Form F-1/A J-Star Holding Co., Ltd.

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As filed with the U.S. Securities and Exchange
Commission on August 19, 2022.

 
Registration
No. 333-263755
 

 
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
Amendment No. 4
to
FORM
F-1
 
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF 1933
 
J-Star
Holding Co., Ltd.
(Exact
name of Registrant as specified in its charter)
 
Not
Applicable
(Translation of Registrant’s name into English)
 
Cayman
Islands
 
3949
 
Not
Applicable(State
or other jurisdiction ofincorporation or organization)
 
(Primary
Standard IndustrialClassification Code Number)
 
(I.R.S.
EmployerIdentification Number) 
7/F-1,
No. 633, Sec. 2, Taiwan Blvd.,
Xitun
District, Taichung City 407,
Taiwan
(R.O.C.)Tel: + 886-423229900(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
 
Puglisi
& Associates
850
Library Avenue, Suite 204
Newark, DE19711
Tel:
(302) 738-6680(Name, address, including zip code, and telephone number, including area code, of agent for service)
 
Copies
to: 
 
 Lawrence
S. Venick, Esq.
Loeb
& Loeb LLP
10100
Santa Monica Boulevard
Suite
2200
Los
Angeles, CA 90067
Telephone:
(310) 282-2000
Facsimile:
(310) 282-2200
 
Richard
I. Anslow, Esq.
Charles
Phillips, Esq.
Ellenoff
Grossman & Schole LLP
1345
Avenue of the Americas
New
York, New York 10105
Telephone:
(212) 370-1300

Facsimile: (212) 370-7889  
Approximate
date of commencement of proposed sale to the public: as soon as practicable after the effective date of this registration statement.
 
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. ☒
 
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the earlier effective registration statement for the same
offering. ☐
 
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
 
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
 
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
 
Emerging
growth company. ☒
 
If
an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided
pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
 

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

 

 
The
information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities
and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.
 
PRELIMINARY
PROSPECTUS (Subject to Completion)
Dated
August 19, 2022  
5,250,000
Ordinary Shares
 

 
J-Star
Holding Co., Ltd.

(incorporated in the Cayman Islands with limited
liability)
 
This is the initial public offering of the ordinary
shares of J-Star Holding Co., Ltd. We are offering 5,250,000 of our ordinary shares, par value $0.50 per share, on a firm commitment
basis. The assumed initial public offering price is expected to be $4.00 per share. Currently, no public market exists for our ordinary
shares. We have applied to have our ordinary shares listed on the Nasdaq Capital Market, or Nasdaq, under the symbol “YMAT.”
We cannot guarantee that we will be successful in listing our ordinary shares on the Nasdaq; however, we will not complete this offering
unless we are so listed.
 
J-Star Holding Co., Ltd. is an exempted company with
limited liability incorporated under the laws of the Cayman Islands. As a holding company with no material operations of our own, our
operations are conducted through our subsidiaries in the People’s Republic of China (the “PRC”), Taiwan, Hong
Kong and Samoa with our headquarters in Taiwan, and such structure involves unique risks to investors, as the Chinese government may
exercise significant oversight and discretion over the conduct of our business and may intervene in or influence our operations at any
time. Such governmental actions:
 
 ●could
disallow our corporate structure;
   ●could
result in a material change in our operations;   ●could
hinder our ability to continue to offer securities to investors; and   ●may
cause the value of our securities to significantly decline or be worthless. 
We are aware that recently, the
Chinese government initiated a series of regulatory actions and statements to regulate business operations in China with little advance
notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed
overseas using variable interest entity (“VIE”) structure, adopting new measures to extend the scope of cybersecurity reviews,
and expanding the efforts in anti-monopoly enforcement. Since these regulatory actions and statements are new, it is highly uncertain
how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed
implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations
will have on our business operations in China, the ability to accept foreign investments and list on a U.S. or other foreign exchange.
Although currently our business of carbon fiber composite products is not affected under these regulatory actions, however, if the legislative
or administrative regulation making bodies change their focus to the sector which we operate in, it may impact our ability to conduct
our business, accept foreign investments, or list on a U.S. or other foreign exchange. Any future action by the Chinese government expanding
the categories of industries and companies whose foreign securities offerings are subject to government review could significantly limit
or completely hinder our ability to offer or continue to offer securities to investors and could cause the value of such securities to
significantly decline or be worthless. For a detailed description of the risks related to doing business in the PRC and Taiwan, and the
offering, see “Risks Related to Conducting Operations in PRC and Hong Kong”, “Risks Related
to Doing Business in Taiwan” and “Risks Related to this Offering and Ownership of Our Ordinary Shares” in
the Risk Factors section. Unless otherwise stated, as used in this prospectus, “we,” “us,” “our company,”
the “Company,” “our,” “our group,” or the “Group” refers to J-Star Holding Co., Ltd.,
together with its subsidiaries, and also in the context of describing our operations and consolidated financial information. To specifically
indicate any of the subsidiaries under J-Star Holding Co., Ltd, separated definition of each subsidiary is adopted as defined below in
order to refer to the same.
 
Regarding
the cash transfer throughout our organization, within the organization, approximately 80% of our customer cash inflows have been received
by our order-taking subsidiary in Hong Kong, and approximately 20% of our customer cash inflows have been received by our subsidiary
in Taiwan. Our Hong Kong subsidiary purchases goods and services from our Taiwan subsidiary and then pays into our operating PRC subsidiaries;
or directly from our Taiwan subsidiary to our PRC subsidiaries, and from our operating PRC subsidiaries to our operating Samoa subsidiary,
through payments on the goods and services provided by the relevant entities. As such, our Hong Kong subsidiary, PRC subsidiaries and/or
Samoa subsidiary are funded by its own cash inflows or by our Taiwan subsidiary. As of the date of this prospectus, none of our subsidiaries
have ever faced difficulties or limitations on the ability to transfer cash to another subsidiary. We have implemented cash management
policies for all of our subsidiaries, which require the relevant financial staff to verify that the relevant documents issued by the
requesting staff with the approval of the competent supervisor are qualified, and then transfer the payment to the cashier upon competent
supervisor of the relevant financial staff. Any voucher will be stamped after payment and the payee will sign the request for payment
as receipt. In addition, all payments shall be made by remittance, crossed and stamped non-endorsed transfer cheques except for certain
specified cash payables. When transferring any inter-group funds, the cash management procedures is the same as the cash management policies
for external payment as set out above. For a detailed description on the transfer of cash through our organization and details on the
aggregate intra-group cash flow for the years ended December 31, 2020 and 2021, see “Organizational Structure and Cash
Flow” in the Prospectus Summary section.
 
Our
group intends to retain all available funds and future earnings, if any, for the operation and expansion of our business and do not anticipate
declaring or paying any dividends in the foreseeable future. We also intend to settle amounts owned under our operating structure through
bank loans and loans from related parties. We currently do not have any dividend policy, and any future determination will be made at
the discretion of our board of directors after considering our financial condition, results of operations, capital requirements, business
prospects and other factors the board of directors deems relevant, and subject to the restrictions contained in any future financing
instruments. In or around July 2017, J-Star declared NTD61.5 million (approximately $2.2 million) of dividends to the then shareholders.
For the years ended December 31, 2020 and 2021, we did not pay any dividends to our shareholders. As of the date of this prospectus,
neither we nor any of our subsidiaries have ever paid dividends or made distributions to U.S. investors. Save as disclosed, there
were no other transfers, dividends or distributions which have been made between our holding company, our subsidiaries or to our investors.
If we determine to pay dividends on any of our ordinary shares in the future, as a holding company, we will be dependent on
receipt of funds from our operating subsidiaries in Hong Kong and Taiwan. Although we did not rely on our PRC subsidiaries in dividends
and other distributions on equity in the past, we may rely on dividends and other distributions on equity paid by our PRC subsidiaries
for our cash and financing requirements in the future, including the funds necessary to pay dividends and other cash distributions to
our shareholders or to service any debt we may incur. If any of our PRC subsidiaries incur debt on its own behalf in the future, the
instruments governing such debt may restrict their ability to pay dividends to us. To date, there have not been any such dividends or
other distributions from our PRC subsidiaries to our subsidiaries located outside of China. In addition, save as disclosed above, as
of the date of this prospectus, none of our subsidiaries have ever issued any dividends or distributions to us or their respective shareholders
outside of China. In the future, cash proceeds raised from overseas financing activities, including this offering, may be transferred
by us to our PRC subsidiaries via capital contribution or shareholder loans, as the case may be. For a detailed description on our intentions
to distribute earnings or settle amounts owed and any transfers, dividends or distributions made to date, see “Dividends and
other distributions” in the Prospectus Summary Section.
 
Pursuant
to the Holding Foreign Companies Accountable Act (the “HFCAA”), the Public Company Accounting Oversight Board (the “PCAOB”)
issued a Determination Report on December 16, 2021 which found that the PCAOB is unable to inspect or investigate completely registered
public accounting firms headquartered in: (1) mainland China of the PRC, and (2) Hong Kong, because of positions taken by the PRC authorities
in those jurisdictions. In addition, the PCAOB’s report identified the specific registered public accounting firms which are subject
to these determinations. Our auditor, PricewaterhouseCoopers, Taiwan, is headquartered in Taipei, and has been inspected by the PCAOB
on a periodic basis. Therefore, our auditor was not identified in this report as a firm subject to the PCAOB’s determination. Notwithstanding
the foregoing, if the PCAOB is not able to inspect and investigate completely our auditor’s work papers in China, you may be deprived
of the benefits of such inspection which could result in limitation or restriction to our access to the U.S. capital markets and trading
of our securities may be prohibited under the HFCAA and the Nasdaq may determine to delist our securities if the PCAOB determines that
it cannot inspect or investigate completely our auditor under the HFCAA. See “Risk Factors – Risks Related to Our Corporate
Structure – The audit work on our PRC subsidiaries may not be inspected or investigated completely by the PCAOB and our ordinary
shares may be prohibited from being traded on a national exchange under the HFCAA if the PCAOB is unable to inspect our auditor for
three consecutive years beginning in 2021. The delisting of our ordinary shares, or the threat of being delisted, may materially and
adversely affect the value of your investment” for more information.

 

We
are an “emerging growth company,” as that term is used in the Jumpstart Our Business Startups Act of 2012, and will be subject
to reduced public company reporting requirements. See “Prospectus Summary — Implications of Being an Emerging Growth Company.”
 

Investing in our ordinary shares is highly speculative
and involves a significant degree of risk. See “Risk Factors” beginning on page 13 of this prospectus for a discussion of
information that should be considered before making a decision to purchase our ordinary shares. As a holding company with no material
operations of our own, we conduct a substantial majority of our operations through our operating entities established in the PRC, Taiwan,
Hong Kong and Samoa with our headquarters in Taiwan. Our ordinary shares offered in this prospectus are shares of our Cayman Islands
holding company.
 
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed
upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
 
  
Per Share  
Total Public offering price 
$4.00  
$ 21,000,000  Underwriting
discount and commissions (1) 
$0.30  
$ 1,575,000  Proceeds to us, before expenses 
$3.70  
$ 19,425,000   
(1)
ViewTrade
Securities, Inc. as representative to the underwriters will receive compensation in addition to the underwriting discount,
as set forth in the section entitled “Underwriting” beginning on page 141
upon the closing of this offering. We have also agreed to reimburse the underwriters for certain expenses incurred
in connection with this offering. See “Underwriting” for additional information.
 
This offering is being conducted on a firm commitment
basis. The underwriters are obligated to take and pay for all of the shares if any such shares are taken. We have granted the underwriters
an option, exercisable in whole or in part, to purchase up to 787,500 additional ordinary shares from us at the public offering
price, less the underwriting discounts and commissions, within 45 days from the date of this prospectus to cover over-allotments, if
any. If the underwriters exercise the option in full, the total underwriting discounts and commissions payable will be $1,811,250
based on an assumed initial public offering price of $4.00 per ordinary share, and the total proceeds to us, before expenses, will
be $22,338,750.

 
The
underwriters expect to deliver the ordinary shares to purchasers in the offering on or about [____], 2022.
 

 
VIEWTRADE
SECURITIES, INC.
 
The
date of this prospectus is [_____], 2022.
 

 
TABLE
OF CONTENTS
 
 
You
should rely only on the information contained in this prospectus or in any related free-writing prospectus. We have not authorized anyone
to provide you with information different from that contained in this prospectus. We are offering to sell, and seeking offers to buy,
the ordinary shares only in jurisdictions where offers and sales are permitted. Unless otherwise stated, the information contained in
this prospectus is current only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale
of the ordinary shares.
 
We
have not taken any action to permit a public offering of the ordinary shares outside the United States or to permit the possession or
distribution of this prospectus outside the United States. Persons outside the United States who come into possession of this prospectus
must inform themselves about and observe any restrictions relating to the offering of the ordinary shares and the distribution of the
prospectus outside the United States.
 
Until
                  , 2022 (the 25th
day after the date of this prospectus), all dealers that buy, sell or trade ordinary shares, whether or not participating in this
offering, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting
as underwriters and with respect to their unsold allotments or subscriptions.
 

 
PROSPECTUS
SUMMARY
 
The
following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial
statements appearing elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully,
especially the risks of investing in our ordinary shares discussed under “Risk Factors,” before deciding whether to buy our
ordinary shares.
 
“Bohong Technology” refers to Bohong Technology Jiangsu
Co., Ltd.
 
All
references to “we,” “us,” “our,” “our company,” the “Company,”
“our group,” the “Group” or similar terms used in this prospectus refer to J-Star Holding Co., Ltd., an
exempted company with limited liability incorporated under the laws of the Cayman Islands, including its consolidated subsidiaries,
unless the context otherwise indicates. To specifically indicate any of the subsidiaries under J-Star Holding Co., Ltd, separated
definition of each subsidiary is adopted as defined below in order to refer to the same.
 
“Companies Act” means the Companies
Act (2022 Revision) of the Cayman Islands, as may be amended from time to time.
 
“HKD” refers to the legal currency
of Hong Kong Special Administrative Region of the People’s Republic of China.
 
“Hong Kong” or “HK”
refers to the Hong Kong Special Administrative Region of the People’s Republic of China.
 
“J-Star” refers to J-Star Holding
Co., Ltd.
 
“NTD” refers to the New Taiwan
dollar, the legal currency of Taiwan.
 
“PRC” or “China” refers
to the People’s Republic of China, including, for the purpose of this prospectus only, Hong Kong and Macau, but
excluding, Taiwan, unless the context otherwise indicates.
 
“Predecessor
Group” refers to the companies comprising Yuan Min An Enterprises Co., Ltd., Skyfort International PTE. Ltd., YMA Corporation (formerly
known as Yuan Chuan International Co., Ltd.), Dongguan Yuantai Sports Equipment Co., Ltd., Forwell Sports Equipment Co., Ltd. and Time
Yield Limited.

 
“RMB”
or “Renminbi” refers to the legal currency of China.
 
“Taiwan”
refers to Taiwan, Republic of China.
 

“$,”
“US$,” “USD” or “U.S. Dollars” refers to the legal currency of the United States.

 
“share
capital” or “shares in the capital of” or similar expressions include a reference to shares in a company that does
not have a share capital under its governing law, but which is authorized to issue a maximum or unlimited number of shares.
 
Unless
the context indicates otherwise, all information in this prospectus assumes no exercise by the underwriters of their over-allotment option.
 
Business
Overview
 
Our
Predecessor Group was established in 1970 and we have accumulated over 50 years know-how in material composite industry. We develop and
commercialize the technology on carbon reinforcement and resin systems. With decades of experience and knowledge in composites and materials,
we are able to apply our expertise and technology on designing and manufacturing a great variety of lightweight, high-performance carbon
composite products, ranging from key structural parts of electric bicycles and sports bicycles, rackets, automobile parts to healthcare
products. According to the industry report commissioned by us and prepared by Frost & Sullivan, we are one of the major global leading
players in the carbon fiber bicycle parts industry and carbon fiber racket parts industry.
 
As
our business is technology-driven, our vision is to offer cutting edge technology and manufacturing expertise in carbon composite to
our customers, and many of our products are directly or indirectly supplied to different renowned international sports brand owners.
Our carbon composite products deliver substantial weight savings, endurance and stiffness comparing to those constructed from conventional
materials, such as steel and aluminum, and in doing so, our products offer remarkable and valuable efficiency and performance benefits
to our customers in various applications. While our technology has potential applications over a broad range of industries, we currently
have our main focus on the sporting goods industry and we prioritize the electric bicycle market to commercialize our technology.
 

 
We
are based in Taiwan with our headquarters, research and development (“R&D”) center and material laboratory located in
Taichung, Taiwan and our production plant and our second R&D center located in Dongguan, the PRC. The R&D center in Taichung
focuses on resin material application, new product development and production process enhancement, and the R&D center in Dongguan,
the PRC, which is located next to our production plant, focuses on structural design of products, testing on product performance
and enhancement on strength and stiffness of products. Our business focuses on the research and development of, as well as manufacturing,
a wide range of carbon composite products. We primarily generate revenue through three divisions and revenue streams, namely (i)
sales of bicycles parts of sports bicycle and electric bicycle; (ii) sales of rackets for use in tennis, badminton, squash and beach
tennis; and (iii) sales of other products, which mainly include structural parts of automobile, other sporting goods and healthcare products.
Our bicycle parts and rackets are mainly supplied directly or indirectly to branded customers located in Switzerland, France, Italy,
the Netherlands, Germany and Japan and they market and distribute their products worldwide. Other customers which rely on our
new products, such as automobile parts and healthcare products, are mainly located in Australia, Canada and Japan.
 
Advanced
carbon composite materials offer a number of advantages relative to traditional materials, including light weight, high strength to weight
ratio, high stiffness, and improved resistance to heat, corrosion and fatigue. Nonetheless, different products require different degrees
and combinations of such properties according to their functions. Carbon composite materials are formed by combining carbon fibers and
resins. The properties of carbon composite materials could vary largely due to different systems of resin and structural arrangement.
Differing from our competitors in the industry, instead of using preset formulas of resins with lower degree of flexibility, we have
our own R&D center to develop our own resin systems and formulas according to the product requirements. Therefore, we are able to
incorporate customized resin systems that can be optimized for specific parameters, such as durability, temperature performance, cure
times and viscosity. This not only allows us to manufacture our products with high precision to customers’ specifications, but
also offers us flexibility in developing a greater variety of new products in the future. Thus, we believe that the parallel development
of our complex product and process technology has resulted in our competitive advantage which makes it difficult for our competitor to
replicate.
 
Our
total revenue for the years ended December 31, 2020 and 2021 amounts to $22.2 million and $31.3 million,
respectively. Our sales of bicycle parts accounted for approximately 64.4%, and 63.9% of our total revenues for the years
ended December 31, 2020 and 2021, respectively. Our sales of rackets business brought us considerable revenue for
the years ended December 31, 2020 and 2021, which accounted for approximately 35.5% and 36.1%, respectively,
of our total revenues. Our sales of other products, which accounted for approximately 0.1%, and 0.0%, respectively, of our
total revenues for the years ended December 31, 2020 and 2021.
 
While
having our main focus on development and sales of key structural parts of bicycles and rackets in the past years, we would not limit
ourselves to the existing scope of product. We intend to extend our product spectrum by launching new products, such as sporting goods
for new sports like padel racket and mast foil, and further expand our production on relatively new existing products that are emerging
in the market, including key structural parts of electric bicycles, automobile and robotic arms, bicycle crank sets and other healthcare
products, such as wheelchairs and senior walkers.
 

We target to achieve growth in terms of both scale
and scope. To expand our scale, we plan to establish a new production plant in Yangzhou in the PRC. For such purpose, in March 2019,
Bohong Technology acquired the land use right of a land parcel in Yangzhou with a total gross land area of 64,851 square meters
in order to build our new production plant for the production on key structural parts of electric bicycle, robotic arms, automobile parts
and prepreg material. We intend to invest approximately $6.2 million on the purchase of machinery for our production plant in Yangzhou.
We are in discussion with a local construction company in the PRC on a hire purchase agreement of building and infrastructure construction
of our production plant in Yangzhou and such construction would be funded by the said local construction company in the PRC. Due to COVID-19
and its impact on economic and social activities, we suspended the construction work of our production plant in Yangzhou and the construction
work is expected to resume by the fourth quarter of 2022. The first phase of such construction is expected to be completed by
third quarter of 2023. The construction of our production plant in Yangzhou is expected to be fully completed by the fourth
quarter of 2023 and the machines are expected to be set up by the first quarter of 2024. As for growth in terms of
scope, we anticipate that, by the first quarter of 2023, we will launch our own brand on electric bicycle and sporting
goods and will set up sales and administration office in the U.S. and the Netherlands. We are in close dialogue with a reputed bicycle
frame manufacturer in the U.S. on exploring investment opportunities, including but not limited to possibilities on acquisition, joint-venture
and /or co-branding production.  In addition, we intend to add a U.S. sales and administration office in Houston, Texas, which
will work closely with our office in Taiwan in U.S. market sales and expansion, while our sales and administration office in the Netherlands
will be handling sales on our online business platform expected to be launched around the first quarter of 2023. We also
expect to further extend our production of automobile parts so as to leverage on the surging market demand of electric vehicles. By June
of 2024, we expect to launch our micro factory and R&D center in the U.S., with a view to developing automation of our production
process and integrating the most advanced technology to our production. In this regard, we intend to invest in a manufacturer of carbon
fiber products in the U.S. We have been in contacts with several potential target companies in the U.S., one of which is a U.S.-based
aerospace composite parts manufacturer. We also plan to establish our third R&D center in Houston, Texas and our initial plan is
to hire 4 to 6 employees on developing composite material and conducting researches on chemical interactions.
 

 

Summary
of Risks Affecting Our Company
 
Our
business is subject to numerous risks described in the section titled “Risk Factors” and elsewhere in this prospectus. The
main risks set forth below and others you should consider are discussed more fully in the section entitled “Risk Factors –
Risks Related to Conducting Operations in PRC and Hong Kong,” “Risk Factors – Risks Related to Our Business
and Industry,” “Risks Related to Our Corporate Structure,” “Risk Factors – Risks Related
to Doing Business in Taiwan,” and “Risks Related to this Offering and Ownership of Our Ordinary Shares”
which you should read in its entirety starting from page 13.

 
Risks Related to
Conducting Operations in PRC and Hong Kong
 
Currently,
part of our operations are based in the PRC. Because of such ties to China, we may be subjected to the laws, rules and regulations of
the PRC. For more detailed description of the below risks and other risks related to acquiring and operating business in China and Hong
Kong, see “Risk Factors — Risks Related to Conducting Operations in PRC and
Hong Kong”
beginning on page 13. These risks include, but are not limited to, the following:
 

 

A downturn in the PRC or global economy, and economic and political
policies of the PRC could materially and adversely affect our business and financial condition. For more detailed discussion of this
risk, please refer to “Risks Factors – Risks Related to Conducting Operations in PRC and Hong Kong – A downturn
in the PRC or global economy, and economic and political policies of the PRC could materially and adversely affect our business and
financial condition” on page 13. 
 
  

Uncertainties with respect to the PRC legal system could adversely
affect us. For more detailed discussion of this risk, please refer to “Risks Factors – Risks Related to Conducting
Operations in PRC and Hong Kong – Uncertainties with respect to the PRC legal system could adversely affect us”
on page 13. 
 
  

As most of our production is currently conducted in PRC, we are subject to certain legal and
operational risks associated with our PRC operating subsidiaries. Changes in the policies, regulations, rules, and the enforcement
of laws of the PRC government may be quick with little advance notice and could have a significant impact upon our ability to
operate profitably in the PRC and the value of our securities. For more detailed discussion of this risk, please refer to
“Risks Factors – Risks Related to Conducting Operations in PRC and Hong Kong – Changes in the policies, regulations,
rules, and the enforcement of laws of the PRC government may be quick with little advance notice and could have a significant impact
upon our ability to operate profitably in the PRC and may cause the value of our securities to significantly decline or be
worthless” on page 13.  
 
  

The Chinese government may exercise significant oversight and discretion
over the conduct of business in the PRC and may intervene in or influence our operations at any time, which could result in a material
change in our operations and/or the value of our securities. We are currently not required to obtain any pre-approval or fulfill
the filing and reporting obligation from or to Chinese authorities to list on U.S. exchanges; however, if we are required to obtain
approval or fulfill the filing and reporting in the future and are denied permission from Chinese authorities to list on U.S. exchanges,
we will not be able to continue listing on U.S. exchange, which would materially affect the interest of the investors. For more detailed
discussion of this risk, please refer to “Risks Factors – Risks Related to Conducting Operations in PRC and Hong
Kong – The Chinese government may exercise significant oversight and discretion over the conduct of business in the PRC and may
intervene in or influence our operations at any time, which could result in a material change in our operations and/or the value
of our securities. We are currently not required to obtain any pre-approval or fulfill the filing and reporting obligation from or
to Chinese authorities to list on U.S. exchanges; however, if we are required to obtain approval or fulfill the filing and reporting
in the future and are denied permission from Chinese authorities to list on U.S. exchanges, we will not be able to continue listing
on U.S. exchange, which would materially affect the interest of the investors” on page 14. 
 
  

The Chinese government may intervene in or influence our business operations
at any time or may exert more control over offerings conducted overseas and foreign investment in China based issuers, which could
result in a material change in our business operations and significantly and adversely impact the value of our securities. Additionally,
the governmental and regulatory interference could significantly limit or completely hinder our ability to offer or continue to offer
securities to investors and cause the value of such securities to significantly decline or be worthless. For more detailed
discussion of this risk, please refer to “Risks Factors – Risks Related to Conducting Operations in PRC and Hong
Kong – The Chinese government may intervene in or influence our business operations at any time or may exert more control over
offerings conducted overseas and foreign investment in China based issuers, which could result in a material change in our business
operations and significantly and adversely impact the value of our securities. Additionally,
the governmental and regulatory interference could significantly limit or completely hinder our ability to offer or continue to offer
securities to investors and cause the value of such securities to significantly decline or be worthless” on page
14. 
 
  

Compliance with China’s new Data Security Law, Cybersecurity
Review Measures, Personal Information Protection Law, regulations and guidelines relating to the multi-level protection scheme and
any other future laws and regulations may entail significant expenses and could materially affect our business. For more detailed
discussion of this risk, please refer to “Risks Factors – Risks Related to Conducting Operations in PRC and Hong
Kong – Compliance with China’s new Data Security Law, Cybersecurity Review Measures, Personal Information Protection Law,
regulations and guidelines relating to the multi-level protection scheme and any other future laws and regulations may entail significant
expenses and could materially affect our business” on page 17. 
 
  

The approval of the CSRC (as defined below) or other Chinese regulatory
agencies may be required in connection with this offering under Chinese law. For more detailed discussion of this risk, please refer
to “Risks Factors – Risks Related to Conducting Operations in PRC and Hong Kong – The approval of the CSRC
or other Chinese regulatory agencies may be required in connection with this offering under Chinese law” on page 16. 
 
  

We have entered into land use right assignment transaction with PRC
government authority and we may be subject to penalties for failure to fully comply with the contract thereunder. For more detailed
discussion of this risk, please refer to “Risks Factors – Risks Related to Conducting Operations in PRC and Hong
Kong – We have entered into land use right assignment transaction with PRC government authority and we may be subject to penalties
for failure to fully comply with the contract thereunder” on page 18. 
 
  

Failure to comply with regulations related to export of processed materials
may result in fines and legal or administrative actions. For more detailed discussion of this risk, please refer to “Risks
Factors – Risks Related to Conducting Operations in PRC and Hong Kong – Failure to comply with regulations related to
export of processed materials may result in fines and legal or administrative actions” on page 19. 
 
  

Any lack of requisite approvals, licenses, permits or filings or failure
to comply with any requirements of PRC laws, regulations and policies may materially and adversely affect our daily operations. For
more detailed discussion of this risk, please refer to “Risks Factors – Risks Related to Conducting Operations in
PRC and Hong Kong – Any lack of requisite approvals, licenses, permits or filings or failure to comply with any requirements
of PRC laws, regulations and policies may materially and adversely affect our daily operations” on page 19. 
 
  

We may be subject to additional contributions under various employee
benefits plans and late payments and fines imposed by relevant governmental authorities. For more detailed discussion of this risk,
please refer to “Risks Factors – Risks Related to Conducting Operations in PRC and Hong Kong – We may be subject
to additional contributions under various employee benefits plans and late payments and fines imposed by relevant governmental authorities”
on page 20. 
 
  

Failure to comply with PRC laws and regulations on employees’
overtime wages payment may expose us to potential compensations. For more detailed discussion of this risk, please refer to “Risks
Factors – Risks Related to Conducting Operations in PRC and Hong Kong – Failure to comply with PRC laws and regulations
on employees’ overtime wages payment may expose us to potential compensations” on page 21. 
 
  

Existing
and future environmental laws and regulations could result in increased compliance costs
or additional operating costs or construction costs and restrictions. Failure to comply with
such laws and regulations may result in substantial fines or other limitations that may adversely
impact our financial condition or results of operation. For more detailed discussion of this
risk, please refer to “Risks Factors – Risks Related to Conducting Operations
in PRC and Hong Kong – Existing and future environmental laws and regulations could
result in increased compliance costs or additional operating costs or construction costs
and restrictions. Failure to comply with such laws and regulations may result in substantial
fines or other limitations that may adversely impact our financial condition or results of
operation” on page 27.
 
 
  

Failure
to comply with regulations related to production safety may result in fines and legal or administrative actions. For more detailed
discussion of this risk, please refer to “Risks Factors – Risks Related to Conducting Operations in PRC and Hong
Kong – Failure to comply with regulations related to production safety may result in fines and legal or administrative actions”
on page 27. 

 
Risks Related to Our Business and Industry

 

 

We
rely on raw materials supplied by our suppliers for the production of our products which exposes us to risk of production shortages
and fluctuations in prices of raw materials. 
 
  

If
we fail to adopt new technologies or develop new manufacturing technologies or adapt our products to evolving customer requirements,
our business may be materially and adversely affected. 
 
  

We
recorded a negative cash flow for the year ended December 31, 2021, which may continue
in the future. 
 
  

We
may incur losses in the future. 
 
  

Our
production capacity may not correspond precisely to our production demands, and intended economic results may not be achieved if
there is any significant increase in production demand which exceeds our production capacity or any idle or unutilized production
capacity during any particular period. 
 
  

Our
success depends on our ability to attract, retain and motivate members of senior leadership, technical personnel and other employees. 
 
  

Our
failure to comply with data protection laws and regulations could lead to government enforcement
actions and significant penalties against us, and adversely impact our operating results. 
 
 Risks
Related to Our Corporate Structure
  

We
are a holding company and our sole material asset after completion of this offering will be our equity interest in our subsidiaries.
Accordingly, we will depend on distributions from our subsidiaries to pay dividends and cover our corporate and other expenses. 
 
  

The audit work on our PRC subsidiaries
may not be inspected or investigated completely by the PCAOB and our ordinary shares may be prohibited from being traded on a national
exchange under the HFCAA if the PCAOB is unable to inspect our auditor for three consecutive years beginning in 2021. The delisting
of our ordinary shares, or the threat of being delisted, may materially and adversely affect the value of your investment.
 
 
  

We
may rely on dividends and other distributions on equity paid by our PRC subsidiaries
to fund any cash and financing requirements 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.
 
Risks
Related to Doing Business in Taiwan
  

We
face economic and political risks associated with doing business in Taiwan, particularly due to the geopolitical tension between
Taiwan and China that could negatively affect our business and hence the value of your investment. 
 
  

The
imposition of foreign exchange restrictions in Taiwan may have an adverse effect on foreign investors’ abilities to acquire
securities of a Taiwan company, including the shares of our subsidiaries in Taiwan, or to repatriate the interest, dividends or sale
proceeds from those securities. 

Risks
Related to this Offering and Ownership of Our Ordinary Shares
  

The
recent joint statement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and
the HFCAA all call for additional and more stringent criteria to be applied to emerging market
companies upon assessing the qualification of their auditors, especially the non-U.S. auditors
who are not inspected by the PCAOB. In September 2021, the PCAOB adopted a new rule to provide
a framework for its determinations under the HFCAA that the PCAOB is unable to inspect or
investigate completely registered public accounting firms located in a foreign jurisdiction
because of a position taken by one or more authorities in that jurisdiction. In addition,
in June 2021, the Senate passed the Accelerating Holding Foreign Companies Accountable Act
which, if signed into law, would reduce the time period for the delisting of foreign companies
under the HFCAA to two consecutive years, instead of three. If the Accelerating Holding
Foreign Companies Accountable Act is enacted into law and the PCAOB determined that it is
unable to inspect or investigate completely our auditor because of a position taken
by an authority in a foreign jurisdiction for two consecutive years, our securities could
be prohibited from trading. Trading in our securities may be prohibited under the HFCAA if the PCAOB determines that it cannot inspect or investigate
completely our auditor, and as a result an exchange (i.e. the Nasdaq) may determine to delist
our securities. On December 16, 2021, the PCAOB issued a report on its determinations that
the PCAOB is unable to inspect or investigate completely PCAOB-registered public accounting
firms headquartered in mainland China and in Hong Kong. Our auditor, PricewaterhouseCoopers,
Taiwan, is headquartered in Taipei, Taiwan and is not subject to the determinations announced
by the PCAOB on December 16, 2021.
 
 
  

There
has been no public market for our ordinary shares prior to this offering, and you may not be able to resell our ordinary shares at
or above the price you paid, or at all.  
 
  

Nasdaq
may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities
and subject us to additional trading restrictions.

 

 

Legal
and Operational Risks Related to Operations in PRC
 
We conduct certain operations through our subsidiaries in PRC and we also have direct and indirect wholly-owned subsidiaries with some
operations in the PRC, which may subject us to certain laws and regulations in the PRC. The Chinese government has exercised and continues
to exercise substantial control over virtually every sector of the Chinese economy through regulations and state ownership. Our ability
to conduct business may be harmed by changes in its laws and regulations, including those relating to taxation, environmental regulations,
property and other matters. Also, economic, political and legal developments in the PRC will affect our business, financial condition,
results of operations and prospects. Policies, regulations, rules, and the enforcement of laws of the PRC government can have significant
effects on economic conditions in the PRC and the ability of business to operate profitably. Our ability to operate profitably in the
PRC may be adversely affected by changes in policies by the PRC government, including changes in laws, regulations or their interpretation,
particularly those dealing with the Internet, including censorship and other restriction on material which can be transmitted over the
Internet, security, intellectual property, money laundering, taxation and other laws that affect our ability to operate our business
in China. As such, these may result in a material change in our operations and/or the value of the securities we are registering for
sale or could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the
value of such securities to significantly decline or be worthless.

 

Regulatory Actions and Statements to Regulate Business Operation
in PRC
 
We are aware that recently, the Chinese government
initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice, including
cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using
VIE structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement.
Since these regulatory actions and statements are new, it is highly uncertain how soon legislative or administrative regulation making
bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or
promulgated, if any, and the potential impact such modified or new laws and regulations will have on our business operations in China,
the ability to accept foreign investments and list on a U.S. or other foreign exchange. Although currently our business of carbon fiber
composite products is not affected under these regulatory actions, however, if the legislative or administrative regulation making bodies
change their focus to the sector which we operate in, it may impact our ability to conduct our business, accept foreign investments,
or list on a U.S. or other foreign exchange. Any future action by the Chinese government expanding the categories of industries and companies
whose foreign securities offerings are subject to government review could significantly limit or completely hinder our ability to offer
or continue to offer securities to investors and could cause the value of such securities to significantly decline or be worthless. For
a detailed description of the risks related to doing business in the PRC and Taiwan, and the offering, see “Risks Related to
Conducting Operations in PRC and Hong Kong”, “Risks Related to Doing Business in Taiwan” and
“Risks Related to this Offering and Ownership of Our Ordinary Shares” in the Risk Factors section.
 
PRC Approvals
 
On
July 6, 2021, the relevant Chinese government authorities published the Opinions on Strictly Cracking Down Illegal Securities Activities
in Accordance with the Law. These opinions call for strengthened regulation over illegal securities activities and increased supervision
of overseas listings by China-based companies, and propose to take effective measures, such as promoting the construction of relevant
regulatory systems to regulate the risks and incidents faced by China-based overseas-listed companies. As of the date of this prospectus,
no official guidance or related implementation rules have been issued in relation to these recently issued opinions and the interpretation
and implementation of these opinions remain unclear at this stage. On December
24, 2021, the State Council published the Provisions on the Administration of Overseas Securities Offering and Listing by Domestic Companies
(draft for consultation, “Draft
Administration Provisions”),
as well as the Administrative Measures for the Filing of Overseas Securities Offering and Listing by Domestic Companies (draft for consultation,
“Draft Administration Measures”). Under the Draft Administration Provisions, a filing-based regulatory system will be introduced
to cover both direct and indirect overseas issuance and listing of securities. The Draft Administration Measures further provide the
scope of activities subject to the filing requirement, and relevant criteria for determining whether an activity falls within the scope.
Pursuant to the Draft Administration Measures, the determination as to whether a PRC domestic company is indirectly offering and listing
securities in an overseas market shall be made on a substance over form basis. If the issuer meets the following conditions, the offering
and listing shall be determined as an indirect overseas offering and listing by a domestic company: (1) the total assets, net assets,
revenues or profits of the domestic operating entity of the issuer in the most recent accounting year account for more than 50% of the
corresponding figure in the issuer’s audited consolidated financial statements for the same period; and (2) the senior management
in charge of business operation and management of the issuer are mostly Chinese citizens or have domicile in China, and the issuer’s
main places of business are located in China or main business activities are conducted in China. The Draft Administration Provisions
and the Draft Administration Measures were released for public comment only, and the draft provisions and anticipated adoption or effective
date are subject to changes and thus its interpretation and implementation remain substantially uncertain.
 
As a holding company with no material operations
of our own, our operations are conducted through our subsidiaries in the PRC, Taiwan, Hong Kong and Samoa with our headquarters in Taiwan,
which may subject us to certain laws and regulations in China. Our business is subject to various government regulations and regulatory
interference. As of the date of this prospectus, we have been advised by L&L-Leaven, Attorneys-at-Law, our counsel as to PRC law,
that each of our PRC subsidiaries has received all requisite permissions and approvals from the Chinese authorities for the operation
of our business in the PRC, including but not limited to the business license from the State Administration for Market Regulation (“SAMR”),
sewage discharge permits, pollution discharge registration of stationary pollution source, customs registration certificate for customs
declaration entities, record-filing form for entry exit inspection and quarantine for declaration enterprise, food operation permit,
and those with respect to environment protection and fire safety inspection, as applicable, and such permissions and approvals are valid
and have not been revoked. Based on the PRC laws and regulations currently effective, we have been advised by L&L-Leaven, Attorneys-at-Law
that we, including our subsidiaries, are not subject to any pre-approval requirement, filing or reporting from Chinese authorities, including
the China Securities Regulatory Commission, or CSRC, or Cybersecurity Administration Committee, or CAC, to conduct this offering or list
on U.S. exchanges or issue securities to foreign investors or to obtain any further permissions to conduct our current business in the
PRC in addition to the permits currently held by us to operate our general business activities. Nevertheless, we may incur increased
costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply. Furthermore, given
recent statements by the Chinese government indicating an intent to exert more oversight and control over offerings that are conducted
overseas and there are uncertainties with respect to the Chinese legal system and changes in laws, regulations and policies, including
how those laws and regulations will be interpreted or implemented, although as of the date of this prospectus, we have not been involved
in any investigations initiated by the applicable government regulatory authorities, nor have we received any inquiry, notice, warning
or sanction in such respect, it is uncertain whether or when we might be subject to such requirements, permission and approval from any
related PRC government to list our shares on Nasdaq in the future. If approval is required in the future and we were denied permission
from Chinese authorities to list on U.S. exchanges, we will not be able to continue listing on U.S. exchange or it may adversely affect
our business and results of operation, which would materially affect the interest of the investors. It is uncertain when and whether
the Company will be required to obtain permission from the PRC government to continue to list on U.S. exchanges or to conduct our
current business in the future, and even when such permission is obtained, whether it will be denied or rescinded. Although we are advised
by L&L-Leaven, Attorneys-at-Law, that we are currently not required to obtain any pre-approval requirement from any of the PRC central
or local government and we have not received any denial to conduct this offering, to list on the U.S. exchange or to conduct our current
business, our operations may be adversely affected in the future, directly or indirectly, by existing or future PRC laws and regulations
if PRC regulatory authorities do not take the same view as us. We could be subject to additional requirements that we obtain pre-approval
or fulfill the filing and reporting obligation to pursue this offering or any future offerings from the CSRC and potentially other regulatory
authorities. Although we believe, that CSRC’s approval is not required for the listing and trading of our ordinary shares on Nasdaq
in the context of this offering, we cannot assure you that relevant PRC governmental agencies, including the CSRC, would reach the same
conclusion as we do. If the CSRC or other regulatory agencies later promulgate new rules or explanations requiring that we obtain their
approvals for this offering and any follow-on offering, we may be unable to obtain such approvals which could significantly limit or
completely hinder our ability to offer or continue to offer securities to our investors. The CSRC or other PRC regulatory agencies may
also take actions requiring us, or making it advisable for us, to halt this offering before the settlement and delivery of the ordinary
shares that we are offering. Consequently, if you engage in market trading or other activities in anticipation of and prior to the settlement
and delivery of the ordinary shares we are offering, you would be doing so at the risk that the settlement and delivery may not occur.
Any uncertainties or negative publicity regarding such approval requirements could have a material adverse effect on our ability to complete
this offering or any follow-on offering of our securities or the market for and market price of our ordinary shares. However, currently,
we are not required to obtain additional permission or approval from Chinese authorities, including the CSRC and the CAC, to either approve
our PRC subsidiaries’ operation or to offer the securities being registered to foreign investors. For more detailed information,
see “Risk Factors — Risks Related to Conducting Operations in PRC and Hong Kong — The approval of the CSRC or
other Chinese regulatory agencies may be required in connection with this offering under Chinese law,” “Risks
Factor — Risks Related to Conducting Operations in PRC and Hong Kong — The Chinese government
may exercise significant oversight and discretion over the conduct of business in the PRC and may intervene in or influence our operations
at any time, which could result in a material change in our operations and/or the value of our securities. We are also currently not
required to obtain any pre-approval or fulfill the filing and reporting obligations from or to Chinese authorities to list on U.S. exchanges,
however, if we are required to obtain approval in the future and are denied permission from Chinese authorities to list on U.S. exchanges,
we will not be able to continue listing on U.S. exchange, which would materially affect the interest of the investors”
and “Risks Factors — The Chinese government may intervene in or influence our business operations at any
time or may exert more control over offerings conducted overseas and foreign investment in China based issuers, which could result in
a material change in our business operations and significantly and adversely impact the value of our securities. Additionally,
the governmental and regulatory interference could significantly limit or completely hinder our ability to offer or continue to offer
securities to investors and cause the value of such securities to significantly decline or be worthless.”
 
However,
to operate our general business activities currently conducted in China, each of our PRC subsidiaries is required to obtain a
business license from the SAMR. Each of our PRC subsidiaries has obtained
a valid business license from the SAMR, and no application for any such license has been denied. Further, to operate our general
business activities currently conducted in China, our relevant PRC subsidiaries are also required to obtain other permits from
the PRC government, including sewage discharge permits, pollution discharge registration of stationary pollution source, customs registration
certificate for customs declaration entities, record-filing form for entry-exit inspection and quarantine for declaration enterprise,
food operation permit, and those with respect to environment protection and fire safety inspection, as applicable. Our PRC subsidiaries
have obtained the foregoing permits applicable to them and no application for such permits has been denied.
 

  
Proposed PRC
Cybersecurity Measures
 

The
amendment to the Cybersecurity Review Measures published
by CAC on December 28, 2021, which has become effective on February 15, 2022 replaced the former Cybersecurity Review Measures. On November 14, 2021, the CAC released a draft of the Administrative Regulations on
Network Data Security, or Draft Regulations, for public comments. The amended Cybersecurity Review Measures stipulate that, among other
items, if an issuer is classified as a “network platform operator” and such issuer possesses personal information of more
than one million users and intends to be listed on a securities exchange in a foreign country, it must complete a cybersecurity review.
Alternatively, relevant governmental authorities in China may initiate a cybersecurity review if such governmental authorities determine
an operator’s cyber products or services, data processing or potential listing in a foreign country affect or may affect national
security. The Draft Regulations also stipulate that, among other items, for any listing to be done on a securities exchange in a foreign
country involving a “data processing operator” with personal information of more than one million users, such “data
processing operator” shall report to the CAC for a cybersecurity review. The Draft Regulations were released for public comment
only, and the draft provisions and anticipated adoption or effective date are subject to changes and thus its interpretation and implementation
remain substantially uncertain. We cannot predict the impact of the draft measures, if any, on the operations of our Company at this
stage.
 
“Data
processing operators” is defined under the Draft Regulations as “any individual or organization that autonomously determines
the purpose and manner of the processing of network data” and “network platform operators” is not defined under the
amended Cybersecurity Review Measures. While the exact scope of “network platform” and “data processing operators”
remains unclear, the Chinese government authorities may have wide discretion in the interpretation and enforcement of these laws. Currently,
the draft amended Cybersecurity Review Measures and the Draft Regulations have not materially affected our business and operations and
we do not believe our business activities affect or may be interpreted to affect PRC’s national security. We have been advised
by L&L-Leaven, Attorneys-at-Law, our counsel as to PRC law, that we are not subject to pre-approval requirement, filing or reporting
from CAC to conduct this offering or list on U.S. exchanges or issue securities to foreign investors. As of the date of this prospectus,
we have not been informed by any relevant Chinese government authorities that we are identified as or considered a “network platform
operator” or “data processing operator.” We are not aware of any requirement that we should file for a cybersecurity
review, nor have we received any inquiry, notice, warning, sanction in such respect or any regulatory objections to this offering. However,
in anticipation of the strengthened implementation of cybersecurity laws and regulations, there can be no assurance that we will not
be deemed as a network platform operator or data processing operator under the Chinese cybersecurity laws and regulations in the future,
or that the amended Cybersecurity Review Measures and the Draft Regulations will not be further amended or other laws or regulations
will not be promulgated to subject us to the cybersecurity review or other compliance requirements. In such case, we may face challenges
in addressing such enhanced regulatory requirements. For additional information, see “Risk Factors––Risks related
to Our Business and Industry—Our failure to comply with data protection laws and regulations could lead to government enforcement
actions and significant penalties against us, and adversely impact our operating results,” “Risk Factors — Risks
Related to Conducting Operations in PRC —Compliance with China’s new Data Security Law, Cybersecurity Review Measures, Personal
Information Protection Law, regulations and guidelines relating to the multi-level protection scheme and any other future laws and regulations
may entail significant expenses and could materially affect our business,” and “Risk Factors — Risks Related
to Conducting Operations in PRC and Hong Kong — The approval of the CSRC or other Chinese regulatory agencies may be required
in connection with this offering under Chinese law.”

 

History
and Corporate Structure
 
Our
History
 
Our
Predecessor Group commenced wood composite manufacturing and sports equipment processing business in 1970 and was one of the earliest
private enterprises to manufacture wood composite in Taiwan. However, due to changes in the product development in the sporting goods
industry with higher product requirements on the weight-saving, endurance and stiffness, our Predecessor Group gradually shifted the
focus from wood composite manufacturing to carbon composite product manufacturing since 1980. Our Predecessor Group launched the carbon
composite business line in 1980, targeting sporting goods, such as rackets. In 2005, our Predecessor Group launched the bicycle business
line in order to expand our scope of carbon composite sporting goods to sports bicycle. In 2017, we produced our first electric bicycle
frame. In 2018, in light of the prevalence of and favorable government policies on electric bicycle around the world, while continuing
our development and sales of sports bicycle, we have in parallel strategically expanded further on the development and production of
electric bicycle. We also developed our first carbon fiber robotic arm and other health care products in 2018. In 2019, we expanded our
R&D team on the design and production of electric bicycle by addition of personnel. Through our R&D centers in Taiwan and the
PRC, we have continued to upgrade and enhance our material technology, product structural design and production process technology, in
order to uplift our product quality, product performance, production efficiency and expand our product spectrum.
 
Corporate
Structure
 
On May 24, 2016, J-Star Holding Co., Ltd. (“J-Star”)
was incorporated as an exempted company with limited liability under the laws of the Cayman Islands as our holding company. J-Star directly
holds all the share capital of (i) Goal Beyond Limited (“Goal Beyond”), which is an International Company incorporated in
Samoa on April 13, 2016, (ii) Star Leader Trading Limited (“Star Leader Trading”), which was incorporated in Hong
Kong on May 30, 2016 as a limited company, and (iii) Bohong Technology, which was incorporated in the PRC on October 9, 2018. Our wholly
owned subsidiary Goal Beyond, in turn, holds all the share capital of (i) YMA Corporation (“TW YMA”), which was incorporated
in Taiwan on July 17, 2015, (ii) Time Yield Limited (“Time Yield”), which was incorporated in Samoa on January 30, 2013,
(iii) YMA Composite Materials (DG) Co., Ltd. (“Dongguan YMA”), which was incorporated in the PRC on September 30,
2018, and (iv) Forwell Sports Equipment Co., Ltd. (“Dongguan Forwell”), which was incorporated in the PRC on December
5, 2003.

 

 

Organizational
Structure and Cash Flow
 
The
following diagram depicts our current corporate structure. As of the date of this prospectus, the shares of each of our subsidiaries
are 100% owned by the respective entity displayed immediately above that subsidiary. Currently, our corporate structure contains no variable
interest entities (“VIE”) and we do not intend to enter into any contractual arrangements to establish a VIE structure with
any entity in the PRC. For the defined term of each subsidiary of our Group, please refer to the paragraph headed “Prospectus
Summary – History and Corporate Structure – Corporate Structure”.
 

 
our subsidiaries with earnings.
our non-operating subsidiaries as of the date of this prospectus.
 
Within
the organization, approximately 80% of our customer cash inflows have been received by Star Leader Trading, our order-taking subsidiary
in Hong Kong, and approximately 20% of our customer cash inflows have been received by TW YMA, our subsidiary in Taiwan. Two of our subsidiaries
in the PRC, Dongguan YMA and Dongguan Forwell, are involved in providing supportive services to the Group, mainly manufacturing of products,
and they do not have any sales to external customers. Time Yield is our subsidiary in Samoa mainly involved in the supportive services
of procurement of raw material and it does not have any sales to external customers. As of the date of this prospectus, our subsidiaries
in Samoa and the PRC, Goal Beyond and Bohong Technology, does not have any operating business activities.
 
Our Hong Kong subsidiary purchases goods and
services from our Taiwan subsidiary and then pay into our operating PRC subsidiaries; or directly from our Taiwan subsidiary to our PRC
subsidiaries, and from our operating PRC subsidiaries to Time Yield, through payments on the goods and services provided by the relevant
entities. As such, our Hong Kong subsidiary, PRC subsidiaries and/or Samoa subsidiary are funded by its own cash inflows or by our
Taiwan subsidiary. As of the date of this prospectus, none of our subsidiaries have ever faced difficulties or limitations on the ability
to transfer cash to another subsidiary. We have implemented cash management policies for all of our subsidiaries, which require the relevant
financial staff to verify that the relevant documents issued by the requesting staff with the approval of the competent supervisor are
qualified, and then transfer the payment to the cashier upon competent supervisor of the relevant financial staff. Any voucher will
be stamped after payment and the payee will sign the request for payment as receipt. In addition, all payments shall be made by remittance,
crossed and stamped non-endorsed transfer cheques except for certain specified cash payables. When transferring any inter-group funds,
the cash management procedures is the same as the cash management policies for external payment as set out above.
  
The
following are the aggregate intra-group cash flow for the years ended December 31, 2020 and 2021:
 

 From  
To 
For the Year Ended December 31, 2020  
For the Year Ended December 31, 2021 Star Leader Trading 
TW YMA 
$17,848,000  
$29,912,500 Star Leader Trading 
Time Yield 
$260,000  
$630,000 TW YMA 
Star Leader Trading 
$-  
$990,000 TW YMA 
Dongguan YMA 
$10,850,000  
$15,547,000 TW YMA 
Dongguan Forwell 
$2,739,000  
$9,872,000 Dongguan YMA 
Time Yield 
$-  
$574,000 Dongguan Forwell 
Time Yield 
$714,800  
$1,855,000  

Dividends
and other distributions
 
J-Star
was incorporated in Cayman Islands on May 24, 2016, to be the ultimate parent company of the Group. As a holding company with no
material operations of our own, our operations are conducted through our subsidiaries in the PRC, Taiwan, Hong Kong and Samoa with
our headquarters in Taiwan. Our operations in the PRC may also subject us to certain laws and regulations in China. J-Star is permitted under
the laws of Cayman Islands to provide funding to our subsidiaries in Taiwan, Hong Kong and Samoa through loans or capital
contributions without restrictions on the amount of the funds provided such arrangement is in the best interests of the
Company.
 
Our
operating subsidiaries in Hong Kong and Taiwan are permitted under the laws of Hong Kong and Taiwan, respectively, to provide direct
or indirect funding to J-Star, the holding company incorporated in the Cayman Islands, through dividend distributions. Our Group
currently intend to retain all available funds and future earnings, if any, for the operation and expansion of our business and do
not anticipate declaring or paying any dividends in the foreseeable future. We also intend to settle amounts owned under our
operating structure through bank loans and loans from related parties. We currently do not have any dividend policy, and any future
determination will be made at the discretion of our board of directors after considering our financial condition, results of
operations, capital requirements, contractual requirements, business prospects and other factors the board of directors deems
relevant, and subject to the restrictions contained in any future financing instruments.
 

 
Subject
to the Companies Act (2022 Revision) of the Cayman Islands and our Amended and Restated Memorandum and Articles of Association,
our board of directors may authorize and declare a dividend to shareholders (including shareholders who are based in the U.S.) from time
to time out of the profits from the Company, realized or unrealized, or out of the share premium account, provided that the Company will
remain solvent, meaning the Company is able to pay its debts as they come due in the ordinary course of business. There is no further
Cayman Islands statutory restriction on the amount of funds which may be distributed by us in the form of dividends.
 
In
or around July 2017, J-Star declared NTD 61.5 million (approximately $2.2 million) of dividends to the then shareholders. For the years
ended December 31, 2020 and 2021, we did not pay any dividends to our shareholders. As of the date of this prospectus, neither
we nor any of our subsidiaries have ever paid dividends or made distributions to U.S. investors. Save as disclosed, there were no
other transfers, dividends or distributions which have been made between our holding company, our subsidiaries or to our investors.
If we determine to pay dividends on any of our ordinary shares in the future, as a holding company, we will be dependent on
receipt of funds from our operating subsidiaries in Hong Kong and Taiwan. Under the current practice of the Inland Revenue Department
of Hong Kong, no tax is payable in Hong Kong in respect of dividends paid by us, and under the current laws of Taiwan, dividends (whether
in cash or shares) declared by TW YMA out of its retained earnings and distributed to Goal Beyond are subject to Taiwan withholding tax,
currently at the rate of 21% on the amount of the distribution (in the case of cash dividends) or on the par value of the shares (in
the case of stock dividends).
 
There
are no restrictions or limitations under the laws of Hong Kong imposed on the conversion of HK dollar into foreign currencies and the
remittance of currencies out of Hong Kong, nor is there any restriction on any foreign exchange to transfer cash between the Company
and its subsidiaries, across borders and to investors outside of PRC, nor is there any restrictions and limitations to distribute earnings
from the subsidiaries, to the Company and investors outside of PRC and amounts owed. There are no exchange controls in Cayman Islands.
 
All
cash dividends declared and payable on the shares of TW YMA may be paid by TW YMA to Goal Beyond (as a foreign corporate shareholder)
in New Taiwan dollars that, so long as Goal Beyond maintains its status as a foreign investor as approved by the Investment Commission
of Taiwan, may be converted into foreign currency and freely transferred out of Taiwan without the necessity of obtaining any additional
Taiwan governmental approvals.
 
Under
current Taiwan Foreign Exchange Control Law and regulations, foreign currency earned from exports of merchandise and services may be
retained and used freely by exporters, and all foreign currency needed for the importation of merchandise and services may be purchased
freely from the designated foreign exchange banks. Apart from trade-related or service-related foreign exchange transactions, Taiwan
companies may, without foreign exchange approval, remit to and from Taiwan foreign currency in each calendar year of up to US$50 million
(or such other amount as determined by Taiwan’s Central Bank from time to time at its discretion in consideration of Taiwan’s
economic and financial conditions or the needs to maintain the order of foreign exchange market in Taiwan). The above limits apply to
remittances involving either a conversion of New Taiwan dollars into a foreign currency or a conversion of foreign currency into New
Taiwan dollars. For further details, please refer to “Regulations – Regulations in Taiwan – Regulations Relating
to Foreign Exchange”.
 
Although
we did not rely on our PRC subsidiaries in dividend and other distributions on equity in the past, we may rely on dividends and
other distributions on equity paid by our PRC subsidiaries for our cash and financing requirements in the future, including the
funds necessary to pay dividends and other cash distributions to our shareholders or to service any debt we may incur. If any of our
PRC subsidiaries incur debt on its own behalf in the future, the instruments governing such debt may restrict their ability to
pay dividends to us. To date, there have not been any such dividends or other distributions from our PRC subsidiaries to our subsidiaries
located outside of China. In addition, save as disclosed above, as of the date of this prospectus, none of our subsidiaries have
ever issued any dividends or distributions to us or their respective shareholders outside of China. As of the date of this prospectus,
neither we nor any of our subsidiaries have ever paid dividends or made distributions to U.S. investors. In the future, cash proceeds
raised from overseas financing activities, including this offering, may be transferred by us to our PRC subsidiaries via capital
contribution or shareholder loans, as the case may be.
 

 
According
to the Foreign Investment Law of the People’s Republic of China and its implementing rules, which jointly established the legal
framework for the administration of foreign-invested companies, a foreign investor may, in accordance with other applicable laws, freely
transfer into or out of China its contributions, profits, capital earnings, income from asset disposal, intellectual property rights
royalties acquired, compensation or indemnity legally obtained, and income from liquidation, made or derived within the territory of
China in RMB or any foreign currency, and any entity or individual shall not illegally restrict such transfer in terms of the currency,
amount and frequency. According to the Company Law of the People’s Republic of China and other Chinese laws and regulations, our
PRC subsidiaries may pay dividends only out of their respective accumulated profits as determined in accordance with Chinese accounting
standards and regulations. In addition, each of our PRC subsidiaries is required to set aside at least 10% of its accumulated
after-tax profits, if any, each year to fund a certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of
its registered capital. Where the statutory reserve fund is insufficient to cover any loss the Chinese subsidiary incurred in the previous
financial year, its current financial year’s accumulated after-tax profits shall first be used to cover the loss before any statutory
reserve fund is drawn therefrom. Such statutory reserve funds and the accumulated after-tax profits that are used for covering the loss
cannot be distributed to us as dividends. At their discretion, our PRC subsidiaries may allocate a portion of their after-tax
profits based on Chinese accounting standards to a discretionary reserve fund.
 
Renminbi
is not freely convertible into other currencies. As result, any restriction on currency exchange may limit the ability of our PRC subsidiaries
to use their potential future renminbi revenues to pay dividends to us. The Chinese government imposes controls on the convertibility
of renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. Shortages in availability of foreign
currency may then restrict the ability of our PRC subsidiaries to remit sufficient foreign currency to our offshore entities for our
offshore entities to pay dividends or make other payments or otherwise to satisfy our foreign-currency-denominated obligations. The renminbi
is currently convertible under the “current account,” which includes dividends, trade and service-related foreign exchange
transactions, without the need of the approval of the State Administration of Foreign Exchange of China (“SAFE”). By contrast,
the renminbi under the “capital account,” which includes foreign direct investment and foreign currency debt, including loans
we may secure for our onshore subsidiaries, may be converted into other currencies upon the approval of the SAFE and the conversion is
also subject to other restrictions or limitations, e.g., control of a Chinese entity’s foreign debt quota. Currently, our PRC subsidiaries
may purchase foreign currency for settlement of “current account transactions,” including payment of dividends to us, without
the approval of the SAFE by complying with certain procedural requirements. However, the relevant Chinese governmental authorities may
limit or eliminate our ability to purchase foreign currencies in the future for current account transactions. The Chinese government
may continue to strengthen its capital controls, and additional restrictions and substantial vetting processes may be instituted by SAFE
for cross-border transactions falling under both the current account and the capital account. Any existing and future restrictions on
currency exchange may limit our ability to utilize revenue generated in renminbi to fund our business activities outside of China or
pay dividends in foreign currencies to holders of our securities. Foreign exchange transactions under the capital account remain subject
to limitations and require approvals from, or registration with, SAFE and other relevant Chinese governmental authorities. This could
affect our ability to obtain foreign currency through debt or equity financing for our subsidiaries. See “Risks Related to Conducting
Operations in PRC and Hong Kong —We may rely on dividends and other distributions on equity paid by our PRC subsidiaries
to fund any cash and financing requirements 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” for a detailed discussion of the Chinese
legal restrictions on the payment of dividends and our ability to transfer cash within our group. In addition, shareholders may potentially
be subject to Chinese taxes on dividends paid by us in the event we are deemed a Chinese resident enterprise for Chinese tax purposes.
See “Taxation— People’s Republic of China Taxation” for more details.

  

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

 

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

for
interim reporting, we are permitted to comply solely with our home country requirements, which are less rigorous than the rules that
apply to domestic public companies; 
 
  

we
are not required to provide the same level of disclosure on certain issues, such as executive compensation; 
 
  

we
are exempt from provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information; 
 
  

we
are not required to comply with the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations
in respect of a security registered under the Exchange Act; and 
 
  

we
are not required to comply with Section 16 of the Exchange Act requiring insiders to file public reports of their share ownership
and trading activities and establishing insider liability for profits realized from any “short-swing” trading transaction. 

 
Implications
of Being an Emerging Growth Company
 
As
a company with less than US$1.07 billion in revenue for the last fiscal year, we qualify as an “emerging growth company”
pursuant to the Jumpstart Our Business Startups Act of 2012 (as amended by the Fixing America’s Surface Transportation Act of
2015) (the “JOBS Act”). An emerging growth company may take advantage of specified reduced reporting and other
requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor
attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, in the assessment of the emerging
growth company’s internal control over financial reporting. The JOBS Act also provides that an emerging growth company that
prepares its financial statements in accordance with generally accepted accounting principles in the United States (“U.S.
GAAP”), does not need to comply with any new or revised financial accounting standards until such date that a private company
is otherwise required to comply with such new or revised accounting standards. Because we prepare our financial statements in
accordance with International Financial Reporting Standards (“IFRS”), we are unable to take advantage of the
aforementioned provision.
 

We
may take advantage of these provisions until the last day of our fiscal year following the fifth anniversary of the date of the first
sale of our ordinary shares pursuant to this offering. However, if certain events occur before the end of such five-year period, including
if we become a “large accelerated filer,” our annual gross revenues exceed $1.07 billion or we issue more than $1.0 billion
of non-convertible debt in any three-year period, we will cease to be an emerging growth company before the end of such five-year period.
 
In
addition, Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition
period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised
accounting standards. The extended transition period provision only applies to companies preparing
financial statements under U.S. GAAP. Because we prepare our financial statements in accordance with IFRS, we are unable to take advantage
of the aforementioned provision.
 
We
will remain an emerging growth company until the earliest of (i) the last day of our fiscal year during which we have total annual gross
revenues of at least US$1.07 billion; (ii) the last day of our fiscal year following the fifth anniversary of the completion of this
offering; (iii) the date on which we have, during the previous three year period, issued more than US$1.0 billion in non-convertible
debt; or (iv) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act, which would occur
if the market value of our ordinary shares that are held by non-affiliates exceeds US$700 million as of the last business day of our
most recently completed second fiscal quarter and we have been publicly reporting for at least 12 months. Once we cease to be an emerging
growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.
 
Corporate
Information
 
Our
principal executive offices in Taiwan are located at 7F-1, No. 633, Sec. 2, Taiwan Blvd., Xitun District, Taichung City 407, Taiwan (R.O.C.).
Our telephone number at this address is +886-423229900. Our registered agent in Cayman Islands is Portcullis (Cayman) Ltd of The Grand
Pavilion Commercial Centre, Oleander Way, 802 West Bay Road, P.O. Box 32052, Grand Cayman, KY1-1208, Cayman Islands. Investors should
submit any inquiries to the address and telephone number of our principal executive offices.
 
Our
principal website is www.ymaunivers.com. The information contained on this website is not a part of this prospectus. Our agent for service
of process in the United States is Puglisi & Associates, located at 850 Library Avenue, Suite 204, Newark, Delaware 19711.
 
Conventions
that Apply to this Prospectus
 
This
prospectus contains information and statistics relating to Taiwan and the PRC’s economy and the industries in which we operate
derived from various publications issued by market research companies and Taiwan and the PRC governmental entities, which have not been
independently verified by us, the underwriters or any of our affiliates or advisers including Frost & Sullivan, an independent
market research and consulting firm with respect to information on the global carbon fiber industry, global carbon fiber bicycle parts
industry, global carbon fiber racket parts industry and other carbon fiber sectors industry. The information in such sources may not
be consistent with other information compiled in or outside Taiwan and the PRC.
 
Unless
otherwise noted, all translations from NTD to U.S. Dollars and from U.S. Dollars to NTD or from RMB to U.S. Dollars and from U.S.
Dollars to RMB in this prospectus are made at a rate of NTD27.91 to US$1.00 and RMB6.46 to US$1.00, respectively, the exchange
rate in effect as of June 30, 2021 as set forth in the H.10 statistical release of The Board of Governors of the Federal Reserve
System. We make no representation that any NTD or RMB or U.S. Dollar amounts or could have been, or could be, converted into U.S.
dollars or NTD or RMB, as the case may be, at any particular rate, or at all.
 

 

The
Offering
 
Shares
being offered:
5,250,000
ordinary shares on a firm commitment basis. 
 Initial
offering price:
$4.00
per share. 
 Number
of ordinary shares outstanding before the offering:
15,762,887 ordinary shares are outstanding as
of May 31, 2022. 
 Number
of ordinary shares outstanding after the offering:
21,012,887
ordinary shares (or 21,800,387 ordinary
shares if the underwriters exercise their over-allotment option in full). 
 Underwriters
over-allotment option:
We
have granted the underwriters an option for a period of up to 45 days to purchase up to 787,500 additional ordinary shares. 
 Use
of proceeds:
We
expect that we will receive net proceeds of approximately US$19,065,000 from this
offering or approximately US$21,947,250 if the underwriters exercise their over-allotment
option in full, assuming an initial public offering price of US$4.00 per share, after deducting
underwriting discounts and commissions and estimated offering expenses payable by us.
 
We
plan to use the net proceeds of this offering as follows:
 

    approximately 25% for acquiring and investing in production plant in the U.S. for the production of electric bicycle;
 
●     approximately
25% for purchasing equipment for our second production plant in Yangzhou, the PRC, for the production of key structural parts
of electric bicycle, robotic arms, automobile and prepreg material;
 

    approximately 15% for investment on electric bicycle and sports bicycle brands in Michigan State, the U.S.,  through acquisition,
joint venture and/or co-branding production;
 

    approximately 15% for establishing our R&D center in Houston, the U.S., for developing automation and advanced composite material
and chemical technologies;
 

   approximately 15% for general administration and working capital expansion; and
 

    approximately 5% for establishing our sales and administration office in Houston, the U.S., to closely work
with our office in Taiwan on U.S. market sales and expansion.
 
See
“Use of Proceeds.” 
 Lock-up:
We,
all of our directors and officers and certain 5% or greater shareholders have agreed with the underwriters not to sell, transfer
or dispose of, directly or indirectly, any of our ordinary shares or securities convertible into or exercisable or exchangeable for
our ordinary shares for a period of six (6) months from the date on which the trading of the ordinary shares on a National Securities
Exchange commences. See “Shares Eligible for Future Sale” and “Underwriting” for more information. 
 Listing:
We
have applied to have our ordinary shares listed on the Nasdaq Capital Market, or Nasdaq. We cannot guarantee that we will
be successful in listing our ordinary shares on the Nasdaq; however, we will not complete this offering unless we are so listed.
 
 Proposed
Nasdaq symbol:
YMAT 
 Risk
factors:
Investing
in our ordinary shares is highly speculative and involves a significant degree of risk. As an investor, you should be able to
bear a complete loss of your investment. You should carefully consider the information set forth in the “Risk Factors”
section. 

 
RISK
FACTORS
 
An
investment in our ordinary shares involves significant risks. You should carefully consider all of the information in this prospectus,
including the risks and uncertainties described below, before making an investment in our ordinary shares. Any of the following risks
could have a material adverse effect on our business, financial condition and results of operations. In any such case, the market price
of our ordinary shares could decline, and you may lose all or part of your investment.
 
Risks
Related to Conducting Operations in PRC and Hong Kong
 
A
downturn in the PRC or global economy, and economic and political policies of the PRC could materially and adversely affect our business
and financial condition.
 
We
conduct certain operations through our subsidiaries in the PRC and Hong Kong and we also have direct and indirect wholly-owned
subsidiaries with some operations in the PRC. Accordingly, our business, prospects, financial condition and results of operations may
be influenced to a significant degree by political, economic and social conditions in the PRC generally and by continued economic growth
in the PRC as a whole. The Chinese economy differs from the economies of most developed countries in many respects, including the amount
of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. While the Chinese
economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors
of the economy. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources.
Some of these measures may benefit the overall Chinese economy, but may have a negative effect on us.
 
Economic
conditions in China are sensitive to global economic conditions. Any prolonged slowdown in the global or Chinese economy may affect potential
clients’ confidence in financial market as a whole and have a negative impact on our business, results of operations and financial
condition. Additionally, continued turbulence in the international markets may adversely affect our ability to access the capital markets
to meet liquidity needs.
 
Uncertainties
with respect to the PRC legal system could adversely affect us.
 
We
conduct certain operations through our subsidiaries in PRC and Hong Kong and we also have direct and indirect wholly-owned subsidiaries
with some operations in the PRC. PRC companies are generally subject to laws and regulations applicable to foreign investments in China
and, in particular, laws and regulations applicable to wholly foreign-owned enterprises. The PRC legal system is based on statutes. Prior
court decisions may be cited for reference but have limited precedential value.
 
Since
1979, PRC legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments in
China. However, China has not developed a fully integrated legal system and recently enacted laws and regulations may not sufficiently
cover all aspects of economic activities in China. In particular, because these laws and regulations are relatively new, and because
of the limited volume of published decisions and their nonbinding nature, the interpretation and enforcement of these laws and regulations
involve uncertainties. In addition, the PRC legal system is based in part on government policies and internal rules (some of which are
not published on a timely basis or at all) that may have a retroactive effect. As a result, we may not be aware of our violation of these
policies and rules until sometime after the violation. In addition, any litigation in China may be protracted and result in substantial
costs and diversion of resources and management attention.
 
Changes
in the policies, regulations, rules, and the enforcement of laws of the PRC government may be quick with little advance notice and could
have a significant impact upon our ability to operate profitably in the PRC and may cause the value of our securities to significantly
decline or be worthless.
 
We
conduct certain operations through our subsidiaries in the PRC and Hong Kong, which may subject us to certain laws and regulations
in the PRC. Accordingly, economic, political and legal developments in the PRC will affect our business, financial condition, results
of operations and prospects. Policies, regulations, rules, and the enforcement of laws of the PRC government can have significant effects
on economic conditions in the PRC and the ability of businesses to operate profitably. Our ability to operate profitably in the PRC may
be adversely affected by changes in policies by the PRC government, including changes in laws, regulations or their interpretation, particularly
those dealing with the Internet, including censorship and other restriction on material which can be transmitted over the Internet, security,
intellectual property, money laundering, taxation and other laws that affect our ability to operate our business in China.
 
Additionally,
most of our production is currently conducted in PRC, and we are subject to certain legal and operational risks associated with our
PRC operating subsidiaries. We are aware of the recent regulatory actions and statements initiated by the PRC government to regulate
business operations in certain areas in PRC with little advance notice, such as regulatory actions targeting certain sectors of the
for-profit education sector and technology and gaming platforms that have a quantitatively significant number of users located in
PRC. There was also introduction of new legislative and regulatory proposals in PRC concerning data protection, see “Risk
Factors – Our failure to comply with data protection laws and regulations could lead to government enforcement actions and
significant penalties against us, and adversely impact our operating results”. Although our business of carbon fiber
composite products are not affected under these regulatory actions, it is highly uncertain if the legislative or administrative
regulation making bodies will change their focus to the sector which we operate in. It is also highly uncertain if, in the case we
are subject to new laws and regulations, it will result in a material change in our operations and/or the value of our securities or
if such modified or new laws and regulations could significantly limit or completely hinder our ability to offer or continue to
offer securities to investors and cause the value of our securities to significantly decline or be worthless.
 

 
The
Chinese government may exercise significant oversight and discretion over the conduct of business in the PRC and may intervene in or
influence our operations at any time, which could result in a material change in our operations and/or the value of our securities. We
are also currently not required to obtain any pre-approval or fulfill the filing or reporting obligations from or to Chinese authorities
to list on U.S. exchanges, however, if we are required to obtain approval in the future and are denied permission from Chinese authorities
to list on U.S. exchanges, we will not be able to continue listing on U.S. exchange, which would materially affect the interest of the
investors.
 
Since
our operations are conducted through our subsidiaries in the PRC, Taiwan, Hong Kong and Samoa with our headquarters in Taiwan, this may
subject us to certain laws and regulations in China. The Chinese government has exercised and continues to exercise substantial control
over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to conduct our current business
may be harmed by changes in its laws and regulations, including those relating to taxation, environmental regulations, property and other
matters. The central or local governments of these jurisdictions may impose new, stricter regulations or interpretations of existing
regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations.
Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return
to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant
effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then
hold in Chinese properties.
 
For
example, the Chinese cybersecurity regulator announced on July 2, 2021 that it had begun an investigation of Didi Global Inc. (NYSE: DIDI)
and two days later ordered that the company’s app be removed from smartphone app stores. On July 24, 2021, the General
Office of the Communist Party of China Central Committee and the General Office of the State Council jointly released the Guidelines
for Further Easing the Burden of Excessive Homework and Off-campus Tutoring for Students at the Stage of Compulsory Education, pursuant
to which foreign investment in such firms via mergers and acquisitions, franchise development, and variable interest entities are banned
from this sector.
 
As
such, we could be subject to regulations by various political and regulatory entities, including various local and municipal agencies
and government sub-divisions, and these regulations may be interpreted and applied inconsistently by different agencies or authorities.
We may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to
comply, and such compliance or any associated inquiries or investigations or any other government actions may:
 

 

delay or impede our development; 
 
  

result in negative publicity
or increase our operating costs; 
 
  

require significant management
time and attention; and 
 
  

subject our Company to
remedies, administrative penalties and even criminal liabilities that may harm our business, including fines assessed for our current
or historical operations, or demands or orders that we modify or even cease our business practices. 
Further,
our business is subject to various government regulations and regulatory interference. As of the date of this prospectus, each
of our PRC subsidiaries has received all requisite permissions and approvals from the Chinese authorities for the operation of our business
in the PRC, including but not limited to the business license from the SAMR,
sewage discharge permits, pollution discharge registration of stationary pollution source, customs registration certificate for
customs declaration entities, record-filing form for entry-exit inspection and quarantine for declaration enterprise, food operation
permit, and those with respect to environment protection and fire safety inspection, as applicable, and such permissions and approvals
are valid and have not been revoked. Based on the PRC laws and regulations currently effective, we, including our subsidiaries, are not
subject to any pre-approval requirement, filing or reporting from Chinese authorities, including the China Securities Regulatory Commission,
or CSRC, or Cybersecurity Administration Committee, or CAC, to conduct this offering or list on U.S. exchanges or issue securities to
foreign investors or to obtain any further permissions to conduct our current business in the PRC in addition to the permits currently
held by us to operate our general business activities. Nevertheless, we may incur increased costs necessary to comply with existing and
newly adopted laws and regulations or penalties for any failure to comply. Furthermore, given recent statements by the Chinese government
indicating an intent to exert more oversight and control over offerings that are conducted overseas and there are uncertainties with
respect to the Chinese legal system and changes in laws, regulations and policies, including how those laws and regulations will be interpreted
or implemented, although as of the date of this prospectus, we have not been involved in any investigations initiated by the applicable
government regulatory authorities, nor have we received any inquiry, notice, warning or sanction in such respect, it is uncertain whether
or when we might be subject to such requirements, permission and approval from any related PRC government to list our shares on Nasdaq
in the future. If approval is required in the future and we were denied permission from Chinese authorities to list on U.S. exchanges,
we will not be able to continue listing on U.S. exchange or it may adversely affect our business and results of operation, which would
materially affect the interest of the investors. Although we are currently not required to obtain any pre-approval requirement from any
of the PRC central or local government and we have not received any denial to conduct this offering, to list on the U.S. exchange or
to conduct our current business, our operations may be adversely affected in the future, directly or indirectly, by existing or future
PRC laws and regulations if PRC regulatory authorities do not take the same view as us. If the CSRC or other regulatory agencies later
promulgate new rules or explanations requiring that we obtain their approvals for this offering and any follow-on offering, we may be
unable to obtain such approvals which could significantly limit or completely hinder our ability to offer or continue to offer securities
to our investors. The CSRC or other PRC regulatory agencies may also take actions requiring us, or making it advisable for us, to halt
this offering before the settlement and delivery of the ordinary shares that we are offering. Consequently, if you engage in market trading
or other activities in anticipation of and prior to the settlement and delivery of the ordinary shares we are offering, you would be
doing so at the risk that the settlement and delivery may not occur. Any uncertainties or negative publicity regarding such approval
requirements could have a material adverse effect on our ability to complete this offering or any follow-on offering of our securities
or the market for and market price of our ordinary shares. However, currently, we are not required to obtain additional permission or
approval from Chinese authorities, including the CSRC and the CAC, to either approve our PRC subsidiaries’ operation or to offer
the securities being registered to foreign investors.
  
It
is uncertain when and whether we will be required
to obtain any pre-approval or fulfill any filing or reporting obligation from or to the PRC government to list on U.S. exchanges or to
obtain any further permissions to conduct our current business operation in the PRC in addition to the permits currently held by us to
operate our general business activities, and even when such pre-approval or permission is obtained, whether it will be denied or rescinded.
Further, the promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in each case that restrict
or otherwise unfavorably may impact the ability or the way we may conduct our business and could require us to change certain aspects
of our business to ensure compliance, which could decrease demand for our products or services, reduce revenues, increase costs, require
us to obtain more licenses, permits, approvals or certificates, or subject it to additional liabilities. As such, our operations could
be adversely affected, directly or indirectly, by existing or future PRC laws and regulations relating to its business or industry, which
could result in a material adverse change in the value of our ordinary shares, potentially rendering it worthless. As a result, both
you and us face uncertainty about future actions by the PRC government that could significantly affect our ability to offer or continue
to offer securities to investors and cause the value of our securities to significantly decline or be worthless.
 
The
Chinese government may intervene in or influence our business operations at any time or may exert more control over offerings conducted
overseas and foreign investment in China based issuers, which could result in a material change in our business operations and significantly
and adversely impact the value of our securities. Additionally, the governmental and regulatory interference could significantly limit
or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly
decline or be worthless.
 

 
The
Chinese government has significant oversight and discretion over the conduct of our business and may intervene or influence our operations
as the government deems appropriate to further regulatory, political and societal goals. The Chinese government has recently published
new policies that significantly affected certain industries such as the education and internet industries, and we cannot rule out the
possibility that it will in the future release regulations or policies regarding our industry that could require us to seek permission
from Chinese authorities to continue to operate our business, which may adversely affect our business, financial condition and results
of operations. Furthermore, recent statements made by the Chinese government have indicated an intent to increase the government’s
oversight and control over offerings of companies with significant operations in China that are to be conducted in foreign markets, as
well as foreign investment in China-based issuers like us. Any such action, once taken by the Chinese government, could significantly
limit or completely hinder our ability to offer or continue to offer ordinary shares to our investors, and could cause the value of our
ordinary shares to significantly decline or become worthless.
 
Recent
statements by the Chinese government have indicated an intent to exert more oversight and control over offerings that are conducted overseas
and/or foreign investments in China-based issuers. On July 6, 2021, the General Office of the Central Committee of the Communist Party
of China and the General Office of the State Council jointly promulgated the Opinions on Strictly Cracking Down on Illegal Securities
Activities in Accordance with the Law, pursuant to which Chinese regulators are required to accelerate rulemaking related to the overseas
issuance and listing of securities, and update the existing laws and regulations related to data security, cross-border data flow, and
management of confidential information. On December 24, 2021, the State Council published the Provisions on the Administration of Overseas
Securities Offering and Listing by Domestic Companies, or Draft Administration Provisions, as well as the Administrative Measures for
the Filing of Overseas Securities Offering and Listing by Domestic Companies, or Draft Administration Measures, for public comments.
Under the Draft Administration Provisions, a filing-based regulatory system will be introduced to cover both direct and indirect overseas
issuance and listing of securities. The Draft Administration Measures further provide the scope of activities subject to the filing requirement,
and relevant criteria for determining whether an activity falls within the scope. Pursuant to the Draft Administration Measures, the
determination as to whether a PRC domestic company is indirectly offering and listing securities in an overseas market shall be made
on a substance over form basis. If the issuer meets the following conditions, the offering and listing shall be determined as an indirect
overseas offering and listing by a domestic company: (1) the total assets, net assets, revenues or profits of the domestic operating
entity of the issuer in the most recent accounting year account for more than 50% of the corresponding figure in the issuer’s audited
consolidated financial statements for the same period; and (2) the senior management in charge of business operation and management of
the issuer are mostly Chinese citizens or have domicile in China, and the issuer’s main places of business are located in China
or main business activities are conducted in China. The PRC has recently published new rules that require companies collecting or holding
large amounts of data to undergo a cybersecurity review prior to listing in foreign countries. Pursuant to Article 7 of the Measures
for Cybersecurity Review published by the CAC on December 28, 2021 and became effective on February 15, 2022, if an issuer is
classified as a “network platform operator” and such issuer possesses personal information of more than 1 million users must
now apply for cybersecurity approval when seeking listings in other nations due to the risk that such data and personal information could
be “affected, controlled, and maliciously exploited by foreign governments.”
 
