uniform invoice for sales of used cars for him/her or handle the transaction registration formalities, and the relevant authorities will handle the matter according to the regulations. 66 Table of Contents Regulations on Automobile Sales On April 5, 2017, the Ministry of Commerce promulgated the Measures on the Administrations of Sales of Automobile, or the Measures on Sales of Automobile, which came into effect on July 1, 2017 and the original Implementation Measures for the Administration of Sales of Branded Automobile (the “Branded Automobile Sales Measures”) was abolished at the same time.
It was stated that from January 1, 2023, if a natural person sells three or more used cars that have been held for less than one year in a calendar year, auto sales companies, used car trading markets, auction companies, etc. shall not issue the uniform invoice for sales of used cars for him/her or handle the transaction registration formalities, and the relevant authorities will handle the matter according to the regulations.
Pursuant to the agreement among Shanghai Renren Financial Leasing Co, Ltd. and the noncontrolling shareholders of relevant Dealership: ○ The noncontrolling shareholders agree to repay Shanghai Renren Financial Leasing Co, Ltd. the outstanding balance of financial leasing payables following a schedule tie to the controlling shareholders’ receipts of settlement shares as specified in the Amendments to Equity Purchase Agreement. 63 Table of Contents Sales and Marketing Automobile Sales We believe that our customer base is similar to the overall market for premium automobiles.
Pursuant to the agreement among Shanghai Renren Financial Leasing Co, Ltd. and the noncontrolling shareholders of relevant Dealership: ● The noncontrolling shareholders agree to repay Shanghai Renren Financial Leasing Co, Ltd. the outstanding balance of financial leasing payables following a schedule tie to the controlling shareholders’ receipts of settlement shares as specified in the Amendments to Equity Purchase Agreement .
We also utilize other online vertical channels such as Autohome and 58.com. We believe that this is a key advantage over our competitors, whether traditional dealers, who do not have a strong online presence, or online-only competitors, who lack the offline infrastructure and in-store experiences that we are able to provide.
We believe that this is a key advantage over our competitors, whether traditional dealers, who do not have a strong online presence, or online-only competitors, who lack the offline infrastructure and in-store experiences that we are able to provide. Marketing and Brand Promotion We believe that brand recognition is important to our ability to attract users.
Pursuant to the Mobile Application Administrative Provisions, an internet application program provider must verify a user’s mobile phone number and other identity information under the principle of mandatory real name registration at the back-office end and voluntary real name display at the front-office end.
The content expressed should be true, accurate, eye-catching and normative, and users should be charged only after their confirmation. 55 Table of Contents Pursuant to the Mobile Application Administrative Provisions, an internet application program provider must verify a user’s mobile phone number and other identity information under the principle of mandatory real name registration at the back-office end and voluntary real name display at the front-office end.
Regulations on Anti-unfair Competition Under the Anti-unfair Competition Law, effective in 1993 and revised in 2017 and 2019, a business operator is prohibited from carrying out acts intending to cause confusion, which would mislead others into thinking that its products belong to another party or that there is an association with another party, by: ● using without permission, a mark that is identical with or similar to product names, packaging or decoration of others with a certain degree of influence; ● using without permission, the name of an enterprise, a social organization or an individual with a certain degree of influence; ● using without permission, the main element of a domain name, website name or webpage with a certain degree of influence; or ● carrying out confusing acts that are sufficient to mislead others into thinking that a product belongs to another party or there is an affiliation with another party. 77 Table of Contents Regulations on Foreign Exchange Under the Foreign Currency Administration Rules, which were revised in 2008, if documents certifying the purposes of the conversion of RMB into foreign currency are submitted to the relevant foreign exchange conversion bank, the RMB will be convertible for current account items, including the distribution of dividends, interest, royalty payments, trade and service-related foreign exchange transactions.
We have registered domain names including www.kaixin.com, www.htche.com and www.htche.net. 59 Table of Contents Regulations on Anti-unfair Competition Under the Anti-unfair Competition Law, effective in 1993 and revised in 2017 and 2019, a business operator is prohibited from carrying out acts intending to cause confusion, which would mislead others into thinking that its products belong to another party or that there is an association with another party, by: ● using without permission, a mark that is identical with or similar to product names, packaging or decoration of others with a certain degree of influence; ● using without permission, the name of an enterprise, a social organization or an individual with a certain degree of influence; ● using without permission, the main element of a domain name, website name or webpage with a certain degree of influence; or ● carrying out confusing acts that are sufficient to mislead others into thinking that a product belongs to another party or there is an affiliation with another party.
Moreover, pursuant to SAFE Circular 3, verification on the genuineness and compliance of the foreign direct investments in domestic entities has also been tightened. 78 Table of Contents In utilizing funds that we hold offshore, as an offshore holding company with PRC subsidiaries, we may (i) make additional capital contributions to our PRC subsidiaries; (ii) establish new PRC subsidiaries and make capital contributions to these new PRC subsidiaries; (iii) make loans to our PRC subsidiaries or consolidated affiliated entities; or (iv) acquire offshore entities with business operations in China during offshore transactions.
In utilizing funds that we hold offshore, as an offshore holding company with PRC subsidiaries, we may (i) make additional capital contributions to our PRC subsidiaries; (ii) establish new PRC subsidiaries and make capital contributions to these new PRC subsidiaries; (iii) make loans to our PRC subsidiaries or consolidated affiliated entities; or (iv) acquire offshore entities with business operations in China during offshore transactions.
In addition, mobile smart terminal application software involving charges should strictly comply with the relevant regulations such as explicitly marking the price, charge standard and charge method. The content expressed should be true, accurate, eye-catching and normative, and users should be charged only after their confirmation.
In addition, mobile smart terminal application software involving charges should strictly comply with the relevant regulations such as explicitly marking the price, charge standard and charge method.
In addition, the State Administration of Taxation (“SAT”), has issued circulars concerning employee share options such as the Notice on Issues Concerning the Individual Income Tax on Equity Incentives issued in 2009 and Notice on Issue of Levying Individual Income Taxes on Incomes from Individual Stock Options promulgated in 2005.
If share options are exercised in a cashless exercise, the PRC domestic individuals are required to remit the proceeds to special foreign exchange accounts. 62 Table of Contents In addition, the State Administration of Taxation (“SAT”), has issued circulars concerning employee share options such as the Notice on Issues Concerning the Individual Income Tax on Equity Incentives issued in 2009 and Notice on Issue of Levying Individual Income Taxes on Incomes from Individual Stock Options promulgated in 2005.
Neither party ever places their own funds at risk and any potential losses resulting from the purchase and sale of the car are borne by Anhui Xin Jieying.
Based on the agreements, neither the Jieying Legal Representative nor the Dealership employee bears any risk of loss or has any future economic benefits. Neither party ever places their own funds at risk and any potential losses resulting from the purchase and sale of the car are borne by Anhui Xin Jieying.
On January 30, 2018, the Ministry of Commerce, the MIIT, the Ministry of Public Security, the Ministry of Environmental Protection, the Ministry of Transport, the General Administration of Customs, the General Administration of Quality Supervision and Inspection and Quarantine, and the Certification and Accreditation Administration of the People’s Republic of China jointly issued a Reply on Issues for Conducting Pilot Programs for the Parallel-import of Automobiles in Inner Mongolia and the Other Areas (“the Parallel-import Automobile Reply”), approving automobile parallel import pilot programs in the Manchuria Port of Inner Mongolia, Zhangjiagang Free Trade Zone in Jiangsu Province, Zhengzhou Railway Port in Henan Province, Yueyang Lingji Port in Hunan Province, Qinzhou Free Trade Zone in Guangxi Zhuang Autonomous Region, Haikou Port in Hainan Province, Railway Port in Chongqing, and Qingdao Qianwan Free Trade Zone.
Any pilot enterprise failed to meet this requirement shall depend on a third party to provide such services to participate in the pilot program; (4) it has good reputation and has well-established purchasing channels of oversea automobile and experiences in automobile sales industry; and (5) the enterprises that have participated in the pilot program and had parallel-import records on Shanghai port shall be prioritized. 52 Table of Contents On January 30, 2018, the Ministry of Commerce, the MIIT, the Ministry of Public Security, the Ministry of Environmental Protection, the Ministry of Transport, the General Administration of Customs, the General Administration of Quality Supervision and Inspection and Quarantine, and the Certification and Accreditation Administration of the People’s Republic of China jointly issued a Reply on Issues for Conducting Pilot Programs for the Parallel-import of Automobiles in Inner Mongolia and the Other Areas (“the Parallel-import Automobile Reply”), approving automobile parallel import pilot programs in the Manchuria Port of Inner Mongolia, Zhangjiagang Free Trade Zone in Jiangsu Province, Zhengzhou Railway Port in Henan Province, Yueyang Lingji Port in Hunan Province, Qinzhou Free Trade Zone in Guangxi Zhuang Autonomous Region, Haikou Port in Hainan Province, Railway Port in Chongqing, and Qingdao Qianwan Free Trade Zone.
Organizational Structure. The following diagram illustrates our corporate structure as of the date of this Annual Report. ​ As of the date of this Annual Report, we have no VIEs in the PRC. Historically, as a Cayman Islands holding company, we conduct our operations in China through our PRC subsidiaries and the VIEs.
Organizational Structure. The following diagram illustrates our corporate structure and identifies our subsidiaries and their subsidiaries, as of the date of this Annual Report. ​ 65 Table of Contents As of the date of this Annual Report, we have no VIEs in the PRC and we conduct our operations exclusively through our wholly-owned subsidiaries.
We provide high-quality photos of the vehicles we sell from multiple angles, allowing consumers to browse our inventory online and attract them to physically visit our Dealership Outlets.
Value Propositions to Car Buyers We provide integrated online and offline sales channels to car buyers, aiming to create a superior and convenient vehicle purchase experience. We provide high-quality photos of the vehicles we sell from multiple angles, allowing consumers to browse our inventory online and attract them to physically visit our Dealership Outlets.
In addition to paid channels, we intend to attract new customers through enhancing our media and public relations efforts, including organic marketing to enhance its reputation.
We expect that these advertisements will generally fall into three areas: vertical automotive media, selected online channels and selected offline channels. In addition to paid channels, we intend to attract new customers through enhancing our media and public relations efforts, including organic marketing to enhance its reputation.
History of KAG Before the Business Combination Before the completion of Business Combination, KAG had been a wholly-owned subsidiary of Renren. KAG’s business was historically operated by Renren through certain subsidiaries and variable interest entities, including KAG itself. KAG was formed in March 2011 as Renren-Jingwei Inc., an exempted company under the laws of the Cayman Islands.
KAG’s business was historically operated by Moatable through certain subsidiaries and variable interest entities, including KAG itself. KAG was formed in March 2011 as Renren-Jingwei Inc., an exempted company under the laws of the Cayman Islands. KAG initially focused on providing consumer financing solutions through Renren Fenqi, an installment payment business.
We seek to protect our intellectual property assets and brand through a combination of monitoring and enforcement of trademark, patent, copyright and trade secret protection laws in the PRC and other jurisdictions, as well as through confidentiality agreements and procedures. 65 Table of Contents In March 2018, Renren transferred to us the kaixin.com domain name and, in May 2018, an affiliate of Renren granted us an exclusive license to use its “Kaixin” brand.
We seek to protect our intellectual property assets and brand through a combination of monitoring and enforcement of trademark, patent, copyright and trade secret protection laws in the PRC and other jurisdictions, as well as through confidentiality agreements and procedures.
Seasonality Our automobile sales business is affected by seasonality in automobile sales, which tends to affect dealers’ needs for financing for new inventory. Automobile sales tend to be lower in the first quarter of each year than in the other three quarters due to the effect of the Chinese New Year holiday.
Automobile sales tend to be lower in the first quarter of each year than in the other three quarters due to the effect of the Chinese New Year holiday.
Bujia will order a total of RMB1 billion (equivalent to US$156 million) worth of new energy vehicles from our Company in the coming years. The first model vehicle was delivered to Bujia in mid-2022. We aim to continuously establish strategic partnerships with platforms that have big sales potentials and to make customized production according to customer needs.
Bujia will order a total of RMB1 billion (equivalent to US$156 million) worth of new energy vehicles from our Company in the coming years. The first model vehicle was delivered to Bujia in mid-2022.
“Kaixin” means “happiness” in Chinese and has had strong impact and positive responses in other applications, including a social gaming platform previously operated by Renren. By empowering our Dealerships with this highly recognizable brand name, we aim to help them gain further credibility and trustworthiness.
We co-brand our Dealerships, many of which have an established local brand, to associate their existing brands with the Kaixin brand. “Kaixin” means “happiness” in Chinese and has had strong impact and positive responses in other applications. By empowering our Dealerships with this highly recognizable brand name, we aim to help them gain further credibility and trustworthiness.
Settlement arrangement with noncontrolling shareholders of dealerships over disputes Starting from 2019, due to disagreements with certain noncontrolling shareholders on operational matters, some noncontrolling shareholders detained the Company’s inventories in certain dealerships.