As
a holding company with no material operations of our own, our operations are conducted through our subsidiaries in the PRC, Taiwan, Hong
Kong and Samoa with our headquarters in Taiwan, which may subject us to certain laws and regulations in China. As such, we may collect
certain personal data from our customers in connection with our business and operations and we are subject to various regulatory requirements
relating to the security and privacy of data in various jurisdictions, as our customers are worldwide and are mostly based in Europe.
However, we do not hold personal information of more than one million users and we believe that this offering is not subject to PRC cybersecurity
review. In addition, as of the date of this prospectus, we have not received any notice of and is not currently subject to any proceedings
initiated by the CAC or any other PRC regulatory authority. Nonetheless, we may be subject to heightened regulatory scrutiny from PRC
governmental authorities in the future. As there remains significant uncertainty in the interpretation and enforcement of the Data Security
Law and the Personal Information Protection Law, we cannot assure you that we will comply with such regulations in all respects. Any non-compliance with these laws
and regulations may subject us to fines, orders to rectify or terminate any actions that are deemed illegal by regulatory authorities,
other penalties, including but not limited to reputational damage or legal proceedings
against us, which may affect our business, financial condition or results of operations.
 

 
Notwithstanding
the foregoing, as of the date of this prospectus, there are no PRC laws and regulations in force explicitly requiring that we obtain
any pre-approval from PRC authorities to issue securities to foreign investors, and we have not received any inquiry, notice, warning,
sanction or any regulatory objection to this offering from the CSRC, the CAC or any other PRC authorities that have jurisdiction over
our operations. Based on our understanding of the PRC laws and regulations currently in effect as of the date of this prospectus, our
registered public offering in the U.S. is not subject to the review or prior approval of the CAC or the CSRC. However, there remains
uncertainty as to the enactment, interpretation and implementation of regulatory requirements related to overseas securities offering
and other capital markets activities and due to the possibility that laws, regulations, or policies in the PRC could change rapidly in
the future. Any future action by the PRC government expanding the categories of industries and companies whose foreign securities offerings
are subject to review by the CSRC, the CAC or other PRC regulatory authorities could significantly limit or completely hinder our ability
to offer or continue to offer securities to investors and could cause the value of such securities to significantly decline or be worthless.
 
The
approval of the CSRC or other Chinese regulatory agencies may be required in connection with this offering under Chinese law.
 
The
Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the “M&A Rules”) purport to require
offshore special purpose vehicles that are controlled by Chinese companies or individuals and that have been formed for the purpose of
seeking a public listing on an overseas stock exchange through acquisitions of Chinese domestic companies or assets in exchange for the
shares of the offshore special purpose vehicles shall obtain CSRC approval prior to publicly listing their securities on an overseas
stock exchange.
 
Furthermore,
on July 6, 2021, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council
jointly promulgated the Opinions on Strictly Cracking Down on Illegal Securities Activities in Accordance with the Law, pursuant to which
Chinese regulators are required to accelerate rulemaking related to the overseas issuance and listing of securities, and update the existing
laws and regulations related to data security, cross-border data flow, and management of confidential information. On December 24, 2021,
the State Council published the Provisions on the Administration of Overseas Securities Offering and Listing by Domestic Companies, or
Draft Administration Provisions, as well as the Administrative Measures for the Filing of Overseas Securities Offering and Listing by
Domestic Companies, or Draft Administration Measures, for public comments. Under the Draft Administration Provisions, a filing-based
regulatory system will be introduced to cover both direct and indirect overseas issuance and listing of securities. The Draft Administration
Measures further provide the scope of activities subject to the filing requirement, and relevant criteria for determining whether an
activity falls within the scope. Pursuant to the Draft Administration Measures, the determination as to whether a PRC domestic company
is indirectly offering and listing securities in an overseas market shall be made on a substance over form basis. If the issuer meets
the following conditions, the offering and listing shall be determined as an indirect overseas offering and listing by a domestic company:
(1) the total assets, net assets, revenues or profits of the domestic operating entity of the issuer in the most recent accounting year
account for more than 50% of the corresponding figure in the issuer’s audited consolidated financial statements for the same period;
and (2) the senior management in charge of business operation and management of the issuer are mostly Chinese citizens or have domicile
in China, and the issuer’s main places of business are located in China or main business activities are conducted in China. Numerous
regulations, guidelines and other measures have been or are expected to be adopted under the umbrella of or in addition to the Cyber
Security Law and Data Security Law. As there are still uncertainties regarding the interpretation and implementation of such regulatory
guidance, we cannot assure you that we will be able to comply with new regulatory requirements relating to our future overseas capital-raising
activities and we may become subject to more stringent requirements with respect to matters including data privacy and cross-border investigation
and enforcement of legal claims. Notwithstanding the foregoing, as of the date of this prospectus, we are not aware of any Chinese laws
or regulations in effect requiring that we obtain permission from any Chinese authority to issue securities to foreign investors, and
we have not received any inquiry, notice, warning, sanction or any regulatory objection to this offering from the CSRC, the CAC or any
other Chinese authorities that have jurisdiction over our operations.
 
Our business is subject to various
government regulations and regulatory interference. As of the date of this prospectus, each of our PRC subsidiaries has received all
requisite permissions and approvals from the Chinese authorities for the operation of our business in the PRC, including but not limited
to the business license from the SAMR, sewage discharge permits, pollution
discharge registration of stationary pollution source, customs registration certificate for customs declaration entities, record-filing
form for entry-exit inspection and quarantine for declaration enterprise, food operation permit, and those with respect to environment
protection and fire safety inspection, as applicable, and such permissions and approvals are valid and have not been revoked. Based on
the PRC laws and regulations currently effective, we, including our subsidiaries, are not subject to any pre-approval requirement, filing
or reporting from Chinese authorities, including the China Securities Regulatory Commission, or CSRC, or Cybersecurity Administration
Committee, or CAC, to conduct this offering or list on U.S. exchanges or issue securities to foreign investors or to obtain any further
permissions to conduct our current business in the PRC in addition to the permits currently held by us to operate our general business
activities. Nevertheless, we may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties
for any failure to comply. Furthermore, given recent statements by the Chinese government indicating an intent to exert more oversight
and control over offerings that are conducted overseas and there are uncertainties with respect to the Chinese legal system and changes
in laws, regulations and policies, including how those laws and regulations will be interpreted or implemented, although as of the date
of this prospectus, we have not been involved in any investigations initiated by the applicable government regulatory authorities, nor
have we received any inquiry, notice, warning or sanction in such respect, it is uncertain whether or when we might be subject to such
requirements, permission and approval from any related PRC government to list our shares on Nasdaq in the future. If approval is required
in the future and we were denied permission from Chinese authorities to list on U.S. exchanges, we will not be able to continue listing
on U.S. exchange or it may adversely affect our business and results of operation, which would materially affect the interest of the
investors. It is uncertain when and whether the Company will be required to obtain permission from the PRC government to continue to
list on U.S. exchanges or to conduct our current business in the future, and even when such permission is obtained, whether it will
be denied or rescinded. Although we are currently not required to obtain any pre-approval requirement from any of the PRC central or
local government and we have not received any denial to conduct this offering, to list on the U.S. exchange or to conduct our current
business, our operations may be adversely affected in the future, directly or indirectly, by existing or future PRC laws and regulations
if PRC regulatory authorities do not take the same view as us. If the CSRC or other regulatory agencies later promulgate new rules or
explanations requiring that we obtain their approvals for this offering and any follow-on offering, we may be unable to obtain such approvals
which could significantly limit or completely hinder our ability to offer or continue to offer securities to our investors. The CSRC
or other PRC regulatory agencies may also take actions requiring us, or making it advisable for us, to halt this offering before the
settlement and delivery of the ordinary shares that we are offering. Consequently, if you engage in market trading or other activities
in anticipation of and prior to the settlement and delivery of the ordinary shares we are offering, you would be doing so at the risk
that the settlement and delivery may not occur. Any uncertainties or negative publicity regarding such approval requirements could have
a material adverse effect on our ability to complete this offering or any follow-on offering of our securities or the market for and
market price of our ordinary shares. However, currently, we are not required to obtain additional permission or approval from Chinese
authorities, including the CSRC and the CAC, to either approve our PRC subsidiaries’ operation or to offer the securities being
registered to foreign investors.
 

 
Based
on the above and our understanding of the Chinese laws and regulations currently in effect as of the date of this prospectus, we are
not required to submit an application to the CSRC or the CAC for the approval of this offering and the listing and trading of our ordinary
shares on the Nasdaq. However, there remains significant uncertainty as to the enactment, interpretation and implementation of regulatory
requirements related to overseas securities offerings and other capital markets activities. If it is determined in the future that the
approval or filing of the CSRC, CAC or any other regulatory authority is required for this offering, we may face sanctions by the CSRC,
the CAC or other Chinese regulatory agencies. These regulatory agencies may impose fines and penalties on our operations in China, limit
our ability to pay dividends outside of China, limit our operations in China, delay or restrict the repatriation of the proceeds from
this offering into China or take other actions that could have a material adverse effect on our business, financial condition, results
of operations and prospects, as well as the trading price of our ordinary shares. The CSRC, the CAC or other Chinese regulatory agencies
may take actions requiring us, or making it advisable for us, to halt this offering before settlement and delivery of the ordinary shares.
Consequently, if you engage in market trading or other activities in anticipation of and prior to settlement and delivery, you do so
at the risk that settlement and delivery may not occur. In addition, if the CSRC, the CAC or other regulatory agencies later promulgate
new rules requiring that we obtain their approvals for this offering, we may be unable to obtain a waiver of such approval requirements,
if and when procedures are established to obtain such a waiver. Any uncertainties and/or negative publicity regarding such an approval
requirement could have a material adverse effect on the trading price of the ordinary shares.
 
Compliance
with China’s new Data Security Law, Cybersecurity Review Measures, Personal Information Protection Law, regulations and guidelines
relating to the multi-level protection scheme and any other future laws and regulations may entail significant expenses and could materially
affect our business.
 
China
has implemented or will implement rules and is considering a number of additional proposals relating to data protection. China’s
new Data Security Law took effect in September 2021. The Data Security Law provides that the data processing activities must be conducted
based on “data classification and hierarchical protection system” for the purpose of data protection and prohibits entities
in China from transferring data stored in China to foreign law enforcement agencies or judicial authorities without prior approval by
the Chinese government.
 
Additionally,
China’s Cyber Security Law requires companies to take certain organizational, technical and administrative measures and other necessary
measures to ensure the security of their networks and data stored on their networks. Specifically, the Cyber Security Law provides that
China adopt a multi-level protection scheme (MLPS), under which network operators are required to perform obligations of security protection
to ensure that the network is free from interference, disruption or unauthorized access, and prevent network data from being disclosed,
stolen or tampered. Under the MLPS, entities operating information systems must have a thorough assessment of the risks and the conditions
of their information and network systems to determine the level to which the entity’s information and network systems belong-from
the lowest Level 1 to the highest Level 5 pursuant to a series of national standards on the grading and implementation of the classified
protection of cyber security. The grading result will determine the set of security protection obligations that entities must comply
with. Entities classified as Level 2 or above should report the grade to the relevant government authority for examination and approval.
 

 
Recently,
the Cyberspace Administration of China has taken action against several Chinese internet companies in connection with their initial public
offerings on U.S. securities exchanges, for alleged national security risks and improper collection and use of the personal information
of Chinese data subjects. According to the official announcement, the action was initiated based on the National Security Law, the Cyber
Security Law and the Cybersecurity Review Measures, which are aimed at “preventing national data security risks, maintaining national
security and safeguarding public interests.” On December 28, 2021, the CAC published an amendment to the Cybersecurity Review Measures
which have been in effect since June 1, 2020 and became effective on February 15, 2022, expanding the cybersecurity review to
network platform operators in possession of personal information of over 1 million users if the operators intend to list their securities
in a foreign country.
 
It
is unclear at the present time how widespread the cybersecurity review requirement and the enforcement action will be and what effect
they will have on the manufacturing and healthcare sectors generally and the Company in particular. China’s regulators may impose
penalties for non-compliance ranging from fines or suspension of operations, and this could lead to us delisting from the U.S. stock
market.
 
The
National People’s Congress released the Personal Information Protection Law, which has become effective on November 1, 2021. The
Personal Information Protection Law provides a comprehensive set of data privacy and protection requirements that apply to the processing
of personal information and expands data protection compliance obligations to cover the processing of personal information of persons
by organizations and individuals in China, and the processing of personal information of persons in China outside of China if such processing
is for purposes of providing products and services to, or analyzing and evaluating the behavior of, persons in China. The Personal Information
Protection Law also provides that critical information infrastructure operators and personal information processing entities who process
personal information meeting a volume threshold to be set by Chinese cyberspace regulators are also required to store in China personal
information generated or collected in China, and to pass a security assessment administered by Chinese cyberspace regulators for any
export of such personal information. Lastly, the Personal Information Protection Law contains proposals for significant fines for serious
violations of up to RMB 50 million (approximately $7.7 million) or 5% of annual revenues from the prior year and may also be ordered
to suspend any related activity by competent authorities.
 
Interpretation,
application and enforcement of these laws, rules and regulations evolve from time to time and their scope may change, through new legislation,
amendments to existing legislation or changes in enforcement. Compliance with the Cyber Security Law and the Data Security Law could
significantly increase the cost to us of providing our service offerings, require significant changes to our operations or even prevent
us from providing certain service offerings in jurisdictions in which we currently operate or in which we may operate in the future.
Despite our efforts to comply with applicable laws, regulations and other obligations relating to privacy, data protection and information
security, it is possible that our practices, offerings or platform could fail to meet all of the requirements imposed on us by the Cyber
Security Law, the Data Security Law and/or related implementing regulations. Any failure on our part to comply with such law or regulations
or any other obligations relating to privacy, data protection or information security, or any compromise of security that results in
unauthorized access, use or release of personally identifiable information or other data, or the perception or allegation that any of
the foregoing types of failure or compromise has occurred, could damage our reputation, discourage new and existing counterparties from
contracting with us or result in investigations, fines, suspension or other penalties by Chinese government authorities and private claims
or litigation, any of which could materially adversely affect our business, financial condition and results of operations. Even if our
practices are not subject to legal challenge, the perception of privacy concerns, whether or not valid, may harm our reputation and brand
and adversely affect our business, financial condition and results of operations. Moreover, the legal uncertainty created by the Data
Security Law and the recent Chinese government actions could materially adversely affect our ability, on favorable terms, to raise capital,
including engaging in follow-on offerings of our securities in the U.S. market once we are a public company.
 
In
addition, on April 2, 2022, the CSRC published a draft of the Provisions on Strengthening Confidentiality and Archives Administration
of Overseas Securities Offering and Listing by Domestic Companies, or Draft Provisions, for public comments. The Draft Provisions provides
that, in relation to the overseas listing activities of domestic enterprises, such domestic enterprises therein, as well as securities
companies and securities service institutions providing relevant securities services, are required to strictly comply with the relevant
requirements on confidentiality and archives management, establish a sound confidentiality and archives system, and take necessary measures
to implement their confidentiality and archives management responsibilities. It further provides that, during the course of an overseas
offering and listing therein, if a PRC company needs to publicly disclose or provide to securities companies, accounting firms or other
securities service providers and overseas regulatory authorities, any materials that contain relevant state secrets or that have a sensitive
impact, the PRC company should complete the relevant approval/filing and other regulatory procedures. However, the Draft Provisions has
been issued recently and the definition of materials that contain relevant state secrets or that have a sensitive impact requires further
interpretation or detailed rules or regulations. Hence, there exists uncertainties regarding the interpretation and enforcement of the
Draft Provisions.

 
We
have entered into land use right assignment transaction with PRC government authority and we may be subject to penalties for failure
to fully comply with the contract thereunder.
 
Under
PRC laws and regulations, if the land assignee fails to develop and use the land according to the terms of the land use right assignment
contract (including those relating to designated use of land, time for commencement and completion of development of the land) or fails
to pay any outstanding land grant premium by the stipulated deadlines, the relevant government authorities may issue a warning to, or
impose a penalty on, the land assignee or require the land assignee to forfeit the land use rights. Specifically, under current PRC laws,
if land assignee fails to pay any outstanding land grant premium by the stipulated deadlines, the land assignee may be subject to late
land fees or the repossession of the land by the PRC government. If land assignee fails to commence development within one year of the
commencement date stipulated in the land use right assignment contract, the relevant PRC land bureau may issue a warning to the land
assignee and impose an idle land penalty of up to 20% of the land premium.
 
If
the land assignee fails to commence development within two years from the commencement date stipulated in the land use right assignment
contract, the relevant PRC land bureau may confiscate its land use right without compensation, except where the delay in the development
is attributable to a force majeure event or the action of relevant government department or delay in the requisite preliminary work preceding
commencement of such development. Moreover, under typical land use right assignment contracts, violation of certain terms under the land
use right assignment contracts may subject the land assignee to claims on liquidated damages equivalent to certain percentage of the
total purchase price for the right to use the state-owned construction land.
 
Bohong
Technology, has entered into the State-Owned Construction Land Use Right Assignment Contract (the “Assignment Contract”)
with Hanjiang Branch of Yangzhou Land and Resource Bureau (the “Hanjiang Land Bureau”) for a land parcel in Yangzhou. According
to the Assignment Contract, Bohong Technology shall commence construction prior to August 28, 2020 or such later date as agreed by Hanjiang
Land Bureau. The Assignment Contract also provides that if Bohong Technology cannot commence construction on schedule, it shall apply
to Hanjiang Land Bureau for an extension of thirty (30) days prior to the scheduled commencement date; if such extension is approved
by Hanjiang Land Bureau, the completion date of the construction project shall be extended accordingly, provided that the extended construction
period shall not exceed one year. However, due to COVID-19 and its impact on economic and social activities, Bohong Technology failed
to commence construction on schedule and failed to apply to and obtain the approval for extension within the prescribed 30-day period.
Pursuant to the Assignment Contract, if Bohong Technology fails to commence construction on the scheduled date or a later date as agreed
by Hanjiang Land Bureau, for each day of delay, Bohong Technology shall pay Hanjiang Land Bureau a liquidated damage equivalent to 0.1%
of the total purchase price for the right to use the state-owned construction land. The Assignment Contract provides further that if
the land is left idle for not less than one year but not more than two years, Bohong Technology shall pay the land idle fees according
to the applicable laws.
 

 
Hanjiang Land Bureau previously
requested Bohong Technology to complete the construction project on or prior to August 28, 2022 as indicated in the Assignment
Contract without granting any extension. As of the date of this prospectus, Bohong Technology has not commenced the development of
the construction project, and thus the land is left idle. If Bohong Technology does not have any progress, it may be exposed
to a liquidated damage in the amount of approximately RMB5.98 million (approximately $925,697) calculated as of February 28, 2022,
and we may be exposed to land idle fees up to 20% of the land premium. However, Bohong Technology is in the process of applying for a Land Construction Permit and the Hanjiang Land Bureau has considered the
application as a progress on the project, and thus, it will not penalize Bohong Technology. If we fail to have further
progress in the project, we may be subsequently be subject to the aforesaid liquidated damage,
which, in turn, may have a material and adverse effect on our business, results of operations and financial condition. We cannot
assure you that circumstances leading to the repossession of land or delays in the commencement and completion of construction on
our acquired land in Yangzhou will not arise in the future. If our land is repossessed, we will not be able to continue our
construction on the forfeited land, recover the costs incurred for the initial acquisition of the repossessed land or recover
construction costs and other costs incurred up to the date of the repossession. In addition, we cannot assure you that regulations
relating to idle land or other aspects of land use right assignment contracts will not become more restrictive or punitive in the
future. If we fail to comply with the terms of any land use right assignment contract as a result of delays in land construction, or
as a result of other factor, we may lose the opportunity to develop the land as well as our past investments in the land, which
could materially and adversely affect our business, financial condition and results of operations.
 
Failure
to comply with regulations related to export of processed materials may result in fines and legal or administrative actions.
 
During
the years ended December 31, 2020 and 2021, our products were exported from PRC to branded customers around the world,
especially in Switzerland, France, Italy, the Netherlands, Germany and Japan. Pursuant to the Regulation of the PRC on the Implementation
of Customs Administrative Punishment, for a PRC entity managing businesses such as the transportation, storage, processing, assembly,
consignment sale and exhibition of goods under customs supervision, if it fails to provide justifiable reasons for the relevant goods
that are lost or short in quantity or whose records are untrue, a fine of 5% up to 30% the value of goods may be imposed upon, and the
illegal gains shall be confiscated. During the year ended December 31, 2018, due to administrative oversight, one of our PRC subsidiaries,
Dongguan Forwell, arbitrarily supplied the bonded materials which it imported for third party’s use (including for the use of Dongguan
Yuantai Sports Equipment Co., Ltd., as Dongguan Forwell’s affiliate at that time); as a result, the short of bonded materials was
identified and a fine of RMB 492,500 (approximately $76,238) was imposed upon Dongguan Forwell, and the fine was duly paid by Dongguan
Forwell.
 
As
we aim to increase our presence in overseas market, we are subject to a variety of risks and uncertainties associated with exporting
of goods, such as compliance with foreign laws and regulatory requirements, foreign taxes and trade barriers. Any failure to comply with
regulations related to import of raw materials or export of processed materials may result in fines and legal or administrative actions,
which may have material adverse impact on our financial condition, results of operations and prospects.
 
Any
lack of requisite approvals, licenses, permits or filings or failure to comply with any requirements of PRC laws, regulations and policies
may materially and adversely affect our daily operations.
 
In
accordance with the relevant PRC laws and regulations, we are required to maintain various approvals, licenses, permits and filings to
operate our business, including but not limited to business license, sewage discharge permits, pollution discharge registration of stationary
pollution source, customs registration certificate for customs declaration entities, record-filing form for entry-exit inspection and
quarantine for declaration enterprise, food operation permit, and those with respect to environment protection and fire safety inspection.
The obtaining of these approvals, licenses, permits and filings are subject to satisfactory compliance with, among other things, the
applicable laws and regulations.
 

 
Furthermore,
uncertainties exist with respect to the interpretation of relevant legal requirements regarding certain licenses and permits. In practice,
relevant government authorities may take the view that certain license is not required for operating our business though there may be
different interpretations with respect to the licensing requirements. We cannot assure you that relevant government authorities’
interpretation on such licensing requirements will remain the same in the future. If we are required to obtain relevant licenses, we
will have to obtain those licenses in a timely manner. In addition, government authorities may impose additional licenses or permits
or provides more strict supervision requirements when we make application, extension or renewal of licenses or permits. There is no guarantee
that we would be able to obtain such licenses or permits or meet all the supervision requirements in a timely manner, or at all, or that
they will not be subsequently revoked by relevant authorities. If we are unable to obtain any of such licenses and permits or extend
or renew any of our current licenses or permits upon their expirations, or if we are required to incur significant additional costs to
obtain or renew these licenses, permits and approvals, our daily operations could be materially and adversely affected.
 
We
may be subject to additional contributions under various employee benefits plans and late payments and fines imposed by relevant governmental
authorities.
 
Companies
operating in PRC are required to participate in various government-sponsored employee benefit plans, including certain social insurance,
housing provident funds and other welfare-oriented payment obligations, and contribute to the plans in amounts equal to certain percentages
of salaries, including bonuses and allowances, of employees up to a maximum amount specified by the local government from time to time
at locations where our employees are based.
 
Two of
our PRC subsidiaries, Dongguan YMA and Dongguan Forwell, did not make adequate contributions for the social insurance premiums, consisted
of pension premium, medical insurance premium, work-related injury insurance premium, unemployment insurance premium and maternity insurance
premium, for our employees in accordance with the statutory payment base required by the relevant PRC laws. Our failure in paying the
social insurance premiums may subject us to any order to pay the shortfall of the social security insurance premiums within the prescribed
time limited by the relevant PRC governmental authority. As of December 31, 2020 and 2021, we provided reserve in the sum
of approximately RMB4.7 million (approximately $0.7 million), and RMB7.6 million (approximately $1.2 million) for the underpaid
social insurance premiums, respectively.
 
Furthermore,
Dongguan YMA and Dongguan Forwell may be liable for a late fee of 0.5% per day of the underpaid amount, calculated from the original
due date of such underpaid amount. In the event that Dongguan YMA and Dongguan Forwell failed to pay the underpaid amount within the
period specified by the PRC authority, a fine of no less than one time and up to three times of the aggregate unpaid amount may be imposed.
Furthermore, the relevant PRC governmental authority may apply the relevant administrative department for a decision on the allocation
of the social insurance premium and notify the bank in writing for the allocation of the social insurance premium from Dongguan YMA’s
and Dongguan Forwell’s bank accounts. If the balance of the bank account of Dongguan YMA and Dongguan Forwell is insufficient to
cover the underpaid amount, the relevant PRC governmental authority may order Dongguan YMA and Dongguan Forwell to offer guarantee. If
Dongguan YMA and Dongguan Forwell still fail to pay the social insurance premium in full amount and do not provide guarantee, the relevant
PRC governmental authority may apply to competent people’s court for compulsory enforcement.
 
In
addition, Dongguan YMA and Dongguan Forwell did not make adequate contributions for the housing provident fund for certain employees
or pay such fund for our employees in accordance with the statutory payment base required by the relevant PRC laws. The reason for Dongguan
YMA’s and Dongguan Forwell’s failure to pay the housing provident fund for part of their employees is that those employees
are not willing to participate in the housing provident fund scheme and pay the housing provident fund. In this regard, Dongguan YMA
and Dongguan Forwell may be ordered to pay the housing provident fund by the relevant PRC governmental authority. As of December 31,
2020 and 2021, we have provided reserve in the sum of approximately RMB4.3 million (approximately $0.7 million),
and RMB6.0 million (approximately $0.9 million) for the underpaid housing provident fund, respectively. If Dongguan YMA
and Dongguan Forwell fail to make the payment within the specified period, the relevant PRC governmental authority may apply to the competent
people’s court for compulsory enforcement.
 

 
Failure
to comply with PRC laws and regulations on employees’ overtime wages payment may expose us to potential compensations.
 
From
time to time, we are under tight production schedule in order to meet customers’ requested timeline in different projects, and
this, we may require employees to work overtime in order to fulfill the tight production schedule. Under the PRC labor law and regulations,
employers are required to pay overtime wages to employees for the extended working hours. According to the PRC Labor Law, wage payments
to an employee shall be no less than 150% of his/her wage if such employee is required to work longer hours during business days; wage
payments to an employee shall be no less than 200% of his/her wages if such employee is required to work on days off and no rest can
be arranged ex post facto; and wage payments to an employee shall be no less than 300% of his/her wages if such employee is required
to work on national holidays. Two of our PRC subsidiaries, Dongguan YMA and Dongguan Forwell, have not formulated an employee overtime
system and did not pay overtime wages to their employees for the extended working hours as they made payment to the employees on a piecework
basis. There exists the circumstance that Dongguan YMA and Dongguan Forwell requested their employees to work overtime but did not pay
overtime wages to such employees. Failure to make overtime wages payment to employees may lead to the relevant PRC governmental authority’s
order on Dongguan YMA and Dongguan Forwell to pay overtime wages to employees who worked overtime within a prescribed time limit. If
Dongguan YMA or Dongguan Forwell failed to do so, it may be ordered to pay a compensation of not less than fifty percent and up to one
time the aggregate unpaid amount to the employees.
 
In
addition, there can be no assurance that there will be additional or new labor laws, rules and regulations in the PRC, which may lead
to potential increases in the labor costs with our employees. In such events, our business, financial condition and results of operations
may be materially and adversely affected.

 
Uncertainties
in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us.
 
We
operate through our subsidiaries in PRC, Taiwan, Hong Kong and Samoa with our headquarters in Taiwan. Because
of such ties to PRC, the majority of our subsidiaries
may be governed by various PRC laws and regulations generally applicable to companies in the PRC. The PRC legal system is based
on written statutes. Unlike common law systems, it is a system in which legal cases have limited value as precedents. In the late 1970s,
the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall
effect of legislation over the past four decades has significantly increased the protections afforded to various forms of foreign or
private-sector investment in the PRC.
 
As
relevant laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, the interpretations of many laws,
regulations and rules are not always uniform and enforcement of these laws, regulations and rules involve uncertainties.
 
From
time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. However, since PRC administrative
and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult
to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal
systems. Furthermore, the PRC legal system is based in part on government policies and internal rules (some of which are not published
in a timely manner or at all) that may have retroactive effect. As a result, we may not be aware of our violation of these policies and
rules until sometime after the violation. Such uncertainties, including uncertainty over the scope and effect of our contractual, property
(including intellectual property) and procedural rights, and any failure to respond to changes in the regulatory environment in the PRC
could materially and adversely affect our business and impede our ability to continue our operations.
 

 
The
enforcement of the PRC Labor Contract Law and other labor-related regulations in the PRC may adversely affect our business and our results
of operations.
 
The
PRC Labor Law and the Labor Contract Law require that employers must execute written employment contracts with full-time employees. All
employers must compensate their employees with wages equal to at least the local minimum wage standards. Violations of the PRC Labor
Law and the Labor Contract Law may result in the imposition of fines, compensations and other administrative sanctions, and serious violations
may constitute criminal offenses.
 
The
PRC Labor Contract Law became effective and was implemented on January 1, 2008, which was amended on December 28, 2012. It has reinforced
the protection of employees who, under the PRC Labor Contract Law, have the right, among others, to enter into written labor contracts,
to enter into labor contracts with no fixed terms under certain circumstances, to receive overtime wages and to terminate or alter terms
in labor contracts. According to the PRC Social Insurance Law, which became effective on July 1, 2011, and was amended on December 29,
2018, and the Administrative Regulations on the Housing Provident Funds, companies operating in PRC are required to participate in pension
insurance, work-related injury insurance, medical insurance, unemployment insurance, maternity insurance and housing provident funds
plans, and the employers must pay all or a portion of the social insurance premiums and housing provident funds for their employees.
 
As
the interpretation and implementation of these laws and regulations are still evolving, our employment practice may not at all times
be deemed in compliance with the new laws and regulations. If we are subject to severe penalties or incur significant liabilities in
connection with labor disputes or investigations, our business and results of operations may be adversely affected.

 
Changes
in PRC’s economic, political or social conditions or government policies could have a material adverse effect on our business and
operations.
 
Currently,
most of our production is conducted in PRC. Further, we operate through our subsidiaries in PRC, Taiwan, Hong Kong and Samoa with
our headquarters in Taiwan. Because of such ties
to PRC, accordingly,
our business, financial condition, results of operations and prospects may be influenced to a significant degree by political, economic
and social conditions in PRC generally and by continued economic growth in PRC as a whole.
 
PRC’s
economy differs from the economies of most developed countries in many respects, including the level of government involvement, level
of development, growth rate, control of foreign exchange and allocation of resources. Although the PRC government has implemented measures
since the late 1970’s emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive
assets, and the establishment of improved corporate governance in business enterprises, which are generally viewed as a positive development
for foreign business investment, a substantial portion of productive assets in PRC is still owned by the PRC government. In addition,
the PRC government continues to play a significant role in regulating industry development by imposing industrial policies. The PRC government
also exercises significant control over the PRC economic growth through allocating resources, controlling payments of foreign currency-denominated
obligations, setting monetary policy, and providing preferential treatment to particular industries or companies.
 
While
PRC’s economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various
sectors of the economy, and the rate of growth has been slowing down. Some of the governmental measures may benefit the overall Chinese
economy, but may have a negative effect on us. For example, our financial condition and results of operations may be adversely affected
by government control over capital investments or changes in tax regulations. Any stimulus measures designed to boost the Chinese economy
may contribute to higher inflation, which could adversely affect our results of operations and financial condition. For example, certain
operating costs and expenses, such as employee compensation and office operating expenses, may increase as a result of higher inflation.
In addition, the PRC government has implemented in the past certain measures to control the pace of economic growth. These measures may
cause decreased economic activity, which in turn could lead to a reduction in demand for our products and services, and consequently
have a material adverse effect on our businesses, financial condition and results of operations.
 

 
Failure
to comply with PRC laws and regulations on leased property may expose us to potential fines.
 
Certain
of our leasehold interests in leased properties have not been registered with the relevant PRC governmental authorities as required by
PRC law, which may expose us to potential fines if we fail to remediate after receiving any notice from the relevant PRC government authorities.
Our PRC subsidiary, Dongguan YMA, has subleased real properties located at Factory #B, No. 8, Block A, No. 128 Industrial Zone, Tangxia
Town, Dongguan City, PRC to our another PRC subsidiary, Dongguan Forwell for its production and office, and they have not processed the
lease registration in respect of such sub-lease. According to the Measures for Dongguan Housing Lease Management in the PRC, the parties
to a lease agreement shall, within 15 days from the date of signing the lease, apply to the local housing rental management administrative
authority where the house is located for the lease registration. Failure to process with the lease registration may lead to the administrative
authority’s order on the lessor to make corrections within a prescribed time limit and a fine ranging from one to three times the
monthly rent will be imposed on the lessor. As of the date of this prospectus, we have not been ordered by relevant governmental authorities
for failure of registering our lease agreements. However, we may still be subject to potential fines if we fail to remediate after receiving
any notice from the relevant PRC government authorities.
 
Failure
to conform to the employment agreement regarding the practice of reassignment of employees’ job positions may expose us to lawsuits.
 
We
enter into employment agreements with our employees when there are new hires and will reassign an employee’s job position when we
need to meet production and operation demands or for other administrative reasons. We adopt our template employment agreement when entering
into employment with our employees. Pursuant to the template employment agreement adopted by one of our PRC subsidiaries, Dongguan Forwell,
if Dongguan Forwell intends to reassign an employee’s job position due to production and operation demands or other reasons, it
shall reach a consensus with its employee through negotiation and the parties shall enter into a supplemental agreement. However, during
the years ended December 31, 2017 and 2019 there were labor lawsuits where Dongguan Forwell unilaterally reassigned the employees’
job positions without reaching consensus with the employees, and Dongguan Forwell further terminated the employment agreement with the
employees when the employees rejected to follow the reassignment. In such lawsuits, the court determined that Dongguan Forwell violated
the relevant PRC labor laws for its unilateral termination of the employment agreement. As of the date of this prospectus, the abovementioned
lawsuits have been duly settled and we are not aware of any other potential labor lawsuit in respect of the reassignment of employees’
job positions.  However, if we are unable to conform to the employment agreement terms in any further reassignment of employees’
job positions, we may be liable for fines assessed by the relevant governmental authorities or incur settlement costs in order to resolve
labor disputes and, and we may even be subject to higher labor costs in the future when recruiting new employees due to the reputation
damage caused by labor disputes or related incidents.
 
Fluctuations
in exchange rates could result in foreign currency exchange losses to us.
 
The
value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political
and economic conditions and the foreign exchange policy adopted by the PRC government. In August 2015, the People’s Bank of China,
or PBOC, changed the way it calculates the mid-point price of Renminbi against the U.S. dollar, requiring the market-makers who submit
for reference rates to consider the previous day’s closing spot rate, foreign-exchange demand and supply as well as changes in
major currency rates. In 2017, the value of the Renminbi appreciated by approximately 6.3% against the U.S. dollar; and in 2018, the
Renminbi depreciated by approximately 5.7% against the U.S. dollar. From the end of 2018 through the end of 2021, the value of the Renminbi
appreciated by approximately 7.6% against the U.S. dollar. It is difficult to predict how market forces or PRC or U.S. government
policy, including any interest rate increases by the Federal Reserve, may impact the exchange rate between the Renminbi and the U.S.
dollar in the future. There remains significant international pressure on the PRC government to adopt a more flexible currency policy,
including from the U.S. government, which has threatened to label China as a “currency manipulator,” which could result in
greater fluctuation of the Renminbi against the U.S. dollar.
 

 
Governmental
control of currency conversion may limit our ability to utilize our net revenues effectively and affect the value of your investment.
 
The
PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of
currency into or out of China, which essentially may restrict the ability to transfer funds into or out of China. We receive part of
our revenues in Renminbi. Under our current corporate structure, our Cayman Islands holding company relies on dividend payments from
our PRC subsidiaries to fund some of the cash and financing requirements we may have. Under existing PRC foreign exchange regulations,
payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions,
can be made in foreign currencies without prior approval of the SAFE by complying with certain procedural requirements. Specifically,
under the existing exchange restrictions, without prior approval of SAFE, cash generated from the operations of our PRC subsidiaries
in China may be used to pay dividends to our company. However, approval from or registration with appropriate government authorities
is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment
of loans denominated in foreign currencies. As a result, we need to obtain SAFE approval to use cash generated from the operations of
our PRC subsidiaries to pay off their respective debt in a currency other than Renminbi owed to entities outside China, or to make other
capital expenditure payments outside China in a currency other than Renminbi. The PRC government may at its discretion restrict access
to foreign currencies for current account transactions in the future. If the foreign exchange control system prevents us from obtaining
sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our
shareholders.
 
Our
PRC subsidiaries are subject to restrictions on paying dividends or making other payments to us, which may restrict our ability to satisfy
our liquidity requirements.
 
We
are an exempted company with limited liability incorporated under the laws of the Cayman Islands structured as a holding company. We
may need dividends and other distributions on equity from our PRC subsidiaries to satisfy our liquidity requirements. Current PRC regulations
permit our PRC subsidiaries to pay dividends to their respective shareholders only out of their accumulated profits, if any, determined
in accordance with PRC accounting standards and regulations. In addition, each of PRC subsidiaries is required to set aside at least
10% of its accumulated profits each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of its registered
capital. Each of our PRC subsidiaries may also, at its discretion, allocate a portion of its after-tax profits based on its articles
of association and PRC accounting standards to certain reserve funds. These reserves are not distributable as cash dividends. Furthermore,
if our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to
pay dividends or make other payments to us. Any limitation on the ability of our PRC subsidiaries to distribute dividends or to make
payments to us may restrict our ability to satisfy our liquidity requirements.
 
In
addition, the Enterprise Income Tax Law and its implementation rules provide that a withholding tax rate of up to 10% will be applicable
to dividends payable by Chinese companies to non-PRC-resident enterprises unless otherwise exempted or reduced according to treaties
or arrangements between the PRC central government and governments of other countries or regions where the non-PRC-resident enterprises
are incorporated.
 
PRC
regulation on loans to, and direct investment in, PRC entities by offshore holding companies and governmental control in currency conversion
may delay or prevent us from using the proceeds of our initial public offering to make loans to or make additional capital contributions
to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
 
We
are an exempted company with limited liability incorporated under the laws of the Cayman Islands structured as a holding company conducting
our partial operations in China and Hong Kong through our PRC and Hong Kong subsidiaries. As permitted under PRC laws and
regulations, in utilizing the proceeds of our initial public offering, we may make loans to our PRC subsidiaries subject to the approval
from governmental authorities and limitation of amount, or we may make additional capital contributions to our PRC subsidiaries. Furthermore,
loans by us to our PRC subsidiaries to finance its activities cannot exceed the difference between their respective total project investment
amount and registered capital or 2.5 times of their net worth and capital contributions to our PRC subsidiaries are subject to the requirement
of making necessary filings in the Foreign Investment Comprehensive Management Information System and registration with other governmental
authorities in China.
 

 
The
SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement
of Capital of Foreign-invested Enterprises, or SAFE Circular 19, effective on June 1, 2015, in replacement of the Circular on the Relevant
Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested
Enterprises, the Notice from the State Administration of Foreign Exchange on Relevant Issues Concerning Strengthening the Administration
of Foreign Exchange Businesses, and the Circular on Further Clarification and Regulation of the Issues Concerning the Administration
of Certain Capital Account Foreign Exchange Businesses. According to SAFE Circular 19, the flow and use of the RMB capital converted
from foreign currency-denominated registered capital of a foreign-invested company is regulated such that RMB capital may not be used
for the issuance of RMB entrusted loans, the repayment of inter-enterprise loans or the repayment of bank loans that have been transferred
to a third party. Although SAFE Circular 19 allows RMB capital converted from foreign currency-denominated registered capital of a foreign-invested
enterprise to be used for equity investments within the PRC, it also reiterates the principle that RMB converted from the foreign currency-denominated
capital of a foreign-invested company may not be directly or indirectly used for purposes beyond its business scope. Thus, it is unclear
whether the SAFE will permit such capital to be used for equity investments in the PRC in actual practice. The SAFE promulgated the Notice
of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital
Account, or SAFE Circular 16, effective on June 9, 2016, which reiterates some of the rules set forth in SAFE Circular 19, but changes
the prohibition against using RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company
to issue RMB entrusted loans to a prohibition against using such capital to grant loans to non-associated enterprises. Violations of
SAFE Circular 19 and SAFE Circular 16 could result in administrative penalties. SAFE Circular 19 and SAFE Circular 16 may significantly
limit our ability to transfer any foreign currency we hold, including the net proceeds from our initial public offering, to our PRC subsidiaries,
which may adversely affect our liquidity and our ability to fund and expand our business in the PRC.
 
In
light of the various requirements imposed by PRC regulations on loans to, and direct investment in, PRC entities by offshore holding
companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government
approvals on a timely basis, if at all, with respect to future loans by us to our PRC subsidiaries or with respect to future capital
contributions by us to our PRC subsidiaries. If we fail to complete such registrations or obtain such approvals, our ability to use the
proceeds from our initial public offering and to capitalize or otherwise fund our PRC operations may be negatively affected, which could
materially and adversely affect our liquidity and our ability to fund and expand our business.
 
Certain
PRC regulations may make it more difficult for us to pursue growth through acquisitions.
 
Among
other things, the M&A Rules, adopted by six PRC regulatory agencies in 2006 and amended in 2009, established additional procedures
and requirements that could make merger and acquisition activities by foreign investors more time-consuming and complex. Such regulation
requires, among other things, that the Ministry of Commerce of the PRC, or the MOFCOM, be notified in advance of any change-of-control
transaction in which a foreign investor acquires 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, are triggered. Moreover, the Anti-Monopoly Law promulgated by the Standing Committee of the National People’s
Congress which became effective in 2008 requires that transactions which are deemed concentrations and involve parties with specified
turnover thresholds must be cleared by the Anti-Monopoly Bureau of State Administration for Market Regulation, or the Anti-Monopoly Bureau
before they can be completed. In addition, PRC national security review rules which became effective in September 2011 require acquisitions
by foreign investors of PRC companies engaged in military related or certain other industries that are crucial to national security be
subject to security review before consummation of any such acquisition. We may pursue potential strategic acquisitions that are complementary
to our business and operations. Complying with the requirements of these regulations to complete such transactions could be time-consuming,
and any required approval processes, including obtaining approval or clearance from the MOFCOM or the Anti-Monopoly Bureau or its local
counterparts, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or
maintain our market share.
 
Enhanced
scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue
in the future.
 
Pursuant
to the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises, or SAT Circular
698, issued by China’s State Administration of Taxation (“SAT”) on December 10, 2009, where a foreign investor transfers
the equity interests of a resident enterprise indirectly via disposition of the equity interests of an overseas holding company, or an
“indirect transfer,” and such overseas holding company is located in a tax jurisdiction that (i) has an effective tax rate
less than 12.5% or (ii) does not tax foreign income of its residents, the foreign investor shall report the indirect transfer to the
competent PRC tax authority. The PRC tax authority will examine the true nature of the indirect transfer, and if the tax authority considers
that the foreign investor has adopted an “abusive arrangement” in order to avoid PRC tax, it may disregard the existence
of the overseas holding company and re-characterize the indirect transfer and as a result, gains derived from such indirect transfer
may be subject to PRC withholding tax at a rate of up to 10%.
 

 
On
February 3, 2015, the SAT issued the Announcement of the State Administration of Taxation on Several Issues Concerning the Enterprise
Income Tax on Indirect Property Transfer by Non-Resident Enterprises, or SAT Bulletin 7, to supersede existing provisions in relation
to the “indirect transfer” as set forth in SAT Circular 698, while the other provisions of SAT Circular 698 remain in force.
Pursuant to SAT Bulletin 7, where a non-resident enterprise indirectly transfers properties such as equity in PRC resident enterprises
without any justifiable business purposes and aiming to avoid the payment of enterprise income tax, such indirect transfer must be reclassified
as a direct transfer of equity in PRC resident enterprise. To assess whether an indirect transfer of PRC taxable properties has reasonable
commercial purposes, all arrangements related to the indirect transfer must be considered comprehensively and factors set forth in SAT
Bulletin 7 must be comprehensively analyzed in light of the actual circumstances. SAT Bulletin 7 also provides that, where a non-PRC
resident enterprise transfers its equity interests in a resident enterprise to its related parties at a price lower than the fair market
value, the competent tax authority has the power to make a reasonable adjustment to the taxable income of the transaction.
 
On
October 17, 2017, the SAT issued the Announcement of the State Administration of Taxation on Matters Concerning Withholding of Income
Tax of Non-resident Enterprises as Source, or SAT Bulletin 37, which repealed the entire SAT Circular 698 and the provision in relation
to the time limit for the withholding agent to declare to the competent tax authority for payment of such tax of SAT Bulletin 7. Pursuant
to SAT Bulletin 37, the income from a property transfer, as stipulated in the second item under Article 19 of the Enterprise Income Tax
Law, shall include the income derived from transferring such equity investment assets as stock equity. The balance of deducting the equity’s
net value from the total income from equity transfer shall be taxable income from equity transfer. Where a withholding agent enters into
a business contract, involving the income specified in the third paragraph of Article 3 in the Enterprise Income Tax Law, with a non-resident
enterprise, the tax-excluding income of the non-resident enterprise will be treated as the tax-including income, based on which the tax
payment will be calculated and remitted, if it is agreed in the contract that the withholding agent shall assume the tax payable.
 
During
the effective period of SAT Circular 698 and by the application of SAT Bulletin 7 and SAT Bulletin 37, some intermediary holding companies
were actually looked through by the PRC tax authorities, and consequently the non-PRC resident investors were deemed to have transferred
the PRC subsidiary and PRC corporate taxes were assessed accordingly. It is possible that we or our non-PRC resident investors may become
at risk of being taxed under SAT Bulletin 7 and SAT Bulletin 37 and may be required to expend valuable resources to comply with SAT Bulletin
7 and SAT Bulletin 37 or to establish that we or our non-PRC resident investors should not be taxed under SAT Bulletin 7 and SAT Bulletin
37, which may have an adverse effect on our financial condition and results of operations or such non-PRC resident investors’ investment
in us.
 
It
may be difficult for overseas shareholders and/or regulators to conduct investigation or collect evidence within PRC.
 
Shareholder
claims or regulatory investigation that are common in the U.S. generally are difficult to pursue as a matter of law or practicality in
PRC. For example, in PRC, there are significant legal and other obstacles to providing information needed for regulatory investigations
or litigation initiated outside PRC or otherwise with respect to foreign entities. Although the authorities in PRC may establish a regulatory
cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and
administration, such cooperation with the securities regulatory authorities in the Unities States may not be efficient in the absence
of mutual and practical cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, which became effective
in March 2020, or Article 177, the securities regulatory authority of the State Council may collaborate with securities regulatory authorities
of other countries or regions in order to monitor and oversee cross border securities activities. Article 177 further provides that no
overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of
the PRC, and that any Chinese entities and individuals are not allowed to provide documents or materials related to securities business
activities to overseas agencies without prior consent of the securities regulatory authority of the State Council and the competent departments
of the State Council. While detailed interpretation of or implementation rules under Article 177 have yet to be promulgated, the inability
for an overseas securities regulator to directly conduct investigation or evidence collection activities within PRC may further increase
difficulties faced by you in protecting your interests.
 
Notwithstanding
the foregoing, on April 2, 2022, the CSRC published a draft of the Provisions on Strengthening Confidentiality and Archives Administration
of Overseas Securities Offering and Listing by Domestic Companies, or Draft Provisions, for public comments. The Draft Provisions is
to update and revise the Provisions on Strengthening Confidentiality and Archives Administration for Overseas Securities Offering and
Listing (Announcement No. 29 [2009] of the CSRC, “Current Provisions”). The Draft Provisions stipulates that a cross-border
regulatory cooperation mechanism as prescribed in Article 177 of the PRC Securities Law will be established and that the CSRC or relevant
authorities shall provide necessary assistance in accordance with the bilateral and multilateral cooperation mechanism. It shifts the
overall direction of cross-border supervision of overseas listings from a “PRC dominant” approach under the Current Provisions
to a cross-border regulatory cooperation mechanism. We will continue to monitor the developments of relevant laws and regulations and
make necessary preparations so far as it is reasonably practicable.
 

 
You
may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in PRC against us
or our directors and officers based on foreign laws.
 
We
are an exempted company with limited liability incorporated under the laws of the Cayman Islands, and we conduct substantially all of
our operations in Taiwan and PRC and substantially all of our assets are located in Taiwan and PRC. In addition, certain of our directors
and officers reside outside the U.S. As a result, it may be difficult for you to effect service of process within the U.S. or elsewhere
outside PRC upon us or those persons. In addition, there is uncertainty as to whether the courts of PRC would recognize or enforce judgments
of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the U.S. or any state.
 
The
recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce
foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between PRC and the country
where the judgment is made or on principles of reciprocity between jurisdictions. PRC does not have any treaties or other forms of written
arrangement with the U.S. that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to
the PRC Civil Procedures Law, the PRC courts will not enforce a foreign judgment against us if they decide that the judgment violates
the basic principles of PRC laws or national sovereignty, security or public interest. As a result, it is uncertain whether and on what
basis a PRC court would enforce a judgment rendered by a court in the U.S.
 
Regulation
and censorship of information disseminated over the internet in PRC may adversely affect our business, and we may be liable for content
that is displayed on our website.
 
PRC
has enacted laws and regulations governing internet access and the distribution of products, services, news, information, audio-video
programs and other content through the internet. In the past, the PRC government has prohibited the distribution of information through
the internet that it deems to be in violation of PRC laws and regulations. If any of our internet information was deemed by the PRC government
to violate any content restrictions, we would not be able to continue to display such content and could become subject to penalties,
including confiscation of income, fines, suspension of business and revocation of required licenses, which could materially and adversely
affect our business, financial condition and results of operations. We may also be subject to potential liability for any unlawful actions
of our customers or users of our website or for content we distribute that is deemed inappropriate. It may be difficult to determine
the type of content that may result in liability to us, and if we are found to be liable, we may be prevented from operating our website
in PRC.
 
Additional
factors outside of our control related to doing business in PRC could negatively affect our business.
 
Additional
factors that could negatively affect our business include a potential significant revaluation of the Renminbi, which may result in an
increase in the cost of producing products in PRC, labor shortages and increases in labor costs in PRC as well as difficulties in moving
products manufactured in PRC out of the country, whether due to port congestion, labor disputes, slowdowns, product regulations and/or
inspections or other factors. Prolonged disputes or slowdowns can negatively impact both the time and cost of transporting goods. Natural
disasters or health pandemics impacting PRC can also have a significant negative impact on our business. Further, the imposition of trade
sanctions or other regulations against products imported by us from, or the loss of “normal trade relations” status with,
PRC, could significantly increase our cost of products exported outside of PRC and harm our business.

 
Existing and future environmental laws and
regulations could result in increased compliance costs or additional operating costs or construction costs and restrictions. Failure
to comply with such laws and regulations may result in substantial fines or other limitations that may adversely impact our financial
condition or results of operation.
 
The operations of our PRC Subsidiaries are subject
to certain environmental laws and regulations, including laws related to the use, handling, storage, transportation and disposal of hazardous
substances and wastes. These laws may require our PRC Subsidiaries to comply with procedures that impose various restrictions and obligations
that may have material effects on our PRC Subsidiaries’ operations. If operational requirements cannot be met in a manner satisfactory
for our PRC Subsidiaries’ operations, it may adversely impact our business.
 
During the year ended December 31, 2021, due to
administrative oversight, one of our PRC subsidiaries, Dongguan Forwell, piled up the general industrial solid wastes and hazardous wastes
generated in the production process in an open air area but failed to build storage facilities and site as required by law; as a result,
Dongguan Forwell was imposed upon a fine of RMB 200,000 (approximately $30,960) by Dongguan Bureau of Ecology and Environment on December
21, 2021. Such fine was paid up and the non-compliance was rectified by Dongguan Forwell.
 
Environmental laws and regulations can be complex
and may be subject to change, such as through new requirements enacted at the supranational, national, sub-national and/or local level
or new or modified regulations that may be implemented under existing law. The nature and extent of any changes in these laws, rules,
regulations and permits may be unpredictable and may have material effects on our business. Future legislation and regulations or changes
in existing legislation and regulations, or interpretations thereof, including those relating to disposal of hazardous substances and
wastes, could cause additional expenditures and restrictions in connection with our operations.
 
Failure to comply with regulations related
to production safety may result in fines and legal or administrative actions.
 
Pursuant to the Production Safety Law of the PRC,
or the Production Safety Law, which took effect on November 1, 2002, amended on August 31, 2014 and June 10, 2021, respectively, the
entities that are engaged in production and business operation activities must implement national industrial standards which guarantee
the production safety and comply with production safety requirements provided by the laws, administrative regulations and national or
industrial standards. An entity must take effective measures for safety production, maintain safety facilities, examine the safety production
procedures, educate and train employees and take any other measures to ensure the safety of its employees and the public. An entity or
its relevant persons-in-charge which has failed to perform such safety production liabilities will be required to make amends within
a time limit or face administrative penalties. If it fails to amend within the prescribed time limit, the production and business operation
entity may be ordered to suspend business for rectification, and serious violations may result in criminal liabilities.
 

 

During the year ended December 31, 2021, due to
administrative oversight, one of our PRC subsidiaries, Dongguan YMA, failed to adopt relevant safety precautions as required by the Production
Safety Law; as a result, the violation of the Production Safety Law was identified and a fine of RMB 48,000 (approximately $7,430) was
imposed upon Dongguan YMA by Dongguan Emergency Management Bureau on December 31, 2021. The fine was paid up and the non-compliance was
rectified by Dongguan YMA.
 
Any failure to comply with regulations related
to production safety may result in fines and legal or administrative actions, which may have material adverse impact on our results of
operations and prospects.
 

Risks
Related to Our Business and Industry
 
We
rely on raw materials supplied by our suppliers for the production of our products which exposes us to risk of production shortages and
fluctuations in prices of raw materials.
 
Our
major raw materials comprise carbon fiber yarn and resin. We generally purchase carbon fiber yarn and resin from independent
suppliers in Japan. The procurement of such raw materials required to manufacture carbon fiber composite material, which is a key component
of our products, represents a major component of our cost of sales. Any failure to secure adequate supplies of such raw materials or
any interruptions in any part of the supply chain may disrupt our operations. During the years ended December 31, 2020 and 2021, the
purchases from our top supplier accounted for approximately 22.6% and 25.0% of our total purchases, respectively. We cannot assure you
that our relationship with our top supplier will continue to be as stable, or that our current supplier will continue to supply products
to us on terms acceptable to us, or that we will be able to establish new or extend current supplier relationships to ensure a steady
supply in a timely and cost-efficient manner. If our relationships with our important suppliers are terminated, interrupted, or modified
in any way adverse to us, our business, financial condition and results of operations could be adversely affected.
 
In
addition, these raw materials used in our manufacturing are subject to price volatility caused by external conditions, such as market
supply and demand, commodity price fluctuations, government control, business performance and operational needs (such as scheduled maintenance
shutdowns) of the suppliers, which are beyond our control. For instance, there was certain price volatility for carbon fiber yarn
during the year ended December 31, 2020 due to regulatory investigation on a carbon fiber supplier in Japan, who is one of our carbon
fiber suppliers, by the Japanese government. The said carbon fiber supplier exported a portion of carbon fiber products, which had been
transferred to third parties to which such supplier had no license to export the products. In this regard, the Ministry of Economy Trade
and Industry of Japan has issued a warning to request the said supplier to implement recurrence prevention measures and strict security
export control. Such event raised concern in the market as to the stable supply of carbon fiber by such supplier for a short period of
time. As such, our supplier base has ever since been diversified to include more suppliers in Taiwan. However, if any price volatility
occurs again and we fail to effectively manage the price fluctuations in our raw materials or transfer the increased costs to our customers
or modify our products or adjust our procurement strategy, any significant increase in the prices of our major raw materials would affect
our profit margin and more generally, our business, financial condition and prospect.
 
If
we fail to adopt new technologies or develop new manufacturing technologies or adapt our products to evolving customer requirements,
our business may be materially and adversely affected.
 
Our
edge lies in our carbon fiber composite materials, which as key structural component is used or featured in electronic bicycles, sports
bicycles, rackets, other sporting goods, automobile and healthcare products for its light, stiff and durable qualities. As such it is
crucial that the functionality, compatibility and quality of our carbon fiber composite materials can be designed and manufactured in
a manner effective for and compatible to the respective purpose of electronic bicycles, rackets, other sporting goods, automobile, healthcare
products and any other new products our customers request us to co-design or co-develop.
 
As
the developments of certain of these goods and products, or goods and products that carbon fiber composite materials are increasingly
used or featured in (such as electric vehicles), are evolving and speeding up at a rapid pace, we prioritize and invest heavily in the
research and development of new technologies to enhance the qualities of lightweight and durability in our products. We need to continue
to enhance and improve by adopting new technologies, develop new manufacturing technologies as well as adapt our products to the evolving
customer requirements and preferences so as to keep up with the market trends and industry competition. If we are unable to anticipate
the evolving customer requirements and preferences or the market trends and respond effectively and timely, our business, prospects,
financial condition and results of operations may be materially and adversely affected.
 

 

We
recorded a negative cash flow for the year ended December 31, 2021, which may continue
in the future.
 
We recorded a negative cash flow from operating activities
of $0.5 million for the year ended December 31, 2021. For the main reason
leading to the negative cash flow from operating activities for the year ended December 31, 2021, please see “Management’s
Discussion and Analysis of Financial Condition and Results of Operations — Cash Flows.” Although we seek to manage our
working capital from time to time and we have unused credit lines from bank loans of the Group, we cannot assure you that we will be
able to match the timing and amounts of our cash inflows with the timing and amounts of our payment obligations and other cash outflows.
As a result, there could be a period during which we experience net cash outflow from operating activities. Net cash outflow from operating
activities may impact our business growth and adversely affect our financial condition and results of operations. 
We
may incur losses in the future.
 
We
had a net income of approximately $1.1 million for the fiscal year ended December 31, 2020, while we had a net
loss of approximately $0.1 million for the fiscal year ended December 31, 2021. As a growing public company, we anticipate that our
operating expenses might increase in the foreseeable future as we seek to maintain and continue to grow our business, attract potential
customers and further enhance our product offering. These efforts may prove more expensive than we currently anticipate, and we may not
succeed in increasing our revenue sufficiently to offset these higher expenses. As a result of the foregoing and other factors, we may
incur net losses in the future and may be unable to achieve or maintain profitability on a quarterly or annual basis for the foreseeable
future.
 
Our
production capacity may not correspond precisely to our production demands, and intended economic results may not be achieved if there
is any significant increase in production demand which exceeds our production capacity or any idle or unutilized production capacity
during any particular period.
 
We
have two production lines for the manufacture of different types of carbon fiber composite, and all of the carbon fiber composites are
applied as key structural parts of electric bicycles and sports bicycle, rackets, automobile and healthcare products and which are custom-made
to the requests of our customers. Except for the outsourcing of part of the painting, cosmetic and sanding processes for greater cost
efficiency, we do not outsource any production processes to independent sub-contractors. As our production demands depend on the specific
orders of our customers, our actual production volume varies with various factors such as customers’ preferences, market trend,
economic conditions, industry competitors’ pricing strategies or any other factors beyond our control. As a result, our production
capacity may not correspond precisely to our production demands. If there is any significant increase in production demand which exceeds
our production capacity, unless we are able to expand our production capacity or outsource certain production processes, we may have
to reject orders from customers and intended economic results may not be achieved. And in case we opt for the outsourcing of certain
production processes to meet production demands, we may experience a lower gross profit margin and it may be difficult to ensure the
quality of the products. If the orders from our customers are not sufficient to fully utilize our production capacity and there is idle
or unutilized production capacity which is much lower than the desired rate of utilization of our production lines, our business, financial
condition and results of operations may be adversely affected.
 
Our
success depends on our ability to attract, retain and motivate members of senior leadership, technical personnel and other employees.
 
Our
success and growth are, to a large extent, attributable to our experienced talent pool of senior management team with strong execution
capabilities, our highly skilled technical personnel who keep pace with the latest developments and manufacturing technologies in the
carbon fiber composite industry, as well as our committed and qualified employees. Given the technology-driven nature of our business,
as of the date of this prospectus, we have over 60 technical personnel who are responsible for research and development of new technologies
and manufacturing technologies in relation to carbon fiber composite materials  and we made continued and substantial investment
in our technical personnel by providing them with training and various types of incentives.
 

 

Notwithstanding
our efforts to reward them for their services and contributions, there is no assurance that our compensation packages will attract and
retain our senior management team, technical personnel and employees. In particular, we may not be able to recruit talents upon unanticipated
departure of our members of senior management team or key technical personnel. In addition, to keep pace with our anticipated growth,
we may need to recruit additional personnel with necessary industry expertise and such candidates may not be readily available. Therefore,
any failure to attract, retain and motivate senior leadership, technical personnel and other employees may impact our competitiveness
and our ability to meet our growth targets, and in turn, have an adverse impact on our business operations and profitability.
 

Our
failure to comply with data protection laws and regulations could lead to government enforcement actions and significant penalties against
us, and adversely impact our operating results.
 
The
regulatory framework for the collection, use, safeguarding, sharing, transfer and other processing of personal information worldwide
is rapidly evolving and is likely to remain uncertain for the foreseeable future. Regulatory authorities in virtually every jurisdiction
in which we operate in Greater China and other Asian markets have implemented and are considering a number of legislative and regulatory
proposals concerning personal data protection.
 
Regulatory
authorities in China have implemented and are considering a number of legislative and regulatory proposals concerning data protection.
For example, the Cyber Security Law of the People’s Republic of China (the “Cyber Security Law”), which became effective
in June 2017, created China’s first national-level data protection regime for “network operators,” which may include
all organizations in China that provide services over the internet or other information network.
 
Under
the Cyber Security Law, the transmission of certain personal information and important data outside of China is only permitted upon the
completion of a security assessment conducted by or as determined by the Chinese government. Certain draft regulations, including the
Measures for Security Assessment for Cross-border Transfer of Personal Information and Important Data (Draft for Comment), published
in 2017, and the Measures for Security Assessment for Cross-border Transfer of Personal Information (Draft for Comment), published in
2019, have been proposed by the Chinese government that specify the procedures and stipulate more detailed compliance requirements relating
to such assessment, and in certain circumstances, government approval, prior to the transmission of such information and data outside
of China.
 
In
addition, the Standing Committee of the National People’s Congress of the People’s Republic of China (“SCNPC”)
promulgated the Data Security Law of the People’s Republic of China (the “Data Security Law”) on June 10, 2021, which
became effective on September 1, 2021. The Data Security Law imposes data security and privacy obligations on entities and individuals
carrying out data processing activities, and introduces a data classification and hierarchical protection system. The classification
of data is based on its importance in economic and social development, as well as the degree of harm expected to be caused to national
security, public interests, or legitimate rights and interests of individuals or organizations if such data is tampered with, destroyed,
leaked, or illegally acquired or used. The security assessment mechanism was also included in the Personal Information Protection Law
(the “Personal Information Protection Law”), which was promulgated in August 2021 and became effective on November
1, 2021, for the Chinese government to supervise certain cross-border transfers of personal information.
 
Under
the Cyber Security Law and Data Security Law, we are required to establish and maintain a comprehensive data and network security management
system that will enable us to monitor and respond appropriately to data security and network security risks. We will need to classify
and take appropriate measures to address risks created by our data processing activities and use of networks. We will be obligated to
notify affected individuals and appropriate Chinese regulators of and respond to any data security and network security incidents. Establishing
and maintaining such systems takes substantial time, effort and cost, and we may not be able to establish and maintain such systems fully
as needed to ensure compliance with our legal obligations. Despite our investment, such systems may not fully guard us or enable us to
appropriately respond to or mitigate all data security and network security risks or incidents we face. Furthermore, under the Data Security
Law, data categorized as “important data,” which will be determined by governmental authorities in the form of catalogs,
is to be processed and handled with a higher level of protection. The notion of important data is not clearly defined by the Cyber Security
Law or the Data Security Law. In order to comply with the statutory requirements, we will need to determine whether we possess important
data, monitor the important data catalogs that are expected to be published by local governments and departments, perform risk assessments
and ensure we are complying with reporting obligations to applicable regulators. We may also be required to disclose to regulators business-sensitive
or network security-sensitive details regarding our processing of important data, and may need to pass the government security review
or obtain government approval in order to share important data with offshore recipients, which can include foreign licensors, or share
data stored in China with judicial and law enforcement authorities outside of China. If judicial and law enforcement authorities outside
China require us to provide data stored in China, and we are not able to pass any required government security review or obtain any required
government approval to do so, we may not be able to meet the foreign authorities’ requirements. The potential conflicts in legal
obligations could have adverse impact on our operations in and outside of China.
 

 
Furthermore,
on November 14, 2021, the CAC released a draft of the Administrative Regulations on Network Data Security, or Draft Regulations, for
public comments. On December 28, 2021, the Cybersecurity Administration of China, China’s top cyberspace regulator, issued an amendment
to the Cybersecurity Review Measures which have been in effect since June 1, 2020 and became effective on February 15, 2022. Under
the amended Cybersecurity Review Measures, the scope of entities required to undergo cybersecurity review to assess national security
risks that arise from data processing activities would be expanded to include all critical information infrastructure operators who purchase
network products and services and all network platform operator carrying out data processing activities that affect or may affect national
security. In addition, the amended Cybersecurity Review Measures stipulates that all network platform operators that maintain or store
the personal information of more than 1 million users and undertake a public listing of securities in a foreign country would be required
to pass cybersecurity review, which would focus on the potential risk of core data, important data, or a large amount of personal information
being stolen, leaked, destroyed, illegally used or exported out of China, or critical information infrastructure being affected, controlled
or maliciously used by foreign governments after such a listing. The Draft Regulations also stipulate that, among other items, for any
listing to be done on a security exchange in a foreign country involving a “data processing operator” with personal information
of more than one million users, such “data processing operator” shall report to the CAC for a cybersecurity review. The Draft
Regulations were released for public comment only, and the draft provisions and anticipated adoption or effective date are subject to
changes and thus its interpretation and implementation remain substantially uncertain. We cannot predict the impact of the Draft Regulations,
if any, on our operations at this stage.
 
The
national security legal regime imposes stricter data localization requirements on personal information and requires us to undergo cybersecurity
or other security review, obtain government approval or certification, or put in place certain contractual protections before transferring
personal information out of China. As a result, personal information and important data that we or our customers, suppliers, and other
third parties collect, generate or process in China may be subject to such data localization requirements and heightened regulatory oversight
and controls. To comply with these requirements, maintaining local data centers in China, conducting security assessments or obtaining
the requisite approvals from the Chinese government for the transmission outside of China of such controlled information and data could
significantly increase our operating costs or cause delays or disruptions in our business operations in and outside China. We expect
that the evolving regulatory interpretation and enforcement of the national security legal regime will lead to increased operational
and compliance costs and will require us to continually monitor and, where necessary, make changes to our operations, policies, and procedures.
If our operations, or the operations of our CROs, licensees or partners, are found to be in violation of these requirements, we may suffer
loss or use of data, suffer a delay in obtaining regulatory approval for our products, be unable to transfer data out of China,
be unable to comply with our contractual requirements, suffer reputational harm or be subject to penalties, including administrative,
civil and criminal penalties, damages, fines and the curtailment or restructuring of our operations. If any of these were to occur, it
could adversely affect our ability to operate our business and our financial results.
 
In
addition, in the United States, at both the federal and state levels, and in territories outside of China, including Taiwan
and Hong Kong, we are subject to laws and regulations that address privacy, personal information protection and data security. Numerous
laws and regulations, including security breach notification laws and consumer protection laws, govern the collection, use, disclosure
and protection of personal information. Given the variability and evolving state of these laws, we face uncertainty as to the exact interpretation
of the new requirements, and we may be unsuccessful in implementing all measures required by regulators or courts in their interpretation.
 
We
expect that these data protection and transfer laws and regulations will receive greater attention and focus from regulators going forward,
and we will continue to face uncertainty as to whether our efforts to comply with evolving obligations under data protection, privacy
and security laws in China, the United States and other countries where we plan or conduct business will be sufficient.
 
Any
failure or perceived failure by us to comply with applicable laws and regulations could result in reputational damage or proceedings
or actions against us by governmental entities, individuals or others. These proceedings or actions could subject us to significant civil
or criminal penalties and negative publicity, result in the delayed or halted transfer or confiscation of certain personal information,
result in the suspension of ongoing clinical trials or ban on initiation of new trials, require us to change our business practices,
increase our costs and materially harm our business, prospects, financial condition and results of operations. In addition, our current
and future relationships with customers, suppliers and other third parties could be negatively affected by any proceedings or actions
against us or current or future data protection obligations imposed on them under applicable law, including the European Union General
Data Protection Regulation and Cyber Security Law. In addition, a data breach affecting personal information, or a failure to comply
with applicable requirements could result in significant management resources, legal and financial exposure and reputational damage that
could potentially have a material adverse effect on our business and results of operations.
 

 
We
may be exposed to product returns and product liability claims and latent defect liability claims
 
Our
products are used as key components in electric bicycles and sports bicycle parts, rackets, automobile parts and healthcare products
of our customers who will, after assembling various parts of and packaging the products, provide such products to the end-users. We are
exposed to potential product returns, product liability claims and latent defect liability claims from our customers and the end-users
of goods and products. Although we have put in place stringent quality control measures, including the setting up of different teams
for incoming quality control, quality control and quality assurance which monitor the quality of the raw material, semi-finished products
as well as finished products, there may be undetected flaws or manufacturing defects or other irregularities that may be subsequently
detected at any point in the life of our products. We have adopted return policy on products with manufacturing defects to accommodate
our customers. If after any checkup or analysis by our laboratory the defect of a product is found to be manufacturing defect, return
and replacement of products will be made. Therefore, if undetected flaws or manufacturing defects or other irregularities from either
the design or manufacture of our products are to occur, additional costs and expenses which we may not recoup may incur and our revenue
and costs control can be negatively impacted.
 
In
addition, if our defective or sub-standard products cause bodily injuries or property damage, we as the manufacturer may face product
liability claims or latent defect liability claims from our customers or the end-users of goods and products made with our products and
regardless of the merits or the outcome of these claims, we may be required to address and, if necessary, defend ourselves against such
claims, which may incur substantial legal costs and divert management attention and other resources from our business and operations.
We may also face adverse publicity associated with such claims, which could have an adverse effect on our business, results of operations
and financial condition.
 
As
we target to increase U.S. market exposure, if relations between the United States and PRC worsen, our business plan and operating results
may be adversely impacted.
 
During
the years ended December 31, 2020 and 2021, our products were supplied to customers in Europe, Japan and U.S. and we target
to increase our U.S. market exposure as we see growing demand in the U.S. markets. However, the U.S. government and Chinese government
have in recent years made respective statements and taken respective actions that signal changes to its global trade policies and trade
protection measures, including trade restriction or tariffs which affect certain products manufactured in the PRC and exported to the
U.S. As our production is based in PRC, the export of our products may be affected by adverse changes and developments in such global
trade policies and trade protection measures, such as the imposition of new trade barriers, sanctions, boycotts and other measures, which
are beyond our control. It is unknown whether and to what extent new tariffs (or other new laws or regulations) will be adopted, or the
effect that any such actions would have on us or our industry and users. Any trade restrictions imposed by the U.S. government or tariffs
imposed by the PRC could significantly affect our gross profit margin if our products manufactured in PRC are subject to the trade restriction
or tariffs or could disrupt our plan to increase U.S. market exposure, and in turn, have an adverse effect on our business plan, financial
condition and results of operations.
 
We
may not be able to obtain, maintain and protect our intellectual property rights and proprietary information, which could harm our business
and competitive position.
 
The
protection of our intellectual property rights, including trade secrets, trademarks, patents, domain names and other technical and proprietary
know-how is critical to our success as we operate in an industry where technological innovation and technical capabilities and knowledge
are the key to remain competitive. As of the date of this prospectus, we have obtained 30 registered patents related to our bicycle,
racket and manufacturing process (with 7 invention patents, 14 utility model patents and 9 design patents) in Taiwan, PRC, Japan,
Europe and the U.S. and 12 trademarks in PRC and Taiwan. We have also applied for the registration of 6 invention patents in Taiwan,
PRC, Vietnam, Cambodia and Germany. See “Business – Intellectual Property.”
 

 
We
rely on, and expect to continue to rely on a combination of intellectual property laws and contractual arrangements, including confidentiality
agreements and non-compete covenants with our employees and independent parties which we have business relationships with, to protect
our intellectual property and proprietary rights. We also have security system in place to ensure that access to the manufacturing process
will not be misappropriated. For instance, we have 24 hours door security at the production plant in the PRC and laboratory in
Taiwan, and our computer server is safeguarded as external partners’ access is not permitted, and our backup computer server
is located in Taichung, Taiwan. However, there is no assurance that such efforts, policies and precautions are either sufficient
or effective. As a result, our intellectual property rights may be infringed, misappropriated, or challenged. Legal proceedings involving
intellectual property rights are generally costly and time consuming, and may divert management attention and other resources from our
business and operations. Further, our computer server is also vulnerable to damage or interruption from catastrophic occurrences such
as earthquakes, floods, fires, power loss, telecommunication failures, cybersecurity threats, terrorist attacks, natural disasters, public
health crises such as the COVID-19 pandemic, geopolitical and similar events, or acts of misconduct. Despite any precautions we may take,
the occurrence of a catastrophic disaster or other unanticipated problems at our facilities, or within our systems, could result in interruptions,
performance problems, or failure of our infrastructure, technology, or platforms, which may adversely impact our business. In addition,
our ability to conduct normal business operations could be severely affected. In the event of significant physical damage to our facilities,
it may take a significant period of time to achieve full resumption of our operations, and our disaster recovery planning may not account
for all eventualities. In addition, any negative publicity arising from these disruptions and any failure in protecting or enforcing
our intellectual property rights could harm our reputation and brand and adversely affect our business.
 
Most recently, in February
2022, the Russian Federation commenced a military invasion of Ukraine, and Russian actions with respect to Ukraine have resulted in certain
broad sanctions being imposed by the United States, the European Union, the United Kingdom and other international authorities. We cannot
predict the impact of Russian actions in Ukraine or the reaction to such actions by the United States, the European Union, the United
Kingdom or other international authorities. In connection with the aforesaid military invasion, cybersecurity experts anticipate a meaningful
increase in cyberattack and cybercrime activity in connection with the Russian invasion of Ukraine around the globe. However, as at the
date of this prospectus, we believe there is no new or heightened risk of potential cyberattacks by state actors or others since Russia’s
invasion of Ukraine on our Company.
 
We
may be subject to third-party intellectual property infringement claims.
 
We
depend, to a large extent, on our ability to effectively develop and maintain intellectual property rights relating to our business.
However, we cannot assure you that third parties will not put forward claims that our business infringes upon or otherwise violates patents,
copyrights or other intellectual property rights which they hold, whether such claims are valid or otherwise. We may face allegations
that we have infringed the trademarks, copyrights, patents and other intellectual property rights of third parties, including our competitors,
or allegations that we are involved in unfair trade practice. If we are found to have violated the intellectual property rights of others,
we may be subject to liability for our infringement activities or may be prohibited from using such intellectual property, and any such
liability or prohibition may materially and adversely affect our business, financial condition and results of operations.
 
Our
profitability, financial condition and results of operations may be adversely affected by a downturn in the global economies.
 

Our products are supplied directly or indirectly
to branded customers around the world, especially in Switzerland, France, Italy, the Netherlands, Germany and Japan. Sales attributable
to the markets in Europe are substantial, in particular the revenue from customers in Switzerland, Italy, Germany and France represented
approximately 23.0%, 10.4%, 10.1% and 9.4%, respectively, of our total revenue for the year ended December 31, 2020 and the revenue from
customers in Switzerland, Italy, Japan and Germany represented approximately 23.7%, 14.4%, 8.2% and 11.3%, respectively, of our
total revenue for the year ended December 31, 2021. We estimate our sales to markets in Europe will continue to be our major source of
income in the foreseeable future. Therefore, our results of operation are largely affected by the level of demand for our products from
our customers located in Europe which is in turn influenced by various factors which are beyond our control, including, among others,
economic downturn. We cannot predict the timing, magnitude or duration of any economic downturn. These and other economic factors may
have a negative impact on our profitability, financial condition and results of operations.
 
Our
insurance coverage may not be adequate to cover all the risks related to our business and operations.
 
We
maintain commercial fire insurance for our headquarters, R&D center and warehouses in Taiwan and public general liability insurance
in Taiwan, as well as property all risks insurance for the production plant, R&D center and warehouse in Dongguan, PRC. In addition,
we purchase cargo transportation insurance to insure the risks and liabilities in relation to the shipping of our products and raw materials
between our warehouse in Taiwan, production plant and warehouse in the PRC and delivery points designated by customers. We also maintain
credit insurance in respect of debts arising in the course of business activity and from the trading of products and performance of services
under TW YMA. We also maintain commercial general liability insurance with products liability coverage in respect of the bicycle parts
products, senior walker products, motorcycle handler and pre-preg materials manufactured or distributed by us and exported or sold worldwide.
 
We
had not made any material claims under our insurance policies. However, there is no assurance that injuries or casualties or similar
or other accidents will not occur or that our insurance coverage would be adequate to cover all our potential losses associated with
serious or major accidents. If we were subject to substantial liabilities that were not covered by our insurance, we may suffer loss
that may adversely affect our business, financial condition and results of operations.
 

 

We
are exposed to various risks associated with our business and operations, and we have limited liability insurance coverage. A successful
liability claim against us due to injuries or damages suffered by our users could materially and adversely affect our reputation, results
of operations and financial conditions. Even if unsuccessful, such a claim could cause us adverse publicity, require substantial costs
to defend, and divert the time and attention of our management. In addition, we do not have any business disruption insurance. Any business
disruption event could result in substantial costs to us and a diversion of our resources.
 
Our
operations and financial condition have been and may continue to be affected by the COVID-19 pandemic.
 
The
COVID-19 pandemic and the measures imposed to contain the pandemic disrupted our operation and business in early 2020. As the pandemic
continues to rapidly evolve around the world, with several new COVID-19 variants discovered in recent months, we cannot anticipate with
any certainty the length or severity of the effects of COVID-19. As of the date of this prospectus, our business has been adversely affected
by COVID-19 pandemic primarily in the following aspects:
 
 

Operation: Our production plant in Dongguan, the PRC, suspended
work for approximately one month in 2020 which adversely affected our production schedules, despite that the operation of our headquarters
and offices in Taiwan remained unaffected. The pandemic also casted minor negative impacts on our supply chain such as manufacturing,
warehousing and shipping of our products.  
 
  

Financial conditions: Despite the strong growth of market demand, recent shortage of shipping containers
and delays in international shipments delayed our shipment of inventories to our customers as scheduled which resulted in significant
increase  in the amount of inventories from $11,699,660
as of December 31, 2020 to $23,010,057 as of December 31, 2021, which is the main reason for our negative cash outflow in operating activities
of $539,215 for the year ended December 31, 2021. 
Furthermore,
the COVID-19 pandemic has resulted in, and may intensify, economic distress in different countries, and the duration and extent of the
impact of COVID-19 outbreak is still uncertain at this time. If the COVID-19 pandemic cannot be contained and it subsequently results
in greater global economic distress, there may be reduced consumer confidence and spending cut backs, which may result in reduced demand
for our products and in which case our business and results of operations would be adversely affected.
 
In addition, the situation will be worsen off
if the spread of COVID-19 intensifies and more tightening measures are implemented whereby the supply chain of our products will be adversely
affected as there would be shortage of shipping containers and delays in international shipments and also suppliers of raw materials
may have to temporarily suspend the operation of their production plants or factories. As a result, if the shortage of shipping containers
and delays in international shipment remain unrelieved in the near future, it may continue to have negative impact on our liquidity and
we may be required to raise additional funds from bank financing or issuance of equity to fund our operations. Also, our cost for purchase
of raw materials may increase. If we are unable to find similar supplies at similar prices within a reasonable time, our production schedule
may be affected, which will in turn delay the delivery of products to our customers. Under such circumstances, our customers’ loyalty
and confidence may be reduced and they may bring civil claims against us. In such event, we may incur substantial amount of litigation
cost and utilize our internal resources that adversely affect our financial conditions and results of operations. In addition, in the
event there are transportation bans or restrictions following the escalation of the spread of COVID-19, our logistics expenses may increase.
All the foregoing may in turn materially and adversely affect our business and results of operations.
 
The
occurrence of force majeure events and natural disasters may adversely affect our business, financial condition and results of operations.
 
The
occurrence of force majeure events and natural disasters, including hurricanes, floods, earthquakes, tornadoes, fires and pandemics may
adversely affect our business, financial condition or results of operations. For instance, in 2019, there was an outbreak of COVID-19
in PRC and there was emergency public health policies and measures such as suspension of work, travel restrictions and/or traffic control
measures in various cities in PRC. For instance, our production plant suspended work for approximately one month in 2020 in light of
such policies and measures. Additionally, some regions in PRC and Taiwan, including certain cities in which we have operations, are under
the threat of flood, earthquake, fire and drought.
 
The
potential impact of a force majeure event or natural disaster on our results of operations and financial position is speculative and
would depend on numerous factors. The impact and severity of these natural disasters determines their effect on each given economy. Where
there is an outbreak or a recurrence of such force majeure event or natural disaster which are beyond our control, this could result
in disruption to our business or that of our customers, which could in turn materially and adversely affect our business, financial condition
and results of operations.
 
Any
labor shortage or unrest or increased labor cost may adversely affect our business, financial condition and results of operations.
 
Our
production plant is located in the PRC. Some of our manufacturing processes, such as lamination and decals, are labor intensive and cannot
be completely replaced by automation technology at this time. At the same time, there has been labor shortage from time to time in certain
cities in the PRC. Although we did not experience material operational difficulty due to labor shortage in the past, there is no assurance
that there will be no labor shortage for our production plant in the future. In addition, we may also be required to increase the wages
to keep our labor force or attract new workers if there is labor shortage or other changes in the labor market conditions. If we cannot
transfer the increased costs to our customers, our profit may be significantly impacted in such case. Also, although we have no experienced
any labor unrest in the past, any future labor unrest will disrupt our production or pose threat to our properties. Therefore, any labor
shortage or unrest or increased labor cost may adversely affect our business, financial condition and results of operations.
 

 
If
we fail to implement and maintain an effective system of internal controls or fail to remediate the material weaknesses in our internal
control over financial reporting that has been identified, we may be unable to accurately report our results of operations or prevent
fraud or fail to meet our reporting obligations, and investor confidence and the market price of our ordinary shares may be materially
and adversely affected.
 
Prior
to this offering, we were a private company with limited accounting personnel and other resources with which to address our internal
controls and procedures. Our independent registered public accounting firm has not conducted an audit of our internal control over financial
reporting. However, in preparing our consolidated financial statements as of and for the years ended December 31, 2019, 2020 and
2021, we and our independent registered public accounting firm identified weaknesses in our internal control over financial reporting,
as defined in the standards established by the PCAOB. The material weakness identified arose from our lack of effective financial reporting
oversight process for our period-end financial reporting as well as our lack of policies and procedures over evaluation of significant
complex transactions and evaluation of certain general ledger accounts. Following the identification of the material weakness, we have
taken and plan to continue to take remedial measures to remedy the weakness. For details of these remedies, see “Management’s
Discussion and Analysis of Financial Condition and Results of Operations—Internal Control over Financial Reporting.”
However, the implementation of these measures may not fully address the material weakness in our internal control over financial reporting,
and we cannot conclude that they have been fully remedied. Our failure to correct the material weakness or our failure to discover and
address any other material weakness or control deficiencies could result in inaccuracies in our financial statements and could also impair
our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. As a result,
our business, financial condition, results of operations and prospects, as well as the trading price of our ordinary shares may be materially
and adversely affected. Moreover, ineffective internal control over financial reporting significantly hinders our ability to prevent
fraud.
 
Furthermore,
it is possible that, had our independent registered public accounting firm conducted an audit of our internal control over financial
reporting, such firm might have identified additional material weakness and deficiencies. Upon completion of this offering, we will become
a public company in the United States subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002, or Section
404, will require that we include a report of management on our internal control over financial reporting in our annual report on Form
20-F beginning with our annual report for the fiscal year ending December 31, 2023. In addition, once we cease to be an “emerging
growth company” as such term is defined in the JOBS Act, our independent registered public accounting firm must attest to and report
on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial
reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective,
our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified
if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed,
or if it interprets the relevant requirements differently from us. In addition, after we become a public company, our reporting obligations
may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may
be unable to timely complete our evaluation testing and any required remediation.
 
During
the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404, we may identify
other weaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail to maintain the adequacy
of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may
not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section
404. If we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial
statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial
information. This could in turn limit our access to capital markets, harm our results of operations, and lead to a decline in the trading
price of our ordinary shares. Additionally, ineffective internal control over financial reporting could expose us to increased
risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory
investigations and civil or criminal sanctions. We may also be required to restate our financial statements from prior periods.
 

 
We
adopt cost-plus pricing approach as our general pricing model and the results of our operations are dependent on the ability to remain
cost competitive.
 
We
adopt a cost-plus pricing approach for our general pricing model. The unit price of our products is determined by reference to various
factors, including the technical complexity of the product, the volume of the order, estimated material cost, labor cost and production
overhead. Our ability to continue to implement our pricing model and maintain our margins will depend on our ability to remain cost competitive,
which means we will have to actively manage our cost of sales, and in particular, our cost of materials, labor costs and product development
costs.
 
Historically,
we have been able to pass any increases in material cost, labor cost onto our customers as we generally negotiate and agree on the estimated
unit price of a product prior to confirming the purchase orders from customers. However, if there is sudden and significant increase
in such costs after the purchase orders are confirmed, we will not be able to pass such increased costs onto our customers. In such event,
if we are not able to lower other costs in amounts sufficient to compensate such increased costs, our margins would be negatively impacted
which could have a material and adverse effect on our results of operations.

 
The
war in Ukraine could materially and adversely affect our business and results of operations.
 
The
recent outbreak of war in Ukraine has already affected global economic markets, including a dramatic increase in the price of oil
and gas, and the uncertain resolution of this conflict could result in protracted and/or severe damage to the global economy.
Russia’s recent military interventions in Ukraine have led to, and may lead to, additional sanctions being levied by the
United States, European Union and other countries against Russia. Russia’s military incursion and the resulting sanctions
could adversely affect global energy and financial markets and thus could affect the global markets, our customers’ businesses
and potentially our business. However, as at the date of this prospectus, to the best knowledge of the Company, we do not have any
direct business or contracts with any Russian entity as a supplier or customer, and we do not have any knowledge whether any our
customers or suppliers have any direct business or contracts with any Russian entity.  The extent and duration of the military
action, sanctions and resulting market disruptions are impossible to predict, but could be substantial. Any such disruptions caused
by Russian military action or resulting sanctions may magnify the impact of other risks described in this section. We cannot predict
the progress or outcome of the situation in Ukraine, as the conflict and governmental reactions are rapidly developing and beyond
their control. Prolonged unrest, intensified military activities or more extensive sanctions impacting the region could have a
material adverse effect on the global economy, and such effect could in turn have a material adverse effect on our business,
financial condition, results of operations and prospects.
 
Risks
Related to Our Corporate Structure
 
We
are a holding company and our sole material asset after completion of this offering will be our equity interest in our subsidiaries.
Accordingly, we will depend on distributions from our subsidiaries to pay dividends and cover our corporate and other expenses.
 
We
are a holding company and will have no material assets other than our equity interest in our subsidiaries. Because we will have no independent
means of generating revenue, our ability to pay dividends, if any, and cover our corporate and other expenses is dependent on the ability
of our subsidiaries to generate revenue to pay such dividends and expenses and then distribute them up to us. The ability of our subsidiaries
to make any distributions will be subject, among others, to restrictions in our exiting or future credit facilities or other debt instruments
and applicable law and regulations, which could impose withholding taxes on internal distributions. Our existing credit facilities, for
example, significantly restrict our ability to pay dividends. To the extent that we need funds and our subsidiaries are restricted from
making such distributions or payments under the terms of any financing arrangements or under applicable law or regulation, or otherwise
are unable to provide such funds, our liquidity and financial condition could be materially adversely affected. We are also subject
to the risks of uncertainty about any future actions of the PRC government or authorities which could disallow our corporate structure,
which would likely result in a material change in our operations and the value of our securities may significantly decline or be worthless.

 
The
audit work on our PRC subsidiaries may not be inspected or investigated completely by the PCAOB and our ordinary shares may be prohibited
from being traded on a national exchange under the HFCAA if the PCAOB is unable to inspect our auditor for three consecutive years beginning
in 2021. The delisting of our ordinary shares, or the threat of being delisted, may materially and adversely affect the value of your
investment.
 
Auditors
of companies that are registered with the Securities and Exchange Commission (the “SEC”) and traded publicly in the
United States, including our independent registered public accounting firm, must be registered with the PCAOB, and are subject to laws
in the United States pursuant to which the PCAOB conducts regular inspections to assess their compliance with the relevant professional
standards.
 
On
March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements
of the HFCAA. A company will be required to comply with these rules if the SEC identifies it as having a having a “non-inspection”
year under a process to be subsequently established by the SEC. The SEC is assessing how to implement other requirements of the HFCAA,
including the listing and trading prohibition requirements described above. Furthermore, on June 22, 2021, the U.S. Senate passed the
Accelerating Holding Foreign Companies Accountable Act , which, if signed into law, would amend the HFCAA and require the SEC to prohibit
an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive
years instead of three consecutive years. On September 22, 2021, the PCAOB adopted a final rule implementing the HFCAA, which provides
a framework for the PCAOB to use when determining, as contemplated under the HFCAA, whether the PCAOB is unable to inspect or investigate
registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.
On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission
and disclosure requirements in the HFCAA. The rules apply to registrants that the SEC identifies as having filed an annual report with
an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect
or investigate completely because of a position taken by an authority in foreign jurisdictions. On December 16, 2021, the
PCAOB issued a Determination Report which found that the PCAOB is unable to inspect or investigate registered public accounting firms
headquartered in: (1) mainland China, and (2) Hong Kong. In addition, the PCAOB’s report identified the specific registered
public accounting firms which are subject to these determinations. Our auditor, PricewaterhouseCoopers, Taiwan, is headquartered in Taipei, Taiwan and is not subject to the determinations
announced by the PCAOB on December 16, 2021.
 
Our
auditor, PricewaterhouseCoopers, Taiwan, which is based in Taiwan, is currently subject to inspection by the PCAOB every three years.
Prior to 2021, the audit work on our PRC subsidiaries was performed directly by our auditor under a temporary license issued
by the Ministry of Finance of the PRC. However, our auditor is unable to provide audit working papers of the Company’s subsidiaries
in China for PCAOB’s inspection without the approval of the PRC authorities.
 
The
PCAOB’s inspections of other firms outside China have identified deficiencies in those firms’ audit procedures and quality
control procedures, which may be addressed as part of the inspection process to improve future audit quality. The lack of PCAOB’s
inspections in China prevents the PCAOB from regularly evaluating audits and quality control procedures of any auditors operating in
China. Also, the potential inability of the PCAOB to inspect our auditor’s working paper of our PRC subsidiaries prevents the PCAOB
from evaluating audits and quality control procedures of our independent registered public accounting firm. As a result, investors may
be deprived of the benefits of PCAOB inspections. The inability of the PCAOB to inspect our auditor’s working paper for the
audit work prior to 2021 on our PRC subsidiaries which was performed directly by our auditor under a temporary license issued by the
Ministry of Finance of the PRC makes it more difficult to evaluate the effectiveness of our auditor’s audit procedures or quality
control procedures as compared to other auditors that are subject to PCAOB inspections. Investors may lose confidence in our reported
financial information and procedures and the quality of our financial statements. Also, if the PCAOB is not able to conduct inspections
of our auditor’s work papers of our PRC subsidiaries, you may be deprived of the benefits of such inspection which could result
in limitation or restriction to our access to the U.S. capital markets and trading of our securities may be prohibited and the Nasdaq
may determine to delist our securities if the PCAOB determines that it cannot inspect or investigate our auditor under the HFCAA.
 
While
our auditor is based in Taiwan and is registered with PCAOB and has been inspected by the PCAOB on a regular basis, in the event it is
later determined that the PCAOB is unable to inspect or investigate completely our auditor because of a position taken by an authority
in a foreign jurisdiction, then such lack of inspection could cause trading in the our securities to be prohibited under the HFCAA.
The recent developments would also add uncertainties to our
offering and we cannot assure you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria to us after
considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training,
or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements. It
remains unclear what the SEC’s implementation process related to the above rules will entail or what further actions the SEC, the
PCAOB or Nasdaq will take to address these issues and what impact those actions will have on companies that have significant operations
in the PRC and have securities listed on a U.S. stock exchange (including a national securities exchange or over-the-counter stock market).
In addition, the above amendments and any additional actions, proceedings, or new rules resulting from these efforts to increase U.S.
regulatory access to audit information could create some uncertainty for investors, the market price of our ordinary shares could
be adversely affected, and we could be delisted if we and our auditor are unable to meet the PCAOB inspection requirement or being required
to engage a new audit firm, which would require significant expense and management time.

 

 
The
SEC may propose additional rules or guidance that could impact us if our auditor is not subject to PCAOB inspection. For example, on
August 6, 2020, the President’s Working Group on Financial Markets, or the PWG, issued the Report on Protecting United States Investors
from Significant Risks from Chinese Companies to the then President of the United States. This report recommended the SEC implement five
recommendations to address companies from jurisdictions that do not provide the PCAOB with sufficient access to fulfill its statutory
mandate. Some of the concepts of these recommendations were implemented with the enactment of the HFCAA. However, some of the recommendations
were more stringent than the HFCAA. For example, if a company’s auditor was not subject to PCAOB inspection, the report recommended
that the transition period before a company would be delisted would end on January 1, 2022.
 
In
December 2020, the United States enacted the HFCAA. The HFCAA requires that the SEC identify issuers that retain an auditor that has
a branch or office that is located in a foreign jurisdiction and that the PCAOB determines it is unable to inspect or investigate completely
because of a position taken by an authority in that foreign jurisdiction. Amongst other things, the HFCAA also requires the SEC to prohibit
the securities of any issuer from being traded on any of the U.S. national securities exchanges, such as Nasdaq, or on the U.S. “over-the-counter”
markets, if the auditor of the issuer’s financial statements is not subject to PCAOB inspections for three consecutive “non-inspection”
years after the law became effective. On April 5, 2021, the SEC’s interim final rule to implement the disclosure and submission
requirements of the HFCAA was published in the U.S. Federal Register, along with the SEC’s request for public comment on the interim
final rule. Regarding how the term “retain” should be interpreted for purposes of determining whether an issuer has retained
an auditor that has a branch or office that is located in a foreign jurisdiction and that the PCAOB determines it is unable to inspect
or investigate completely because of a position taken by an authority in that foreign jurisdiction, the SEC noted in the interim final
rule that the HFCAA does not define the term “retain,” and requested comment on how the term “retain” should
be understood for purposes of the HFCAA. On December
2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCAA. The rules
apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting
firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken
by an authority in foreign jurisdictions. On December
16, 2021, the PCAOB issued a Determination Report which found that the PCAOB is unable to inspect or investigate registered public accounting
firms headquartered in: (1) mainland China, and (2) Hong Kong. In
addition, the PCAOB’s report identified the specific registered public accounting firms which are subject to these determinations.
It remains unclear what the SEC’s implementation process related to the above rules will entail or what further actions the SEC,
the PCAOB or Nasdaq will take to address these issues and what impact those actions will have on companies that have significant operations
in the PRC and have securities listed on a U.S. stock exchange (including a national securities exchange or over-the-counter stock market).
In addition, the above amendments and any additional actions, proceedings, or new rules resulting from these efforts to increase U.S.
regulatory access to audit information could create some uncertainty for investors, the market price of our ordinary shares could
be adversely affected, and we could be delisted if we and our auditor are unable to meet the PCAOB inspection requirement or being required
to engage a new audit firm, which would require significant expense and management time. Furthermore,
there have been recent media reports on deliberations within the U.S. government regarding potentially limiting or restricting China-based
companies from accessing U.S. capital markets. If any such deliberations were to materialize, the resulting legislation may have material
and adverse impact on the stock performance of China-based issuers listed in the United States.
  

 
We may rely on dividends
and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements 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.
 

We are a holding company,
and we may rely on dividends and other distributions on equity paid by our PRC subsidiaries for our cash and financing requirements,
including the funds necessary to pay dividends and other cash distributions to our shareholders or holders of our ordinary shares or
to service any debt we may incur. If any of our PRC subsidiaries incur debt on its own behalf in the future, the instruments governing
the debt may restrict its ability to pay dividends or make other distributions to us.
 
According to the Foreign
Investment Law of the People’s Republic of China and its implementing rules, which jointly established the legal framework for
the administration of foreign-invested companies, a foreign investor may, in accordance with other applicable laws, freely transfer into
or out of China its contributions, profits, capital earnings, income from asset disposal, intellectual property rights royalties acquired,
compensation or indemnity legally obtained, and income from liquidation, made or derived within the territory of China in RMB or any
foreign currency, and any entity or individual shall not illegally restrict such transfer in terms of the currency, amount and frequency.
According to the Company Law of the People’s Republic of China and other Chinese laws and regulations, our PRC subsidiaries
may pay dividends only out of their respective accumulated profits as determined in accordance with Chinese accounting standards and
regulations. In addition, each of our PRC subsidiaries is required to set aside at least 10% of its accumulated after-tax profits,
if any, each year to fund a certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of its registered capital.
Where the statutory reserve fund is insufficient to cover any loss the Chinese subsidiary incurred in the previous financial year, its
current financial year’s accumulated after-tax profits shall first be used to cover the loss before any statutory reserve fund
is drawn therefrom. Such statutory reserve funds and the accumulated after-tax profits that are used for covering the loss cannot be
distributed to us as dividends. At their discretion, our PRC subsidiaries may allocate a portion of their after-tax profits based
on Chinese accounting standards to a discretionary reserve fund.
 
Renminbi is not freely
convertible into other currencies. As result, any restriction on currency exchange may limit the ability of our PRC subsidiaries
to use any future renminbi revenues to pay dividends to us. The Chinese government imposes controls on the convertibility of renminbi
into foreign currencies and, in certain cases, the remittance of currency out of China. Shortages in availability of foreign currency
may then restrict the ability of our PRC subsidiaries to remit sufficient foreign currency to our offshore entities for our offshore
entities to pay dividends or make other payments or otherwise to satisfy our foreign-currency-denominated obligations. The renminbi is
currently convertible under the “current account,” which includes dividends, trade and service-related foreign exchange transactions,
without the need of the approval of the SAFE. By contrast, the renminbi under the “capital account,” which includes foreign
direct investment and foreign currency debt, including loans we may secure for our onshore subsidiaries, may be converted into other
currencies upon the approval of the SAFE and the conversion is also subject to other restrictions or limitations, e.g., control of a
Chinese entity’s foreign debt quota. Currently, our PRC subsidiaries may purchase foreign currency for settlement of “current
account transactions,” including payment of dividends to us, without the approval of SAFE by complying with certain procedural
requirements. However, the relevant Chinese governmental authorities may limit or eliminate our ability to purchase foreign currencies
in the future for current account transactions. Any existing and future restrictions on currency exchange may limit our ability to utilize
revenue generated in renminbi to fund our business activities outside of China or pay dividends in foreign currencies to holders of our
ordinary shares. Foreign exchange transactions under the capital account remain subject to limitations and require approvals from, or
registration with, SAFE and other relevant Chinese governmental authorities. This could affect our ability to obtain foreign currency
through debt or equity financing for our subsidiaries.
 
In response to the
persistent capital outflow in China and renminbi’s depreciation against the U.S. dollar in the fourth quarter of 2016, the People’s
Bank of China (“PBOC”) and the SAFE have promulgated a series of capital controls in early 2017, including stricter vetting
procedures for domestic companies to remit foreign currency for overseas investments, dividends payments and shareholder loan repayments.
 
The Chinese government
may continue to strengthen its capital controls, and more restrictions and substantial vetting processes may be put forward by SAFE for
cross-border transactions falling under both the current account and the capital account. Any limitation on the ability of our PRC
subsidiaries to pay dividends or make other kinds of payments to us could materially and adversely limit our ability to grow, make
investments or acquisitions that could be beneficial to our business, pay dividends or otherwise fund and conduct our business.
 

 
Risks
Related to Doing Business in Taiwan
 
We
face economic and political risks associated with doing business in Taiwan, particularly due to the geopolitical tension between Taiwan
and PRC that could negatively affect our business and hence the value of your investment.
 

As we supply
our products to customers around the globe, our performance is affected by global economic conditions as well as geopolitical issues
and other conditions with global reach. Macroeconomic weakness and uncertainty make it more difficult for us to manage our operations
and accurately forecast financial result. As a result of the recent movement of Russian military units into provinces in Ukraine, the
United States, the European Union, the United Kingdom and other jurisdictions have imposed sanctions on certain Russian and Ukrainian
persons and entities, including certain Russian banks, energy companies and defense companies, and have imposed restrictions on exports
of various items to Russian and certain regions of Ukraine (including the self-proclaimed Donetsk People’s Republic and Luhansk
People’s Republic and Crimea). Moreover, on February 22, 2022, the Office of Foreign Assets Control of the United States issued
sanctions aimed at limiting Russia’s ability to raise funds through sovereign debt. Such ongoing events between Ukraine and Russia
could also increase China/Taiwan political tensions and U.S./China trade and other relations. These geopolitical issues have resulted
in increasing global tensions and create uncertainty for global commerce. Any or all of these factors could negatively affect demand
for our products and our business, financial condition and result of operations. In addition, new requirements or restrictions could
come into effect which might increase the scrutiny on our business or result in one or more of our business activities being deemed to
have violated sanctions. Our business and reputation could be adversely affected if the authorities of United States, the European Union,
the United Nations, Taiwan or other jurisdictions were to determine that any of our activities constitutes a violation of the sanctions
they impose or provides a basis for a sanctions designation of us.
 
Further,
our headquarters, R&D center and material laboratory
are located in Taiwan. Accordingly, our business, financial condition and results of operations and the market price of our ordinary
shares may be affected by changes in governmental policies, taxation, growth rate, inflation rate or interest rates and by social instability
and diplomatic and social developments in or affecting Taiwan. In particular, the unique political status of Taiwan and its internal
political movement cause sustained tension between PRC and Taiwan. Past developments related to the interactions between PRC and Taiwan,
especially in relation to trade activities such as bans on exports of goods from time to time, have on occasions depressed the transactions
and business operations of certain Taiwanese companies and overall economic environment. We cannot predict whether there will be escalation
of the tensions between PRC and Taiwan which would lead to new bans or tariffs on exports or even conflict. Any conflict which threatens
the military, political or economic stability in Taiwan could have a material adverse effect on our current or future business and financial
condition and results of operations.
 
The
imposition of foreign exchange restrictions in Taiwan may have an adverse effect on foreign investors’ abilities to acquire securities
of a Taiwan company, including the shares of our subsidiaries in Taiwan, or to repatriate the interest, dividends or sale proceeds from
those securities.
 
Taiwan
government may impose foreign exchange restrictions in certain emergency situations, including situations where there are sudden fluctuations
in interest rates or exchange rates, where Taiwan government experiences extreme difficulty in stabilizing the balance of payments or
where there are substantial disturbances in the financial and capital markets in Taiwan. These restrictions may require foreign investors
to obtain Taiwan government’s approval before acquiring securities of a Taiwan company, including the shares of our subsidiaries
in Taiwan, repatriating the interest or dividends from those securities or repatriating the proceeds from the sale of those securities.
 
Risks
Related to this Offering and Ownership of Our Ordinary Shares
 

The
recent joint statement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and the HFCAA all call for additional and more
stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S.
auditors who are not inspected by the PCAOB. In September 2021, the PCAOB is adopting a new rule to provide a framework for its determinations
under the HFCAA that the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign
jurisdiction because of a position taken by one or more authorities in that jurisdiction. In addition, in June 2021, the Senate passed
the Accelerating Holding Foreign Companies Accountable Act which, if signed into law, would reduce the time period for the delisting
of foreign companies under the HFCAA to two consecutive years, instead of three years. If the Accelerating
Holding Foreign Companies Accountable Act is enacted into law and the PCAOB determined that it is unable to inspect or investigate completely
our auditor because of a position taken by an authority in a foreign jurisdiction for two consecutive years, our securities could
be prohibited from trading. Trading in our securities may be prohibited under the HFCAA if the
PCAOB determines that it cannot inspect or investigate completely our auditor, and as a result an exchange (i.e. the Nasdaq) may determine
to delist our securities. On December 16, 2021, the PCAOB issued a report on its determinations that the PCAOB is unable to inspect or
investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong. Our auditor, PricewaterhouseCoopers,
Taiwan, is headquartered in Taipei, Taiwan and is not subject to the determinations announced by the PCAOB on December 16, 2021.

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

On
May 18, 2020, Nasdaq filed three proposals with the SEC to (i) apply minimum offering size requirement for companies primarily operating
in “Restrictive Market”, (ii) adopt a new requirement relating to the qualification of management or board of director for
Restrictive Market companies, and (iii) apply additional and more stringent criteria to an applicant or listed company based on the qualifications
of the company’s auditors.
 

 

On
May 20, 2020, the U.S. Senate passed the HFCAA requiring a foreign company to certify it is not owned
or controlled by a foreign government if the PCAOB is unable to audit specified reports because the company uses a foreign auditor not
subject to PCAOB inspection. If the PCAOB is unable to inspect an issuer’s auditors for three consecutive years, the issuer’s
securities are prohibited to trade on a national securities exchange or in the over the counter trading market in the U.S. On December
2, 2020, the U.S. House of Representatives approved the HFCAA. On December 18, 2020, the HFCAA was signed into law.
 
On
March 24, 2021, the SEC announced that it had adopted interim final amendments to implement congressionally mandated submission and disclosure
requirements of the Act. The interim final amendments will apply to registrants that the SEC identifies as having filed an annual report
on Forms 10-K, 20-F, 40-F or N-CSR with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction
and that the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by an authority in that
jurisdiction. The SEC will implement a process for identifying such a registrant and any such identified registrant will be required
to submit documentation to the SEC establishing that it is not owned or controlled by a governmental entity in that foreign jurisdiction,
and will also require disclosure in the registrant’s annual report regarding the audit arrangements of, and governmental influence
on, such a registrant.
 
On
June 22, 2021, the U.S. Senate passed a bill which, if passed by the U.S. House of Representatives and signed into law, would reduce
the number of consecutive non-inspection years required for triggering the prohibitions under the HFCAA from three years to two
years.
 

Since September 22, 2021, the PCAOB is adopting
a new rule, PCAOB Rule 6100, Board Determinations Under the HFCAA to provide a framework for its determinations under the HFCAA
that the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because
of a position taken by one or more authorities in that jurisdiction. The rule establishes the manner of the PCAOB’s determinations;
the factors the PCAOB will evaluate and the documents and information the PCAOB will consider when assessing whether a determination
is warranted; the form, public availability, effective date, and duration of such determinations; and the process by which the Board
will reaffirm, modify, or vacate any such determinations.
 
In
December 2021, the SEC adopted amendments to finalize rules implementing the submission and disclosure requirements in the HFCAA. Also,
on December 16, 2021, pursuant to the HFCAA, the PCAOB issued a Determination Report which determined that the PCAOB is unable to inspect
or investigate completely registered public accounting firms headquartered in mainland China and in Hong Kong, a Special Administrative
Region of PRC, because of positions taken by PRC authorities in those jurisdictions. In addition, the PCAOB’s report identified
the specific registered public accounting firms which are subject to these determinations.
 
Our auditor, which is based
in Taiwan, is currently subject to inspection by the PCAOB every three years. The audit work on our PRC subsidiaries is performed directly
by our auditor under a temporary license issued by the Ministry of Finance of the PRC. However, our auditor is unable to provide audit
working papers of the Company’s subsidiaries in China for PCAOB’s inspection without the approval of the PRC authorities.
If it is later determined that the PCAOB
is unable to inspect or investigate completely our auditor because of a position taken by an authority in a foreign jurisdiction (e.g.
the PRC authorities), it would make it more difficult to evaluate the effectiveness of our auditor’s audit procedures or quality
control procedures as compared to other auditors that are subject to PCAOB inspections. Investors may lose confidence in our reported
financial information and procedures and the quality of our financial statements. As a result, the
market price of our ordinary shares could be adversely affected.
Also, if the PCAOB is not able to conduct inspections of our auditor’s work papers of our PRC subsidiaries, you may be deprived
of the benefits of such inspection which could result in limitation or restriction to our access to the U.S. capital markets and trading
of our securities may be prohibited and the Nasdaq may determine to delist our securities if the PCAOB determines that it cannot inspect
or investigate completely our auditor under the HFCAA.

 
However, the recent developments would add uncertainties
to our offering and we cannot assure you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria
to us. It
remains unclear what the SEC’s implementation process related to the March 2021 interim final amendments will entail or what further
actions the SEC or Nasdaq will take to address these issues and what impact those actions will have on U.S. companies that have significant
operations in the PRC and have securities listed on a U.S. stock exchange (including a national securities exchange or over-the-counter
stock market). In addition, the March 2021 interim final amendments and any additional actions, proceedings, or new rules resulting from
these efforts to increase U.S. regulatory access to audit information could create some uncertainty for investors, the market price of
our ordinary shares could be adversely affected, and we could be delisted if we and our auditor are unable to meet the PCAOB inspection
requirement or being required to engage a new audit firm, which would require significant expense and management time.
 
There
has been no public market for our ordinary shares prior to this offering, and you may not be able to resell our ordinary shares at or
above the price you paid, or at all.
 
Prior
to this initial public offering, there has been no public market for our ordinary shares. We have applied to list our ordinary shares
on Nasdaq under the symbol “YMAT.” If an active trading market for our ordinary shares does not develop after this offering,
the market price and liquidity of our ordinary shares will be materially and adversely affected. Negotiations with the underwriters
determine the initial public offering price for our ordinary shares which may bear no relationship to their market price after the
initial public offering. We cannot assure you that an active trading market for our ordinary shares will develop or that the market price
of our ordinary shares will not decline below the initial public offering price.
 

 
Nasdaq
may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities
and subject us to additional trading restrictions.
 
We
cannot assure you that our securities will continue to be listed on Nasdaq after our initial public offering. In order to continue listing
our securities on Nasdaq, we must maintain certain financial, distribution and share price levels. In general, we must maintain a minimum
amount in shareholders’ equity (generally $2,500,000) and a minimum of 300 round lot holders. For instance, our share price would
generally be required to be at least $4.00 per share, our shareholders’ equity would generally be required to be at least $5.0
million and we would be required to have a minimum of 300 round lot holders of our securities (with at least 50% of such round lot holders
holding securities with a market value of at least $2,500). We cannot assure you that we will be able to meet those initial listing requirements
at that time.
 
If
Nasdaq delists our securities from trading on its exchange and we are not able to list our securities on another national securities
exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material
adverse consequences, including:
 
 

a
limited availability of market quotations for our securities; 
 
   

reduced
liquidity for our securities; 
 
   

a
determination that our ordinary shares is a “penny stock” which will require brokers trading in our ordinary shares to
adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our
securities; 
 
   

a
limited amount of news and analyst coverage; and 
 
   

a
decreased ability to issue additional securities or obtain additional financing in the future. 
The
National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the
sale of certain securities, which are referred to as “covered securities.” Because we expect that our ordinary shares will
be listed on Nasdaq, our ordinary shares will be covered securities. Although the states are preempted from regulating the sale of our
securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding
of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware
of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the State
of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these
powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed on Nasdaq, our
securities would not be covered securities and we would be subject to regulation in each state in which we offer our securities.
 
If
a limited number of participants in this offering purchase a significant percentage of the offering, the effective public float may be
smaller than anticipated and the price of our ordinary shares may be volatile.
 
As
a company conducting a relatively modest public offering, we are subject to the risk that a small number of investors will purchase a
high percentage of the offering. If this were to happen, investors could find our ordinary shares to be more volatile than they
might otherwise anticipate. Companies that experience such volatility in their stock price may be more likely to be the subject of securities
litigation. In addition, if a large portion of our public float were to be held by a few investors, smaller investors may find it more
difficult to sell their shares.
 

 
The
market price for our ordinary shares may be volatile, which could result in substantial losses to investors.
 
The
trading prices of our ordinary shares are likely to be volatile and could fluctuate widely due to factors beyond our control. This may
happen because of broad market and industry factors, like the performance and fluctuation in the market prices or the underperformance
or deteriorating financial results of companies based in Taiwan that have listed their securities in the United States in recent years.
The securities of some of these companies have experienced significant volatility since their initial public offerings, including, in
some cases, substantial decline in their trading prices. The trading performances of other Taiwan companies’ securities after their
offerings may affect the attitudes of investors toward Taiwan companies listed in the United States, which consequently may impact the
trading performance of our ordinary shares, regardless of our actual operating performance. In addition, securities markets may from
time to time experience significant price and volume fluctuations that are not related to our operating performance, which may have a
material adverse effect on the market price of our ordinary shares. In addition to the above factors, the price and trading volume
of our ordinary shares may be highly volatile due to multiple factors, including the following:
 
 

regulatory
developments affecting us, our customers, or our industry; 
 
   

announcements
of studies and reports relating to our service offerings or those of our competitors; 
 
   

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

changes
in financial estimates by securities research analysts; 
 
   

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

additions
to or departures of our senior management; 
 
   

detrimental
negative publicity about us, our management or our industry; 
 
   

fluctuations
of exchange rates between the NTD, Renminbi and the U.S. dollar; 
 
   

release
or expiry of lock-up or other transfer restrictions on our outstanding ordinary shares; and 
 
   

sales
or perceived potential sales of additional ordinary shares. 
Shares
eligible for future sale may adversely affect the market price of our ordinary shares, as the future sale of a substantial amount of
outstanding ordinary shares in the public marketplace could reduce the price of our ordinary shares.
 
The
market price of our ordinary shares could decline as a result of sales of substantial amounts of our ordinary shares in the public market,
or the perception that these sales could occur. In addition, these factors could make it more difficult for us to raise through future
offerings of our ordinary shares. An aggregate of 15,762,887 ordinary shares were outstanding before the consummation of this offering
and 21,012,887 ordinary shares (or 21,800,387 ordinary shares if the underwriters exercise their over-allotment option in full)
will be outstanding immediately after this offering. All of the shares sold in the offering will be freely transferable without restriction
or further registration under the Securities Act. The remaining shares will be “restricted securities” as defined in Rule
144. These shares may be sold in the future without registration under the Securities Act to the extent permitted by Rule 144 or other
exemptions under the Securities Act.
 
You
will experience immediate and substantial dilution.
 
The
initial public offering price of our ordinary shares is expected to be substantially higher than the pro forma net tangible book value
per share of our ordinary shares. Assuming the completion of the offering, if you purchase shares in this offering, you will incur immediate
dilution of approximately $2.70 or approximately 67.5% in the pro forma net tangible book value per share from the price
per share that you pay for the shares. Accordingly, if you purchase shares in this offering, you will incur immediate and substantial
dilution of your investment. See “Dilution.”
 

 
As
an exempted company with limited liability incorporated under the laws of the Cayman Islands, we are permitted to adopt certain home
country practices in relation to corporate governance matters that differ significantly from Nasdaq corporate governance listing standards.
These practices may afford less protection to shareholders than they would enjoy if we complied fully with Nasdaq corporate governance
listing standards.
 
As
a Cayman Islands company that is expected to be listed on Nasdaq, we are subject to Nasdaq corporate governance listing standards. However,
Nasdaq rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate
governance practices in the Cayman Islands, which is our home country, may differ significantly from Nasdaq corporate governance listing
standards. For example, neither the Companies Act nor our post-offering amended and restated memorandum and articles of association
requires a majority of our board of directors to be independent and we could include non-independent directors as members of our compensation
committee and nominating committee and our independent directors would not necessarily hold regular scheduled meetings at which only
independent directors are present. In addition, we will be able to follow our home country law instead of the Nasdaq listing rules that
require us to obtain shareholder approval for certain dilutive events, such as certain transactions other than a public offering involving
issuances of a 20% or greater interest in the company, and acquisitions of the stock or assets of another company. If we choose to follow
home country practice in the future, our shareholders may be afforded less protection than they otherwise would under Nasdaq’s
corporate governance listing standards applicable to U.S. domestic issuers.
 
Our
management has a certain level of discretion over use of proceeds of this offering.
 
While
we have identified the priorities to which we expect to put the proceeds of this offering, our management will have considerable discretion
in the application of the net proceeds received by us. Specifically, we intend to use the net proceeds from this offering to upgrade
manufacturing facility and equipment and for working capital and general corporate purposes. We have reserved the right to re-allocate
funds currently allocated to that purpose to our general working capital. If that were to happen, then our management would have significant
discretion over even more of the net proceeds to be received by our company in this offering. You will not have the opportunity, as part
of your investment decision, to assess whether the proceeds are being used appropriately. You must rely on the judgment of our management
regarding the application of the net proceeds of this offering. The net proceeds may be used for corporate purposes that do not improve
our efforts to achieve profitability or increase our stock price. The net proceeds from this offering may be placed in investments that
do not produce profit or increase value. See “Use of Proceeds.”
 
We
are an exempted company with limited liability incorporated under the laws of the Cayman Islands and, because judicial precedent regarding
the rights of shareholders is more limited under Cayman Islands law than under U.S. law, you may have less protection for your shareholder
rights than you would under U.S. law.
 
Our
corporate affairs are governed by our memorandum and articles of association as amended from time to time, the Companies Act and the
common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and
the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the
Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands
as well as that from English common law, which has persuasive, but not binding, authority on a court in the Cayman Islands. The rights
of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law may not be as clearly established as
they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has
a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially
interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate
a shareholder derivative action in a federal court of the United States.
 
Shareholders
of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to obtain
copies of lists of shareholders of these companies (other than copies of our Memorandum and Articles of Association, as amended, and
register of mortgages and charges). Under Cayman Islands law, the names of our current directors can be obtained from a search conducted
at the Registrar of Companies. Our directors have discretion under our memorandum and articles of association to determine whether or
not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available
to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a
shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.
 

 
As
a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance
matters that differ from the Nasdaq corporate governance requirements; these practices may afford less protection to shareholders than
they otherwise would under rules and regulations applicable to United States domestic issuers.
 
As
a result of all of the above, our public shareholders may encounter different issues in protecting their interests in the face of actions
taken by management, members of the board of directors or controlling shareholders than they would as shareholders of a U.S. public company.
 
We
are a foreign private issuer and, as a result, will not be subject to U.S. proxy rules and will be subject to more lenient and less frequent
Exchange Act reporting obligations than a U.S. issuer.
 
Upon
consummation of this offering, we will report under the Securities Exchange Act as a foreign private issuer. Because we qualify as a
foreign private issuer under the Exchange Act, we will be exempt from certain provisions of the Exchange Act that are applicable to U.S.
public companies, including:
 
 

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

the
sections of the Exchange Act that require insiders to file public reports of their stock ownership and trading activities and impose
liability on insiders who profit from trades made in a short period of time; and 
 
   

the
rules under the Exchange Act that require the filing of quarterly reports on Form 10-Q containing unaudited financial and other specified
information and current reports on Form 8-K upon the occurrence of specified significant events. 
In
addition, foreign private issuers are not required to file their annual report on Form 20-F until 120 days after the end of each fiscal
year, while U.S. domestic issuers that are not large accelerated filers or accelerated filers are required to file their annual report
on Form 10-K within 90 days after the end of each fiscal year. Foreign private issuers are also exempt from Regulation FD, aimed at preventing
issuers from making selective disclosures of material information. As a result, you may not have the same protections afforded to shareholders
of companies that are not foreign private issuers.
 
We
will incur increased costs as a result of being a public company, particularly after we cease to qualify as an “emerging growth
company.”
 
Upon
completion of this offering, we will become a public company and expect to incur significant legal, accounting and other expenses that
we did not incur as a private company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and Nasdaq,
impose various requirements on the corporate governance practices of public companies. As a company with less than US$1.07 billion in
revenues for our last fiscal year, we qualify as an “emerging growth company” pursuant to the JOBS Act. An emerging growth
company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies.
These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the
assessment of the emerging growth company’s internal control over financial reporting and permission to delay adopting new or revised
accounting standards until such time as those standards apply to private companies.
 
We
expect these rules and regulations to increase our legal and financial compliance costs and to make some corporate activities more time-consuming
and costly. After we are no longer an “emerging growth company,” we expect to incur significant expenses and devote substantial
management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the other rules
and regulations of the SEC. For example, as a result of becoming a public company, we will need to increase the number of independent
directors and adopt policies regarding internal controls and disclosure controls and procedures. We also expect that operating as a public
company will make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required
to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. In addition,
we will incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find
qualified persons to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments
with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the amount of additional
costs we may incur or the timing of such costs.
 

 

In
the past, shareholders of a public company often brought securities class action suits against the company following periods of instability
in the market price of that company’s securities. If we were involved in a class action suit, it could divert a significant amount
of our management’s attention and other resources from our business and operations, which could harm our results of operations
and require us to incur significant expenses to defend the suit. Any such class action suit, whether or not successful, could harm our
reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be
required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.
 
We
may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.
 
As
discussed above, we are a foreign private issuer, and therefore, we are not required to comply with all of the periodic disclosure and
current reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last business
day of an issuer’s most recently completed second fiscal quarter, and, accordingly, the next determination will be made with respect
to us on [*]. In the future, we would lose our foreign private issuer status if (1) more than 50% of our outstanding voting securities
are owned by U.S. residents and (2) a majority of our directors or executive officers are U.S. citizens or residents, or we fail to meet
additional requirements necessary to avoid loss of foreign private issuer status. If we lose our foreign private issuer status, we will
be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed
and extensive than the forms available to a foreign private issuer. We will also have to mandatorily comply with U.S. federal proxy requirements,
and our officers, directors and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions
of Section 16 of the Exchange Act. In addition, we will lose our ability to rely upon exemptions from certain corporate governance requirements
under the listing rules of the Nasdaq. As a U.S. listed public company that is not a foreign private issuer, we will incur significant
additional legal, accounting and other expenses that we will not incur as a foreign private issuer.
 
There
can be no assurance that we will not be a passive foreign investment company, or PFIC, for United States federal income tax purposes
for any taxable year, which could subject United States investors in our ordinary shares to significant adverse United States income
tax consequences.
 
A
non-United States corporation, such as our company, will be classified as a PFIC, for U.S. federal income tax purposes for any taxable
year, if either (i) 75% or more of its gross income for such year consists of certain types of “passive” income or (ii) 50%
or more of the value of its assets (determined on the basis of a quarterly average) during such year is attributable to assets that produce
or are held for the production of passive income.
 
Based
on our current composition of assets, subsidiaries and market capitalization (which will fluctuate from time to time), we do not expect
to be or become a PFIC for U.S. federal income tax purposes. However, the determination of whether we will be or become a PFIC will depend,
in part, upon the value of our goodwill and other unbooked intangibles. Furthermore, the determination of whether we will be or become
a PFIC will depend, in part, on the composition of our income and assets. Fluctuations in the market price of our ordinary shares may
cause us to become a PFIC for the current or subsequent taxable years. The composition of our income and assets may also be affected
by how, and how quickly, we use our liquid assets and the cash raised in this offering. In addition, because there are uncertainties
in the application of the relevant rules, it is possible that the Internal Revenue Service may challenge our classification of certain
income and assets as non-passive or our valuation of our tangible and intangible assets.
 
Because
determination of PFIC status is a fact-intensive inquiry made on an annual basis that depends upon the composition of our assets and
income, no assurance can be given that we are not or will not become classified as a PFIC. If we were to be or become classified as a
PFIC in any taxable year, a U.S. Holder (as defined in “Taxation—United States Federal Income Taxation”) may
incur significantly increased U.S. federal income tax on gain recognized on the sale or other disposition of our ordinary shares and
on the receipt of distributions on the ordinary shares to the extent such gain or distributions is treated as an “excess distribution”
under the U.S. federal income tax rules. Further, if we are classified as a PFIC for any year during which a U.S. Holder holds our ordinary
shares, we generally will continue to be treated as a PFIC for all succeeding years during which such U.S. Holder holds our ordinary
shares. You are urged to consult your tax advisor concerning the United States federal income tax consequences of acquiring, holding,
and disposing of ordinary shares if we are or become classified as a PFIC. For more information, see “Taxation— Certain
United States Federal Income Tax Considerations.”
 

 
If
securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the market
price for our ordinary shares and trading volume could decline.
 
The
trading market for our ordinary shares will depend in part on the research and reports that securities or industry analysts publish about
us or our business. If research analysts do not establish and maintain adequate research coverage or if one or more of the analysts who
cover us downgrade our ordinary shares or publish inaccurate or unfavorable research about our business, the market price for our ordinary
shares would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly,
we could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for our ordinary shares
to decline.
 
You
may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because
we are incorporated under Cayman Islands law and all of our officers are nationals or residents of jurisdictions other than the U.S..
 
We
are an exempted company with limited liability incorporated under the laws of the Cayman Islands and all of our officers and directors
are nationals or residents of Taiwan or India, being jurisdictions outside the United States. As all of our officers
are nationals or residents of jurisdictions other than the United States, a substantial portion of their assets are located outside the
United States. As a result, there may be difficulty of bringing actions against our officers and directors, for instance, it
may be difficult for investors to effect service of process within the United States upon our directors or executive officers, and
it may be difficult to enforce judgments obtained in the United States courts against our directors or officers.
 
Our
corporate affairs will be governed by our amended and restated memorandum and articles of association as amended from time to time, the
Companies Act and the common law of the Cayman Islands. The rights of shareholders to take legal action against our directors and us,
actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent
governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited
judicial precedent in the Cayman Islands as well as that from English common law, which has persuasive, but not binding authority on
a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands
law may not be as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States.
In particular, the Cayman Islands has a less developed body of securities laws as compared to the United States, and some states, such
as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman
Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.
 
We
have been advised by our Cayman Islands legal counsel, Ogier, that there is uncertainty as to whether the courts of the Cayman Islands
would:
 
 

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

entertain
original actions brought in each respective jurisdiction against us or our directors or officers predicated upon the securities laws
of the United States or any state in the United States. 
There
is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, although the courts of the Cayman Islands
will in certain circumstances recognize and enforce a foreign judgment, without any re-examination or re-litigation of matters adjudicated
upon, provided such judgment:
 
 
(a)

is
given by a foreign court of competent jurisdiction; 
 
  
(b)
imposes
on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given; 
 
  
(c)
is
final; 

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

was
not obtained by fraud; and 
 
  
(f)
is
not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands. 
Subject
to the above limitations, in appropriate circumstances, a Cayman Islands court may give effect in the Cayman Islands to other kinds of
final foreign judgments such as declaratory orders, orders for performance of contracts and injunctions.
 
As
a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken
by our board of directors, management or controlling shareholders than they would as public shareholders of a U.S. company. For a discussion
of certain differences between the provisions of the Companies Act, remedies available to shareholders and the laws applicable to companies
incorporated in the United States and their shareholders, see “Enforceability of Civil Liabilities” and “Description
of Securities.”
 
Judgments
obtained against us by our shareholders may not be enforceable.
 
We
are a Cayman Islands company and substantially all of our assets are located outside of the United States. Substantially all of our current
operations are conducted in Taiwan and/or PRC. In addition, certain of our directors and officers reside outside the United States. As
a result, it may be difficult for you to effect service of process within the United States or elsewhere outside Taiwan and/or PRC upon
these persons. It may also be difficult for you to enforce in Taiwan and/or PRC or Cayman Islands courts judgments obtained in U.S. courts
based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors, most of whom are
not residents in the United States and the substantial majority of whose assets are located outside of the United States. It may be difficult
or impossible for you to bring an action against us in the Cayman Islands if you believe your rights under the U.S. securities laws have
been infringed. In addition, there is uncertainty as to whether the courts of the Cayman Islands or Taiwan and/or PRC would recognize
or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws
of the United States or any state and it is uncertain whether such Cayman Islands or Taiwan and/or PRC courts would hear original actions
brought in the Cayman Islands or Taiwan and/or PRC against us or such persons predicated upon the securities laws of the United States
or any state. See “Enforceability of Civil Liabilities.”
 
Provisions
in our post-offering amended and stated memorandum and articles of association may inhibit a takeover of us, which could limit the price
investors might be willing to pay in the future for our ordinary shares and could entrench management.
 
Our
post-offering amended and restated memorandum and articles of association will contain provisions that may discourage unsolicited takeover
proposals that shareholders may consider to be in their best interests. These provisions include a staggered board of directors and the
ability of the board of directors to designate the terms of and issue new series of preferred shares, which may make the removal of management
more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our
ordinary shares.
 
We
are subject to changing law and regulations regarding regulatory matters, corporate governance and public disclosure that have increased
both our costs and the risk of non-compliance.
 
We
are subject to rules and regulations by various governing bodies, including, for example, the SEC, which are charged with the
protection of investors and the oversight of companies whose securities are publicly traded, and to new and evolving regulatory measures
under applicable law. Our efforts to comply with new and changing laws and regulations have resulted in and are likely to continue to
result in, increased general and administrative expenses and a diversion of management time and attention from revenue generating activities
to compliance activities.
 
Moreover,
because these laws, regulations and standards are subject to varying interpretations, their application in practice may evolve over time
as new guidance becomes available. This evolution may result in continuing uncertainty regarding compliance matters and additional costs
necessitated by ongoing revisions to our disclosure and governance practices. If we fail to address and comply with these regulations
and any subsequent changes, we may be subject to penalty and our business may be harmed.
 

 
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
This
prospectus contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical
facts are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause
our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.
 
You
can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,”
“anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,”
“likely to” or other similar expressions. We have based these forward-looking statements largely on our current expectations
and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business
strategy and financial needs. These forward-looking statements include, but are not limited to, statements about:
 
 

our
goals and growth strategies; 
 
   

our
expectations regarding demand for and market acceptance of our products and services; 
 
   

our
future business development, results of operations and financial condition; 
 
   

competition
in our industry;  
 
   

the
expected growth of, and trends in, the markets for our products and services; 
 
   

government
policies and regulations relating to our corporate structure, business and industry; 
 
  

our
expectation regarding the use of proceeds from this offering; 
 
  

our
ability to comply with the continued listing standards on the exchange or trading market on which our ordinary shares is listed for
trading; 
 
  

the
possibility that COVID-19 may adversely affect our results of operations, financial position and cash flows; 
 
  

general
economic and business condition in Taiwan and elsewhere; and 
 
  

assumptions
underlying or related to any of the foregoing. 
You
should read thoroughly this prospectus and the documents that we refer to in this prospectus with the understanding that our actual future
results may be materially different from and worse than what we expect. Other sections of this prospectus include additional factors
which could adversely impact our business and financial performance. Moreover, we operate in an evolving environment. New risk factors
and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor
can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual
results to differ materially from those contained in any forward-looking statements. We qualify all of our forward-looking statements
by these cautionary statements.
 
You
should not rely upon forward-looking statements as predictions of future events. We undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to
reflect the occurrence of unanticipated events. You should read this prospectus and the documents that we refer to in this prospectus
and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that
our actual future results may be materially different from what we expect.
 

 
USE OF PROCEEDS
 
After
deducting the estimated underwriters’ discount and offering expenses payable by us, we expect to receive net proceeds of approximately
$19,065,000 (or $21,947,250 in the aggregate if the underwriters exercise their over-allotment option in full) from this
offering. The net proceeds from this offering must be remitted to Taiwan before we will be able to use the funds to grow our business.
 
We
intend to use the net proceeds of this offering as follows, after we complete the remittance process:
 
 

approximately
25% for acquiring and investing in production plant in the U.S. for the production of electric bicycle; 
 
   

approximately
25% for purchasing equipment for our second production plant in Yangzhou, the PRC, for the production of key structural parts
of electric bicycle, robotic arms, automobile and prepreg material; 
 
   

approximately
15% for investment on electric bicycle and sports bicycle brands in Michigan State, the U.S., through acquisition, joint venture
and/or co-branding production; 
 
  

approximately
15% for establishing our R&D center in Houston, the U.S., for developing automation and advanced composite material and chemical
technologies;  
 
  

approximately
15% for general administration and working capital; and  
 
  

approximately
5% for establishing our sales and administration office in Houston, the U.S., to closely work with our office in Taiwan on U.S. market
sales and expansion. 

We carefully plan for the use of proceeds
from this offering, not only to support our existing growth, but also build a road map for our future development. Regarding the
acquisition and investment in production plant in the U.S., we will co-operate with the local bicycle assembly house in the U.S. and
the investment amount will be capped at approximately 25% of the proceeds in respect of the
infrastructure construction and machinery procurement. Regarding the construction of our second production plant in Yangzhou, approximately 25% of the proceeds is intended to be used for purchasing equipment for
production only. Meanwhile, we are in discussion with a local construction company in the PRC on a hire purchase agreement of
building and infrastructure construction of the production plant on our land in Yangzhou and such construction would be funded by
the said local construction company in the PRC. As we intended to invest approximately USD6.2 million on the purchase of machinery
and the proceeds would not be sufficient for us to accomplish such purpose, we would require additional funding by building lines of
credit with financial institutions in the U.S. Concerning the investment on electric bicycle and sports bicycle brands in Michigan
State, the U.S., our investment amount will be capped at approximately 15% of the proceeds in order
to allow us to build our U.S. local talent force with handful of staffs to undertake the business development task. With regards to
the R&D center in Houston, the U.S., we estimate that approximately 15% of the proceeds shall be
sufficient for us to establish our R&D center in the U.S. as the major role of the R&D center in the U.S. is to guide our
R&D center in Taiwan with their more innovated technology. For setting up our sales and administration office in Houston, the
U.S., we consider that approximately 5% of the proceeds shall be sufficient for us
to rent an office in Houston and hire staff for operation. We intend that our office in the U.S. will be a hub in coordinating all
our business activities in the U.S. Based on the abovementioned, we believe that the proceeds from this offering shall be sufficient
to accomplish each purpose. If in any circumstances we require additional funding, we will build lines of credit with financial
institutions in the U.S.

 
The
precise amounts and percentage of proceeds we devote to particular categories of activity, and their priority of use, will depend on
prevailing market and business conditions as well as on the nature of particular opportunities that may arise from time to time. Accordingly,
we reserve the right to change the use of proceeds that we presently anticipate and describe herein.
 
The
foregoing is set forth based on the order of priority of each purpose and represents our current intentions based upon our present plans
and business conditions to use and allocate the net proceeds of this offering. Our management, however, will have significant flexibility
and discretion to apply the net proceeds of this offering. If an unforeseen event occurs or business conditions change, we may use the
proceeds of this offering differently than as described in this prospectus.
 

 
CAPITALIZATION
 
The
following tables set forth our cash and cash equivalents and capitalization as of December 31, 2021:
 
 

on
an actual basis; and 
 

on
a pro forma as adjusted basis to reflect the issuance and sale of 5,250,000 shares at an assumed initial public offering price
of $4.00 per share after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. 
You
should read the tables together with our consolidated financial statements and the related notes included elsewhere in this prospectus
and the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
 

 
 
As
of December 31, 2021
  
 
Actual
 
 
As
Adjusted
  
 
 
(in
US$)
 Current:
 
 
 
 
 
 
 
 Cash
and cash equivalents
 
 
2,850,817
 
 
 
21,915,817
  
 
 
 
 
 
 
 
 Current:
 
 
 
 
 
 
 
 Short-term
loans
 
 
5,707,934
 
 
 
5,707,934
 Current
portion of long-term loans
 
 
1,282,934
 
 
 
1,282,934
 Subtotal
 
 
6,990,868
 
 
 
6,990,868
 Non-current:
 
 
 
 
 
 
 
 Long-term
loans
 
 
1,066,602
 
 
 
1,066,602
 Subtotal
 
 
1,066,602
 
 
 
1,066,602
 Total
interest-bearing loans and borrowings
 
 
8,057,470
 
 
 
8,057,470
  
 
 
 
 
 
 
 
 Equity:
 
 
 
 
 
 
 
 Ordinary
shares, $0.31 par value, 35,000,000 shares authorized, 21,892,889 ordinary shares outstanding on an actual basis; and $0.50 par value,
21,012,887 ordinary shares outstanding after taking into consideration of the reverse stock split conducted on March 4, 2022
on an as adjusted basis
 
 
6,805,098
 
 
 
10,506,444
(2) Additional
paid-in capital (1)
 
 
8,528,956
 
 
 
23,892,610
 Accumulated
other comprehensive loss
 
 
(177,754
)
 
 
(177,754
)Retained
earnings
 
 
(5,884,541
)
 
 
(5,884,541
 Total
equity
 
 
9,271,759
 
 
 
28,336,759
  
 
 
 
 
 
 
 
 Total
capitalization
 
 
17,329,229
 
 
 
36,394,229
  
(1)
Additional
paid in capital reflects the net proceeds we expect to receive, after deducting underwriting fee, underwriters expense allowance
and other expenses. We expect to receive net proceeds of approximately $19,065,000 (offering proceeds of $21,000,000,
less underwriting discounts of $1,575,000, non-accountable expense of $210,000 and offering expenses of $150,000).
The additional paid in capital reflects the net proceeds we expect to receive, after deducting underwriting discounts, underwriters
expense allowance and other expenses.(2)
The as adjusted share capital, ordinary share of 10,506,444,
is computed based on the par value of $0.50 after taking into consideration of the reverse stock split conducted on March 4, 2022.
 

 
DILUTION
 
If
you invest in our ordinary shares, you will incur immediate dilution since the public offering price per share you will pay in this offering
is more than the net tangible book value per ordinary share immediately after this offering.
 
The
net tangible book value of our ordinary shares as of December 31, 2021 was $8,318,740, or $0.53 per share based
upon 15,762,887 ordinary shares outstanding. Net tangible book value per share represents the amount of our total tangible assets
reduced by the amount of our total liabilities, divided by the total number of ordinary shares outstanding. Tangible assets equal our
total assets less intangible assets, deferred tax assets and deferred offering cost.

 
The dilution in net
tangible book value per share to new investors, represents the difference between the amount per share paid by purchasers of shares in
this offering and the pro forma net tangible book value per share immediately after completion of this offering. After giving effect
to the sale of the 5,250,000 shares being sold pursuant to this offering price of $4.00 per share and after deducting underwriters’
discount and commission payable by us in the amount of $1,575,000, non-accountable expenses of $210,000 payable to the
underwriters and estimated offering expenses in the amount of $150,000, our pro forma net tangible book value would be approximately
$27,383,740, or $1.30 per share of ordinary shares. This represents an immediate increase in net tangible book value of
$0.77 per share to existing shareholders and an immediate decrease in net tangible book value of $2.70 per share to new
investors purchasing the shares  in this offering.

 
The
following table illustrates this per share dilution:
 
  
As
of December 31,
2021 Public offering price per ordinary share 
$4.00 Net tangible book value per share as of December 31, 2021 
$0.53 Increase in net tangible book value per share attributable to existing shareholders 
$ 0.77  Pro forma net tangible book value per share after this offering 
$ 1.30  Dilution per share to new investors 
$ 2.70   
Our
adjusted pro forma net tangible book value after the offering, and the decrease to new investors in the offering, will change from the
amounts shown above if the underwriters’ over-allotment option is exercised.
 
The following table
sets forth, on a pro forma as adjusted basis as of December 31, 2021, the difference between the number of ordinary shares purchased
from us, the total cash consideration paid, and the average price per share paid by our existing shareholders and by new public investors
before deducting estimated underwriters’ discounts and commissions and estimated offering expenses payable by us, using an assumed
public offering price of $4.00 per ordinary share:
 

  
Shares Purchased  
Total Cash Consideration  
AveragePrice Per   
Number  
Percent  
Amount  
Percent  
Share Existing shareholders 
 15,762,887  
  75.02 % 
$11,048,366  
  34.47 % 
$0.70 New investors from public offering 
  5,250,000   
  24.98 % 
$ 21,000,000   
  65.53 % 
$4.00 Total 
  21,012,887   
 100.00% 
$ 32,048,366   
$100.00% 
$ 1.53  
 
The
pro forma as adjusted information discussed above is illustrative only. Our net tangible book value following the completion of this
offering is subject to adjustment based on the actual initial public offering price of our ordinary shares and other terms of this offering
determined at pricing.
 

 
ENFORCEABILITY
OF CIVIL LIABILITIES
 
We
are incorporated under the laws of the Cayman Islands as an exempted company with limited liability in order to enjoy the following benefits:
 
 

political
and economic stability; 
 
   

an
effective judicial system; 
 
   

a
favorable tax system; 
 
   

the
absence of foreign exchange control or currency restrictions; and 
 
  

the
availability of professional and support services. 
However,
certain disadvantages accompany incorporation in the Cayman Islands. These disadvantages include, but are not limited to, the following:
 
 

the
Cayman Islands has a less developed body of securities laws as compared to the United States and these securities laws provide significantly
less protection to investors; and 
 
   

Cayman
Islands companies may not have standing to sue before the federal courts of the United States. 
Currently,
substantially all of our operations are conducted outside the United States, and substantially all of our assets are located outside
the United States. Our directors and officers are nationals or residents of Taiwan or India. As all of our officers are nationals
or residents of jurisdictions other than the United States, a substantial portion of their assets are located outside the United
States. As a result, it may be difficult for a shareholder to effect service of process within the United States upon these persons,
or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability
provisions of the securities laws of the United States or any state in the United States.
 
We
have appointed Puglisi & Associates, located at 850 Library Avenue, Suite 204, Newark, DE19711, as our agent upon whom process may
be served in any action brought against us under the securities laws of the United States.
 
Ogier,
our counsel as to Cayman Islands law, Lee and Li, Attorneys-at-Law, our counsel as to Taiwan law, and L&L-Leaven, Attorneys-at-Law,
our counsel as to PRC law, have advised us, respectively, that there is uncertainty as to whether the courts of the Cayman Islands, Taiwan
and China, respectively, would:
 
 

recognize
or enforce judgments of U.S. courts obtained against us or our directors or officers predicated upon the civil liability provisions
of securities laws of the United States or any state in the United States; or 

entertain
original actions brought in each respective jurisdiction against us or our directors or officers predicated upon the securities laws
of the United States or any state in the United States. 
Ogier
has informed us that it is uncertain whether the courts of the Cayman Islands will allow shareholders of our company to originate actions
in the Cayman Islands based upon securities laws of the United States. In addition, there is uncertainty with regard to Cayman Islands
law related to whether a judgment obtained from the U.S. courts under civil liability provisions of U.S. securities laws will be determined
by the courts of the Cayman Islands as penal or punitive in nature. If such a determination is made, the courts of the Cayman Islands
will not recognize or enforce the judgment against a Cayman Islands company, such as our company. As the courts of the Cayman Islands
have yet to rule on making such a determination in relation to judgments obtained from U.S. courts under civil liability provisions of
U.S. securities laws, it is uncertain whether such judgments would be enforceable in the Cayman Islands. Ogier has further advised us
that although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman
Islands will recognize and enforce a foreign judgement, without any re-examination or re-litigation of matters adjudicated upon, provided
such judgment:
 

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

 
 
(b)
imposes
on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given; 
 
  
(c)
is
final; 
 
  
(d)
is
not in respect of taxes, a fine or a penalty; 
 
  
(e)
was
not obtained by fraud; and 
 
  
(f)
is
not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands. 
Our
Taiwan counsel, Lee and Li, Attorneys-at-Law, has advised us that any United States judgments obtained against us will be enforced by
courts in Taiwan without further review of the merits only if the court of Taiwan in which enforcement is sought is satisfied with the
following:
 
 

the
court rendering the judgment has jurisdiction over the subject matter according to the laws of Taiwan; 
 
  

if
the judgment was rendered by default by the court rendering the judgment, (i) we were duly served within a reasonable period of time
within the jurisdiction of such court in accordance with the laws and regulations of such jurisdiction, or (ii) process was served
on us with judicial assistance of Taiwan; 
 
  

the
judgment and the court procedures resulting in the judgment are not contrary to the public order or good morals of Taiwan; and 
 
  

judgments
of the courts of Taiwan are recognized in the jurisdiction of the court rendering the judgment on a reciprocal basis. 
Our
PRC counsel, L&L-Leaven, Attorneys-at-Law, has advised us that the recognition and enforcement of foreign judgments are subject to
compliance with the PRC Civil Procedures Law and relevant civil procedure requirements in the PRC. PRC courts may recognize and enforce
foreign judgments in accordance with the requirements of PRC Civil Procedures Law based either on treaties between China and the country
where the judgment is made or on reciprocity between jurisdictions. China does not have any treaties or other form of reciprocity with
the United States or the Cayman Islands that provide for the reciprocal recognition and enforcement of foreign judgments. In addition,
according to the PRC Civil Procedures Law, courts in the PRC will not enforce a foreign judgment against us or our directors and officers
if they decide that the judgment violates the basic principles of PRC law or national sovereignty, security or public interest. As a
result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States or in
the Cayman Islands.
 
As
a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken
by management, members of the board of directors or controlling shareholders than they would as public shareholders of a U.S. company.
 

 
CORPORATE
STRUCTURE
 
On
May 24, 2016, J-Star Holding Co., Ltd was incorporated as an exempted company with limited liability in the Cayman Islands as our holding
company. J-Star directly holds all the share capital of (i) Goal Beyond, which was incorporated as an international company in
Samoa on April 13, 2016; (ii) Star Leader Trading, which was incorporated in Hong Kong on May 30, 2016 as a limited company; and (iii)
Bohong Technology, which was incorporated in the PRC on October 9, 2018. Our wholly-owned subsidiary Goal Beyond, in turn, holds
all the share capital of (i) TW YMA, which was incorporated in Taiwan on July 17, 2015; (ii) Time Yield, which was incorporated
in Samoa on January 30, 2013; (iii) Dongguan YMA, which was incorporated in the PRC on September 30, 2018; and (iv) Dongguan
Forwell, which was incorporated in the PRC on December 5, 2003. As described below, J-Star, through a series of transactions which
is accounted for as a reorganization of entities under a common control (the “Reorganization”), became the ultimate parent
entity of its subsidiaries. Our principal executive offices are located at 7/F-1, No. 633, Sec.2, Taiwan Blvd.,
Xitun District, Taichung City 407, Taiwan (R.O.C.), and our phone number is +886-423229900. We maintain a corporate website at www.ymaunivers.com.
The information contained in, or accessible from, our website or any other website does not constitute a part of this prospectus.
 
The
diagram below shows our corporate structure subsequent to the completion of the reorganization:
 

 
our subsidiaries with earnings.
our non-operating subsidiaries as of the date of this prospectus.
 
The
Reorganization
 
The
Reorganization involved (i) the incorporation of J-Star under the laws of the Cayman Islands on May 24, 2016; (ii) the incorporation
of J-Star’s wholly-owned subsidiary, Star Leader Trading, under the laws of Hong Kong on May 30, 2016; (iii) the transfer of all
equity ownership of Goal Beyond to J-star from the former shareholders on August 31, 2016; (iv) the transfer of all equity ownership
of Bohong Technology to J-Star from the former shareholders on December 7, 2021; (v) the transfer of all equity ownership of TW YMA
to Goal Beyond from the former shareholders on August 16, 2016; (vi) the transfer of all equity ownership of Time Yield to Goal Beyond
from the former shareholders on July 6, 2016; (vii) the incorporation of Dongguan YMA, a wholly-owned subsidiary of Goal Beyond, under
the laws of PRC on September 30, 2018; (viii) the disposal of all equity ownership of Dongguan Yuantai Sports Equipment Co., Ltd. (“Dongguan
Yuantai”), a company incorporated under the laws of PRC, by Skyfort International Pte. Limited (“Skyfort International”),
a former wholly-owned subsidiary of Goal Beyond incorporated under the laws of Singapore, on April 3, 2019; (ix) the transfer of all
equity ownership of Dongguan Forwell to Goal Beyond from the former shareholder on January 17, 2020; and (x) the deregistration of Skyfort
International on February 13, 2020.
 

 

On
July 6, 2016, Mr. Kuo-Pin Yu and Mr. Hsiu-Shan Chao transferred all of their respective shares of Time Yield to Goal Beyond, through
a share purchase agreement dated June 1, 2016, in a total consideration of $1,000,000. After the transfer, Goal Beyond owns 100% equity
interests of Time Yield.
 
On
August 31, 2016, Mr. Jing-Bin Chiang, Mr. Kuo-Pin Yu, New Moon Corporation, Star Centurion Limited, Radian Faith Limited, Glitter Group
Ltd., Colossal City Limited and Vantage Wave Limited (the “Goal Beyond Former Shareholders”), being the former shareholders
of Goal Beyond transferred all of their respective shares of Goal Beyond to J-Star, through a share subscription agreement entered into
between each of the Goal Beyond Former Shareholders, J-Star and Goal Beyond on June 1, 2016, for the subscription of J-Star’s newly-issued
shares by Goal Beyond Former Shareholders through contributing all of their respective shares of Goal Beyond to J-Star to offset the
obligation on the subscription payment. After the transfer, J-Star owns 100% equity interests of Goal Beyond.
 
On
August 16, 2016, Mr. Kuo-Pin Yu and Ms. Hsiu-Shan Chao transferred all of their respective shares of TW YMA to Goal Beyond, through share
transfer agreements dated July 27, 2016, in a total consideration of NTD1,000,000. After the transfer, Goal Beyond owns 100% equity interests
of TW YMA.
 
Under
a share transfer agreement dated August 14, 2018 (“Yuantai Share Transfer Agreement”), Skyfort International agreed to sell
and Shenzhen Meishangsheng Technology Co., Ltd. (“Shenzhen Meishangsheng”), an independent third party, among others, agreed
to purchase 100% equity ownership of Dongguan Yuantai, in a total consideration of RMB142.0 million, of which RMB12.0 million were agreed
to be paid to certain independent third parties as agency commission fee under a separate undertaking dated May 29, 2018. Through the
disposal of Dongguan Yuantai, the Group disposed of the ownership of two parcels of land in Dongguan, the PRC (“Dongguan Land”)
held by Dongguan Yuantai, including the constructions and equipment implanted thereon, without disposing the assets and liabilities,
production plant and products held under Dongguan Yuantai. Lease back arrangement has been made, in which Dongguan Yuantai (as lessor)
leases out part of Dongguan Land (the “Leased Back Portions”) to Dongguan YMA (as lessee), which are currently used for operating
our production plant in Dongguan, the PRC, and part of the consideration under Yuantai Share Transfer Agreement has been set off by rent
of the Leased Back Portion for the lease period from July 2019 to June 2021. For further details on the lease concerning the Leased Back
Portions, please refer to the two leased properties in Dongguan, the PRC, summarized under “Business – Properties.”
The transfer of 50% equity ownership of Dongguan Yuantai to Shenzhen Meishangsheng was completed on November 13, 2018 and the transfer
of another 50% of equity ownership of Dongguan Yuantai was completed on April 3, 2019. The assets and liabilities under Dongguan Yuantai
were then transferred to Dongguan YMA on September 30, 2018.
 
On
January 17, 2020, Goal Beyond acquired 100% equity ownership of Dongguan Forwell from Skyfort International Pte. Limited in a total consideration
of HKD20.0 million through a share transfer agreement dated November 20, 2019. After the transfer, Goal Beyond owns 100% equity interests
of Dongguan Forwell.
 
On
December 30, 2020, J-Star, New Moon Corporation, Barium Glory Financial Ltd., Sendai Investments entered into a share swap agreement,
whereby J-Star would acquire all share capital of Bohong Technology from New Moon Corporation, Barium Glory Financial Ltd., Sendai Investments,
being the former shareholders of Bohong Technology, by a share swap of 838,053 treasury shares of J-Star. After the transfer, J-Star
owns 100% equity interests of Bohong Technology.
 
On
April 23, 2021, J-Star, Mr. Frédéric Sallet, Mr. Christophe Quiniou, Le Gallion and 6ème Sens Immobilier entered
into an investment agreement, whereby the Group agreed to invest in 19.5% of the equity interest in Cycles Services Loire, a bicycle
assemble house in France engaging in the assembly and trading of bicycles, bicycle accessories and other leisure products, in consideration
of 19,500 euros, and the Group intended to invest further in Cycles Services Loire, in the amount of 40,500 euros, by the third quarter
of 2022, with a view to expanding our market in Europe and enhancing our proximity with customers in Europe.
 

 
SELECTED
CONSOLIDATED FINANCIAL DATA
 

The
following selected consolidated statements of operation data for the years ended December 31, 2020 and 2021, selected
consolidated balance sheets data as of December 31, 2020 and 2021 and selected consolidated statements of cash flow data for
the years ended December 31, 2020 and 2021 have been derived from our audited consolidated financial statements included
elsewhere in this prospectus. Our annual consolidated financial statements are prepared and presented in accordance with
International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRSs”). Our
historical results are not necessarily indicative of results expected for future periods. You should read this Selected Consolidated
Financial Data section together with our consolidated financial statements and the related notes and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this
prospectus.

 
Selected
Consolidated Statements of Operation:

 

  
For the Years Ended December 31,   
2020  
2021   
USD  
USD   
   
  Operating revenue 
$22,178,572  
$31,328,379 Gross profit from operations 
$7,361,667  
$8,990,175 Operating expenses 
$(5,675,281) 
$(8,759,382)Other income and expenses 
$13,691  
$(350,589)Net operating income (loss) 
$1,770,077  
$(119,796) Income taxes expense 
$(355,273) 
 (160,182)Profit (Loss) from continuing operations 
$1,110,146  
$(132,902)Total comprehensive income (loss) 
$940,595  
 (79,004)Profit (Loss) from continuing operations per ordinary share: 
    
   Basic and diluted 
$0.08  
$(0.01)
 

About
calculation of profit (loss) from continuing operations per ordinary share, the weighted average numbers of ordinary shares outstanding
in 2020 and 2021 have been retrospectively adjusted and calculated weighted averagely by considering the reverse stock split conducted
by the company in March 2022.
 
Selected
Consolidated Balance Sheets Data:
 
  
As of December 31,   
2020  
2021   
USD  
USD   
   
  Current assets 
$21,657,681  
$33,093,797 Total assets 
$28,592,759  
$40,425,680 Current liabilities 
$18,619,237  
$29,901,371 Total liabilities 
$19,373,708  
$31,153,921 Total equity 
$9,219,051  
$9,271,759 
 
Selected
Consolidated Statements of Cash Flow Data:
 

  
For the Years EndedDecember 31,   
2020  
2021   
USD  
USD   
   
  Net cash from (used in) operating activities 
$239,408  
$(539,215)Net cash used in investing activities 
$(1,238,681) 
$(895,927)Net cash from financing activities 
$858,786  
$2,919,683 Effect of foreign exchange rate changes on cash and cash equivalents 
$(85,751) 
$29,456 Net (decrease) increase in cash, cash equivalents 
$(226,238) 
$1,513,997 Cash, cash equivalents at beginning of year 
$1,563,058  
$1,336,820 Cash, cash equivalents at end of year 
$1,336,820  
$2,850,817  

 
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS

 
The
following management’s discussion and analysis of financial condition and results of operations contains forward-looking statements
which involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements
as a result of certain factors, including those set forth under “Risk Factors” and elsewhere in this prospectus. We assume
no obligation to update forward-looking statements or the risk factors. You should read the following discussion in conjunction with
our consolidated financial statements and related notes included elsewhere in this prospectus.
 
Overview
 
Our
vision is to offer cutting edge technology and manufacturing expertise in carbon composite to our customers. We have preliminarily engaged
in the research and development as well as manufacturing of carbon fiber for a wide variety products including carbon bicycles, carbon
rackets, automotive parts, outdoor sports gears and healthcare products.
 
For the fiscal years ended December 31, 2020 and
2021, our operating revenue were approximately $22.2 million and $31.3 million, respectively. Our profit after income tax
from continuing operations was approximately $1.1 million for the fiscal year ended December 31, 2020 and our loss after income tax from continuing
operations was approximately $0.1 million for the fiscal year ended December 31, 2021. We primarily generate revenue through three divisions
and revenue streams, namely (i) sales of bicycle parts for sports bicycle and electric bicycle, (ii) sales of rackets, and (iii) sales
of other products.
 
Key
Factors that Affect Operating Results
 
We
believe the following key factors may affect our financial condition and results of operations:
 
 

our
ability to increase our bicycle parts sales volume; 

our
ability to increase our rackets sales volume; 

our
ability to increase our other products sales volume; 

our
ability to enhance our operational efficiency; and 

our
ability to research and develop new products. 
COVID-19
 
The
outbreak of novel coronavirus (COVID-19) began in December 2019 and was declared as a pandemic on March 11, 2020 by the World Health
Organization. Subsequent to the outbreak, COVID-19 has spread rapidly to many parts of China and other parts of the world. The pandemic
has resulted in quarantines, travel restrictions, and the temporary closure of stores and facilities in China and elsewhere.
 

As
our production plant is located in China, the COVID-19 pandemic has adversely affected our business operations and financial condition,
operating results and cash flow for fiscal year 2020, including but not limited to adverse impacts to our production pipeline and total
revenue in 2020. However, we have developed corresponding systems in response to COVID-19 to relieve its impact based on past
experience. Our operating revenue increased by approximately 41.3% for the year ended December 31, 2021 as compared
to the same period in 2020. For the year ended December 31, 2021, there is an increase in inventories of $11,310,397
due to shortage of containers for international shipment to ship our products to the customers, which has in turn casted impact on
our operating revenue for the year ended December 31, 2021. In response to the COVID-19 pandemic, our primary focuses are
on our cash flow management and timely collection of accounts receivables.

 

 
Results
of Operations
 
The
following table sets forth a summary of our consolidated statements of income for the fiscal years ended December 31, 2020 and 2021,
respectively. This information should be read together with our consolidated financial statements and related notes included elsewhere
in this prospectus. The results of operations in any period are not necessarily indicative of our future trends.
 

Years
Ended December 31, 2020 and 2021
 

  
For the Years Ended December 31,   
2020  
2021   
USD  
%  
USD  
% Operating revenue 
$22,178,572  
 100  
$31,328,379  
 100 Less: Cost of revenue 
 (14,816,905) 
 (67) 
 (22,338,204) 
 (71)Gross profit from operations 
 7,361,667  
 33  
 8,990,175  
 29 Operating expenses: 
    
    
    
   Selling expenses 
 (1,386,309) 
 (6) 
 (1,997,810) 
 (7)Administrative expenses 
 (2,517,208) 
 (11) 
 (5,080,761) 
 (16)Research and development expenses 
 (1,689,817) 
 (8) 
 (1,660,330) 
 (5)Expected credit losses 
 (81,947) 
 (0) 
 (20,481) 
 (0)Other income and expenses 
 13,691  
 0  
 (350,589) 
 (1)Net operating income (loss) 
 1,700,077  
 8  
 (119,796)  
 0 Non-operating income and expenses 
    
    
    
   Interest income 
 2,802  
 0  
 2,156  
 0 Other gains and losses 
 180,463 
 1 
 370,180 
 1Finance costs 
 (417,923) 
 (2) 
 (225,260) 
 (1)Non-operating income and expenses 
 (234,658) 
 (1) 
 147,076 
 0Profit before income tax 
 1,465,419  
 7  
 27,280  
 0   
    
    
    
   Income tax expense 
 (355,273) 
 (2) 
 (160,182) 
 (1)Profit (Loss) after income tax 
 1,110,146  
 5  
 (132,902) 
 (1)Exchange differences on translation of foreign operations 
 (169,551) 
 (1) 
 53,898 
 0 Total comprehensive income (loss) 
$940,595  
 4  
$(79,004) 
 0  

 
Segment
Information
 
For
the years ended December 31, 2020 and 2021, we primarily generated revenue through three divisions and revenue streams,
namely (i) sales of bicycle parts for sports bicycle and electric bicycle, (ii) sales of rackets, (iii) sales of other products.
 
The
following tables present the summary of each reportable segment’s revenue and income (loss), which are considered as segment operating
performance measures, for the years ended December 31, 2020 and 2021:
 

  
Year ended December 31, 2021   
Bicycle parts segment  
Racket segment  
Others  
Total segments Total segment revenue 
$20,003,503  
$11,311,263  
$13,613  
$31,328,379 Inter-segment revenue 
$0  
$0  
$0  
$0 Revenue from contracts with customers 
$20,003,503  
$11,311,263  
$13,613  
$31,328,379 Segment profit before income tax 
$401,290  
$(384,967) 
$10,957  
$27,280  

  
Year
ended December 31, 2020   
Bicycle
parts segment  
Racket
segment 
 
Others  
Total
segments Total
segment revenue 
$14,275,730  
$7,880,514 
 
$22,328  
$22,178,572 Inter-segment
revenue 
$0  
$0 
 
$0  
$0 Revenue
from contracts with customers 
$14,275,730  
$7,880,514 
 
$22,328  
$22,178,572 Segment
profit before income tax 
$1,893,547  
$(436,219)
 
$8,091  
$1,465,419   
*
Please
refer to the analysis of operating revenue in the paragraph headed “Components of Results of Operations” in this section. 

 
Components
of Results of Operations
 
Years
Ended December 31, 2020 and 2021
 
Operating
revenues
 
The
following table identifies the disaggregation of our revenue from continuing operations and reportable segments for the years ended December
31, 2020 and 2021, respectively:
 
  
For the Year Ended December 31,  
 
Change
 Segment 
2020  
%  
2021  

 
Amount
 
 
%
 Bicycle parts 
$14,275,730  
 64.4  
$20,003,503 
 63.9
 
$
5,727,773
 
 
 
40.1
 Racket 
 7,880,514  
 35.5  
 11,311,263 
 36.1
 
 
3,430,749
 
 
 
43.5
 Others 
 22,328  
 0.1  
 13,613 
 0.0
 
 
(8,715
)
 
 
(39.0
)Revenue from contracts with customers 
$  22,178,572  
 100  
$  31,328,379 
 100
 
$
  9,149,807
 
 
 
41.3
  

Our
operating revenue for the years ended December 31, 2020 and 2021 were $22,178,572 and $31,328,379, respectively, representing an increase
of approximately 41.3%. The increase in revenues was mainly driven by increase in sales of bicycle parts and racket. The revenue from
sales of bicycle parts for the year ended December 31, 2021 was $20,003,503, as compared to $14,275,730 for the year ended December 31,
2020. The revenue from sales of bicycle parts increased by $5,727,773, was mainly due to the increase in sales of bicycle parts in the
Europe and Asia markets. The revenue from sales of racket for the year ended December 31, 2021 was $11,311,263, as compared to $7,880,514
for the year ended December 31, 2020. The revenue from sales of racket increased by $3,430,749, which was mainly due to (i) the increase
in sales of racket to a racket brand customer in Spain; and (ii) the increase in sales of racket to two racket brand customers in U.S.
and Taiwan.
  

 
Cost
of revenue
 

Cost
of revenue consists primarily of (i) cost of goods sold; (ii) loss on physical inventory observation; and (iii) Reversal of inventory
valuation. Our cost of revenue increased by $7,521,299, or approximately 50.8%, to $ 22,338,204 for the year ended December 31, 2021
from $14,816,905 for the year ended December 31, 2020, which was primarily due to (i) the increase of revenue, (ii) cost of goods sold
such as increase in manufacture expenses and (iii) increase in labor cost incurred during the year ended December 31, 2021.
 