Furthermore, it is within Anhui Xin Jieying’s sole power to redirect the Loan and Service Agreement, title and registration of the car. Settlement arrangement with noncontrolling shareholders of dealerships over disputes Starting from 2019, due to disagreements with certain noncontrolling shareholders on operational matters, some noncontrolling shareholders detained the Company’s inventories in certain dealerships.
On January 29, 2016, the SAT, the Ministry of Science and Technology and the Ministry of Finance jointly issued the Administrative Rules for the Certification of High and New Technology Enterprises specifying the criteria and procedures for the certification of High and New Technology Enterprises. 80 Table of Contents Value-added Tax The Provisional Regulations of the PRC on Value-added Tax, which were promulgated by the State Council on December 13, 1993 and came into effect on January 1, 1994, were most recently amended on November 19, 2017.
Value-added Tax The Provisional Regulations of the PRC on Value-added Tax, which were promulgated by the State Council on December 13, 1993 and came into effect on January 1, 1994, were most recently amended on November 19, 2017.
On March 24, 2006, the Ministry of Commerce promulgated the Specifications for Used Automobile Trade, which provided detailed requirements as to the responsibilities of used automobiles trading entity regarding the trading of used automobiles, including confirming the identity of the seller and the legitimacy of the used automobiles, signing contract for used automobile trading, establishing transaction archives and keeping records for at least three years.
Furthermore, under certain circumstances, used automobiles are prohibited from being resold, including instances where an automobile has been discarded as unusable, been required to be discarded, or been obtained by illegal means, such as theft, robbery or fraud. 51 Table of Contents On March 24, 2006, the Ministry of Commerce promulgated the Specifications for Used Automobile Trade, which provided detailed requirements as to the responsibilities of used automobiles trading entity regarding the trading of used automobiles, including confirming the identity of the seller and the legitimacy of the used automobiles, signing contract for used automobile trading, establishing transaction archives and keeping records for at least three years.
Haitaoche Acquisition On November 3, 2020, we entered into a binding term sheet with Haitaoche pursuant to which Haitaoche will merge with a newly formed wholly-owned subsidiary of ours, with Haitaoche continuing as the surviving entity and a wholly-owned subsidiary of ours.
On June 28, 2019, we determined that we qualify as a “foreign private issuer” as defined under Rule 3b-4 of the Exchange Act, and started reporting under the Exchange Act as a foreign private issuer. 43 Table of Contents Haitaoche Acquisition On November 3, 2020, we entered into a binding term sheet with Haitaoche pursuant to which Haitaoche will merge with a newly formed wholly-owned subsidiary of ours, with Haitaoche continuing as the surviving entity and a wholly-owned subsidiary of ours.
To streamline its corporate structure, mitigate the uncertainties, and exert full control on our operating entities, the management explored the options to dispose of the Disposal Group. The Disposal Group had a negative book of around $3 million at that time. On August 5, 2022, KAG, our wholly-owned subsidiary, and Stanley Star entered into the August 2022 Agreement.
The Disposal Group had a negative book of around US$3 million at that time. On August 5, 2022, KAG, our wholly-owned subsidiary, and Stanley Star entered into a shares transfer agreement (the “August 2022 Agreement”).
On September 26, 2022, the Company signed a binding acquisition term sheet with Wuxi Morning Star Technology Co., Ltd. (“Morning Star”), who manufactures and operates the POCCO EVs. According to the term sheet, the Company intends to acquire 100% equity of Morning Star through new share issuance and makes it a wholly owned subsidiary (the “Acquisition”).
On September 26, 2022, the Company signed a binding acquisition term sheet with Wuxi Morning Star Technology Co., Ltd. (“Wuxi Morning Star”), who manufactures and operates the POCCO EVs.
In connection with the growth of this business, KAG was rebranded in the first quarter of 2016 as Renren Financial Holdings. In 2017, Renren’s finance business, as well as certain shell companies were transferred to KAG, and certain reorganization steps were undertaken. The main components of the reorganization include: ● Establishment of Anhui Xin Jieying (renamed from Shanghai Jieying).
In 2017, Moatable’s finance business, as well as certain shell companies were transferred to KAG, and certain reorganization steps were undertaken. The main components of the reorganization include: ● Establishment of Anhui Xin Jieying (renamed from Shanghai Jieying). In February 2017, Anhui Xin Jieying was established in the PRC by Mr. Thomas Jintao Ren. In April 2017, Mr.
KAG initially focused on providing consumer financing solutions through Renren Fenqi, an installment payment business. In 2015, KAG underwent a strategic realignment and launched Renren Licai, a peer-to-peer financing platform. Following the acquisition of a government license for leasing and factoring, KAG began to offer floor financing to auto dealerships.
In 2015, KAG underwent a strategic realignment and launched Renren Licai, a peer-to-peer financing platform. Following the acquisition of a government license for leasing and factoring, KAG began to offer floor financing to auto dealerships. In connection with the growth of this business, KAG was rebranded in the first quarter of 2016 as Renren Financial Holdings.
Furthermore, Sino-foreign equity joint ventures, Sino-foreign cooperative joint ventures and wholly foreign-owned enterprises cannot engage in the providing of web publishing services. 72 Table of Contents Regulations on Mobile Internet Applications On June 28, 2016, the Cyberspace Administration of China promulgated the Administrative Provisions on Mobile Internet Applications Information Services (the “Mobile Application Administrative Provisions”), which took effect on August 1, 2016.
Regulations on Mobile Internet Applications On June 28, 2016, the Cyberspace Administration of China promulgated the Administrative Provisions on Mobile Internet Applications Information Services (the “Mobile Application Administrative Provisions”), which took effect on August 1, 2016.
We primarily compete on the basis of our deep understanding of consumers’ needs and offering of numerous product choices from our substantial inventory. Research and Development Our intellectual property includes trademarks and trademark applications related to our brands and services, copyrights in software, trade secrets, patent applications and other intellectual property rights and licenses.
Research and Development Our intellectual property includes trademarks and trademark applications related to our brands and services, copyrights in software, trade secrets, patent applications and other intellectual property rights and licenses.
To date, the growth of our automobile sales business has primarily been through customer referrals. We also believe that our strong customer focus ensures customer loyalty which will drive both repeat purchases and referrals. Our sales are primarily made in-store, but we have invested heavily in online sales channels, including through the Kaixin app and web interfaces.
Sales and Marketing Automobile Sales We believe that our customer base is similar to the overall market for premium automobiles. To date, the growth of our automobile sales business has primarily been through customer referrals. We also believe that our strong customer focus ensures customer loyalty which will drive both repeat purchases and referrals.
We aim to continuously establish strategic partnerships with platforms that have big sales potentials and to make customized production according to customer needs. Value Propositions to Car Buyers We provide integrated online and offline sales channels to car buyers, aiming to create a superior and convenient vehicle purchase experience.
We aim to continuously establish strategic partnerships with platforms that have big sales potentials and to make customized production according to customer needs.
SAFE Circular 13 delegates the power to enforce the foreign exchange registration in connection with inbound and outbound direct investments under relevant SAFE rules from local branches of SAFE to banks, thereby further simplifying the foreign exchange registration procedures for inbound and outbound direct investments.
SAFE Circular 13 delegates the power to enforce the foreign exchange registration in connection with inbound and outbound direct investments under relevant SAFE rules from local branches of SAFE to banks, thereby further simplifying the foreign exchange registration procedures for inbound and outbound direct investments. 60 Table of Contents In March 2015, SAFE issued the Circular on Reform of the Administrative Rules of the Payment and Settlement of Foreign Exchange Capital of Foreign-Invested Enterprises (“SAFE Circular 19”), which became effective on June 1, 2015 and was last amended on March 23, 2023.
In August 2021, the Standing Committee of the National People’s Congress issued the Personal Information Protection Law of the PRC, which provide that personal information processors shall be responsible for their processing of personal information and take necessary measures to ensure the security of the personal information processed.
According to the Notice, if the personal information solicited by an app for a new service function is beyond the scope of a user’s original consent, it is a violation of law for the app to refuse to provide the original service function if the user disagrees with the new scope, unless the new service function is a replacement of the original service function. 57 Table of Contents In August 2021, the Standing Committee of the National People’s Congress issued the Personal Information Protection Law of the PRC, which provide that personal information processors shall be responsible for their processing of personal information and take necessary measures to ensure the security of the personal information processed.
Our network of Dealerships is focused primarily on tier 2 and below cities, where we believe the mix of cost structure, consumers’ demand and opportunity for growth is most favorable. 58 Table of Contents Dealership Evaluation and Selection Process In expanding our network of Dealerships, we carefully consider potential markets and conduct a systematic evaluation of each potential new site, using a scoring system that we have developed internally.
Dealership Evaluation and Selection Process In expanding our network of Dealerships, we carefully consider potential markets and conduct a systematic evaluation of each potential new site, using a scoring system that we have developed internally.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

66 edited+16 added−23 removed56 unchanged
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS A. Operating results. Overview By integrating the operations and resources of Haitaoche with the used car dealership business, we are currently engaged in the sales of both new and used, domestic and imported automobiles. We are a leading premium used auto dealership group in China.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS. A. Operating Results. Overview By integrating the operations and resources of Haitaoche with the used car dealership business, we are currently engaged in the sales of both new and used, domestic and imported automobiles. We are a leading premium new and used auto dealership group in China.
The Company invested significant resources in revamping the used car business after the completion of the reverse merger, which contributed the growt of the car sales. Cost of Revenues Cost of revenues consists of costs directly related to used-car sales and new-car wholesales.
The Company invested significant resources in revamping the car sales business after the completion of the reverse merger, which contributed the growt of the car sales. Cost of Revenues Cost of revenues consists of costs directly related to used-car sales and new-car wholesales.
The principal item accounting for the difference between our net loss and the net cash used in operating activities in 2022 were a loss from impairment of other non-current assets of US$22.9 million, provision for dealership settlement of $15.1 million, and share-based compensation expense of US$39.3 million. Net cash used in operating activities was US$2.1 million in 2021.
The principal item accounting for the difference between our net loss and the net cash used in operating activities in 2022 were a loss from impairment of other non-current assets of US$22.9 million, provision for dealership settlement of US$15.1 million, and share-based compensation expense of US$39.3 million. Net cash used in operating activities was US$2.1 million in 2021.
Specifically, we sold 1,582 used vehicles in the second half of 2021 after the completion of the Haitaoche Acquisition, which are included in the sales revenue of the Company’s statement of operating results for the year ended December 31, 2021.
Specifically, we sold 1,582 vehicles in the second half of 2021 after the completion of the Haitaoche Acquisition, which are included in the sales revenue of the Company’s statement of operating results for the year ended December 31, 2021.
The Company assessed goodwill for impairment on annual basis till 2021 in accordance with ASC 350-20, Intangibles – Goodwill and Other: Goodwill, which permits the Company to first assess qualitative factors to determine whether it is “more likely than not” that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative impairment test.
The Company assessed goodwill for impairment on annual basis in accordance with ASC 350-20, Intangibles – Goodwill and Other: Goodwill, which permits the Company to first assess qualitative factors to determine whether it is “more likely than not” that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative impairment test.
If our holding company in the Cayman Islands or any of our subsidiaries outside of China were deemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%. 92 Table of Contents Results of Operations The following tables set forth a summary of our consolidated results of operations for the periods presented.
If our holding company in the Cayman Islands or any of our subsidiaries outside of China were deemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%. 70 Table of Contents Results of Operations The following tables set forth a summary of our consolidated results of operations for the periods presented.
Financing and Access to Capital We have historically funded our operations and expansion with support from Renren, the issuance of ABSs and term loans, and we believe that the future growth and expansion of our business will involve additional debt and/or equity financing from both Chinese and international external investors.
Financing and Access to Capital We have historically funded our operations and expansion with support from Moatable, the issuance of ABSs and term loans, and we believe that the future growth and expansion of our business will involve additional debt and/or equity financing from both Chinese and international external investors.
Cash flows and working capital The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
Liquidity and Capital Resources Cash flows and working capital The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
The Company did not record any impairment charge for the years ended 2020, 2021 and 2022. Provision of income tax and valuation allowance for deferred tax asset Current income taxes are provided for in accordance to the laws of relevant local tax authorities.
The Company did not record any impairment charge for the years ended 2021, 2022 and 2023. Provision of income tax and valuation allowance for deferred tax asset Current income taxes are provided for in accordance to the laws of relevant local tax authorities.
However, since our public float was not over $75 million on June 30, 2022, we are exempted from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 for the assessment of our internal control over financial reporting for the year ended December 31, 2022. C. Research and Development, Patents and Licenses, etc. See “Item 4.
However, since our public float was not over US$75 million on June 30, 2023, we are exempted from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 for the assessment of our internal control over financial reporting for the year ended December 31, 2023. C. Research and Development, Patents and Licenses, etc. See “Item 4.
The used car industry in China is highly fragmented, and we see a trend towards consolidation that will take hold in the future. In addition, we believe that there are trends towards the growth of online technologies and consumer auto financing in China.
The car retail industry in China is highly fragmented, and we see a trend towards consolidation that will take hold in the future. In addition, we believe that there are trends towards the growth of online technologies and consumer auto financing in China.
Out of our significant accounting policies, which are described in Note 2—Summary of Significant Accounting Policies of our consolidated financial statements included elsewhere in this Form 20F, certain accounting policies are deemed “critical”, including (i) revenue recognition; (ii) business combinations, (iii) goodwill, and (iv) fair value measurements, since they require management’s highest degree of judgment, estimates and assumptions.
Out of our significant accounting policies, which are described in Note 2—Summary of Significant Accounting Policies of our consolidated financial statements included elsewhere in this Form 20 - F, certain accounting policies are deemed “critical”, including (i) revenue recognition; (ii) business combinations, (iii) goodwill, and (iv) fair value measurements, since they require management’s highest degree of judgment, estimates and assumptions.
The Company did not recognize any income tax due to uncertain tax position or incur any interest and penalties related to potential underpaid income tax expenses for the years ended December 31, 2020, 2021 and 2022, respectively. ​
The Company did not recognize any income tax due to uncertain tax position or incur any interest and penalties related to potential underpaid income tax expenses for the years ended December 31, 2021, 2022 and 2023, respectively. ​
We may selectively pursue acquisitions, investments, joint ventures and partnerships that we believe are strategic and complementary to our operations and technology. These acquisitions, investments, joint ventures and partnerships may affect our results of operations. On June 25, 2021, we closed the Haitaoche Acquisition. Haitaoche is a China-based merchant for domestic and imported automobiles.
We may selectively pursue acquisitions, investments, joint ventures and partnerships that we believe are strategic and complementary to our operations and technology. These acquisitions, investments, joint ventures and partnerships may affect our results of operations. 67 Table of Contents On June 25, 2021, we closed the Haitaoche Acquisition. Haitaoche is a China-based merchant for domestic and imported automobiles.
Key Factors Affecting Our Results of Operations We believe that our results of operations are significantly affected by the following key factors. Demand for Premium Passenger Vehicles in China We generate a substantial majority of our revenues from the sales of premium passenger vehicles and the market demand for such passenger vehicles in China directly affects our revenues.
Key Factors Affecting Our Results of Operations We believe that our results of operations are significantly affected by the following key factors. 66 Table of Contents Demand for Premium Passenger Vehicles in China We generate a substantial majority of our revenues from the sales of premium passenger vehicles and the market demand for such passenger vehicles in China directly affects our revenues.
Gain on disposal of subsidiaries There is a gain on disposal of subsidiaries of US $1.6 million in 2022. Income Tax Benefit (Expense) Our income tax benefit was US$0.7 million in 2021, and our income tax expense was US$74 thousand in 2022.
Gain on disposal of subsidiaries There is a gain on disposal of subsidiaries of US $1.6 million in 2022. 73 Table of Contents Income Tax Benefit (Expense) Our income tax benefit was US$0.7 million in 2021, and our income tax expense was US$74 thousand in 2022.
For the year ended December 31, 2022, we generated negative cash flows from operating activities that amounted to US$2.4 million and has working capital of US$22.4 million as of December 31, 2022. KX Venturas 4 LLC invested US$3.0 million in convertible preferred shares of the Company on December 28, 2020, which were all converted to ordinary shares during 2021.
For the year ended December 31, 2023, we generated negative cash flows from operating activities that amounted to US$2.1 million and has working capital of negative US$10.9 million as of December 31, 2023. KX Venturas 4 LLC invested US$3.0 million in convertible preferred shares of the Company on December 28, 2020, which were all converted to ordinary shares during 2021.
Under the current laws of the Cayman Islands, we are not subject to tax based upon profits, income, gains or appreciations and there is no taxation in the nature of inheritance tax or estate duty.
Taxation Cayman Islands We are an exempted company incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, we are not subject to tax based upon profits, income, gains or appreciations and there is no taxation in the nature of inheritance tax or estate duty.
The following table sets forth the breakdown of our cost of revenues, both in absolute amounts and as percentages of our total cost of revenues, for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ 2020 2021 2022 ​ ​ US$ % ​ US$ % ​ US$ % ​ (in thousands, except for percentages) Cost of revenues: Car sales ​ 1,207 ​ 100.0 ​ 248,583 ​ 100.0 ​ 82,194 ​ 100.0 Total cost of revenues 1,207 100.0 248,583 100.0 82,194 100.0 ​ 90 Table of Contents Cost of Used-car sales Cost of revenues consists of costs directly related to used-car sales and new car wholesales, including inventory acquisition costs and write-down of inventory.
The following table sets forth the breakdown of our cost of revenues, both in absolute amounts and as percentages of our total cost of revenues, for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ 2021 2022 2023 ​ ​ US$ % ​ US$ % ​ US$ % ​ (in thousands, except for percentages) ​ Cost of revenues: ​ Car sales ​ 248,583 ​ 100.0 ​ 82,194 ​ 100.0 ​ 31,193 ​ 100 % Total cost of revenues 248,583 100.0 82,194 100.0 31,193 100 % ​ Cost of Used-car sales Cost of revenues consists of costs directly related to used-car sales and new car wholesales, including inventory acquisition costs and write-down of inventory.
As of December 31, 2022, we had three used car Dealerships covering three cities in China. On average, our Dealership operators have over ten years of experiences in the used car industry.
As of December 31, 2023, we had three Dealerships covering three cities in China. On average, our Dealership operators have over ten years of experiences in the car sales industry.
The amount of valuation allowances was US$0.4 million, US$24.2 million, and US$0.7 million as of December 31, 2020, 2021, and 2022, respectively. The impact of an uncertain income tax position on the income tax return is recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant tax authority.
The amount of valuation allowances was US$24.2 million, US$1.1 million and nil as of December 31, 2021, 2022 and 2023, respectively. The impact of an uncertain income tax position on the income tax return is recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant tax authority.
The following table sets forth our operating expenses for continuing operations, both in absolute amounts and as percentages of our total operating expenses for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ 2020 2021 2022 ​ ​ US$ % ​ US$ % ​ US$ % ​ (in thousands, except for percentages) Operating expenses: Selling and marketing 11 4.0 481 0.3 2,097 4.3 General and administrative 265 96.0 43,734 23.2 46,488 95.7 Impairment of goodwill — — 143,655 76.5 — — Total operating expenses 276 100.0 187,870 100.0 48,585 100 ​ Selling and Marketing Expenses Selling and marketing expenses consist primarily of salaries, benefits and commissions for our selling and marketing personnel and advertising, promotion expenses, and provision for dealership incentive.
The following table sets forth our operating expenses for continuing operations, both in absolute amounts and as percentages of our total operating expenses for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ 2021 2022 2023 ​ ​ US$ % ​ US$ % ​ US$ % ​ (in thousands, except for percentages) ​ Operating expenses: ​ Selling and marketing 481 0.3 2,097 4.3 3,313 15.5 % General and administrative 43,734 23.2 46,488 95.7 18,013 84.5 % Impairment of goodwill 143,655 76.5 — — — — ​ Total operating expenses 187,870 100.0 48,585 100.0 21,326 100 % ​ Selling and Marketing Expenses Selling and marketing expenses consist primarily of salaries, benefits and commissions for our selling and marketing personnel and advertising, promotion expenses, and provision for dealership incentive.
The following table sets forth a summary of our cash flows for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, ​ 2020 2021 2022 ​ ​ (in thousands of US$) Net cash used in operating activities ​ (1,135) ​ (2,103) ​ (2,394) Net cash (used in) provided by investing activities ​ (290) ​ 4,267 ​ (156) Net cash provided by financing activities ​ 2,132 2,000 5,406 Cash and cash equivalents at beginning of year ​ 4 607 5,263 Cash and cash equivalents at end of year ​ 607 5,263 7,102 ​ Operating Activities Net cash used in operating activities was US$2.4 million in 2022.
The following table sets forth a summary of our cash flows for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, ​ 2021 2022 2023 ​ ​ (in thousands of US$) Net cash used in operating activities ​ (2,103) ​ (2,394) ​ (2,108) Net cash (used in) provided by investing activities ​ 4,267 ​ (156) ​ (3,134) Net cash provided by financing activities ​ 2,000 5,406 1,015 Cash and cash equivalents at beginning of year ​ 607 5,263 7,102 Cash and cash equivalents at end of year ​ 5,263 7,102 2,085 ​ Operating Activities Net cash used in operating activities was US$2.1 million in 2023.
The Company recorded impairment loss of $4.2 million and $22.9 million for prepaid expenses and other current assets for the years ended December 31, 2021 and 2022, respectively. Goodwill Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations.
The Company recorded impairment loss of US$22.9 million and US$23.3 million for prepaid expenses and other current assets for the years ended December 31, 2022 and 2023, respectively. Goodwill Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations.
Our sales revenue are $1.2 million, $253.8 million, and $82.8 million in 2020, 2021, and 2022, respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ 2020 2021 2022 ​ US$ ​ % ​ US$ ​ % ​ US$ ​ % ​ (in thousands, except for percentages) Revenues: ​ ​ Car sales revenue ​ 1,207 ​ 100.0 ​ 253,840 ​ 100.0 ​ 82,840 ​ 100.0 Total revenues 1,207 100.0 253,840 ​ 100.0 82,840 ​ 100.0 ​ On June 25, 2021, Kaixin Auto Holdings (KAH) completed the Haitaoche Acquisition, which is considered a reverse acquisition (or reverse takeover, or “Acquisition”) of KAH by Haitaoche Limited (Haitaoche) as the acquirer under the applicable accounting treatment.
Our sales revenue are US$253.8 million, US$82.8 million and US$31.5 million in 2021, 2022 and 2023, respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ ​ 2021 2022 2023 ​ ​ US$ ​ % ​ US$ ​ % ​ US$ ​ % ​ ​ (in thousands, except for percentages) ​ Revenues: ​ ​ ​ Car sales revenue ​ 253,840 ​ 100.0 ​ 82,840 ​ 100.0 ​ 31,535 ​ 100 % Total revenues 253,840 100.0 82,840 ​ 100.0 31,535 ​ 100 % ​ 68 Table of Contents On June 25, 2021, Kaixin Holdings (KAH) completed the Haitaoche Acquisition, which is considered a reverse acquisition (or reverse takeover, or “Acquisition”) of KAH by Haitaoche Limited (Haitaoche) as the acquirer under the applicable accounting treatment.
The operating results in any periods are not necessarily indicative of the results that may be expected for any future period. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ ​ 2020 2021 2022 ​ ​ (in thousands, exepct for percentage) ​ ​ ​ % ​ % ​ % Total revenues 1,207 100.0 253,840 100.0 82,840 100.0 Total cost of revenues 1,207 100.0 248,583 97.9 82,194 99.2 Gross profit — 0.0 5,257 2.1 646 0.8 Operating expenses: Selling and marketing expenses 11 0.9 481 0.2 2,097 2.5 General and administrative expenses 265 22.0 43,734 17.2 46,488 56.1 Impairment of goodwill — — 143,655 56.6 — — Total operating expenses 276 22.9 187,870 74.0 48,585 58.6 Loss from operations (276) (22.9) (182,613) (71.9) (47,939) (57.9) Other income (expenses), net 25 2.1 (4) (0.0) 728 0.9 Foreign currency exchange gain (loss) ​ 86 ​ 7.1 ​ (432) ​ (0.2) ​ (139) ​ (0.2) Interest expense, net (1) (0.1) (245) (0.1) (1,034) (1.2) Change in fair value of warrants ​ — ​ — ​ 1,995 ​ 0.8 ​ 316 ​ 0.4 Impairment of other non-current assets ​ — ​ — ​ (4,216) ​ (1.7) ​ (22,921) ​ (25.9) Provision for dealership settlement ​ — ​ — ​ (11,142) ​ (4.4) ​ (15,134) ​ (18.3) Gain on disposal of subsidiaries ​ — ​ — ​ — ​ — ​ 1,578 ​ 1.9 Loss before income tax provision (166) (13.8) (196,657) (77.5) (84,545) (100.3) Income tax benefit (expense) ​ — ​ ​ ​ 729 ​ 0.3 ​ (74) ​ (0.1) Net loss (166) (13.8) (195,928) (77.2) (84,619) (100.4) ​ Year ended December 31, 2022 compared with year ended December 31, 2021 Revenues Our total revenues decreased from US$253.8 million in 2021 to US$82.8 million in 2022, primarily due to closure of several dealerships.