Gross
profit
 

Gross
profit for the years ended December 31, 2020 and 2021 were $7,361,667 and $8,990,175, respectively, representing 33.2% and 28.7%,
respectively, of operating revenue. Gross profit for the year ended December 31, 2021 increased by 22.1% due to the increase in the selling
price of all our products and the increase in the number of new projects. The decrease in gross profit margin from 33.2% for the year
ended December 31, 2020 to 28.7% for the year ended December 31, 2021 was due to the increase of outsourcing activities in order to cope
with the strong growth on demand of our products.
  
Operating
expenses
 

Our
operating expenses primarily consist of (i) selling expenses; (ii) administrative expenses; (iii) research and development expenses;
and (iv) expected credit gains or losses. Our operating expenses increased by $3,084,101 from $5,675,281 for the year ended December
31, 2020 to $8,759,382 for the year ended December 31, 2021. Such increase was primarily due to the increase in number of employees,
resulting in increase in salary expense in the amount of $601,111, and the increase in IPO expenses in the amount of $1,290,625.
  
Other
income and expenses
 
Our
other income and expenses consist primarily of (i) losses on disposals of property, plant and equipment and (ii) exchange gain and
loss. We recorded an other income of $13,691 for the year ended December 31, 2020 while we incurred other expenses of $350,589 for
the year ended December 31, 2021. The change was mainly due to the increase in losses on disposal of property, plant and
equipment by $172,682 from the loss on disposals of property, plant and equipment of $71,801 for the year ended December 31, 2020 to
the losses on disposals of property, plant and equipment of $244,483 for the year ended December 31, 2021.
 
Non-operating
income and expenses
 

Our
non-operating income and expenses consist primarily of (i) interest income; (ii) other gains and losses; and (iii) finance costs. We
incurred non-operating expenses of $234,658 for the year ended December 31, 2020 while we recorded non-operating income of $147,076
for the year ended December 31, 2021. The decrease in non-operating expenses was mainly due to foreign exchange gains increased by $189,717 from $180,463 for the year
ended December 31, 2020 to $370,180 for the year ended December 31, 2021 and the decrease in finance costs from $417,923
for the year ended December 31, 2020 to $225,260 for the year ended December 31, 2021. Such change was mainly due to loan from related
parties from $306,237 for the year ended December 31, 2020 to $4,085 for the year ended December 31, 2021.
 
Income
tax expense
 
We
recorded income tax expense of $355,273 and $160,182 for the years ended December 31, 2020 and 2021, respectively.
 
The
effective tax rate was 24.2% and 587.2% for the years ended December 31, 2020 and 2021, respectively. The increase
in effective tax rate during the year December 31, 2021 was mainly because we incurred loss before income tax for the year
ended December 31, 2021 and recognized provisions of potential tax risk proposed by tax specialists.
 

 
Profit
after income tax
 

Our
profit after income tax for the year ended December 31, 2020 was $1,110,146, while we incur
loss after income tax of $132,902 for the year ended December 31, 2021.
 
Exchange
differences on translation of foreign operations
 
We
recorded an exchange gain of $53,898 for the year ended December 31, 2021 and an exchange loss of $169,551 for the year
ended December 31, 2020. The change from exchange
loss to exchange gain during the years ended December 31, 2020 and 2021 was primarily due to the depreciation of NTD against USD
by approximately 10% and the appreciation of RMB against USD by approximately 8.6% from 2020 to 2021. The changes in exchange differences
on translation of foreign operations year-over-year of $223,449 from gain to loss for the year ended December 31, 2021 was primarily
due to foreign currency translation gain from our subsidiaries located in China and Taiwan as a result of the translation of assets,
liabilities, and results of operations into U.S. dollars using the relevant foreign currency exchange rates.
 
We
do not currently engage in currency hedging activities in order to reduce our currency exposure.
 
Total
comprehensive income
 
As
a result of the foregoing, our total comprehensive income for the year ended December 31, 2020 was $940,595, while our total comprehensive loss for the year ended December 31, 2021 was $79,004.
 
Liquidity
and Capital Resources
 
Our
primary sources of liquidity consist of existing cash balances, cash flows from our operating activities and availability under our loan
arrangements with banks. As of December 31, 2021, we had outstanding short-term loans with aggregate principal amount of $5,707,934
and $2,349,536 of long-term loans (including current portion), respectively. The short-term loans had floating interest rate
between 1.40% to 2.65%. Long-term bank loans, however, had floating interest rate between 0.66% to 0.94%, and other long-term
loans have interest rate ranging from 6.20% to 10.62%. As of December 31, 2021, we had cash and cash equivalents of $2,850,817
and working capital of $3,192,426. We also had unused credit lines from bank loans of $1,944,289, of which $1,663,512
expires within one year and $280,777 expires beyond one year, as of December 31, 2021. As of December 31, 2020, we
had outstanding short-term loans with aggregate principal amount of $2,743,646 and $663,000 of long-term loans (including current portion),
respectively. The short-term loans had floating interest rate between 1.69% to 2.6%. Long-term loans, however, had floating interest
rate between 0.66% to 0.94%. As of December 31, 2020, we had cash and cash equivalents of $1,336,820 and working capital of $3,038,444.
Our short-term capital requirements are mainly due to strong growth of the market demand and increase in inventories as a result of
shortage of shipping containers and delays in international shipments and accordingly, the increase of working capital requirements.
 
As
of December 31, 2021, we had cash and cash equivalent of $2,850,817, unused credit terms of $1,944,289, and loss after tax of $132,902
and negative cash outflow in operating activities of $539,215 for the year ended December 31, 2021. We also had inventories of $23,010,057
as of December 31, 2021 which represents 73.4% of the Company’s sales revenue for the year December 31, 2021. 

 
Despite
the strong growth of market demand, recent shortage of shipping containers and delays in international shipments delayed our
shipment of inventories to our customers as scheduled which resulted in significant increase in the amount of inventories from
$11,699,660 as of December 31, 2020 to $23,010,057 as of December 31, 2021. Such increase is the main reason for our negative cash
outflow in operating activities of $539,215 for the year ended December 31, 2021. For the fiscal year ended December 31,
2021, the shipments were not shipped out due to the delays in international shipments to customers, and thus, they were recognized
as the sales during the first four months of 2022 totaled $1,046,478 for finished goods and $2,579,404 for work in progress. These
amounts were determined based on the confirmed orders from the customers with anticipated shipment by or before December 31, 2021.
The remaining increase in inventories of $7,684,515 mainly represents increase in demands from the customers with scheduled shipment
through December 2022. Also, as our production lead time is on average approximately three to four months and we are required to
wait until the products are inspected by our customers’ quality control process before we can paint, assemble, generate a
barcode for the products, and package the products, after which, we can then classify these products as finished goods. Our
customer’s quality control process will not inspect our work in progress inventories if they are unable to secure the shipping
containers for shipment. As a result, the shortage of shipping containers for shipments to customers affects the classification of
work in progress inventories and finished goods.
 
We
anticipate that the shortage of shipping containers and delays in international shipments may
continue, at least in the near future. Aforementioned shortage of shipping containers and delays in international shipments, if
remain unrelieved in the near future, may continue to have negative impact on our liquidity and we may be required to raise additional
funds from bank financing or issuance of equity to fund our operations. We have taken certain actions to manage the level of inventories
held by us as well as negotiating new credit terms with our customers (for example we requested our customers to shorten the payment
terms to support our operation) to ensure sufficient liquidity and capital resources.
 
For the expansion of our
production capacity through Bohong Technology in Yangzhou, China, due to COVID-19 and its impact on economic and social activities, we
suspended the construction work of our production plant in Yangzhou and the construction work is expected to resume by the fourth
quarter of 2022. We expect to use cash generated from operations, additional bank secured borrowings with collateral of land use
right and around $3 million of capital contribution, which have yet to be arranged or received to support the capital expenditures on
machinery amounted to RMB 40.0 million (approximately $6.2 million). To date, we have financed our operations primarily through capital
contributions, bank borrowings and from operations. We believe that we will generate sufficient cash flows after taking into account
the inventory management, negotiation of new credit terms with customers, cash and cash equivalents on hand, our operating cash flows,
available financing facilities and around $3 million of capital contributions, which have yet to arranged or received, to fund our operations
and to meet our obligations on a timely basis for the next 12 months from the date our financial statements as of and for the year ended
December 31, 2021 was authorized for issuance. Accordingly, the financial statements have been prepared on a basis that assumes we will
continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary
course of business.
 

 
Current foreign exchange and other regulations
in the PRC may restrict our PRC entities in their ability to transfer their net assets to us and our subsidiary. However, we have no
present plans to declare dividend and we plan to retain our retained earnings to continue to grow our business.
 
We are permitted under
PRC laws and regulations to provide funding to our PRC subsidiaries only through loans or capital contributions, and only if we satisfy
the applicable government registration and approval requirements. The relevant filing and registration processes for capital contributions
to our PRC subsidiaries typically take approximately eight weeks to complete. The filing and registration processes for loans either
to our PRC subsidiaries typically take approximately four weeks or longer to complete. While we currently see no material obstacles to
completing the filing and registration procedures with respect to future capital contributions to our PRC subsidiaries and loans to our
PRC subsidiaries, we cannot assure you that we will be able to complete these filings and registrations on a timely basis, or at all.
See “Risk Factors—Risks Related to Conducting Operations in PRC and Hong Kong —Governmental control of currency
conversion may limit our ability to utilize our net revenues effectively and affect the value of your investment.’’ Additionally,
while there is no statutory limit on the amount of capital contribution that we can make to our PRC subsidiaries, loans provided to our
PRC subsidiaries are subject to certain statutory limits. We are able to use all of the net proceeds from this offering for investment
in our PRC operations by funding our PRC subsidiary through capital contributions which is not subject to any statutory limit on the
amount under PRC laws and regulations. We expect the net proceeds from our initial public offering to be used in the PRC will be in the
form of Renminbi and, therefore, our PRC subsidiaries will need to convert any capital contributions or loans from U.S. dollars into
Renminbi in accordance with applicable PRC laws and regulations.
 
Cash
Flows

 
Years
Ended December 31, 2020 and 2021
 
The
following table summarizes our cash flows for the periods indicated:
 

 
 
For
the Years EndedDecember 31,
  
 
2020
 
 
2021
  
 
USD
 
 
USD
  
 
 
 
 
 
 Net
cash from (used in) operating activities
 
$
239,408
 
 
$
(539,215
)Net
cash used in investing activities
 
$
(1,238,681
)
 
$
(895,927
)Net
cash from financing activities
 
$
858,786
 
 
$
2,919,683
 Effect
of foreign exchange rate changes
 
$
(85,751
)
 
$
29,456
 Net
(decrease) increase in cash, cash equivalents
 
$
(226,238
)
 
$
1,513,997
 Cash,
cash equivalents at beginning of year
 
$
1,563,058
 
 
$
1,336,820
 Cash,
cash equivalents at end of year
 
$
1,336,820
 
 
$
2,850,817
  

 
Operating
Activities
 

Net
cash used in operating activities was $539,215 for the year ended December 31, 2021, primarily derived from profit before tax of
$27,280, adjusted mainly by (a) the increase in accounts and payable of $2,359,272; (b) the increase in other payables of $6,211,585;
and (c) the increase in inventories of $11,310,397 due to shortage of containers for international shipment to ship our products to
the customers as well as our strategy to increase inventories to support our growth on sales and to avoid shortage on raw material
as a consequence of the outbreak of COVID-19 that delayed the shipment of raw materials to us during the year ended December 31,
2021.
 
Net
cash from operating activities was $239,408 for the year ended December 31, 2020, primarily derived from profit before tax of $1,465,419,
adjusted mainly by (a) a decrease in prepayments of $1,109,801 mainly because we made large sum of prepayment to our supplier at the
end of 2019; (b) an increase in accounts and payable of $850,274, and offset by an increase in inventories of $3,522,931 as we intended
to increase the inventories to avoid for shortage of inventory as a consequence of the outbreak of COVID-19 that delayed the shipment
of raw materials to us during the year ended December 31, 2020.
  
Investing
Activities
 

For
the year ended December 31, 2021, net cash used in investing activities was $895,927, mainly for (i) acquisition of property, plant
and equipment of $1,256,121; (ii) increase in guarantee deposits paid of $94,140; and (iii) decrease in financial assets at amortized cost of $498,588.
 
For
the year ended December 31, 2020, net cash used in investing activities was $1,238,681, mainly for (i) acquisition of financial assets
at amortized cost of $704,776; and (ii) acquisition of property, plant and equipment of $659,266.
  
Financing
Activities
 

For the year ended December 31, 2021, net
cash from financing activities was $2,919,683, mainly consisted of (i) proceeds from short-term bank loans of 2,950,060 offset by
payments on short-term bank loans of $8,505,303, and (ii) proceeds from long-term bank loans of $1,653,004 offset by payments on long-term bank loans of $764,800.
 
For
the year ended December 31, 2020, net cash from financing activities was $858,786, mainly consisted of proceeds from short-term bank
loans of $2,011,783 and long-term bank loans of $638,444, and offset by decrease in other payables to related parties of $1,137,495.
  
Trend
Information
 
Despite
the demand from the Company’s customers, recent shortage of shipping containers and delays in international shipments delayed
the Company’s shipment of inventories to its customers as scheduled which resulted in significant increase in the amount of
inventories as compared to December 31, 2020 and negative cash outflow in operating activities of $539,215 for the year ended
December 31, 2021. Management anticipates that the shortage of shipping containers and delays in international shipments may
continue, at least in the near future. To deal with these issues, the Company has been using Shenzhen and Guanzhou, apart from Hong
Kong which was the only port for the Company’s shipment of inventories, since March 2022 as alternative ports for international
shipment. Aforementioned shortage of shipping containers and delays in international shipments, if remain unrelieved in the near
future, may continue to have negative impact on our liquidity and we may be required to raise additional funds from bank financing
or issuance of equity to fund our operations.
Other than as disclosed in “Risk Factors – Our operations have been and may continue to be affected by the COVID-19
pandemic” and “Risk Factors—Risks Related to Our Business and Industry—The occurrence of
force majeure events and natural disasters may adversely affect our business, financial condition and results of
operations” in this prospectus, we are not aware of any trends, uncertainties, demands, commitments or events that are
reasonably likely to have a material effect on our operating revenue, income from continuing operations, profitability, liquidity or
capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results
or financial condition.
 
Off-Balance
Sheet Arrangements
 
We
did not have during the periods presented, and we do not currently have, any off-balance sheet financing arrangements or any relationships
with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose
entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited
purposes.
 

 
Internal
Control Over Financial Reporting
 
Prior
to this offering, we were a private company with limited accounting personnel and other resources to address our internal control over
financial reporting. Our independent registered public accounting firm has not conducted an audit of our internal control over financial
reporting. However, in preparing our consolidated financial statements as of and for the years ended December 31, 2019, 2020 and
2021, we and our independent registered public accounting firm identified material weaknesses in our internal control over financial
reporting as of December 31, 2021, defined in accordance with the standards established by PCAOB. As defined in standards established
by the PCAOB, a “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting,
such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented
or detected on a timely basis.
 
The
material weaknesses identified arose from our lack of effective financial reporting oversight process for our period-end financial reporting
as well as our lack of policies and procedures over evaluation of significant complex transactions and evaluation of certain general
ledger accounts. Following the identification of the material weaknesses, we have taken and plan to continue to take remedial measures
to remedy the material weaknesses. Neither we nor our independent registered public accounting firm undertook a comprehensive assessment
of our internal control over financial reporting under the Sarbanes-Oxley Act for purposes of identifying and reporting any weakness
or significant deficiency in our internal control over financial reporting, as we and they will be required to do so once we become a
public company. Had we performed a formal assessment of our internal control over financial reporting or had our independent registered
public accounting firm performed an audit of our internal control over financial reporting, additional control deficiencies may have
been identified.
 
To
remedy our identified material weaknesses, we are in the process of adopting several measures that will improve our internal control
over financial reporting, including: (i) recruiting a chief financial officer with extensive financial reporting experience to
effectively oversight our financial reporting process; (ii) establishing a comprehensive accounting policies and procedures manual,
which document the current IFRS accounting policies and technical accounting guidance and are tailored to the Company’s
business; (iii) establishing an ongoing program to provide sufficient and additional appropriate training to its accounting staff,
especially trainings related to IFRSs and SEC financial reporting requirements; and (iv) implementing internal controls over
financial reporting to ensure our controls over accounting policies and procedures are operating effectively.
 
We
expect to complete the measures above as soon as practicable and we will continue to implement measures to remedy our internal control
deficiencies in order to meet the deadline imposed under Section 404 of the Sarbanes-Oxley Act. The process of designing and implementing
an effective financial reporting system is a continuous effort that requires us to anticipate and react to changes in our business and
the economic and regulatory environments and to expend significant resources to maintain a financial reporting system that is adequate
to satisfy our reporting obligations. If we fail to develop or maintain an effective system of internal controls over our financial reporting,
we may not be able to accurately report our financial results, prevent fraud or meet our reporting obligations. As a result, investor
confidence and the market price of our ordinary shares may be materially and adversely affected. See “Risk Factors—Risks
Related to Our Business and Industry—If we fail to implement and maintain an effective system of internal controls or fail to remediate
the material weaknesses in our internal control over financial reporting that has been identified, we may be unable to accurately report
our results of operations or prevent fraud or fail to meet our reporting obligations, and investor confidence and the market price of
our ordinary shares may be materially and adversely affected.”
 
For
the Critical Accounting Policies, please refer to Note 4 “Summary of significant accounting policies” of our consolidated
financial statements.
 

 
Quantitative
and Qualitative Disclosures about Market Risks
 
Market
Risks
 
Our
exposure to financial market risks relates primarily to changes in foreign exchange rates and interest rates. To mitigate these risks,
we utilize derivative financial instruments, the application of which is primarily for hedging, and not for speculative purposes.
 
Foreign
Currency Exchange Rate Risks
 

Our
foreign currency exposure gives rise to market risks associated with exchange rate movements against the NT dollar, the RMB, the HKD
and the US dollar. As of December 31, 2020 and 2021, we did not hold or issue any derivative for trading purposes or to hedge against
fluctuations in foreign exchange rates. We mitigated this risk by conducting sales and purchases transactions in the same currency. Doing
so helped to reduce, but has not eliminated, the impact of foreign currency exchange rate movements. An average appreciation of the US
dollar against all other relevant foreign currencies of 5% would decrease our exchange loss by US$156,786 and increase our exchange
loss by US$ 56,009, respectively, based on our outstanding assets and liabilities denominated in foreign currencies as of December
31, 2020 and, 2021. As of December 31, 2020 and 2021, we had no outstanding forward exchange or foreign currency option contracts.
 
See
Note 37 of our audited consolidated financial statements for additional
information on financial risk management.

 
Interest
Rate Risks
 

As
of December 31, 2020 and 2021, we had aggregate debts outstanding of US$3,406,646 and US$8,057,470, which was incurred for capital
expenditure and general operating expenses. Of our outstanding debts as of December 31, 2020 and 2021, 100% and 76% bore interest
at variable rates, respectively. The interest rate for the majority of our variable rate debts varies based on a fixed percentage spread
over the prime rate established by our lenders. Our variable rate debts had an annual interest rate between 0.66% and 2.60% as of December
31, 2020 and between 0.66% and 2.65% as of December 31, 2021. Accordingly, we have cash flows and earnings exposure due
to market interest rate changes for our variable rate debts. An increase in interest rates of 1% would increase our annual interest charge
by US$34,066 and US$79,633, respectively, based on our outstanding floating rate indebtedness as of December 31, 2020 and December
31, 2021.
 
As
of December 31, 2020 and 2021, we had no interest rate swap agreements outstanding.

 

 
INDUSTRY
 

The
information presented in this section has been derived from an industry report commissioned by us and prepared by Frost & Sullivan,
an independent research firm, regarding our industry and our market position around the world.
 
Global
Carbon Fiber Industry Overview
 
Carbon
fiber is a kind of fiber material with the carbon content of more than 90%. Because of its fibrous shape and softness, it can be processed
into various fabrics. It is usually combined with resin, metal and ceramic materials to make advanced composite materials. Carbon fiber
is widely used in many fields because of its high specific strength, high specific modulus, corrosion resistance, high-temperature tolerance,
friction resistance, good electrical conductivity and low thermal expansion coefficient. The figure below summarizes the classification
of carbon fiber.
 
Figure
1: Overview of classification of carbon fiber
 
 
 
Source:
Frost & Sullivan
 
As
shown in the figure below, the carbon fiber industry chain is divided into upstream, midstream and downstream, in which the production
process of carbon fiber in midstream is complex. The precursors are obtained after a series of treatment processes which include polymerization
and spinning process by raw material. Then, applying the pre-oxidation and carbonization process on precursors to obtain carbon fiber.
To meet different requirements, carbon fiber is processed together with other materials like resin, metal and ceramic to composite material
parts, which are used in downstream products. For instance, because of its lightweight, high rigidity and other advantages, carbon fiber
is used instead of wood in sports goods like golf clubs, hockey clubs, ski clubs, tennis rackets, badminton rackets, bicycles, fishing
rods and bows.
 

 
Figure
2: Overview of the industry chain of carbon fiber
 

 
Source:
Frost & Sullivan
 
Market
Size
 
The
concept of carbon fiber has appeared for many years and carbon fiber products have increased market presence over the past few years.
As shown in Figure 3, the market size of the global carbon fiber industry increased from approximately USD2,114.7 million in 2016 and
reached approximately USD2,630.0 million in 2020 at a Compound Annual Growth Rate (“CAGR”) of approximately 5.6%. In 2020,
carbon fiber is mainly used in aerospace (38%), wind blade (17%) and sports/leisure (14%), which shows major application markets of carbon
fiber are for commercial and industrial use (Figure 4). At present, there is a fierce competition in the low-end carbon fiber market
with low profit margins. There is still a large profit margin in the mid-end and high-end carbon fiber markets. However, in the future,
the demands of carbon fiber products for consumption use will continue to be released. With the development of technology, there will
be increasing application of carbon fiber for new purpose and usage, and the cost of carbon fiber products will be reduced. It is expected
that these factors will enable a higher margin for the manufacturers and promote people’s willingness to buy carbon fiber sports
and leisure products. Therefore, the global carbon fiber industry market size is expected to maintain a CAGR of approximately 10.1%,
reaching approximately USD4,117.6 million by 2025 from approximately USD2,806.2 million in 2021. In the future, long-term low-price competition
will force low-end carbon fiber products manufacturers to face business transformation. However, manufacturers who develop mid-end and
high-end products will maintain their first-mover advantages through resource accumulation and research and development capability and
maintain a leading position in the industry.
 

 
Figure
3: Market Size of Global Carbon Fiber Industry, 2016-2025E
 
 
 
Source:
Frost & Sullivan
 
Figure
4: Breakdown by Application Segments of Global Carbon Fiber Market, 2020
 
 
 
Source:
Frost & Sullivan
 
Market
Drivers and Development Trends
 
Favorable
policies
 
The
global major countries and regions pay attention to the development of carbon fiber industry and have launched relevant policies to stimulate
the development of carbon fiber industry. For example, the “Going Climate Neutral” by 2050 which issued by European Commission
calls for the study of carbon fiber products to reduce costs. The “Research and Development of Innovative Structural Materials”
from the New Energy and Industrial Technology Development Organization aim to develop new carbon fiber precursor compounds, clarified
the formation mechanism of carbonization structure and standardize evaluation methods for carbon fibers. There are not only policies
to encourage R&D, but also many policies to encourage industrialization and capacity improvement. Policy support will provide a good
external environment for the development of the carbon fiber industry, which is conducive to the rapid development of the industry.
 

 
Strong
downstream demand
 

With
the release of the National Fitness Plan (2021-2025), China will focus on promoting table tennis, badminton, cycling and other sports
in the next five years. The plan will also focus on supporting research and development of fitness equipment and manufacturing enterprises.
With the promotion of policies and the continuous integration of outdoor sports and tourism, more people will participate in these sports
activities, which will directly promote the development of related equipment. In addition, with the increasing influence of cycling events
such as the Tour de France, the Tour of Italy, the Tour of Spain, and the Crossing the U.S. Cycling Race, the number of cyclists in Europe
and the United States is also increasing, which will also push up the demands for sports and fitness equipment. As important equipment
for sports such as bicycles, tennis, badminton and surfing, carbon fiber products will have greater market demand in the future.
 

High-end
products
 
Europe
attaches importance to the application of carbon fiber in the aerospace field and emphasizes the use of carbon fiber composite aerospace
materials to reduce the generation of waste in “Horizon 2020” released by the European Commission. American companies such
as SpaceX, Blue Origin and Boeing also use carbon fiber materials in their products in the aerospace field. Compared with the foreign
carbon fiber market, domestic carbon fiber is mainly concentrated in low value-added areas, which results in competitive pressure on
the price. At the same time, key technologies of China’s carbon fiber industry lag behind developed countries, which leads to the
limitation of carbon fiber materials in high value-added fields such as aviation manufacturing. With policy support and the pursuit of
high value-added products, more domestic enterprises will invest in the research and development of high-end carbon fiber so that the
products of the whole industry will develop into a high-end trend.
 
Global
Carbon Fiber Bicycle Parts Industry Overview
 
Carbon
fiber bicycle is the second largest segment of the sports/leisure market. Major components of bicycles made of carbon fiber (CF) composite
materials include bicycle frame, fork, wheelset, pedal, seat post, and so forth. Since the 1970s, carbon fiber has become the
material for bicycle frames on account of its lightweight, ease of shaping, high strength, high stiffness, and so forth, and has
been mainly used in mid-to-high-end products for professional athletes or bicycle enthusiasts. Compared with traditional racing bicycles
made of aluminium alloys, carbon fiber bicycles could remarkably reduce the extra energy consumption of athletes due to the lightweight
of the bicycle and reduce bendability occurred by accidental collision. Carbon fiber and its composite materials have now become mainstream
materials for racing bicycles and high-end bicycle products (including electric bicycles). Figure 5 below shows the comparison of features
between regular bicycles and carbon bicycles and Figure 6 below shows different types of carbon fiber composite bicycles.
 

 
As
shown in Figure 7 below, carbon fiber bicycle is the second largest segment of the sports/leisure market, which accounts for around 25.0%
of the market share in the global carbon fiber demand in sports/leisure market in 2020. Major components of bicycles made of carbon fiber
composite materials include bicycle frame, fork, wheelset, pedal, seat post, and so forth. Since the 1970s, carbon fiber has become
the material for bicycle frames on account of its lightweight, ease of shaping, high strength, high rigidity, and so forth, and
has been mainly used in mid-to-high-end products for professional athletes or bicycle enthusiasts. Compared with traditional racing bicycles
made of aluminium alloys, carbon fiber bicycles could remarkably reduce the extra energy consumption of athletes due to the lightweight
of the bicycle and reduce bendability occurred by accidental collision. Up to date, carbon fiber and its composite materials have now
become mainstream materials for racing bicycles and high-end bicycle products (including electric bicycles).
 
Figure
5: Comparison of Regular Bicycles and Carbon Bicycles

 

 
Source:
Frost & Sullivan
 
Figure
6: Types of Carbon Fiber Composite Bicycles
 

Source:
Frost & Sullivan
 
Figure
7: Global Carbon Fiber Demand in Sports/Leisure Market, 2020
 

Source:
Frost & Sullivan
 

 
Market
Size
 
As
shown in Figure 8 below, in recent years, global carbon fiber bicycle parts market experienced moderate growth, increasing from approximately
USD288.0 million in 2016 to USD462.0 million in 2020, registering a CAGR of 12.5%. Driven by improving people’s living standards,
transformation of consumers’ lifestyle and technology development, the market size of global carbon fiber bicycle parts industry
is expected to increase from approximately USD522.1 million in 2021 to USD945.0 million in 2025, representing a CAGR of 16.0%. The penetration
of carbon fiber in professional-grade bicycles is expected to further grow due to its outstanding physical performance, while as the
manufacturing process becomes mature, carbon fiber or carbon fiber composite materials are expected to expand its application in regular
bicycles and electric bicycles.
 
Followed
by the implementation of policies in the U.S. and Europe and the other countries to encourage replacement of public transportation by
bicycle, such as addition of bicycle lanes and other bicycle-related infrastructures, the market demand on electric bicycles increased,
which recorded an annual growth rate of 23.4% from January 2020 to May 2020. The pandemic in 2020 has changed people’s commuting
behavior in Europe and the U.S. Government’s policies and subsidies on encouraging the use of bicycles also contribute to the
increasing market demand on electric bicycles.
 
Figure
8: Market Size of Global Carbon Fiber Bicycle Parts Industry, 2016-2025E
 
 
Source:
Frost & Sullivan
 
As
shown in Figure 9 below, the market size of global electric bicycle reached approximately USD40.5 billion in 2020, and is expected to
further increase to approximately USD68.3 billion in 2025, with a CAGR of 10.5% from 2021 to 2025. Compared with other public transportation
systems, the electric bicycle has advantages of affordability and convenience. Most countries are working on boosting electric bicycle
to reduce the stress on public transportation systems. Driven by the growing urbanization, traffic congestion in the city, as well as
support and initiatives from governments, the demand of electric bicycle is expected to further expand.
 

 
Figure
9: Market Size of Global Electric Bicycle Industry, 2016-2025E
 

Source:
Frost & Sullivan
 
Market
Drivers and Development Trends
 
Sustainable
Cooperation with Cycling Brands
 
As
bicycle parts manufacturers, companies who have established expansive and stable client networks with well-known cycling brands may stand
out in the competition globally. For example, for racing bicycles, carbon fiber bicycle parts manufacturers produce frames, wheelsets,
forks, cranks according to specifications and functions required by racing bicycle brands. Thus, carbon fiber bicycle parts are highly
customized products, and reliable bicycle parts manufacturers which can design and manufacture products that meet or exceed the requirement
would be a determining success factor for carbon fiber bicycle brand customers in their operation. Besides, brand spillover effects could
increase the market visibility of carbon fiber bicycle parts companies due to supplier relationships with award-winning racing bicycles.
 
Technology
Upgrade of Manufacturing
 
With
the development of carbon fiber and composite materials manufacturing technology, as well as the decreasing manufacturing cost, carbon
fiber has been applied in regular bicycles and emerging electric bicycles. Some leading companies in the industry have set up the prototyping
center for manufacturing carbon fiber frames, and applied automated painting technology to continuously optimize the production process
and enhance manufacturing efficiency. Additionally, the state-of-the-art technology includes vacuum forming, plasma surface treatment
technology, and so forth. Companies who own strong R&D capabilities, ability to design resin formulas and diverse product
portfolios are more likely to stand out in the global competition. The disruptive technology innovation is conducive to elevating the
industrialization of carbon fiber bicycle parts to a new level, increasing production capacities and expanding downstream applications.
 
Growing
Consumer Demand for Carbon Fiber Bicycles
 
As
consumers’ health awareness rises around the globe, cycling is considered a new symbol of a healthy lifestyle. The outbreak of
COVID-19 in 2020 has greatly impacted consumers’ perceptions of health and fitness, which is reflected by the increasing number
of road and mountain bicycle enthusiasts, not only for races but also for tour or leisure purposes. Besides, more and more people have
chosen cycling as a fast, flexible and reliable method of transport, which spurs the demand for carbon fiber bicycle parts.
 
Currently,
major consumers of high-end bicycles are located in Europe and North America, while it is expected that Asia-Pacific area will become
the next promising carbon fiber bicycle market. Thus, the global carbon fiber bicycle parts market is expected to embrace growth opportunities
in the next few years.
 

 
Increasing
Environmental Awareness
 
In
recent years, the environmental awareness of people around the globe is growing. In April 2018, the United Nations General Assembly declared
June 3 as International World Bicycle Day to foster environmental stewardship and health. In 2020, due to the impact of the COVID-19,
the European and American governments have begun to encourage people to walk or ride bicycles in order to prevent people from using public
transportation, which might in turn cause group infections, and at the same time to avoid traffic jams. Countries such as the U.K., France
and Italy have also expanded bicycle lanes and provided subsidies on purchasing bicycles, in order to encourage citizens to opt for zero-carbon
bicycles, which has also led to a rapid growth in bicycle sales. Bicycles contribute to cleaner air, reduce congestion and make education,
health care and other social services more accessible to the most vulnerable populations. A sustainable transport system that promotes
economic growth reduces inequalities while bolstering the fight against climate change is critical to achieving sustainable development
goals. Copenhagen and Amsterdam are considered as bicycle capitals in the world, which have been building their bicycle infrastructure
since the 1970s and fostered a sustainable lifestyle. Therefore, the growing environmental consciousness is conducive to the development
of carbon bicycle industry and related upstream industries.
 
Vertical
Integration
 
At
present, many carbon fiber composite material manufacturers purchase yarns and resin raw materials from suppliers, and then produce prepreg
according to a specific ratio, followed by laminating, molding, heat treatment and other processes. However, the material properties
cannot be standardized, which prolongs the product launch period and raises production costs. Many industry-leading players proactively
extend their business to the upstream industry, including establishing their own material research centers, investing material analysis
instruments and equipment, and recruiting technical talents to develop differentiated products by self-developed resin formations, which
reduces production costs and capture a larger portion of the value chain. On the other hand, some carbon bicycle parts manufacturers
step into the manufacturing of carbon bicycles business by providing bicycle assembly service or cooperating with renowned carbon bicycle
brands to achieve vertical integration, which expands business portfolio and increases brand awareness.
 
Favorable
Government Policies
 
Electric
Bicycle Incentive Kickstart for the Environment (E-BIKE) Act
 
In
2021, the Senate and House of Representatives of the United States issued the Electric Bicycle Incentive Kickstart for the Environment
(E-BIKE) Act, which encourages the use of electric bicycles through a consumer tax credit. Due to the distance, speed and ease by which
they can travel, electric bicycle will help replace vehicle trips and commutes and reduce carbon emissions. If the E-BIKE Act is passed,
it would create a consumer tax credit that (i) covers 30% of the cost of the electric bicycle, up to a US$1,500 credit, (ii) applies
to new electric bicycles that cost less than US$8,000, and (iii) is fully refundable, which allows lower-income workers to claim the
credit.
 
Recommendations
for Delivering Green Growth and an Effective Mobility in 2030
 
In
2020, the European Commission issued Recommendations for Delivering Green Growth and an Effective Mobility in 2030, in which recommends
that cycling should be an equal partner in the mobility system. It suggests that there is an increase in use of bicycle in European Union
by 50% in average in 2019-2020 and expects that such trend will be continued until 2030. It also indicates that the European Union investment
in cycling will be raised to 3 billion Euros from 2021 to 2027 and 6 billion Euros from 2028 to 2034.
 
Bicycle
Sports Industry Development Plan
 
In
2018, the General Administration of Sports and Development and Reform Commission in China issued the Bicycle Sports Industry Development
Plan. It takes the supply-side structural reform of the bicycle sports industry as the main line, focusing on consolidating the foundation
of the bicycle sports industry, improving the ability and quality of the supply of bicycle sports products and services, promoting industrial
agglomeration and integration, and promoting the marketization, standardization and branding of bicycle sports in China. It also promotes
the healthy and sustainable development of the bicycle sports industry and provides solid and stable support for expanding sports consumption
and demand, realizing the transformation and upgrading the sports industry in China.
 

 
Light
Industry Development Plan
 
In
2016, the Ministry of Industry and Information Technology in China issued the Light Industry Development Plan. It is pointed out
that the bicycle industry should be promoted in the direction of lightweight, diversified, fashionable and intelligent. Such plan
accelerates the research and development and application of high-strength lightweight materials, transmissions, transmission
systems, new energy, smart sensing technologies and Internet of Things technologies. The Light Industry Development Plan also focus
on the development of diversified bicycles such as fashion leisure, sports fitness, long-distance cross-country and high-performance
folding, as well as standard-compliant lithium-ion battery electric bicycles and smart electric bicycles.
 
E-bike
Subsidy Schemes by European Cyclists’ Federation in 2016
 
In
2016, the European Commission set up the E-bike Subsidy Schemes, in which subsidies aimed at cycling can be provided to encourage uptake
or an increase in cycle use through providing a financial benefit. Using a subsidy to encourage cycling can take one of two forms: providing
a financial benefit for commuters to switch to cycling by paying for km travelled or subsidising the untaxed purchase of equipment through
employee schemes.
 
Competitive
Landscape – Competitor Profiles
 
The
table below shows the major global leading players in the carbon fiber bicycle parts industry:
 
Company
Name 
Listed or
Unlisted 
Year
Established
and Headquarters 
Business
Introduction 
Major ProductsYMA
Corporation  
Unlisted 
2015,
Taichung City, Taiwan  
YMA
Corporation, a subsidiary of J-Star, is principally engaged in the R&D, manufacture and processing and trading of carbon fiber
composite materials. YMA has reached the production capacity of about 100,000 carbon bicycle frames per year and 200,000 carbon forks
per year. YMA has established cooperation with multiple renowned bicycle brands, including Conalgo, and so forth. YMA has
obtained many patents regarding bicycle products, which are well recognized by global athletes and cycling enthusiasts; for example,
Thomas Pidcock won the MTB World Cup championship on a YMA-built Lightrider Worldcup (EST-MS-08) frame in 2021.  
Tennis
rackets parts, badminton rackets parts, road bicycle parts, mountain bicycle parts, electric bicycle parts, automotive parts, healthcare
products, and so forth.Topkey
Group  
Listed
(4536 .TPE) 
1980,
Taichung City, Taiwan 
Topkey
Group is principally engaged in the manufacture, processing and trading of carbon fiber materials in sports and leisure products
and aerospace medical equipment. 
Tennis
rackets parts, helmets parts, bicycle racks and aerospace materials, and so forth. XDS
Shenzhen Xidesheng Bicycles Co., Ltd. 
Unlisted 
1995,
Shenzhen City, Guangdong 
As
the largest manufacturer of carbon-fiber bicycles in the world, XDS specializes in the integration of R&D, manufacturing, sales
and services of bicycles. 
Parts
of mountain bicycles, road bicycles, electric bicycles, folding bicycles, city bicycles, and so forth. Tentech
Composite Technology Co., Ltd  
Unlisted 
2003,
Dongguan City, Guangdong 
Tentech
is principally engaged in the manufacture, processing and trading of carbon fiber composite products. 
Bicycle
frames, accessories, modules, and so forth. 
Source:
Frost & Sullivan
 

 
Global
Carbon Fiber Racket Parts Industry Overview
 
Carbon
fiber is widely used in tennis and badminton rackets due to its excellent performance. With the gradual development of material technology,
rackets have gradually evolved from traditional wooden rackets and metal rackets (such as iron and aluminum) to aluminum alloy and carbon
fiber materials. Carbon fiber is the high-end material of the current racket frame, and is mainly used in sports events and professional
or amateurish training. Compared with aluminum alloy rackets, carbon fiber rackets have the characteristics of light weight, good mechanical
properties, good impact resistance and good damping properties. The carbon fiber racket has low vibration, which can provide better hitting
feel and ball control without hurting the wrist, but the price of carbon fiber racket is still high; while the aluminum alloy racket
has a simple production process and lower production cost, its weight is high and the damping property is poor, and hence, players’
wrist is easily injured. In addition, in order to further improve the performance of the racket, some leading companies produce hybrid
carbon fiber rackets by adding high-performance materials such as graphite and glass fiber. At present, the U.S., Europe and Japan markets
are the major consumer markets of rackets.
 
Market
Size
 
Driven
by the higher requirements on the mechanical properties of rackets and increasing purchasing ability of high-end sports goods customers,
as shown in Figure 9 below, the market size by revenue of global carbon fiber applied in rackets has witnessed a steady growth, increasing
from $194.1 million in 2016 to $242.6 million in 2019. The outbreak of the COVID-19 has caused a negative impact in the carbon fiber
racket parts industry due to the limited sports events and reduced daily sports activities around the world. As a result, the sales revenue
of global carbon fiber racket parts declined to USD230.5 million in 2020.
 
Looking
forward, as the pandemic is gradually controlled, the carbon fiber racket parts industry is expected to recover from 2021. Promoted by
the increasing health awareness post-pandemic, encouraging policies of sports activities in developing countries, as well as progressed
carbon fiber manufacturing techniques, it is estimated that the demand of carbon fiber applied in the rackets will further rise and the
market size by revenue of carbon fiber racket parts will increase from USD243.9 million in 2021 to USD332.4 million in 2025, representing
a CAGR of approximately 8.0%.
 

 
Figure
10: Market Size of Global Carbon Fiber Racket Parts Industry, 2016-2025E
 

 
Source:
Frost & Sullivan
 
Market
Drivers and Development Trends
 
Increasing
Tennis and Badminton Participants
 
Driven
by the supportive policies on sports activities, the number of people participating in tennis and badminton is increasing all over the
world. In 2019, the State Council of China issued the “outline of building a sports power” and stated the target that the
proportion of people who regularly participate in physical exercise will reach more than 45%, and the per capita sports area will reach
2.5 square meters in 2035. In Japan, facing issues such as aging problem and declining birth rates, the Japanese government has successively
promulgated the “Basic Sports Law” and “Basic Sports Plan,” emphasizing the right of everyone to participate
in sports, and promoting the development of “sports for all” by holding the international events such as the Olympic Games.
In the United States, a new iteration of “Healthy People” initiative is launched at the beginning of every decade to set
measurable objectives to improve the health and well-being of people nationwide. According to the “2021 Physical Activity Council’s
Overview Report on U.S. Participation” released by the Physical Activity Council (PAC), around 75.6% of people in the U.S. regularly
participate in sports, and the penetration rate of racket sports has increased from 12.4% in 2013 to 13.9% in 2020. In Europe, voluntary
sports clubs are promoted by many countries to support mass sports participation. According to the data released by European Union, there
were over 320,000 people employed in the sports and fitness sector in the European Union in 2020. Under the continuous publicity, public
health awareness is also increasing year by year. Besides, with the investment of various government agencies, the construction of sports
facilities is gradually improved and sports events are more abundant. Meanwhile, the emergence of many badminton and tennis superstars
has further stimulated people’s enthusiasm for participating in these two sports. Badminton has become an extremely popular sport,
which is played regularly by over 300 million people around the world. It is particularly popular in Asia, with many of the best players
ever to grace the game hailing from the continent. The number of global tennis players reached 87 million in 2019, of which China accounted
for the highest of 22.5%, according to the report released by the ITF (International Tennis Association). Therefore, the increasing participants
of tennis and badminton are expected to drive the demand for relevant sports equipment such as carbon fiber rackets.
 
Application
of Carbon Fiber Rackets Expanding from Professional Events to the Public
 
From
2016 to 2020, the global per capita GDP increased from USD10,365.2 to USD10,953.6 at a CAGR of 1.4%. Driven by the growing economy, people’s
health awareness and average purchasing ability on sports equipment are rising as well, especially in developing countries like China.
For example, the overall sales value of sports equipment in China increased from RMB12.0 billion in 2016 to RMB13.9 billion in 2019,
representing a CAGR of 5.1%. In addition, the sport industry in the developed world has also experienced a continuous growth. Taking
Switzerland as an example, a recent report published by Federal Department of Defense, Civil Protection and Sport shows that Switzerland
has witnessed a rapid increase of sport over the past few years as increasing sports events are hold in the country (e.g., European Athletics
Championships, the Youth Olympic Games and the World Road Cycling Championships), with the estimated turnover of sport sector in Switzerland
reaching 22.2 billion francs in 2017, increasing by 31% from 2005. Besides, the media strengthened the promotion and marketing of carbon
fiber rackets such as the excellent properties of the carbon fiber material, which enhanced consumers’ recognition and demand for
carbon fiber rackets. Some racket manufacturers also launch co-branding carbon fiber rackets with other famous brands or IPs and promoting
the same racket models used by sports stars to attract customers. As result, carbon fiber rackets is not just limited to the professional
market. It is expected that increasing amateurs will be willing to purchase carbon fiber rackets in the future.
 

 
Technology
Breakthrough of Carbon Fiber Racket Parts
 
Among
high-end rackets, major brands have strong brand recognition and brand loyalty, and hence, well-known brands. Under the absolute leadership
of brand manufacturers, there are fewer tennis racket manufacturers developing their own brands, and most of them adopt OEM or ODM business
models. As one of the key competitive factors of carbon fiber manufacturers, technological upgrade accelerates the production speed of
carbon fiber rackets and improves the quality of finished products. The carbon fiber racket is composed of a carbon fiber composite racket
frame which is made of a racket surface interlaced with mesh and a resin material skeleton wrapped with carbon fiber belt. For most players
in the carbon fiber racket parts industry, the carbon fiber used to make rackets is purchased from upstream suppliers, but the resin
formula is the secret and R&D focus of each company. Our breakthrough nanoresin formula and patented technology are the key to improve
the performance and durability of the carbon fiber rackets. After years of accumulation of technology and experience, leading companies
in the industry continue to improve resin formulations and produce prepreg materials according to product characteristics and customer
needs. In addition, driven by the improving automation level, emerging moulding technologies can improve the product quality and production
efficiency of carbon fiber rackets. Some leading carbon fiber racket manufacturers have made great efforts in core technology development
such as microscopic analysis of material, product structure design, module design, tooling design and customized process design, and
so on. In the future, with further maturity of material technology and production techniques, the price of carbon fiber rackets will
gradually decrease, attracting more consumers.
 
Competitive
Landscape – Competitor Profiles
 
The
table below shows the major global leading players in the carbon fiber racket parts industry:
 
Company
Name 
Listed
orUnlisted 
Year
Established
and
Headquarters
 
Business
Introduction 
MajorProductsTopkey
Group 
Listed
(4536 .TPE) 
1980,
Taichung City, Taiwan 
Topkey
Group is principally engaged in the manufacture, processing and trading of sports and leisure products and aerospace medical equipment. 
Tennis
rackets, helmets, bicycle racks and aerospace materials, and so forth. OTIS
Co., Ltd.  
Unlisted 
2002,
Dongguan, Guangdong 
The
company is a Taiwan-funded enterprise, mainly engaged in the production, sales and processing of carbon fiber composite materials.
In 2017, the company became a partner supplier of Decathlon, participating in the R&D and production of carbon fiber related
sports products. It is a cooperative manufacturer of many sports goods companies in Europe and America. 
Carbon
Fiber parts of tennis rackets, badminton rackets, squash rackets, beach rackets, paddles, hockey sticks, fishing rods, arrow shafts,
golf clubs, and so forth.  

 
Forwell
Sports Equipment Co., Ltd. 
Unlisted 
2003,
Dongguan, Guangdong 
As
a subsidiary of J-Star, the company is a Taiwan-funded enterprise with more than 20 years of professional carbon fiber bicycle and
racket manufacturing experience. The company has built a wide customer network of many world-renowned brands such as Tecnifiber,
and so forth. Its products are exported to Europe, America, Asia and other countries and has supported many athletes to win the
champion in the international competitions. 
Golf
clubs, ice hockey sticks, carbon bicycle tubes, bicycle accessories, shoe accessories, composite products, rackets, and so forth.
Bonny
Worldwide Co., Ltd. 
Listed
(8467 .TPE) 
1982,
Taichung City, Taiwan 
The
company is a professional manufacturer of carbon fiber rackets OEM and ODM and related sports goods. The company has developed a
variety of new deceleration patents, and many all-carbon fiber rackets with novel and unique designs and shapes. The company has
become an important partner of many well-known international companies, and its products are sold all over the world.  
Carbon
fiber parts products of hockey sticks, tennis rackets, badminton rackets, and so forth.Long
Yi Industrial (Huizhou) Co., Ltd. 
Unlisted 
2004,
Huizhou, Guangdong 
The
company is a wholly foreign-owned manufacturing enterprise focusing on the development and production of carbon fiber tennis racket
sports goods series and carbon fiber tube sheet industrial products series. The company is currently one of the largest and most
prominent enterprises in the international high-end carbon fiber tennis racket industry. 
Carbon
fiber parts products in the fields of tennis rackets, badminton rackets, golf clubs, water skis, bicycles, automobiles, home appliances,
and medical applications, and so forth. Xiamen
Keentech Composite Technology Co., Ltd. 
Unlisted 
1988,
Xiamen, Fujian 
As
a subsidiary of Topkey Group, the company is engaged in the development and manufacturing of advanced carbon fiber composite products.
The company’s R&D and production in the application of composite materials ranks the highest level in the world. It cooperates
with many world-renowned brand manufacturers and sells its products to Europe, America, Japan and other countries. 
Carbon
fiber tennis rackets, badminton rackets, racing helmets, bicycle racks, aviation knots, medical equipment, and so forth. Xiamen
Leader Sporting Goods Co., Ltd. 
Unlisted 
1988,
Xiamen, Fujian 
Affiliated
with Lianjie Group, Xiamen Leader Sporting Goods Co., Ltd. is a
Hong Kong-invested enterprise having been specialized in the R&D and manufacture of carbon fiber composite products for 25 years,
being one of the largest professional manufacturers of composite products. 
Frame
of mountain bicycle, frame of road bicycle, front fork of road bicycle, tennis racket, pelota racket, squash racket, bow and arrow,
badminton racket, baseball bat, and so forth.  
Source:
Frost & Sullivan
 

 
Other
Global Carbon Fiber Sectors Industry Overview
 
Automobile
 
Compared
to metals, carbon fiber composite materials applied in some car parts such as chassis, car roof, cockpits, interior accessories and the
car body could reduce the weight by approximately 10%. Simultaneously, the lighter the vehicle, the higher fuel efficiency, the lower
volume of carbon dioxide emissions. Due to the integration, designability, high vibration damping, carbon fiber composite materials could
make vehicles lighter, which accelerates the development of anti-pollution and lower fuel consumption. For example, Volkswagen’s
“2L car” CC1 used carbon material as 45% of its car body. The market size of global carbon fiber automotive parts industry
is USD1,147.5 million in 2020 and is expected to increase from 1,319.6 million in 2021 to USD2,044.8 million in 2025, registering a CAGR
of 11.6%.
 
Foil
Masts and Padel Rackets
 
With
the increasing popularity of surfing and padel around the world, the foil masts made of carbon fiber are coming into people’s spotlight.
Carbon foil masts have unique advantages compared to aluminium foil masts due to the high strength, corrosion resistance, strong seismic
performance, good balance, and high flexibility. Carbon foil masts enable surfers to maintain stability and avoid damage when riding
big waves or immersing in seawater for a long period, achieving protection for surfers. The market size of global carbon fiber foil mast
parts industry is expected to reach over USD30 million in 2025 with a CAGR of 10.4% from 2021 to 2025.
 
The
excellent performance of carbon padel rackets is widely recognized by athletes and the public. Padel rackets made of carbon fiber are
lighter, more durable and can withstand high temperature. For athletes, carbon fiber rackets can reduce the load on the arm during long
rallies and improve the speed and efficiency when hitting the ball. The market size of global carbon fiber padel racket parts industry
is expected to reach over USD35 million in 2025 with a CAGR of 9.2% from 2021 to 2025.
 
Healthcare
Products
 
Carbon
fiber is widely applied in healthcare products. Due to the lightweight, high stability, high strength and fatigue resistance, carbon
fiber is generally used in wheelchairs, senior walkers and other medical equipment. Carbon fiber is usually used in the chassis and backrest
frame of wheelchairs and the body of senior walkers, featuring lightness, stiffness and exceptional durability. The stability and biocompatibility
of carbon fiber materials have attracted extensive attention in medical devices and biomaterials. With the average expenditure on health
care in China increasing from RMB1,307 in 2016 to RMB1,843 in 2020, as well as population ageing, healthcare products made of carbon
fiber are expected to fulfill growth potential in the future. In developed countries, per capita healthcare spending in the US, the UK,
Denmark and Japan were USD10,948, USD4,500, USD5,47 and USD4,691 in 2019. The global market size of medical device in 2019 is USD445.93
billion and is expected to increase to USD587.41 in 2024, registering a CAGR of 5.7%. The market size of global carbon fiber healthcare
product parts industry is expected to reach over USD300 million in 2025 with a CAGR of 19.0% from 2021 to 2025.
 

 
Robotic
Arm
 
With
the continuous improvement of carbon fiber production and processing technology, carbon fiber has gained more market share in robotic
arms, particularly industrial robots. Compared to traditional robotic arms made of aluminium alloy and alloy steel, carbon fiber robotic
arms have higher flexibility, fracture resistance and a longer service life. Also, the vibration dampening of carbon fiber robotic arms
allows for precise control and positioning, enhancing working speed and efficiency of robots. With the accelerated automation process
and wide application of industrial robotics, carbon fiber is expected to develop further and be favored by downstream customers. The
global robotic arm market is expected to grow at a CAGR of approximately 14.0% during the forecast period, growing from USD24.9 billion
in 2021 to USD42.0 billion by 2025.
 
Aerospace
 
Carbon
fiber composite materials are widely applied in aircraft and aerospace fields, such as civil and military aircraft, rockets for space
development and artificial satellites, and so forth. Subject to a harsh operating environment, aerospace equipment is usually
required to have high tensile and compression performance, high impact and fatigue resistance, and so forth. Thus, the carbon fiber
product in aerospace is on the high end of the quality and cost spectrum. In recent years, the proportion of carbon fiber composite materials
employed in aircraft has increased, which could significantly reduce the weight of the plane body, improve aeroelasticity and enhance
the overall performance. Therefore, the square, weight and parts of carbon fiber composite materials used in aircraft are forecast to
grow in the next few years.
 
Electronics
 
Driven
by the lightweight of consumer electronics, carbon fiber is gradually applied in 3C products. For example, Lenovo, a leading PC brand,
released the YOGA Pro 13s Carbon 2021 laptop in 2020, with its body made of carbon fiber and magnesium alloy, weighing only 966 grams.
Chopped carbon fiber reinforced plastic with anti-static, electromagnetic shielding and other functions in copiers, printers, digital
cameras, data transmission cable connectors and other products has been applied in different products. Compared with other similar materials
such as carbon black and metal, carbon fiber with reinforced plastic has a more affordable price, which raises the demand for the market.
 

 
BUSINESS
 
Overview
 
Our
Predecessor Group was established in 1970 and we have accumulated over 50 years know-how in material composite industry. We currently
develop and commercialize the technology on carbon reinforcement and resin systems. With decades of experience and knowledge in composites
and materials, we are able to apply our expertise and technology on designing and manufacturing a great variety of lightweight, high-performance
carbon composite products, ranging from key structural parts of electric bicycles and sports bicycles, rackets, automobile parts to healthcare
products. According to the industry report commissioned by us and prepared by Frost & Sullivan, we are one of the major global leading
players in the carbon fiber bicycle parts industry and carbon fiber racket parts industry.
 
As
our business is technology-driven, our vision is to offer cutting edge technology and manufacturing expertise in carbon composite to
our customers, and many of our products are directly or indirectly supplied to different renowned international sports brand owners.
Our carbon composite products deliver substantial weight savings, endurance and stiffness comparing to those constructed from conventional
materials, such as steel and aluminum, and in doing so, our products offer remarkable and valuable efficiency and performance benefits
to our customers in various applications. While our technology has potential applications over a broad range of industries, we currently
have our main focus on the sporting goods industry and we prioritize the electric bicycle market to commercialize our technology.
 
We
are based in Taiwan with our headquarters, R&D center and material laboratory located in Taichung, Taiwan and our production plant
and our second R&D center located in Dongguan, the PRC. The R&D center in Taichung focuses on resin material application, new
product development and production process enhancement, and the R&D center in Dongguan, the PRC, which is located next to our production
plant focuses on structural design of products, testing on product performance and enhancement on strength and stiffness of products.
Our business focuses on the research and development as well as manufacturing a wide range of carbon composite products. We primarily
generate revenue through three divisions and revenue streams, namely (i) sales of bicycles parts of sports bicycle and electric bicycle;
(ii) sales of rackets for use in tennis, badminton, squash and beach tennis; and (iii) sales of other products, which mainly include
structural parts of automobile, other sporting goods and healthcare products. Our bicycle parts and rackets are mainly supplied directly
or indirectly to branded customers located in Switzerland, France, Italy, the Netherlands, Germany and Japan and they primarily market
and distribute their products worldwide. Other customers which rely on our new products, such as healthcare products, are mainly located
in Australia, Canada and Japan.
 
Advanced
carbon composite materials offer a number of advantages relative to traditional materials, including light weight, high strength to weight
ratio, high stiffness, and improved resistance to heat, corrosion and fatigue. Nonetheless, different products require different degrees
and combinations of such properties according to their functions. For instance, automobile parts, such as hoods and seatback, require
higher heat resistance, while bicycle frames require greater degree of stiffness. Hence, material application technology plays an important
role in refining the production of different types of carbon composite products. Carbon composite materials are formed by combining carbon
fibers and resins. The properties of carbon composite materials could vary largely due to different systems of resin and structural arrangement.
Differing from our competitors in the industry, instead of using preset formulas of resins with lower degree of flexibility, we have
our own R&D center to develop our own resin systems and formulas according to the product requirements. Therefore, we are able to
incorporate customized resin systems that can be optimized for specific parameters, such as durability, temperature performance, cure
times and viscosity. This not only allows us to manufacture our products with high precision to customers’ specifications, but
also offers us flexibility in developing a greater variety of new products in the future. Apart from our advanced material application
technology, our R&D team is also experienced in providing technical recommendations and solutions to and respond to feedbacks from
our customers regarding the structural design of product. Our advanced material application technology and expertise in product design
and development complement each other. Thus, we believe that the parallel development of our complex product and process technology has
resulted in our competitive advantage which makes it difficult for our competitor to replicate.
 

 
Our
total revenue for the years ended December 31, 2020 and 2021 amounts to $22.2 million and $31.3 million, respectively.
Our sales of bicycle parts accounted for approximately 64.4% and 63.9% of our total revenue for the years ended December 31, 2020
and 2021, respectively. Our sales of rackets business brought us considerable revenue for the years ended December 31, 2020 and
2021, which accounted for approximately 35.5% and 36.1%, respectively, of our total revenues. Our sales of other products,
which accounted for approximately 0.1% and 0.0%, respectively, of our total revenues for the years ended December 31,
2020 and 2021, respectively.
 
While
having our main focus on development and sales of key structural parts of bicycles and rackets in the past years, we would not limit
ourselves to the existing scope of product. We intend to extend our product spectrum by launching new products, such as sporting goods
for new sports like padel racket and mast foil, and further expand our production on relatively new existing products that are emerging
in the market, including key structural parts of electric bicycles, automobile and robotic arms, bicycle crank sets and other healthcare
products, such as wheelchairs and senior walkers.
 
Our
production plant is located in Dongguan in the PRC with two production lines in place. The production plant has a total gross floor area
of 42,695 square meter. We selected Dongguan, the PRC, as a place to set up our production plant due to its geographical proximity to
Hong Kong which favors the shipping of products and its strong labor supply in the region. As of December 31, 2021, we had 27 forming
machines and 10 prepreg machines in use and other equipment including vacuum forming machine, automated painting robotic arm and an EFBE
standard (“EFBE”) testing machine with testing standards specific to the bicycle and electric bicycle. The prepreg machines
and forming machines are major machines we used in our manufacturing process. We use our prepreg machines to convert our raw material,
carbon fiber yarn, to carbon fiber sheet by adding our self-engineered resin to enhance the material’s malleability. We
then utilize our forming machines to give designated shape, stiffness and strength to our products under high temperature. These machines
and equipment form two production lines in total, one of which focuses on the production of key structural parts of sports bicycle, electric
bicycle and automobile, while the another focuses on manufacturing rackets and healthcare products. Equipped with these automation and
testing machines, and leveraged on our strong research and development efforts, we are able to offer a wide range of high-quality customized
products to our customers. In the future, in order to enhance our production capacity, we intend to recruit more manpower for our production
team, acquire more forming machines, increase the operating hours of forming machines and outsource our painting, cosmetic and sanding
processes, which are labor-intensive manufacturing procedures with lower technical requirements.
 
In
March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. Countries across Asia, North America, Europe
have continued to report increases in COVID-19 infections, which has resulted in governments implementing travel bans, lockdowns, quarantines
and social distancing measures in those countries in an effort to contain the virus. In response to the outbreak of pandemic, in January
2020, the People’s Government of Guangdong Province announced certain measures to prevent continuing widespread of the disease
in the community, among others, corporates were not allowed to resume operation before February 10, 2020. In compliance with the government
instructions, we temporarily suspended the operation of our production plant in Dongguan, the PRC, from February 3, 2020 to February
26, 2020, which has then fully resumed our production on March 9, 2020 and remained normal thereafter. In this regard, we had arranged
for tighter production schedule from June 2020 to December 2020 to make up for the suspension of operation of our production plant in
February 2020.
 

 
History
and Milestones
 
Our
Predecessor Group commenced wood composite manufacturing and sports equipment processing business in 1970 and was one of the earliest
private enterprises to manufacture wood composite in Taiwan. However, due to changes in the product development in the sporting goods
industry with higher product requirements on the weight-saving, endurance and stiffness, our Predecessor Group gradually shifted the
focus from wood composite manufacturing to carbon composite product manufacturing since 1980. Our Predecessor Group launched the carbon
composite business line in 1980, targeting sporting goods, such as rackets. In 2005, our Predecessor Group launched the bicycle business
line in order to expand the scope of carbon composite sporting goods to sports bicycle. In 2017, we launched our first electric bicycle.
In 2018, in light of the prevalence of and favorable government policies on electric bicycle around the world, while continuing our development
and sales of sports bicycle, we have in parallel strategically expanded further on the development and production of electric bicycle.
We also developed our first carbon fiber robotic arm and other health care products in 2018. In 2019, we expanded our R&D team on
the design and production of electric bicycle by addition of personnel. Through our R&D centers in Taiwan and the PRC, we have continued
to upgrade and enhance our material technology, product structural design and production process technology, in order to uplift our product
quality, product performance, production efficiency and expand our product spectrum.
 

We target to achieve growth in terms of both scale
and scope. To expand our scale, we plan to establish a new production plant in Yangzhou in the PRC. For such purpose, in March 2019,
Bohong Technology acquired the land use right of a land parcel in Yangzhou with a total gross land area of 64,851 square meter in order
to build our new production plant for the production on key structural parts of electric bicycle, robotic arms, automobile parts and
prepreg material. We intend to invest approximately $6.2 million on the purchase of machinery for our production plant in Yangzhou. As
to the construction of our production plant in Yangzhou, we are in discussion with a local construction company in the PRC on a hire
purchase agreement of building and infrastructure construction of our production plant in Yangzhou and such construction would be funded
by the said local construction company in the PRC. Due to COVID-19 and its impact on economic and social activities, we suspended the
construction work of our production plant in Yangzhou and the construction work is expected to resume by the fourth quarter of
2022. The first phase of such construction is expected to be completed by third quarter of 2023. The construction of our production
plant in Yangzhou is expected to be fully completed by the fourth quarter of 2023 and the machines are expected to be set up by
the first quarter of 2024. As for growth in terms of scope, we anticipate that, by the first quarter of 2023,
we will launch our own brand on electric bicycle and sporting goods and will set up sales and administration office in the U.S. and
the Netherlands. We are in close dialogue with a reputed bicycle frame manufacturer in the U.S. on exploring investment opportunities,
including but not limited to possibilities on acquisition, joint-venture and/or co-branding production. In addition, we intend to add
a U.S. sales and administration office in Houston, Texas, which will work closely with our office in Taiwan in U.S. market sales and
expansion, while our sales and administration office in the Netherlands will be handling sales on our online business platform expected
to be launched around the first quarter of 2023. We also expect to further extend our production of automobile parts so
as to leverage on the surging market demand of electric vehicles. By June of 2024, we expect to launch our micro factory and R&D
center in the U.S., with a view to developing automation of our production process and integrating the most advanced technology to our
production. In this regard, we intend to invest in a manufacturer of carbon fiber products in the U.S. We have been in contacts with
several potential target companies in the U.S., one of which is a U.S.-based aerospace composite parts manufacturer. We also plan to
establish our third R&D center in Houston, Texas and our initial plan is to hire 4 to 6 employees on developing composite material
and conducting researches on chemical interactions.
 

The
following events are our key business developments and milestones:
 
Year

 
Event 
 
 1970
 
Our
Predecessor Group commenced business of manufacturing and trading of wood composite products and processing of sports equipment.
Our Predecessor Group developed our first wooden racket and commenced production for wooden composite rackets in Taiwan. 
 
 1978
 
Our
Predecessor Group commenced graphite or wood composite processing for rackets. 

 
1980 
Our Predecessor Group established carbon composite production line and developed our first carbon fiber racket, ski stick and golf shaft.   
 1990 
Our Predecessor Group established the first production plant in Dongguan, the PRC for manufacturing of rackets.   
 1992 
Our Predecessor Group developed our first full carbon racket.   
 2000 
Our Predecessor Group acquired the hot-melt prepreg technology and applied the technology to the production.  
 2005 
Our Predecessor Group established the bicycle business line and the second production plant in Dongguan, the PRC, for the production of carbon fiber bicycles. Our Predecessor Group then developed our first carbon fiber bicycle.   
 2012 
Our Predecessor Group applied for numerous patents on manufacturing of a variety of carbon fiber products.  
 2016 
We produced our first Olympic Champion badminton racket  used by Misaki Matsutomo in winning her champion in the badminton women’s doubles tournament at 2016 Summer Olympics.   
 2017 
We established our R&D center and material laboratory in Taiwan. We also produced our first electric bicycle frame.   
 2018 
We developed our first carbon fiber automobile parts, robotic arm and other health care products, such as wheelchairs and senior walkers.   
 2019 
We expanded our R&D team on the design and production of key structural parts of electric bicycles.   
 2021 
We produced key structural parts of Colnago 2021 V3-R,
which is the racing bicycle model ridden by Tadej Pogacar in winning his championship in Tour de France 2021. 
On
May 24, 2016, we established J-Star as a holding and management company, holding 100% of the equity of Goal Beyond, 100% of the equity
of Star Leader Trading and 100% of Bohong Technology. Goal Beyond, in turn, holds 100% of the equity of TW YMA, 100% of equity of Time
Yield, 100% of equity of Dongguan YMA and 100% of equity of Dongguan Forwell. For further details regarding the Reorganization of the
Group, see “Corporate Structure – The Reorganization.”
 

 
Our
Business Model
 
We
are engaged in the design, development, manufacturing and sale of carbon fiber composite products, with our main focus on key structural
bicycle parts and racket products, on an original equipment manufacturing (“OEM”) & original design manufacturing (“ODM”)
basis. For our OEM model, we manufacture our products in accordance with the customer’s specifications and are marketed under the
customer’s own brand names. Our products are mainly supplied directly or indirectly to international sports brand owners. We secure
sales contracts with customers on project basis.
 

 
Our
ODM business begins with receiving customer’s request in designing and developing a new product. After our sales team communicates
client’s requests with our R&D team, our R&D team will then consult with our procurement team and production team on our
production capacity in order to assess the production timeline and make quotation. The product design and development process will be
commenced once our customers confirmed our quotation. Our sales team is responsible for preparing the project summary which lists out
the customers’ specification on the new product, including but not limited to requirements on physical properties of product material,
special features on the design of product, product performance, accessories, outlook, the brand name to be used and expected size of
order, and so forth. Our R&D team will then work on the structural design and composite material formula design based on the
specifications required by our customers. Throughout the entire process of design, customization and modification of product, we communicate
and receive feedbacks from our customers and provide various technical solutions in response to customers’ feedbacks regarding
the product design and development. We will then deliver a prototype to our customers for their review and confirmation. Meanwhile, we
will also conduct preliminary product testing with our in-house testing equipment or recognized independent third party institutions
on the prototype to ensure that the product meets our customers’ required standard.
 
After
the product development process is completed, the customers will place purchase orders with us according to their needs. We will then
arrange for procurement of raw materials and commence production. We will conduct quality control on the raw materials, semi-finished
product and the finished product. We have our technical staff on-site to provide supervision and technical support in our production
plant in Dongguan, the PRC. We also have quality control staff on-site to monitor the production process. The finished products will
then be delivered to designated place agreed with our customers. For example, for bicycle parts, we will send them to customer’s
designated bicycle assemble house for assembly, while for racket products, we will send them to our customers directly.
 
Competitive
Strengths
 
We
attribute our success to the following key competitive strengths:
 
Strong
research and products development capabilities
 
With
over 50 years of composite product manufacturing experience accumulated from our Predecessor Group and our continuous commitment to enhance
our composite material application technologies and production process, we pride ourselves on our accumulated know-how and research and
development capabilities focused on the development of new products and the improvement of our production process. For instance, our
resin technologies allow for prepreg-ing of our carbon fiber composite and creating higher ratio of strength and stiffness with lower
weight. Some of the bicycle and racket products we co-designed and developed with our customer had been used by players in Olympic Games
and international tournaments in winning their champion. We believe our accumulated composite material application know-how and continuous
dedication to research and product development has enabled us to increase our product quality, production efficiency, technical expertise,
ability to tailor-make products to meet customers specifications and reduce costs, which would in turn help us retain and attract customers
who demand precise, reliable and high quality composite products and obtain higher profit margin. We also believe that our strong research
and development ability will widen the product types to effectively satisfy customers’ changing needs, which in turn will enhance
our organic growth.
 

 
Our
research and development primarily focuses on product development, new application discovery and production process improvement. Our
objectives in research and development is to promote innovation, automation and differentiation in our production and enhance our product
quality. Our investment in research and development are significant. From January 2019 to December 2021, our continued expenditure in
research and development has amounted to approximately $4.9 million. We had a R&D team of 65 members as of December 31, 2021. The
majority of our R&D team members also have over 10 years of experience in industries relevant to our business. Our R&D centers
have accomplished a number of research results and successfully developed and improved various composite materials formulas and application
as well as the production process. In addition, we have also undertaken leading research and development projects on resins formulas
and production processes, such as formulas on highly heat resistant resins, formulas on biomass materials, vacuum forming technology
and waterborne paint technology, which could enhance the performance, cleanliness and durability of products, as well as satisfy our
customers’ particular requirements on different products. As of the date of this prospectus, we have registered 7
invention patents, 9 design patents and 14 utility model, including but not limited to patents on structure of bicycle frame,
structure and design of rackets and manufacturing process of carbon fiber products, in Taiwan, PRC, Japan, Europe and the U.S. We have
also applied for the registration of 6 invention patents. We also work with research institute to improve our production process, to
discover new product applications, and to develop our material technologies. In particular, we are collaborating with National Chin-Yi
University of Technology in Taiwan on carrying out comprehensive analysis and testing on our product materials, researches on production
techniques of thermoplastic composite material and market research and comparisons on our products and other similar products readily
available in the market. We believe that this collaboration will give us synergy and allow us to focus on the development of high-value
and cost-effective products.
 
We
have been devoting research and development efforts in respect of our carbon composite technology and application. In particular, we
developed new resins systems, Nano-CT and Nano-GS, which are applied to our bicycle frame and racket products. Comparing to resins of
regular formulation, Nano-CT and Nano-GS can increase the material strength, resistance to fatigue and stiffness, which effectively enhance
the performance and toughness of our bicycle and racket products and lower their susceptibility to shocks. We also developed our nano-powder
modification technology which uplifts the strength and impact resistance of our product material. We are also developing resins with
higher degree of heat resistance and strength which are applicable to carrier plates of furnace and bicycle wheels, and halogen-free
resins with higher degree of strength and transparency which are applicable to exhaust pipe, engine protector and brake disc of automobile.
 
We
have optimized our production processes through our research and development efforts. We applied our vacuum forming technology in the
production process to maintain the strength and quality of our products. We also developed and applied our waterborne paint technology
to our bicycle frames, air intakes and engine rods of automobile, which enhance the cleanliness of our production process and improve
the durability, gloss finish extent and corrosion and abrasion resistance of our products. We also introduced automated painting technology
with robotic arms in order to promote automation in the painting process of our products, which in turn improves cost efficiency in our
production process. With a view to further upgrading our production process, we commenced our major research and development projects
on resins rapid curing technology, which not only could boost the production efficiency by speeding up the curing process, but also could
enhance the strength, malleability and manufacturability of material. Being one of the major global leading players in the carbon fiber
bicycle parts industry and the carbon fiber racket parts, we believe we have been able to capture the relevant technology and know-how
in advance of our competitors in the industry.
 
In
order to optimize the research and development effort, we have set up two R&D centers carefully designed for different purposes.
The R&D center in Taiwan, which includes a laboratory, focuses on resin material application, new product development and production
process enhancement, while R&D center in the PRC, which locates next to our production plant focuses on structural design of products,
testing on product performance and enhancement on strength and stiffness of products. Under such arrangement, research and development
in Taiwan can adopt a more experimental and innovative oriented approach while research and development conducted in the PRC, can focus
more on resources and process enhancement which can be quickly implemented and tested in the production plant. We intend to establish
our third R&D center in the U.S. to carry out researches on automation of production processes.
 

 
Quality
product and comprehensive services which cater our customers’ needs
 
Leveraging
on our solid experience and expertise in research and development, we are able to develop and produce high quality products satisfying
our customers’ specific requirements. Depending on the needs of our customers, we also offer comprehensive services covering the
processes of product analysis, product design and development; processing and manufacturing; product testing and adjustment; trial production
of final products; and after sales services. Our product development team and our sales team work closely with our branded customers
to understand their needs and make recommendations to them. Our product development team assists our customers in either (i) advising
on the product designs; or (ii) designing products based on the customers’ ideas, concepts or specifications, with a view to enhancing
the product efficiency, functionality and endurance.
 
Our
quality control team is responsible for developing and implementing quality control policy specifying various quality control procedures
for different kinds of products. We have adopted stringent quality assurance procedures throughout each stage in the entire production
processes from the inspection of raw materials to finished products. We have our internal quality control room for testing the quality
of the incoming raw materials. We inspect the appearance, structure, dimensions and performance of raw materials according to our inspection
standards. We will also produce prototype as part of the product development process and perform a series of tests on the prototype to
ensure it performs as designed. Throughout the manufacturing process, we carry out quality control procedures at the stage of molding,
machining, gluing, mending, grinding and painting. Various performance tests, such as fatigue resistance test, compressive strength test,
loading test, shock resistance test, are carried out in our in-house laboratory or by recognized independent third party to ensure our
products meet the quality and safety requirements. Before packing and shipment, our quality control team will conduct final checking
on products so as to ascertain that the quality of our products complies with the specifications and standards of our customers.
 
We
have a stringent quality management system to ensure adherence to and consistency in the quality of our products. In 2011, we obtained
ISO9001:2015 certification for manufacture of carbon fiber rackets. In 2019, we also obtained IATF 16949:2016 certification for manufacture
of carbon fiber seat fittings. We also adopt the EFBE standards, which is a testing standard specific to the bicycle and electric bicycle
industry, on certain bicycle and electric bicycle products. EFBE tests offer comprehensive and high-standard tests on bicycle-related
products, such as fatigue tests on bicycle parts, maximum load and overload test stands and stiffness test stands. The EFBE test standards
are compatible with ISO 4210 and European standard EN15194. In consideration of saving time and cost, we have acquired EFBE testing machines
in March 2021, so that we are capable of quickly running our own in-house tests, and hence, we could ensure that our bicycle and electric
bicycle products adhere to the EFBE.
 
We
believe our ability to provide customized composite products of quality to meet customers’ requirements in a timely and cost efficient
manner enables us to develop strong customer relationship and reputation, which are crucial in our long-term growth.
 
Strong
presence in the carbon composite application industry and sporting goods industry with long operating history and strong production capabilities
 
The
history of our Predecessor Group can be traced back to over 50 years ago when it was established in 1970. We have been applying our material
technology accumulated for decades in manufacturing a great variety of composite products, which are mainly sports equipment, such as
bicycles and rackets, and have extensive industry experience in respect of design, research and development of carbon composite products.
We have established strong reputation in the carbon composite application industry and sporting goods industry as a result of the long
operating history and establishment of our Predecessor Group in the industry. Such reputation has attracted various renowned brand owners
(including their distributors) to procure our products directly or indirectly, including Colnago, Tecnifibre and Groupe Magellan SA,
the distributor of Prince in France. According to the industry report commissioned by us and prepared by Frost & Sullivan, we are
one of the major global leading players in the carbon fiber bicycle parts industry and the carbon fiber racket parts industry. Based
on our successful track record, we believe we are positioned to capture market opportunities in the future.
 

 
Our
production plant in Dongguan, the PRC, is set up with two production lines, which enable us to keep pace with our business development
and to satisfy our customers’ demand in terms of product type, volume, customization, timelines and pricing. As of December 31,
2021, our production plant had an aggregate gross floor area of approximately 42,695 square meter and we owned 10 prepreg machines and
27 forming machines and other special equipment including vacuum forming machine, automated painting robotic arm and an EFBE testing
machine. The prepreg machines and forming machines are major machines we used in our manufacturing process. We use our prepreg machines
to convert our raw material, carbon fiber yarn, to carbon fiber sheet by adding our self-engineered resin to enhance the material’s
malleability. We then utilize our forming machines to give designated shape, stiffness and strength to our products under high temperature.
Further, we are committed to invest in enhancing the automation of our production process with an aim to accommodate the production for
a variety of products with high precision, efficiency and consistency. We believe that with our production capabilities, coupled with
our product design and development expertise, we are able to offer a comprehensive portfolio of carbon composite products to our customers.
 
Well-established
relationship with customers and diversified customer base
 
We
had established strong and long-standing business relationships with our key customers through our Predecessor Group, which connect us
to internationally reputed sports brands (including their distributors), such as Colnago, Tecnifibre and Groupe Magellan SA, the distributor
of Prince in France. We believe that our good business relationships connected directly or indirectly with internationally well-known
sports brand operators, are recognitions of the high standards of our quality and services. We believe that such relationships help us
enhance our reputation in the industry and attract new customers with profile similar to our existing branded customers. We mainly acquire
customers by referrals from our existing customers, direct approach by potential customers after learning our industry reputation and
our current customer base and direct approach by bicycle assemble houses which connect us to branded customers. We also approach potential
customers directly through phone call and email. With our long-standing reputation, we are able to secure numerous new customers from
different countries, such as Australia, Canada, the U.S., Spain and the PRC, which helps us maintain diversified base of customers.
We believe these strong and extensive relationships enable us to establish and maintain market leadership in the carbon composite application
industry. We believe that other than our reliable and high-quality products, our customers are satisfied with our dedicated customer
services. We have adopted return policy on products with manufacturing defects to accommodate our customers. If after any checkup or
analysis by our laboratory the defect of a product is found to be manufacturing defect, return and replacement of products will be made.
 
We
also capitalize on our experiences in the current business operation to further expand into the European and US markets. In January
2021, we invested in 19.5% equity ownership of a bicycle assemble house in France, which is a newly established company without
revenue or income yet, in consideration of 19,500 Euros (approximately $23,100), to enhance our presence in Europe.  We believe such measured
business expansion strategy will help to further diversify our customer base and market recognition effectively.
 
Our
Strategies
 
Our
principal goal is to offer cutting edge technology and manufacturing expertise in carbon composite to customers in the international
market and from different industries.
 
Enhance
our research and development capabilities and enrich our product portfolio
 
We
believe that it is essential for us to continue to strengthen our R&D team in order to improve our product quality, range of product
and production efficiency. We intend to expand our research and development capabilities by setting up a R&D center in the U.S. to
develop automation of our production process, integrate the most advanced technology to our production and acquire talents from the globe
with a view to enhancing our perspective and innovation in research and development. We believe that development on automation of production
process would greatly enhance the efficiency of production and minimize occurrence of human errors. We also believe that global talents
with extensive industry experience would lead us to explore and develop the continuous innovation in technology research and development.
To capitalize on the market opportunities, we intend to enrich our product portfolio to increase our profitability. Hence, we intend
to further research and develop our material technology such that our product can be applied to greater variety of industries, such as
electric vehicle and aerospace industries. Currently, we are also expanding our scope of products under the sporting goods industry.
For instance, we are having upcoming new projects on producing padel rackets for major padel players and we commenced our production
in the second half year of 2021 and have launched in the first quarter of 2022. Further,
in view of the growing market trend on electric vehicles, we plan to open up separate production line on automobile parts, supported
by a local U.S. carbon fiber products manufacturer which we will invest in, in order to extend our production on key structural components
for electric motorcycle and electric automobile in support of local U.S. manufacturer. We also intend to expand our business to electric
vehicle market once we have developed appropriate scale and manufacturing automation and have established our strong presence in the
U.S., so as to open up opportunities in public transport, freight and logistics vehicles. We intend to further improve our production
efficiency by developing new production technologies and keeping abreast of latest growth and development of the industry. We also encourage
our R&D personnel to participate in training provided by external research institutions in order to maintain our capabilities in
developing new technologies and equipment.
 

 
Expand
our customer base and extend our sales to global market
 
We intend to continue to leverage on our experience
in carbon composite application industry to expand our market share and continue to identify new customers in these industries to diversify
our customer base. In the years ended December 31, 2020 and 2021, our sales were made primarily to the Asia and Europe markets,
which accounted for approximately 50.7% and 40.4%
of our revenue for the year ended December 31, 2020, and approximately 47.3% and 47.7% of our revenue for the year
ended December 31, 2021, respectively. Our strategy is to further increase our market presence in Europe and the U.S. and expand
our business in the PRC and other overseas market. In addition to our investment in 19.5% equity ownership of a bicycle assemble house
in France, we plan to penetrate the Europe and U.S. markets by investing in other suitable local bicycle assemble house and setting up
sales and administration offices in Europe and the U.S., in order to provide total solutions to our existing customers and enhance our
presence in the U.S. and Europe markets by having direct access to the market. We also launched a co-owned electric bicycle brand, Ymagine,
in Europe in July 2021 and intend to invest in a local electric bicycle brand in the U.S. 
In
addition, we also plan to build alliance with partners in different nations by firstly building up business relationship with potential
customers from different countries progressively and discussing on investment plans on part of these customers’ operation after
cooperating with them for certain period of time, in order to enter other overseas markets. In view of the fast growing trend of electric
bicycle industry in the PRC, we plan to expand our business in the PRC market by promoting our electric bicycle products under our co-owned
brand in Europe to local retail stores in China to attract domestic customers as end-users in the PRC. Further, we plan to expand our
customer base and market sales by organizing and participating in different product exhibitions in the U.S. and the PRC. Apart from maintaining
our strong and long-standing relationship with existing customers, we also intend to diversify our customer base, with a view to diverting
our operational risks and enhance the sustainability of our business.
 
Vertical
expansion of our business by establishing our own brand
 
We
believe that our success is driven by our ability to adapt swiftly to the market demand and seamlessly cater the customers’ need.
According to the industry report commissioned by us and prepared by Frost & Sullivan, the global expected CAGR of the carbon fiber
bicycle parts industry from 2021 to 2025 is 16.0%. With the anticipation of further growth of demand on bicycles, in particular electric
bicycles, in the future, we believe sales of our carbon composite electric bicycle and sporting goods will continue to grow remarkably
in the coming years. The industry report prepared by Frost & Sullivan also reveals that the market size by revenue of carbon fiber
racket parts will increase from US$243.9 million in 2021 to US$332.4 million in 2025, representing a CAGR of approximately 8.0%. To capitalize
on the market opportunities, we established our co-owned electric bicycle brand, Imagine Bikes, in Europe in July 2021. In addition,
we also plan to expand our business vertically in the next 1 to 3 years by establishing and launching our own brand in the U.S. by the
first quarter of 2023 on carbon composite electric bicycle and sporting goods, ranging from electric bicycle, bicycle crank
set, padel racket to mast foil, and intend to offer such products via online stores and distributing agents. Our brand will target end-consumers,
who seeks for sporting goods of excellent quality and performance at reasonable price. We aim to set up a sales and administration office
in the U.S. for selling products under our electric bicycles and sporting goods brand immediately after listing. We believe that setting
up sales and administration office in the U.S. will help us further explore new areas of customer demand and drive the growth of our
sales and enhance our brand recognition. We are also in the progress of setting up our sales and administration office in the Netherlands
and are currently applying for its company registration.
 
Expand
our production plant and capabilities
 
We expect the market demand
for sports bicycle, electric bicycle, mast foil and padel rackets to increase in the near future, as there are rising number of inquiries
on these products from our potential customers. We expect to capture the market growth and also increase our market share through our
equipment upgrade and capacity expansion. According to the industry report prepared by Frost & Sullivan, the global carbon fiber
bicycle parts market experienced moderate growth in recent years, increasing from approximately US$288 million in 2016 to US$462 million
in 2020, registering a CAGR of 12.5%. Driven by improving people’s living standards, transformation of consumers, lifestyle and
technology development, the market size of global carbon fiber bicycle parts industry is expected to increase from approximately US$522
million in 2021 to US$945 million in 2025, representing a CAGR of 16.0%. The penetration of carbon fiber professional-grade bicycles
is expected to further grow due to its outstanding physical performance, while wider application of carbon fiber composite materials
in the market on regular bicycles and electric bicycles is also expected. Referring to the industry report of Frost & Sullivan, the
popularity of surfing and padel is increasing around the world and the foil mast made of carbon fiber are coming into people’s
spotlight as carbon fiber foil masts enable surfers to maintain stability and avoid damage when riding big waves or immersing in seawater
for a long period, which provides protection for surfers. The excellent performance of carbon fiber padel rackets is also widely recognized
by athletes and the public as carbon fiber rackets can reduce the load on the arm during long rallies and improve the speed and efficiency
when hitting the ball. For the years ended December 31, 2020 and 2021, the utilization rate of the production plant in Dongguan, the
PRC, was approximately 80% and 94%, respectively. As a result of the limited production capacity of our existing production plant, we
currently outsource certain production processes that require less technical skills, such as painting, cosmetic and sanding. However,
we still focus on our competencies on those key production processes, including structure design, lamination, formation and quality control.
In order to cater for our expected growth in sales and increase our production capacity, we plan to a construct new production plant
in the PRC and set up a micro factory in the U.S. by channeling our know-how from our production plant in China to the U.S. factory.
In respect of our plan on new production plant in the PRC, we have already acquired the land use right of a parcel of land in Yangzhou
and the expected time for completion of construction and commencement of operation would be in 2023. We also plan to set up our sales
and administration office in the U.S. by the first quarter of 2023 and establish our micro factory in the U.S. by 2023. 

 
Our
Products and Services 
 
We
are principally engaged in offering cutting edge technology and manufacturing expertise in carbon composite products, focusing on products
in electric bicycle industry, sports bicycle industry, sporting goods industry, automobile industry and healthcare industry. Our products
include carbon fiber electric bicycle and sports bicycle parts, rackets, automobile parts, medical robotic arms and healthcare products.
Carbon fiber composite products are remarkable in their properties of high strength, durability, light weight, high stiffness and corrosion
resistance. We aim at offering our customers superior levels of performance and efficiency on our products. Our carbon fiber composite
products are also custom-made to meet our customers’ specifications and requirements. The life span and prices of composite products
we manufacture varies depending on the specifications of the product.
 
Bicycle
parts
 
Our
bicycle-related products include key structural parts of electric bicycle and sports bicycle, such as bicycle frame, seat post, front
fork, paddle, crank and handle bar and so on. As an important underpinning structure, bicycle frames are mostly made of Carbon Fiber
Reinforced Polymers (CFRP) or carbon fiber composite materials, which has high rigidity, flexibility, durability and lightweight, determined
by the fabric property, which is impregnated with a glue called resin that allows shaping and joining the material. The great advantage
is that carbon fiber can be fine-tuned to provide any ride qualities riders desire. A bicycle fork is the part of a bicycle that holds
the front wheel, which is commonly made of steel, aluminium, carbon fiber, titanium and other materials. Since the material of the forks
can noticeably affect the feel and handling of the bicycle, forks of road bicycles and touring bicycles are usually made of carbon fiber
to lessen and absorb vibrations from the road surface. Carbon crank wholly made of carbon fiber can minimize the weight of the bicycle
while maintaining a smooth appearance; while handlebar made of carbon fiber can absorb vibrations and deliver outstanding strength-to-weight
ratio, which is commonly applied in mountain bicycles and racing bicycles.
 
The
figure below shows the key structural parts of a bicycle:
 

Source:
Frost & Sullivan
 
We
realized revenue of approximately $14.3 million and $20.0 million from our sales of bicycle parts for the years ended December
31, 2020 and 2021, which accounted for approximately 64.4% and 63.9%, respectively, of our revenue for the corresponding
periods. In the future, we will continue to engage in and focus on our sales of bicycle parts, in particular electric bicycles, in light
of the expected market growth the electric bicycle industry.
 

 
We
believe that there is a strong market demand on sports bicycles and electric bicycles in the global market. According to the industry
report prepared by Frost & Sullivan, such inclining trend on the demand of bicycle products is mainly attributable to the change
in people’s habit on pursuing healthier lifestyle and the implementation of government policies on supporting environmentally friendly
transportation or vehicles. Additionally, in the aftermath of the outbreak of COVID-19, the market demand on bicycle products is likely
to grow as people are spending more time on outdoor activities domestically owing to the travel restrictions implemented globally. In
light of the inclining market demand on bicycle products, in the future, we will focus on sales of bicycle products and continue to enhance
the quality and modify the design of our sports bicycle and electric bicycle products. For further details in respect of the industry
report prepared by Frost & Sullivan, see the section “Industry” of this prospectus.
 
With
our direction on commercializing and popularizing more bicycle products, including both electric bicycle and sports bicycle, in the future,
we continuously design and develop new models of bicycle products. In 2021, we launched 28 new models of bicycle, and in 2022, 24 new
models of bicycle are expected to be launched. We combined our competitive strengths on material technology and structural design expertise
in the development of our new electric bicycle models under the concerted effort of our R&D team in Taichung and Dongguan, the PRC.
Distinguished from other electric bicycles available in the market, our new electric bicycle model adopts minimalistic and stylish structural
design, which is able to hide the battery in a less visible manner. Its key components are made of our developed nano resins, which boosts
its level of stiffness and weight savings, such that these new models could offer smoother and more cozy commuting experience to customers.
 
Below
are some of the electric bicycle and sports bicycle models that we co-designed with customers and manufactured their carbon fiber parts:
 

One
of the most requested carbon full suspension electric bicycles in market launched under a reputed Swiss-based bicycle brand.  
The
entire frame of this electric bicycle is constructed of carbon fiber, which keeps its weight down to 20.54kg and it won acclaim internationally
for its lightness, agility and directness on trails.
 

 

YMA
2017 B-01 
The
first carbon electric mountain bicycle open model launched by us. 
A
lightweight carbon-fiber electric mountain bicycle with the improved vehicle weight to a new level. This open model carbon frame is made
with more concise appearance design, pull-up battery extraction and higher frame strength. The geometric design of this bicycle is compatible
with 500W & 600W battery.
 

YMA
2017 S-01 
The
first carbon electric mountain bicycle open model launched and its carbon fiber frame is manufactured to fulfill the industry standard
weight.
 

 
 
 

Colnago
2017 V2-R
This
racing bicycle is launched by Colnago, a prominent high-end road-racing bicycle brand based in Italy. Seat post clamp of Colnago 2017
V2-R is designed to boost the aero efficiency of the bicycle.
 
 
 

 
Colnago
2021 V3-R
This
racing bicycle is also launched by Colnago and is an upgraded version of Colnago 2017 V2-R. The V3Rs Capsule Collection represents excellence
in terms of technological innovation, performance and style. We used a new type of carbon fiber that allows Colnago V3Rs to significantly
increase the rigidity to lateral flexions. Tadej Pogacar rode Colnago V3R in winning his championship in Tour de France 2021. The ability
to absorb vertical shocks has improved significantly, which translates into greater comfort. Colnago 2021 V3-R is fast on long climbs,
in windy plains, on big tours and in stages and its design improves the concepts of lightness and aerodynamics of its road frames.
 

 

 
A
mountain bicycle launched by a reputed Swiss-based bicycle brand that is reliable in all conditions and surfaces and allows world-class
performance.
Manufactured
with high-strength and modular high-end carbon fibers, the frame is controlled at a light weight combined with the low frame weight give
this bicycle an enormous amount of propulsion.
  

 
One
of the most desirable urban electric bicycles in the market launched by a reputed Swiss-based bicycle brand. With our carbon fiber
frame adopted, this electric bicycle weights lighter than a typical electric bicycle. On the road, this electric bicycle is extremely
good-natured and predictable, making it the perfect companion for the next city adventure.
 
Rackets
 
Our
racket products include carbon fiber tennis rackets, badminton rackets, squash rackets and beach tennis rackets. We also provide racket
stringing services upon customers’ requests. Based on our customers’ requirements and specifications, our racket development
team provides product design that could enhance products’ efficiency, endurance and functionalities. Mass production of racket
products will only be carried out after the prototype has passed our product tests in our test center. Racket products are usually delivered
to customers’ warehouse around the world through free on board (FOB) in Hong Kong.
 
According
to the industry report prepared by Frost & Sullivan, driven by the higher requirements on the mechanical properties of rackets and
increasing purchasing ability of high-end sports goods customers, the market size by revenue of global carbon fiber applied in rackets
has witnessed a steady growth, increasing from US$194.1 million in 2016 to US$242.6 million in 2019. Promoted by the increasing health
awareness post-pandemic, encouraging policies of sports activities in developing countries, as well as progressed carbon fiber manufacturing
techniques, it is estimated that the demand of carbon fiber applied in rackets will further rise and the market size by revenue of carbon
fiber racket parts will increase from US$243.9 million in 2021 to US$332.4 million in 2025, representing a CAGR of approximately 8.0%.
In light of the inclining market demand on racket products, in the future, we will focus on sales of racket products and continue to
enhance the quality and modify the design of our racket products. For further details in respect of the industry report prepared by Frost
& Sullivan, see the section “Industry” of this prospectus.
 
We
generated revenue of approximately $7.9 million and $11.3 million from our sales of racket for the years ended December 31, 2020
and 2021, which accounted for approximately 35.5% and 36.1%, respectively, of our revenue for the corresponding periods.
In the future, we will continue to engage in our sales of racket products and we expect that our sales of rackets will remain stable
in 2022.
 

 
Below
are some of the championship rackets we co-designed with our customers and manufactured their carbon fiber parts:
 

 
PRINCE
Twistpower X100
 
Twistpower
X100 is a Prince tennis racket distributed by Groupe Magellan S.A. Twistpower X100 is a light and speedy player’s racket that
rewards full swings with a great combination of spin, power and precision. It has uniquely good feel and pocketing, which comes in
part from a twisted shaft design which helps the racket bend optimally at impact.
 

 
TECNIFIBRE
CARBOFLEX 125S
 
Carboflex
125S is a squash racket launched by Tecnifibre, a French brand of sporting equipment, specializing in tennis and squash. Carboflex 125S
is used by Mohamed El Shorbagy, the world number one squash player in 2020. It offers quick response, great maneuverability and high
swing speed. 
 
 

 
PRINCE
Pro Rebel 950
Pro
Rebel 950 is a Prince squash racket distributed by Groupe Magellan S.A. It offers an excellent accuracy and unique maneuverability
for players seeking for enhanced performance with lightweight power. Prince Pro Rebel 950 is endorsed by Ramy Ashour, a former worldclass
professional squash player.
 
 

 
TECNIFIBRE
Wall Master 360 PHD
Wall
Master 360 PHD is the padel paddle dedicated to club players and it has been engineered with a round head shop to optimize precision
and control. Its light weight also allows easier maneuverability. 

 
Other
products
 
Other
products include automobile parts, healthcare products, prepreg sheets and carbon fiber boards.
 
We generated revenue of
$22,328 and $13,613 from our sales of other products for the years ended December 31, 2020 and 2021, which accounted for approximately
0.1% and 0.0% of our revenue for the corresponding periods. Despite that our revenue from our sales of other products accounts for a
relatively small portion of our total revenue for the years ended December 31, 2020 and 2021, we intend to expand and develop our products
on automobile parts, healthcare products and raw materials. We are currently in discussion with a number of customers concerning new
projects on certain healthcare products and motorcycle parts. 
 
Our
automobile-related products include carbon fiber parts of automobile, such as air intakes, air-collecting hoods, engine rods, seat back,
windshield, handlebar, and so on. Similar to the production model of our bicycle products, our automobile parts development team will
first discuss with our customers on the design and specification of the automobile parts. Our R&D team will then commence the product
development process based on our customers’ specific requirements.
 
The
electric vehicle market is showing a pattern of continued growth and such trend is pushed forward by the favorable government policies
on promoting the use of electric vehicles in different countries, such as providing tax incentives and subsidies. Due to the light-weight
property, strength and stiffness of carbon composite, it is commonly used as the major material for producing key components of electric
vehicles, such as air intake and seatback. In order to seize market opportunities, we have been preparing the know-how to produce carbon
fiber automobile parts since 2019 and have expanded our R&D on technology of producing carbon fiber automobile parts. Although our
revenue from sales of automobile parts is yet to be significant in the years ended December 31, 2020 and 2021, we received numerous
inquiries from customers in the electric vehicle industry and we expect that there will be more upcoming projects on automobile parts
in the future.
 
Below
are some of the carbon fiber automobile parts manufactured by us:
 

  
Air
intake of automobile
 

 

Air
intake of automobile
 

  
Air-collecting
hoods of automobile
 

  
Wind
shield of motorcycle
 

 

cover
sets of motor cycle
 

 

Seat
back of automobile
 

 

Engine
rod of automobile
 

 

Handlebar
of motorcycle
 
(ii)
Healthcare
and other products 
We
had also manufactured carbon fiber healthcare products and other parts, which include carbon fiber senior walker, wheelchair, medical
robotic arm, electric wheelchair robotic arm and drone parts. We adopt the same ODM model in respect of the production of health care
and other products.
 
According
to the industry report prepared by Frost & Sullivan, carbon fiber is usually used in the chassis and backrest frame of wheelchairs,
featuring lightness, stiffness and exceptional durability. The stability and biocompatibility of carbon fiber materials have attracted
extensive attention in medical devices and biomaterials. In addition, with the continuous improvement of carbon fiber production and
processing technology, carbon fiber has gained more market share in robotic arms, particularly industrial robots. Compared to traditional
robotic arms made of aluminium alloy and alloy steel, carbon fiber robotic arms have higher flexibility, fracture resistance and a longer
service life. Also, the vibration dampening of carbon fiber robotic arms allows for precise control and positioning, enhancing working
speed and efficiency of robots. With the accelerated automation process and wide application of industrial robotics, carbon fiber is
expected to develop further and be favored by downstream customers. Therefore, we intended to further expand our production on healthcare
products and we are currently in discussion with a number of customers concerning new projects on certain healthcare products. For further
details in respect of the industry report prepared by Frost & Sullivan, see the section “Industry” of this prospectus.
 

 
Below
are some of the healthcare products and other products we co-designed with our customers and manufactured their carbon fiber parts:
 

  
Rollator

 

Wheelchair
 

  
Medical
robotic arm

  
Electric
wheelchair robotic arm
 

  
Medical
robotic arm

Rollator 
Research
and Development
 
From
January 2017 to December 2021, our continued expenditure in research and development has amounted to an aggregate of approximately
$7.5 million. We had a R&D team of 65 members as of December 31, 2021. The majority of our R&D team
members also have over 10 years of experience in industries relevant to our business. We predominately focused on developing know-how
for the carbon fiber & resin application technology and carbon fiber & resin processing technology. We obtained a number of patents
in this area. For more details on our patents, see the paragraph “Intellectual Property” in this section.
 

 
Our
R&D center in Taichung focuses on resin material application, new product development and production process enhancement. We invested
approximately NTD83.6 million (approximately $2.8 million) in our R&D in Taiwan to develop our resin technology between
January 2019 and December 2021, and we have various resin recipes for applications on different scope of products. Meanwhile,
our R&D center in Dongguan, the PRC, focuses on structural design of products, testing on product performance and enhancement on
strength and stiffness of products and we invested approximately RMB14.1 million (approximately $2.1 million) from January
2019 to December 2021 in our R&D in Dongguan, the PRC, and we have on-site machinery and equipment for product testing in
order to offer more comprehensive services to our customer.
 
In
2020, we entered into a strategic cooperation with National Chin-Yi University of Technology in Taiwan, which provides us with opportunities
in personnel training, technologies sharing and technical supports.
 
In
the future, as part of our use of proceeds, we intend to open up a new R&D center in the U.S. in order to focus on our research and
development on automation of production processes. For more details on our use of proceeds, see “Use of Proceeds” section.
 
Raw
Materials and Suppliers
 
Our
major raw materials mainly include carbon fiber yarn and resin, which are the major components for manufacturing carbon composite
material of our products. Typically, our purchases are made based on the purchase orders we receive from our customers and customer’s
forecast for the year after. We mainly purchase top-graded carbon fiber yarn and resin from independent suppliers in Japan, Taiwan
and PRC. To procure carbon fiber yarn from Japan, we are required to obtain Special General Bulk Export License from the Japanese
government in order to comply with regulations from the Security Export Control implemented in Japan. In order to avoid over-reliance
on a single source of supply, we will continue to maintain more than one supplier for each category of our major raw materials. For instance,
we have been sourcing quality carbon fiber yarn not only from Japan and Taiwan, but also from certain reliable suppliers in PRC.
Save as disclosed above, during the years ended December 31, 2020 and 2021, we had not encountered any material shortage, delay or major
difficulty in the procurement of raw materials from our suppliers. Further, as at the date of this prospectus, to the best knowledge
of the Company, we do not have any direct business or contracts with any Russian entity as a supplier, but we do not have any knowledge
whether any our suppliers have any direct business or contracts with any Russian entity

 
Customers
 
We
supply our products directly or indirectly to reputed branded customers predominantly engaged in the electric bicycle industry, sports
bicycle industry, sporting goods industry, automobile industry and healthcare industry, most of which are based in European countries,
including Colnago, an international high-end road-racing bicycle manufacturer and trader based in Italy, and Tecnifibre, a well-known
French brand of sporting equipment specializing in tennis and squash. We usually supply our products on an order basis and we do not
have formal contracts or agreements with our customers. Hence, sales terms and arrangements are made through purchase orders from the
customers and accepted by us.
 
We
are currently diversifying our customer base in order to lower our exposure to risks relating to reliance on any one single customer.
Leveraging our substantial experience and expertise in the carbon composite application industry and sporting goods industry, we believe
we are positioned to maintain our relationship with our current customers, and further expand our customer base in the future. However,
as at the date of this prospectus, to the best knowledge of the Company, we do not have any direct business or contracts with any Russian
entity as a customer, but we do not have any knowledge whether any our customers have any direct business or contracts with any Russian
entity.

 
Sales
and Marketing
 
We
primarily acquire our customers by the following means: (i) referrals from our existing customers; (ii) direct approach to potential
customers through phone calls or emails; (iii) direct approach by potential customers after learning our industry reputation and our
current customer base; and (iv) direct approach by bicycle assemble houses which connect us to branded customers. Our sales and marketing
team is responsible for handling purchase orders received from our customers, coordinating with our production plant for execution of
purchasing orders, and communicating with customers on their requests and feedbacks and developing relationship with customers. We generally
market and tailor-make products for our branded customers. We seek opportunities to expand our customer base while maintain our business
relationship with our existing customers. We conduct visits to and meet with our existing major customers from time to time with a view
to securing existing business, promoting our scope of business and our range of products, and increasing of their chance of engaging
new projects with us. Our customers will also regularly visit our Taichung headquarters and Dongguan production plant to discuss ongoing
projects, explore opportunities of new projects and share business and market information. In 2018, we had our anniversary celebrations
and we invited our customers, suppliers and connoisseur to attend our celebration, during which we introduced the history and development
of our Group, our major products and new products to be launched. In terms of after-sales service, our sales and marketing team
gathers feedback from our customers regarding our products from time to time. We visit our customers on a periodic basis to discuss the
quality of our products and services.
 

 
Seasonality
 
Our
products and services have no obvious seasonal characteristics. We generally record relatively stable sales revenue around the year.
We only experience production declines during the first two months of the year due to the Chinese New Year holidays. To overcome the
seasonality effect on production, we encourage our manufacturing employees to take early leave for the Chinese New Year and resume work
as soon as possible in February.
 
Quality
Control
 
We
place great emphasis on the quality of our products. We have adopted stringent quality procedures throughout each stage in the entire
production processes from the inspection of raw materials, production of prototype, manufacturing processes to finished products. We
have our internal quality control room for testing the quality of the incoming raw materials We also have our reliability test laboratory
and in-house testing equipment serving a purpose of continuously monitoring the reliability and function stability of our products. Our
quality control team is responsible for developing and implementing the quality control policy, which specifies various quality control
steps for different products at different stages.
 
We
have a stringent management system to ensure adherence to and consistency in the quality of our products. We obtained ISO9001:2015 certification
in 2011 for manufacture of carbon fiber rackets and obtained IATF 16949:2016 certification in 2019 for manufacture of carbon fiber seat
fittings. We also adopt the EFBE on certain bicycle and electric bicycle products. EFBE tests offer comprehensive and high-standard tests
on bicycle-related products, such as fatigue tests on bicycle parts, maximum load and overload test stands and stiffness test stands.
The EFBF are compatible with ISO4210 and European standard EN15194. In consideration of saving time and cost, we have acquired EFBE testing
machines in March 2021, so that we are capable of quickly running our own in-house tests and ensure that our bicycle and electric bicycle
products adhere to the EFBE. We did not experience any significant quality defects or product claims or refunds or returns from our customers
or remedies in respect of our products which materially and adversely affected our business, operations or financial conditions during
the years ended December 31, 2020 and 2021 and up to the date of this prospectus.

 

Intellectual
Property
 
We
regard our patents, copyrights, trademarks, trade secrets and other intellectual property rights as critical to our success. We rely
on a combination of patent, copyright, trademark and trade secret laws and restrictions on disclosure to protect our intellectual property
rights. Our intellectual property portfolio as of the date of this prospectus included the following:
 

Patents:
We have 30 registered patents in Taiwan, PRC, Japan, Europe and the U.S., among which 7 of them are invention patents, 14 of them
are utility model patents and 9 of them are design patents). The registered patents cover bicycle, racket and manufacturing process
of carbon fiber products. Details of the 30 registered patents are as follows:

 
No. 
Patent Description 
Holder 
Place of Registration 
Patent Type 
Patent Number 
Duration  
  
  
  
  
  
 1 
Carbon-fiber product forming device 
Star Leader Trading 
Taiwan 
Utility Model 
M538875 
April 1, 2017 – August 4, 20262 
Carbon-fiber product forming device 
Star Leader Trading 
PRC 
Utility Model 
ZL201620845839.X 
August 5, 2016 – August 5, 20263 
Carbon-fiber product forming device 
Star Leader Trading 
Japan 
Utility Model 
3208329 
October 24, 2016 – October 24, 20264 
Apparatus of manufacturing carbon fiber prepreg 
TW YMA 
Taiwan 
Utility Model 
M567260 
September 21, 2018 – May 17, 20285 
Carbon fiber prepreg material preparation equipment 
TW YMA 
PRC 
Utility Model 
ZL201821112561.0 
July 13, 2018 – July 13, 20286 
Twisted bicycle frame 
TW YMA 
PRC 
Utility Model 
ZL201821587258.6 
September 28, 2018 – September 28, 20287 
Tennis racket with padding material 
TW YMA 
Taiwan 
Utility Model 
M581924 
August 11, 2019 – January 28, 20298 
Lightweight pike racket 
TW YMA 
Taiwan 
Utility Model 
M581926 
August 11, 2019 – January 28, 20299 
Lightweight pike racket 
TW YMA 
PRC 
Utility Model 
ZL201920211539.X 
February 19, 2019 – February 19, 202910 
Tennis racket with packing material 
TW YMA 
Japan 
Utility Model 
3221292 
February 27, 2019 – February 27, 202911 
Racket frame with shock absorption effect 
TW YMA 
PRC 
Utility Model 
ZL201921038799.8 
July 4, 2019 – July 4, 202912 
The badminton racket frame has functions of adjusting shock absorption effect and changing gravity center position 
TW YMA 
PRC 
Utility Model 
ZL201921033514.1 
July 4, 2019 – July 4, 202913 
The racket frame having a vibration absorbing effect 
TW YMA 
Japan 
Utility Model 
3223222 
July 12, 2019 – July 12, 202914 
Badminton racket that can adjust vibration absorption effect and change the center of gravity position 
TW YMA 
Japan 
Utility Model 
3223277 
July 18, 2019 – July 18, 2029 

 
15 
Racket with replaceable grip sleeve 
TW YMA 
the U.S. 
Invention 
US8579738B2 
May 11, 2012 – June 5, 203216 
Weight changeable racket 
TW YMA 
the U.S. 
Invention 
US8721478B2 
May 11, 2012 – August 9, 203217 
Weighting device and racket equipped with the same 
TW YMA 
the U.S. 
Invention 
US8758175B2 
May 22, 2012 – January 26, 203318 
Shock-absorbing seat stay for bicycle 
TW YMA 
the U.S. 
Invention 
US8894085B2 
April 16, 2013 – April 16, 203319 
Twisted tennis racket frame 
TW YMA 
Europe 
Invention 
EP3056249B1 
December 28, 2015 – December 28, 203520 
Device method forming carbon-fiber product 
Star Leader 
Europe 
Invention 
EP3278965 
November 7, 2016 – November 7, 203621 
Method of forming carbon-fiber product and implementation device thereof 
Star Leader Trading 
the U.S. 
Invention 
US10500798B2 
November 16, 2016 – August 25, 2037 22  
Squash racket 
TW YMA 
Europe 
Design 
005804630-0001 
October 23, 2018 – October 23, 2043 23  
Squash frame 
TW YMA 
PRC 
Design 
ZL201830591835.8 
October 23, 2018 – October 23, 2028 24  
Badminton racket frame 
TW YMA 
PRC 
Design 
ZL201930062297.8 
February 12, 2019 – February 12, 2029 25  
Badminton racket frame 
TW YMA 
PRC 
Design 
ZL201930062298.2 
February 12, 2019 – February 12, 2029 26  
Squash racket 
TW YMA 
the U.S. 
Design 
USD876562S 
February 25, 2020 – February 25, 2035 27  
Badminton racket frame 
TW YMA 
Japan 
Design 
1643801 
January 31, 2019 – January 31, 2039 28  
Badminton racket frame 
TW YMA 
Japan 
Design 
1643802 
January 31, 2019 – January 31, 2039 29  
Tennis Racket Frame 
TW YMA 
the U.S. 
Design 
USD813962S 
March 27, 2018 – March 27, 2033 30  
Tennis Racket Frame 
TW YMA 
the U.S. 
Design 
USD777859S 
January 31, 2017 – January 31, 2032 

 
We
had applied for the registration of the following patents in Taiwan, PRC, Vietnam, Cambodia and Germany, covering carbon-fiber products
manufacturing, parts manufacturing and prepreg production equipment. Details of the 6 patent applications  are as follows:
 
No. 
Patent Description 
Holder 
Place of Application 
Patent Type 
Application Number 
Date of Application1 
Manufacturing method of bicycle parts 
TW YMA 
Taiwan 
Invention 
109110056 
March 25, 20202 
Manufacturing method of parts 
TW YMA 
Taiwan 
Invention 
109144726 
December 17, 20203 
Manufacturing method of parts 
TW YMA 
PRC 
Invention 
202011642889.5 
December 30, 20204 
Carbon-fiber prepreg producing equipment 
TW YMA 
Vietnam 
Invention 
VN 1-2018-05804 
December 21, 20185 
Carbon-fiber prepreg producing equipment 
TW YMA 
Cambodia 
Invention 
KH/P/2018/00062 
December 6, 20186 
Equipment for the production of carbo fiber prepreg materials 
TW YMA 
Germany 
Invention 
102018221759.9 
 December 14, 2018 
 

Trademarks:
We owned a total of 12 registered trademarks in PRC and Taiwan. Our trademarks include the combination of graphs and names for TW YMA: 
 
 
 

Domain
name: We have 2 registered domain names in the U.S., which are www.ymaunivers.com and www.j-starholding.com.  
In
addition to the foregoing protections, we generally control access to and use of our proprietary and other confidential information through
the use of internal and external controls. For example, for external controls, we enter into non-disclosure agreements or agree to confidentiality
clauses with our customers and, for internal controls, we adopt and maintain policies governing the operation and maintenance of our
systems and the management of user-generated data, and enter into standard confidentiality and intellectual property agreements with
our key employees.
 

 
Competition
 
According
to the industry report commissioned by us and prepared by Frost & Sullivan, at present, there is a fierce competition in the low-end
carbon fiber market with low profit margins. There is still a large profit margin in the mid-end and high-end carbon fiber markets. However,
in the future, the demands of carbon fiber products for consumption use will continue to be released. With the development of technology,
there will be increasing application of carbon fiber for new purpose and usage, and the cost of carbon fiber will be reduced. It is expected
that these factors will enable a higher margin for the manufacturers and promote people’s willingness to buy carbon fiber productions
sports and leisure products. In the future, long-term low-price competition will force low-end carbon fiber products manufacturers to
face business transformation. However, manufacturers who develop mid-end and high-end products will maintain their first mover advantages
through resource accumulation and research and development capability and maintain a leading position in the industry.
 
Our
ability to remain competitive will largely depend on our business model, the quality of our products and services, the effectiveness
of our sales and marketing efforts and our ability to enhance the features and functionality of our products to satisfy our customers’
needs.
 
We
believe that the principal competitive factors in our market are:
 
 

Core
competence in providing high-standard customized products according to customers’ specifications; 
 
  

quality
of technologies and, as a result, research and development capabilities; 
 
  

ability
to innovate and respond rapidly to customer needs; 
 
  

strategic
expansion of production capacity and quality management; 
 
  

ability
to control costs; 
 
  

sufficient
capital support; and  
 
  

brand
awareness and reputation of the Company. 
Employees
 
We
had 817 full-time employees as of December 31, 2021. As of the date of this prospectus, our employees are based
in Taiwan and the PRC. In order to address the development, attraction and retention of personnel, we made continued and substantial
investment in our technical personnel by providing them with training and various types of incentives so as to reward them for their
services and contributions.
 
The
following table provides the number of our employees by function, as of December 31, 2021:
 
Function 
Number of Full-Time Employees R&D 
 65 Quality control 
 7 Business development 
 24 Procurement 
 10 Management 
 2 Accounting & finance 
 14 Production 
 667 Human resources, I.T. & Administration 
 28 Total 
 817  

 
As
required by the laws of the PRC, we participate in various employee social security plans that are organized by municipal and provincial
governments for our PRC-based full-time employees, including pension, unemployment insurance, childbirth insurance, work-related injury
insurance and medical insurance. We are required under PRC law to make contributions monthly at specified percentages of the salaries,
bonuses and certain allowances of our PRC-based full-time employees, up to maximum amounts specified by applicable local governments.
For risks relating to our failure to make adequate contributions for social insurance premiums for our employees in accordance with the
statutory payment base required by the relevant PRC laws, see “Risk Factors – Risks Related to Conducting Operations in
PRC and Hong Kong – We may be subject to additional contributions under various employee benefits plans and late payments
and fines imposed by relevant government authority.”
 
We
have a defined contribution pension plan under Taiwan’s Labor Pension Act covering all Taiwan employees. We contribute 6% of an
employee’s monthly wages to the personal pension account of such employee each month with the Bureau of Labor Insurance of Taiwan.
 
We
enter into labor contracts and standard confidentiality with our key employees. We have been involved in 9 legal proceedings in relation
to labor disputes during the years ended December 31, 2019, 2020 and 2021, all of which have been duly settled. None of our employees
are represented by labor unions.
 
Inventory
 
We
generally maintain limited inventory. We order materials for our projects on an as-needed basis. Where our proprietary products are needed,
we place orders with our suppliers for raw materials and commence our production upon receipt of orders from our customers.
 
We held total inventory
of $11,699,660 and $23,010,057 as of December 31, 2020 and 2021, respectively. The higher level of total inventory in December 31, 2021 as compare to December 31, 2020 was mainly due
to unstable shipping schedule of our products. As demands from our customers are dependent on, among other things, market
conditions, the higher level of inventory in the year ended December 31, 2021 may not be indicative of our future inventory levels.
 
Properties
 
Our
headquarters are located in 7/F-1, No.633, Sec. 2, Taiwan Blvd., Xitun District, Taichung City 407, Taiwan (the “Taichung headquarters”),
and we maintain a R&D center with material laboratory in Taichung and production plant in Dongguan in the PRC. As of June 30, 2021,
we have land use right to one property of approximately 64,851 square meters (approximately 698,050.4 square feet) at the development
zones for new and high technology industries in Yangzhou, the PRC (the “Yangzhou Property”), which would be used for building
our new production plant in Yangzhou under our expansion plan. We currently leased 5 properties with an aggregate of approximately
14,175.3 square meters (approximately 152,581.73 square feet) in Taiwan and PRC, which primarily carry out production function. Saved
for our Yangzhou Property, we lease all of our facilities and do not own any real property. We do not expect to experience difficulties
in renewing any of the leases when they expire. For the leasing agreement of our production plant located at No. 613, Dongfu Guoyong
2003, No. 128 Industrial Zone, Tangxia Town, Dongguan City, it contains a renewal clause in which we enjoy the right to preferential
lease, and therefore, we do not expect to experience difficulties in renewing such lease. If we require additional space, we expect to
be able to obtain additional facilities on commercially reasonable terms.
 

 
Address
 
Size

 
Rent
 
ExpirationFlat
1 & 2, 7th Floor, No. 633, Section 2, Taiwan Blvd., Xitun District, Taichung City,
Taiwan

 
approximately
696.5 square meters (approximately 7,497.1 square feet)
 
NTD214,870
per month (approximately $7,692)
 
August
16, 2024  
 
 
 
 
 
 No.
18, 1 Shude Lane, South District, Taichung City, Taiwan

 
approximately
696.9 square meters (approximately 7,501.4 square feet)
 
NTD204,336
per month (approximately $7,321)
 
June
15, 2023 
 
 
 
 
 
 Car
Park Space B4-72, 73, 74, 75 & 76, No. 633, Section 2, Taiwan Blvd., Xitun District,
Taichung City, Taiwan

 
N/A
 
NTD15,000
per month (approximately $537)
 
August
16, 2024  
 
 
 
 
 
 4/F
and 5/F, Block B, Industrial Zone, 93 Tangxia Main Road South, Dongguan City, PRC

 
approximately
750 square meters (approximately 8,072.93 square feet)
 
RMB16,500
per month (approximately $2,554)
 
February
25, 2025 
 
 
 
 
 
 No.
613, Dongfu Guoyong 2003, No. 128 Industrial Zone, Tangxia Town, Dongguan City, PRC
 
approximately
12,031.9 square meters (approximately 129,510.3 square feet)
 
RMB1,030,000
per month (approximately $159,442)
 
February
25, 2025 
For
risks relating to our failure to fully comply with the land use right assignment contract entered into between Bohong Technology and
the PRC government authority in respect of the Yangzhou Property, see “Risk Factors – Risks Related to Conducting Operations
in PRC and Hong Kong – We have entered into land use right assignment transaction with PRC government authority and we may
be subject to penalties for failure to fully comply with the contract thereunder.”
 
Insurance
 
We
maintain commercial fire insurance for our headquarters, R&D center and warehouse in Taiwan and public general liability insurance
in Taiwan. In respect of the production plant, R&D center and warehouses in Dongguan, the PRC, we maintain property all risks insurance.
We also maintain credit insurance in respect of debts arising in the course of business activity and from the trading of products and
performance of services under TW YMA. In addition, we purchase cargo transportation insurance to insure the risks and liabilities in
relation to the shipping of our products and raw materials between our warehouse in Taiwan, production plant and warehouse in the PRC
and delivery points designated by customers. We also maintain commercial general liability insurance with products liability coverage
in respect of the bicycle parts products, senior walker products, motorcycle handler and pre-preg materials manufactured or distributed
by us and exported or sold worldwide. We consider our insurance coverage to be consistent with customary industry standards adopted by
other companies in the same industry and of similar size.
 
Legal
Proceedings
 
Other
than the legal proceedings in relation to the labor disputes disclosed in the sub-section above headed “Employees”
under the Business section, we are not a party to, nor are we aware of, any legal proceedings, investigations or claims which, in the
opinion of our management, are likely to have a material adverse effect on our business, financial condition or results of operations.
 

 
REGULATIONS
 
Our
business operations are primarily in Taiwan and the PRC and we are primarily subject to Taiwan and the PRC laws and regulations. This
section sets forth a summary of the most significant regulations or requirements that affect our business activities in Taiwan and PRC
or our shareholders’ rights to receive dividends and other distributions from us.
 
Regulations
in Taiwan
 
Regulations
Relating to Foreign Exchange
 
Taiwan
Foreign Exchange Control Law and regulations provide that all foreign exchange transactions must be executed by banks designated by Taiwan’s
Financial Supervisory Commission and the Central Bank of the Republic of China (Taiwan) to engage in such transactions. Current regulations
favor trade-related or service-related foreign exchange transactions. Consequently, foreign currency earned from exports of merchandise
and services may now be retained and used freely by exporters, and all foreign currency needed for the importation of merchandise and
services may be purchased freely from the designated foreign exchange banks.
 
Apart
from trade-related or service-related foreign exchange transactions, Taiwan companies and individual residents reaching the age of 20
may, without foreign exchange approval, remit foreign currency of up to US$50 million (or its equivalent) and US$5 million (or its equivalent)
to and from Taiwan (or such other amount as determined by the Central Bank of the Republic of China (Taiwan) from time to time at its
discretion in consideration of Taiwan’s economic and financial conditions or the needs to maintain the order of foreign exchange
market in Taiwan), respectively, in each calendar year. The above limits apply to remittances involving either a conversion of NTD into
a foreign currency or a conversion of foreign currency into NTD. In addition, a requirement is also imposed on all enterprises to register
medium- and long-term foreign debt with the Central Bank of the Republic of China (Taiwan).
 
Subject
to specified requirements but without foreign exchange approval of the Central Bank of the Republic of China (Taiwan), foreign persons
may remit to and from Taiwan foreign currencies of up to US$100,000 (or its equivalent) per remittance if the required documentation
is provided to the authorities in Taiwan. The above limit applies to remittances involving either a conversion of NTD into a foreign
currency or a conversion of foreign currency into NTD.
 
Regulations
Relating to Dividend Distributions
 
Except
under limited circumstances, a Taiwanese company will not be permitted to distribute dividends or make other distributions to shareholders
in any given year in which it did not record net income or retained earnings (excluding reserves). The Taiwan Company Act requires that
10% of annual net income (less prior years’ losses, if any, and applicable income taxes) be set aside as a legal reserve until
the accumulated legal reserve equals the paid-in capital of the company. The company will be permitted to make distributions to its shareholders
in cash or in the form of ordinary shares from legal reserves if it has no accumulated loss, provided that the distribution payable out
of the company’s legal reserve can only come from the amount exceeding 25% of the total paid-in capital.
 
The
articles of incorporation of TW YMA provide that its net profit after tax shall be distributed first for making up accumulated losses,
and then setting aside 10% as legal reserve, unless the accumulated legal reserve equals the paid-in capital. The remaining earnings
along with the undistributed earnings at the beginning of the period are considered as accumulated distributable earnings. The shareholders’
dividends are appropriated based on the accumulated distributable earnings. The dividend payout ratio is proposed by TW YMA’s board
of directors and approved by its shareholder(s) at the shareholders’ meeting.
 

 
According
to the articles of incorporation of TW YMA, upon the final settlement of accounts, if there is any surplus profit (meaning the net profit
before tax before deduction of employees’ remuneration), TW YMA shall set aside at least 10% of the surplus profit as employees’
remuneration, and set aside certain amount as the remuneration of directors and supervisors; provided that if TW YMA has accumulated
losses, it shall reserve an amount thereof for making up the losses. Employees’ remuneration may be in the form of cash or shares.
Employees (including those of TW YMA’s controlling companies or subsidiaries) entitled to such remuneration or other employee incentive
programs shall meet certain requirements, and such requirements shall be determined by the board of directors of TW YMA.
 
Regulations
Relating to Preemptive Rights
 
Under
Taiwan Company Act, when a Taiwan company issues new shares for cash, the company’s employees, whether they are shareholders of
the company or not, have rights to subscribe for 10% to 15% of the new issue, and existing shareholders who are listed on the shareholders’
register as of the record date have a preemptive right to acquire the remaining 85% to 90% of the issue; provided that pursuant to the
Statute For Investment By Foreign Nationals, such employee preemptive rights may be excluded if 45% or more of the company’s total
capital is owned by foreign investors.
 
Regulations
on Taxation
 
Effective
from 2018, Taiwan’s Income Tax Law abolished the imputation system, raised the corporate income tax rate from 17% to 20%, and reduced
the rate of surtax imposed on unappropriated earnings from 10% to 5%. Effective from 2020, Taiwan’s Statute for Industrial Innovation
extended the tax incentive by 10 years for R&D expenditure. In addition, if a company uses its undistributed earnings to construct
or purchase buildings, software or hardware equipment, or technology for use in production or operation, such investment amounts may
be deducted from the undistributed earnings in calculation of the current year’s undistributed earnings for assessment of surtax
imposed on undistributed earnings from the year 2018.
 
The
alternative minimum tax (“AMT”) imposed under Taiwan’s AMT Act is a supplemental income tax which applies if the amount
of regular income tax calculated pursuant to Taiwan’s Income Tax Law and relevant laws and regulations is below the amount of basic
tax prescribed under the AMT Act. The taxable income for calculating AMT includes most income that is exempt from income tax under various
regulations, such as tax holidays. The prevailing AMT rate for business entities is 12%.
 
Regulations
in PRC
 
Regulations
on Foreign Currency Exchange
 
The
principal regulations governing foreign currency exchange in China are the Foreign Exchange Administration Regulations, most recently
amended in 2008. Under PRC foreign exchange regulations, payments of current account items, such as profit distributions, interest payments
and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from the SAFE,
by complying with certain procedural requirements. By contrast, approval from or registration with appropriate government authorities
is required where RMB is to be converted into foreign currency and remitted out of China to pay capital account items, such as direct
investments, repayment of foreign currency-denominated loans, repatriation of investments and investments in securities outside of China.
 
In
2012, SAFE promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign Direct Investment,
or Circular 59, as amended in May 2015, which substantially amends and simplifies the foreign exchange procedure. Pursuant to Circular
59, the opening of various special purpose foreign exchange accounts, such as pre-establishment expenses accounts, foreign exchange capital
accounts and guarantee accounts, the reinvestment of Renminbi proceeds derived by foreign investors in the PRC, and remittance of foreign
exchange profits and dividends by an foreign-invested enterprise, or FIE to its foreign shareholders no longer require the approval or
verification of SAFE. In February 2015, SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign
Exchange Concerning Direct Investment, or SAFE Notice 13. Instead of applying for approvals regarding foreign exchange registrations
of foreign direct investment and overseas direct investment from SAFE, entities and individuals may apply for such foreign exchange registrations
from qualified banks. The qualified banks, under the supervision of SAFE, may directly review the applications and conduct the registration.
 

 
In
addition, the PRC governmental authorities have gradually relaxed restrictions on the settlement of the foreign exchange capitals of
FIEs in recent years. In March 2015, SAFE promulgated SAFE Circular 19, which expands a pilot reform of the administration of the settlement
of the foreign exchange capitals of FIEs nationwide. SAFE Circular 19 replaced both the Circular of the SAFE on Issues Relating to the
Improvement of Business Operations with Respect to the Administration of Foreign Exchange Capital Payment and Settlement of Foreign-
invested Enterprises, or SAFE Circular 142, and the Circular of the SAFE on Issues concerning the Pilot Reform of the Administrative
Approach Regarding the Settlement of the Foreign Exchange Capitals of Foreign-invested Enterprises in Certain Areas, or SAFE Circular
36. SAFE Circular 19 allows all FIEs established in the PRC to settle their foreign exchange capital on a discretionary basis according
to the actual needs of their business operation, provides the procedures for foreign invested companies to use Renminbi converted from
foreign currency-denominated capital for equity investments and removes certain other restrictions that had been provided in SAFE Circular
142. However, SAFE Circular 19 continues to prohibit FIEs from, among other things, using Renminbi funds converted from their foreign
exchange capital for expenditure beyond their business scope and providing entrusted loans or repaying loans between non-financial enterprises.
SAFE promulgated the SAFE Circular 16, effective June 2016, which reiterates some of the rules set forth in SAFE Circular 19. SAFE Circular
16 provides that discretionary foreign exchange settlement applies to foreign exchange capital, foreign debt offering proceeds and remitted
foreign listing proceeds, and the corresponding Renminbi capital converted from foreign exchange may be used to extend loans to related
parties or repay inter-company loans (including advances by third parties). On October 23, 2019, SAFE further issued Circular of the
State Administration of Foreign Exchange on Further Promoting the Facilitation of Cross-border Trade and Investment, or SAFE Circular
28, which took effect on the same day. SAFE Circular 28 allows non-investment FIEs to use their capital funds to make equity investments
in China as long as such investments do not violate the Negative List and the target investment projects are genuine and in compliance
with laws. In addition, SAFE Circular 28 stipulates that qualified enterprises in certain pilot areas may use their capital income from
registered capital, foreign debt and overseas listing for the purpose of domestic payments without providing authenticity certifications
to the relevant banks in advance for those domestic payments.
 
Regulations
Relating to Dividend Distributions
 
The
principal laws, rules and regulations governing dividend distributions by FIEs in the PRC are the PRC Company Law, promulgated in 1993
and last amended in 2018 and the Foreign Investment Law and its Implementing Regulations, both came into effect on January 1, 2020. Under
these requirements, FIEs may pay dividends only out of their accumulated after-tax profit, if any, as determined in accordance with PRC
accounting standards and regulations. In addition, a PRC company, including FIEs in the PRC, is required to allocate at least 10% of
its accumulated after-tax profit each year, if any, to fund the statutory reserve fund until the aggregate amount of the reserve fund
has reached 50% of its registered capital. A PRC company may, at its discretion, allocate a portion of its after-tax profits based on
its articles of association and PRC accounting standards to certain reserve funds. These reserves can only be used for specific purposes
and are not distributable as cash dividends. A PRC company is not permitted to distribute any profits until any losses from prior fiscal
years have been offset. Profits retained from prior fiscal years may be distributed together with distributable profits from the current
fiscal year.
 
Regulations
on Foreign Exchange Registration of Overseas Investment by PRC Residents
 
In
2014, SAFE issued the SAFE Circular on Relevant Issues Relating to Domestic Resident’s Investment and Financing and Roundtrip Investment
through Special Purpose Vehicles, or SAFE Circular 37, replacing the SAFE Circular on Issues Concerning the Regulation of Foreign Exchange
in Equity Finance and Return Investments by Domestic Residents through Offshore Special Purpose Vehicles, or SAFE Circular 75. SAFE Circular
37 regulates foreign exchange matters in relation to the use of special purpose vehicles by PRC residents or entities to seek offshore
investment and financing or conduct round trip investment in China. Under SAFE Circular 37, a “special purpose vehicle” refers
to an offshore entity established or controlled, directly or indirectly, by PRC residents or entities for the purpose of seeking offshore
financing or making offshore investment, using legitimate onshore or offshore assets or interests, while “round trip investment”
refers to direct investment in the PRC by PRC residents or entities through special purpose vehicles, namely, establishing FIEs to obtain
ownership, control rights and management rights. SAFE Circular 37 provides that, before making a contribution into a special purpose
vehicle, PRC residents or entities are required to complete foreign exchange registration with SAFE or its local branch.
 

 
In
2015, SAFE promulgated SAFE Notice 13, which amended SAFE Circular 37 by requiring PRC residents or entities to register with qualified
banks rather than SAFE or its local branch in connection with their establishment or control of an offshore entity established for the
purpose of overseas investment or financing. PRC residents or entities who had contributed legitimate onshore or offshore interests or
assets to special purpose vehicles but had not registered as required before the implementation of SAFE Circular 37 must register their
ownership interests or control in the special purpose vehicles with qualified banks. An amendment to the registration is required if
there is a material change with respect to the special purpose vehicle registered, such as any change of basic information (including
change of PRC residents, name and operation term), increases or decreases in investment amount, transfers or exchanges of shares, and
mergers or divisions.
 
Failure
to comply with the registration procedures set forth in SAFE Circular 37 and the subsequent notice, or making misrepresentations or failing
to disclose the control of the FIE that is established through round-trip investment, may result in restrictions being imposed on the
foreign exchange activities of the relevant FIEs, including payment of dividends and other distributions, such as proceeds from any reduction
in capital, share transfer or liquidation, to its offshore parent or affiliate, and the capital inflow from the offshore parent, and
may also subject relevant PRC residents or entities to penalties under PRC foreign exchange administration.
 
Regulations
on Taxation
 
Enterprise
Income Tax
 
On
March 16, 2007, the National People’s Congress promulgated the PRC Enterprise Income Tax Law, which was amended on February 24,
2017 and December 29, 2018. On December 6, 2007, the State Council enacted the Regulations for the Implementation of the Enterprise Income
Tax Law, which became effective on January 1, 2008 and was amended on April 23, 2019. Under the Enterprise Income Tax Law and the relevant
implementing regulations, both resident enterprises and non-resident enterprises are subject to tax in the PRC. Resident enterprises
are defined as enterprises that are established in the PRC in accordance with PRC laws, or that are established in accordance with the
laws of foreign countries but are actually or in effect controlled from within China. Non-resident enterprises are defined as enterprises
that are organized under the laws of foreign countries and whose actual management is conducted outside the PRC, but have established
institutions or premises in the PRC, or have no such established institutions or premises but have income generated from inside the PRC.
Under the Enterprise Income Tax Law and relevant implementing regulations, a uniform corporate income tax rate of 25% is applied. However,
if non-resident enterprises have not formed permanent establishments or premises in the PRC, or if they have formed permanent establishments
or premises in the PRC but there is no actual relationship between the relevant income derived in the PRC and the established institutions
or premises set up by them, withholding income tax is set at the rate of 10% with respect to their income sourced from inside the PRC.
 
Value-Added
Tax
 
The
PRC Provisional Regulations on Value-Added Tax were promulgated by the State Council on December 13, 1993, became effective on January
1, 1994, and were subsequently amended from time to time. The Detailed Rules for the Implementation of the PRC Provisional Regulations
on Value-Added Tax (2011 Revision) were promulgated by the Ministry of Finance on December 25, 1993 and subsequently amended in 2008
and 2011. On November 19, 2017, the State Council promulgated the Decisions on Abolishing the PRC Provisional Regulations on Business
Tax and Amending the PRC Provisional Regulations on Value-Added Tax. Pursuant to these regulations, rules and decisions, all enterprises
and individuals engaged in sale of goods, provision of processing, repair, and replacement services, sales of services, intangible assets,
real property, and the importation of goods within the PRC are value-added tax, or VAT taxpayers. On March 20, 2019, the Ministry of
Finance, the State Administration of Taxation, or SAT, and the General Administration of Customs jointly issued the Announcement on Relevant
Policies on Deepening the Reform of Value-Added Tax. Pursuant to this announcement, the generally applicable VAT rates are simplified
as 13%, 9%, 6%, and 0%, which became effective on April 1, 2019, and the VAT rate applicable to the small-scale taxpayers is 3%. If a
small-scale taxpayer’s total monthly sales amount does not exceed RMB100 thousand and its quarterly sales volume does not exceed
RMB300 thousand, the VAT will be exempted.
 

 
Dividend
Withholding Tax
 
The
Enterprise Income Tax Law and its implementation rules provide that since January 1, 2008, an income tax rate of 10% will normally apply
to dividends declared to non-PRC resident investors that do not have an establishment or place of business in the PRC, or that have such
establishment or place of business but the relevant income is not effectively connected with the establishment or place of business,
to the extent such dividends are derived from sources within the PRC.
 
Tax
on Indirect Transfer
 
On
February 3, 2015, SAT issued the Bulletin on Issues of Enterprise Income Tax on Indirect Transfers of Assets by Non PRC Resident Enterprises,
or SAT Bulletin 7. Pursuant to SAT Bulletin 7, an “indirect transfer” of assets, including equity interests in a PRC resident
enterprise, by non-PRC resident enterprises, may be recharacterized and treated as a direct transfer of PRC taxable assets, if such arrangement
does not have a reasonable commercial purpose and was established for the purpose of avoiding payment of PRC enterprise income tax. As
a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax. When determining whether there is a
“reasonable commercial purpose” in the transaction arrangement, features to be taken into consideration include, inter alia,
whether the main value of the equity interest of the relevant offshore enterprise derives directly or indirectly from PRC taxable assets;
whether the assets of the relevant offshore enterprise mainly consists of direct or indirect investment in China or if its income is
mainly derived from China; and whether the offshore enterprise and its subsidiaries directly or indirectly holding PRC taxable assets
have a real commercial nature which is evidenced by their actual function and risk exposure. SAT Bulletin 7 does not apply to transactions
of sale of shares by investors through a public stock exchange where such shares are acquired on a public stock exchange. On October
17, 2017, SAT issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non- resident Enterprise
Income Tax at Source, or SAT Bulletin 37, which was amended by the Announcement of the State Administration of Taxation on Revising Certain
Taxation Normative Documents issued on June 15, 2018 by SAT. SAT Bulletin 37 further elaborates the relevant implemental rules regarding
the calculation, reporting, and payment obligations of the withholding tax by the non-resident enterprises. Nonetheless, there remain
uncertainties as to the interpretation and application of SAT Bulletin 7. SAT Bulletin 7 may be determined by the tax authorities to
be applicable to our offshore transactions or sale of our shares or those of our offshore subsidiaries where non-resident enterprises,
being the transferors, are involved.
 
Regulation
of Foreign Investment
 
The
PRC Company Law or Company Law was promulgated on December 29, 1993, which became effective on July 1, 1994, and was subsequently revised
on December 25, 1999, August 28, 2004, October 27, 2005, December 28, 2013 and on October 26, 2018. Limited liability companies and companies
limited by shares established in China shall be subject to the Company Law. Each company has the status of a legal person and owns its
own assets. Assets of a company may be used in full for the company’s liability. Foreign-invested companies are also subject to
the Company Law, except as otherwise provided in the foreign investment laws including the Law of the PRC on Wholly Foreign-owned Enterprise.
 
Pursuant
to the Law of the PRC on Wholly Foreign-owned Enterprise, which was adopted on April 12, 1986, amended on October 31, 2000 and September
2016, and abolished on January 1, 2020, the establishment and subsequent changes of a wholly foreign-owned enterprise is subject to the
approval by the authority in charge of commerce or foreign trade and investment and registration with the relevant administration for
industry and commerce. The investor of the wholly foreign-owned enterprise must make payment or subscribe for the registered capital
according to its articles of association.
 

 
On
March 15, 2019, the National People’s Congress approved the Foreign Investment Law, which came into effect on January 1, 2020 and
replace the trio of existing laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law,
the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with their implementation
rules and ancillary regulations. The organization form, organization and activities of foreign-invested enterprises shall be governed,
among others, by the Company Law and the PRC Partnership Enterprise Law. Foreign-invested enterprises established before the implementation
of the Foreign Investment Law may retain the original business organization and so on within five years after the implementation of this
law. Foreign investors’ investment, earnings and other legitimate rights and interests within the territory of China shall be protected
in accordance with the law, and all national policies on supporting the development of enterprises shall equally apply to foreign-invested
enterprises. Among others, the state guarantees that foreign-invested enterprises participate in the formulation of standards in an equal
manner and that foreign-invested enterprises participate in government procurement activities through fair competition in accordance
with the law. Further, the state shall not expropriate any foreign investment except under special circumstances. In special circumstances,
the state may levy or expropriate the investment of foreign investors in accordance with the law for the needs of the public interest.
The expropriation and requisition shall be conducted in accordance with legal procedures and timely and reasonable compensation shall
be given.
 
The
Foreign Investment Law is formulated to further expand opening-up, vigorously promote foreign investment and protect the legitimate rights
and interests of foreign investors. According to the Foreign Investment Law, foreign investments are entitled to pre-entry national treatment
and are subject to negative list management system. The pre-entry national treatment means that the treatment given to foreign investors
and their investments at the stage of investment access shall not be less favorable than that of domestic investors and their investments.
The negative list management system means that the state implements special administrative measures for access of foreign investment
in specific fields. The Foreign Investment Law does not mention the relevant concept and regulatory regime of contractual arrangement
structures. However, since it is relatively new, uncertainties still exist in relation to its interpretation and implementation.
 
On
December 26, 2019, the State Council promulgated the Implementing Regulations of the Foreign Investment Law of the PRC, or the Implementing
Regulations of the Foreign Investment Law, which became effective on January 1, 2020. The Implementing Regulations of the Foreign Investment
Law strictly implement the legislative principles and purpose of the Foreign Investment Law, emphasize on promoting and protecting the
foreign investment, and refine the specific measures. At the same day, the Supreme People’s Court issued an Interpretation on the
Application of the Foreign Investment law, which also came into effect on January 1, 2020. This interpretation shall apply to any contractual
dispute arising from the acquisition of the relevant rights and interests by a foreign investor by way of, among other things, gift,
division of property, merger of enterprises, or division of enterprises.
 
Furthermore,
foreign investments in China are subject to investment information reporting obligations under the foreign investment laws, which is
further stipulated in the Measures for Reporting of Foreign Investment Information, or the Foreign Investment Reporting Measures, that
were jointly promulgated by the MOFCOM and the State Administration for Market Regulation on December 30, 2019 and became effective on
January 1, 2020. Pursuant to the Foreign Investment Reporting Measures, foreign investors and foreign-invested enterprises are obligated
to submit investment information reports in regard with their direct or indirect investment activities in China through the Enterprise
Registration System and the National Enterprise Credit Information Publicity System, commencing from January 1, 2020. Such reports include
preliminary report relating to establishment, modification report, deregistration report, and annual report.
 
Negative
List of Foreign Investment
 
The
current regulation regime of foreign investment in the PRC, setting aside special arrangements adopted in pilot free trade zones, preliminarily
consists of two principal legal documents, i.e. the Catalogue of Industries for Encouraged Foreign Investment (2020 Edition),
or the 2020 Encouraged Catalogue, which was promulgated jointly by the Ministry of Commerce and the National Development and Reform Commission
(or NDRC), on December 27, 2020 and became effective on January 27, 2021 and the Special Administrative Measures for Access of
Foreign Investment (Negative List) (2021 Edition), or the 2021 Negative List, which was promulgated jointly by the Ministry
of Commerce and the NDRC, on December 27, 2021 and became effective on January 1, 2022.
 

 
The
2020 Encouraged Catalogue and the 2021 Negative List govern investment activities in the PRC by foreign investors and classify
industries into three categories with regard to foreign investment: “encouraged,” “restricted” and “prohibited.”
Industries not listed in the Catalogue are generally deemed as falling into a fourth category, “permitted,” unless specifically
restricted by other PRC laws. For some restricted industries, foreign investors can only conduct investment activities through equity
or contractual joint ventures, while in other cases PRC partners are required to hold the majority interests in such joint ventures.
In addition, some projects in the restricted category are subject to higher-level governmental approvals. Foreign investors are not allowed
to invest in industries in the prohibited category.
 
Regulations
Related to Mergers and Acquisitions and Overseas Listings
 
On
August 8, 2006, six PRC governmental and regulatory agencies, including MOFCOM and the China Securities Regulatory Commission, or the
CSRC, promulgated the M&A Rules, governing the mergers and acquisitions of domestic enterprises by foreign investors that became
effective on September 8, 2006 and was revised on June 22, 2009. The M&A Rules, among other things, requires that offshore special
purpose vehicles that are controlled by PRC companies or individuals and that have been formed for overseas listing purposes through
acquisitions of PRC domestic interest held by such PRC companies or individuals, to obtain the approval of the CSRC prior to publicly
listing their securities on an overseas stock exchange.
 
Regulation
of the Production of Electric Bicycles
 
On
June 24, 2017, the State Council of the PRC issued the Decision on Adjusting the Catalogue for the Administration of Production Permits
for Industrial Products and on Trying out the Simplification of Approval Procedures, or the Decision. Pursuant to the Decision, the production
license for electric bicycle was cancelled and was changed to implement mandatory product certification management. On July 2, 2018,
the Announcement on the Arrangements for the Transfer of Electric Bicycle Products from Licensing to CCC Certification Management or
Announcement was jointly promulgated by the State Administration for Market Regulation and the Certification and Accreditation Administration
of the PRC, or the CNCA. According to the Announcement, electric bicycle products without CCC certification shall not be delivered, sold,
imported or used in other business activities commencing from April 15, 2019. On July 19, 2018, the CNCA issued the Implementation Rules
for Compulsory Product Certification of Electric Bicycles (CNCA-C11-16: 2018) which came into effect on August 1, 2018. On June 23, 2021,
the CNCA issued the amended Implementation Rules for Compulsory Product Certification of Electric Bicycles (CNCA-C11-16: 2021), which
has become effective on July 1, 2021, replacing the Implementation Rules for Compulsory Product Certification of Electric Bicycles (CNCA-C11-16:
2018).
 
On
May 15, 2018, the New National Standards were promulgated by the State Administration for Market Regulation and the National Standardization
Management Committee and became effective on April 15, 2019. The New National Standards replace the General Technical Requirements for
Electric Bicycles (GB 17761-1999) which were issued on May 28, 1999.
 
Regulation
of the Registration of Electric Bicycles
 
Pursuant
to the Road Traffic Safety Law of the PRC (revised in 2011), a non-motorized vehicle which ought to be lawfully registered shall be deemed
street-illegal until it has been registered with the local traffic administrative department. In addition, the categories of such non-motorized
vehicles shall be determined by provincial governments in light of their respective actual local situation and shall consist of technical
standards in terms of overall weight, braking performance, overall size and reflectors, which all non-motorized vehicles should abide
by. Pursuant to the Circular on Strengthening the Management of Electric Bicycles, promulgated on March 18, 2011, any non-compliant vehicle
may not be registered as a non-motorized vehicle, which in turn means it shall be deemed street-illegal.
 

 
Regulations
Relating to Production Safety
 
Pursuant
to the Production Safety Law of the PRC, or the Production Safety Law, which took effect on November 1, 2002, amended on August
31, 2014 and June 10, 2021, respectively, the entities that are engaged in production and business operation activities must implement
national industrial standards which guarantee the production safety and comply with production safety requirements provided by the laws,
administrative regulations and national or industrial standards. An entity must take effective measures for safety production, maintain
safety facilities, examine the safety production procedures, educate and train employees and take any other measures to ensure the safety
of its employees and the public. An entity or its relevant persons-in-charge which has failed to perform such safety production liabilities
will be required to make amends within a time limit or face administrative penalties. If it fails to amend within the prescribed time
limit, the production and business operation entity may be ordered to suspend business for rectification, and serious violations may
result in criminal liabilities.
 
Regulations
Relating to Product Quality
 
The
Product Quality Law of the PRC was promulgated on February 22, 1993, amended on July 8, 2000, August 27, 2009 and December 29, 2018,
respectively. The Product Quality Law applies to anyone who manufactures or sells any product within the territory of the PRC. It is
prohibited from producing or selling counterfeit products in any form, including counterfeit brands, or providing false information about
the product manufacturers. Violation of national or industrial standards may result in civil liability and administrative penalties such
as compensation, fines, suspension of business and confiscation of illegal income, and serious violations may result in criminal liabilities.
 
Regulations
Relating to Intellectual Property Rights
 
Patent
 
Pursuant
to the Patent Law of the PRC, which was promulgated by the Standing Committee of the National People’s Congress on March 12, 1984
and became effective from April 1, 1985, and was most recently amended on October 17, 2020, and became effective on June 1, 2021, patents
in China are classified into three categories, namely, inventions, utility models and designs. A patentable invention, utility model
or design must meet three conditions: novelty, inventiveness and practical applicability. Patents cannot be granted for scientific discoveries,
rules and methods for intellectual activities, methods used to diagnose or treat diseases, animal and plant breeds or substances obtained
by means of nuclear transformation. The Patent Office under the China National Intellectual Property Administration is responsible for
receiving, examining and approving patent applications. A patent is valid for a twenty-year term for an invention and a ten-year term
for a utility model or design, starting from the application date. After the grant of the patent right for an invention or utility model,
except where otherwise provided for in the Patent Law of the PRC, no entity or individual may, without the authorization of the patent
owner, exploit the patent, that is, make, use, offer to sell, sell or import the patented product, or use the patented process, or use,
offer to sell, sell or import any product which is a direct result of the use of the patented process, for production or business purposes.
And after a patent right is granted for a design, no entity or individual shall, without the permission of the patent owner, exploit
the patent, that is, for production or business purposes, manufacture, offer to sell, sell, or import any product containing the patented
design.
 
Copyright
 
Pursuant
to the Copyright Law of the PRC, which was first promulgated by the Standing Committee of the National People’s Congress on September
7, 1990 and became effective from June 1, 1991, and was last amended on November 11, 2020 and became effective as of June 1, 2021, copyrights
include personal rights such as the right of publication and that of attribution as well as property rights such as the right of production
and that of distribution. Reproducing, distributing, performing, projecting, broadcasting or compiling a work or communicating the same
to the public via an information network without permission from the owner of the copyright therein, unless otherwise provided in the
Copyright Law of the PRC, constitute infringements of copyrights. The amended Copyright Law of the PRC extends copyright protection to
Internet activities, products disseminated over the Internet and software products. In addition, there is a voluntary registration system
administered by the China Copyright Protection Center.
 
In
order to further implement the Computer Software Protection Regulations, promulgated by the State Council on June 4, 1991 and amended
on January 30, 2013, the National Copyright Administration issued the Computer Software Copyright Registration Procedures on April 6,
1992 and amended on February 20, 2002, which specify detailed procedures and requirements with respect to the registration of software
copyrights. The China Copyright Protection Center shall grant registration certificates to the computer software copyrights applicants
which meet the requirements of both the software copyright registration procedures and the computer software protection regulations.
 

 

Trademark
 
Pursuant
to the Trademark Law of the PRC, or the Trademark Law, which was first promulgated by the Standing Committee of the National People’s
Congress on August 23, 1982 and became effective from March 1, 1983, and was most recently amended on April 23, 2019 and became effective
on November 1, 2019, the right to exclusive use of a registered trademark shall be limited to trademarks which have been approved for
registration and to goods and/or services for which the use of such trademark has been approved. The period of validity of a registered
trademark shall be ten years, counted from the day the registration is approved, and may be renewed for another ten years provided relevant
application procedures have been completed within twelve months before the end of the validity period. According to this law, using a
trademark that is identical to or similar to a registered trademark in connection with the same or similar goods and/or services without
the authorization of the owner of the registered trademark constitutes an infringement of the exclusive right to use a registered trademark.
 
The
Implementation Regulation for the Trademark Law promulgated by the State Council came into effect on September 15, 2002 and was further
amended on April 29, 2014. Under the Trademark Law and the implementing regulation, the Trademark Office of the State Administration
for Market Regulation, or the Trademark Office, is responsible for the registration and administration of trademarks. The Trademark Office
handles trademark registrations. As with patents, China has adopted a “first-to-file” principle for trademark registration.
If two or more applicants apply for registration of identical or similar trademarks for the same or similar commodities, the application
that was filed first will receive preliminary approval and will be publicly announced. A registrant may apply to renew a registration
within twelve months before the expiration date of the registration. If the registrant fails to apply in a timely manner, a grace period
of six additional months may be granted. If the registrant fails to apply before the grace period expires, the registered trademark shall
be deregistered. Renewed registrations are valid for ten years.
 
In
addition to the above, a Trademark Review and Adjudication Board was established for resolving trademark disputes. According to the Trademark
Law, within three months since the date of the announcement of a preliminarily validated trademark, if a titleholder is of the view that
such trademark in application is identical or similar to its registered trademark for the same type of commodities or similar commodities
which violates relevant provisions of the Trademark Law, such titleholder may raise an objection to the Trademark Office within the aforesaid
period. In such event, the Trademark Office shall consider the facts and grounds submitted by both the dissenting party and the party
being challenged and shall decide on whether the registration is allowed within twelve months upon the expiration of the announcement
after investigation and verification, and notify the dissenting party and the person challenged in writing.
 
Domain
Names
 
Pursuant
to the Administrative Measures on Internet Domain Names, which was amended by the Ministry of Industry and Information
Technology on August 24, 2017 and became effective on November 1, 2017, “domain name” shall refer to the character mark of
hierarchical structure, which identifies and locates a computer on the internet and corresponds to the internet protocol (IP) address
of that computer. The principle of “first come, first serve” is followed for the domain name registration service. Applicants
for registration of domain names shall provide the true, accurate and complete information of their identifications to domain name registration
service institutions. After completing the domain name registration, the applicant becomes the holder of the domain name registered by
him/it. Furthermore, the holder shall pay operation fees for registered domain names on schedule. If the domain name holder fails to
pay the corresponding fees as required, the original domain name registrar shall write it off and notify the holder of the domain name
in written form.
 

 
Regulation
of Employment and Social Welfare
 
Labor
Laws
 
Companies
in the PRC are subject to the PRC Labor Law which was promulgated on July 5, 1994, became effective on January 1, 1995 and was further
amended on August 27, 2009 and December 29, 2018, PRC Labor Contract Law which was promulgated on June 29, 2007, became effective on
January 1, 2008 and was further amended on December 28, 2012, and the Implementation Regulations of the PRC Labor Contract Law which
was promulgated by the State Council on September 18, 2008 and became effective on the same date, as well as other related regulations,
rules and provisions promulgated by the relevant government authorities from time to time. Compared to previous PRC laws and regulations,
the PRC Labor Contract Law imposes stricter requirements in such respects as signing of labor contracts with employees, stipulation of
probation period and violation penalties, termination of labor contracts, payment of remuneration and economic compensation, use of labor
dispatches as well as social security premiums.
 
According
to the PRC Labor Law and the PRC Labor Contract Law, a labor contract in writing shall be concluded when a labor relationship is to be
established between an employer and an employee. An employer shall pay an employee two times of his/her salary for each month in the
circumstance where the employer fails to enter a written labor contract with the employee for more than a month but less than a year;
where such period exceeds one year, the parities are deemed to have entered an unfixed-term labor contract. Employers shall pay wages
that are not lower than the local minimum wage standards to the employees. Employers are also required to establish labor safety and
sanitation systems in compliance with PRC rules and standards, and to provide relevant training to the employees.
 
Social
Insurance and Housing Provident Funds
 
According
to the Temporary Regulations on the Collection and Payment of Social Insurance Premium, the Regulations on Work Injury Insurance, the
Regulations on Unemployment Insurance and the Trial Measures on Employee Maternity Insurance of Enterprises, enterprises in the PRC must
provide beneficial plans for their employees, that include basic pension insurance, unemployment insurance, maternity insurance, work-related
injury insurance and medical insurance. An enterprise must also provide social insurance by processing social insurance registration
with local social insurance agencies, and must pay or withhold relevant social insurance premiums for or on behalf of the employees.
The Law on Social Insurance, which was promulgated on October 28, 2010 and came into effect on July 1, 2011 and was amended on December
29, 2018, regulates basic pension insurance, unemployment insurance, maternity insurance, work injury insurance and medical insurance,
and has elaborated in detail the legal obligations and liabilities of employers who do not comply with relevant laws and regulations
on social insurance. The Administrative Regulations on the Housing Provident Funds, which was promulgated and came into effect on April
3, 1999, and was amended on March 24, 2002 and March 24, 2019, provides that housing provident fund contributions paid by an individual
employee and housing provident fund contributions paid by his or her employer all belong to the individual employee.
 
Regulation
under PRC Securities Law
 
The
PRC Securities Law was promulgated in December 1998 and was subsequently revised in August 2004, October 2005, June 2013, August
2019 and December 2019. According to Article 177 of the PRC Securities Law, or Article 177, which became effective in March 2020, the
securities regulatory authority of the State Council may collaborate with securities regulatory authorities of other countries or regions
in order to monitor and oversee cross border securities activities. Article 177 further provides that no overseas securities regulator
is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC, and that any Chinese
entities and individuals are not allowed to provide documents or materials related to securities business activities to overseas agencies
without prior consent of the securities regulatory authority of the State Council and the competent departments of the State Council.
While there is no detailed interpretation regarding the rule implementation under Article 177, it will be difficult for an overseas securities
regulator to conduct investigation or evidence collection activities in China.
 
Notwithstanding
the foregoing, on April 2, 2022, the CSRC published a draft of the Provisions on Strengthening Confidentiality and Archives Administration
of Overseas Securities Offering and Listing by Domestic Companies, or Draft Provisions, for public comments. The Draft Provisions stipulates
that a cross-border regulatory cooperation mechanism as prescribed in Article 177 of the PRC Securities Law will be established and that
the CSRC or relevant authorities shall provide necessary assistance in accordance with the bilateral and multilateral cooperation mechanism.
Hence, it exists that possibility that Draft Provisions may pave the way for cross-border cooperation with and inspection by overseas
securities regulatory authorities.
 
Regulations
on Loans to and Direct Investment in the PRC Entities by Offshore Holding Companies
 
According
to the Implementation Regulations on Statistics and Supervision of Foreign Debt promulgated by SAFE on September 24, 1997 and the Interim
Measures on the Management of Foreign Debts promulgated by SAFE, the NDRC and the Ministry of Finance of the PRC and effective from March
1, 2003, loans by foreign companies to their subsidiaries in China, which accordingly are FIEs, are considered foreign debt, and such
loans must be registered with the local branches of the SAFE. Under the provisions, the total amount of accumulated medium-term and long-term
foreign debt and the balance of short-term debt borrowed by a FIE is limited to the difference between the total investment and the registered
capital of the foreign invested enterprise.
 

 
On
January 11, 2017, the PBOC promulgated the Circular of the People’s Bank of China on Matters relating to the Macro-prudential
Management of Comprehensive Cross-border Financing, or PBOC Circular 9, which took effect on the same date. The PBOC Circular 9 established
a capital or net assets-based constraint mechanism for cross-border financing. Under such mechanism, a company may carry out cross-border
financing in Renminbi or foreign currencies at their own discretion. The total cross-border financing of a company shall be calculated
using a risk-weighted approach and shall not exceed an upper limit. The upper limit is calculated as capital or assets multiplied by
a cross-border financing leverage ratio and multiplied by a macro-prudential regulation parameter.
 
In
addition, according to PBOC Circular 9, as of the date of the promulgation of PBOC Circular 9, a transition period of one year is set
for foreign-invested enterprises and during such transition period, FIEs may apply either the current cross-border financing management
mode, namely the mode provided by Implementation Rules for the Provisional Regulations on Statistics and Supervision of Foreign Debt
and the Interim Provisions on the Management of Foreign Debts, or the mode in this PBOC Circular 9 at its sole discretion. After the
end of the transition period, the cross-border financing management mode for FIEs will be determined by the People’s Bank of China
and SAFE after assessment based on the overall implementation of this PBOC Circular 9. However, although the transitional period ended
on January 10, 2018, as of the date of this prospectus, neither PBOC nor SAFE has issued any new regulations regarding the appropriate
means of calculating the maximum amount of foreign debt for foreign-invested enterprises. Domestic-invested enterprises, have only been
subject to the net assets limit in calculating the maximum amount of foreign debt they may hold from the date of promulgation of PBOC
Circular 9.
 
Laws
and Regulations on the Protection of Consumer Rights and Interests
 
Business
operators in the business of supplying and selling manufactured goods or services to consumers, shall comply with the Law of the PRC
on the Protection of Consumer Rights and Interests, or the Consumer Rights Protection Law, promulgated by the Standing Committee of the
National People’s Congress on October 31, 1993, and effective as of January 1, 1994, and revised on August 27, 2009 and October
25, 2013.
 
According
to the Consumer Rights Protection Law, business operators must ensure that the goods or services provided by them meet the requirements
for safeguarding personal and property safety. For goods and services that may endanger personal and property safety, consumers should
be provided with a true description and an explicit warning, as well as a description and indication of the proper way to use the goods
or accept the services and the methods of preventing the occurrence of a hazard. If the goods or services provided by the business operators
cause personal injuries to consumers or third parties, the business operators shall compensate the injured parties for their losses.
 
Laws
on Contracts
 
On
May 28, 2020, the Civil Code of the PRC was issued by the National People’s Congress and became effective on January 1, 2021 and
replaced the General Principles of the Civil Law of the PRC, the Security Law of the PRC, the Contract Law of the PRC, the Real Right
Law of PRC, the General Rules of the Civil Law of the PRC and several other basic civil laws in the PRC. Under the Civil Code of the
PRC, a natural person, legal person or other legally established organization shall have full capacity of civil right and civil conduct
in order to enter into a valid contract. Except as otherwise required by other laws and regulations, the formation, validity, performance,
modification, assignment, termination, and liability for breach of a contract are governed by the Civil Code of the PRC. A contracting
party who fails to perform or fails to fulfill its contractual obligation shall bear the responsibility of a continued duty to perform
or to provide remedies and compensation as provided by PRC laws.
 
Standardization
Law of the People’s Republic of China
 
Standardization
Law of the People’s Republic of China was passed by the fifth session of the Standing Committee of the Seventh National People’s
Congress on December 29, 1988, and revised on November 4, 2017. This law is formulated for the purposes of enhancing standardization
work, promoting scientific and technological advancement, improving the quality of products and services, safeguarding personal health
and life and property security, protecting state security and ecological environmental security, raising the level of economic and social
development. This law applies to technical requirements that need to be unified for agricultural field, industrial field, service industry,
social undertakings industry, and others. Enterprises which manufacture, sell, import products or provide services that fail to meet
the mandatory standards, and enterprises which manufacture products or provide services that fail to meet the technical requirements
under their publicized standardization, shall undertake civil liabilities.
 
Regulations
of the People’s Republic of China on Certification and Accreditation
 
Regulations
of the People’s Republic of China on Certification and Accreditation became effective as of November 1, 2003, and was revised
on February 6, 2016 and November 29, 2020. This regulation is formulated for the purposes of standardizing certification and accreditation,
improving the quality of products and services and management standard. This regulation applies to all certification agencies, certification
services and accreditation services in the PRC, excluding certification on quality management standardization of enterprises engaging
in pharmaceutical productions and/or operations, certification on quality of laboratory animals, certification of military products,
accreditation on laboratories and personnel engaging in the calibration and testing of military products.
 

 
MANAGEMENT
 
Directors
and Executive Officers
 
The
following table sets forth information regarding our executive officers and directors as of the date of this prospectus:
 
Directors
and Executive Officers  
 
Age
 
Position/TitleJing-Bin
Chiang
 
55
 
Chairman,
Chief Executive Officer and DirectorAbraham Pullolickel Ittycheriah
 
64
 
Chief
Financial OfficerTing-Pang
Sung  
 
65
 
Director
Ching-Chou
Huang  
 
64
 
Independent
DirectorShen-Huei
Wang  
 
66
 
Independent
DirectorPing-Hong
Lin  
 
62
 
Independent
Director 
Jing-Bin
Chiang has been appointed as our Chief Executive Officer since May 2016 and as our Chairman of the Board since July 2021.
Prior to that, Mr. Chiang had been acting as representative of one of our former corporate directors as Chairman from February 2017
to July 2021. For our subsidiary TW YMA, Mr. Chiang has been serving as the chairman of the board since its incorporation date. Mr.
Chiang is responsible for the overall strategic planning, corporate management and business development of our day-to-day operation
as well as the overall accounting management. Mr. Chiang has approximately 18 years of experience in the composite material
application industry. From November 2003 to August 2009, Mr. Chiang worked as chief financial officer and vice president in finance
in LCY Elastomers LP, a thermoplastic rubber manufacturer with factory in Houston. From September 2010 to February 2015, Mr. Chiang
worked as vice president in Coretronic Corporation (TWO: 5371), a company which develops, manufactures and markets liquid crystal
display (LCD). Mr. Chiang received a bachelor’s degree in business administration from Tunghai University in Taiwan in June
1990 and a master’s degree in Accountancy and Financial Information System from Cleveland State University in the United
States in March 1995. Mr. Chiang has been admitted as a certified public accountant of Washington State Board of Accountancy since
February 1997. Mr. Chiang has also been admitted as a certified internal auditor of The Institute of Internal Auditors since May
2000. We believe Mr. Chiang is well qualified to serve on our Board due to his experience and expertise in the
industry.
 