The operating results in any periods are not necessarily indicative of the results that may be expected for any future period. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ ​ 2021 2022 2023 ​ ​ (in thousands, except for percentage) ​ ​ ​ % ​ % ​ % Total revenues 253,840 100.0 82,840 100.0 31,535 100.0 Total cost of revenues 248,583 97.9 82,194 99.2 31,193 98.9 Gross profit 5,257 2.1 646 0.8 342 1.1 Operating expenses: Selling and marketing expenses 481 0.2 2,097 2.5 3,313 10.5 General and administrative expenses 43,734 17.2 46,488 56.1 18,013 57.1 Impairment of goodwill 143,655 56.6 — — — — Total operating expenses 187,870 74.0 48,585 58.6 21,326 67.6 Loss from operations (182,613) (71.9) (47,939) (57.9) (20,984) (66.5) Other income (expenses), net (4) (0.0) 728 0.9 (10) (0.0) Foreign currency exchange gain (loss) ​ (432) ​ (0.2) ​ (139) ​ (0.2) ​ (10) ​ (0.0) Interest expense, net (245) (0.1) (1,034) (1.2) (525) (1.7) Change in fair value of warrants ​ 1,995 ​ 0.8 ​ 316 ​ 0.4 ​ (207) ​ (0.7) Impairment of other receivables ​ — ​ — ​ — ​ — ​ (8,848) ​ (28.1) Impairment of prepaid expenses and other current assets ​ (4,216) ​ (1.7) ​ (22,921) ​ (25.9) ​ (23,262) ​ (73.8) Provision for dealership settlement ​ (11,142) ​ (4.4) ​ (15,134) ​ (18.3) ​ — ​ — Gain on disposal of subsidiaries ​ — ​ — ​ 1,578 ​ 1.9 ​ 64 ​ (0.2) Loss before income tax provision (196,657) (77.5) (84,545) (100.3) (53,782) ​ (170.5) Income tax benefit (expense) ​ 729 ​ 0.3 ​ (74) ​ (0.1) ​ 228 ​ (0.7) Net loss (195,928) (77.2) (84,619) (100.4) (53,554) ​ (169.8) ​ Year ended December 31, 2023 compared with year ended December 31, 2022 Revenues Our total revenues decreased from US$82.8 million in 2022 to US$31.5 million in 2023, primarily due to the decline in auto sales volume.
We provide used car buyers in China with access to a wide selection of used vehicles across our network of Dealerships, with a focus on premium brands, such as Audi, BMW, Mercedes-Benz, Land Rover and Porsche. We sourced, marketed and sold approximately 1,814 and 879 used and new vehicles to customers across China in 2021 and 2022, respectively.
We provide new and used car buyers in China with access to a wide selection of used vehicles across our network of Dealerships, with a focus on premium brands, such as Audi, BMW, Mercedes-Benz, Land Rover and Porsche.
Net cash used in investing activities was US$0.3 million in 2020, which was mostly attributable to purchase of intangible assets of US$0.3 million. 97 Table of Contents Financing Activities Net cash used in financing activities was US$5.4 million in 2022, which was primarily attributable to proceeds from issuance of ordinary shares of $4.7 million and a convertible note of $2.0 million, partially offset by cash paid for offering cost of $2.0 million.
Net cash provided by financing activities was US$5.4 million in 2022, which was primarily attributable to proceeds from issuance of ordinary shares of US$4.7 million and a convertible note of US$2.0 million, partially offset by cash paid for offering cost of US$2.0 million.
Gross Profit As a result of the foregoing, we recorded gross profit of US$5,257 thousand in 2021 and gross profit of $646 thousand in 2022. 93 Table of Contents Operating Expenses Our total operating expenses decreased from US$187.9 million in 2021 to US$48.6 million in 2022.
Gross Profit As a result of the foregoing, we recorded gross profit of US$646 thousand in 2022 and gross profit of US$342 thousand in 2023. 71 Table of Contents Operating Expenses Our total operating expenses decreased from US$48.6 million in 2022 to US$24.2 million in 2023.
Demand for premium passenger vehicles is affected by a variety of factors, including: ● macro-economic conditions in China, level of urbanization and household income; ● continued increase in the number of affluent individuals and consumer sentiment towards premium automobiles; ● continued improvement of road networks and infrastructure; and ● PRC laws and regulations with regard to passenger vehicles. 88 Table of Contents Integration of Our Dealerships We began to acquire majority control of used car dealers across China in the second half of 2017.
Demand for premium passenger vehicles is affected by a variety of factors, including: ● macro-economic conditions in China, level of urbanization and household income; ● continued increase in the number of affluent individuals and consumer sentiment towards premium automobiles; ● continued improvement of road networks and infrastructure; and ● PRC laws and regulations with regard to passenger vehicles.
The other income in 2022 is mainly due to subsidies received from the Taishun County local government. Interest Expenses, Net Our interest expenses, net were US$245 thousand in 2021 and US$1,034 thousand in 2022. Change in fair value of warrants Gain from change in fair value of warrants was US$1,995 thousand and US$316 thousand in 2021 and 2022, respectively.
Other Income (Expenses) Other expense was US$4 thousand in 2021, as compared to other income of US$728 thousand in 2022. The other income in 2022 is mainly due to subsidies received from the Taishun County local government. Interest Expenses, Net Our interest expenses, net were US$245 thousand in 2021 and US$1,034 thousand in 2022.
Cost of Revenues Our cost of revenues for the new car wholesales decreased from US$248.6 million in 2021 to US$82.2 million in 2022. The decrease was consistent with the decrease in sales revenue.
Cost of Revenues Our cost of revenues for the new car wholesales decreased from US$248.6 million in 2021 to US$82.2 million in 2022. The decrease was consistent with the decrease in sales revenue. Gross Profit As a result of the foregoing, we recorded gross profit of US$5,257 thousand in 2021 and gross profit of US$646 thousand in 2022.
Our general and administrative expenses increased from US$43,734 thousand in 2021 to US$46,488 thousand in 2022. The increase was primarily due to amortization of trademark of $1,681 thousand. Other Income (Expenses) Other expense was US$4 thousand in 2021, as compared to other income of US$728 thousand in 2022.
The increase resulted from the provision for sales incentives of US$1,638 thousand. ● General and administrative expenses. Our general and administrative expenses increased from US$43,734 thousand in 2021 to US$46,488 thousand in 2022. The increase was primarily due to amortization of trademark of US$1,681 thousand.
Our success in such collaboration will affect our ability to broaden our prospective car buyer base through online channels in a cost-efficient manner. Our growth depends on our ability to strengthen our brand through word of mouth and advertisements.
We also collaborate with the leading online automotive advertising platforms to tap into their large user bases. Our success in such collaboration will affect our ability to broaden our prospective car buyer base through online channels in a cost-efficient manner. Our growth depends on our ability to strengthen our brand through word of mouth and advertisements.
The trademark recognized from the Acquisition were tested for impairment due to identification of impairment indicators, including low gross margin and unstable sales revenues. 101 Table of Contents The test is a two-step quantitative test.
Software and domain name are used for the business of Haitaoche and no impairment factors was noted. The trademark recognized from the Acquisition were tested for impairment due to identification of impairment indicators, including low gross margin and unstable sales revenues. The test is a two-step quantitative test.
In accordance with ASC Topic 360, the Company reviews intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset group may not be fully recoverable. Software and domain name are used for the business of Haitaoche and no impairment factors was noted.
Estimated useful life of software, domain name and trademark is 10 years. 78 Table of Contents In accordance with ASC Topic 360, the Company reviews intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset group may not be fully recoverable.
In addition, upon payment of dividends by us to our shareholders, no Cayman Islands withholding tax will be imposed. 91 Table of Contents Hong Kong Our subsidiary incorporated in Hong Kong is subject to Hong Kong two-tiered profit tax at a rate of 8.25% for the first 2 million Hong Kong dollars (“HKD”) of profits and at a rate of 16.5% for profits above 2 million HKD.
Hong Kong Our subsidiary incorporated in Hong Kong is subject to Hong Kong two-tiered profit tax at a rate of 8.25% for the first 2 million Hong Kong dollars (“HKD”) of profits and at a rate of 16.5% for profits above 2 million HKD.
The difference is mainly resulted from the one-time loss from goodwill impairment of $143.7 million. ● Selling and marketing expenses. Our selling and marketing expenses increased from US$481 thousand in 2021 to US$2,097 thousand in 2022. The increase resulted from the provision for sales incentives of $1,638 thousand. ● General and administrative expenses.
Operating Expenses Our total operating expenses decreased from US$187.8 million in 2021 to US$48.6 million in 2022. The difference is mainly resulted from the one-time loss from goodwill impairment of US$143.7 million. ● Selling and marketing expenses. Our selling and marketing expenses increased from US$481 thousand in 2021 to US$2,097 thousand in 2022.
However, we believe material weaknesses persist in (i) lack of sufficient resources with US GAAP and the SEC reporting experiences, which could adversely affect the Company’s ability to provide accurate disclosures on a timely matter; (ii) the lack of an effective and continuous risk assessment procedure to identify and assess the financial reporting risks; (iii) lack of evaluations to ascertain whether the components of internal control are present and functioning; (iv) inadequate controls over prepayment for vehicle purchase at local dealerships; and (v) lack of key monitoring mechanisms to control the communication and disclosure of material information to the appropriate parties as of December 31, 2022.
However, we believe material weaknesses persist in (i) lack of sufficient resources with US GAAP and the SEC reporting experiences, which could adversely affect the Company’s ability to provide accurate disclosures on a timely matter; (ii) the lack of an effective and continuous risk assessment procedure to identify and assess the financial reporting risks; and (iii) lack of evaluations to ascertain whether the components of internal control are present and functioning as of December 31, 2023. 76 Table of Contents We ceased to qualify as an “emerging growth company” pursuant to the JOBS Act on December 31, 2022.
We released our new energy vehicle strategic plan on December 1, 2021, and we target to quickly expand our new energy vehicle team and start with developing commercial new energy vehicles for intra-city and inter-city logistics applications in the initial stage. 89 Table of Contents In addition, we have signed a sales order for 5,000 new energy logistics vehicles with Bujia, a leading automobile logistics service provider in China.
We released our new energy vehicle strategic plan on December 1, 2021, and we target to quickly expand our new energy vehicle team and start with developing commercial new energy vehicles for intra-city and inter-city logistics applications in the initial stage.
There were partially offset by an increase in advances from customers of US$0.3 million. Investing Activities Net cash used in investing activities was US$0.2 million in 2022, which was mostly attributable to cash disposed on disposal of subsidiaries.
Investing Activities Net cash used in investing activities was US$3.1 million in 2023, which was mostly attributable to cash disposed on disposal of subsidiaries. Net cash used in investing activities was US$0.2 million in 2022, which was mostly attributable to cash disposed on disposal of subsidiaries.
Net cash provided by investing activities was US$4.3 million in 2021, which was mostly attributable to Cash acquired on reverse acquisition of US$4.3 million.
Net cash provided by investing activities was US$4.3 million in 2021, which was mostly attributable to Cash acquired on reverse acquisition of US$4.3 million. Financing Activities Net cash provided by financing activities was US$1.0 million in 2023, which was primarily attributable to proceeds from issuance of ordinary shares and warrants.
Impairment of other non-current assets Loss from impairment of other non-current assets was US $4.2 million and US $22.9 million in 2021 and 2022, respectively. Provision for dealership settlement Loss from provision for dealership settlement was US $11.1 million and US $15.1 million in 2021 and 2022, respectively.
Provision for dealership settlement Loss from provision for dealership settlement was US $11.1 million and US $15.1 million in 2021 and 2022, respectively.
The incurrence of indebtedness would result in the increased of fixed obligations and could result in operating covenants that would restrict our operations. There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all. See “Item 3. Key Information — D.
There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all. See “Item 3. Key Information — D.
Net Loss As a result of the foregoing, we recorded net losses of US$195.9 million and US$84.6 million in 2021 and 2022, respectively. ​ 94 Table of Contents Year ended December 31, 2021 compared with year ended December 31, 2020 Revenues Our total revenues increased from US$1.2 million in 2020 to US$253.8 million in 2021, primarily due to the revamping of our used car sales business following the completion of the reverse acquisition. ● Used-car sales.
Net Loss As a result of the foregoing, we recorded net losses of US$84.6 million and US$53.6 million in 2022 and 2023, respectively. 72 Table of Contents Year ended December 31, 2022 compared with year ended December 31, 2021 Revenues Our total revenues decreased from US$253.8 million in 2021 to US$82.8 million in 2022, primarily due to closure of several dealerships.
Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity.
In addition, we have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity.
Based on the results of the quantitative goodwill impairment test, a full impairment loss in goodwill of US$143.7 million was recorded in the consolidated statements of operations for the year ended December 31, 2021. Taxation Cayman Islands We are an exempted company incorporated in the Cayman Islands.
For the goodwill recognized as a result of the reverse acquisition, the management performed qualitative assessment and impairment test. Based on the results of the quantitative goodwill impairment test, a full impairment loss in goodwill of US$143.7 million was recorded in the consolidated statements of operations for the year ended December 31, 2021.
General and Administrative Expenses General and administrative expenses consist primarily of salaries and benefits for our general and administrative personnel and fees, write-offs of prepayment for vehicle purchase and other current assets, share-based compensation expenses, and expenses for third-party professional services. Our general and administrative expenses may increase in the future on an absolute basis as our business grows.