Abraham
Pullolickel Ittycheriah has been serving as our Chief Financial Officer since February 2022. Mr. Ittycheriah has over 39 years
of professional experience in accounting and auditing. Mr. Ittycheriah has been acting as finance manager in Qatar Fuel
Additives Company, a company engaged in production and export of methanol and other chemicals, since June 1998. From February 1986 to
May 1998, Mr. Ittycheriah served as supervising senior in Deloitte & Touche. From January 1982 to November 1985, he served as audit
executive in P.R. Narayanan Nair & Co, a chartered accounting firm based in India. Mr. Ittycheriah obtained his bachelor’s
degree in science from University of Kerala in April 1978. Mr. Ittycheriah has been admitted as a certified public accountant in India
in July 1985.
 
Ting-Pang
Sung has been serving as our Director since July 2021. Mr. Sung is responsible for our formulation of business strategies
and supervision on daily operation. Mr. Sung holds various management positions in different companies, and among others, he served
as the Methanol/Solvent Business Unit Vice President of LCY Chemical Corp., a company engaged in manufacturing various chemical
products, including but not limited to TPE and copper foil, from May 2012 to November 2016, and has subsequently been serving as the
Performance Plastics Business Unit Senior Vice President since November 2016. He has been serving as the director of LCY Technology
Corp. (TW: 4989), a company engaging in the manufacturing of copper foil used in electronic products, such as computer, since June
2020. Mr. Sung has also been serving as a director of Global Rubber Corp., a company engaging in the manufacture and export of
conveyor belts, transmission belts and rubber hoses, since December 2019. He served as a chairman of Zhenjiang LCY Warehousing &
Storage Co., Ltd., a company providing import or export storage, blending packaging and transportation services from August 2015 to
February 2017, and has subsequently been serving as a director since then. From August 2015 to February 2017, Mr. Sung also served
as a chairman of Zhenjiang Lee Chang Yung General Chemical Co., Ltd, a company engaging in the manufacture and distribution of
chemical products, and has then been serving as a director since February 2017. Mr. Sung received a bachelor’s degree of
science from Tamkang University in June 1982 and an executive master of business administration from National Chengchi University in
March 2012. We believe Mr. Sung is well qualified to serve on our Board due to his experience and expertise in the
industry.
 

 
Ching-Chou
Huang has been serving as our independent Director since February 2017 and will be the chairman of the compensation
committee and nominating and corporate governance committee effective upon the SEC’s declaration of effectiveness of our
registration statement on Form F-1. Since June 2015, Mr. Huang has been serving as the Chairman of Young Optics, Inc. (TW: 3504), a
company which develops, designs and retails optical engineering parts. From November 2008 to November 2013, Mr. Huang served as the
director of Chung Tsen Investment Corp., an investment company, and he subsequently served as the chairman from November 2013 to
June 2020. From February 2011 to June 2020, he also served as a director of Coretronic Venture Capital Co., Ltd. an investment
company. Mr. Huang is a graduate of Chien Hsin University of Science and Technology (formerly known as Chien Hsin Industrial
Specialized Private School) in electrical engineering in June 1978 and he also obtained a master’s degree in industrial
engineering from National Tsing Hua University in January 2005. We believe Mr. Huang is well qualified to serve on our Board due
to his experience and expertise.
 
Shen-Huei
Wang has been serving as our independent Director since February 2017. Since June 2020, Mr. Wang has
been serving as an independent director of Welldone Company (TWO: 6170), a company engaging in foreign workers’ internet fund
transfers and shopping services, including pre-paid phone card and wifi machine leasing service at the airport. From October 2001 to
May 2016, Mr. Wang worked as general manager in the assets management department of Coretronic Corporation, a company providing
innovative display solution. Mr. Wang received a bachelor’s degree in electrical engineering from National Taiwan University
in June 1977 and a master’s degree in science from Virginia Polytechnic Institute and State University in December
1981. We believe Mr. Wang is well qualified to serve on our Board due to his experience and expertise.

 
Ping-Hong Lin has been serving as
our independent Director since July 2021 and will be the chairman of the audit committee effective upon the SEC’s declaration of
effectiveness of our registration statement on Form F-1. Since February 2012, Mr. Lin has been serving as the general manager of
Taiwan Copper Foils Co., Ltd., an electrodeposited copper foil manufacturer to supply for the printed circuit board industry. Mr. Lin
served as finance manager in Qatar Fuel Additives Co., Ltd., a company engaged in production and export of methanol and other chemicals.
Mr. Lin obtained a master of business administration from the University of Akron in January 1991. We believe Mr. Lin is well qualified
to serve on our Board due to his experience and expertise.

 
Family
Relationships
 
There
is no family relationship among any of our directors or executive officers.
 
Employment
Agreements, Director Agreements and Indemnification
 
We
have entered into employment agreements with each of our executive officers. Under these agreements, each of our executive officers is
employed for an initial term of three year. The executive officers are entitled to a fixed salary and other company benefits, each as
determined by the Board from time to time. We may terminate an executive officer’s employment under Cayman Law and under other
applicable laws and regulations.
 
Each
executive officer has agreed to hold, at all times during and after the termination or expiry of his or her employment agreement, in
strict confidence and not to use, except as required in the performance of his or her duties in connection with the employment or pursuant
to applicable law, any of our confidential information, or the confidential or proprietary information disclosed to the executive officer
by or obtained by the executive officer from us either directly or indirectly in writing, orally or otherwise, if specifically indicated
to be confidential or reasonably expected to be confidential.
 

 
We
have also entered into director agreements with each of our directors which agreements set forth the terms and provisions of their engagement.
 
Under
the employment agreements and director agreements, we have agreed 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.
 
Board
of Directors
 
Duties
of Directors
 
Under
Cayman Islands law, our board of directors has the powers necessary for managing, and for directing and supervising, our business affairs.
The functions and powers of our board of directors include, among others:
 
 

convening
shareholders’ annual and extraordinary general meetings and reporting its work to shareholders at such meetings; 
 
  

declaring
dividends and distributions; 
 
  

appointing
officers and determining the term of office of the officers; 
 
  

exercising
the borrowing powers of our company and mortgaging the property of our company; and 
 
  

approving
the transfer of shares in our company, including the registration of such shares in our share register. 
Under
Cayman Islands law, directors owe the following fiduciary duties: (i) duty to act in good faith in what the director believes to be in
the best interests of the company as a whole; (ii) duty to exercise powers for the purposes for which those powers were conferred and
not for a collateral purpose; (iii) directors should not improperly fetter the exercise of future discretion; (iv) duty not to put themselves
in a position in which there is a conflict between their duty to the company and their personal interests; and (v) duty to exercise independent
judgment. In addition to the above, directors also owe a duty to act with skill, care and diligence. This duty has been defined as a
requirement to act as a reasonably diligent person having both the general knowledge, skill and experience that may reasonably be expected
of a person carrying out the same functions as are carried out by that director in relation to the company and the general knowledge
skill and experience which that director has. As set out above, directors have a duty not to put themselves in a position of conflict
and this includes a duty not to engage in self-dealing, or to otherwise benefit as a result of their position. However, in some instances
what would otherwise be a breach of this duty can be forgiven and/or authorized in advance by the shareholders provided that there is
full disclosure by the directors. This can be done by way of permission granted in the amended and restated memorandum and articles of
association or alternatively by shareholder approval at general meetings. You should refer to “Description of Securities—Differences
in Corporate Law” for additional information on our standard of corporate governance under Cayman Islands law.
 
Composition
of our Board of Directors
 
Our
board of directors consists of five (5) directors. A director is not required to hold any shares in our Company to qualify to
serve as a director. Subject to making appropriate disclosures to the board of directors in accordance with our post-offering amended
and restated memorandum and articles of association, a director may vote with respect to any contract, proposed contract, or arrangement
in which he or she is interested, in voting in respect of any such matter, such director should take into account his or her directors
duties. A director may exercise all the powers of the company to borrow money, mortgage its business, property and uncalled capital,
and issue debentures or other securities whenever money is borrowed or as security for any obligation of the company or of any third
party.
 

 
Committees
of the Board of Directors
 
We
plan to establish an audit committee, a compensation committee and a nominating and corporate governance committee under the board
of directors upon the effectiveness of the registration statement of which this prospectus forms a part. We will adopt a
charter for each of the three committees. Each committee’s members and functions are described below.
 
Audit
Committee. Our audit committee will consist of Ching-Chou Huang, Shen-Huei Wang and Ping-Hong Lin and will be chaired by Ping-Hong
Lin. We have determined that each of these directors satisfies the “independence” requirements of the
Nasdaq Listing Rules and meet the independence standards under Rule 10A-3 under the Exchange Act. We have determined that Ping-Hong Lin
qualifies as an “audit committee financial expert.” The audit committee oversees our accounting and financial reporting processes
and the audits of our financial statements. The audit committee is responsible for, among other things:
 
 

selecting
the independent registered public accounting firm and pre-approving all auditing and non-auditing services permitted to be performed
by the independent registered public accounting firm; 
 
   

reviewing
with the independent registered public accounting firm any audit problems or difficulties and management’s response; 
 
   

reviewing
and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K under the Securities Act; 
 
   

discussing
the annual audited financial statements with management and the independent registered public accounting firm; 
 
   

reviewing
the adequacy and effectiveness of our accounting and internal control policies and procedures and any special steps taken to monitor
and control major financial risk exposures; 
 
   

annually
reviewing and reassessing the adequacy of our audit committee charter; 
 
   

meeting
separately and periodically with management and the independent registered public accounting firm; 
 
   

monitoring
compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to
ensure proper compliance; and 
 
   

reporting
regularly to the board. 
Compensation
Committee. Our compensation committee will consist of Ching-Chou Huang, Shen-Huei Wang and Ping-Hong Lin, and will be
chaired by Ching-Chou Huang. We have determined that each of these directors satisfies the “independence” requirements of
the Nasdaq Listing Rules. 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 their compensation is deliberated upon. 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 other similar arrangements; and 
 
   

selecting
compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s
independence from management. 

 
Nominating
and Corporate Governance Committee. Our nominating and corporate governance committee will consist of Ching-Chou
Huang, Shen-Huei Wang and Ping-Hong Lin and will be chaired by Ching-Chou Huang. We have determined that each of these directors
satisfies the “independence” requirements of the Nasdaq Listing Rules. The nominating and corporate governance committee
assists the board in selecting individuals qualified to become our directors and in determining the composition of the board and its
committees. The nominating and corporate governance committee is responsible for, among other things:
 
 

recommending
nominees to the board for election or re-election to the board, or for appointment to fill any vacancy on the board; 
 
   

reviewing
annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills,
experience, expertise, diversity and availability of service to us; 
 
   

selecting
and recommending to the board the names of directors to serve as members of the audit committee and the compensation committee, as
well as of the nominating and corporate governance committee itself; 
 
   

developing
and reviewing the corporate governance principles adopted by the board and advising the board with respect to significant developments
in the law and practice of corporate governance and our compliance with such laws and practices; and 
 
   

evaluating
the performance and effectiveness of the board as a whole. 
Terms
of Directors and Officers
 
Our
board of directors is divided into three classes with only one class of directors being elected in each year and each class (except for
those directors appointed prior to our first annual meeting of shareholders) serving a three-year term. The term of office of the first
class of directors, consisting of Ching-Chou Huang, will expire at our first annual meeting of shareholders. The term of office of the
second class of directors, consisting of Shen-Huei Wang and Ping-Hong Lin, will expire at the second annual meeting of shareholders.
The term of office of the third class of directors, consisting of Jing-Bin Chiang and Ting-Pang Sung, will expire at the third annual
meeting of shareholders.
 
Our
officers are elected by the board of directors and serve at the discretion of the board of directors, rather than for specific terms
of office. Our board of directors is authorized to appoint persons to the offices set forth in our post-offering amended and restated
memorandum and articles of association as it deems appropriate.
 
Compensation
of Directors and Executive Officers
 

For the years ended December
31, 2020 and 2021, we paid an aggregate of $472,181 and $624,468, respectively, in cash and benefits in-kind granted
to or accrued on behalf of all of our directors and members of senior management for their services, in all capacities, and we did not
pay any additional compensation to our directors and members of senior management. We have not set aside or accrued any amount to provide
pension, retirement or other similar benefits to our executive officers and directors. Our PRC subsidiaries are required by law to make
contributions equal to certain percentages of each full-time employee’s salary for his or her pension insurance, medical insurance,
unemployment insurance, work-related injury insurance and maternity insurance and a housing provident fund.
 
Equity
Compensation Plan Information
 
We
have not adopted any equity compensation plans.
  
Outstanding
Equity Awards at Fiscal Year-End
 
On
August 28, 2020, New Moon Corporation (“New Moon”), a shareholder of the Company, an employee of the Company and the Company
signed a tripartite talent award agreement. Under the agreement, the Company provides NT$10,000,000 (US$327,600) to the employee for
the purchase of 1,000,000 ordinary shares of the Company owned by New Moon at NT$10 per share. The employee should return the
payment to the Company if the acquisition of the shares could not be completed in thirty days after the payment. Also, the employee should
return the shares to New Moon if the employee resigned within five years from the date of the agreement. New Moon should also return
the consideration received from the employee to the Company.
 
The
aforementioned bonus shares settled by a shareholder of the Company cannot be transferred during the vesting period, but voting right
and dividend right are not restricted. The employee is required to return the shares to the shareholder but not required to return the
dividends received if she resigns during the vesting period.
 
The
Company accounted for the shares contributed by New Moon as share-based payment arrangement settled by equity. The NT$10,000,000 (US$327,600)
contributed by the Company is accounted for as prepaid cash incentive to the employee and is amortized over the contract period which
is five years.
 

 
PRINCIPAL
SHAREHOLDERS
 
The
following table sets forth information regarding the beneficial ownership of our ordinary shares as of the date of this prospectus by
our officers, directors, and 5% or greater beneficial owners of ordinary shares. There is no other person or group of affiliated persons
known by us to beneficially own more than 5% of our ordinary shares. The following table assumes that none of our officers, directors
or 5% or greater beneficial owners of our ordinary shares will purchase shares in this offering. In addition, the following table assumes
that the over-allotment option has not been exercised. Holders of our ordinary shares are entitled to one (1) vote per share and vote
on all matters submitted to a vote of our shareholders, except as may otherwise be required by law.
 
We
have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership
of securities to persons who possess sole or shared voting power or investment power with respect to those securities. The person is
also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60
days. Unless otherwise indicated, the person identified in this table has sole voting and investment power with respect to all
shares shown as beneficially owned by him, subject to applicable community property laws. Unless otherwise noted, the business
address for each of our directors and executive officers is 7F-1, No. 633, Sec. 2, Taiwan Blvd., Xitun District, Taichung City 407,
Taiwan (R.O.C.).
 

 
 

Ordinary Shares
Beneficially Owned
Prior to The Offering(1)
 
 

Ordinary Shares
Beneficially Owned
After The Offering(2)
 Name of Beneficial Owners
 
Number
 
 
%
 
 
Number
 
 
%
 Directors, Executive Officers and over 5% Shareholders:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Jing-Bin Chiang(3)
 
 
6,097,183
 
 
 
38.68
%
 
 
6,097,183
 
 
 
29.02
%Ting-Pang Sung
 
 

 
 
 

 
 
 

 
 
 

 Abraham Pullolickel Ittycheriah
 
 

 
 
 

 
 
 

 
 
 

 Ching-Chou Huang
 
 

 
 
 

 
 
 

 
 
 

 Shen-Huei Wang
 
 

 
 
 

 
 
 

 
 
 

 Ping-Hong Lin
 
 

 
 
 

 
 
 

 
 
 

 All directors and executive officers as a group (6 persons)
 
 
6,097,183
 
 
 
38.68
%
 
 
6,097,183
 
 
 
29.02
%NEW MOON CORPORATION(4)
 
 
4,888,092
 
 
 
31.01

 
 
4,888,092
 
 
 
23.26
% Lee Bo-Wei(5)
 
 
3,031,869
 
 
 
19.23
%
 
 
3,031,869
 
 
 
14.43
% RADIANT FAITH LIMITED(6)
 
 
2,700,000
 
 
 
17.13
%
 
 
2,700,000
 
 
 
12.85
% STAR CENTURION LIMITED(7)
 
 
1,719,835
 
 
 
10.91
%
 
 
1,719,835
 
 
 
8.19
% Barium Glory Financial Ltd.(8)
 
 
1,500,849
 
 
 
9.52
%
 
 
1,500,849
 
 
 
7.14
%  
*
Less than 1%
 
(1)
Applicable
percentage of ownership is based on 15,762,887 ordinary shares outstanding as of the date of this prospectus. 
 (2)
Applicable
percentage of ownership is based on 21,012,887 ordinary shares outstanding immediately after the offering. 
 (3)
Chiang
Jing-Bin is the sole shareholder of NEW MOON CORPORATION and holds the voting and dispositive power over the ordinary shares held
by such entity. Chiang Jing-Bin also directly holds 1,209,091 ordinary shares of J-Star. 

(4)
The registered address of NEW MOON CORPORATION, a British Virgin
Islands company, is OMC Chambers, Wickhams Cay 1, Road Town, Tortola, British Virgin Islands. 4,888,092 ordinary shares directly
held by NEW MOON CORPORATION of which Chiang Jing-Bin is the sole shareholder and holds the voting and dispositive power over the
ordinary shares held by such entity. 
 (5)
Lee Bo-Wei is the sole shareholder of Barium Glory Financial Ltd.,
which directly holds 1,500,849 ordinary shares of J-Star, and he holds the voting and dispositive power over the ordinary
shares held by such entity. Lee Bo-Wei is also the sole shareholder of Sendai Investments Company Inc., which directly holds 631,020
ordinary shares of J-Star, and he holds the voting and dispositive power over the ordinary shares held by such entity. Lee Bo-Wei
also directly holds 900,000 ordinary shares of J-Star. 
 (6)
The registered address of RADIANT FAITH LIMITED, a Samoa company,
is Offshore Chambers, P.O. Box 217, Apia, Samoa. 2,700,000 ordinary shares directly held by RADIANT FAITH LIMITED of which
Chiang Yu-Ning is the sole shareholder and holds the voting and dispositive power over the ordinary shares held by such entity. 
 (7)
The registered address of STAR CENTURION LIMITED, a Republic of
Seychelles company, is P.O. Box 1239, Offshore Incorporations Centre, Victoria, Maché, Republic of Seychelles. 1,719,835
ordinary shares directly held by STAR CENTURION LIMITED of which Yu Li-Hsin is the sole shareholder and holds the voting and
dispositive power over the ordinary shares held by such entity. 
 (8)
The registered address of Barium Glory Financial Ltd., a British
Virgin Islands company, is Nerine Chambers, P.O. Box 905, Road Town, Tortola, British Virgin Islands. 1,500,849 ordinary shares
directly held by Barium Glory Financial Ltd. of which Lee Bo-Wei is the sole shareholder and holds the voting and dispositive power
over the ordinary shares held by such entity. 

 
RELATED
PARTY TRANSACTIONS
 

Transactions
with Certain Related Parties
 
Set
forth below are our related party transactions that occurred since the beginning of our preceding three fiscal years up to the
date of December 31, 2021. The “related party transactions” are transactions identified in accordance with the rules
prescribed under Part I, Item 7B of Form 20-F.
 
Under
Part I, Item 7B of Form 20-F, the Company is required to disclose any transaction occurring since the beginning of the Company’s
preceding two financial years, with respect to transactions or loans between the Company and (a) enterprises that directly or indirectly
through one or more intermediaries, control or are controlled by, or are under common control with, the Company; (b) associates; (c)
individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over
the Company, and close members of any such individual’s family; (d) key management personnel, that is, those persons having authority
and responsibility for planning, directing and controlling the activities of the Company, including directors and senior management of
companies and close members of such individuals’ families; and (e) enterprises in which a substantial interest in the voting power
is owned, directly or indirectly, by any person described in (c) or (d) or over which such a person is able to exercise significant influence.
 
Before
the completion of this offering, we intend to adopt an audit committee charter, which will require the committee to review all related
party transactions on an ongoing basis and all such transactions be approved by the audit committee. In determining whether to approve
a related party transaction, the audit committee shall consider, among other factors, the following factors to the extent relevant to
the related party transaction:
 
 

whether
the terms of the related party transaction are fair to the Company and on the same basis as would apply if the transaction did not
involve a related party; 
 
  

whether
there are business reasons for the Company to enter into the related party transaction; 
 
  

whether
the related party transaction would impair the independence of an outside director; 
 
  

whether
the related party transaction would present an improper conflict of interest for any director or executive officer of the Company,
taking into account the size of the transaction, the overall financial position of the director, executive officer or the related
party, the direct or indirect nature of the director’s, executive officer’s or the related party’s interest in
the transaction and the ongoing nature of any proposed relationship, and any other factors the audit committee deems relevant; and 
 
  

any
pre-existing contractual obligations. 

 
During
the years ended December 31, 2020 and 2021, we had the following material related party transactions:
 

 
 
 
 

For the years ended
December 31,
 Related Parties
 
Nature
 
2020
 
 
2021
  
 
 
 
 
 
 
 
 New Moon Corporation
 
Interest expense from a related party loan
 
$
102,337
 
 
$

 Jiang Ke Composite Materials (DG) Co., Ltd. (“Jiang Ke”)
 
Sales of goods to related parties
 
 

 
 
 
624,003
 Yuan Fu Sport Equipment Co., Ltd. (Yuan Fu)
 
Other payables for processing cost to related parties
 
 

 
 
 
0
 Ke-Chung Teng
 
Other payables for professional service fees to related parties
 
 

 
 
 
0
 Key management including Chiang, Jing-Bin and Chiang, Yu-Ning
 
Interest expense from a related party loan
 
$
203,900
 
 
$
4,085
 Key management including Chiang, Jing-Bin and Chiang, Yu-Ning
 
Compensation including salaries and other short-term benefits, post-employment benefits and share-based payment
 
$
472,181
 
 
$
620,365
  

As
of December 31, 2020 and 2021, we had the following
material related party balances:
 

  
As of December 31,    
2020  
2021   
   
  Amounts due from related parties-current 
    
   New Moon Corporation 
$-  
$- Bohong Technology Jiangsu Co., Ltd 
$-  
$- Total 
$-  
$-   
    
   Receivables from related parties 
   
  Jiang Ke 
$-  
$144,538 Total 
$-  
$144,538   
    
   Other payables to related parties 
    
   Ke-Chung Teng 
$-  
$1,844,400 Yuan Fu 
$-  
$989,704 New Moon Corporation 
$-  
$79,466 Total 
$-  
$2,834,104   
    
   Amounts due to related parties – current 
    
   Key management including Chiang, Jing-Bin and Chiang, Yu-Ning 
$442,473  
$- New Moon Corporation 
$-  
$- Total 
$442,473  
$-   
    
   Amounts due to related parties – non-current 
    
   Key management including Chiang, Jing-Bin and Chiang, Yu-Ning 
$-  
$- New Moon Corporation 
$-  
$- Total 
$-  
$-   
    
   Endorsements and guarantees provided by related parties: 
    
   Key management including Chiang, Jing-Bin and Chiang, Yu-Ning 
$6,756,265  
$8,835,229 Total 
$6,756,265  
$8,835,229  
Share
Based Payment
 
a)
For the years ended December 31, 2020 and 2021, the Group’s share-based payment arrangements was as follows:
 
  
  
Quantitygranted 
Fair value 
Contract 
VestingType of arrangement 
Grant date 
(shares) 
per unit 
period 
conditionsBonus shares 
August 28, 2020 
1,000,000 
1.02 
5 years 
5 years’ service 

 
On
August 28, 2020, New Moon, a shareholder of the Company, an employee of the Company and the Company signed a tripartite talent award
agreement. Under the agreement, the Company provides NT$10,000,000 (US$327,600) to the employee for the purchase of 1,000,000 ordinary
shares of the Company owned by New Moon at NT$10 per share. The employee should return the payment to the Company if the acquisition
of the shares could not be completed in thirty days after the payment. Also, the employee should return the shares to New Moon if the
employee resigned within five years from the date of the agreement. New Moon should also return the consideration received from the employee
to the Company.
 
The
aforementioned bonus shares settled by a shareholder of the Company cannot be transferred during the vesting period, but voting right
and dividend right are not restricted. The employee is required to return the shares to the shareholder but not required to return the
dividends received if she resigns during the vesting period.
 
The
Company accounted for the shares contributed by New Moon as share-based payment arrangement settled by equity. The NT$10,000,000 (US$327,600)
contributed by the Company is accounted for as prepaid cash incentive to the employee and is amortized over the contract period which
is five years.
 
b)
The expenses incurred on share-based payment transactions for the years ended December 31, 2020 and 2021 were $46,944 and
$131,712, respectively.
 
Share
Swap
 

On
December 25, 2020, the Board of Directors resolved to issue 838,053 shares (3.4% of the total ordinary share capital issued) of
the treasury shares repurchased in 2019 (with book value of $1,344,734) to the shareholders of Bohong Technology to obtain 100% of its
ordinary shares through a share swap. On December 30, 2020, the Group signed the share swap agreement with the shareholders of Bohong
Technology. The ordinary shares issued have the same rights as other shares in issue. Bohong Technology was a company that only held
land use right without any operation, did not have an organized workforce and manufacturing equipment. As a result, the Group treated
this transaction as an asset acquisition. The fair value of the land use right amounted to $1,415,559. As of December 31, 2020 and 2021, the issued shares were shown as other non-current assets as long-term prepayments for investments since the share
swap registration of the shareholders of Bohong Technology was not yet completed. The shareholder registration was completed and approved
by relevant government authority on December 7, 2021.

 

 
DESCRIPTION
OF SECURITIES
 
We
are an exempted company with limited liability incorporated under the laws of the Cayman Islands and our affairs are governed by our
memorandum and articles of association, as amended from time to time and the Companies Act, and the common law of the Cayman Islands.
 
The
share capital of the Company consists of ordinary shares. As of the date hereof, our authorized share capital is US$17,500,000
divided into 35,000,000 ordinary shares of par value US$0.50 each. As of the date of this prospectus, ordinary shares were issued
and outstanding. We will issue ordinary shares in this offering. The following are summaries of material provisions of our post-offering
amended and restated memorandum and articles of association (which will become effective immediately prior to completion of this offering)
and the Companies Act insofar as they relate to the material terms of our ordinary shares.
 
Ordinary
Shares
 

General. Upon the
completion of this offering, our authorized share capital is US$17,500,000 divided into 35,000,000 ordinary shares of par
value US$0.50 each. All of our outstanding ordinary shares are fully paid and non-assessable. Certificates representing the ordinary
shares are issued in registered form. Our shareholders, whether or not they are non-residents of the Cayman Islands, may freely hold
and transfer their ordinary shares in accordance with our post-offering amended and restated memorandum and articles of association.
 
Dividends.
The holders of our ordinary shares are entitled to such dividends as may be declared by our board of directors. Our post-offering
amended and restated articles of association provide that our board of directors may declare and pay dividends if justified by our financial
position and permitted by law.
 
Voting
Rights. Holders of our ordinary shares vote on all matters submitted to a vote of our shareholders, except as may otherwise be
required by law. In respect of matters requiring shareholders’ vote, each ordinary share is entitled to one vote. At any
general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless voting by poll is required by Nasdaq
rules or demanded by the chairman of the meeting or by shareholder(s) together holding not less than 10% of the total voting
rights of all our shareholders having the right to vote at such general meeting. A quorum required for a meeting of shareholders
consists of one shareholder who holds at least one-third of our issued voting shares. Shareholders’ meetings may be held
annually. Each general meeting, other than an annual general meeting, shall be an extraordinary general meeting. Extraordinary
general meetings may be called by a majority of our board of directors or upon a requisition of any one or more shareholders holding
at the deposit of the requisition not less than 10% of the aggregate share capital of our company that carries the right to vote at
a general meeting, in which case on advance notice of at least 7 clear days is required for the convening of our annual general
meeting and other general meetings by requisition of our shareholders.
 
Any
ordinary resolution to be made by the shareholders requires the affirmative vote of a simple majority of the votes attaching to the ordinary
shares cast in a meeting, while a special resolution requires the affirmative vote of no less than two-thirds of the votes attaching
to the ordinary shares cast in a meeting.
 
A
special resolution will be required for important matters such as amending our memorandum and articles of association or changing the
name of the Company.
 
There
are no limitations on non-residents or foreign shareholders in the memorandum and articles of association to hold or exercise voting
rights on the ordinary shares imposed by foreign law or by the charter or other constituent document of our company. However, no person
will be entitled to vote at any general meeting or at any separate meeting of the holders of the ordinary shares unless the person is
registered as of the record date for such meeting and unless all calls or other sums presently payable by the person in respect of ordinary
shares in the Company have been paid.
 
Winding Up; Liquidation.
Subject to any special rights, privileges or restrictions as to the distribution of available surplus assets on liquidation applicable
to any class or classes of shares (1) if we are wound up and the assets available for distribution among our shareholders are more than
sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed pari passu
among our shareholders in proportion to the amount paid up at the commencement of the winding up on the shares held by them, respectively,
and (2) if we are wound up and the assets available for distribution among our shareholders as such are insufficient to repay the whole
of the paid-up capital, those assets shall be distributed so that, as nearly as may be, the losses shall be borne by our shareholders
in proportion to the capital paid up, or which ought to have been paid up, at the commencement of the winding up on the shares held by
them, respectively.

 

 
Calls
on Ordinary Shares and Forfeiture of Ordinary Shares. Our directors may from time to time make calls on our shareholders in
respect of any moneys unpaid on their shares including any premium in a notice served to such shareholders at least 14 clear days prior
to the specified time of payment. Any ordinary shares that have been called upon and remain unpaid are subject to forfeiture.
 
Redemption
of Ordinary Shares. The Companies Act and our post-offering amended and restated memorandum and articles of association permit
us to purchase our own shares. In accordance with our post-offering amended and restated articles of association, provided the necessary
shareholders or board approval have been obtained and requirements under the Companies Act have been satisfied, we may issue shares on
terms that are subject to redemption at our option on such terms and in such manner as may be determined by our board of directors.
 
Inspection
of Books and Records. Holders of our ordinary shares have no general right under our post-offering amended and restated articles
of association to inspect or obtain copies of our list of shareholders or our corporate records. However, we will provide our shareholders
with annual audited financial statements. See “Where You Can Find Additional Information.”
 
Issuance
of Additional Shares. Our post-offering amended and restated memorandum and articles of association authorize our board of directors
to issue additional ordinary shares from time to time as our board of directors shall determine, to the extent of available authorized
but unissued shares. Issuance of these shares may dilute the voting power of holders of ordinary shares.
 
Anti-Takeover
Provisions. Some provisions of our post-offering amended and restated memorandum and articles of association may discourage, delay
or prevent a change of control of our company or management that shareholders may consider favorable. Our authorized, but unissued ordinary
shares are available for future issuance without shareholders’ approval and could be utilized for a variety of corporate purposes,
including future offerings to raise addition capital, acquisitions and employee benefit plans. The existence of authorized but unissued
and unreserved ordinary shares could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest,
tender offer, merger or otherwise.
 
Exempted
Company. We are an exempted company with limited liability under the Companies Act. The Companies Act distinguishes between ordinary
resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside
of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the
same as for an ordinary company except that an exempted company:
 
 

does
not have to file an annual return of its shareholders with the Registrar of Companies;
 
 
 
 

is
not required to open its register of members for inspection;
 
 
 
 

does
not have to hold an annual general meeting;
 
 
 
 

may
not issue negotiable or bearer shares, but may issue shares with no par value;
 
 
 
 

may
obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first
instance);
 
 
 
 

may
register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;
 
 
 
 

may
register as a limited duration company; and
 
 
 
 

may
register as a segregated portfolio company.
 
“Limited
liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on the shares of the
company.
 

 
Anti-Money
Laundering — Cayman Islands
 
In
order to comply with legislation or regulations aimed at the prevention of money laundering, we are required to adopt and maintain anti-money
laundering procedures, and may require subscribers to provide evidence to verify their identity and source of funds. Where permitted,
and subject to certain conditions, we may also delegate the maintenance of our anti-money laundering procedures (including the acquisition
of due diligence information) to a suitable person.
 
We
reserve the right to request such information as is necessary to verify the identity of a subscriber. In some cases the directors may
be satisfied that no further information is required since an exemption applies under the Anti-Money Laundering Regulations (Revised)
of the Cayman Islands, as amended and revised from time to time (the “Regulations”) or any other applicable law. Depending
on the circumstances of each application, a detailed verification of identity might not be required where:
 
 
(a)
the
subscriber makes the payment for their investment from an account held in the subscriber’s name at a recognized financial institution;
or 
 
  
(b)
the
subscriber is regulated by a recognized regulatory authority and is based or incorporated in, or formed under the law of, a recognized
jurisdiction; or 
 
  
(c)
the
application is made through an intermediary which is regulated by a recognized regulatory authority and is based in or incorporated
in, or formed under the law of a recognized jurisdiction and an assurance is provided in relation to the procedures undertaken on
the underlying investors. 
For
the purposes of these exceptions, recognition of a financial institution, regulatory authority or jurisdiction will be determined in
accordance with the Regulations by reference to those jurisdictions recognized by the Cayman Islands Monetary Authority as having equivalent
anti-money laundering regulations.
 
In
the event of delay or failure on the part of the subscriber in producing any information required for verification purposes, we may refuse
to accept the application, in which case any funds received will be returned without interest to the account from which they were originally
debited.
 
We
also reserve the right to refuse to make any payment to a shareholder if our directors or officers suspect or are advised that the payment
to such shareholder might result in a breach of applicable anti-money laundering or other laws or regulations by any person in any relevant
jurisdiction, or if such refusal is considered necessary or appropriate to ensure our compliance with any such laws or regulations in
any applicable jurisdiction.
 
If
any person in the Cayman Islands knows or suspects or has reasonable grounds for knowing or suspecting that another person is engaged
in criminal conduct or money laundering or is involved with terrorism or terrorist financing and property and the information for that
knowledge or suspicion came to their attention in the course of business in the regulated sector, or other trade, profession, business
or employment, the person will be required to report such knowledge or suspicion to (i) the Financial Reporting Authority (“FRA”)
of the Cayman Islands, pursuant to the Proceeds of Crime Act (Revised) of the Cayman Islands if the disclosure relates to criminal conduct
or money laundering, or (ii) a police officer of the rank of constable or higher, or the FRA, pursuant to the Terrorism Act (Revised)
of the Cayman Islands, if the disclosure relates to involvement with terrorism or terrorist financing and property. Such a report shall
not be treated as a breach of confidence or of any restriction upon the disclosure of information imposed by any enactment or otherwise.
 
Data
Protection in the Cayman Islands – Privacy Notice
 
This
privacy notice explains the manner in which the company collects, processes and maintains personal data about investors of the company
pursuant to the Data Protection Act, 2017 of the Cayman Islands, as amended from time to time and any regulations, codes of practice
or orders promulgated pursuant thereto (“DPA”).
 
The
company is committed to processing personal data in accordance with the DPA. In its use of personal data, the company will be characterized
under the DPA as a “data controller”, whilst certain of the company’s service providers, affiliates and delegates
may act as “data processors” under the DPA. These service providers may process personal information for their own
lawful purposes in connection with services provided to the company.
 
This
privacy notice puts our shareholders on notice that, by virtue of making an investment in the company, the company and certain of the
company’s service providers may collect, record, store, transfer and otherwise process personal data by which individuals may be
directly or indirectly identified.
 

 
Your
personal data will be processed fairly and for lawful purposes, including (a) where the processing is necessary for the company to perform
a contract to which you are a party or for taking pre-contractual steps at your request (b) where the processing is necessary for compliance
with any legal, tax or regulatory obligation to which the company is subject or (c) where the processing is for the purposes of legitimate
interests pursued by the company or by a service provider to whom the data are disclosed. As a data controller, we will only use your
personal data for the purposes for which we collected it. If we need to use your personal data for an unrelated purpose, we will contact
you.
 
We
anticipate that we will share your personal data with the company’s service providers for the purposes set out in this privacy
notice. We may also share relevant personal data where it is lawful to do so and necessary to comply with our contractual obligations
or your instructions or where it is necessary or desirable to do so in connection with any regulatory reporting obligations. In exceptional
circumstances, we will share your personal data with regulatory, prosecuting and other governmental agencies or departments, and parties
to litigation (whether pending or threatened), in any country or territory including to any other person where we have a public or legal
duty to do so (e.g. to assist with detecting and preventing fraud, tax evasion and financial crime or compliance with a court order).
 
Your
personal data shall not be held by the company for longer than necessary with regard to the purposes of the data processing.
 
We
will not sell your personal data. Any transfer of personal data outside of the Cayman Islands shall be in accordance with the requirements
of the DPA. Where necessary, we will ensure that separate and appropriate legal agreements are put in place with the recipient of that
data.
 
The
company will only transfer personal data in accordance with the requirements of the DPA, and will apply appropriate technical and organizational
information security measures designed to protect against unauthorized or unlawful processing of the personal data and against the accidental
loss, destruction or damage to the personal data.
 
If
you are a natural person, this will affect you directly. If you are a corporate investor (including, for these purposes, legal arrangements
such as trusts or exempted limited partnerships) that provides us with personal data on individuals connected to you for any reason in
relation to your investment into the company, this will be relevant for those individuals and you should inform such individuals of the
content.
 
You
have certain rights under the DPA, including (a) the right to be informed as to how we collect and use your personal data (and this privacy
notice fulfills the Company’s obligation in this respect); (b) the right to obtain a copy of your personal data; (c) the
right to require us to stop direct marketing; (d) the right to have inaccurate or incomplete personal data corrected; (e) the right to
withdraw your consent and require us to stop processing or restrict the processing, or not begin the processing of your personal data;
(f) the right to be notified of a data breach (unless the breach is unlikely to be prejudicial); (g) the right to obtain information
as to any countries or territories outside the Cayman Islands to which we, whether directly or indirectly, transfer, intend to transfer
or wish to transfer your personal data, general measures we take to ensure the security of personal data and any information available
to us as to the source of your personal data; (h) the right to complain to the Office of the Ombudsman of the Cayman Islands; and (i)
the right to require us to delete your personal data in some limited circumstances.
 
If
you consider that your personal data has not been handled correctly, or you are not satisfied with the company’s responses to any
requests you have made regarding the use of your personal data, you have the right to complain to the Cayman Islands’ Ombudsman.
The Ombudsman can be contacted by calling +1 (345) 946-6283 or by email at [email protected]
 
Differences
in Corporate Law
 
The
Companies Act is modeled after that of English law but does not follow many recent English law statutory enactments. In addition, the
Companies Act differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of some
of the significant differences between the provisions of the Companies Act applicable to us and the laws applicable to companies incorporated
in the State of Delaware.
 
Mergers
and Similar Arrangements. The Companies Act permits merger and consolidations between Cayman Islands companies and between Cayman
Islands companies and non-Cayman Islands companies. For these purposes, a “merger” means the merging of two or more constituent
companies and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company, and a “consolidation”
means the combination of two or more constituent companies into a consolidated company and the vesting of the undertaking, property and
liabilities of such companies to the consolidated company.
 

 
In
order to effect a merger or consolidation, the directors of each constituent company must approve a written plan of merger or consolidation,
which must then be authorized by a special resolution of the shareholders of each constituent company, and such other authorization,
if any, as may be specified in such constituent company’s articles of association. A merger between a Cayman Islands parent company
and its Cayman Islands subsidiary or subsidiaries does not require authorization by a resolution of shareholders of that Cayman Islands
subsidiary if a copy of the plan of merger is given to every member of that Cayman Islands subsidiary to be merged unless that member
agrees otherwise. For this purpose, a subsidiary is a company of which at least ninety percent (90%) of the issued shares entitled to
vote are owned by the parent company.
 
The
plan of merger or consolidation must be filed with the Registrar of Companies of the Cayman Islands together with a declaration as to
the solvency of the consolidated or surviving company, a list of the assets and liabilities of each constituent company and an undertaking
that a copy of the certificate of merger or consolidation will be given to the members and creditors of each constituent company and
that notification of the merger and consolidation will be published in the Cayman Islands Gazette. Dissenting shareholders have the right
to be paid the fair value of their shares if they follow the required procedures under the Companies Act subject to certain exceptions.
The fair value of the shares will be determined by the Cayman Islands court if it cannot be agreed among the parties. Court approval
is not required for a merger or consolidation effected in compliance with these statutory procedures.
 
In
addition, there are statutory provisions that facilitate the reconstruction and amalgamation of companies, provided that the arrangement
is approved by a majority in number of each class of shareholders and creditors (as the case may be) with whom the arrangement is to
be made, and who must in addition represent three-fourths in value of each such class of shareholders or creditors, as the case may be,
that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings
and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the
right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement
if it determines that:
 
 

the
statutory provisions as to the required majority vote have been met; 
 
  

the
shareholders have been fairly represented at the meeting in question; 
 
  

the
arrangement is such that an intelligent and honest man of that class acting in respect of his interest would reasonably approve;
and 
 
  

the
arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act. 
When
a takeover offer is made and accepted by holders of not less than 90.0% of the shares within four months, the offeror may, within a two-month
period commencing on the expiration of such four month period, give notice to require the holders of the remaining shares to transfer
such shares on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands by a dissenting shareholder
within one month from the date on which the notice was given but this is unlikely to succeed unless there is evidence of fraud, bad faith
or collusion.
 
If
an arrangement and reconstruction is thus approved, the dissenting shareholder would have no rights comparable to appraisal rights, which
would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive payment in cash
for the judicially determined value of the shares.
 

 
Shareholders’
Suits. In principle, we will normally be the proper plaintiff and as a general rule a derivative action may not be brought by
a minority shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority in the Cayman
Islands, there are exceptions to the foregoing principle, including when:
 
 

a
company acts or proposes to act illegally or ultra vires and is therefore incapable of ratification by the shareholders;
 
 
 
 

the
act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has
not been obtained; and
 
 
 
 

those
who control the company are perpetrating a “fraud on the minority.”
 
Indemnification
of Directors and Executive Officers and Limitation of Liability. The Companies Act does not limit the extent to which a company’s
memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision
may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the
consequences of committing a crime. Our post-offering amended and restated memorandum and articles of association permit, in the absence
of fraud or wilful default, indemnification of officers and directors for costs, losses, damages and expenses, which such director or
officers may incur or become liable in respect of by reason of any contract entered into or act or thing done by him as such director
and officer in any way in or about the execution of his duties incurred in connection with legal, administrative or investigative proceedings
incurred in their capacities as such. This standard of conduct is generally the same as permitted under the Delaware General Corporation
Law for a Delaware corporation. Insofar as indemnification for holder to a refund, provided that certain required information is timely
furnished to the IRS. Holders are urged to consult their own tax advisors regarding the application of backup withholding and the availability
of a procedure for obtaining an exemption from backup withholding in their particular circumstances.
 
Directors’
Fiduciary Duties. Under Delaware General Corporation Law, a director of a Delaware corporation has a fiduciary duty to
the corporation and its shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires
that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under
this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available regarding a
significant transaction. The duty of loyalty requires that a director acts in a manner he reasonably believes to be in the best interests
of the corporation. He must not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director
and mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director,
officer or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have
been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation.
However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning
a transaction by a director, the director must prove the procedural fairness of the transaction, and that the transaction was of fair
value to the corporation.
 
As
a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company
and therefore it is considered that he or she owes the following duties to the company—a duty to act bona fide in the best
interests of the company, a duty not to make a profit based on his or her position as director (unless the company permits him or her
to do so) and a duty not to put himself or herself in a position where the interests of the company conflict with his or her personal
interest or his or her duty to a third party. A director of a Cayman Islands company owes to the company a duty to act with skill and
care. It was previously considered that a director need not exhibit in the performance of his or her duties a greater degree of skill
than may reasonably be expected from a person of his or her knowledge and experience. However, English and Commonwealth courts have moved
towards an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman
Islands.
 
Shareholder
Action by Written Consent. Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders
to act by written consent by amendment to its certificate of incorporation. Cayman Islands law and our articles of association provide
that shareholders may approve corporate matters by way of a unanimous written resolution signed by or on behalf of each shareholder who
would have been entitled to vote on such matter at a general meeting without a meeting being held.
 

 
Shareholder
Proposals. Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting
of shareholders, provided it complies with the notice provisions in the governing documents. A special meeting may be called by the board
of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special
meetings.
 
Cayman
Islands law does not provide shareholders any right to put proposals before a meeting or requisition a general meeting. However, these
rights may be provided in articles of association. Our articles of association allow our shareholders holding not less than one-tenth
of all voting power of our share capital in issue to requisition a shareholder’s meeting. Other than this right to requisition
a shareholders’ meeting, our articles of association do not provide our shareholders other right to put proposal before a meeting.
As an exempted Cayman Islands company, we are not obliged by law to call shareholders’ annual general meetings.
 
Cumulative
Voting. Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the
corporation’s certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation
of minority shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder
is entitled on a single director, which increases the shareholder’s voting power with respect to electing such director. There
are no prohibitions in relation to cumulative voting under the Companies Act but our articles of association do not provide for cumulative
voting.
 
Removal
of Directors. Under the Delaware General Corporation Law, a director of a corporation with a classified board may be removed
only for cause with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides
otherwise. Under our articles of association, directors may be removed with or without cause, by an ordinary resolution of our shareholders.
 
Transactions
with Interested Shareholders. The Delaware General Corporation Law contains a business combination statute applicable to Delaware
corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate
of incorporation, it is prohibited from engaging in certain business combinations with an “interested shareholder” for three
years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group
who or which owns or owned 15% or more of the target’s outstanding voting share within the past three years. This has the effect
of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated
equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder,
the board of directors approves either the business combination or the transaction which resulted in the person becoming an interested
shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with
the target’s board of directors.
 
The
Cayman Islands has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware
business combination statute. However, although Cayman Islands law does not regulate transactions between a company and its significant
shareholders, it does provide that such transactions must be entered into bona fide in the best interests of the company and for
a proper corporate purpose and not with the effect of constituting a fraud on the minority shareholders.
 
Dissolution;
Winding up. Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution
must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the
board of directors may it be approved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware
corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated
by the board. Under the Companies Act, a company may be wound up by either an order of the courts of the Cayman Islands or by a special
resolution of its members or, if the company is unable to pay its debts as they fall due, by an ordinary resolution of its members. The
court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just
and equitable to do so. Under the Companies Act and our articles of association, our company may be dissolved, liquidated or wound up
by a special resolution of our shareholders.
 
Variation
of Rights of Shares. Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with
the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under
the Companies Act and our post-offering amended and restated articles of association, if our share capital is divided into more than
one class of shares, we may vary the rights attached to any class with the written consent of the three-fourths of the issued shares
of that class or with the sanction of a resolution passed by not less than three-fourths of such holders of the shares of that class.
 
Amendment
of Governing Documents. Under the Delaware General Corporation Law, a corporation’s governing documents may be amended
with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise.
As permitted by the Companies Act, our memorandum and articles of association may only be amended with a special resolution of our shareholders.
 
Rights
of Non-resident or Foreign Shareholders. There are no limitations imposed by our post-offering amended and restated
memorandum and articles of association on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our
shares. In addition, there are no provisions in our post-offering amended and restated memorandum and articles of association governing
the ownership threshold above which shareholder ownership must be disclosed.
 

 
SHARES ELIGIBLE FOR FUTURE SALE
 
Prior
to this offering, there was no established public trading market for our ordinary shares. We cannot assure you that a liquid trading
market for our ordinary shares will develop on Nasdaq or be sustained after this offering. Future sales of substantial amounts of ordinary
shares in the public market, or the perception that such sales may occur, could adversely affect the market price of our ordinary shares.
Further, since a large number of our ordinary shares will not be available for sale shortly after this offering because of the contractual
and legal restrictions on resale described below, sales of substantial amounts of our ordinary shares in the public market after these
restrictions lapse, or the perception that such sales may occur, could adversely affect the prevailing market price and our ability to
raise equity capital in the future.
 
Upon
completion of this offering and assuming the issuance of 5,250,000 ordinary shares offered hereby, we will have an aggregate of
21,012,887 ordinary shares outstanding. Upon completion of this offering and assuming the exercise of the underwriters’
over-allotment option and the issuance of 6,037,500 ordinary shares offered hereby, we will have an aggregate of 21,800,387
ordinary shares outstanding. All of the ordinary shares sold in this offering will be freely transferable by persons other than our
“affiliates” without restriction or further registration under the Securities Act. Sales of substantial amounts of our ordinary
shares in the public market could adversely affect prevailing market prices of our ordinary shares. Prior to this offering, there has
been no public market for our ordinary shares, and while we intend to submit application for the ordinary shares to be listed on Nasdaq,
we cannot assure you that a regular trading market will develop in the ordinary shares.
 
Lock-Up
Agreements
 
We,
our directors and executive officers, and our existing shareholders have agreed, subject to some exceptions, not to transfer or dispose
of, directly or indirectly, any of our ordinary shares, or any securities convertible into or exchangeable or exercisable for our ordinary
shares, for a period of six (6) months from the date on which the trading of the ordinary shares on a National Securities Exchange
commences. After the expiration of the six (6) months period, the ordinary shares held by our directors, executive officers and our
existing shareholders may be sold subject to the restrictions under Rule 144 under the Securities Act or by means of registered public
offerings.
 
Regulation
S
 
Regulation
S under the Securities Act provides an exemption from registration requirements in the United States for offers and sales of securities
that occur outside the United States. Rule 903 of Regulation S provides the conditions to the exemption for a sale by an issuer, a distributor,
their respective affiliates or anyone acting on their behalf, while Rule 904 of Regulation S provides the conditions to the exemption
for a resale by persons other than those covered by Rule 903. In each case, any sale must be completed in an offshore transaction, as
that term is defined in Regulation S, and no directed selling efforts, as that term is defined in Regulation S, may be made in the United
States.
 
We
are a foreign issuer as defined in Regulation S. As a foreign issuer, securities that we sell outside the United States pursuant to Regulation
S are not considered to be restricted securities under the Securities Act, and are freely tradable without registration or restrictions
under the Securities Act, unless the securities are held by our affiliates. Generally, subject to certain limitations, holders of our
restricted shares who are not our affiliates or who are our affiliates solely by virtue of their status as an officer or director of
us may, under Regulation S, resell their restricted shares in an “offshore transaction” if none of the seller, its affiliate
nor any person acting on their behalf engages in directed selling efforts in the United States and, in the case of a sale of our restricted
shares by an officer or director who is an affiliate of us solely by virtue of holding such position, no selling commission, fee or other
remuneration is paid in connection with the offer or sale other than the usual and customary broker’s commission that would be
received by a person executing such transaction as agent. Additional restrictions are applicable to a holder of our restricted shares
who will be an affiliate of us other than by virtue of his or her status as an officer or director of us.
 
We
are not claiming the potential exemption offered by Regulation S in connection with the offering of newly issued shares outside the United
States and will register all of the newly issued shares under the Securities Act.
 

 
Rule
144
 
All
of our ordinary shares outstanding prior to this offering are “restricted shares” as that term is defined in Rule 144 under
the Securities Act and may be sold publicly in the United States only if they are subject to an effective registration statement under
the Securities Act or pursuant to an exemption from the registration requirements. Under Rule 144 as currently in effect, a person who
has beneficially owned our restricted shares for at least six months is generally entitled to sell the restricted securities without
registration under the Securities Act beginning 90 days after the date of this prospectus, subject to certain additional restrictions.
 
Our
affiliates may sell within any three-month period a number of restricted shares that does not exceed the greater of the following:
 
 

1%
of the then outstanding ordinary shares of the same class, which will equal approximately 210,129 ordinary shares immediately
after this offering assuming the over-allotment option is not exercised and 218,004 ordinary shares assuming the over-allotment
option is exercised in full; or 
 
   

the
average weekly trading volume of our ordinary shares on Nasdaq during the four calendar weeks preceding the date on which notice
of the sale is filed with the SEC. 
Affiliates
who sell restricted securities under Rule 144 may not solicit orders or arrange for the solicitation of orders, and they are also subject
to notice requirements and the availability of current public information about us.
 
Persons
who are not our affiliates are only subject to one of these additional restrictions, the requirement of the availability of current public
information about us, and this additional restriction does not apply if they have beneficially owned our restricted shares for more than
one year.
 
Rule
701
 
In
general, under Rule 701 of the Securities Act as currently in effect, each of our employees, consultants or advisors who purchases our
ordinary shares from us in connection with a compensatory stock or option plan or other written agreement relating to compensation is
eligible to resell such ordinary shares 90 days after we became a reporting company under the Exchange Act in reliance on Rule 144, but
without compliance with some of the restrictions, including the holding period, contained in Rule 144. However, these shares would remain
subject to lock-up arrangements and would only become eligible for sale when the lock-up period expires.
 

 
TAXATION
 
The
following discussion of material Cayman Islands, Taiwan, PRC and United States federal income tax consequences of an investment in our
ordinary shares is based upon laws and relevant interpretations thereof in effect as of the date of this prospectus, all of which are
subject to change. This discussion does not deal with all possible tax consequences relating to an investment in our ordinary shares,
such as the tax consequences under state, local and other tax laws. Unless otherwise noted in the following discussion, this section
is the opinion of Lee and Li, Attorneys-at-Law, insofar as it relates to legal conclusions with respect to matters of Taiwan tax
law, and of L&L-Leaven, Attorneys-at-Law, insofar as it relates to legal conclusions with respect to matters of PRC tax law, and
of Ogier, insofar as it relates to legal conclusions with respect to matters of Cayman Islands tax law.
 
Cayman
Islands Taxation
 
The
following is a discussion on certain Cayman Islands income tax consequences of an investment in our securities. The discussion is a general
summary of present law, which is subject to prospective and retroactive change. It is not intended as tax advice, does not consider any
investor’s particular circumstances, and does not consider tax consequences other than those arising under Cayman Islands law.
 
Payments
of dividends and capital in respect of our securities will not be subject to taxation in the Cayman Islands and no withholding will be
required on the payment of a dividend or capital to any holder of the securities nor will gains derived from the disposal of the securities
be subject to Cayman Islands income or corporation tax.
 
The
Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is
no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the Government
of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or brought within, the jurisdiction
of the Cayman Islands. The Cayman Islands is not party to any double tax treaties. There are no exchange control regulations or currency
restrictions in the Cayman Islands. No stamp duty is payable in respect of the issue of our securities or on an instrument of transfer
in respect of our securities.
 
Taiwan
Taxation
 
The
following is a general summary of the principal Taiwan tax consequences of the ownership and disposition of our ordinary shares by and
to a non-resident individual or non-resident entity holder (referred to herein as a “Non-Taiwan Holder”). As used in the
preceding sentence, a “non-resident individual” is a foreign national who owns our ordinary shares and is not physically
present in Taiwan for 183 days or more during any calendar year, and a “non-resident entity” is a corporation or a non-corporate
body that owns our ordinary shares and is organized under the laws of a jurisdiction other than Taiwan.
 
Holders
should consult their tax advisors concerning the Taiwan tax consequences of holding our ordinary shares and the laws of any relevant
taxing jurisdiction to which they are subject.
 
Capital
gains from the sale or disposal of our ordinary shares
 
Sale
or disposal of our ordinary shares is not regarded as the sale of Taiwan securities; thus, any gains generated therefrom by Non-Taiwan
Holders are not subject to Taiwan income tax.
 
Securities
Transaction Tax
 
Sale
of our ordinary shares by Non-Taiwan Holders is not subject to Taiwan securities transaction tax.
 

 
People’s
Republic of China Taxation
 
According
to the Enterprise Income Tax Law of the PRC (the “Income Tax Law”) and the Implementation Regulations of Enterprise Income
Tax Law of the PRC, the enterprise income tax for both domestic and foreign-invested enterprises are unified at 25%.
 
According
to the Income Tax Law, income such as dividends, rental, interest and royalty from the PRC derived by a non-resident enterprise
which has no establishment in the PRC or has establishment but the income has no relationship with such establishment is subject to
a 10% withholding tax, which may be reduced if the foreign jurisdiction of incorporation has a tax treaty with the PRC that provides
for a different withholding arrangement, unless the relevant income is specifically exempted from tax under the applicable income
tax laws, regulations, notices and decisions which relate to foreign invested enterprises and their investors.
 
According
to the Notice of the State Administration of Taxation on Issues Relating to the Administration of the Dividend Provision in Tax Treaties,
the corporate recipients of dividends distributed by PRC enterprises must satisfy the direct ownership thresholds at all times during
the twelve (12) consecutive months preceding the receipt of the dividends.
 
Certain
United States Federal Income Tax Considerations
 
The
following discussion is a summary of U.S. federal income tax considerations generally applicable to U.S. Holders (as defined below) of
the ownership and disposition of our ordinary shares. This summary applies only to U.S. Holders that hold our ordinary shares as capital
assets (generally, property held for investment) and that have the U.S. dollar as their functional currency. This summary is based on
U.S. federal tax laws in effect as of the date of this prospectus, on U.S. Treasury regulations in effect or, in some cases, proposed
as of the date of this prospectus, and judicial and administrative interpretations thereof available on or before such date. All of the
foregoing authorities are subject to change, which could apply retroactively and could affect the tax consequences described below. No
ruling has been sought from the Internal Revenue Service (“IRS”) with respect to any U.S. federal income tax considerations
described below, and there can be no assurance that the IRS or a court will not take a contrary position. Moreover, this summary
does not address the U.S. federal estate, gift, backup withholding, and alternative minimum tax considerations, or any state, local,
and non-U.S. tax considerations, relating to the ownership and disposition of our ordinary shares. The following summary does not address
all aspects of U.S. federal income taxation that may be important to particular investors in light of their individual circumstances
or to persons in special tax situations such as:
 
 

financial
institutions or financial services entities; 
 
   

insurance
companies; 
 
   

pension
plans; 
 
   

cooperatives; 
 
   

regulated
investment companies; 
 
   

real
estate investment trusts; 
 
   

broker-dealers; 
 
   

traders
that elect to use a mark-to-market method of accounting; 
 
  

governments
or agencies or instrumentalities thereof; 
 
   

certain
former U.S. citizens or long-term residents; 
 
   

tax-exempt
entities (including private foundations); 
 
   

persons
liable for alternative minimum tax; 

 
  

persons
holding stock as part of a straddle, hedging, conversion or other integrated transaction; 
 
  

persons
whose functional currency is not the U.S. dollar; 
 
  

passive
foreign investment companies; 
 
  

controlled
foreign corporations; 
 
   

persons
that actually or constructively own 5% or more of the total combined voting power of all classes of our voting stock; or 
 
   

partnerships
or other entities taxable as partnerships for U.S. federal income tax purposes, or persons holding ordinary shares through such entities. 
PROSPECTIVE
INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE APPLICATION OF U.S. FEDERAL TAXATION TO THEIR PARTICULAR CIRCUMSTANCES,
AND THE STATE, LOCAL, NON-U.S., OR OTHER TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF OUR ORDINARY SHARES.
 
For
purposes of this discussion, a “U.S. Holder” is a beneficial owner of our ordinary shares that is, for U.S. federal income
tax purposes:
 
 

an
individual who is a citizen or resident of the United States; 
 
   

a
corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in the United States
or under the laws of the United States, any state thereof or the District of Columbia; 
 
   

an
estate, the income of which is subject to U.S. federal income taxation regardless of its source; or 
 
   

a
trust that (1) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons
for all substantial decisions, or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as
a U.S. person. 
If
a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of our ordinary shares,
the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership.
Partnerships holding our ordinary shares and their partners are urged to consult their tax advisors regarding an investment in our ordinary
shares.
 
Taxation
of Dividends and Other Distributions on Our Ordinary Shares
 
Subject
to the discussion below under “Passive Foreign Investment Company Rules,” any cash distributions (including the amount of
any PRC tax withheld) paid on our ordinary shares out of our current or accumulated earnings and profits, as determined under U.S. federal
income tax principles, will generally be includible in the gross income of a U.S. Holder as dividend income on the day actually or constructively
received by the U.S. Holder. Because we do not intend to determine our earnings and profits on the basis of U.S. federal income tax principles,
any distribution we pay will generally be treated as a “dividend” for U.S. federal income tax purposes. A non-corporate U.S.
Holder will be subject to tax on dividend income from a “qualified foreign corporation” at a lower applicable capital gains
rate rather than the marginal tax rates generally applicable to ordinary income provided that certain holding period requirements are
met. A non-U.S. corporation (other than a corporation that is classified as a PFIC for the taxable year in which the dividend is paid
or the preceding taxable year) will generally be considered to be a qualified foreign corporation (i) if it is eligible for the benefits
of a comprehensive tax treaty with the United States that the U.S. Secretary of Treasury determines is satisfactory for purposes of this
provision and includes an exchange of information program, or (ii) with respect to any dividend it pays on stock that is readily tradable
on an established securities market in the United States, including Nasdaq. It is unclear whether dividends that we pay on our ordinary
shares will meet the conditions required for the reduced tax rate. However, in the event that we are deemed to be a PRC resident enterprise
under the PRC Enterprise Income Tax Law, we may be eligible for the benefits of the United States-PRC income tax treaty. If we are eligible
for such benefits, dividends we pay on our ordinary shares, would be eligible for the reduced rates of taxation described in this paragraph.
You are urged to consult your tax advisor regarding the availability of the lower rate for dividends paid with respect to our ordinary
shares. Dividends received on our ordinary shares will not be eligible for the dividends-received deduction allowed to corporations.
 

 
Dividends
will generally be treated as income from foreign sources for U.S. foreign tax credit purposes and will generally constitute passive category
income. Depending on the U.S. Holder’s individual facts and circumstances, a U.S. Holder may be eligible, subject to a number of
complex limitations, to claim a foreign tax credit not in excess of any applicable treaty rate in respect of any foreign withholding
taxes imposed on dividends received on our ordinary shares. A U.S. Holder who does not elect to claim a foreign tax credit for foreign
tax withheld may instead claim a deduction, for U.S. federal income tax purposes, in respect of such withholding, but only for a year
in which such U.S. Holder elects to do so for all creditable foreign income taxes. The rules governing the foreign tax credit are complex
and their outcome depends in large part on the U.S. Holder’s individual facts and circumstances. Accordingly, U.S. Holders are
urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.
 
Taxation
of Sale or Other Disposition of Ordinary Shares
 
Subject
to the discussion below under “Passive Foreign Investment Company Rules,” a U.S. Holder will generally recognize capital
gain or loss upon the sale or other disposition of ordinary shares in an amount equal to the difference between the amount realized upon
the disposition and the U.S. Holder’s adjusted tax basis in such ordinary shares. Any capital gain or loss will be long term if
the ordinary shares have been held for more than one year and will generally be U.S.-source gain or loss for U.S. foreign tax credit
purposes. Long-term capital gains of non-corporate taxpayers are currently eligible for reduced rates of taxation. In the event that
gain from the disposition of the ordinary shares is subject to tax in the PRC, such gain may be treated as PRC-source gain under the
United States-PRC income tax treaty. The deductibility of a capital loss may be subject to limitations. U.S. Holders are urged to consult
their tax advisors regarding the tax consequences if a foreign tax is imposed on a disposition of our ordinary shares, including the
availability of the foreign tax credit under their particular circumstances.
 
Passive
Foreign Investment Company Rules
 
A
non-U.S. corporation, such as our company, will be classified as a PFIC, for U.S. federal income tax purposes for any taxable year, if
either (i) 75% or more of its gross income for such year consists of certain types of “passive” income or (ii) 50% or more
of the value of its assets (determined on the basis of a quarterly average) during such year is attributable to assets that produce or
are held for the production of passive income. For this purpose, cash and cash equivalents are categorized as passive assets and the
company’s goodwill and other unbooked intangibles are taken into account as non-passive assets. Passive income generally includes,
among other things, dividends, interest, rents, royalties, and gains from the disposition of passive assets. We will be treated as owning
a proportionate share of the assets and earning a proportionate share of the income of any other corporation in which we own, directly
or indirectly, more than 25% (by value) of the stock.
 
Based
on our current composition of assets, subsidiaries and market capitalization (which will fluctuate from time to time), we do not expect
to be or become a PFIC for U.S. federal income tax purposes. However, no assurance can be given in this regard because the determination
of whether we will be or become a PFIC is a factual determination made annually that will depend, in part, upon the composition of our
income and assets. Furthermore, the composition of our income and assets may also be affected by how, and how quickly, we use our liquid
assets and the cash raised in this offering. Under circumstances where our revenue from activities that produce passive income significantly
increase relative to our revenue from activities that produce non-passive income, or where we determine not to deploy significant amounts
of cash for active purposes, our risk of becoming classified as a PFIC may substantially increase. In addition, because there are uncertainties
in the application of the relevant rules, it is possible that the Internal Revenue Service may challenge our classification of certain
income and assets as non-passive or our valuation of our tangible and intangible assets, each of which may result in our becoming a PFIC
for the current or subsequent taxable years. If we were classified as a PFIC for any year during which a U.S. Holder held our ordinary
shares, we generally would continue to be treated as a PFIC for all succeeding years during which such U.S. Holder held our ordinary
shares even if we cease to be a PFIC in subsequent years, unless certain elections are made.
 

 
If
we are classified as a PFIC for any taxable year during which a U.S. Holder holds our ordinary shares, and unless the U.S. Holder makes
a mark-to-market election (as described below), the U.S. Holder will generally be subject to special tax rules that have a penalizing
effect, regardless of whether we remain a PFIC, on (i) any excess distribution that we make to the U.S. Holder (which generally means
any distribution paid during a taxable year to a U.S. Holder that is greater than 125 percent of the average annual distributions paid
in the three preceding taxable years or, if shorter, the U.S. Holder’s holding period for the ordinary shares), and (ii) any gain
realized on the sale or other disposition of ordinary shares. Under these rules,
 
 

the
U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S. Holder’s holding period for the ordinary
shares; 
 
   

the
amount allocated to the current taxable year and any taxable years in the U.S. Holder’s holding period prior to the first taxable
year in which we are classified as a PFIC (each, a “pre-PFIC year”), will be taxable as ordinary income; 
 
   

the
amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect
for individuals or corporations, as appropriate, for that year; and 
 
   

an
additional tax equal to the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable
to each prior taxable year, other than a pre-PFIC year, of the U.S. Holder. 
If
we are treated as a PFIC for any taxable year during which a U.S. Holder holds our ordinary shares, or if any of our subsidiaries is
also a PFIC, such U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of any lower-tier PFICs for
purposes of the application of these rules. U.S. Holders are urged to consult their tax advisors regarding the application of the PFIC
rules to any of our subsidiaries.
 
As
an alternative to the foregoing rules, a U.S. Holder of “marketable stock” in a PFIC may make a mark-to-market election with
respect to such stock, provided that such stock is “regularly traded” within the meaning of applicable U.S. Treasury regulations.
If our ordinary shares qualify as being regularly traded, and an election is made, the U.S. Holder will generally (i) include as ordinary
income for each taxable year that we are a PFIC the excess, if any, of the fair market value of ordinary shares held at the end of the
taxable year over the adjusted tax basis of such ordinary shares and (ii) deduct as an ordinary loss the excess, if any, of the adjusted
tax basis of the ordinary shares over the fair market value of such ordinary shares held at the end of the taxable year, but such deduction
will only be allowed to the extent of the amount previously included in income as a result of the mark-to-market election. The U.S. Holder’s
adjusted tax basis in the ordinary shares would be adjusted to reflect any income or loss resulting from the mark-to-market election.
If a U.S. Holder makes a mark-to-market election in respect of a corporation classified as a PFIC and such corporation ceases to be classified
as a PFIC, the U.S. Holder will not be required to take into account the gain or loss described above during any period that such corporation
is not classified as a PFIC. If a U.S. Holder makes a mark-to-market election, any gain such U.S. Holder recognizes upon the sale or
other disposition of our ordinary shares in a year when we are a PFIC will be treated as ordinary income and any loss will be treated
as ordinary loss, but such loss will only be treated as ordinary loss to the extent of the net amount previously included in income as
a result of the mark-to-market election.
 
Because
a mark-to-market election cannot be made for any lower-tier PFICs that we may own, a U.S. Holder may continue to be subject to the PFIC
rules with respect to such U.S. Holder’s indirect interest in any investments held by us that are treated as an equity interest
in a PFIC for U.S. federal income tax purposes.
 
Furthermore,
as an alternative to the foregoing rules, a U.S. Holder that owns stock of a PFIC generally may make a “qualified electing fund”
election regarding such corporation to elect out of the PFIC rules described above regarding excess distributions and recognized gains.
However, we do not intend to provide information necessary for U.S. Holders to make qualified electing fund elections which, if available,
would result in tax treatment different from the general tax treatment for PFICs described above.
 

 
If
a U.S. Holder owns our ordinary shares during any taxable year that we are a PFIC, the U.S. Holder must generally file an annual Internal
Revenue Service Form 8621 and provide such other information as may be required by the U.S. Treasury Department, whether or not a mark-to-market
election is or has been made. If we are or become a PFIC, you should consult your tax advisor regarding any reporting requirements that
may apply to you.
 
You
should consult your tax advisors regarding how the PFIC rules apply to your investment in our ordinary shares.
 
Non-U.S.
Holders
 
Cash
dividends paid or deemed paid to a Non-U.S. Holder with respect to the ordinary shares generally will not be subject to U.S. federal
income tax unless such dividends are effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the
United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base that
such holder maintains or maintained in the United States).
 
In
addition, a Non-U.S. Holder generally will not be subject to U.S. federal income tax on any gain attributable to a sale or other taxable
disposition of the ordinary shares unless such gain is effectively connected with its conduct of a trade or business in the United States
(and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base that such holder maintains
or maintained in the United States) or the Non-U.S. Holder is an individual who is present in the United States for 183 days or more
in the taxable year of such sale or other disposition and certain other conditions are met (in which case, such gain from U.S. sources
generally is subject to U.S. federal income tax at a 30% rate or a lower applicable tax treaty rate).
 
Cash
dividends and gains that are effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the United States
(and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base that such holder maintains
or maintained in the United States) generally will be subject to regular U.S. federal income tax at the same regular U.S. federal income
tax rates as applicable to a comparable U.S. Holder and, in the case of a Non-U.S. Holder that is a corporation for U.S. federal income
tax purposes, may also be subject to an additional branch profits tax at a 30% rate or a lower applicable tax treaty rate.
 
Information
Reporting and Backup Withholding
 
Certain
U.S. Holders are required to report information to the Internal Revenue Service relating to an interest in “specified foreign financial
assets,” including shares issued by a non-United States corporation, for any year in which the aggregate value of all specified
foreign financial assets exceeds $50,000 (or a higher dollar amount prescribed by the Internal Revenue Service), subject to certain exceptions
(including an exception for shares held in custodial accounts maintained with a U.S. financial institution). These rules also impose
penalties if a U.S. Holder is required to submit such information to the Internal Revenue Service and fails to do so.
 
In
addition, dividend payments with respect to our ordinary shares and proceeds from the sale, exchange or redemption of our ordinary shares
may be subject to additional information reporting to the IRS and possible U.S. backup withholding. Backup withholding will not apply,
however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification on IRS Form
W-9 or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status generally must
provide such certification on IRS Form W-9. U.S. Holders are urged to consult their tax advisors regarding the application of the U.S.
information reporting and backup withholding rules.
 
Backup
withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability,
and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund
with the IRS and furnishing any required information. We do not intend to withhold taxes for individual shareholders. However, transactions
effected through certain brokers or other intermediaries may be subject to withholding taxes (including backup withholding), and such
brokers or intermediaries may be required by law to withhold such taxes.
 
THE
PRECEDING DISCUSSION OF U.S. FEDERAL TAX CONSIDERATIONS IS FOR GENERAL INFORMATION PURPOSES ONLY. IT IS NOT TAX ADVICE. EACH PROSPECTIVE
INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE PARTICULAR U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF PURCHASING,
HOLDING AND DISPOSING OF OUR ORDINARY SHARES, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAWS.
 

 
UNDERWRITING
 
Under
the terms and subject to the conditions of an underwriting agreement, the underwriters named below, for
whom ViewTrade Securities, Inc. is acting as the representative and sole book-running manager, have severally agreed to purchase, and
we have agreed to sell to them, the number of our ordinary shares at the initial public offering price, less the underwriting discounts
and commissions, as set forth on the cover page of this prospectus and as indicated below:
 
Underwriters
 
Number
of
SharesViewTrade
Securities, Inc.
 
  

 Total
 
5,250,000  
The
underwriters are offering the shares subject to their acceptance of the shares from us and subject to prior sale. The underwriting agreement
provides that the obligations of the underwriters to pay for and accept delivery of the ordinary shares offered by this prospectus are
subject to the approval of certain legal matters by their counsel and to other conditions. The underwriters are obligated to take and
pay for all of the ordinary shares offered by this prospectus if any such shares are taken. However, the underwriters are not required
to take or pay for the shares covered by the underwriters’ option to purchase additional shares described below.
 
We
have granted to the underwriters an option, exercisable for 45 days from the date of this prospectus, to purchase up to additional ordinary
shares at the initial public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions.
The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering
contemplated by this prospectus. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions,
to purchase approximately the same percentage of the additional ordinary shares as the number listed next to the underwriter’s
name in the preceding table bears to the total number of ordinary shares listed next to the names of all underwriters in the preceding
table.
 
The
underwriters will offer the shares to the public at the initial public offering price set forth on the cover of this prospectus and to
selected dealers at the initial public offering price less a selling concession not in excess of $[  ] per share. After this offering,
the initial public offering price, concession and reallowance to dealers may be reduced by the representative. No change in those terms
will change the amount of proceeds to be received by us as set forth on the cover of this prospectus. The securities are offered by the
underwriters as stated herein, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in
part.
 
Discount,
Commissions and Expenses
 
The
underwriting discounts and commissions are equal to 7.5% of the initial public offering price set forth on the cover of this prospectus.
 

 
The
following table shows the per share and total initial public offering price, underwriting discounts and commissions, and proceeds before
expenses to us. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase up
to an additional ordinary shares.
 

  
Per Share  
Total Without Exercise of Over-allotment Option  
Total With Full Exercise of Over-allotment Option Initial public offering price 
$4.00  
$ 21,000,000   
$ 24,150,000  Underwriting discounts and commissions to be paid by us 
$0.30  
$ 1,575,000   
$ 1,811,250  Proceeds, before expenses, to us 
$3.70  
$ 19,425,000   
$ 22,338,750  
 
We
will also pay to the representative by deduction from the net proceeds of the offering contemplated herein, a non-accountable expense
allowance equal to one and one percent (1.0%) of the gross proceeds received by us from the sale of our ordinary shares.

 
We
paid an expense deposit of $35,000 to the representative, within three days of the execution of the letter of intent between us and the
representative, and will pay an additional $35,000 upon receipt of the SEC’s first comments to the registration statement of which
this prospectus forms a part, for the representative’s anticipated out-of-pocket expenses; any expense deposits will be returned
to us to the extent the representative’s out-of-pocket accountable expenses are not actually incurred in accordance with FINRA
Rule 5110(f)(2)(C).
 
We
have agreed to reimburse the representative’s accountable expenses of the offering, up to $150,000, including, but not limited
to: (i) the legal and due diligence fees and expenses incurred by the representative; (ii) translation costs for due diligence purposes;
(iii) the reasonable cost for road show meetings and preparation of a PowerPoint presentation; and (iv) all reasonable travel and lodging
expenses incurred by the representative or its counsel in connection with visits to, and examinations of, our company.
 
We
estimate that the total expenses of the offering payable by us, excluding the underwriting discounts and commissions and non-accountable
expense allowance, will be approximately $1,815,262, including a maximum aggregate reimbursement of $150,000 of representative’s
accountable expenses.
 
In
addition, we agreed, until the effectiveness of the registration statement in connection with this offering, not to negotiate with any
other broker-dealer relating to a possible private and/or public offering of the securities without the written consent of the representative.
If, prior to the 12 month period following the effective date of our letter of intent with the representative, we (i) do not complete
the offering and listing of the securities on a national securities exchange and enter into discussions regarding a letter of intent
or similar agreement with a third party broker-dealer and enter into a new engagement letter, and/or (ii) effect a private and/or public
offering of the securities with another broker-dealer or any other person without the written consent of the representative, we will
be liable to the representative for its accountable expenses of up to $150,000 and a breakup fee in the amount of $250,000;
provided, however, that such fees shall be subject to FINRA Rule 5110(f)(2)(D)(ii) and shall not apply if and to the extent the representative
has advised us of the representative’s inability or unwillingness to proceed with this offering.
 
We
have applied to list our ordinary shares on the Nasdaq Capital Market under the symbol “YMAT.” There is no assurance that
such application will be approved, and if our application is not approved, this offering may not be completed.
 
For
a period of one year from the effective date of the registration statement of which this prospectus forms a part, the representative
shall have the right to send a representative to observe each meeting of our board of directors; provided, that (i) such representative
shall sign a Regulation FD compliant confidentiality agreement which is reasonably acceptable to the representative and its counsel;
and (ii) upon written notice to the representative, we may exclude such representative from meetings where, upon the written opinion
of our counsel, such representative’s presence would compromise an attorney-client privilege.
 

 
Representative’s
Warrants
 
In
addition, we have agreed to issue warrants to the representative of the underwriters to purchase a number of ordinary shares equal to
10% of the total number of ordinary shares sold in this offering (including any ordinary shares sold pursuant to an exercise of the over-allotment
option). Such warrants shall have an exercise price equal to 125% of the offering price of the ordinary shares sold in this offering.
The representative’s warrants may be exercised in cash or on a cashless basis, will be exercisable for five years from the commencement
of sales in this offering and will terminate on the fifth anniversary of the commencement of sales. The representative’s warrants
and the underlying shares will be deemed compensation by FINRA, and therefore will be subject to FINRA Rule 5110(g)(1). In accordance
with FINRA Rule 5110(g)(1), and except as otherwise permitted by FINRA rules, neither the representative’s warrants nor any of
our shares issued upon exercise of the representative’s warrants may be sold, transferred, assigned, pledged or hypothecated, or
be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition
of such securities by any person, for a period of 180 days immediately following the commencement of sales in this offering. In addition,
although the representative’s warrants and the underlying ordinary shares will be registered by the registration statement of which
this prospectus forms a part, we have also agreed that the warrants will provide for registration rights in certain cases. These registration
rights apply to all of the securities directly and indirectly issuable upon exercise of the representative’s warrants. The piggyback
registration right provided will not be greater than seven years from the effective date of the offering in compliance with FINRA Rule
5110(f)(2)(G)(v).
 
We
will bear all fees and expenses attendant to registering the ordinary shares issuable upon exercise of the warrants. The exercise price
and number of ordinary shares issuable upon exercise of the warrants may be adjusted in certain circumstances, including in the event
of a stock dividend, extraordinary cash dividend or our recapitalization, reorganization, merger or consolidation.
 
Indemnification;
Indemnification Escrow
 
We
have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act and liabilities
arising from breaches of representations and warranties contained in the underwriting agreement, or to contribute to payments that the
underwriters may be required to make in respect of those liabilities.
 
Concurrently
with the execution and delivery of the underwriting agreement, the Company will set up an escrow account with a third-party escrow agent
in the United States and will fund such account with $600,000 from this offering that may be utilized by the underwriters to fund
any bona fide indemnification claims of the underwriters arising during the 12 month period following the closing of the offering. The
escrow account will be interest bearing, and we will be free to invest the assets in securities. All funds that are not subject to an
indemnification claim will be returned to us after the applicable period expires. The Company will pay the reasonable fees and expenses
of the escrow agent.
 
Lock-Up
Agreements
 
We,
our officers, directors and principal shareholders
(5% or more shareholders, provided that the representative may in its discretion require a lower percentage threshold) have agreed, subject
to certain exceptions, to a six (6) month “lock-up” period from the date on which the trading of the ordinary shares on a
National Securities Exchange commences with respect to the ordinary shares that they beneficially own, including the issuance of shares
upon the exercise of convertible securities and options that are currently outstanding or which may be issued. This means that, for a
period of six (6) months following the date on which the trading of the ordinary shares on a National Securities Exchange commences,
such persons may not offer, sell, pledge or otherwise dispose of these securities without the prior written consent of the representative.
 
The
representative has no present intention to waive or shorten the lock-up period; however, the terms of the lock-up agreements may be waived
at its discretion. In determining whether to waive the terms of the lock-up agreements, the representative may base its decision on its
assessment of the relative strengths of the securities markets and companies similar to ours in general, and the trading pattern of,
and demand for, our securities in general.
 
Pricing
of the Offering
 
Prior
to this offering, there has been no public market for our ordinary shares. The initial public offering price of the shares has been negotiated
between us and the underwriters. Among the factors considered in determining the initial public offering price of the shares, in addition
to the prevailing market conditions, are our historical performance, estimates of our business potential and earnings prospects, an assessment
of our management and the consideration of the above factors in relation to market valuation of companies in related businesses.
 

 
No
Sales of Similar Securities
 
We
have agreed not to offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of, directly or indirectly,
any ordinary shares or any securities convertible into or exercisable or exchangeable for ordinary shares or enter into any swap or other
agreement that transfers, in whole or in part, any of the economic consequences of ownership of our ordinary shares, whether any such
transaction is to be settled by delivery of ordinary shares or such other securities, in cash or otherwise, without the prior written
consent of the representative, for a period of days from the effective date of the registration statement of which this prospectus forms
a part.
 
Electronic
Offer, Sale and Distribution of Securities
 
A
prospectus in electronic format may be made available on the websites maintained by the underwriters or selling group members, if any,
participating in this offering and the underwriters may distribute prospectuses electronically. The underwriters may agree to allocate
a number of ordinary shares to selling group members for sale to their online brokerage account holders. The ordinary shares to be sold
pursuant to internet distributions will be allocated on the same basis as other allocations. Other than the prospectus in electronic
format, the information on these websites is not part of, nor incorporated by reference into, this prospectus or the registration statement
of which this prospectus forms a part, has not been approved or endorsed by us or the underwriters, and should not be relied upon by
investors.
 
Price
Stabilization, Short Positions and Penalty Bids
 
In
connection with this offering, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of
our ordinary shares. Specifically, the underwriters may sell more shares than they are obligated to purchase under the underwriting agreement,
creating a short position. A short sale is covered if the short position is no greater than the number of shares available for purchase
by the underwriters under option to purchase additional shares. The underwriters can close out a covered short sale by exercising the
option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out a covered
short sale, the underwriters will consider, among other things, the open market price of shares compared to the price available under
the option to purchase additional shares. The underwriters may also sell shares in excess of the option to purchase additional shares,
creating a naked short position. The underwriters must close out any naked short position by purchasing shares in the open market. A
naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price
of the shares in the open market after pricing that could adversely affect investors who purchase in the offering.
 