Our selling and marketing expenses may increase in the near term if we increase our promotion expenses for the Kaixin Auto brand or the new energy vehicles business. 69 Table of Contents General and Administrative Expenses General and administrative expenses consist primarily of salaries and benefits for our general and administrative personnel and fees, write-offs of prepayment for vehicle purchase and other current assets, share-based compensation expenses, and expenses for third-party professional services.
It will order a total of RMB1 billion (equivalent to US$156 million) worth of new energy vehicles from our Company in the upcoming years. The first model vehicle was delivered to Bujia in July 2022. We aim to continuously establish strategic partnerships with platforms that have big sales potentials and to make customized production according to customer needs.
In addition, we have signed a sales order for 5,000 new energy logistics vehicles with Bujia, a leading automobile logistics service provider in China. It will order a total of RMB1 billion (equivalent to US$156 million) worth of new energy vehicles from our Company in the upcoming years. The first model vehicle was delivered to Bujia in July 2022.
The following table sets forth our contractual obligations as of December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less than 1 More than ​ ​ Total ​ year ​ 1–3 years ​ 3–5 years ​ 5 years ​ ​ (in thousands of US$) Operating Lease Obligations (1) ​ 521 ​ 159 ​ 262 ​ 100 ​ — Loans and Convertible Note obligations (2) ​ 6,305 ​ 6,305 ​ — ​ — ​ — Total 6,826 6,464 262 100 — (1) Representing contractual undiscounted operating lease obligations relating to our non-cancelable lease of offices and facilitates.
The following table sets forth our contractual obligations as of December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less than 1 More than ​ ​ Total ​ year ​ 1–3 years ​ 3–5 years ​ 5 years ​ ​ (in thousands of US$) Operating Lease Obligations (1) ​ 364 ​ 126 ​ 238 ​ — ​ — Loans and Convertible Note obligations ​ 2,392 ​ 2,392 ​ — ​ — ​ — Total 2,756 2,518 238 — — (1) Representing contractual undiscounted operating lease obligations relating to our non-cancelable lease of offices and facilitates. 75 Table of Contents Other than as shown above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of December 31, 2023.
For restrictions and limitations on liquidity and capital resources as a result of our corporate structure, see “—Holding Company Structure”. Net cash used in operating activities was US$1.1 million, US$2.1 million and US$2.4 million in 2020, 2021 and 2022, respectively. As of December 31, 2022, we had cash of approximately US$7.1 million.
Net cash used in operating activities was US$2.1 million, US$2.4 million and US$2.1 million in 2021, 2022 and 2023, respectively. As of December 31, 2023, we had cash of approximately US$2.1 million.
As a result, we rely on dividends and other distributions paid by our operating subsidiaries to pay dividends to our shareholders or to service our outstanding debts. As a result, our ability to pay dividends depends upon dividends paid by our subsidiaries.
Holding Company Structure Our Company, Kaixin Holdings, is a holding company with no operations of its own. We own and conduct operations primarily through operating subsidiaries in China. As a result, we rely on dividends and other distributions paid by our operating subsidiaries to pay dividends to our shareholders or to service our outstanding debts.
Items with a collection period greater than 12 months from December 31, 2020 and 2021 have been classified as other non-current assets. Other non-current assets also include the receivable from two foreign suppliers for payment of automobiles purchase early in 2016, which the Company has sought to recover through litigation and collection effort.
Other non-current assets also include the receivable from two foreign suppliers for payment of automobiles purchase early in 2016, which the Company has sought to recover through litigation and collection effort. 77 Table of Contents Certain noncontrolling shareholders has not reached settlement agreements with the Company yet, but still keep a good business partnership with the Company.
The Company believes the guaranteed amount is the minimum net recoverable amount of the various assets detained by these noncontrolling shareholders, which had been reclassified as prepayment for vehicle purchase and other current assets as of December 31, 2020, 2021, and 2022. 100 Table of Contents The Company maintains an allowance for doubtful accounts for the prepayments based on a variety of factors, including but not limited to the aging of prepayments, concentrations, credit-worthiness, historical and current economic trends and changes in delivery patterns.
The Company maintains an allowance for doubtful accounts for the prepayments based on a variety of factors, including but not limited to the aging of prepayments, concentrations, credit-worthiness, historical and current economic trends and changes in delivery patterns.
Net cash provided by financing activities was US$2.0 million in 2021, which was primarily attributable to proceeds from a convertible note of US$2.0 million. Net cash provided by financing activities was US$2.1 million in 2020, which was primarily attributable to capital contribution of US$8.1 million, partially offset by capital divestment of US$6 million. Off-Balance Sheet Arrangements.
Net cash provided by financing activities was US$2.0 million in 2021, which was primarily attributable to proceeds from a convertible note of US$2.0 million. Off-Balance Sheet Arrangements. We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties.
In addition, expansion of our network of Dealerships may affect our results of operations in the form of startup costs, acquisitions of new Dealership assets or capital injections. Customer Engagement and Branding We engage car buyers primarily through our network of Dealerships, our website and mobile apps, and advertising on third-party platforms.
Customer Engagement and Branding We engage car buyers primarily through our network of Dealerships, our website and mobile apps, and advertising on third-party platforms. Our ability to expand our customer base depends on the scale and performance of the Dealerships as well as our ability to expand the Dealership network.
Loss from Impairment of Goodwill Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations. For the goodwill recognized as a result of the reverse acquisition, the management performed qualitative assessment and impairment test.
Our general and administrative expenses may increase in the future on an absolute basis as our business grows. Loss from Impairment of Goodwill Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations.
The Company had intangible assets of US12.9 million as of end of 2022, mainly comprised of recognition of trademark associated with the Acquisition on June 25, 2021. Estimated useful life of software, domain name and trademark is 10 years.
The Company had intangible assets of US$12.9 million as of end of 2022, mainly comprised of recognition of trademark associated with the Acquisition on June 25, 2021. The Company had intangible assets of US$24.4 million as of end of 2023, mainly from technology identified in the acquisition of Morning Star in August 2023.
Information on the Company — B. Business Overview — Our Technology” and “Item 4. Information on the Company — B. Business Overview — Regulation”. 99 Table of Contents D. Trend Information.
Information on the Company — B. Business Overview — Research and Development”. D. Trend Information.
Renren Inc. purchased US$6.0 million convertible preferred shares of the Company on March 31, 2021. Derong Group Limited invested $4.6 million in the Company in February 2022 and received ordinary shares in March 2022. 96 Table of Contents We intend to obtain additional equity or debt financing arrangements to support the growth of our business.
Moatable purchased US$6.0 million convertible preferred shares of the Company on March 31, 2021. Derong Group Limited invested US$4.6 million in the Company in February 2022 and received ordinary shares in March 2022. A group of investors, namely Mr. Long Li, Hermann Limited and Aslan Family Limited, invested in $1.0 million in ordinary shares in November 2023.
Capital Expenditures Our capital expenditures were US$290 thousand, US$32 thousand and US$156 thousand in 2020, 2021 and 2022, respectively. In these periods, our capital expenditures were mainly used to purchase intangible assets for our business.
Capital Expenditures Our capital expenditures were US$32 thousand, US$59 thousand and US$396 thousand in 2021, 2022 and 2023, respectively. In 2023, our capital expenditures were mainly used to purchase of vehicles used in our business. We will continue to make capital expenditures to meet the expected growth of our business.
Our cost of revenues for used-car sales is US$245.8 million in 2021. The amount was in line with the used-car sales volume. ● Cost of New-car wholesales. Our cost of revenues for new-car wholesales increased from US$1.2 million in 2020 to US$2.8 million in 2021. The increase was in line with the increase in new-car wholesales volume.
Cost of Revenues Our cost of revenues for the new car wholesales decreased from US$82.2 million in 2022 to US$31.2 million in 2023, corresponding to the decline in sales revenues.
The principal items accounting for the difference between our net loss and the net cash used in operating activities in 2020 were an increase in amount due from related parties of US$0.5 million, an increase in prepayment for vehicle purchase and other current assets of USD$0.4 million and an increase in other non-current assets of US$0.4 million.
The principal item accounting for the difference between our net loss and the net cash used in operating activities in 2023 were a loss from impairment of other non-current assets of US$23.3 million, loss from impairment of other receivables of US$8.8 million, share-based compensation expense of US$12.0 million, and depreciaton and amortization expenses of $2.3 million. 74 Table of Contents Net cash used in operating activities was US$2.4 million in 2022.
The increase is mainly resulted from the full impairment of goodwill of US$143.7 million in 2021. ● Selling and marketing expenses. Our selling and marketing expenses increased from US$11 thousand in 2020 to US$481 thousand in 2021. The increase resulted from the increase in our car sales volume. ● General and administrative expenses.
The difference is mainly resulted from a decrease in general and administrative expenses. ● Selling and marketing expenses. Our selling and marketing expenses increase from US$2,097 thousand in 2022 to US$ 3313 thousand in 2023. The increase resulted from higher sales incentives expenses to the Dealerships . ● General and administrative expenses.
We rely on our Dealerships to conduct significant aspects of our business. As of December 31, 2022, we had 3 Dealerships. Our Dealerships and their employees directly interact with the consumers and other dealerships, and their performance directly impact our results of operations and financial condition.
Our Dealerships and their employees directly interact with the consumers and other dealerships, and their performance directly impact our results of operations and financial condition. In addition, expansion of our network of Dealerships may affect our results of operations in the form of startup costs, acquisitions of new Dealership assets or capital injections.
Recent Accounting Pronouncements See Part III, “Financial Statements — Note 2 — Summary of significant accounting policies — Recent accounting pronouncements not yet adopted”. B. Liquidity and Capital Resources.
Net Loss As a result of the foregoing, we recorded net losses of US$195.9 million and US$84.6 million in 2021 and 2022, respectively. Recent Accounting Pronouncements See Part III, “Financial Statements — Note 2 — Summary of significant accounting policies — Recent accounting pronouncements”. B.
Removed
Our ability to expand our customer base depends on the scale and performance of the Dealerships as well as our ability to expand the Dealership network. We also collaborate with the leading online automotive advertising platforms to tap into their large user bases.
Added
We sourced, marketed and sold approximately 1,814, 879, and 525 new and used vehicles to customers across China in 2021, 2022 and 2023, respectively.
Removed
Our selling and marketing expenses may increase in the near term if we increase our promotion expenses for the Kaixin Auto brand or the new energy vehicles business.
Added
Recent Developments In September 2023, the Group, through one of its subsidiaries in the PRC, set up one subsidiary, namely, Zhejiang Kaixin Yuanman Automobile Trading Co. Ltd.. The Group owned 100% equity interest in the subsidiary. In February through March 2023, the Group, through one of its subsidiaries in the PRC, set up three subsidiaries.
Removed
Our revenues from used-car sales are US$251.1 million in 2021. The number of cars sold in 2021 was 1582 units. The COVID-19 pandemic had a material adverse impact on the Company’s used-car dealership business. Moreover, disputes arising between the Company and the noncontrolling shareholders of the dealerships occupied significant amount of our management’s time.
Added
Namely, Zhejiang Kaixin Xiaoman Automobile Trading Co. Ltd., Zhejiang Kaixin Jingtao Automobile Trading Co. Ltd., and Zhejiang Kaixin Manman Commuting Technology Co. Ltd. The Group owned 70% equity interest in these three subsidiaries.
Removed
In the summer of 2020, the Company decided to put a halt to its used-car dealership business operations amid the sharp decline in gross sales volume and profit margins and disputes with noncontrolling shareholders of the dealerships.
Added
Integration of Our Dealerships We began to acquire majority control of used car dealers across China in the second half of 2017. We rely on our Dealerships to conduct significant aspects of our business. As of December 31, 2023, we had three Dealerships.
Removed
However, the Company has reached settlement with a majority of the noncontrolling shareholders of the dealerships and car sale operations in those locations are resumed in 2021. ● New-car wholesales. Our revenues from new-car wholesales increased from US$1.2 million in 2020 to US$2.8 million in 2021 together with the increased in new-car sales volume.
Added
In April, 2023, the Company reached a strategic business partnership with China Automobile Import and Export Co., Ltd., which aims to build up a joint export trading platform for new energy vehicles with a target total transaction volume of USD$10.8 billion in the coming five years.
Removed
The number of cars sold in 2021 was 184 units, compared with 33 units sold in 2020. Cost of Revenues Our cost of revenues increased from US$1.2 million in 2020 to US$248.6 million in 2021. The increase was in line with the increase in revenues. ● Cost of Used-car sales.
Added
We aim to continuously establish strategic partnerships with platforms that have big sales potentials and to make customized production according to customer needs.
Removed
Gross Profit As a result of the foregoing, we recorded gross profit of nil in 2020 and gross profit of US$5.3 million in 2021. Operating Expenses Our total operating expenses increased from US$0.3 million in 2020 to US$187.8 million in 2021.
Added
In addition, upon payment of dividends by us to our shareholders, no Cayman Islands withholding tax will be imposed.

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Item 6. [Reserved]

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

42 edited+16 added−8 removed41 unchanged
The plan administrator may also, in its sole direction, provide in substitution for the participant’s awards such alternative consideration as it may determine to be equitable in the circumstances.
The plan administrator may also, in its sole direction, provide in substitution for the participant’s awards such alternative consideration as it may determine to be equitable in the circumstances.
However, English and Commonwealth Courts have moved towards an objective standard with regards to the required skill and care and these authorities are likely to be followed in the Cayman Islands. In fulfilling their duty of care to us, our directors must ensure the compliance with our memorandum and articles of association, as amended and restated from time to time.
However, English and Commonwealth Courts have moved towards an objective standard with regards to the required skill and care and these authorities are likely to be followed in the Cayman Islands. In fulfilling their duty of care to us, our directors must ensure the compliance with our memorandum and articles of association, as amended and/or restated from time to time.
Our PRC subsidiaries and VIE are required by law to make contributions equal to certain percentages of each employee’s salary for his or her pension insurance, medical insurance, unemployment insurance and other statutory benefits and a housing provident fund. Employment Agreements and Indemnification Agreements We have entered into employment agreements with each of our executive officers.
Our PRC subsidiaries are required by law to make contributions equal to certain percentages of each employee’s salary for his or her pension insurance, medical insurance, unemployment insurance and other statutory benefits and a housing provident fund. Employment Agreements and Indemnification Agreements We have entered into employment agreements with each of our executive officers.
In addition, Kaixin Auto Holdings entered into a definitive securities purchase agreement with KX Venturas 4 LLC as the investor on December 28, 2020 pursuant to which the investor has the right to invest US$6.0 million in newly designated convertible preferred shares of Kaixin and US$4.0 million in ordinary shares of Kaixin.
In addition, Kaixin Holdings entered into a definitive securities purchase agreement with KX Venturas 4 LLC as the investor on December 28, 2020 pursuant to which the investor has the right to invest US$6.0 million in newly designated convertible preferred shares of Kaixin and US$4.0 million in ordinary shares of Kaixin.
The plan administrator is authorized to interpret the plan and to determine the provisions of each award. 104 Table of Contents Change in Control In the event of a change in control or another transaction having a similar effect, then the plan administrator may, in its sole discretion, adjust the number of ordinary shares subject to the awards then held by a participant in the 2021 Plan as needed to prevent dilution or enlargement of the participant’s rights that otherwise would result from such event.
The plan administrator is authorized to interpret the plan and to determine the provisions of each award. 81 Table of Contents Change in Control In the event of a change in control or another transaction having a similar effect, then the plan administrator may, in its sole discretion, adjust the number of ordinary shares subject to the awards then held by a participant in the 2021 Plan as needed to prevent dilution or enlargement of the participant’s rights that otherwise would result from such event.
The plan administrator is authorized to interpret the plan and to determine the provisions of each award. 105 Table of Contents Change in Control In the event of a change in control or another transaction having a similar effect, then the plan administrator may, in its sole discretion, adjust the number of ordinary shares subject to the awards then held by a participant in the 2022 Plan as needed to prevent dilution or enlargement of the participant’s rights that otherwise would result from such event.
The plan administrator is authorized to interpret the plan and to determine the provisions of each award. 82 Table of Contents Change in Control In the event of a change in control or another transaction having a similar effect, then the plan administrator may, in its sole discretion, adjust the number of ordinary shares subject to the awards then held by a participant in the 2022 Plan as needed to prevent dilution or enlargement of the participant’s rights that otherwise would result from such event.
Lin held senior management positions with TOM Online and Tencent, and he was the founder of SUV.cn, a vertical online media that focused on SUV customer communities. 102 Table of Contents Yi Yang has served as our director since August 2022 and chief financial officer since August 2019. Prior to joining us, Ms.
Lin held senior management positions with TOM Online and Tencent, and he was the founder of SUV.cn, a vertical online media that focused on SUV customer communities. 79 Table of Contents Yi Yang has served as our director since August 2022 and chief financial officer since August 2019. Prior to joining us, Ms.
Under these agreements, we agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our Company. 103 Table of Contents 2020 Equity Incentive Plan Our 2020 equity incentive plan, or the 2020 Plan, was adopted by our board of directors on November 17, 2020.
Under these agreements, we agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our Company. 80 Table of Contents Equity Incentive Plans 2020 Equity Incentive Plan Our 2020 equity incentive plan, or the 2020 Plan, was adopted by our board of directors on November 17, 2020.
Our directors are not subject to a term of office and each director shall hold office until his or her successor shall have been elected and qualified. A director may be removed from office by special resolution of our shareholders at any time before the expiration of his or her term, except that Mr.
Our directors are not subject to a term of office and each director shall hold office until his or her successor shall have been elected and qualified. A director may be removed from office by special resolution of our shareholders at any time before the expiration of his or her term, except that Mr. Mingjun Lin and Ms.
Pursuant to the purchase agreement, the investor will also receive warrants to subscribe for Kaixin’s ordinary shares at an exercise price of US$3.00 per share. In May 2023, the Company issued 50,000 convertible preferred shares of the Company to Stanley Star in connection of the disposal of the Disposal Group.
Pursuant to the purchase agreement, the investor will also receive warrants to subscribe for Kaixin’s ordinary shares at an exercise price of US$3.00 per share. 88 Table of Contents In May 2023, the Company issued 50,000 convertible preferred shares of the Company to Stanley Star in connection of the disposal of the Disposal Group.
Renren shall have the right to appoint or remove two (2) directors, including one (1) independent director, by delivering a written notice to our Company. Mr. Lin shall have the right to designate the chief executive officer of our Company to be appointed by the directors. Our Board currently consists of five directors.
Moatable shall have the right to appoint or remove two (2) directors, including one (1) independent director, by delivering a written notice to our Company. Mr. Mingjun Lin shall have the right to designate the chief executive officer of our Company to be appointed by the directors. Our Board currently consists of five directors.
Lin”) shall have the right to appoint or remove three (3) directors, including one (1) independent director (as that term is defined under the Nasdaq Stock Market Rules), by delivering a written notice to our Company.
Mingjun Lin shall have the right to appoint or remove three (3) directors, including one (1) independent director (as that term is defined under the Nasdaq Stock Market Rules), by delivering a written notice to our Company.
The audit committee is responsible for, among other things: ● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; ● reviewing with the independent auditors regarding any audit problems or difficulties and management’s response; ● discussing the annual audited financial statements with management and the independent auditors; ● reviewing the adequacy and effectiveness of our accounting and internal control policies, procedures and any steps taken to monitor and control major financial risk exposures; ● reviewing and approving all proposed related party transactions; ● meeting separately and periodically with management and the independent auditors; and ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance. 107 Table of Contents Compensation Committee Our compensation committee consists of Lin Cong.
The audit committee is responsible for, among other things: ● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; ● reviewing with the independent auditors regarding any audit problems or difficulties and management’s response; ● discussing the annual audited financial statements with management and the independent auditors; ● reviewing the adequacy and effectiveness of our accounting and internal control policies, procedures and any steps taken to monitor and control major financial risk exposures; ● reviewing and approving all proposed related party transactions; ● meeting separately and periodically with management and the independent auditors; and ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our ordinary shares as of March 31, 2023 by: ● each of our directors and executive officers; and ● each person known to us to beneficially own more than 5% of our ordinary shares on an as-converted basis.
Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our ordinary shares as of March 31, 2024 by: ● each of our directors and executive officers; and 87 Table of Contents ● each person known to us to beneficially own more than 5% of our ordinary shares on an as-converted basis.
Amendment and Termination of Plan Our Board may at any time amend, alter or discontinue the 2021 Plan, subject to certain exceptions. 2022 Equity Incentive Plan Our 2022 equity incentive plan (the “2022 Plan”), was adopted by our Board on May 17, 2022, which replaced an earlier equity incentive plan.
Amendment and Termination of Plan Our Board may at any time amend, alter or discontinue the 2021 Plan, subject to certain exceptions. 2022 Equity Incentive Plan Our 2022 equity incentive plan (the “2022 Plan”), was adopted by our Board on May 17, 2022.
Board Practices. Board of Directors Under our memorandum and articles of association, our company shall have not less than three (3) and not more than nine (9) directors, unless such number is changed by special resolution of our shareholders. Mr. Mingjun Lin (“Mr.
C. Board Practices. Board of Directors Under our memorandum and articles of association, our company shall have not less than three (3) and not more than nine (9) directors, unless such number is changed by special resolution of our shareholders. Mr.
The compensation committee is responsible for, among other things: ● reviewing and approving, or recommending to the Board for its approval, the compensation for our chief executive officer and other executive officers; ● reviewing and recommending to the Board for determination with respect to the compensation of our non-employee directors; ● reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and ● selecting compensation consultant, legal counsel or other advisers only after taking into consideration all factors relevant to that person’s independence from management.
The compensation committee is responsible for, among other things: ● reviewing and approving, or recommending to the Board for its approval, the compensation for our chief executive officer and other executive officers; ● reviewing and recommending to the Board for determination with respect to the compensation of our non-employee directors; ● reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and ● selecting compensation consultant, legal counsel or other advisers only after taking into consideration all factors relevant to that person’s independence from management. 85 Table of Contents Nominating and Governance Committee Our nominating and governance committee consists of Xiaoning Wu.
The preferred shares are convertible, at any time and from time to time from at the option of the holder, into 50,000,000 ordinary shares of the Company. As of March 31, 2023, 32,866,092 of our shares were held by record holders in the United States.
The preferred shares are convertible, at any time and from time to time from at the option of the holder, into 50,000,000 ordinary shares of the Company. As of March 31, 2024, our shares were held by ten record holders in the United States.
He is the general manager of Wenzhou Fude Property Co., Ltd. since 2013 and consultant to Wenzhou Zhongxiao Culture Co., Ltd. since 2016. He served as the chairman of the board of directors of Fude Feida Petrochemical Whole Set Equipment Limited Company during 2003 to 2013. Mr.
Deqiang Chen has served as our director since May 2021. He is the general manager of Wenzhou Fude Property Co., Ltd. since 2013 and consultant to Wenzhou Zhongxiao Culture Co., Ltd. since 2016. He served as the chairman of the board of directors of Fude Feida Petrochemical Whole Set Equipment Limited Company during 2003 to 2013. Mr.
Chen holds an MBA degree from Guanghua School of Management of the Beijing University. B. Compensation. Compensation of Directors and Executive Officers For the fiscal year ended December 31, 2022, we paid an aggregate of approximately US$396 thousand in cash to our directors and executive officers.
Chen holds an MBA degree from Guanghua School of Management of the Beijing University. B. Compensation. Compensation of Directors and Executive Officers For the fiscal year ended December 31, 2023, we paid an aggregate of approximately US$0.56 million in cash to our directors and executive officers.
None of our non-executive directors has a service contract with us that provides for benefits upon termination of service. Committees of the Board of Directors We have established three committees under the Board: an audit committee, a compensation committee and a nominating and governance committee. Each committee’s members and functions are described as below.
None of our non-executive directors has a service contract with us that provides for benefits upon termination of service. Committees of the Board of Directors We have established three committees under the Board: an audit committee, a compensation committee and a nominating and governance committee.
The following table sets forth the number of our employees categorized by function as of December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ Number of % of Total Functional Area ​ Employees ​ Employees Management and administration 21 78 % Sales and marketing 1 4 % Research and development 5 18 % Total 27 100.0 % ​ We believe that we offer our employees competitive compensation packages and a dynamic work environment that encourages initiative and is based on merits.
The following table sets forth the number of our employees categorized by function as of December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ Number of % of Total Functional Area ​ Employees ​ Employees Management and administration 16 70 % Sales and marketing 6 26 % Research and development 1 4 % Total 23 100.0 % ​ We believe that we offer our employees competitive compensation packages and a dynamic work environment that encourages initiative and is based on merits.
Lin and Renren shall have the exclusive right to remove any director appointed by them. Our officers are elected by and serve at the discretion of the Board.
Lucy Yi Yangshall have the exclusive right to remove any director appointed by them. Our officers are elected by and serve at the discretion of the Board.
The functions and powers of our Board include, among others: ● convening shareholders’ annual and extraordinary general meetings and reporting its work to shareholders at such meetings; ● declaring dividends and distributions; ● appointing officers and determining the term of office of the officers; ● exercising the borrowing powers of our Company and mortgaging the property of our Company; and ● approving the transfer of shares in our Company, including the registration of such shares in our share register.
The functions and powers of our Board include, among others: ● convening shareholders’ annual and extraordinary general meetings and reporting its work to shareholders at such meetings; ● declaring dividends and distributions; ● appointing officers and determining the term of office of the officers; ● exercising the borrowing powers of our Company and mortgaging the property of our Company; and ● approving the transfer of shares in our Company, including the registration of such shares in our share register. 86 Table of Contents Terms of Directors and Officers Other than the directors that may be appointed by Mr.