The
underwriters may also impose a penalty bid. This occurs when a particular underwriter or dealer repays selling concessions allowed to
it for distributing our ordinary shares in this offering because such underwriter repurchases those shares in stabilizing or short covering
transactions.
 
Finally,
the underwriters may bid for, and purchase, our ordinary shares in market making transactions, including “passive” market
making transactions as described below.
 
These
activities may stabilize or maintain the market price of our ordinary shares at a price that is higher than the price that might otherwise
exist in the absence of these activities. The underwriters are not required to engage in these activities, and may discontinue any of
these activities at any time without notice. These transactions may be effected on the Nasdaq Capital Market, in the over-the-counter
market, or otherwise.
 

 
Passive
Market Making
 
In
connection with this offering, the underwriters may engage in passive market making transactions in our ordinary shares on the Nasdaq
Capital Market in accordance with Rule 103 of Regulation M under the Exchange Act, during a period before the commencement of offers
or sales of the shares and extending through the completion of the distribution. A passive market maker must display its bid at a price
not in excess of the highest independent bid of that security. However, if all independent bids are lowered below the passive market
maker’s bid, then that bid must then be lowered when specified purchase limits are exceeded.
 
Potential
Conflicts of Interest
 
The
underwriters and their affiliates may, from time to time, engage in transactions with and perform services for us in the ordinary course
of their business for which they may receive customary fees and reimbursement of expenses. In the ordinary course of their various business
activities, the underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities
(or related derivative securities) and financial instruments (including bank loans) for their own accounts and for the accounts of their
customers and such investment and securities activities may involve securities and/or instruments of our Company. The underwriters and
their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities
or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and
instruments.
 
Other
Relationships
 
The
underwriters and certain of their affiliates are full service financial institutions engaged in various activities, which may include
securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment,
hedging, financing and brokerage activities. Some of the underwriters and certain of their affiliates may in the future engage in investment
banking and other commercial dealings in the ordinary course of business with us and our affiliates, for which they may in the future
receive customary fees, commissions and expenses.
 
In
addition, in the ordinary course of their business activities, the underwriters and their affiliates may make or hold a broad array of
investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank
loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities
and/or instruments of ours or our affiliates. The underwriters and their affiliates may also make investment recommendations and/or publish
or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that
they acquire, long and/or short positions in such securities and instruments.
 

Nasdaq
Listing
 
We
have applied to have our ordinary shares listed on the Nasdaq Capital Market, or Nasdaq, under the symbol “YMAT.”
We cannot guarantee that we will be successful in listing our ordinary shares on the Nasdaq; however, we will not complete this offering
unless we are so listed.
 

 
EXPENSES
RELATING TO THIS OFFERING
 
Set
forth below is an itemization of the total expenses, excluding underwriting discounts and commissions, that we expect to incur in connection
with this offering. With the exception of the SEC registration fee, the Nasdaq listing fee and the filing fee payable to Financial Industry
Regulatory Authority, Inc., or FINRA, all amounts are estimates.
 

SEC Registration Fee 
$ 2,463  Nasdaq Listing Fee 
$5,000 FINRA filing fee 
$ 3,087  Legal Fees and Expenses 
$735,000 Accounting Fees and Expenses 
$850,054 Printing and Engraving Expenses 
$4,995 Miscellaneous Expenses 
$ 214,663  Total 
$ 1,815,262  
 
LEGAL
MATTERS
 
We
are being represented by Loeb & Loeb LLP, New York, with respect to certain legal matters as to United States federal securities
and New York State law. The validity of the ordinary shares offered by this prospectus and legal matters as to Cayman Islands law will
be passed upon for us by Ogier. Legal matters as to PRC law will be passed upon for us by L&L-Leaven, Attorneys-at-Law. Legal matters
as to Taiwan law will be passed upon for us by Lee and Li, Attorneys-at-Law. Loeb & Loeb LLP may rely upon Ogier with respect to
matters governed by Cayman Islands law, L&L-Leaven, Attorneys-at-Law with respect to matters governed by PRC law and Lee and Li,
Attorneys-at-Law with respect to matters governed by Taiwan law. Ellenoff Grossman & Schole LLP is acting as U.S. counsel for the
underwriters.
 
EXPERTS
 
The
consolidated financial statements as of December 31, 2020 and 2021, and for each of the two years in the period ended December
31, 2021, included in this Prospectus have been so included in reliance on the report of PricewaterhouseCoopers, Taiwan, an independent
registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
 
The
registered business address of PricewaterhouseCoopers, Taiwan is 27F, No. 333, Sec. 1, Keelung Rd., Xinyi Dist., Taipei 11012, Taiwan.
 
CHANGE
IN REGISTRANT’S CERTIFYING ACCOUNTANT
 
Deloitte & Touche was dismissed as our
independent auditor on August 28, 2020. The registered address of Deloitte & Touche is 20/F, Taipei Nan Shan Plaza, No.
100, Songren Rd., Xinyi Dist., Taipei, Taiwan 11073.
 
The dismissal of Deloitte & Touche was
approved by our board of directors. 
 

 
During the fiscal years ended December 31, 2019 and
2018 and the subsequent interim period through August 28, 2020, there were no (1) disagreements with Deloitte & Touche on
any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures, under the auditing
standards and reporting standards of Republic of China, as explained below, which disagreements if not resolved to their satisfaction
would have caused them to make reference in connection with their opinion to the subject matter of the disagreement, or (2) reportable
events as described in Item 16F of Form 20-F.
 
Deloitte & Touche conducted the audit in accordance
with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards
generally accepted in the Republic of China and issued its audit opinion on the consolidated financial statements of J-Star Holding Co.,
Ltd. as of and for the fiscal years ended December 31, 2019 and 2018 in accordance with the Regulations Governing the Preparation of
Financial Reports by Securities Issuers, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS),
IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission
of the Republic of China, of which did not contain any adverse opinion or a disclaimer of opinion and was not qualified or modified
as to uncertainty, audit scope or accounting principles.
 
On September 21, 2020,
we engaged PricewaterhouseCoopers, Taiwan as our independent registered public accounting firm to audit our consolidated financial
statements as of and for the fiscal years ended December 31, 2019 and 2020. During the fiscal years
ended December 31, 2019 and 2018 and the subsequent interim period through September 21, 2020, we did not consult with
PricewaterhouseCoopers, Taiwan with respect to (i) the application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on our financial statements, and neither a written report
nor oral advice was provided to us that PricewaterhouseCoopers, Taiwan concluded was an important factor considered by us in
reaching a decision as to any accounting, auditing or financial reporting issue, or (ii) any matter that was either the subject of a
“disagreement,” as defined in Item 16F(a)(1)(iv) of Form 20-F (and the related instructions thereto), or a
“reportable event” as defined in Item 16F(a)(1)(v) of Form 20-F.
 
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
 
We
have filed with the SEC a registration statement on Form F-1 under the Securities Act with respect to the ordinary shares described herein.
This prospectus, which constitutes part of the registration statement, does not include all of the information contained in the registration
statement. You should refer to the registration statement and its exhibits for additional information. Whenever we make reference in
this prospectus to any of our contracts, agreements or other documents, the references are not necessarily complete and you should refer
to the exhibits attached to the registration statement for copies of the actual contract, agreement or other document. We anticipate
making these documents publicly available, free of charge, on our website at www.ymaunivers.com as soon as reasonably practicable after
filing such documents with the SEC. The information on our website is not incorporated by reference into this prospectus and should not
be considered to be a part of this prospectus. We have included our website address as an inactive textual reference only.
 
You
can read the registration statement and our future filings with the SEC, over the Internet at the SEC’s web site at http://www.sec.gov.
 
Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room.
 

 
J-STAR
HOLDING CO., LTD.
 
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
 
J-STAR
HOLDING CO., LTD. AND SUBSIDIARIES
CONSOLIDATED
FINANCIAL STATEMENTS AND
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2021

 
 

 
J-Star
Holding Co., Ltd. AND SUBSIDIARIES
 
CONSOLIDATED
FINANCIAL STATEMENTS AND
 
INDEPENDENT
AUDITOR’S REVIEW REPORT
 
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2021
 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Board of Directors and Shareholders of J-Star Holding Co., Ltd.
 
Opinion on the Financial Statements
 
We have
audited the accompanying consolidated balance sheets of J-Star Holding Co., Ltd. and its subsidiaries (the “Company”) as
of December 31, 2020 and 2021, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows
for each of the two years in the period ended December 31, 2021, including the related notes (collectively referred to as the “consolidated
financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2020 and 2021, and the results of its operations and its cash flows for each of the two years
in the period ended December 31, 2021, in conformity with International Financial Reporting Standards as issued by the International
Accounting Standards Board.
 
Basis for opinion
 
These consolidated financial statements are the
responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial
statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
 
We conducted our audits of these consolidated
financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
 
Our audits included performing procedures to assess
the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide
a reasonable basis for our opinion.
 
/s/ PricewaterhouseCoopers, Taiwan
Taipei, Taiwan
Republic of China
May 25, 2022
 
We have served as the Company’s auditor since 2020.

 

 
J-Star
Holding Co., Ltd. AND SUBSIDIARIES

CONSOLIDATED
BALANCE SHEETS

DECEMBER
31, 2020 AND 2021

(Expressed
in United States dollars)

 

  
  
December 31, 2020  
December 31, 2021 Assets 
Notes 
AMOUNT  
AMOUNT Current assets 
  
    
   Cash and cash equivalents 

$1,336,820  
$2,850,817 Current financial assets at amortized cost 

 771,592  
 273,004 Accounts receivable, net 

 5,118,874  
 4,204,232 Accounts receivable due from related parties, net 
32 
 –  
 144,538 Other receivables 
  
 858,556  
 184,729 Inventories 

 11,699,660  
 23,010,057 Prepayments 

 1,670,669  
 2,366,290 Other current assets 
  
 201,510  
 60,130 Current assets 
  
 21,657,681  
 33,093,797 Non-current assets 
  
    
   Non-current financial assets at fair value through other comprehensive income 
  
 –  
 21,758 Property, plant and equipment 
10 
 3,955,568  
 3,967,262 Right-of-use assets 
11 
 505,034  
 1,646,748 Intangible assets 
  
 21,816  
 14,021 Deferred tax assets 
28 
 368,009  
 609,047 Other non-current assets, others 
12 
 2,084,651  
 1,073,047 Non-current assets 
  
 6,935,078  
 7,331,883 Current tax assets 
  
$28,592,759  
$40,425,680 

 
(Continued)
 

 
J-Star
Holding Co., Ltd. AND SUBSIDIARIES

CONSOLIDATED
BALANCE SHEETS

DECEMBER
31, 2020 AND 2021

(Expressed
in United States dollars)

 

  
  
December 31, 2020  
December 31, 2021 Liabilities and Equity 
Notes 
AMOUNT  
AMOUNT Current liabilities 
  
    
   Short-term borrowings 
13 
$2,743,646  
$5,707,934 Current contract liabilities 
21 
 601,351  
 380,271 Notes payable 
  
 9,046  
 – Accounts payable 
  
 3,749,984  
 6,109,256 Accounts payable to related parties 
  
 –  
 – Other payables 
14 
 7,481,911  
 10,915,406 Loans and other payables to related parties 
32 
 442,473  
 2,913,570 Current tax liabilities 
  
 1,786,265  
 2,109,306 Current lease liabilities 
  
 1,199,345  
 400,711 Other current liabilities 
  
 605,216  
 1,364,917 Current liabilities 
  
 18,619,237  
 29,901,371 Non-current liabilities 
  
    
   Long-term loans 
15 
 429,000  
 1,066,602 Non-current provisions 
  
 –  
 38,911 Deferred tax liabilities 
28 
 34,405  
 49,468 Non-current lease liabilities 
  
 218,827  
 97,569 Guarantee deposits received 
  
 72,239  
 – Non-current liabilities 
  
 754,471  
 1,252,550 Liabilities 
  
 19,373,708  
 31,153,921 Equity 
  
    
   Equity attributable to owners of parent 
  
    
   Share capital 
18 
    
   Ordinary share 
  
 6,805,098  
 6,805,098 Capital surplus 
19 
    
   Capital surplus 
  
 8,397,244  
 8,528,956 Retained earnings 
20 
    
   Accumulated deficit 
  
 (5,751,639) 
 (5,884,541)Other equity interest 
  
    
   Other equity interest 
  
 (231,652) 
 (177,754) Equity 
  
 9,219,051  
 9,271,759 Total liabilities and equity 
  
$28,592,759  
$40,425,680 
 

The
accompanying notes are an integral part of these consolidated financial statements.
 

 
J-Star
Holding Co., Ltd. AND SUBSIDIARIES

CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME

YEARS
ENDED DECEMBER 31, 2020 AND 2021

(Expressed
in United States dollars)

 
  
  
Year ended December 31   
  
2020  
2021 Items 
Notes 
AMOUNT  
AMOUNT Operating revenue 
21 
$22,178,572  
$31,328,379 Cost of revenue 
8,26,27 
 (14,816,905) 
 (22,338,204)Gross profit from operations 
  
 7,361,667  
 8,990,175 Operating expenses 
26,27 
    
   Selling expenses 
  
 (1,386,309) 
 (1,997,810)Administrative expenses 
  
 (2,517,208) 
 (5,080,761)Research and development expenses 
  
 (1,689,817) 
 (1,660,330)Expected credit losses 
37 
 (81,947) 
 (20,481)Other income and expenses 
22 
 13,691  
 (350,589)Net operating income (loss) 
  
 1,700,077  
 (119,796)Non-operating income and expenses 
  
    
   Interest income 
23 
 2,802  
 2,156 Other gains and losses 
24 
 180,463 
 370,180Finance costs 
25 
 (417,923) 
 (225,260)Non-operating income and expenses 
  
 (234,658) 
 147,076Profit before income tax 
  
 1,465,419  
 27,280 Income tax expense 
28 
 (355,273) 
 (160,182)Profit (Loss) after income tax 
  
$1,110,146  
$(132,902)Components of other comprehensive income that will be reclassified to profit or loss 
  
    
   Exchange differences on translation of
foreign operations 
  
$(169,551) 
$53,898 Total comprehensive income (loss) 
  
$940,595  
$(79,004)  
  
    
   Basic earnings per share 
  
    
   Basic earnings per share 
29 
$0.08  
$(0.01)
 

The
accompanying notes are an integral part of these consolidated financial statements.
 

 
J-Star
Holding Co., Ltd. AND SUBSIDIARIES

CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY

YEARS
ENDED DECEMBER 31, 2020 AND 2021

(Expressed
in United States dollars)

 
  
  
Equity attributable to owners of the parent  
    
 
  
  
  
Other equity interests  
  
   
Notes 
Ordinary share  
Capital
surplus  
Accumulated
deficit  
Exchange
differences on translation of foreign financial statements  
Treasury
shares  
Total
equity Year 2020 
  
    
    
    
    
    
   Balance at January 1, 2020 
  
$7,770,896  
$9,520,046  
$(4,165,476) 
$(62,101) 
$(8,022,078) 
$5,041,287 Profit for the year 
  
 –  
 –  
 1,110,146  
 –  
 –  
 1,110,146 Other comprehensive income 
  
 –  
 –  
 –  
 (169,551) 
 –  
 (169,551)Total comprehensive income 
  
 –  
 –  
 1,110,146  
 (169,551) 
 –  
 940,595 Share-based payments 
17,19 
 –  
 46,944  
 –  
 –  
 –  
 46,944 Treasury shares reissue 
18,19 
 –  
 153,780  
 –  
 –  
 3,036,445  
 3,190,225 Treasury shares retirement 
18,19 
 (965,798) 
 (1,323,526) 
 (2,696,309) 
 –  
 4,985,633  
 – Balance at December 31, 2020 
  
$6,805,098  
$8,397,244  
$(5,751,639) 
$(231,652) 
$-  
$9,219,051 Year 2021 
  
    
    
    
    
    
   Balance at January 1, 2021 
  
$6,805,098  
$8,397,244  
$(5,751,639) 
$(231,652) 
$-  
$9,219,051 Loss for the year 
  
 –  
 –  
 (132,902) 
 –  
 –  
 (132,902)Other comprehensive income 
  
 –  
 –  
 –  
 53,898  
 –  
 53,898 Total comprehensive income 
  
 –  
 –  
 (132,902) 
 53,898  
 –  
 (79,004)Share-based payments 
17,19 
 –  
 131,712  
 –  
 –  
 –  
 131,712 Balance at December 31, 2021 
  
$6,805,098  
$8,528,956  
$(5,884,541) 
$(177,754) 
$-  
$9,271,759   
The
accompanying notes are an integral part of these consolidated financial statements.
 

 
J-Star
Holding Co., Ltd. AND SUBSIDIARIES

CONSOLIDATED
STATEMENTS OF CASH FLOWS

YEARS
ENDED DECEMBER 31, 2020 AND 2021

(Expressed
in United States dollars)

 

  
  
Year ended December 31   
Notes 
2020  
2021 CASH FLOWS FROM OPERATING ACTIVITIES 
  
    
   Profit before tax 
  
$1,465,419  
$27,280 Adjustments 
  
    
   Adjustments to reconcile profit (loss) 
  
    
   Depreciation expenses 
10,26 
 643,003  
 996,921 Depreciation expenses-Right-of-use assets 
11,26 
 222,821  
 330,367 Amortization expenses 
26 
 29,534  
 30,701 Expected credit losses 
37 
 81,947  
 20,481 Share- based payment expenses 
17,27 
 46,944  
 131,712 Interest income 
23 
 (2,802) 
 (2,156)Interest expense 
25 
 417,923  
 225,260  Loss on disposal of property, plant and equipment 
22 
 71,801  
 244,483 Gains arising from lease modifications 
11,22 
 (1,557) 
 – Changes in operating assets and liabilities 
  
    
   Changes in operating assets 
  
    
   Accounts receivable 
  
 240,728  
 733,089 Other receivables 
  
 237,967  
 673,827 Other receivables – related parties 
  
 49,830  
 – Inventories 
  
 (3,522,931) 
 (11,310,397)Prepayments 
  
 1,109,801  
 (421,046)Other current asset 
  
 (95,282) 
 149,260 Other non-current assets 
  
 (276,697) 
 (114,204)Changes in operating liabilities 
  
    
   Current contract liabilities 
  
 (384,788) 
 (221,080)Notes payable 
  
 1,682  
 (9,046)Accounts payable 
  
 850,274  
 2,359,272 Other payables 
  
 17,469  
 6,211,585 Other current liabilities 
  
 (328,548) 
 (289,233)Non-current provisions 
  
 –  
 38,911 Cash inflow (outflow) generated from operations 
  
 874,538  
 (194,013)Interest received 
  
 2,802  
 2,156 Interest paid 
  
 (537,994) 
 (253,116)Income tax paid 
  
 (99,938) 
 (94,242)Net cash flows from (used in) operating
activities 
  
 239,408  
 (539,215)CASH FLOWS FROM INVESTING ACTIVITIES 
  
    
   (Increase) decrease in financial assets at amortized cost 
  
 (704,776) 
 498,588 Acquisition of Non-current financial assets at fair value through other comprehensive income 
  
 –  
 (21,758)Acquisition of property, plant and equipment 
30 
 (659,266) 
 (1,256,121)Proceeds from disposal of property, plant and equipment 
  
 138,188  
 – Acquisition of intangible assets 
  
 (12,827) 
 (22,496)Increase in guarantee deposits paid 
  
 –  
 (94,140)Net cash flows used in investing activities 
  
 (1,238,681) 
 (895,927)CASH FLOWS FROM FINANCING ACTIVITIES 
  
    
   Proceeds from short-term bank loans 
31 
 2,752,858  
 11,455,363 Payments on short-term loans 
31 
 (741,075) 
 (8,505,303)Proceeds from long-term bank loans 
31 
 676,000  
 2,417,804 Payments on long-term bank loans 
31 
 (37,556) 
 (764,800)Decrease in other payables to related parties 
31 
 (1,137,495) 
 (363,007)Payment on lease liabilities 
31 
 (155,052) 
 (973,796)Decrease in long-term notes and accounts payable to
related parties 
31 
 (498,894) 
 – Prepayment of listing expenses 
  
 –  
 (274,339)Decrease in guarantee deposits
received 
  
 –  
 (72,239)Net cash flows from financing activities 
  
 858,786  
 2,919,683 Effect of foreign exchange rate changes 
  
 (85,751) 
 29,456 Net increase (decrease) in cash and cash equivalents 
  
 (226,238) 
 1,513,997 Cash and cash equivalents at beginning of year 
  
 1,563,058  
 1,336,820 Cash and cash equivalents at end of year 
  
$1,336,820  
$2,850,817 

 
The
accompanying notes are an integral part of these consolidated financial statements.
 

 
J-Star
Holding Co., Ltd. AND SUBSIDIARIES

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2021
 
1.
Corporate and group information
 
J-Star
Holding Co., Ltd. (the “Company”) was incorporated in the Cayman Islands in May 2016. The Company and its subsidiaries (collectively
referred herein as the “Group”) are primarily engaged in manufacturing and trading business of bicycles, sports accessories
and carbon fiber composite products.
 
These
consolidated financial statements have been prepared by management on a going concern basis which assumes that the Company will be able
to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. In assessing its liquidity,
management monitors and analyzes the Company’s cash on-hand, its ability to deliver inventories to its customers timely and generate
sufficient revenue in the future, and its operating and capital expenditure commitments. For the year ended December 31, 2021, the Company
had cash and cash equivalent of $2,850,817, unused credit terms of $1,944,289, profit after tax of ($94,971) and negative cash outflow
in operating activities of ($539,215). The Company also had inventories of $23,010,057 as of December 31, 2021 which represents
73% of the Company’s sales revenue for the year ended December 31, 2021.
 
Despite
the demand from the Company’s customers, recent shortage of shipping containers and delays in international shipments delayed the
Company’s shipment of inventories to its customers as scheduled which resulted in significant increase in the amount of inventories
as compared to December 31, 2020 and negative cash outflow in operating activities of ($539,215) for the year ended December 31,
2021. Management anticipates that the shortage of shipping containers and delays in international shipments may continue, at least in
the near future. Aforementioned shortage of shipping containers and delays in international shipments, if remain unrelieved in the near
future, may continue to have negative impact on our liquidity and we may be required to raise additional funds from bank financing or
issuance of equity to fund our operations.
 
Management
has taken certain actions to manage the level of inventories held by the Company as well as negotiating new credit terms with the customers
to ensure sufficient liquidity and capital resources. Based on the actions taken by management and the lines of credit available to the
Company, management believes that its cash and cash equivalents are sufficient to fund its operating expenses and meet its obligations
for at least the next twelve months from the issuance date of these consolidated financial statements.
 

 
2.
The authorization of the consolidated financial statements
 
The
accompanying consolidated financial statements were authorized for issuance by the Board of Directors on May 24, 2022.
 
3.
Application of new and revised International Financial Reporting Standards (“IFRS”), International Accounting Standards (“IAS”),
International Financial Reporting Interpretations Committee (“IFRIC”) Interpretations and Standing Interpretations Committee
(“SIC”) Interpretations issued by the International Accounting Standards Board (“IASB”), (collectively, “IFRSs”)
 
a)
Amendments to IFRSs and the new interpretation that are mandatorily effective for the current year
 
New Standards, Interpretations and Amendments
 
Effective date issued by IASB
 Amendments to IFRS 4, “Extension of the temporary exemption from applying IFRS 9”
 
 
January 1, 2021
 Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, “Interest Rate Benchmark Reform — Phase 2”
 
 
January 1, 2021
 Amendment to IFRS 16, “Covid-19-related rent concessions beyond 30 June 2021”
 
 
April 1, 2021
  
The
Group has adopted the above new standards, interpretations and amendments as of the effective date. Based
on the Group’s assessment, the above standards and interpretations have no significant impact to the Group’s financial
position and financial performance.
 
b)
New Standards, interpretations and amendments in issue but not yet effective
 

New Standards, Interpretations and Amendments 
Effective date issued by IASB Amendments to IFRS 3, “Reference to the conceptual framework” 
 January 1, 2022 Amendments to IAS 16, “Property, plant and equipment: proceeds before intended use” 
 January 1, 2022 Amendments to IAS 37, “Onerous contracts — cost of fulfilling a contract” 
 January 1, 2022 Annual improvements to IFRS Standards 2018–2020 
 January 1, 2022 Amendments to IFRS 10 and IAS 28, “Sale or contribution of assets between an investor and its associate or joint venture” 
 To be determined by IASB IFRS 17, “Insurance contracts” 
 January 1, 2023 Amendments to IFRS 17, “Insurance Contracts” 
 January 1, 2023 Amendments to IFRS 17, “Initial application of IFRS 17 and IFRS 9 — comparative information” 
 January 1, 2023 Amendments to IAS 1, “Classification of liabilities as current or non-current” 
 January 1, 2023 Amendments to IAS 1, “Disclosure of accounting policies” 
 January 1, 2023 Amendments to IAS 8, “Definition of accounting estimates” 
 January 1, 2023 Amendments to IAS 12, “Deferred tax related to assets and liabilities arising from a single transaction” 
 January 1, 2023 
 
The
Group expects to adopt the above new standards, interpretations and amendments as of the effective date and expects
no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.
 

 
4.
Summary of significant accounting policies
 
The
principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies
have been consistently applied to all the periods presented, unless otherwise stated.
 
a)
Statement of compliance
 
The
consolidated financial statements of the Group have been prepared in accordance with IFRSs as issued by the IASB.
 
b)
Basis of preparation
 
 
(a)
Except
for the financial assets at fair value through other comprehensive income, the consolidated financial statements have been prepared
under the historical cost convention. 
 
  
(b)
The
preparation of the consolidated financial statements in conformity with IFRSs requires the use of certain critical accounting estimates.
It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated
financial statements are disclosed in Note 4 aa). 
 
  
(c)
These
consolidated financial statements are presented in U.S. dollars (“US$”), which is the Company’s functional currency. 
c)
Basis of consolidation
 
 
(a)

Basis
for preparation of consolidated financial statements: 
 
i)
All
subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities controlled by the
Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity
and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date
the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries. 
 
  
ii)
Inter-company
transactions, balances and unrealized gains or losses on transactions between companies within the Group are eliminated. Accounting
policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group. 
 
  
iii)
In
2016, the Company, through a series of transactions which is accounted for as a reorganization of entities under a common control,
became the ultimate parent entity of its subsidiaries. The Group accounted for the transactions using the book value method of accounting
and is retrospectively applied. Difference between consideration paid and the net assets acquired is adjusted to shareholders’
equity. 

 
 
(b)
Subsidiaries
included in the consolidated financial statements: 

  
  
  
  
Percentage of Ownership (%)  
   
  
  
  
December 31,  
 Name of investor 
Name of investee 
Main business 
Location 
2020  
2021  
NoteThe Company 
GOAL BEYOND LIMITED(GOAL BEYOND) 
Holding company 
Samoa 
 100  
 100  
 The Company 
STAR LEADER TRADING LIMITED(STAR LEADER) 
Sales of bicycle,sporting goods,and otheer carbon composite products 
Hong Kong 
 100  
 100  
 The Company 
Bohong Technology Jiangsu Co., Ltd.(Bohong) 
Manufacturing of bicycle,sporting goods and carbon fiber composite 
Jiangsu, People’s Republic of China (“PRC”) 
 –  
 100  
iGOAL BEYOND 
YMA CORPORATION(YMA) 
Product development,design,manufacturing and sales of carbon fiber composite products 
Republic of China(“ROC”) 
 100  
 100  
 GOAL BEYOND 
TIME YIELD LIMITED(TIME YIELD) 
Purchasing 
Samoa 
 100  
 100  
 GOAL BEYOND 
Forwell Sports Equipment Co., Ltd.(Forwell) 
Manufacturing of bicycle,sporting goods and carbon fiber composite 
Dongguan, People’s Republic of China (“PRC”) 
 100  
 100  
 GOAL BEYOND 
YMA Composite Materials (DG) Co., Ltd.(YMA DG) 
Manufacturing of bicycle,sporting goods and carbon fiber composite 
Dongguan, People’s Republic of China (“PRC”) 
 100  
 100  
 
 
Note:
 
 
i)
As
discussed in Note 18 d), Bohong was a company that only held land use right and did not meet the definition of a “business”
and the Group treated this transaction as an asset acquisition. The Company signed the share swap agreement with the shareholders
of Bohong and the registration of the shareholders of Bohong was completed and approved by relevant government authority on December
7, 2021. Bohong was held by the Company after the completion of share swap registration. 
 
(c)
Subsidiaries
not included in the consolidated financial statements: None. 
 
  
(d)
Adjustments
for subsidiaries with different statements of financial position dates: Not applicable. 
 
  
(e)
Significant
restrictions 
As
of December 31, 2021, cash and short-term deposits of $1,090,806 deposited in mainland China are under local foreign exchange control
which restricts the capital to be remitted outside the borders (except for normal dividend distribution).
 
 
(f)
Subsidiaries
that have non-controlling interests that are material to the Group: None. 
d)
Foreign currency translation
 
Items
included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment
in which the entity operates (the “functional currency”). The consolidated financial statements are presented in US$, which
is the Company’s functional and the Group’s presentation currency.
 

 
 
(a)
Foreign
currency transactions and balances 
 
i)
Foreign
currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions
or valuation where items are remeasured. Therefore, foreign exchange differences resulting from the settlement of such transactions
are recognized in profit or loss in the period in which they arise.
 
 
 
 
ii)
Monetary
assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at
the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognized in profit or loss.
 
 
 
 
iii)
Non-monetary
assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange
rates prevailing at the balance sheet date; their translation differences are recognized in profit or loss. Non-monetary assets and
liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange
rates prevailing at the balance sheet date; their translation differences are recognized in other comprehensive income. However,
non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the
historical exchange rates at the dates of the initial transactions.
 
 
 
 
iv)
All
foreign exchange gains and losses are presented in the statement of comprehensive income within ‘other gains and losses’.
 
 
(b)
Translation
of foreign operations 
The
operating results and financial position of all the group entities, associates that have a functional currency different from the presentation
currency are translated into the presentation currency as follows:
 
 
i)
Assets
and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet; 
 
  
ii)
Income
and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and 
 
  
iii)
All
resulting exchange differences are recognized in other comprehensive income. 
e)
Classification of current and non-current items
 
 
(a)
Assets
that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets: 
 
i)
Assets
arising from operating activities that are expected to be realized, or are intended to be sold or consumed within the normal
operating cycle; 
 
  
ii)
Assets
held mainly for trading purposes; 
 
  
iii)
Assets
that are expected to be realized within twelve months from the balance sheet date; 
 
  
iv)
Cash
and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to settle liabilities
more than twelve months after the balance sheet date. 
All
assets that do not meet the above criteria are classified as non-current assets.
 

 
 
(b)
Liabilities
that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities: 
 
i)
Liabilities
that are expected to be settled within the normal operating cycle; 
 
  
ii)
Liabilities
arising mainly from trading activities; 
 
  
iii)
Liabilities
that are to be settled within twelve months from the balance sheet date; 
 
  
iv)
Liabilities
for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of
a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect
its classification. 
f)
Cash equivalents
 
Cash
equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value (including time deposits with less than 3 months contract period from date of acquisition).
Time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified
as cash equivalents.
 
g)
Financial assets at fair value through other comprehensive income
 
 
(a)
Financial
assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which
the Group has made an irrevocable election at initial recognition to recognize changes in fair value in other comprehensive
income. 
 
  
(b)
On
a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognized and
derecognized using trade date accounting 
 
  
(c)
At
initial recognition, the Group measures the financial assets at fair value plus transaction costs. 
 
The
Group subsequently measures the financial assets at fair value, the changes in fair value of equity investments that were recognized
in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the
derecognition of the investment. Dividends are recognized as revenue when the right to receive payment is established, future
economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably. 
h)
Financial assets at amortized cost
 
 
(a)
Financial
assets at amortized cost are those that meet all of the following criteria: 
 
i)
The
objective of the Group’s business model is achieved by collecting contractual cash flows. 
 
  
ii)
The
assets’ contractual cash flows represent solely payments of principal and interest. 
 
(b)
At
initial recognition, the Group measures the financial assets at fair value plus transaction costs. Interest income from these financial
assets is included in finance income using the effective interest method. A gain or loss is recognized in profit or loss when the
asset is derecognized or impaired.
 
 
 
 
(c)
The
Group’s time deposits which do not fall under cash equivalents are those with a short maturity period and are measured at initial
investment amount as the effect of discounting is immaterial.
 

 
i)
Accounts and notes receivable
 
 
(a)
Accounts
and notes receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services. 
 
  
(b)
The
short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect
of discounting is immaterial. 
j)
Impairment of financial assets
 
For
financial assets at amortized cost, at each reporting date, the Group recognizes the impairment provision for 12 months expected credit
losses if there has not been a significant increase in credit risk since initial recognition or recognizes the impairment provision
for the lifetime expected credit losses if such credit risk has increased since initial recognition after taking into consideration all
reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable that do not contain a significant
financing component, the Group recognizes the impairment provision for lifetime expected credit losses.
 
k)
Derecognition of financial assets
 
The
Group derecognizes a financial asset when the contractual rights to receive the cash flows from the financial asset expire.
 
l)
Inventories
 
Inventories
are stated at the lower of cost and net realizable value. Cost is determined using the weighted-average method. The cost of finished
goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (allocated based
on normal operating capacity). It excludes borrowing costs. The item by item is approach is used in applying the lower of cost and net
realizable value.
 
Net
realisable value is estimated selling price in the ordinary course of business, less the estimated costs of completion and the
estimated costs necessary to make the sale. The amount of any write-down of inventories to net realizable value and all losses
of inventories are recognized as an expense in the period the write-down or loss occurs. The reversal of inventory valuations should
not be more than historical cost.
 
m)
Property, plant and equipment
 
 
(a)
Property,
plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized. 
 
  
(b)
Subsequent
costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.
The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss during
the financial period in which they are incurred. 
 
  
(c)
Plant
and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful
lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the
item must be depreciated separately. 

 
 
(d)
The
assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial
year-end. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of
consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted
for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the
date of the change. The estimated useful lives of property, plant and equipment are as follows: 
Leasehold
improvement  
3
years 
 
 Machinery
and equipment

3 ~
10
years 
 
 Molding
equipment  
2
~

5
years 
 
 Others   
2
~

10
years
 
n)
Leasing arrangements (lessee)-right-of-use assets/ lease liabilities
 
 
(a)
Leases
are recognized as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for
use by the Group. For short-term leases or leases of low-value assets, lease payments are recognized as an expense on a straight-line
basis over the lease term. 
 
  
(b)
Lease
liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental
borrowing interest rate. 
 
  
 
Lease
payments are fixed payments, less any lease incentives receivable. 
 
  
 
The
Group subsequently measures the lease liability at amortized cost using the interest method and recognizes interest expense over
the lease term. The lease liability is remeasured and the amount of remeasurement is recognized as an adjustment to the right-of-use
asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications. 
 
  
(c)
At
the commencement date, the right-of-use asset is stated at the amount of the initial measurement of lease liability. The right-of-use
asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the
asset’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognized
as an adjustment to the right-of-use asset. 
o)
Intangible assets
 
Computer
software
 
Computer
software is stated at cost and amortized on a straight-line basis over its estimated useful life of 3 to 5 years.
 
p)
Impairment of non-financial assets
 
The
Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired.
An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell or value in use. When the circumstances or reasons for recognizing
impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount
due to reversal should not be more than what the depreciated or amortized historical cost would have been if the impairment had not been
recognized.
 
q)
Loans
 
Loans
comprise long-term and short-term bank loans. Loans are recognized initially at fair value, net of transaction costs incurred. Loans
are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is
recognized as interest expense in profit or loss over the period of the loans using the effective interest method.
 

 
r)
Notes and accounts payable
 
 
(a)
Accounts
payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and
non-operating activities. 
 
  
(b)
The
short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect
of discounting is immaterial. 
s)
Derecognition of financial liabilities
 
 
(a)
A
financial liability is derecognized when the obligation specified in the contract is either discharged or cancelled or expires. 
 
  
(b)
Where
the terms of a financial liability are renegotiated and the Group issues equity instruments to a creditor to extinguish all or part
of the liability (debt for equity swap), a gain or loss is recognized in profit or loss, which is measured as the difference between
the carrying amount of the financial liability and the fair value of the equity instruments issued. 
t)
Employee benefits
 
 
(a)
Short-term
employee benefits 
Short-term
employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees
and should be recognized as expenses when the employees render service.
 
 
Defined
contribution plans
 
For
defined contribution plans, the contributions are recognized as pension expenses when they are due on an accrual basis. Prepaid contributions
are recognized as an asset to the extent of a cash refund or a reduction in future payments.
 
 
(c)
Employees’
compensation and directors’ remuneration 
Employees’
compensation and directors’ remuneration are recognized as expenses and liabilities, provided that such recognition is required
under legal obligation or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts
and the subsequently actual distributed amounts is accounted for as changes in estimates. If employee compensation is paid by shares,
the Company calculates the number of shares based on the closing price at the previous day of the board meeting resolution.
 
u)
Employee share-based payment
 
For
the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments
granted at the grant date, and are recognized as compensation cost over the vesting period, with a corresponding adjustment to equity.
The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non-vesting conditions. Compensation
cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity
instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. Ultimately, the amount of compensation
cost recognized is based on the number of equity instruments that eventually vest.
 

 
v)
Income taxes
 
 
(a)
The
income tax expense for the period comprises current and deferred tax. Income tax is recognized in profit or loss, except to the extent
that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the income
tax is recognized in other comprehensive income or equity. 
 
  
(b)
The
current income tax expense is calculated on the basis of the tax laws enacted or substantially enacted at the balance sheet date
in the countries where the Group and its subsidiaries operate and generate taxable income. Management periodically evaluates positions
taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate
based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings
and is recorded as income tax expense in the year the profit generated. 
 
  
(c)
Deferred
tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred tax is not accounted for if it arises
from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time
of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is provided on temporary differences arising
on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled
by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is determined
using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when
the related deferred tax asset is realized or the deferred tax liability is settled. 
 
  
(d)
Deferred
tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary
differences can be utilized. At each balance sheet date, unrecognized and recognized deferred tax assets are reassessed. 
 
  
(e)
Current
income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable
right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability
simultaneously. Deferred tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right
to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same
entity or different entities that intend to settle on a net basis or realize the asset and settle the liability simultaneously. 
 
  
(f)
A
deferred tax asset shall be recognized for the carryforward of unused tax credits resulting from acquisitions of equipment or technology,
research and development expenditures and equity investments to the extent that it is possible that future taxable profit will be
available against which the unused tax credits can be utilized. 
 
  
(g)
If
a change in tax rate is enacted or substantively enacted, the Group recognizes the effect of the change immediately in the period
in which the change occurs. The effect of the change on items recognized outside profit or loss is recognized in other comprehensive
income or equity while the effect of the change on items recognized in profit or loss is recognized in profit or loss. 

 
w)
Share capital
 
 
(a)
Ordinary
shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction.
 
 
 
 
(b)
Where
the Company repurchases the Company’s equity share capital that has been issued, the consideration paid, including any directly
attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders.
Where such shares are subsequently reissued, the difference between their book value and any consideration received, net of any directly
attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s
equity holders.
 
x)
Revenue recognition
 
 
(a)
The
Group manufactures and sells spare parts such as bicycle frame and racket. Sales are recognized when control of the products has
transferred, being when the products are delivered to the customers. Delivery occurs when the products have been shipped to the specific
location, the risks of obsolescence and loss have been transferred to the customers, and either the customers accepted the products
in accordance with the sales contract, or the Group has objective evidence that all criteria for acceptance have been satisfied. 
 
  
(b)
A
receivable is recognized when the goods are delivered as this is the point in time that the consideration is unconditional because
only the passage of time is required before the payment is due. 
 
  
(c)
Sales
revenue was recognized based on the contract price net of sales discount. Accumulated experience is used to estimate and provide
for the sales discounts and allowances. The sales usually are made with a credit term of 30 to 90 days after monthly billings which
is consistent with market practice. As the time interval between the transfer of committed goods and the payment of customer does
not exceed one year, the Group does not adjust the transaction price to reflect the time value of money. 
y)
Government grants
 
Government
grants are recognized at their fair value only when there is reasonable assurance that the Group will comply with any conditions attached
to the grants and the grants will be received. Government grants are recognized in profit or loss on a systematic basis over the periods
in which the Group recognizes expenses for the related costs for which the grants are intended to compensate. Government grants related
to right-of-use assets are presented by deducing the grants from the asset’s carrying amount and are amortized to profit
or loss over the estimated useful lives of the related assets as reduced depreciation expenses.
 
z)
Business combinations – determination of business
 
The
Group shall determine whether a transaction or other event is a business combinations, which requires that the assets acquired and liabilities
assumed constitute a business. A business consists of inputs and processes applied to those inputs that have the ability to contribute
to the creation of outputs. If the assets acquired are not a business, the Group shall account for the transaction or other event as
an asset acquisition. If the assets acquired are a business, the Group shall account for each business combination by applying the acquisition
method.
 

 

aa)
Operating segments
 
Operating
segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Group’s
chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has
been identified as the Board of Directors that makes strategic decisions.
 
bb)
Critical accounting judgments, estimates and key sources of assumption uncertainty
 
(a)Valuation of allowance for accounts
receivable 
In
the process of assessing uncollectible accounts, the Group must use judgements and assumptions to determine the collectability of accounts
receivable. The collectability is affected by various factors: customers’ financial conditions, the Company’s internal credit
ratings, historical experience, current economic conditions, etc. When sales are not expected to be collected, the Group recognizes a
specific allowance for doubtful receivables after the assessment. The assumptions and estimates of allowance for uncollectible accounts
are based on concerning future events as that on the balance sheet date. Assumptions and estimates may differ from the actual results
which may result in a material adjustment.
 
As
of December 31, 2021, The Group’s total accounts receivable and allowance for accounts receivable amounted to $4,328,668 and $124,436,
respectively. For the year ended December 31, 2021, the amounts of expected credit losses were $20,481.
 

 
(b)
Evaluation
of inventories
 

As
inventories are stated at the lower of cost and net realizable value, the Group must determine the net realizable value of inventories
on balance sheet date using judgements and estimates. Due to the net rapid technology innovation, the Group evaluates the amounts of
normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down
the cost of inventories to the net realizable value. The evaluation of inventories is principally based on the unit price of the sales
order as the basis of the estimate. Therefore, there might be material changes to the evaluation.
 
As
of December 31, 2021, the Group’s cost of inventories and allowance for inventory valuation losses amounted to $24,799,374 and
$1,789,317, respectively. For the year ended December 31, 2021, the amounts of loss on inventory valuation were $775,952.
 
5.
Cash and cash equivalents
 
 
 
December 31, 2020
 
 
December 31, 2021
 Cash on hand and petty cash
 
$
1,870
 
 
$
7,754
 Checking accounts and demand deposits
 
 
1,334,950
 
 
 
2,843,063
  
 
$
1,336,820
 
 
$
2,850,817
  
 
a)
The
Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that
the probability of counterparty default is remote. 
 
  
b)
No
cash and cash equivalents of the Group were pledged to others. 
6.
Financial assets at amortized cost
 
 
 
December 31, 2020
 
 
December 31, 2021
 Current items:
 
 
 
 
 
 
 
 Restricted time deposits
 
$
701,282
 
 
$
200,690
 Restricted demand deposits
 
 
70,310
 
 
 
72,314
  
 
$
771,592
 
 
$
273,004
  
 
a)
Without
taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount
that best represents the financial assets at amortized cost held by the Group is the carrying amount at the end of each reporting
period. 
 
  
b)
Information
about the financial assets at amortized cost that were pledged to others as collateral is provided in Note 13 and 33. 
 
  
c)
Information
relating to credit risk of financial assets at amortized cost is provided in Note 37 c). 

 
7.
Accounts receivable
 
 
 
December 31, 2020
 
 
December 31, 2021
 Accounts receivable
 
$
5,445,860
 
 
$
4,328,668
 Less: Loss allowance
 
 
(326,986
)
 
 
(124,436

 
$
5,118,874
 
 
$
4,204,232
  
 
a)
The
Group’s credit term granted to customers is 30~90 days. Receivables do not bear interest. The loss allowance is determined
based on the credit quality of customers. Information relating to credit risk is provided in Note 37 c). 
 
  
b)
The
ageing analysis of accounts receivable and that were past due but not impaired is as follows: 

  
December 31, 2020  
December 31, 2021 Not past due 
$4,843,098  
$3,818,136 Up to 30 days 
 167,147  
 201,686 31 to 90 days 
 28,675  
 150,922 91 to 180 days 
 12,317  
 7,740 Over 180 days 
 394,623  
 150,184   
$5,445,860  
$4,328,668 
 
 
c)
As
of December 31, 2020 and 2021, accounts receivable were all from contracts with customers. And as of January 1, 2020, the balance
of accounts receivable from contracts with customers was $5,686,588. 
 
  
d)
Without
taking into account of any collateral held or other credit enhancements, the amount that best reflects the Group’s maximum
exposure to credit risk in respect of the accounts receivable is the carrying amount at the end of each reporting period. 
 
e)
No
accounts receivable of the Group were pledged to others. 
8.
Inventories
 

  
December 31, 2020   
Cost  
Allowance forvaluation loss  
Book value Raw materials 
$3,807,079  
$(323,804) 
$3,483,275 Work in progress 
 8,172,868  
 (519,528) 
 7,653,340 Finished goods 
 733,078  
 (170,033) 
 563,045   
$12,713,025  
$(1,013,365) 
$11,699,660 
 
 
 
December 31, 2021
  
 
Cost
 
 
Allowance forvaluation loss
 
 
Book value
 Raw materials
 
$
5,362,560
 
 
$
(180,482
)
 
$
5,182,078
 Work in progress
 
 
17,258,717
 
 
 
(1,159,493
)
 
 
16,099,224
 Finished goods
 
 
2,178,097
 
 
 
(449,342
)
 
 
1,728,755
  
 
$
24,799,374
 
 
$
(1,789,317
)
 
$
23,010,057
  

 
The
cost of inventories recognized as an expense for the period:
 

  
Year ended
December 31, 2020  
Year ended
December 31, 2021 Cost of goods sold 
$14,817,898  
$21,561,248 Loss on physical inventory 
 158,467  
 1,004 (Reversal of) Loss on inventory valuation 
 (159,460) 
 775,952   
$14,816,905  
$22,338,204 
 
 
a)
Reversal
of allowance for inventory valuation and obsolescence loss was recognized due to disposal of certain inventories which were previously
provided with allowance for valuation loss. 
 
  
b)
No
inventories of the Group were pledged to others. 
9.
Prepayments
 

  
December 31, 2020  
December 31, 2021 Prepayment for purchases 
$644,713  
$936,929 Prepaid sales tax 
 787,652  
 878,334 Professional service fees prepayments 
 –  
 329,951 Other prepayments 
 238,304  
 221,076   
$1,670,669  
$2,366,290 
 
10.
Property, plant and equipment, net
 
  
2020   
Machinery and equipment  
Leasehold improvement  
Molding equipment  
Others  
Construction in progress and equipment to be inspected  
Total At January 1 
    
    
    
    
    
   Cost 
$3,746,634  
$638,900  
$1,078,929  
$276,525  
$12,379  
$5,753,367 Accumulated depreciation 
 (1,267,420) 
 (311,344) 
 (65,609) 
 (234,171) 
 –  
 (1,878,544)  
$2,479,214  
$327,556  
$1,013,320  
$42,354  
$12,379  
$3,874,823   
    
    
    
    
    
   January 1 
$2,479,214  
$327,556  
$1,013,320  
$42,354  
$12,379  
$3,874,823 Additions 
 162,832  
 82,992  
 430,473  
 –  
 –  
 676,297 Disposals 
 (130,608) 
 (79,381) 
 –  
 –  
 –  
 (209,989)Depreciation expenses 
 (416,556) 
 (50,890) 
 (154,732) 
 (20,825) 
 –  
 (643,003)Exchange adjustment 
 148,361  
 18,995  
 87,729  
 1,494  
 871  
 257,450 December 31 
$2,243,243  
$299,272  
$1,376,790  
$23,023  
$13,250  
$3,955,578   
    
    
    
    
    
   At December 31 
    
    
    
    
    
   Cost 
$3,880,445  
$497,465  
$1,610,749  
$249,990  
$13,250  
$6,251,899 Accumulated depreciation 
 (1,637,212) 
 (198,193) 
 (233,959) 
 (226,967) 
 –  
 (2,296,331)  
$2,243,233  
$299,272  
$1,376,790  
$23,023  
$13,250  
$3,955,568 
 

 

  
2021   
Machinery and equipment  
Leasehold
improvement  
Molding equipment  
Others  
Construction in progress and equipment to be inspected  
Total At January 1 
    
    
    
    
    
   Cost 
$3,880,445  
$497,465  
$1,610,749  
$249,990  
$13,250  
$6,251,899 Accumulated depreciation 
 (1,637,212) 
 (198,193) 
 (233,959) 
 (226,967) 
 –  
 (2,296,331)  
$2,243,233  
$299,272  
$1,376,790  
$23,023  
$13,250  
$3,955,568   
    
    
    
    
    
   January 1 
$2,243,233  
$299,272  
$1,376,790  
$23,023  
$13,250  
$3,955,568 Additions 
 93,175  
 37,565  
 903,217  
 53,649  
 81,329  
 1,168,935 Disposals 
 (417) 
 –  
 (244,075) 
 –  
 –  
 (244,492)Reclassifications 
 13,362  
 –  
 –  
 –  
 (13,362) 
 – Depreciation expenses 
 (378,154) 
 (31,500) 
 (563,931) 
 (23,336) 
 –  
 (996,921)Exchange adjustment 
 45,270  
 6,889  
 29,928  
 977  
 1,108  
 84,172 December 31 
$2,016,469  
$312,226  
$1,501,929  
$54,313  
$82,325  
$3,967,262   
    
    
    
    
    
   At December 31 
    
    
    
    
    
   Cost 
$4,072,254  
$547,792  
$2,291,770  
$311,253  
$82,325  
$7,305,394 Accumulated depreciation 
 (2,055,785) 
 (235,566) 
 (789,841) 
 (256,940) 
 –  
 (3,338,132)  
$2,016,469  
$312,226  
$1,501,929  
$54,313  
$82,325  
$3,967,262 
 
Information
about the property, plant and equipment that were pledged to others as collaterals is provided in Notes 15 and 33.
 
11.
Leasing arrangements-lessee
 
 
a)
The
Group leases various assets including land and buildings. Rental contracts are typically made for periods of 2 to 3 years. Lease
terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not
impose covenants, but leased assets may not be used as security for borrowing purposes. 
 
  
b)
The
carrying amount of right-of-use assets and the depreciation charge are as follows: 

  
December 31, 2020  
December 31, 2021   
Carrying amount  
Carrying amount Land 
$71,379  
$1,346,349 Buildings 
 433,655  
 300,399   
$505,034  
$1,646,748 
 

 

  
Year ended December 31,   
2020  
2021   
Depreciation expenses  
Depreciation expenses Land 
$57,679  
$69,204 Buildings 
 165,142  
 261,163   
$222,821  
$330,367 
 
 
c)
For
the years ended December 31, 2020 and 2021, the additions to right-of-use assets were $416,641 and $115,648, respectively. 
 
  
d)
The
information on profit and loss accounts relating to lease contracts is as follows: 

  
Year ended
December 31, 2020  
Year ended
December 31, 2021 Items affecting profit or loss 
    
   Interest expense on lease liabilities 
$62,589  
$30,230 Expense on short-term lease contracts 
 52,889  
 1,232 Gain on lease modification 
 1,557  
 – 
 
 
e)
For
the years ended December 31, 2020 and 2021, the Group’s total cash outflow for leases were $270,530 and $1,005,258, respectively. 
f)
For the year ended December 31, 2021, the Group acquired
right-of-use assets amounted to $1,331,885 as Bohong was held by the Company after the completion of share swap registration on December
7, 2021. Refer to Note 18 d) for more information. 
12. Other
non-current assets, others
 

  
December 31,
2020  
December 31,
2021 Prepayments for long-term investments 
$1,410,724  
$- Guarantee deposits paid 
 393,145  
 776,646 Prepaid on equipment 
 18,828  
 107,079 Prepaid cash incentive to the employee 
 257,400  
 189,322 Other 
 4,554  
 –   
$2,084,651  
$1,073,047  

13.
Short-term loans
 

Type of loans 
December 31, 2020  
Interest rate range(Floating rate) 
Collateral Bank loans 
    
  
     Bank secured loans 
$2,041,646  
1.69%~2.60% 
 Restricted bank deposit
Restricted time deposit   Bank unsecured loans 
 702,000  
1.75%~2.33% 
 –   
$2,743,646  
  
   
 

Type of loans 
December 31, 2021  
Interest rate range(Floating rate) 
Collateral Bank loans 
    
  
     Bank secured loans 
$4,985,934  
1.40%~2.65% 
 Restricted demand deposit
Restricted time deposit   Bank unsecured loans 
 722,000  
1.42%~2.30% 
 –   
$5,707,934  
  
   
 
 
a)
Interest
expense recognized in profit or loss amounted to $45,625 and $78,106 for the years ended December 31, 2020 and 2021, respectively. 
 
  
b)
All
short-term loans were guaranteed by key management. 

 
14.
Other payables
 
  
December 31, 2020  
December 31, 2021 Salaries and bonuses payable 
$821,937  
$2,266,776 Processing cost payable 
 735,119  
 845,679 Social security and provident fund payable 
 1,379,340  
 2,132,357 Mold and toolings payable 
 699,665  
 1,406,553 Professional service fees payable 
 1,844,400  
 1,101,971 Employees’compensation payable 
 63,861  
 107,326 Other expense payable 
 1,937,589  
 3,054,744   
$7,481,911  
$10,915,406 
 
 
a)
As
of December 31,2021, the Company presented the professional service fees payable to Ke-Chung Teng amounted to $1,844,400 under “Other
payables to related parties”. Refer to Note 32 “Related parties transactions” for more information. 
 
  
b)
As
of December 31, 2021, the Company presented processing cost payable to Yuan Fu Sports Equipment Co., Ltd amounted to $989,704 under
“Other payables to related parties”. Refer to Note 32 “Related parties transactions” for more information. 
15.
Long-term loans
 
Type of loans 
Period and payment term 
Interest rate range(Floating rate) 
Collateral  
December 31, 2020  
NoteLong-term bank loans 
  
  
    
    
 Unsecured loans 
Borrowing period is from October 12, 2020 to October 12, 2023; interest is repayable monthly;principal is repayable monthly 
0.66%~0.94% 
 –  
$663,000  
b、cLess: Current portion 
  
  
    
 (234,000) 
   
  
  
    
$429,000  
 
 

 

Type of loans 
Period and payment term 
Interest rate range  
Collateral 
December 31, 2021  
NoteLong-term bank loans 
  
    
  
    
 Unsecured loans 
Borrowing period is from October 12, 2020 to October 12, 2023; interest is repayable monthly;principal is repayable monthly 
 0.66%~0.94%  
– 
$441,222  
b、cOther long-term loans 
  
    
  
    
 Secured loans 
Borrowing period is from April 12, 2021 to April 12, 2024; interest is repayable monthly;principal is repayable quarterly 
 6.20% 
Guarantee deposits paid 
 1,166,530  
 Secured loans 
Borrowing period is from June 30, 2021 to May 31, 2023; interest is repayable monthly;principal is repayable monthly 
 10.62% 
Guarantee deposits paid,Property, plant and equipment 
 518,353  
bSecured loans 
Borrowing period is from June 30, 2021 to May 31, 2023; interest is repayable monthly;principal is repayable monthly 
 10.14% 
Guarantee deposits paid,Property, plant and equipment 
 223,431  
b  
  
    
  
 2,349,536  
 Less: Current portion 
  
    
  
 (1,282,934) 
   
  
    
  
$1,066,602  
 
 
 
a)
Information
about the property, plant and equipment that were pledged to others as collaterals for other long-term loans is provided in Note
33. 
 
  
b)
The
long-term loans were guaranteed by key management. 
 
  
c)
The lower interest for this long term unsecured loan
was due to COVID-19 pandemic bailout offered by the Taiwanese government. The Group considered IAS 20 – Government Grants but did not recognize
the bailout subsidy as deferred revenue as the amount was considered immaterial.
 
16.
Pensions
 
Defined
contribution plans
 
 
a)
The
Company’s subsidiaries in Taiwan have established a defined contribution pension plan (the “New Plan”) under the
Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company’s
Taiwan subsidiaries contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’
individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination
of employment. 
 
  
b)
The
subsidiaries in mainland China have defined contribution pension plans and contribute monthly an amount equal to 13% of employees’
monthly salaries and wages to an independent fund administered by a government agency. The plan is administered by the government
of mainland China. Other than the monthly contributions, the Group does not have further pension liabilities. 
 
  
c)
The
pension costs under the defined contribution pension plans of the Group for the years ended December 31, 2020 and 2021 were $106,369
and $1,217,324, respectively. As a result of the coronavirus epidemic in China in early 2020, the local government exempted the pension
insurance premiums for a period of eleven months from February 2020. 

 
17.
Share-based payment
 
 
 
a)
For
the years ended December 31, 2020 and 2021, the Group’s share-based payment arrangements was as follows: 
Type of arrangement 
Grant date 
Quantity granted(shares)  
Fair value per unit  
Contract period 
VestingconditionsBonus shares 
August 28,2020 
 1,000,000  
 1.02  
5 years 
5 years’ service  
On
August 28, 2020, New Moon Corporation (New Moon), a shareholder of the Company, an employee of the Company and the Company signed a tripartite
talent award agreement. Under the agreement, the Company provides NT$10,000,000 (US$327,600) to the employee for the purchase of 1,000,000
shares of the Company owned by New Moon at NT$10 per share. The employee should return the payment to the Company if the acquisition
of the shares could not be completed in thirty days after the payment. Also, the employee should return the shares to New Moon if the
employee resigned within five years from the date of the agreement. New Moon should also return the consideration received from the employee
to the Company.
 
The
aforementioned bonus shares settled by a shareholder of the Company cannot be transferred during the vesting period, but voting right
and dividend right are not restricted. The employee is required to return the shares to the shareholder but not required to return the
dividends received if she resigns during the vesting period.
 
The
Company accounted for the shares contributed by New Moon as share-based payment arrangement settled by equity. The NT$10,000,000 (US$327,600)
contributed by the Company is accounted for as prepaid cash incentive to the employee and is amortized over the contract period which
is five years.
 
 
 
b)
The
expenses incurred on share-based payment transactions for the years ended December 31, 2020 and 2021 were $46,944 and $131,712. 
18.
Share capital
 
 
 
a)
As
of December 31, 2021, the Company’s authorised capital was $12,600,000, consisting of 35,000,000 shares of ordinary stock,
and the paid-in capital was $6,805,098 with a par value of $10 in New Taiwan dollars ($0.31 in US dollars) per share, consisting
of 21,892,899 shares of ordinary stock. All proceeds from shares issued have been collected. 

  
2020  
2021 January 1 
 20,000,553  
 21,892,899 Treasure shares reissue 
 1,892,346  
 – December 31 
 21,892,899  
 21,892,899   

 
 
The
Company’s treasury shares at December 31, 2020 are as follows:
 

  
2020   
Shares  
Amount January 1 
 4,999,447  
$8,022,078 Treasury shares reissue 
 (1,892,346) 
 (3,036,445)Treasury shares retirement 
 (3,107,101) 
 (4,985,633)December 31 
 –  
$- 
 
There
were no treasury shares on January 1 and December 31, 2021.
 
 
c)
On
December 25, 2020, the Board of Directors resolved to issue 1,054,293 shares (4.2% of the total ordinary share capital issued) of
the treasury shares it repurchased in 2019 (with book value of $1,691,712) to one of the Group’s key management as consideration
for repaying the loans from the key management. The book value of the loans from the key management amounted to $1,779,502. The ordinary
shares issued have the same rights as other shares in issue. 
 
  
d)
On
December 25, 2020, the Board of Directors resolved to issue 838,053 shares (3.4% of the total ordinary share capital issued) of the
treasury shares repurchased in 2019 to the shareholders of Bohong Technology Jiansgu Co., Ltd. (Bohong) to obtain 100% of its ordinary
shares through a share swap. The ordinary shares issued have the same rights as other shares in issue. Bohong was a company that
only held land use right and did not meet the definition of a “business” and the Group treated this transaction as an
asset acquisition. The fair value of the land use right and shares issued are both amounted to $1,344,734 ($1.60 per share). Valuations
were made using the market comparable companies’ method while valuations for land use right were made using replacement cost
method which are both categorized within Level 3 in the fair value hierarchy. The significant inputs of the market comparable companies’
method are transaction price of the market comparable companies and the indexes to adjust different conditions, such as area and
useful life, between the target company and the market comparable companies. As of December 31, 2020, the issued shares were shown
as other non-current assets as long-term prepayments for investments since the share swap registration of the shareholders of Bohong
was not yet completed until December 7, 2021. 
19.
Capital surplus
 
Pursuant
to the Cayman Islands Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and
donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership,
provided that the Company has no accumulated deficit. However, capital surplus should not be used to cover accumulated deficit unless
the legal reserve is insufficient.
 

 
  
2020   
Share premium  
Share-based payments  
Total January 1 
$9,520,046  
$-  
$9,520,046 Employee bonus shares 
 –  
 46,944  
 46,944 Treasury shares reissue 
 153,780  
 –  
 153,780 Treasury shares retirement 
 (1,323,526) 
 –  
 (1,323,526)December 31 
$8,350,300  
$46,944  
$8,397,244  
  
2021   
Share premium  
Share-based payments  
Total January 1 
$8,350,300  
$46,944  
$8,397,244 Employee bonus shares 
 –  
 131,712  
 131,712 December 31 
$8,350,300  
$178,656  
$8,528,956  
20.
Accumulated deficit / retained earnings
 
 
 
a)
In
accordance with the Articles of Incorporation of the Company, the Directors may, in their absolute discretion, declare dividends
and distributions on Shares in issue and authorize payment of the dividends or distributions out of the funds of the Company lawfully
available therefor. The Board of Directors may from time to time declare interim dividends to the shareholders. Before the declaration
of an additional dividend distribution, the Board of Directors may set aside provision from the earnings as it deems appropriate
to pay any unforeseen expense or to adjust dividends or for any other purpose to be met by using the earnings based on its discretion,
and before such use, the provision may, at the same discretion, be used temporarily in the business of the Company or to invest in
such investments as the Board of Directors may at any time as it deems appropriate. 
 
 
  
 
b)
As
of December 31, 2020 and 2021, the Directors had not declared any dividends and distributions. 
21.
Operating revenue
 
  
Year ended
December 31, 2020  
Year ended
December 31, 2021 Revenue from contracts with customers 
    
   Good sales 
$22,178,572  
$31,328,379 
 
 
a)
Disaggregation
of revenue from contracts with customers 
The
Group derives revenue from the transfer of goods and services at a point in time in the following major product lines and geographical
regions:
 

  
US  
Asia  
Europe  
   
  Year ended
December 31, 2020 
Bicycle frame  
Racket  
Bicycle frame  
Racket  
Bicycle frame  
Racket  
Others  
Total Revenue fromexternal customercontracts 
$-  
$1,935,333  
$8,063,891  
$3,186,704  
$6,211,839  
$2,758,477  
$22,328  
$22,178,572 
 

 

  
US  
Asia  
Europe  
   
  Year ended
December 31, 2021 
Bicycle frame  
Racket  
Bicycle frame  
Racket  
Bicycle frame  
Racket  
Others  
Total Revenue fromexternal customercontracts 
$12,936  
$1,537,112  
$10,526,944  
$4,304,750  
$9,463,623  
$5,469,401  
$13,613  
$31,328,379 
 
 
b)
Contract
liabilities 
 
 
i)
The
Group has recognized the following revenue-related contract liabilities: 

  
January 1, 2020  
December 31, 2020  
December 31, 2021 Contract liabilities – receipts in advance 
$986,139  
$601,351  
$380,271 
 
 
 
ii)
Revenue
recognized that was included in the contract liability balance at the beginning of the period: 

  
Year ended
December 31, 2020  
Year ended
December 31, 2021 Contract liabilities – receipts in advance 
$852,642  
$559,070 
 
22.
Other income and expenses
 
  
Year ended
December 31, 2020  
Year ended
December 31, 2021 Losses on disposals of property, plant and equipment 
$(71,801) 
$(244,483)Gains arising from lease modifications 
 1,557  
 – Government grants 
 30,783  
 18,202 Others 
 53,152  
 (124,308)  
$13,691  
$(350,589)
 

Losses on disposals of property, plant
and equipment were mainly due to the old models products produced by some molding equipments reached end of life and the molding equipments
were considered no economic benefits in the future.
 

23.
Interest income
 
  
Year ended December 31, 2020  
Year ended December 31, 2021 Interest income from bank deposits 
$2,802  
$2,156 
 
24.
Other gains and losses
 

  
Year ended December 31, 2020  
Year ended December 31, 2021 Foreign exchange losses 
$180,463  
$370,180  

 
25.
Finance costs
 
  
Year ended
December 31, 2020  
Year ended
December 31, 2021 Interest expense 
    
   Bank loans 
$49,097  
$190,945 Lease liabilities 
 62,589  
 30,230 Loans from related parties 
 306,237  
 4,085   
$417,923  
$225,260 
 
26.
Expenses by nature
 
  
Year ended
December 31, 2020  
Year ended
December 31, 2021 Change in inventory of finished goods and work in process 
$(4,302,177) 
$(10,505,207)Raw materials and supplies used 
 11,178,533  
 16,109,710 Employee benefit expenses 
 8,388,842  
 15,491,807 Processing cost 
 1,430,768  
 3,205,165 Fuel and utility expense 
 1,214,071  
 1,767,433 Freight expenses 
 931,768  
 877,960 Professional service expenses 
 322,783  
 1,529,493 Expected credit losses 
 81,947  
 20,481 Loss on physical inventory observation 
 158,467  
 1,004 (Reversal of) Loss on inventory valuation 
 (159,460) 
 775,952 Depreciation expenses 
 865,824  
 1,327,288 Amortization expenses 
 29,534  
 30,701 Other expenses 
 351,286  
 465,799   
$20,492,186  
$31,097,586 
 
27.
Employee benefit expenses
 
  
Year ended
December 31, 2020  
Year ended
December 31, 2021 Wages and salaries 
$7,637,368  
$12,923,327 Labour and health insurance fees 
 307,441  
 411,451 Pension 
 106,369  
 1,217,324 Share-based payments 
 46,944  
 131,712 Other personnel expenses 
 290,720  
 807,993   
$8,388,842  
$15,491,807 
 

 
28.
Income tax
 
 
Components
of income tax expense:
 
  
Year ended
December 31, 2020  
Year ended
December 31, 2021 Current income tax: 
    
   Current income tax on profits for the period 
$387,528  
$383,768 Tax on unappropriated retained earnings 
 –  
 8,362 Prior year income tax over estimation 
 (2,196) 
 (5,973)Total current income tax 
 385,332  
 386,157 Deferred income tax: 
    
   Origination and reversal of temporary differences 
 (30,059) 
 (225,975)Income tax expense 
$355,273  
$160,182 
 
Tax
expenses were computed based on the rates applicable in the respective countries where the Group entities operate.
 
 
 
b)
Reconciliation
between income tax expense and accounting profit 
  
Year ended
December 31, 2020  
Year ended
December 31, 2021 Tax calculated based on profit before tax and statutory tax rate 
$42,792  
$(194,309)Effects from adjustments based on tax regulation 
 314,677  
 352,102 Prior year income tax over estimation 
 (2,196) 
 (5,973)Tax on unappropriated retained earnings 
 –  
 8,362 Income tax expense 
$355,273  
$160,182  
Effect
from adjustments based on tax regulation for the years ended December 31, 2020 and 2021 was mainly due to non-taxable income and expenses
disallowed by tax regulation.
 

 
 
 
 
c)
Amounts
of deferred tax assets or liabilities as a result of temporary differences, tax losses and investment tax credits are as follows: 
  
2020   
January 1  
Recognized in profit or loss  
December 31 Deferred tax assets 
    
    
   Unrealize exchange losses 
$-  
$55,724  
$55,724 Loss on inventories 
 289,478  
 (37,447) 
 252,031 Deferred employee benefits 
 4,003  
 (1,897) 
 2,106 Tax losses 
 17,819  
 (17,819) 
 – Disaster loss 
 –  
 408  
 408 Allowance for bad debts 
 –  
 55,640  
 55,640 Unused vacation bonus 
 –  
 2,100  
 2,100   
$311,300  
$56,709  
$368,009 Deferred tax liabilities 
    
    
   Unrealised exchange gain 
$(7,755) 
$(26,650) 
$(34,405)  
$303,545  
$30,059  
$333,604 
 
  
2021   
January 1  
Recognized in profit or loss  
December 31 Deferred tax assets 
    
    
   Unrealize exchange losses 
$55,724  
$(4,608) 
$51,116 Loss on inventories 
 252,031  
 221,331  
 473,362 Deferred employee benefits 
 2,106  
 (2,106) 
 – Disaster loss 
 408  
 (408) 
 – Allowance for bad debts 
 55,640  
 4,575  
 60,215 Unused vacation bonus 
 2,100  
 2,829  
 4,929 Other 
 –  
 19,425  
 19,425   
$368,009  
$241,038  
$609,047 Deferred tax liabilities 
    
    
   Unrealised exchange gain 
$(34,405) 
$(15,063) 
$(49,468)  
$333,604  
$225,975  
$559,579 
 
 
 
d)
Expiration
dates of unused tax losses and amounts of unrecognized deferred tax assets are as follows:  

December 31, 2020Year incurred 
Amount filed/ assessed  
Unused amount  
Unrecognized deferred tax assets  
Expiry year2019 
$2,009,273  
$1,731,957  
$1,731,957  
2029 
December 31, 2021Year incurred 
Amount filed/ assessed  
Unused amount  
Unrecognized deferred tax assets  
Expiry year2019 
$2,009,273  
$1,731,957  
$1,731,957  
20292020 
 134,398  
 134,398  
 134,398  
2030 

 
 
 
e)
The
amounts of deductible temporary difference that are not recognized as deferred tax assets are as follows: 

  
December 31, 2020  
December 31, 2021 Deductible temporary differences 
$265,149  
$276,573 
 
 
f)
The
Company has not recognized taxable temporary differences associated with investment in subsidiaries as deferred tax liabilities.
As of December 31, 2020 and 2021, the amounts of temporary difference unrecognized as deferred tax liabilities were $1,879,742 and
$1,761,147, respectively. 
 
  
g)
For the years ended December 31, 2020 and 2021, the
Group recognized provisions for uncertain tax position in the amount of $245,475 and $215,323, respectively, for transfer pricing
arrangement over its PRC subsidiaries. 
 
  
h)
The
Company’s foreign subsidiaries file income tax returns in the countries where their operations are located. Generally, these
countries have statutes of limitations ranging from 5 to 6 years. The statute of limitations has closed through the following years
in these major jurisdictions: China (2015), Taiwan (2015) and Hong Kong (2014). 
 
  
i)
The
Group principally operates business in Taiwan, China and Hong Kong. The tax rate for above countries was 20%, 25% and 16.5%, respectively. 
29.
Earnings (loss) per share
 
  
Year ended December 31, 2020   
Amount after income tax  
Weighted average number of ordinary shares outstanding  
Earnings per share(in dollars) Basic and diluted earnings per share 
    
    
   Profit attributable to the parent 
$1,110,146  
 14,400,398  
$0.08 
 
  
Year ended December 31, 2021   
Amount after income tax  
Weighted average number of ordinary shares outstanding  
Loss per share(in dollars) Basic and diluted loss per share 
    
    
   Loss attributable to the parent 
$(132,902) 
 15,762,887  
$(0.01) 

 
a)
The
weighted average numbers of ordinary shares outstanding in 2020 have been calculated weighted averagely by considering acquisition,
reduction, and retirement of treasury shares. Refer to note 18. 
 
  
b)
The
weighted average numbers of ordinary shares outstanding in 2020 and 2021 have been retrospectively adjusted and calculated weighted
averagely by considering the reverse stock split conducted by the company in March 2022. Refer to note 35. 
 
  
c)
There
were no potentially dilutive instruments in 2020 and 2021. 

 
30.
Supplementary cash flow information
 
 
a)
Investing
activities with partial cash payments 
  
Year ended
December 31, 2020  
Year ended
December 31, 2021 Purchase of property, plant and equipment 
$676,297  
$1,168,935 Less: Ending balance of payable on equipment 
 –  
 (1,065)Less: Opening balance of prepaid on equipment 
 (35,859) 
 (18,828)Add: Ending balance of prepaid on equipment 
 18,828  
 107,079 Cash paid during the year 
$659,266  
$1,256,121 
 
b)Financing
activities with no cash flow effects 

  
Year ended
December 31, 2020  
Year ended
December 31, 2021 Other payables being converted to capital stocks-treasury shares reissue 
$1,691,712  
$- Asset acquisition through share swap 
 1,344,733  
               –   
$3,036,445  
$- 
 
31.
Changes in liabilities from financing
activities
 
  
2020   
Short-term loans  
Other payables to related parties  
Long-term loans (including current portion)  
Long-term notes and accounts payable to related parties  
Lease liabilities  
Total liabilities from financing activities January 1 
$667,120  
$1,926,240  
$-  
$1,925,589  
$2,701,284  
$7,220,233 Changes in cash flow from financing activities 
 2,011,783  
 (1,137,495) 
 638,444  
 (498,894) 
 (155,052) 
 858,786 Changes in debt for equity swap 
 –  
 (356,464) 
 –  
 (1,423,038) 
 –  
 (1,779,502)Changes in additions to right-of-use assets 
 –  
 –  
 –  
 –  
 416,641  
 416,641 Changes in lease modification 
    
 –  
 –  
 –  
 (45,376) 
 (45,376)Offset lease liabilities against sale-and-leaseback transaction 
 –  
 –  
 –  
 –  
 (1,656,265) 
 (1,656,265)exchange difference 
 64,743  
 10,192  
 24,556  
 (3,657) 
 156,940  
 252,774 December 31 
$2,743,646  
$442,473  
$663,000  
$-  
$1,418,172  
$5,267,291 
 

 

  
2021   
Short-term loans  
Other payables to related parties  
Long-term loans (including current portion)  
Lease liabilities  
Total liabilities from financing activities January 1 
$2,743,646  
$442,473  
$663,000  
$1,418,172  
$5,267,291 Changes in cash flow from financing activities 
 2,950,060  
 (363,007) 
 1,653,004  
 (973,796) 
 3,266,261 Changes in additions to right-of-use assets 
 –  
 –  
 –  
 115,648  
 115,648 exchange difference 
 14,228  
 –  
 33,532  
 (61,744) 
 (13,984)December 31 
$5,707,934  
$79,466  
$2,349,536  
$498,280  
$8,635,216 
 
32.
Related party transactions
 
 
a)
Parent
and ultimate controlling party 
The
Group is controlled by Jing-Bin Chiang and his family who directly and indirectly owns 55.81% equity interest in the Company as of December
31, 2020 and 2021.
 
 
b)
Names
of related parties and relationship 

Names
of related parties
 
 Relationship
with the Company NEW
MOON CORPORATION (NEW MOON)
 
The
Chairman of NEW MOON is key management of the Company.Jiang
Ke Composite Materials (DG) Co., Ltd. (Jiang Ke)
 
The
Chairman of Jiang Ke is key management of YMA DG.Yuan
Fu Sport Equipment Co., Ltd. (Yuan Fu)
 
The
Chairman of Yuan Fu is key management of Forwell.Jing-Bin
Chiang
 
Key
managementYu-Ning
Chiang
 
Key
managementKe-Chung
Teng
 
Key
management (Note i)
 
Note
i: Appointed as general manager of YMA DG in October 2021.
 
 
c)
Significant
related party transactions 
 
  
December 31, 2020  
December 31, 2021 Sales of goods 
   
  Jiang Ke 
$                  –  
$624,003 
 
Goods
are sold based on the prices and terms that would be available to third parties.
 
 
ii)
Receivables
from related parties: 
  
December 31, 2020  
December 31, 2021 Accounts receivable 
    
   Jiang Ke 
$                  –  
$144,538 
 

 
 
iii)
Other
payables to related parties: 

  
December 31, 2020  
December 31, 2021 Other payables 
    
   Ke-Chung Teng 
$-  
$1,844,400 Yuan Fu 
 –  
 989,704 NEW MOON 
 –  
 79,466   
$                    –  
$2,913,570 
 
 
1)
Other
payables to Ke-Chung Teng are payables for professional service fees 
 
  
2)
Other
payables to Yuan Fu are payables for processing cost 
 
iv)
Loans
from related parties: 
 
1.
Outstanding
balance: 

  

December 31, 2020  

December 31, 2021 Other payables 
    
   Key management 
$442,473  
$-  
 

  
Year ended
December 31, 2020  
Year ended
December 31, 2021 Key management 
$203,900  
$4,085 NEW MOON 
 102,337  
 –   
$306,237  
$4,085 
 
 
1.
The
loans from Key management were repaid in March 2021 at the maturity and carry interest at 5% to 10% per annum for the years ended
December 31, 2020 and 2021, respectively. 
 
  
2.
The
loans from NEW MOON were repaid in December 2020 at the maturity and carry interest at 10% per annum for the year ended December
31, 2020. 
 
d)
Endorsements
and guarantees provided by related parties: 

  
December 31, 2020  
December 31, 2021 Key management 
$6,756,265  
$8,835,229 
 
 
i)
Refer
to Note 13 and 15 for the provision of guarantees by the Group’s key management. 
 
  
ii)
The
provision of guarantees by key management as of December 31, 2020 and 2021 was inclusive of unused credit lines from bank loans. 
 
e)
Key
management compensation 
  
Year ended
December 31, 2020  
Year ended
December 31, 2021 Salaries and other short-term employee benefits 
$415,503  
$476,764 Post-employment benefits 
 9,734  
 11,889 Share-based payments 
 46,944  
 131,712   
$472,181  
$620,365 
 

 
33.
Pledged assets
 
The
Group’s assets pledged as collateral are as follows:
 
Pledged asset 
December 31, 2020  
December 31, 2021  
PurposeFinancial assets at amortized cost 
$771,592  
$273,004  
Short-term bank loansProperty, plant and equipment 
 –  
 979,883  
Long-term bank loansGuarantee deposits paid 
 –  
 374,140  
Long-term bank loans  
$771,592  
$1,627,027  
 
 
34.
Significant contingent liabilities
and unrecognized contract commitments
 
None.
 
35.
Significant events after the reporting
period
 
On
March 4, 2022, the Company conducted reverse stock split and made the following changes in its share capital:
 
 
i)
Every
25 issued and unissued ordinary shares of US$0.36 par value each are consolidated into 18 shares of US$0.50 par value each; 
 
  
ii)
Increase
the authorized share capital of the Company from US$12,600,000 to US$17,500,000 by the creation of new 9,800,000 ordinary shares
of US$0.50 par value each. 
The
company’s authorized and issued capital is $17,500,000 and $6,805,098, respectively, with par value of US$0.50 per share after
the reverse stock split. All share and per share amounts have been recast to reflect the stock split.

 

36. Capital management
 
The
Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to
provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or
adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue
new shares or sell assets to reduce debt. The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net
debt divided by total capital. Net debt is calculated as total loans (including ‘current and non-current loans’ as shown
in the consolidated balance sheet) less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the
consolidated balance sheet plus net debt.
 

 
The
Company’s strategy, which is unchanged for the reporting periods, is to maintain a reasonable ratio in order to raise capital with
reasonable cost. The debt to capital ratios as of December 31, 2020 and 2021 were as follows:
 
  
December 31, 2020  
December 31, 2021 Total borrowings 
$3,849,119  
$8,057,470 Less: Cash and cash equivalents 
 (1,336,820) 
 (2,850,817)Net debt 
 2,512,299  
 5,206,653 Total equity 
 9,219,051  
 9,271,759 Total capital 
 11,731,350  
 14,478,412 Gearing ratio 
 21% 
 36%
 
37. Financial instruments
 
 
a)
Financial
instruments by category 

  
December 31, 2020  
December 31, 2021 Financial assets 
    
   Financial assets at amortised cost 
    
   Cash and cash equivalents 
$1,336,820  
$2,850,817 Financial assets at amortised cost 
 771,592  
 273,004 Accounts receivable 
 5,118,874  
 4,204,232 Accounts receivable due from related parties 
 –  
 144,538 Other receivables 
 858,556  
 184,729 Guarantee deposits paid 
 392,844  
 776,646   
$8,478,686  
$8,433,966   
    
   Financial liability 
    
   Financial liabilities at amortised cost 
    
   Short-term loans 
$2,743,646  
$5,707,934 Notes payable 
 9,046  
 – Accounts payable 
 3,749,984  
 6,109,256 Other payables 
 7,481,911  
 10,915,406 Other payables to related parties 
 442,473  
 2,913,570 Long-term loans (including current portion) 
 663,000  
 2,349,536 Guarantee deposits received 
 72,239  
 –   
$15,162,299  
$27,995,702 Lease liability 
$1,418,172  
$498,280 
 
 
b)
Financial
risk management policies 
 
i)
The
Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk
and price risk), credit risk and liquidity risk. 
 
  
ii)
Risk
management is carried out by a central treasury department (Group treasury) under policies approved by the Board of Directors. Group
treasury identifies, evaluates, and hedges financial risks in close co-operation with the Group’s operating units. The Board
provides written principles for overall risk management, as well as written policies covering specific areas and matters, such as
foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments,
and investment of excess liquidity. 

 
 
c)
Significant
financial risks and degrees of financial risks 
 
Foreign
exchange risk
 
 
1.
The
Group operates internationally and is exposed to foreign exchange risk arising from the transactions of the Company and its subsidiaries
used in various functional currency, primarily with respect to the USD. Foreign exchange risk arises from future commercial transactions
and recognized assets and liabilities. 
 