The following table sets forth certain information relating to our directors and executive officers as of the date of this Annual Report. ​ Directors and Executive Officers Age Position/Title Mingjun Lin ​ 48 ​ Director and Chief Executive Officer Yi Yang ​ 51 ​ Director and Chief Financial Officer Xiaolei Gu ​ 36 ​ Director Lin Cong ​ 43 ​ Independent Director Deqiang Chen ​ 56 ​ Independent Director ​ Mingjun Lin served as our chairman of the Board since May 2021 and our chief executive officer since May 2021.
The following table sets forth certain information relating to our directors and executive officers as of the date of this Annual Report. ​ Directors and Executive Officers Age Position/Title Mingjun Lin ​ 49 ​ Director and Chief Executive Officer Yi Yang ​ 52 ​ Director and Chief Financial Officer Xiaolei Gu ​ 37 ​ Director Deqiang Chen ​ 57 ​ Independent Director Xiaoning Wu ​ 60 ​ Independent Director ​ Mingjun Lin served as our chairman of the Board since May 2021 and our chief executive officer since May 2021.
Term Unless terminated earlier, the 2022 Plan will terminate on July 12, 2031. Awards made under the plan on or prior to the date of its termination will continue in effect subject to the terms of the plan and the award.
Awards made under the plan on or prior to the date of its termination will continue in effect subject to the terms of the plan and the award.
Nominating and Governance Committee Our nominating and governance committee consists of Lin Cong. We have determined that Lin Cong satisfies the “independence” requirements of Rule 5605(c)(2) of the Listing Rules of the Nasdaq Stock Market.
Compensation Committee Our compensation committee consists of Xiaoning Wu. Xiaoning Wu is the chairman of our compensation committee. We have determined that Xiaoning Wu satisfies the “independence” requirements of Rule 5605(c)(2) of the Listing Rules of the Nasdaq Stock Market.
Audit Committee Our audit committee consists of Lin Cong. Lin Cong is the chairman of our audit committee. We have determined that Lin Cong satisfies the “independence” requirements of Rule 5605(c)(2) of the Listing Rules of the Nasdaq Stock Market and Rule 10A-3 under the Exchange Act, as amended.
We have determined that Xiaoning Wu satisfies the “independence” requirements of Rule 5605(c)(2) of the Listing Rules of the Nasdaq Stock Market and Rule 10A-3 under the Exchange Act, as amended. We have determined that Xiaoning Wu qualifies as an “audit committee financial expert”.
We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. ​
We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. F. Disclosure of A Registrant's Action to Recover Erroneously Awarded Compensation Not applicable. ​
Granted Awards The table below summarizes, as of March 31, 2023, the outstanding options and restricted shares that have been granted to our directors and executive officers. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ ​ ​ ​ ​ ​ shares ​ ​ ​ ​ ​ ​ ​ ​ ​ underlying ​ Exercise ​ ​ ​ ​ ​ ​ awards ​ price (US$ ​ ​ ​ ​ Name ​ granted (1) ​ per share) ​ Grant date ​ Expiration date Deqiang Chen ​ 112,500 ​ ​ N/A ​ October 21, 2021, and December 28, 2022 ​ October 21, 2031, and December 28, 2032, respectively, respectively Lin Cong 42,889 ​ N/A May 3, 2019, January 1 and October 21, 2021, and December 28, 2022 ​ May 3, 2029, January 1 and October 21, 2031, December 28, 2032, respectively Xiaolei Gu ​ 225,000 ​ ​ N/A ​ October 21, 2021, and December 28, 2022 ​ October 21, 2031, and December 28, 2032, respectively, respectively Total 380,389 ​ Notes: (1) In the form of restricted shares. 106 Table of Contents C.
Granted Awards The table below summarizes, as of March 31, 2024, the outstanding options and restricted shares that have been granted to our directors and executive officers. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ ​ ​ ​ ​ ​ shares ​ ​ ​ ​ ​ ​ ​ ​ ​ underlying ​ Exercise ​ ​ ​ ​ ​ ​ awards ​ price (US$ ​ ​ ​ ​ Name ​ granted (1) ​ per share) ​ Grant date ​ Expiration date Deqiang Chen ​ 14,998 ​ ​ N/A ​ October 21, 2021, December 28, 2022 and September 11, 2023 ​ October 21, 2031, December 28, 2032 and and September 11, 2023, respectively Mingjun Lin ​ 133,333 ​ ​ N/A ​ October 21, 2021 ​ October 21, 2031 Xiaolei Gu ​ 49,999 ​ ​ N/A ​ October 21, 2021, December 28, 2022 and September 11, 2023 ​ October 21, 2031, December 28, 2032 and September 2033, respectively Total 198,330 ​ Notes: (1) In the form of restricted shares.
The calculations in the table below are based on 228,382,750 ordinary shares outstanding as of March 31, 2023. Beneficial ownership is determined in accordance with the rules and regulations of the SEC.
The calculations in the table below are based on 59,645,217 Class A ordinary shares and 1,000,000 Class B ordinay shares outstanding as of March 31, 2024. Beneficial ownership is determined in accordance with the rules and regulations of the SEC.
D. Employees. We had 27 employees as of December 31, 2022, respectively.
D. Employees. We had 23 employees as of December 31, 2023.
In certain limited exceptional circumstances, a shareholder may have the right to seek damages in our name if a duty owed by our directors is breached. 108 Table of Contents Our Board has all the powers necessary for managing, and for directing and supervising, our business affairs.
Our Company has the right to seek damages if a duty owed by any of our directors is breached. In certain limited exceptional circumstances, a shareholder may have the right to seek damages in our name if a duty owed by our directors is breached.
He served as the chief media content officer of Haitaoche Limited during 2015-2020 and chief media content officer of Beijing Yunfeiyang Technology Company during 2009 to 2014. Lin Cong has served as our director since April 2019. He is also a director of Uxin Limited (NASDAQ: UXIN). He has served as the vice president of 58.com Group since March 2017.
He served as the chief media content officer of Haitaoche Limited during 2015-2020 and chief media content officer of Beijing Yunfeiyang Technology Company during 2009 to 2014. Xiaoning Wu has served as our director since January 2024.
These shares, however, are not included in the computation of the percentage ownership of any other person. ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ % of ​ ​ Ordinary ​ Outstanding Beneficial Owners (1) Shares Shares Directors and Executive Officers: ​ Mingjun Lin ​ 3,373,974 ​ 1.5 % Yi Yang * * ​ Lin Cong * * ​ Deqian Chen ​ * ​ * ​ Xiaolei Gu ​ * ​ * ​ All Directors and Executive Officers as a Group 4,813,843 2.1 % Principal Shareholders: ​ Renren, Inc.
These shares, however, are not included in the computation of the percentage ownership of any other person. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % of ​ ​ ​ ​ ​ ​ ​ ​ ​ Ownership ​ ​ ​ ​ ​ Number of ​ Number of of total Class A ​ % of ​ ​ ​ Class A ​ Class B ​ ordinary shares ​ aggregate ​ ​ ​ ordinary ​ ordinary and Class B ​ voting ​ Beneficial Owners (1) shares shares ordinary shares power** ​ Directors and Executive Officers: ​ ​ ​ ​ ​ Mingjun Lin ​ 133,333 ​ 550,000 ​ 1.1 ​ 44.4 ​ Yi Yang — 450,000 ​ 0.7 ​ 36.3 ​ Deqiang Chen ​ * ​ — ​ * ​ * ​ Xiaolei Gu ​ * ​ — ​ * ​ * ​ All Directors and Executive Officers as a Group 198,330 1,000,000 ​ 2.0 ​ 80.8 ​ Principal Shareholders: ​ ​ ​ ​ ​ ​ Morning Star EV Inc.
We have determined that Lin Cong qualifies as an “audit committee financial expert”. The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our Company.
The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our Company.
We plan to hire additional experienced and talented employees in areas such as new energy vehicles design and manufacturing, big data analytics, marketing and operations, risk management and sales as we expand our business. 109 Table of Contents As required by the PRC regulations, we participate in various government statutory employee benefit plans, including social insurance, namely pension insurance, medical insurance, an unemployment insurance plan, a work-related injury insurance plan and a maternity insurance plan, and a housing provident fund.
As required by the PRC regulations, we participate in various government statutory employee benefit plans, including social insurance, namely pension insurance, medical insurance, an unemployment insurance plan, a work-related injury insurance plan and a maternity insurance plan, and a housing provident fund.
Terms of Directors and Officers Other than the directors that may be appointed by Mr. Lin and Renren in accordance with our memorandum and articles of association, our directors may be elected by ordinary resolution by our shareholders.
Mingjun Lin and Ms. Lucy Yi Yangin accordance with our memorandum and articles of association, our directors may be elected by ordinary resolution by our shareholders.
Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated.
The compensation committee assists the Board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated.
The nominating and governance committee assists the Board in selecting individuals qualified to become our directors and in determining the composition of the Board and its committees.
We have determined that Xiaoning Wu satisfies the “independence” requirements of Rule 5605(c)(2) of the Listing Rules of the Nasdaq Stock Market. The nominating and governance committee assists the Board in selecting individuals qualified to become our directors and in determining the composition of the Board and its committees.
Autod2d, Ltd is wholly owned by Lu Lin. (4) Autoa2a, Ltd is a company incorporated under the laws of the British Virgin Islands with limited liabilities with the registered address of 2/F, Palm Grove House, P.O. Box 3340, Road Town, Tortola, VG 1110, British Virgin Islands. Autod2d, Ltd is wholly owned by Ping Wang.
(2) Morning Star EV Inc. is a company incorporated under the laws of the British Virgin Islands with limited liabilities with the registered address of Craigmuir Chambers, Road Town, Tortola, VG 1110, British Virgin Islands. Morning Star EV Inc. is wholly owned by Lei Gu.
As a result, we have generally been able to attract and retain qualified personnel and maintain a stable core management team.
As a result, we have generally been able to attract and retain qualified personnel and maintain a stable core management team. We plan to hire additional experienced and talented employees in areas such as new energy vehicles design and manufacturing, big data analytics, marketing and operations, risk management and sales as we expand our business.
Removed
Before joining 58.com, he was the co-founder and chief financial officer of Youche.com, a used car dealer chain in China. Mr. Cong took the vice president positions of Finance and IT with 58.com before establishing Youche.com, where he served as a chief executive officer from February 2014 to March 2017. Mr.
Added
He has been serving as the chairman of Shangdong Zibo Fengdu Jiantao Company since 2003 and possesses rich experience in corporate financial management, capital investments, and sales areas. He also served as an accountant and the corporate controller of Taishun Zhanzhou Construction Company from 1986 to 1993 and as the CEO of Nantong Yongxing from 1994 to 2003.
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Cong also served as a management consultant with Boston Consulting Group from August 2008 to August 2009 and as an auditor with PriceWaterhouseCoopers in China from August 2002 to May 2005. Mr. Cong holds a bachelor’s degree in Accounting from Tsinghua University and an M.B.A. degree from Stanford University. Deqiang Chen has served as our director since May 2021.
Added
Term Unless terminated earlier, the 2022 Plan will terminate on May 17, 2032.
Removed
Lin Cong is the chairman of our compensation committee. We have determined that Lin Cong satisfies the “independence” requirements of Rule 5605(c)(2) of the Listing Rules of the Nasdaq Stock Market. The compensation committee assists the Board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers.
Added
Awards made under the plan on or prior to the date of its termination will continue in effect subject to the terms of the plan and the award. 2023 Equity Incentive Plan Our 2023 equity incentive plan (the “2023 Plan”), was adopted by our Board on January 17, 2023.
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Our Company has the right to seek damages if a duty owed by our directors is breached.
Added
The 2023 Plan provides for the grant of options, restricted shares and restricted share units, which are referred to collectively as awards. Up to 39,500,000 ordinary shares may be granted as awards under the 2023 Plan. The following paragraphs describe the principal terms of the 2023 Plan.
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(2) 32,865,687 14.4 % Autod2d, Ltd (3) ​ 13,422,613 ​ 5.9 % Autoa2a, Ltd (4) ​ 21,802,722 ​ 9.5 % Notes: * Less than 1% of our total outstanding ordinary shares.
Added
Administration The 2023 Plan is administered by sole director, the compensation committee, or any subcommittee thereof to whom such directors or the compensation committee shall delegate the power to administer the plan. The plan administrator is authorized to interpret the plan and to determine the provisions of each award.
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(1) Unless otherwise indicated, the business address of each of the beneficial owners is c/o Kaixin Auto Holdings, 9/F, Block A, Dongjin International Center, Huagong Road, Beijing, 100015, People’s Republic of China. (2) Consists of 32,865,687 ordinary shares held by Renren, and 2,000,000 ordinary shares issuable upon the conversion of the US$6 million preferred stock held by Renren.
Added
Change in Control In the event of a change in control or another transaction having a similar effect, then the plan administrator may, in its sole discretion, adjust the number of ordinary shares subject to the awards then held by a participant in the 2023 Plan as needed to prevent dilution or enlargement of the participant’s rights that otherwise would result from such event.
Removed
The address of Renren is45 West Buchanan Street, Phoenix, Arizona, 85003, USA.
Added
The plan administrator may also, in its sole direction, provide in substitution for the participant’s awards such alternative consideration as it may determine to be equitable in the circumstances.
Removed
Renren is a reporting company under the Exchange Act which is listed on the New York Stock Exchange. 110 Table of Contents (3) Autod2d, Ltd is a company incorporated under the laws of the British Virgin Islands with limited liabilities with the registered address of Craigmuir Chambers, Road Town, Tortola, VG 1110, British Virgin Islands.
Added
A “change of control” under the 2023 Plan is defined as: (i) the board of directors changes such that there is turnover of at least 50% of the members of the board; (ii) the shareholders approve any plan or proposal for the liquidation or dissolution of the company; (iii) the shareholders approve any consolidation, merger or share exchange of the company in which the company ceases to exist as a corporation, or as a result of which, the ordinary shares would be converted into cash, securities or other properties; or (iv) any sale, lease, exchange or other transfer of all or substantially all of the company’s assets.
Added
There will be an exception to the definition of “change of control” as follows: a transaction described in (iii) or (iv) shall not be a “change of control” if (A) after such transaction the board of directors did not undergo a turnover of at least 50% of the members of the board of directors, and/or such unchanged board of directors controls an entity which directly or indirectly holds a majority of the ordinary shares of the continuing, surviving or acquiring entity referenced in (iii) or (iv); and (B) such successor entity assumes all outstanding share awards under the 2023 Plan. 83 Table of Contents Term Unless terminated earlier, the 2023 Plan will terminate on January 17, 2033.
Added
Each committee’s members and functions are described as below. 84 Table of Contents Audit Committee Our audit committee consists of Xiaoning Wu. Xiaoning Wu is the chairman of our audit committee.
Added
Our Board has all the powers necessary for managing, and for directing and supervising, our business affairs.
Added
(2) ​ 4,000,000 ​ — ​ 6.6 ​ 1.3 ​ Notes: * Less than 1% of our total outstanding ordinary shares. ** For each person and group included in this column, percentage voting power is calculated by dividing voting power beneficially owned by such person or group by voting power of all of our Class A ordinary shares and Class B ordinary shares as a single class.
Added
Each holder of Class A ordinary shares is entitled to one vote per share and each holder of Class B ordinary shares is entitled to twenty votes per share on all matters subject to vote at our general meeting.
Added
Our Class A ordinary shares and Class B ordinary shares vote together as a single class on all matters submitted to a vote of our shareholders, except as may otherwise be required by law or provided for in our memorandum and articles of association.
Added
Each Class B ordinary share is convertible into one Class A ordinary share at the option of the holder thereof, while Class A ordinary shares cannot be converted into Class B ordinary shares under any circumstances.
Added
(1) Unless otherwise indicated, the business address of each of the beneficial owners is c/o Kaixin Holdings, Unit B2-303-137, 198 Qidi Road, Beigan Community, Xiaoshan District, Hangzhou, Zhejiang Province, People’s Republic of China.

Item 7. Management's Discussion & Analysis

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

3 edited+0 added−36 removed0 unchanged
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A. Major Shareholders. Please refer to “Item 6. Directors, Senior Management and Employees — E. Directors, Senior Management and Employees — Share Ownership”. B. Related Party Transactions Transactions with Renren See “Item 4.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS. A. Major Shareholders. Please refer to “Item 6. Directors, Senior Management and Employees — E. Directors, Senior Management and Employees — Share Ownership”. B. Related Party Transactions.
Share Incentives Please refer to “Item 6. Directors, Senior Management and Employees — B. Compensation — 2018 Equity Incentive Plan” and “Item 6. Directors, Senior Management and Employees — B. Compensation — 2019 Equity Incentive Plan”. C. Interests of Experts and Counsel. Not applicable.
The investment closed on April 8, 2021. Employment Agreements and Indemnification Agreements Please refer to “Item 6. Directors, Senior Management and Employees — B. Compensation — Employment Agreements and Indemnification Agreements.” Share Incentives Please refer to “Item 6. Directors, Senior Management and Employees — B. Compensation — Equity Incentive Plans.” C. Interests of Experts and Counsel. Not applicable.
See Note 10 of our consolidated financial statements for details of the short-term debt. 113 Table of Contents On March 31, 2021, Kaixin entered into a definitive securities purchase agreement with Renren pursuant to which Renren invested US$6,000,000 in newly designated convertible preferred shares of Kaixin.
Related Party Transactions with Moatable On March 31, 2021, Kaixin entered into a definitive securities purchase agreement with Moatable pursuant to which Moatable invested US$6,000,000 in newly designated convertible preferred shares of Kaixin. The preferred shares are convertible into Kaixin’s ordinary shares at the conversion price of US$3.00, subject to customary anti-dilution adjustments. The preferred shares have no voting right.
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Information on the Company — History and Corporate Structure of the Company — History of KAG Before the Business Combination” for information on KAG’s reorganization transactions. Prior to the Business Combination, KAG had been a majority-owned subsidiary of Renren.
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Historically, Renren has provided us with financial, accounting, administrative, sales and marketing, legal and human resources services, as well as the services of a number of our executive officers and other employees, the costs of which were allocated to us based on factors including proportion of revenues, infrastructure usage and labor usage attributable to us, among other things.
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We have begun to invest in our own financial, accounting, administrative, sales and marketing, human resources and legal services functions separate from Renren’s, and we will further establish other support systems of our own or contract with third parties to provide them.
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In connection with the Business Combination, we have entered into agreements with Renren with respect to various ongoing relationships between us and Renren. These agreements include a master transaction agreement, a transitional service agreement, and a non-competition agreement.
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The following are summaries of these agreements: 111 Table of Contents Master Transaction Agreement The master transaction agreement contains provisions relating to our carve-out from Renren.
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Pursuant to this agreement, we are responsible for all the financial liabilities associated with our business that had been conducted by or transferred to us before the completion of the Business Combination, and Renren is responsible for the financial liabilities associated with all of its other current and historical businesses and operations, in each case regardless of the time those liabilities arise.
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The master transaction agreement also contains indemnification provisions under which we and Renren indemnify each other with respect to breaches of the master transaction agreement or any related inter-company agreement.
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In addition, we have agreed to indemnify Renren against liabilities arising from misstatements or omissions in the proxy statement in connection with the Business Combination, except for misstatements or omissions relating to information that Renren provided to Kaixin specifically for inclusion therein.
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We have also agreed to indemnify Renren against liabilities arising from any misstatements or omissions in our subsequent SEC filings and from information Kaixin provides to Renren specifically for inclusion in Renren’s annual reports or other SEC filings following the completion of the Business Combination, but only to the extent that the information pertains to us or our business or to the extent Renren provides us with prior written notice that the information will be included in its annual reports or other subsequent SEC filings and the liability does not result from the action or inaction of Renren.
Removed
Similarly, Renren will indemnify us against liabilities arising from misstatements or omissions in its subsequent SEC filings or with respect to information that Renren provided to us specifically for inclusion in the proxy statement in connection with the Business Combination, or our annual reports or other SEC filings following the completion of the Business Combination.
Removed
The master transaction agreement also contains a general release, under which the parties will release each other from any liabilities arising from events occurring on or before closing date of the Business Combination, including in connection with the activities to implement the Share Exchange Agreement.
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The general release does not apply to the liabilities allocated between the parties under the master transaction agreement or the other inter-company agreements.
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Furthermore, under the master transaction agreement, we have agreed to use our reasonable best efforts to use the same independent certified public accounting firm selected by Renren and to maintain the same fiscal year as Renren until the first Renren fiscal year-end following the earlier of the first date when Renren no longer owns a specified percentage of the voting power of our then outstanding securities.
Removed
This earlier date is referred to as the control ending date. We have also agreed to use our reasonable best efforts to complete our audit and provide Renren with all financial and other information on a timely basis so that Renren may meet its deadlines for its filing of annual and quarterly financial statements.
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Under the master transaction agreement, the parties have also agreed to cooperate in sharing information and data collected from each party’s business operations, including without limitation user information and data relating to user activities. The parties will agree not to charge any fees for their cooperation provided under the agreement unless they separately and explicitly agree otherwise.
Removed
The parties have also agreed on certain other matters related to the relationship between us and Renren, including employees, premises and treatment of loans currently outstanding between us and Renren.
Removed
The master transaction agreement will automatically terminate after a certain period following the first date on which upon which Renren ceases to own in aggregate at least a specified percentage of the voting power of our then outstanding securities, provided that the agreement on sharing information and data will terminate on the earlier of (i) a number of years following the commencement of the cooperation period; or (ii) a number of years after the first date upon which Renren ceases to own in aggregate at least a specified percentage of the voting power of our then outstanding securities.
Removed
This agreement will be terminated earlier or extended by mutual written consent of the parties. The termination of this agreement will not affect the validity and effectiveness of the transitional services agreement, the non-competition agreement and the sales and marketing services agreement.
Removed
Transitional Services Agreement Under the transitional services agreement, we and Renren have agreed that, during the service period as described below, Renren will provide us with various corporate support services, including but not limited to administrative support, operational management support, legal support, technology support and office facilities.
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Renren also may provide us with additional services that we and Renren may identify from time to time in the future. 112 Table of Contents The price to be paid for the services provided under the transitional service agreement will be the actual direct and indirect costs of providing such services.
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Direct costs include labor-related compensation, travel expenses, materials and supplies consumed in performing the services. Indirect costs include office occupancy, information technology supervision and other overhead costs of the department incurring the direct costs of providing the services.
Removed
The transitional service agreement provides that the performance of a service according to the agreement will not subject the provider of such service to any liabilities whatsoever except as directly caused by the gross negligence or willful misconduct of the service provider.
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Liability for gross negligence or willful misconduct is limited to the lower of the price paid for the particular service or the cost of the service’s recipient performing the service itself or hiring a third party to perform the service.
Removed
Under the transitional services agreement, the service provider of each service is indemnified by the recipient against all third-party claims relating to the provision of services or the recipient’s material breach of a third-party agreement, except where the claim is directly caused by the service provider’s gross negligence or willful misconduct.
Removed
The service period under the transitional services agreement commences on the completion of the Business Combination and will end on the expiration of five years thereafter.
Removed
We may terminate the transitional services agreement with respect to either all or part of the services by giving prior written notice to Renren and paying a termination fee equal to the direct costs incurred by Renren in connection with its provision of services at the time of the early termination.
Removed
Renren may terminate this agreement with respect to either all or part of the services by giving us prior written notice if Renren ceases to own in aggregate at least a specified percentage of the voting power of our then outstanding securities or ceases to be the largest beneficial owner of our then outstanding voting securities, without considering holdings of institutional investors that have acquired our securities in the ordinary course of their business and not with the purpose or the effect of changing or influencing control over us.
Removed
There was no transaction between Renren and us pursuant to the transitional services agreement for the year ended December 31, 2022.
Removed
Non-Competition Agreement Our non-competition agreement with Renren provides for a non-competition period beginning upon the completion of the Business Combination and ending on the later of a certain number of years after the first date when Renren ceases to own in aggregate at least a certain percentage of the voting power of our then outstanding securities and a number of years following the completion of the Business Combination.
Removed
This agreement can be terminated earlier by mutual written consent of the parties. Renren has agreed not to compete with us during the non-competition period in the business that is of the same nature as the business operated by us before the completion of the Business Combination, except for owning non-controlling equity interest in any company competing with us.
Removed
We have agreed not to compete with Renren during the non-competition period in the businesses currently conducted by Renren, as described in its periodic filings with the SEC, other than with respect to the business operated by us before the completion of the Business Combination, except for owning non-controlling equity interest in any company competing with Renren.
Removed
The non-competition agreement also provides for a mutual non-solicitation obligation that neither Renren nor we may, during the non-competition period, hire, or solicit for hire, any active employees of or individuals providing consulting services to the other party, or any former employees of or individuals providing consulting services to the other party within a period of time from the termination of their employment or consulting services, without the other party’s consent, except for solicitation activities through generalized non-targeted advertisement not directed to such employees or individuals.
Removed
Other Related Party Transactions with Renren Renren and its subsidiaries provided us with advanced funds to finance our daily operations, which are interest-free and repayable on demand. On April 30, 2019, US$76.0 million was waived by Renren.
Removed
We received US$113.4 million from Renren and repaid US$115.5 million to Renren in 2019, including the repayment for the loan of US$1.1 million due to Renren, which was assumed by KAG in the Business Combination from CM Seven Star. There was US$1.4 million payables outstanding due to Renren as of December 31, 2022.
Removed
Renren has pledged restricted cash as security for US$2 million, and a subsidiary of Renren provided guarantee for US$7.2 million short term debts obtained by our company in 2019 from East West Bank.
Removed
The preferred shares are convertible into Kaixin’s ordinary shares at the conversion price of US$3.00, subject to customary anti-dilution adjustments. The preferred shares have no voting right. The investment closed on April 8, 2021. Employment Agreements and Indemnification Agreements Please refer to “Item 6. Directors, Senior Management and Employees — B. Compensation — Employment Agreements and Indemnification Agreements”.

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