  
2.
Management
has set up a policy to require group companies to manage their foreign exchange risk against their functional currency. Exchange
rate risk arising from the difference between various functional currencies and the reporting currency in the consolidated financial
statements is centrally managed by the Group’s finance department. 
 
  
3.
The
Group’s businesses involve some non-functional currency operations (the Company’s and certain subsidiaries’ functional
currency: USD; other certain subsidiaries’ functional currency: NTD, RMB and HKD). The information on assets and liabilities
denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows: 
  
December 31, 2020   
Foreign currency amount  
Exchange rate  
Book value(USD) (Foreign currency: functional currency) 
    
    
   Financial assets 
    
    
   Monetary items 
    
    
   RMB:HKD 
$235,070  
 1.19  
$36,127 EUR:NTD 
$28,454  
 35.02  
$34,988 USD:NTD 
$2,756,969  
 28.48  
$2,756,969 USD:RMB 
$9,065,990  
 6.51  
$9,065,990 Financial liabilities 
    
    
   Monetary items 
    
    
   EUR:NTD 
$10,106  
 35.02  
$12,427 USD:NTD 
$2,269,887  
 28.48  
$2,269,887 USD:RMB 
$6,476,046  
 6.51  
$6,476,046 
 

 

  
December 31, 2021   
Foreign currency amount  
Exchange rate  
Book value(USD) (Foreign currency: functional currency) 
    
    
   Financial assets 
    
    
   Monetary items 
    
    
   USD:NTD 
$7,081,072  
 27.74  
$7,081,072 USD:RMB 
$8,255,465  
 6.37  
$8,255,465 Financial liabilities 
    
    
   Monetary items 
    
    
   USD:NTD 
$3,537,314  
 27.74  
$3,537,314 USD:RMB 
$10,679,043  
 6.37  
$10,679,043 
 
 
4.
Total
exchange gain (loss), including realized and unrealized, arising from significant foreign exchange variation on the monetary items
held by the Group for the years ended December 31, 2020 and 2021, amounted to loss $30,544 and loss $141,295, respectively. 
 
  
5.
Analysis
of foreign currency market risk arising from significant foreign exchange variation: 

  
December 31, 2020   
Sensitivity analysis   
Degree of variation  
Effect on profit or loss  
Effect on other comprehensive income (Foreign currency: functional currency) 
    
    
   Financial assets 
    
    
   Monetary items 
    
    
   RMB:HKD 
 5% 
$1,806  
$- EUR:NTD 
 5% 
$1,749  
$- USD:NTD 
 5% 
$137,848  
$- USD:RMB 
 5% 
$453,300  
$- Financial liabilities 
    
    
   Monetary items 
    
    
   EUR:NTD 
 5% 
$621  
$- USD:NTD 
 5% 
$113,494  
$- USD:RMB 
 5% 
$323,802  
$- 
 

 
  
December 31, 2021   
Sensitivity analysis   
Degree of variation  
Effect on profit or loss  
Effect on other comprehensive income (Foreign currency: functional currency) 
    
    
   Financial assets 
    
    
   Monetary items 
    
    
   USD:NTD 
 5% 
$354,054  
$- USD:RMB 
 5% 
$412,773  
$- Financial liabilities 
    
    
   Monetary items 
    
    
   USD:NTD 
 5% 
$176,866  
$- USD:RMB 
 5% 
$533,952  
$- 
 
Cash
flow Interest rate risk
 
 
1.
The
Group’s main interest rate risk arises from short-term loans and long-term loans with variable rates, which expose the Group
to cash flow interest rate risk. For the years ended December 31, 2020 and 2021, the Group’s loans at variable rate were mainly
denominated in NTD and USD. 
 
  
2.
The
Group’s loans are measured at amortized cost. The loans are periodically contractually repriced and to that extent are also
exposed to the risk of future changes in market interest rates. 
 
  
3.
If
the borrowing interest rate had increased/decreased by 1% with all other variables held constant, profit for the years ended December
31, 2020 and 2021, would have increased/decreased by $34,066 and $79,633, respectively. The main factor is that changes in interest
expense result in floating-rate loans. 
 
 
1.
Credit
risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments
on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the
agreed terms, and the contract cash flows of debt instruments stated at amortized cost. 
 
  
2.
The
Group manages their credit risk taking into consideration the entire group’s concern. For banks and financial institutions,
only independently rated parties with a minimum rating of ‘A’ are accepted. According to the Group’s credit policy,
each local entity in the Group is responsible for managing and analyzing the credit risk for each of their new clients before standard
payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking
into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external
ratings in accordance with limits set by the Board of Directors. The utilization of credit limits is regularly monitored. 
 
  
3.
In
line with credit risk management procedure, when the contract payments of the counterparty were past due over 180 days and after
repeatedly asking for payment over 180 days, the default has occurred. 

 
 
4.
The
Group adopts following assumptions under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument
since initial recognition: 
 
  
 
If
the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that
instrument since initial recognition. 
 
  
5.
The
Group classifies customer’s accounts receivable in accordance with credit risk on trade and customer type. The Group applies
the modified approach using a provision matrix based on the loss rate methodology to estimate expected credit loss under the provision
matrix basis. 
 
  
6.
The
Group wrote-off the financial assets, which cannot be reasonably expected to be recovered, after initiating recourse procedures.
However, the Group will continue executing the recourse procedures to secure their rights. 
 
  
7.
The
Group used the forecastability of Taiwan Institute of Economic Research boom observation report to adjust historical and timely information
to assess the default possibility of accounts receivable. On December 31, 2020 and 2021, the loss rate methodology is as follows: 

  
Not past due  
Up to 30 days past due  
31~90 days past due  
91~180 days past due  
Over 180 days  
Total At December 31, 2020 
    
    
    
    
    
   Expected loss rate 
 0.02% 
 0.21% 
 0.44% 
 18.36% 
 81.96% 
   Total book value 
$4,843,098  
$167,147  
$28,675  
$12,317  
$394,623  
$5,445,860 Loss allowance 
$832  
$347  
$125  
$2,262  
$323,420  
$326,986 At December 31, 2021 
    
    
    
    
    
   Expected loss rate 
 0%-0.01%  
 0.02% 
 0.16% 
 1.32% 
 82.50% 
   Total book value 
$3,818,136  
$201,686  
$150,922  
$7,740  
$150,184  
$4,328,668 Loss allowance 
$139  
$50  
$242  
$102  
$123,903  
$124,436 
 
 
8.
Movements
in relation to the Group applying the modified approach to provide loss allowance for accounts receivable, contract assets and lease
payments receivable are as follows: 

  
2020   
Accounts receivable At January 1 
$230,953 Provision for impairment 
 81,947 Effect of foreign exchange 
 14,086 At December 31 
$326,986 
 

  
 2021   
 Accounts
receivable At January 1 
$326,986 Provision for impairment 
 20,481 Write-offs 
 (213,979)Effect of foreign exchange 
 (9,052)At December 31 
$124,436 
 

 
 
9.
For
investments in debt instruments at amortized cost, the credit rating levels are presented below: 
  
December 31, 2020   
   
Lifetime  
    
12 months  
Significant increase in credit risk  
Impairment of credit  
Total Financial assets at amortised cost 
$771,592  
$                  –  
$                    –  
$771,592 Other receivables (including related parties) 
$858,556  
$-  
$-  
$858,556 
 
  
December 31, 2021   
   
Lifetime  
    
12 months  
Significant increase in credit risk  
Impairment of credit  
Total Financial assets at amortised   cost 
$273,004  
$                     –  
$                     –  
$273,004 Other receivables (including   related parties) 
$184,729  
$-  
$-  
$184,729 
 
 
 
1.
Cash
flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling
forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs. 
 
  
2.
Surplus
cash held by the operating entities over and above balance required for working capital management are transferred to the Group treasury.
Group treasury invests surplus cash in interest bearing current accounts, time deposits, money market deposits, choosing instruments
with appropriate maturities or sufficient liquidity to provide sufficient head-room as determined by the above-mentioned forecasts. 
 
  
3.
The
unused credit lines from bank loans of the Group as of December 31, 2020 and 2021 are $3,349,619 and $1,944,289, respectively. 
  
December 31, 2020  
December 31, 2021 Floating rate: 
    
   Expiring within one year 
$3,310,619  
$1,663,512 Expiring beyond one year 
 39,000  
 280,777   
$3,349,619  
$1,944,289 
 
 
4.
The
table below analyses the Group’s non-derivative financial liabilities into relevant maturity groupings based on the remaining
period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities. The amounts disclosed
in the table are the contractual undiscounted cash flows. 

 

December 31, 2020 
Less than 1 year  
Between 1 year and 2 year  
Over 2 years  
Total Non-derivative financial liabilities 
    
    
    
   Short-term loans 
$2,754,470  
$-  
$-  
$2,754,470 Notes payable 
 9,046  
 –  
 –  
 9,046 Accounts payable 
 3,749,984  
 –  
 –  
 3,749,984 Other payables 
 7,481,911  
 –  
 –  
 7,481,911 Other payables to related parties 
 442,473  
 –  
 –  
 442,473 Lease liabilities 
 1,068,268  
 358,724  
 35,861  
 1,462,853 Long-term loans(including current portion) 
 238,613  
 236,669  
 195,739  
 671,021 
 

December 31, 2021 
Less than 1 year  
Between 1 year and 2 year  
Over 2 years  
Total Non-derivative financial liabilities 
    
    
    
   Short-term loans 
$6,077,406  
$-  
$-  
$6,077,406 Accounts payable 
 6,109,256  
 –  
 –  
 6,109,256 Other payables 
 10,915,406  
 –  
 –  
 10,915,406 Other payables to related parties 
 2,913,570  
 –  
 –  
 2,913,570 Lease liabilities 
 407,740  
 98,173  
 –  
 505,913 Long-term loans (including current portion) 
 772,344  
 980,405  
 996,132  
 2,748,881 
 
38. Fair value information
 
 
a)
The
different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments
have been defined as follows: 
 
Level
1:
Quoted
prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market
is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume
to provide pricing information on an ongoing basis. 
 
  
Level
2:
Inputs
other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. 
 
  
Level
3:
Unobservable
inputs for the asset or liability. 
 
b)
Financial
instruments not measured at fair value 
The
carrying amounts of cash and cash equivalents, current financial assets at amortized cost, accounts receivable, other receivables, other
receivables due from related parties guarantee deposits paid, short-term loans, current contract liabilities, notes payable, accounts
payable, other payables, other payables to related parties, long-term loans (including current portion), long-term notes and accounts
payable to related parties and guarantee deposits received are approximate to their fair values.
 
39. Segment Information
 
 
a)
General
information 
Management
has determined the reportable operating segments based on the reports reviewed by the Board of Directors that are used to make strategic
decisions. The Group considers the business from a product perspective. The Group’s business is segregated into bicycle business,
racket business and other business.
 

 
b)Measurement
of segment information 
The
Board of Directors evaluates the performance of the operating segments based on a measure of income before tax.
 
c)Information
about segment profit or loss 
The
segment information provided to the chief operating decision-maker for the reportable segments is as follows:
 
Year ended December 31, 2020 
Bicycleframe  
Racket  
Others  
Total Revenue 
    
    
    
   External customers 
$14,275,730  
$7,880,514  
$22,328  
$22,178,572 Inter-segment 
 –  
 –  
 –  
 – Total revenue 
$14,275,730  
$7,880,514  
$22,328  
$22,178,572 Profit before income tax 
$1,893,547  
$(436,219) 
$8,091  
$1,465,419 Depreciation expenses 
$619,488  
$245,996  
$340  
$865,824 Share based payment expense 
 –  
 –  
 46,944  
 46,944 Interest income 
 1,807  
 993  
 2  
 2,802 Finance costs 
 304,374  
 113,230  
 319  
 417,923 
 
Year ended December 31, 2021 
Bicycleframe  
Racket  
Others  
Total Revenue 
    
    
    
   External customers 
$20,003,503  
$11,311,263  
$13,613  
$31,328,379 Inter-segment 
 –  
 –  
 –  
 – Total revenue 
$20,003,503  
$11,311,263  
$13,613  
$31,328,379 Profit before income tax 
$401,290  
$(384,967) 
$10,957  
$27,280 Depreciation expenses 
$977,026  
$350,040  
$222  
$1,327,288 Share based payment expense 
 –  
 –  
 131,712  
 131,712 Interest income 
 1,346  
 810  
 –  
 2,156 Finance costs 
 150,941  
 74,250  
 69  
 225,260 
 
d)Reconciliation
for segment income 
Revenue
from external customers and profit before income tax reported to the chief operating decision maker are measured using the same method
as for revenue and profit before income tax in the financial statements. Thus, no reconciliation is needed.
 
e)Information
on products 
Please
refer to Note 20 for the related information.
 

 
f)Geographical
information 
The
Group’s revenue from external customers by location of operations and information about its non-current assets by location of assets
are detailed below.
 
  
Year ended December 31, 2020  
Year ended December 31, 2021   
Revenue  
Non-current assets  
Revenue  
Non-current assets Taiwan 
$8,086,376  
$725,586  
$10,407,460  
$573,274 China 
 176,822  
 4,155,603  
 942,595  
 5,618,569 Germany 
 3,725,203  
 –  
 3,477,132  
 – France 
 2,293,421  
 –  
 2,558,569  
 – Spain 
 666,378  
 –  
 3,759,775  
 – United States 
 1,888,433  
 –  
 1,475,169  
 – Japan 
 1,783,544  
 –  
 3,074,885  
 – Singapore 
 1,181,380  
 –  
 575,873  
 – Austria 
 923,512  
 –  
 1,636,811  
 – Others 
 1,453,503  
 1,685,880  
 3,420,110  
 506,974   
$22,178,572  
$6,567,069  
$31,328,379  
$6,698,817 
 
g)Major
customer information 
Major
customer representing at least 10% of net revenue of the Group for the years ended December 31, 2020 and 2021 is as follows:
 
  
Year ended December 31, 2020 
Year ended December 31, 2021  
Revenue  
Segment 
Revenue  
SegmentA 
$3,523,444  
Bicycle frame 
$3,793,036  
Bicycle frameB 
 982,278  
Bicycle frame 
 3,245,813  
Bicycle frame  
$4,505,722  
  
$7,038,849  
 
 
40. Restrictions and parent company financial information
 
Under existing foreign exchange regulations
of the People’s Republic of China (“PRC”), payments of current account items, including profit distributions, interest
payments and trade and service related foreign exchange transactions, can be made in foreign currencies without prior approval of the
State Administration of Foreign Exchange (“SAFE”) by complying with certain procedural requirements. However, approval from
or registration or fillings with competent government authorities is required where Renminbi is to be converted into foreign currency
and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies.
 
Considering that such Restriction on the flow of cash from the Subsidiaries
in China to J-Star Holding Co., Ltd., the stand-alone condensed balance sheets, condensed statements of comprehensive income, and condensed
statements of cash flows of J-Star Holding Co., Ltd. Are included below.
 
Condensed balance sheets:

 

  
December 31, 2020  
December 31, 2021  
Amount (USD)  
Amount (USD) ASSETS 
    
   Current assets: 
    
   Cash and cash equivalents 
$83,624  
$- Other receivables-related parties 
 473,705  
 – Prepayments 
 79,757  
 399,378 Total current assets 
$637,086  
$399,378   
    
   Non-current assets: 
    
   Non-current financial assets at fair value through other comprehensive income 
 –  
 21,758 Investment in subsidiaries 
 9,334,781  
 11,003,084 Prepayments for investments 
 1,410,724  
 – Long-term prepayments 
 257,400  
 184,672 Total non-current assets 
 11,002,905  
 11,209,514 Total assets 
$11,639,991  
$11,608,892   
    
   LIABILITIES AND SHAREHOLDERS’ EQUITY 
    
   Current liabilities: 
    
   Other payables 
 30,489  
 1,073,666 Other payables-related parties 
 2,390,451  
 1,263,467 Total current liabilities 
 2,420,940  
 2,337,133 Total liabilites 
 2,420,940  
 2,337,133 Shareholders’ equity 
    
   Ordinary share 
 6,805,098  
 6,805,098 (US$0.31 per value per share; 25,000,000 and 35,000,000 shares authorized as December 31, 2020 and 2021, respectively; 20,000,553
and 21,892,899 shares issued and outstandings as of December 31, 2020 and 2021, respectively) 
    
   Capital surplus 
 8,397,244  
 8,528,956  Accumlated deficit 
 (5,751,639) 
 (5,884,541)Other uquity interest 
 (231,652) 
 (177,754)Total shareholders’ equity 
 9,219,051  
 9,271,759 Total equity and liabilities 
$11,639,991  
$11,608,892 
 

 
Condensed statements of comprehensive
income:
  

  
Year
ended
December
31, 2020  
Year
ended
December
31, 2021   
Amount (USD)  
Amount (USD) Operating expenses: 
    
   Administrative expenses 
$(184,149) 
$(1,266,513)Other income and expenses 
 (21,816) 
 852,977 Net operating loss 
 (205,965) 
 (413,536)  
    
   Interest income 
 1  
 2 Interest expenses 
 (127,903) 
 – Share of profit of subsidiaries 
 1,444,013  
 280,632 Net income attributable to ordinary shareholders 
$1,110,146  
$(132,902)Exchange difference on translation of foreign operations 
 (169,551) 
 53,898 Comprehensive income 
$940,595  
$(79,004)
 

Condensed statements of statements
of cash flows:
 
  
Year
ended
December
31, 2020  
Year
ended
December
31, 2021   
Amount (USD)  
Amount (USD) CASH FLOWS FROM OPERATING ACTIVITES 
    
   Profit before tax 
$1,110,146  
$(132,902)Adjustments: 
    
   Adjustments to reconcile profit (loss): 
    
   Share-based payment expense 
 46,944  
 131,712 Interest income 
 (1) 
 (2)Interest expenses 
 127,903  
 – Share of profit of subsidiaries accounted for under the equity method 
 (1,444,013) 
 (280,632)Changes in operating assets and liabilities: 
    
   Prepayments 
 –  
 83,233 Other payables-related parties 
 116,362  
 68,678 Other payables 
 23,484  
 46,289 Cash outflow generated from operations 
 (19,175) 
 (83,624)Interest received 
 1  
 2 Net cash flows used in operating activities 
$(19,174) 
$(83,622)  
    
   CASH FLOWS FROM FINANCING ACTIVITES 
    
   Increase in other payables to related parties 
 100,000  
 – Net cash flows from financing activties 
 100,000  
 – Net increase in cash and cash equivalents 
 80,826  
 (83,622)Cash and cash equivalents at beginning of year 
 2,796  
 83,622 Cash and cash equivalents at end of year 
$83,622  
$- 

 

 

Supplementary cash flow information

 

Financing activities with no cash flow
effects

 

  
Year
ended
December
31, 2020  
Year
ended
December
31, 2021 Other payables being converted to capital stocks-treasury shares
reissue 
$629,055  
$                      – 
 

Business
activity –
 
J-Star
Holding Co., Ltd. Is the holding company of the J-Star Group (the “Group”). The principal activities of J-Star Holding Co.,
Ltd. Is the holding of investments in entities involved mainly in manufacturing and trading business in China, Hong Kong and Taiwan.
 
Basis
of preparation –
 
Accounting
policies adopted in the preparation of this condensed parent company only financial information are the same as those adopted in the
consolidated financial statements and described in Note 4 – Summary of significant accounting policies, except that the equity
method has been used to accounted for investments in subsidiaries.
 
Investments
in subsidiaries –
 
J-Star
Holding Co., Ltd. records its investment in its subsidiaries under the equity method of accounting, such investment is presented on the
condensed balance sheets as “Investment in subsidiaries” and share of the subsidiaries’ income as “Share of income
in subsidiaries” on the condensed statements of comprehensive income.
 
As
at 31 December 2021 there were no material contingencies at J-Star Holding Co., Ltd.
 
Distribution
to shareholders –
 
In
2020 and 2021, J-Star Holding Co., Ltd. did not distribute any dividends to its shareholders.
 
Dividends
from subsidiary –
 
In
2020 and 2021, J-Star Holding Co., Ltd. did not receive any dividends from subsidiary.
 

 

 
PART
II
 
INFORMATION
NOT REQUIRED IN PROSPECTUS
 
ITEM
6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
 
We
are a Cayman Islands company. Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association
may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands
courts to be contrary to public policy, such as to provide indemnification against willful default, willful neglect, civil fraud or the
consequences of committing a crime. Our articles of association will provide for indemnification of our officers and directors to the
maximum extent permitted by law, including for any liability incurred in their capacities as such, except through their own actual fraud,
willful negligence or default.
 
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us
pursuant to the foregoing provisions, we have been informed that in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act and is therefore unenforceable.
 
ITEM
7. RECENT SALES OF UNREGISTERED SECURITIES.
 
During
the past three years, we have issued the following securities. We believe that each of the following issuances was exempt from registration
under the Securities Act pursuant to Section 4(a)(2) of the Securities Act regarding transactions not involving a public offering or
in reliance on Regulation S under the Securities Act regarding sales by an issuer in offshore transactions. No underwriters were involved
in these issuances of securities and no underwriting commissions were paid in connection therewith.
 
Purchaser
 
Date of Issuance
 
Number of Securities
 
Consideration
 
Underwriting Discount and CommissionNEW MOON CORPORATION
 
September 30, 2019
 
10,251,947
 
Nil
 
-NEW MOON CORPORATION
 
January 10, 2020
 
5,252,500
 
Nil
 
-NEW MOON CORPORATION
 
August 12, 2020
 
2,863,840
 
Nil
 
-NEW MOON CORPORATION
 
August 20, 2020
 
1,856,598
 
Nil
 
-NEW MOON CORPORATION
 
September 30, 2020
 
856,598
 
Nil
 
-NEW MOON CORPORATION
 
December 30, 2020
 
377,124
 
USD585,000.00 from total paid-in capital of USD1,300,000.00 in Bohong Technology
 
-CHIANG Jing-Bin
 
November 6, 2020
 
1,054,293
 
NTD51,133,251
 
-CHIANG Jing-Bin
 
December 18, 2020
 
375,000
 
Nil
 
-STAR CENTURION LIMITED
 
August 15, 2020
 
2,388,660
 
Nil
 
-RADIANT FAITH LIMITED
 
August 20, 2020
 
2,500,000
 
Nil
 
-GLITTER GROUP CO., LTD
 
August 12, 2020
 
2,388,660
 
Nil
 
-ABICO ASIA Capital Corporation
 
December 18, 2020
 
975,000
 
Nil
 
-Sendai Investments Company Inc.
 
December 30, 2020
 
251,416
 
USD390,000.00 from total paid-in capital of USD1,300,000.00 in Bohong Technology
 
-Barium Glory Financial Ltd.
 
December 30, 2020
 
209,513
 
USD325,000 from total paid-in capital of USD1,300,000.00 in Bohong Technology
 
-J-Star Holding Co., Ltd.
 
January 10, 2020
 
4,999,447
 
Nil
 
-J-Star Holding Co., Ltd.
 
November 6, 2020
 
3,945,154
 
Nil
 
-J-Star Holding Co., Ltd.
 
December 30, 2020
 
3,107,101
 
Nil
 
-HSU Chung-Haw
 
August 20, 2020
 
100,000
 
Nil
 
-CHEN Shu-Jhen
 
August 20, 2020
 
1,000,000
 
Nil
 
-CHAN CHIH LIMITED
 
September 30, 2020
 
1,000,000
 
Nil
 
-NEW MOON CORPORATION
 
March 4, 2022
 
4,888,092
 
Nil
 
– STAR CENTURION LIMITED
 
March 4, 2022 
1,719,835
 
Nil
 
– RADIANT FAITH LIMITED
 
March 4, 2022 
2,700,000
 
Nil
 
– ABICO ASIA Capital Corporation
 
March 4, 2022
 
702,000
 
Nil
 
– Barium Glory Financial Ltd.
 
March 4, 2022
 
1,500,849
 
Nil
 
– Sendai Investments Company Inc.
 
March 4, 2022
 
631,020
 
Nil
 
-CHAN CHIH LIMITED
 
March 4, 2022
 
720,000
 
Nil
 
– CHIANG Jing-Bin
 
March 4, 2022
 
1,209,091
 
Nil
 
-LEE Bo-Wei
 
March 4, 2022
 
900,000
 
Nil
 
– HSU Chung-Haw
 
March 4, 2022
 
72,000
 
Nil
 
– CHEN Shu-Jhen
 
March 4, 2022
 
720,000
 
Nil
 

 
ITEM
8. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
 
(a)
Exhibits
 
See
Exhibit Index of this registration statement.
 
The
agreements included as exhibits to this registration statement contain representations and warranties by each of the parties to the applicable
agreement. These representations and warranties were made solely for the benefit of the other parties to the applicable agreement and
(i) were not intended to be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties
if those statements prove to be inaccurate; (ii) may have been qualified in such agreement by disclosures that were made to the other
party in connection with the negotiation of the applicable agreement; (iii) may apply contract standards of “materiality”
that are different from “materiality” under the applicable securities laws; and (iv) were made only as of the date of the
applicable agreement or such other date or dates as may be specified in the agreement.
 
We
acknowledge that, notwithstanding the inclusion of the foregoing cautionary statements, we are responsible for considering whether additional
specific disclosures of material information regarding material contractual provisions are required to make the statements in this registration
statement not misleading.
 
(b)
Financial Statement Schedules
 
Schedules
have been omitted because the information required to be set forth therein is not applicable or is shown in the Consolidated Financial
Statements or the Notes thereto.
 

 
ITEM
9. UNDERTAKINGS.
 
(1)
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
 
i.
To include any prospectus required by Section 10(a)(3) of the Securities Act;
 
ii.
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration
Fee” table in the effective Registration Statement;
 
iii.
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
 
(2)
That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof;
 
(3)
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the
termination of the offering.
 
(4)
To file a post-effective amendment to the registration statement to include any financial statements required by “Item 8.A. of
Form 20-F” at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise
required by Section 10(a)(3) of the Act need not be furnished, provided that the registrant includes in the prospectus, by means of a
post-effective amendment, financial statements required pursuant to this paragraph (4) and other information necessary to ensure that
all other information in the prospectus is at least as current as the date of those financial statements.
 
(5)
That, for purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant
to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time
it was declared effective.
 
(6)
For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
 
(7)
That, for the purpose of determining liability under the Securities Act to any purchaser:
 

 
Each
prospectus filed by the registrant pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration
statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included
in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference
into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract
of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was
part of the registration statement or made in any such document immediately prior to such date of first use.
 

Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of
the small business issuer pursuant to the foregoing provisions, or otherwise, the small business issuer has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the small business issuer
of expenses incurred or paid by a director, officer or controlling person of the small business issuer in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered,
the small business issuer will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
 
(8)
That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution
of the securities:
 
The
undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration
statement, regardless of the placement method used to sell the securities to the purchaser, if the securities are offered or sold to
such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will
be considered to offer or sell such securities to such purchaser:
 
(i)
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule
424;
 
(ii)
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by
the undersigned registrant;
 
(iii)
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant
or its securities provided by or on behalf of the undersigned registrant; and
 
(iv)
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
 

 
EXHIBIT
INDEX
 
Exhibit
No.
 
Description
of document1.1*
 
Form of Underwriting Agreement3.1**
 
Second Amended and Restated Memorandum and Articles of Association3.2**
 
Third Amended and Restated Memorandum and Articles of Association, as currently in effect3.3**
 
Fourth Amended and Restated Memorandum and Articles of Association (effective upon closing of the offering)4.1**
 
Registrant’s Specimen Certificate for Ordinary Shares 4.2*
 
Form of Representative’s Warrants5.1*
 
Opinion of Ogier as to the legality of the shares5.2*
 
Opinion of Loeb & Loeb LLP as to the legality of the underwriters’ warrants 5.3**
 
Opinion of L&L-Leaven, Attorneys-at-Law, as to certain PRC Legal Matters 5.4**
 
Opinion of Lee and Li, Attorneys-at-Law, as to certain Taiwan Legal Matters10.1**
 
Unofficial English Translation of Joint Investment Agreement dated April 23, 2021, by and among Mr. Frédéric Sallet, Christophe Quiniou, Le Gallion, Star Leader Trading Limited and 6ème Sens Immobilier – Investissement.10.2**
 
Unofficial English Translation of Leasing Agreement, dated August 7, 2020, by and among Farglory Life Insurance Inc. and TW YMA.10.3**
 
Unofficial English Translation of Leasing Agreement, dated April 21, 2020, by and among Feng-Yuan Jiang and TW YMA.10.4**
 
Unofficial English Translation of Leasing Agreement, dated February 26, 2022, by and among Dongguan Yuantai and Dongguan YMA.10.5**
 
Unofficial English Translation of Leasing Agreement, dated February 26, 2022, by and among Dongguan Yuantai and Dongguan YMA.10.6**
 
Unofficial English Translation of State-owned Land Use Assignment Contract, dated February 28, 2019, by and among Bohong Technology and Yangzhou Bureau of Land and Resources.10.7**
 
Unofficial English Translation of Comprehensive Credit Loan Agreement, dated May 10, 2021, by and among Mega International Commercial Bank Co., Ltd. and TW YMA, in respect of a loan in the amount of NTD10 million.10.8**
 
Unofficial English Translation of Credit Agreement, dated March 29, 2021, by and among Taishin International Bank and TW YMA, in respect of a loan in the amount of NTD30 million.10.9**
 
Unofficial English Translation of Letter of Guarantee, dated March 29, 2021, by and among Taishin International Bank and Mr. Jing-Bin Chiang, in respect of a loan in the amount of NTD30 million granted to TW YMA.10.10**
 
Unofficial English Translation of Collateral Provision Agreement, dated March 29, 2021, by and among Taishin International Bank, Mr. Jing-Bin Chiang and TW YMA.10.11**
 
Bank Facility Letter, dated March 4, 2021, by and among Taishin International Bank Co., Ltd., Star Leader, J-Star, TW YMA and Mr. Jing-Bin Chiang, in respect of a loan in the amount of US$1.2 million.10.12**
 
Unofficial English Translation of Deed of Guarantee, dated February 11, 2020, by and among King’s Town Bank Co., Ltd. and Mr. Jing-Bin Chiang, in respect of a loan in the amount of NTD10 million granted to TW YMA. 10.13**
 
Executive Officer Employment Agreement, by and between Jing-Bin Chiang and the registrant, dated as of February 1, 2022 10.14**
 
Executive Director Employment Agreement, by and between Jing-Bin Chiang and the registrant, dated as of February 1, 2022 10.15**
 
Employment Agreement, by and between Abraham Pullolickel Ittycheriah and the registrant, dated as of February 1, 2022 10.16**
 
Employment Agreement, by and between Ting-Pang Sung and the registrant, dated as of February 1, 2022 10.17**
 
Independent Director Agreement by and between Ching-Chou Huang and the registrant, dated as of July 9, 2022 10.18**
 
Independent Director Agreement by and between Shen-Huei Wang and the registrant, dated as of July 9, 2022 10.19**
 
Independent Director Agreement by and between Ping-Hong Lin and the registrant, dated as of July 9, 202216.1**
 
Letter from Deloitte & Touche regarding the change in Registrant’s Certifying Account21.1**
 
List of Subsidiaries of the Registrant23.1*
 
Consent of PricewaterhouseCoopers, Taiwan.23.2*
 
Consent of Ogier (included in Exhibits 5.1).23.3*
 
Consent of Loeb & Loeb LLP (included in Exhibit 5.2). 23.4**
 
Consent of L&L-Leaven, Attorneys-at-Law (included in Exhibit 5.3). 23.5**
 
Consent of Lee and Li, Attorneys-at-Law (included in Exhibit 5.4).23.6**
 
Consent of Frost & Sullivan 24.1**
 
Power of Attorney (included in signature page hereto)107*
 
Filing Fee Table 
*
Filed
herein.**
Filed previously.  

 
SIGNATURES
 
Pursuant
to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in Taichung City, Taiwan, on August 19, 2022.
 
 
J-Star
Holding Co., Ltd.
 
 
By:
/s/ Jing-Bin
Chiang 
Name:

Jing-Bin Chiang 
Title: 
Chief Executive Officer 
Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement, as amended, has been signed by the following persons
in the capacities and on the dates indicated.
 
Signature
 
Title
 
Date
 
 
 
 
 /s/ Jing-Bin Chiang
 
Chairman, Chief Executive Officer
 
August 19, 2022 Jing-Bin Chiang
 
(Principal Executive Officer) and Director
 
  
 
 
 
 /s/ Abraham Pullolickel Ittycheriah  
 
Chief Financial Officer  
 
August 19, 2022 Abraham Pullolickel Ittycheriah  
 
(Principal Financial and Accounting Officer)
 
  
 
 
 
 /s/ Ting-Pang Sung

 
Director
 
August 19, 2022 Ting-Pang Sung  
 
 
 
  
 
 
 
 /s/ Ching-Chou Huang
 
Independent Director
 
August 19, 2022 Ching-Chou Huang  
 
 
 
  
 
 
 
 /s/ Shen-Huei Wang
 
Independent Director
 
August 19, 2022 Shen-Huei Wang  
 
 
 
  
 
 
 
 /s/ Ping-Hong Lin

 
Independent Director
 
August 19, 2022 Ping-Hong Lin  
 
 
 
 
 
SIGNATURE
OF AUTHORIZED REPRESENTATIVE IN THE UNITED STATES
 
Pursuant
to the Securities Act of 1933, as amended, the undersigned, the duly authorized representative in the United States of J-Star Holding
Co., Ltd. has signed this registration statement or amendment thereto in City of Newark, State of Delaware on August 19, 2022.
 
 
 
By:
/s/
Donald J. Puglisi 
Name:
Donald J. Puglisi 
Title: 
Managing Director 

 

 
Exhibit 1.1
 
UNDERWRITING
AGREEMENT
 
___________,
2022
 
ViewTrade
Securities, Inc.
7280 W. Palmetto Park Road
Suite 310
Boca
Raton, Florida 33433
 
As
Representative of the Underwriters named on Annex A hereto
 
Ladies
and Gentlemen:
 
The
undersigned, J-Star Holding Co., Ltd., an exempted company with limited liability incorporated under the laws of the Cayman Islands (the
“Company”), hereby confirms its agreement (this “Agreement”) with the several underwriters (the
“Underwriters” and each an “Underwriter”), for whom ViewTrade Securities, Inc. is acting as representative
(in such capacity, the “Representative,” and if there are no underwriters other than the Representative, references
to multiple underwriters shall be disregarded and the term Representative as used herein shall have the same meaning as Underwriter)
to issue and sell to the Underwriters an aggregate of [      ] ordinary shares, $0.50 par value per share (“Ordinary Shares”),
of the Company (the “Firm Shares”). The Company has also granted to the Representative an option (the “Over-allotment
Option”) to purchase up to [      ] additional Ordinary Shares, on the terms and for the purposes set forth in Section 1(b)
hereof (the “Option Shares”). The Firm Shares and any Option Shares purchased pursuant to this Agreement are herein
collectively called the “Securities.” The offering and sale of the securities contemplated by this Agreement on the
terms and conditions set forth herein is referred to herein as the “Offering.”
 
(1) Purchase of Securities/Consideration.
 
a. Firm
Shares. On the basis of the representations and warranties herein contained, but subject to the terms and conditions herein set forth,
the Company agrees to issue and sell to the Underwriters, severally and not jointly, an aggregate of [      ] Firm Shares at a purchase price
equal to the public offering price net of (i) an underwriting discount equal to seven and one half percent (7.5%) of the public offering
price of the securities being offered (the “Underwriting Fee”), and (ii) a non-accountable expense allowance of one
percent (1.0%) of the gross proceeds of the Offering, or $[      ] per share. The Underwriters, severally and not jointly, agree to purchase
from the Company the Firm Shares set forth opposite their respective names on Annex A attached hereto and made a part hereof.
 
b. Option
Shares. On the basis of the representations and warranties herein contained, but subject to the terms and conditions herein set forth,
the Company hereby grants to the several Underwriters an option, severally and not jointly, to purchase all or any portion of the Option
Shares at the same purchase price as the Firm Shares. The option granted hereunder may be exercised in whole or in part from time to
time and at any time within forty-five (45) days after the date of the Prospectus (as defined below) upon notice (confirmed in writing)
by the Representative to the Company setting forth the aggregate number of Option Shares as to which the Underwriters are exercising
the option and the date and time, as determined by the Representative, when the Option Shares are to be delivered, but in no event earlier
than the First Closing Date (as defined below) nor earlier than the second Business Day (as defined below) or later than the tenth Business
Day after the date on which the option shall have been exercised. The number of Option Shares to be purchased by each Underwriter shall
be the same percentage of the total number of Option Shares to be purchased by the Underwriters as the number of Firm Shares to be purchased
by such Underwriter is of the total number of Firm Shares to be purchased by the Underwriters, as adjusted by the Representative in such
manner as the Representative deems advisable to avoid fractional shares. No Option Shares shall be sold and delivered unless the Firm
Shares previously have been, or simultaneously are, sold and delivered.
 
c. Commission
and Expenses. In consideration of the services to be provided hereunder, the Company shall pay the Underwriters or their respective
designees as set forth in Section 1(a) and, as applicable, Section 1(b). In addition, the Company shall reimburse the Representative
for certain out-of-pocket accountable expenses, as set forth in Section 4(i), which reimbursement shall be reduced by any Advances
(as defined below) previously paid to the Representative. To the extent that the Underwriters’ incurred expenses are less than
the Advances previously paid, the Underwriters will return to the Company that portion of the Advances not offset by out-of-pocket accountable
expenses.
 

 
d. Representative’s
Warrant. The Company hereby agrees to issue to the Representative (and/or its designees) on the (i) First Closing Date, warrants
to purchase such number of Ordinary Shares equal to ten percent (10%) of the Firm Shares issued on the First Closing Date and (ii) on
each Option Closing Date, if and as applicable, warrants to purchase such number of Ordinary Shares equal to ten percent (10%) of the
Option Shares issued at such Option Closing Date, if and as applicable (collectively, the “Representative’s Warrants”).
The Representative’s Warrant may be exercised by the payment of cash or via cashless exercise, shall be exercisable for a period
of five years from the Effective Date (as defined below) of the Registration Statement (as defined below) and will terminate on the fifth
anniversary of the Effective Date of the Registration Statement. The exercise price of the Representative’s Warrant is equal to
one hundred and twenty five percent (125%) of the public offering price of a Security. The Representative’s Warrant and the Ordinary
Shares issuable upon exercise of the Representative’s Warrant will be deemed compensation by FINRA (as defined below), and therefore
will be subject to FINRA Rule 5110(g)(1). In accordance with FINRA Rule 5110(e)(1), neither the Representative’s Warrant nor any
of the Ordinary Shares issued upon exercise of the Representative’s Warrant may be sold, transferred, assigned, pledged or hypothecated,
or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition
of such securities by any person, for a period of one hundred and eighty (180) days beginning on the Effective Date, subject to certain
exceptions as set forth in FINRA Rule 5110(e)(2).
 
(2) Delivery and Payment.
 
a. Delivery
of and Payment for Securities. Delivery of and payment for the Firm Shares shall be made at 10:00 a.m., New York City time, on [      ], 2022 or at such other time as shall be agreed upon in writing by the Representative and the Company, and, with respect to the Option
Shares, 10:00 a.m., New York City time, on the date specified by the Representative in the written notice given by the Representative
of the Underwriters’ election to purchase such Option Shares, or at such other time as shall be agreed upon in writing by the Representative
and the Company. The hour and date of delivery of and payment for the Firm Shares is called the “First Closing Date,”
and each time and date for delivery of the Option Shares, if not the First Closing Date, is called an “Option Closing Date,”
and each such closing of the payment of the purchase price for, and delivery of the Firm Shares or Option Shares, as applicable, is referred
to herein as a “Closing” and the date of each such Closing, a “Closing Date.” Each Closing shall
be at the offices of the Representative or at such other place as shall be agreed upon by the Representative and the Company, and each
Closing may be undertaken by remote electronic exchange of Closing documentation. Payment for the Firm Shares and Option Shares, as applicable,
shall be made on the applicable Closing Date by wire transfer in Federal (same day) funds upon delivery to the Representative of the
Firm Shares and Option Shares, as applicable, through the full fast transfer facilities of the Depository Trust Company (the “DTC”)
for the account of the Underwriters. The Firm Shares and Option Shares shall be registered in such names and in such denominations as
the Representative may request in writing at least two Business Days prior to the applicable Closing Date. The Company shall not be obligated
to sell or deliver the Firm Shares and Option Shares to be purchased on such Closing Date except upon tender of payment by the Representative
for all such Firm Shares and Option Shares, as applicable.
 
b.
Escrow Agreement. Concurrently with the execution and delivery of this Agreement, the Company, the Representative and Pearlman
Law Group LLP, as escrow agent (the “Escrow Agent”), shall enter into an escrow agreement (the “Escrow Agreement”),
pursuant to which $600,000 in proceeds from the Offering shall be deposited by the Company at Closing in an escrow account (the
“Escrow Account”). All remaining funds in the Escrow Account that are not subject to an indemnification claim as of
the 12-month period following the First Closing Date will be returned to the Company in accordance with the terms of the Escrow Agreement.
The Company shall pay the reasonable fees and expenses of the Escrow Agent.
 
(3) Representations
and Warranties of the Company. The Company represents and warrants to, and agrees with, each of the Underwriters that, as of
the date hereof and as of the First Closing Date and each Option Closing Date (as if made at such Closing Date):
 
a. Filing
of Registration Statement. The Company has filed with the Commission a registration statement, and an amendment or amendments
thereto, on Form F-1 (File No. 333-[                ]), including any related prospectus or prospectuses, for the registration of the Securities under
the Securities Act, which registration statement and amendment or amendments have been prepared by the Company in conformity with the
requirements of the Securities Act. Except as the context may otherwise require, such registration statement, as amended, on file with
the Commission at the time the registration statement became effective (including the Preliminary Prospectus included in the registration
statement, financial statements, schedules, exhibits and all other documents filed as a part thereof or incorporated therein and all
information deemed to be a part thereof as of the Effective Date pursuant to paragraph (b) of Rule 430A of the Securities Act (the “Rule
430A Information”), is referred to herein as the “Registration Statement.” If the Company files any registration
statement pursuant to Rule 462(b) of the Securities Act, then after such filing, the term “Registration Statement”
shall include such registration statement filed pursuant to Rule 462(b). The Registration Statement has been declared effective by the
Commission on the date hereof.
 

 
Each
prospectus used prior to the effectiveness of the Registration Statement, and each prospectus that omitted the Rule 430A Information
that was used after such effectiveness and prior to the execution and delivery of this Agreement, is herein called a “Preliminary
Prospectus.” The Preliminary Prospectus, subject to completion and filed with the Commission on [      ], 2022, that was included
in the Registration Statement immediately prior to the Applicable Time (as defined below) is hereinafter called the “Pricing
Prospectus.” The final prospectus in the form first furnished to the Underwriters for use in the Offering is hereinafter called
the “Prospectus.” Any reference to the “most recent Preliminary Prospectus” shall be deemed to
refer to the latest Preliminary Prospectus included in the Registration Statement.
 
For
purposes of this Agreement:
 
“Applicable
Time” means [      ]:00 a/p.m., New York City time, on [      ], 2022.
 
“Business
Day” means any day other than a Saturday, a Sunday or a day on which banking institutions or trust companies are authorized
or obligated by law to close in the State of Florida; provided, however, for clarification, banking institutions and trust companies
shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”,
“non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the
direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of banking institutions
in the State of Florida generally are open for use by customers on such day.
 
“Commission”
means the U.S. Securities and Exchange Commission.
 
“Effective
Date” means each date and time that the Registration Statement or post-effective amendment or amendments thereto became or
becomes effective.
 
“Execution
Time” means the date and time that this Agreement is executed and delivered by the parties to this Agreement.
 
“Issuer
Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in Rule 433 under the Securities
Act (“Rule 433”), including any “free writing prospectus” (as defined in Rule 405 under the Securities
Act) relating to the Securities that is (i) required to be filed with the Commission by the Company, (ii) a “road show that is
a written communication” within the meaning of Rule 433(d)(8)(i), whether or not required to be filed with the Commission, or (iii)
exempt from filing with the Commission pursuant to Rule 433(d)(5)(i) because it contains a description of the Securities or of the Offering
that does not reflect the final terms, in each case in the form filed or required to be filed with the Commission or, if not required
to be filed, in the form retained in the Company’s records pursuant to Rule 433(g).
 
“Marketing
Materials” means written roadshow materials prepared by or on behalf of the Company and used or referred to by the Company
or with the Company’s express consent.
 
“Offering”
means the offering and sale of the Securities.
 
“Pricing
Disclosure Package” means the Pricing Prospectus, any Permitted Free Writing Prospectuses set forth on Schedule II and
the information included on Schedule I hereto, all considered together.
 
“Registration
Statement” means the registration statement referred to in Section 3(a) hereof including exhibits and financial statements
and any prospectus supplement relating to the Securities that is filed with the Commission pursuant to Rule 424(b) and deemed part of
such registration statement pursuant to Rule 430A, as amended, on each Effective Date and, in the event any post- effective amendment
thereto becomes effective prior to the First Closing Date, shall also mean such registration statement as so amended.
 

 
“Rule
158,” “Rule 163,” “Rule 164,” “Rule 172,” “Rule 405,”
“Rule 415,” “Rule 424,” “Rule 430A,” “Rule 430B” and “Rule
433” refer to such rules under the Securities Act.
 
“SEC
Filings” means any filings made by the Company with the Commission.
 
“Trading
Day” means any day on which the Exchange is open for trading.
 
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder.
 
b.Disclosures
in Registration Statement. 
i. Each
of the Registration Statement and any post-effective amendment thereto, at the time it became effective, complied in all material respects
with the requirements of the Securities Act. Each Preliminary Prospectus, including the prospectus filed as part of the Registration
Statement as originally filed or as part of any amendment or supplement thereto, and the Prospectus, at the time each was filed with
the Commission, complied in all material respects with the requirements of the Securities Act. Each Preliminary Prospectus delivered
to the Underwriters for use in connection with this Offering and the Prospectus was or will be identical to the electronically transmitted
copies thereof filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval system (“EDGAR”),
except to the extent permitted by Regulation S-T;
 
ii. Neither
the Registration Statement nor any amendment thereto, at the time each part thereto became effective pursuant to the Securities Act,
as of the date of this Agreement, at the First Closing Date or at each Option Closing Date, contained, contains or will contain an untrue
statement of a material fact or omitted, omits or will omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that this representation and warranty shall not apply to statements made or
statements omitted in reliance upon and in conformity with written information furnished to the Company with respect to the Underwriters
by the Representative expressly for use in the Registration Statement, the Pricing Prospectus or the Prospectus or any amendment thereof
or supplement thereto. The parties acknowledge and agree that such information provided by or on behalf of the Underwriters consists
solely of (i) the name of the Underwriters contained on the cover page of the Pricing Prospectus and Prospectus and (ii) the sub-sections
titled “Discount, Commissions and Expenses”, “Representative’s Warrants”, “Indemnification; Indemnification
Escrow”, “Lock-Up Agreements”, “Pricing of the Offering”, “No Sales of Similar Securities”,
“Electronic Offer, Sale and Distribution of Securities”, “Price Stabilization, Short Positions and Penalty Bids”,
“Passive Market Making”, “Potential Conflicts of Interest”, “Other Relationships”, and “Nasdaq
Listing”, in each case under the caption “Underwriting” in the Prospectus (the “Underwriter Information”);
 
iii. The
Pricing Disclosure Package, as of the Applicable Time, as of the date of this Agreement, and at the First Closing Date and each Option
Closing Date, did not, does not and will not include an untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to the Underwriter Information. Each Issuer Free Writing Prospectus
does not conflict with the information contained in the Registration Statement, the Preliminary Prospectus, the Pricing Prospectus or
the Prospectus, and each Issuer Free Writing Prospectus, as supplemented by and taken together with the Pricing Prospectus as of the
Applicable Time, did not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that this
representation and warranty shall not apply to the Underwriter Information; and
 
iv. Neither
the Prospectus nor any amendment or supplement thereto, as of its issue date, at the time of any filing with the Commission pursuant
to Rule 424(b), or at the First Closing Date or each Option Closing Date, included, includes or will include an untrue statement of a
material fact or omitted, omits or will omit to state a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty
shall not apply to the Underwriter Information.
 

 
c. Disclosure
of Agreements. The agreements and documents described in the Registration Statement, the Pricing Disclosure Package and the Prospectus
conform in all material respects to the descriptions thereof contained therein and there are no agreements or other documents required
by the Securities Act to be described in the Registration Statement, the Pricing Disclosure Package or the Prospectus or to be filed
with the Commission as exhibits to the Registration Statement, that have not been so described or filed. Each agreement or other instrument
(however characterized or described) to which any of the Company or its Subsidiaries (as defined below) is a party or by which any of
them is or may be bound or affected and (i) that is referred to in the Registration Statement, the Pricing Disclosure Package or the
Prospectus, or (ii) that is material to the business of the Company and its Subsidiaries, has been duly authorized and validly executed
by the Company or a Subsidiary, as applicable, is in full force and effect in all material respects and is enforceable against the Company
or such Subsidiary, as applicable, and, to the Company’s knowledge, the other parties thereto, in accordance with its terms, except
(x) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights
generally, (y) as enforceability of any indemnification or contribution provision may be limited under the federal and state securities
laws, and (z) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor may be brought. None of such agreements or instruments
has been assigned by any of the Company or its Subsidiaries, and neither the Company or such Subsidiary, as applicable, nor, to the Company’s
knowledge, any other party is in default thereunder and, to the Company’s knowledge, no event has occurred that, with the lapse
of time or the giving of notice, or both, would constitute a default thereunder. To the best of the Company’s knowledge, performance
by the Company or a Subsidiary, as applicable, of such agreements or instruments will not result in a violation of any existing applicable
law, rule, regulation, judgment, order or decree of any governmental authority, agency or court, domestic or foreign, having jurisdiction
over the Company or its Subsidiaries or any of their respective assets or businesses, including those relating to environmental laws
and regulations, except to the extent that the violation would not result in a Material Adverse Change (as defined below).
 
d. Good
Standing. The Company has been duly formed, is validly existing as a company limited by shares in good standing under the laws
of the Cayman Islands, has the corporate power and authority to own its property and to conduct its business as described in the Pricing
Disclosure Package and the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not result in a Material Adverse Change.
 
e. Subsidiaries.
Each of the Company’s direct and indirect subsidiaries (each, a “Subsidiary” and, collectively, the “Subsidiaries”)
has been identified on Schedule III hereto. Each of the Subsidiaries has been duly formed, is validly existing as an entity in good standing
under the laws of the jurisdiction of its formation, has the corporate power and authority to own its property and to conduct its business
as described in the Pricing Disclosure Package and the Prospectus; all of the outstanding equity interests of each Subsidiary have been
duly and validly authorized and issued, are owned directly or indirectly by the Company, are paid according to the applicable laws and
the articles of association and non-assessable and are free and clear of all liens, encumbrances, equities or claims. None of the outstanding
share capital or equity interest in any Subsidiary was issued in violation of preemptive or similar rights of any security holder of
such Subsidiary. All of the constitutive or organizational documents of each of the Subsidiaries comply with the requirements of applicable
laws of its jurisdiction of incorporation or organization and are in full force and effect. Apart from the Subsidiaries, the Company
has no direct or indirect subsidiaries or any other company over which it has direct or indirect effective control, except as described
in the Pricing Disclosure Package and the Prospectus.
 
f. [Reserved].
 
g. Prior
Securities Transactions. No securities of the Company have been sold by the Company or by or on behalf of, or for the benefit
of, any person or persons controlling, controlled by or under common control with the Company, except as disclosed in the Pricing Disclosure
Package and the Preliminary Prospectus.
 
h. Regulations.
 
i. The
disclosures in the Pricing Disclosure Package and the Prospectus concerning the effects of federal, state, local and all foreign regulation
on the Offering and the Company’s business as currently contemplated are correct in all respects and no other such regulations
are required to be disclosed pursuant to the Securities Act in the Registration Statement, the Pricing Disclosure Package or the Prospectus
which are not so disclosed.
 

 
ii. Except
as described in the Pricing Disclosure Package and the Prospectus, each of the Company and its Subsidiaries has complied, and has taken
all steps to ensure compliance, in material respects, by each of its shareholders, directors and officers that is, or is directly or
indirectly owned or controlled by, a PRC resident or citizen with any applicable rules and regulations of the relevant PRC government
agencies in effect on the applicable Closing Date (including but not limited to the Ministry of Commerce, the National Development and
Reform Commission, the China Securities Regulatory Commission (“CSRC”) and the State Administration of Foreign Exchange)
(the “SAFE”) relating to overseas investment by PRC residents and citizens (the “PRC Overseas Investment
and Listing Regulations”), including, requesting each such person that is, or is directly or indirectly owned or controlled
by, a PRC resident or citizen to complete any registration and other procedures required under applicable PRC Overseas Investment and
Listing Regulations (including any applicable rules and regulations of the SAFE).
 
iii. The
Company is aware of and has been advised as to the content of the Provisions on Mergers and Acquisitions of Domestic Enterprises by Foreign
Investors and any official clarifications, guidance, interpretations, implementation rules, revisions in connection with or related thereto
in effect on the applicable Closing Date (the “PRC Mergers and Acquisitions Rules”) jointly promulgated by the Ministry
of Commerce, the State Assets Supervision and Administration Commission, the State Tax Administration, the State Administration of Industry
and Commerce, the CSRC and the State Administration of Foreign Exchange on August 8, 2006, including the provisions thereof which purport
to require offshore special purpose entities formed for listing purposes and controlled directly or indirectly by PRC companies or individuals
to obtain the approval of the CSRC prior to the listing and trading of their securities on an overseas stock exchange. The Company has
received legal advice specifically with respect to the PRC Mergers and Acquisitions Rules from its PRC counsel, and the Company understands
such legal advice. In addition, the Company has communicated such legal advice in full to each of its directors that signed the Registration
Statement and each such director has confirmed that he or she understands such legal advice. The issuance and sale of the Securities,
the listing and trading of the Securities on the Exchange (as defined below) and the consummation of the transactions contemplated by
this Agreement, the Escrow Agreement and the Representative’s Warrant (A) are not and will not be, as of the date hereof or at
the applicable Closing Date, as the case may be, adversely affected by the PRC Mergers and Acquisitions Rules and (B) do not require
the prior approval of the CSRC.
 
i. Absence
of Certain Events. Except as contemplated in the Pricing Disclosure Package and in the Prospectus, subsequent to the respective
dates as of which information is given in the Pricing Disclosure Package, neither the Company nor any of its Subsidiaries has incurred
any material liabilities or obligations, direct or contingent, or entered into any material transactions, or declared or paid any dividends
or made any distribution of any kind with respect to its share capital; and there has not been any change in the share capital (other
than a change in the number of outstanding Ordinary Shares of the Company due to the issuance of shares upon the exercise of outstanding
options or warrants or conversion of convertible securities), or any material change in the short-term or long-term debt (other than
as a result of the conversion of convertible securities of the Company), or any issuance of options, warrants, convertible securities
or other rights to purchase the share capital of the Company or any of its Subsidiaries, or any material adverse change in the general
affairs, condition (financial or otherwise), business, prospects, management, properties, operations or results of operations of the
Company and its Subsidiaries, taken as a whole (“Material Adverse Change”), or any development which could reasonably
be expected to result in any Material Adverse Change.
 
j. Independent
Accountants. PricewaterhouseCoopers, Taiwan (the “Auditor”), which has expressed its opinion with respect
to the financial statements and schedules filed as a part of the Registration Statement and included in the Registration Statement, the
Pricing Disclosure Package and the Prospectus, is (i) an independent public accounting firm within the meaning of the Securities Act,
(ii) a registered public accounting firm (as defined in Section 2(a)(12) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley
Act”)) and (iii) not in violation of the auditor independence requirements of the Sarbanes-Oxley Act. As of the date hereof,
to the knowledge of the Company after due inquiry, the Auditor is registered with the Public Company Accounting Oversight Board.
 

 
k. Financial Statements, etc. The financial statements, including the notes thereto and supporting schedules included in the Registration Statement, the Pricing Disclosure Package and the Prospectus, comply in all material respects with the requirements of the Securities Act and fairly present the financial position and the results of operations of the Company and its Subsidiaries at the dates and for the periods to which they apply; and such financial statements have been prepared in conformity with International Financial Reporting Standards (“IFRS”), consistently applied throughout the periods involved (provided that unaudited interim financial statements are subject to year-end audit adjustments that are not expected to be material in the aggregate and do not contain all footnotes required by IFRS); and the supporting schedules included in the Registration Statement present fairly the information required to be stated therein. Except as included therein, no historical or pro forma financial statements are required to be included in the Registration Statement, the Pricing Disclosure Package or the Prospectus under the Securities Act. All disclosures contained in the Registration Statement, the Pricing Disclosure Package or the Prospectus regarding “non-IFRS financial measures” (as such term is defined by the rules and regulations of the Commission), if any, comply with Item 10 of Regulation S-K of the Securities Act. Each of the Registration Statement, the Pricing Disclosure Package and the Prospectus discloses all material off-balance sheet transactions, arrangements, obligations (including contingent obligations), and other relationships of the Company and its Subsidiaries with unconsolidated entities or other persons that may have a material current or future effect on the financial condition, changes in financial condition, results of operations, liquidity, capital expenditures, capital resources, or significant components of revenues or expenses of the Company and its Subsidiaries.
 
l. Capitalization;
the Securities; Registration Rights. All of the issued and outstanding shares of capital equity of the Company, including the
outstanding Ordinary Shares, are duly authorized and validly issued, fully paid and non-assessable, have been issued in compliance with
all applicable securities laws, were not issued in violation of or subject to any preemptive rights or other rights to subscribe for
or purchase securities that have not been waived in writing (a copy of which waiver has been delivered to counsel to the Underwriters),
and the holders thereof are not subject to personal liability by reason of being such holders; the Securities which may be sold hereunder
by the Company have been duly authorized and, when issued, delivered and paid for in accordance with the terms of this Agreement, will
have been validly issued and will be fully paid and non-assessable, and the holders thereof will not be subject to personal liability
by reason of being such holders; and the share capital of the Company, including the Ordinary Shares, conforms to the description thereof
in the Registration Statement, in the Pricing Disclosure Package and in the Prospectus. Except as otherwise stated in the Registration
Statement, in the Pricing Disclosure Package and in the Prospectus, (i) there are no pre-emptive rights or other rights to subscribe
for or to purchase, or any restriction upon the voting or transfer of, any Ordinary Shares pursuant to the Company’s charter, by-laws
(or other organizational documents) or any agreement or other instrument to which the Company is a party or by which the Company is bound,
(ii) neither the filing of the Registration Statement nor the offering or sale of the Securities as contemplated by this Agreement gives
rise to any rights for or relating to the registration of any Ordinary Shares or other securities of the Company (collectively “Registration
Rights”), and (iii) any person to whom the Company has granted Registration Rights has agreed not to exercise such rights until
after the date that is 180 days after the date of the Prospectus. The Company has an authorized and outstanding capitalization as set
forth in the Registration Statement, in the Pricing Disclosure Package and in the Prospectus under the caption “Capitalization.”
The Ordinary Shares (including the Securities) conform in all material respects to the description thereof contained in the Pricing Disclosure
Package and the Prospectus.
 
m. Validity
and Binding Effect of Agreements. Each of this Agreement, the Escrow Agreement and the Representative’s Warrant has been
duly and validly authorized by the Company, and, when executed and delivered, will constitute, a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors’ rights generally; except (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally, (ii) as enforceability of any indemnification
or contribution provision may be limited under the federal and state securities laws, and (iii) that the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
 
n. No
Conflicts, etc. The execution, delivery and performance by the Company of this Agreement, the Escrow Agreement and the
Representative’s Warrant, the consummation by the Company of the transactions herein and therein contemplated and the
compliance by the Company with the terms hereof and thereof do not and will not, with or without the giving of notice or the lapse
of time or both: (i) result in a breach of, or conflict with any of the terms and provisions of, or constitute a default under, or
result in the creation, modification, termination or imposition of any lien, charge or encumbrance upon any property or assets of
any of the Company and the Subsidiaries pursuant to the terms of any agreement or instrument to which any of the Company or the
Subsidiaries, as applicable, is a party; (ii) result in any violation of the provisions of the Company’s Memorandum and
Articles of Association (as the same may be amended or restated from time to time, the “Organizational
Documents”); or (iii) violate any existing applicable law, rule, regulation, judgment, order or decree of any
governmental authority as of the date hereof, except in the case of (i) or (iii), such as would not result in a Material Adverse
Change.
 

 
o. No
Defaults; Violations. No default exists, and no event has occurred which, with notice or lapse of time or both, would constitute
a default, in the due performance and observance of any term, covenant or condition of any license, contract, indenture, mortgage, deed
of trust, note, loan or credit agreement, or any other agreement or instrument evidencing an obligation for borrowed money, or any other
agreement or instrument to which any of the Company or its Subsidiaries is a party or by which any of the Company or its Subsidiaries
may be bound or to which any of their respective properties or assets is subject. None of the Company or its Subsidiaries is (i) in violation
of any term or provision of its constitutive or organizational documents, or (ii) in violation of any franchise, license, permit, applicable
law, rule, regulation, judgment or decree of any governmental authority, except such as would not result in a Material Adverse Change.
 
p.
Corporate Power; Licenses; Consents.
 
i. Conduct
of Business. Each of the Company and its Subsidiaries has all requisite corporate power and authority, and has all necessary
authorizations, approvals, orders, licenses, certificates and permits of and from all governmental regulatory officials and bodies that
it needs as of the date hereof to conduct its business as described in the Pricing Disclosure Package and the Prospectus.
 
ii. Transactions
Contemplated Herein. The Company has all corporate power and authority to enter into this Agreement, the Escrow Agreement and
the Representative’s Warrant and to carry out the provisions and conditions hereof and thereof, and all consents, authorizations,
approvals and orders required in connection therewith have been obtained. No consent, authorization or order of, and no filing with,
any court, government agency or other body is required for the valid issuance, sale and delivery of the Securities and the consummation
of the transactions and agreements contemplated by this Agreement, the Escrow Agreement and the Representative’s Warrant and as
contemplated by the Pricing Disclosure Package and the Prospectus, except with respect to applicable federal and state securities laws
and the rules and regulations of the Financial Industry Regulatory Authority, Inc. (“FINRA”).
 
q. D&O
Information. All information concerning the Company’s directors, officers and principal shareholders described in the Pricing
Disclosure Package and the Prospectus, is true and correct in all material respects and the Company has not become aware of any information
which would cause such information to become materially inaccurate or incorrect.
 
r. Litigation;
Governmental Proceedings. Except as set forth in the Pricing Disclosure Package and in the Prospectus, there is not pending or,
to the knowledge of the Company, threatened or contemplated, any action, suit or proceeding (i) to which the Company or any Subsidiary
is a party or (ii) which has as the subject thereof any officer or director of, any employee benefit plan sponsored or any property or
assets owned or leased by, the Company or any Subsidiary before or by any court or governmental authority, or any arbitrator, which,
individually or in the aggregate, might result in any Material Adverse Change, or would materially and adversely affect the ability of
the Company to perform its obligations under this Agreement, the Escrow Agreement and the Representative’s Warrant or which are
otherwise material in the context of the sale of the Securities. There are no current or, to the knowledge of the Company, pending, legal,
governmental or regulatory actions, suits or proceedings (x) to which the Company or any Subsidiary is subject or (y) which has as the
subject thereof any officer or director of, any employee plan sponsored by or any property or assets owned or leased by, the Company
or any Subsidiary, that are required to be described in the Registration Statement, Pricing Disclosure Package and Prospectus and that
have not been so described.
 
s. Insurance.
Except as disclosed in the Pricing Disclosure Package and the Prospectus, each of the Company and its Subsidiaries carries, or is covered
by, insurance from reputable insurers in such amounts and covering such risks as is adequate for the conduct of its business and the
value of its properties and as is customary for companies engaged in similar businesses in similar industries; all policies of insurance
and any fidelity or surety bonds insuring any of the Company or its Subsidiaries or their respective businesses, assets, employees, officers
and directors are in full force and effect; each of the Company and its Subsidiaries is in compliance with the terms of such policies
and instruments in all material respects; there are no claims by any of the Company or its Subsidiaries under any such policy or instrument
as to which any insurance company is denying liability or defending under a reservation of rights clause; none of the Company or its
Subsidiaries has been refused any insurance coverage sought or applied for; and none of the Company or its Subsidiaries has reason to
believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its business at a cost that would not result in a Material Adverse Change.
 

 
t.
Transactions Affecting Disclosure to FINRA.
 
i. Finder’s
Fees. There are no claims, payments, arrangements, agreements or understandings relating to the payment of a finder’s,
broker’s, agent’s, consulting or origination fee by the Company or any Subsidiary with respect to the sale of the Firm Shares
or Option Shares hereunder or any other arrangements, agreements or understandings of the Company or any Subsidiary or, to the Company’s
knowledge, any of its shareholders that may affect the Underwriters’ compensation, as determined by FINRA.
 
ii. Payments
Within Twelve Months. None of the Company or its Subsidiaries has made any direct or indirect payments (in cash, securities or
otherwise) to: (A) any person, as a finder’s fee, consulting fee or otherwise, in consideration of such person raising capital
for the Company or introducing to the Company persons who raised or provided capital to the Company; (B) any FINRA member;
or (C) any person or entity that has any direct or indirect affiliation or association with any FINRA member, within the twelve months
prior to the Effective Date, other than the payment to the Underwriters as provided hereunder in connection with the Offering.
 
iii. Use
of Proceeds. None of the net proceeds of the Offering will be paid by the Company to any participating FINRA member or its affiliates,
except as specifically authorized herein.
 
iv. FINRA
Affiliation. There are no affiliations or associations between (A) any member of the FINRA and (B) the Company or any of its
Subsidiaries or any of their respective officers, directors or, to the knowledge of the Company, 5% or greater security holders or, to
the knowledge of the Company, any beneficial owner of the Company’s unregistered equity securities that were acquired at any time
on or after the 180th day immediately preceding the date that the Registration Statement was initially filed with the Commission.
 
v. Information.
All information provided by the Company in its FINRA questionnaire to the Underwriters’ counsel specifically for use by the Underwriters’
counsel in connection with its Public Offering System filings (and related disclosure) with FINRA is true, correct and complete in all
material respects.
 
u. Foreign
Corrupt Practices Act. Neither the Company nor any of its Subsidiaries or their respective affiliates, nor any director or officer,
nor, to the Company’s knowledge, any employee, agent or representative of the Company or of any of its Subsidiaries or their respective
affiliates, has (A) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to
political activity; (B) taken or will take any action in furtherance of an offer, payment, promise to pay, or authorization or approval
of the payment or giving of money, property, gifts or anything else of value, directly or indirectly, to any “government official”
(including any officer or employee of a government or government-owned or controlled entity or of a public international organization,
or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate
for political office) to influence official action or secure an improper advantage; or (C) made, offered, agreed, requested or taken
an act in furtherance of any unlawful bribe or other unlawful benefit, including, any rebate, payoff, influence payment, kickback or
other unlawful or improper payment or benefit; and the Company and its Subsidiaries and their respective affiliates have conducted their
businesses in compliance with applicable anti-corruption laws and have instituted and maintain and will continue to maintain policies
and procedures designed to promote and achieve compliance with such laws and with the representation and warranty contained herein.
 
v.
Compliance with OFAC.
 
i. None
of the Company or its Subsidiaries, nor any director, officer or employee thereof, nor, to the Company’s knowledge, any agent,
affiliate or representative of any of the Company or its Subsidiaries, is an individual or entity that is, or is owned or controlled
by an individual or entity that is:
 
A. the
subject of any sanctions administered or enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control, the United
Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority (collectively, “Sanctions”),
nor
 
B. located,
organized or resident in a country or territory that is the subject of Sanctions (including, Burma/Myanmar, Iran, Libya, North Korea,
Sudan and Syria).
 
ii. The
Company will not, directly or indirectly, use the proceeds of the Offering, or lend, contribute or otherwise make available such proceeds
to any subsidiary, joint venture partner or other individual or entity:
 
A. to
fund or facilitate any activities or business of or with any individual or entity or in any country or territory that, at the time of
such funding or facilitation, is the subject of Sanctions; or
 

 
B. in
any other manner that will result in a violation of Sanctions by any individual or entity (including any individual or entity participating
in the offering, whether as underwriter, advisor, investor or otherwise).
 
iii. For
the past five years, none of the Company or its Subsidiaries has knowingly engaged in, and is now knowingly engaged in, any dealings
or transactions with any individual or entity, or in any country or territory, that at the time of the dealing or transaction is or was
the subject of Sanctions.
 
w. Money
Laundering Laws. None of the Company or its Subsidiaries or their respective affiliates nor any of their respective officers,
directors, supervisors, managers, agents, or employees, has violated, the Company’s participation in the Offering will not violate,
and the Company and its Subsidiaries have instituted and maintain policies and procedures designed to ensure continued compliance with,
each of the following laws: (A) anti-bribery laws, including but not limited to, any applicable law, rule, or regulation of any locality,
including but not limited to any law, rule, or regulation promulgated to implement the OECD Convention on Combating Bribery of Foreign
Public Officials in International Business Transactions, signed December 17, 1997, including the U.S. Foreign Corrupt Practices Act of
1977, as amended, the U.K. Bribery Act 2010, or any other law, rule or regulation of similar purposes and scope or (B) anti-money laundering
laws, including but not limited to, applicable federal, state, international, foreign or other laws, regulations or government guidance
regarding anti- money laundering, including, Title 18 US. Code section 1956 and 1957, the Patriot Act, the Bank Secrecy Act, and international
anti-money laundering principles or procedures by an intergovernmental group or organization, such as the Financial Action Task Force
on Money Laundering, of which the United States is a member and with which designation the United States representative to the group
or organization continues to concur, all as amended, and any Executive order, directive, or regulation pursuant to the authority of any
of the foregoing, or any orders or licenses issued thereunder.
 
x. Lock-Up
Agreements. Schedule IV hereto contains a complete and accurate list of the Company’s officers, directors and each
beneficial owner (5% or greater holder) of the Company’s outstanding Ordinary Shares (or securities convertible or exercisable
into Ordinary Shares) (collectively, the “Lock-Up Parties”). The Company has caused each of the Lock-Up Parties to
deliver to the Representative an executed Lock-Up Agreement, in the form attached hereto as Exhibit A (the “Lock-Up Agreement”),
prior to the execution of this Agreement. The Company will enforce the terms of each Lock-Up Agreement and issue stop-transfer instructions
to its transfer agent and registrar for the Ordinary Shares with respect to any transaction or contemplated transaction that would constitute
a breach of or default under the applicable Lock-Up Agreement. If the Representative, in its sole discretion, agrees to release or waive
the restrictions of any Lock-Up Agreement between an officer or director of the Company and the Representative and provides the Company
with notice of the impending release or waiver at least three Business Days before the effective date of such release or waiver, the
Company agrees to announce the impending release or waiver by means of a press release substantially in the form of Exhibit B
hereto, issued through a major news service, at least two Business Days before the effective date of the release or waiver.
 
y. Related
Party Transactions. There are no business relationships or related party transactions involving the Company or any of its Subsidiaries
or any other person required to be described in the Registration Statement, the Pricing Disclosure Package or the Prospectus that have
not been described as required.
 
z. Sarbanes-Oxley
Compliance. Except in each case as disclosed in the Registration Statement, in the Pricing Disclosure Package and in the Prospectus:
 
i. Disclosure
Controls. To the extent required, the Company has established and maintains disclosure controls and procedures (as defined in
Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended (including the rules and regulations promulgated thereunder,
the “Exchange Act”) and such controls and procedures are effective in ensuring that material information relating
to the Company is made known to the principal executive officer and the principal financial officer. The Company has utilized such controls
and procedures in preparing and evaluating the disclosures in the Registration Statement, in the Pricing Disclosure Package and in the
Prospectus.
 
ii. Compliance.
The Company is in compliance with the provisions of the Sarbanes-Oxley Act applicable to it, and has implemented or will implement such
programs and taken reasonable steps to ensure its future compliance (not later than the relevant statutory and regulatory deadlines therefor)
with all of the provisions of the Sarbanes-Oxley Act.
 

 
iii. Accounting
Controls. To the extent required, the Company maintains a system of internal accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with management’s general or specific authorization; (B) transactions
are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles in
the United States and to maintain accountability for assets; (C) access to assets is permitted only in accordance with management’s
general or specific authorization; and (D) the recorded accountability for assets is compared with existing assets at reasonable intervals
and appropriate action is taken with respect to any differences. Except as disclosed in the Registration Statement, in the Pricing Disclosure
Package and in the Prospectus, the Company’s internal control over financial reporting is effective and none of the Company, its
board of directors and audit committee is aware of any “significant deficiencies” or “material weaknesses” (each
as defined by the Public Company Accounting Oversight Board) in its internal control over financial reporting, or any fraud, whether
or not material, that involves management or other employees of the Company who have a significant role in the Company’s internal
controls; and since the end of the latest audited fiscal year, there has been no change in the Company’s internal control
over financial reporting (whether or not remediated) that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting. The Company’s board of directors has, subject to the exceptions, cure
periods and the phase-in periods specified in the applicable rules of the Exchange (“Exchange Rules”), validly appointed
an audit committee to oversee internal accounting controls whose composition satisfies the applicable requirements of the Exchange Rules
and the Company’s board of directors and/or the audit committee has adopted a charter that satisfies the requirements of the Exchange
Rules.
 
aa.
Investment Company Act. None of the Company or its Subsidiaries is or, after giving effect to the Offering and the application
of the proceeds thereof as described in the Pricing Disclosure Package and the Prospectus, will be, required to register as an “investment
company,” as defined in the Investment Company Act of 1940, as amended.
 
bb.
No Labor Disputes. No labor problem or dispute with the employees of any of the Company or its Subsidiaries exists or is
threatened or imminent, and the Company is not aware of any existing or imminent labor disturbance by the employees of any of its or
its Subsidiaries’ principal suppliers, contractors or customers, that could result in a Material Adverse Change.
 
cc. Intellectual
Property Rights. Each of the Company and its Subsidiaries owns or possesses or has valid rights to use all patents, patent
applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights, licenses,
inventions, trade secrets and similar rights (“Intellectual Property Rights”) necessary for the conduct of its business
as currently carried on and as described in the Pricing Disclosure Package and the Prospectus. No action or use by any of the
Company or its Subsidiaries necessary for the conduct of its business as currently carried on and as described in the Pricing
Disclosure Package and the Prospectus will involve or give rise to any infringement of, or license or similar fees for, any
Intellectual Property Rights of others. None of the Company or its Subsidiaries has received any notice alleging any such
infringement, fee or conflict with asserted Intellectual Property Rights of others. Except as would not result, individually or in
the aggregate, in a Material Adverse Change (A) to the knowledge of the Company, there is no infringement, misappropriation or
violation by third parties of any of the Intellectual Property Rights owned by any of the Company or its Subsidiaries; (B)
there is no pending or, to the knowledge of the Company, threatened action, suit, proceeding or claim by others challenging the
rights of any of the Company or its Subsidiaries in or to any such Intellectual Property Rights, and the Company is unaware of any
facts which would form a reasonable basis for any such claim, that would, individually or in the aggregate, together with any other
claims in this Section 3(cc), reasonably be expected to result in a Material Adverse Change; (C) the Intellectual
Property Rights owned by each of the Company or its Subsidiaries and, to the knowledge of the Company, the Intellectual Property
Rights licensed to any of the Company or its Subsidiaries have not been adjudged by a court of competent jurisdiction invalid or
unenforceable, in whole or in part, and there is no pending or, to the Company’s knowledge, threatened action, suit,
proceeding or claim by others challenging the validity or scope of any such Intellectual Property Rights, and the Company is unaware
of any facts which would form a reasonable basis for any such claim that would, individually or in the aggregate, together with any
other claims in this Section 3(cc), reasonably be expected to result in a Material Adverse Change; (D) there is no
pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others that any of the Company or its
Subsidiaries infringes, misappropriates or otherwise violates any Intellectual Property Rights or other proprietary rights of
others, the Company has not received any written notice of such claim and the Company is unaware of any other facts which would form
a reasonable basis for any such claim that would, individually or in the aggregate, together with any other claims in this Section
3(cc), reasonably be expected to result in a Material Adverse Change; and (E) to the Company’s knowledge, no employee
of the Company or its Subsidiaries is in or has ever been in violation in any material respect of any term of any employment
contract, patent disclosure agreement, invention assignment agreement, non- competition agreement, non-solicitation agreement,
nondisclosure agreement or any restrictive covenant to or with a former employer where the basis of such violation relates to such
employee’s employment with the Company or its Subsidiaries, or actions undertaken by the employee while employed with any of
the Company or its Subsidiaries. To the Company’s knowledge, all material technical information developed by and belonging to
any of the Company or its Subsidiaries which has not been patented has been kept confidential. None of the Company or its
Subsidiaries is a party to or bound by any options, licenses or agreements with respect to the Intellectual Property Rights of any
other person or entity that are required to be set forth in the Pricing Disclosure Package and the Prospectus and are not described
therein. The Pricing Disclosure Package and the Prospectus contain in all material respects the same description of the matters set
forth in the preceding sentence. None of the technology employed by any of the Company or its Subsidiaries has been obtained or is
being used by any of them in violation of any contractual obligation binding on any of the Company or its Subsidiaries or, to the
Company’s knowledge, any of their respective officers, directors or employees, or otherwise in violation of the rights of any
persons.
 

 
dd.
Taxes. Each of the Company and its Subsidiaries has filed all returns (as defined below) required to be filed with taxing
authorities prior to the date hereof or has duly obtained extensions of time for the filing thereof. Each of the Company and its Subsidiaries
has paid all taxes (as defined below) shown as due on such returns that were filed and has paid all taxes imposed on or assessed against
it. The provisions for taxes payable, if any, shown on the financial statements filed with or as part of the Registration Statement are
sufficient for all accrued and unpaid taxes, whether or not disputed, and for all periods to and including the dates of such consolidated
financial statements. No issues have been raised (and are currently pending) by any taxing authority in connection with any of the returns
or taxes asserted as due from any of the Company or its Subsidiaries and no waivers of statutes of limitation with respect to the returns
or collection of taxes have been given by or requested from any of the Company or its Subsidiaries. The term “taxes” means
all federal, state, local, foreign and other net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
license, lease, service, service use, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, windfall
profits, customs, duties or other taxes, fees, assessments or charges of any kind whatever, together with any interest and any penalties,
additions to tax or additional amounts with respect thereto. The term “returns” means all returns, declarations, reports,
statements and other documents required to be filed in respect to taxes.
 
ee.
ERISA and Employee Benefits Matters. None of the Company or its Subsidiaries maintains any “employee benefit plan”
within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended, including any share purchase,
share option, share-based severance, employment, change-in-control, medical, disability, fringe benefit, bonus, incentive, deferred compensation,
employee loan and all other employee benefit plans, agreements, programs, policies or other arrangements, under which (i) any current
or former employee, director or independent contractor has any present or future right to benefits and which are contributed to, sponsored
by or maintained by any of the Company or its Subsidiaries or (ii) any of the Company or its Subsidiaries has had or has any present
or future obligation or liability.
 
ff.
Compliance with Laws. Each of the Company and its Subsidiaries holds, and is operating in compliance in all material respects
with, all franchises, grants, authorizations, licenses, permits, easements, consents, certificates and orders of any governmental authority
or self-regulatory body required for the conduct of its business and all such franchises, grants, authorizations, licenses, permits,
easements, consents, certifications and orders are valid and in full force and effect; and none of the Company or its Subsidiaries has
received notice of any revocation or modification of any such franchise, grant, authorization, license, permit, easement, consent, certification
or order or has reason to believe that any such franchise, grant, authorization, license, permit, easement, consent, certification or
order will not be renewed in the ordinary course; and each of the Company and its Subsidiaries is in compliance in all material respects
with all applicable federal, state, local and foreign laws, regulations, orders and decrees.
 
gg.
Ownership of Assets. The properties held under lease by any of the Company or its Subsidiaries is held by it under valid,
subsisting and enforceable leases with only such exceptions with respect to any particular lease as do not interfere in any material
respect with the conduct of the business of the Company or its Subsidiaries, as applicable. Each of the Company and its Subsidiaries
has good and valid title (free from any Liens other than Permitted liens) to all the Company and/or its Subsidiaries owned properties.
Each of the Company and its Subsidiaries has obtained all permits, licenses, consents, approvals, certificates, qualifications, specifications,
registrations or other authorizations, or filings of a notification, reports or assessments concerned with the Company and/or its Subsidiaries
owned properties, or their ownership, occupation, building of structures or buildings, possession or existing use and operation except
where the failure to obtain a property permit would not reasonably be expected to have a Material Adverse Change to the Company.
 

 
hh.
Compliance with Environmental Laws. None of the Company or its Subsidiaries is in violation of any statute, rule, regulation,
decision or order of any governmental authority or any court, domestic or foreign, relating to the use, disposal or release of hazardous
or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances
(collectively, “Environmental Laws”), owns or operates any real property contaminated with any substance that is subject
to any Environmental Laws, is liable for any off-site disposal or contamination pursuant to any Environmental Laws, or is subject to
any claim relating to any Environmental Laws, which violation, contamination, liability or claim would, individually or in the aggregate,
result in a Material Adverse Change; and none of the Company or its Subsidiaries is aware of any pending investigation which might lead
to such a claim. None of the Company or its Subsidiaries anticipates incurring any material capital expenditures relating to compliance
with Environmental Laws.
 
ii.
Compliance with Occupational Laws. Each of the Company and its Subsidiaries (i) is in compliance, in all material respects,
with any and all applicable foreign, federal, state and local laws, rules, regulations, treaties, statutes and codes promulgated by any
and all governmental authorities relating to the protection of human health and safety in the workplace (“Occupational Laws”);
(ii) has received all material permits, licenses or other approvals required of it under applicable Occupational Laws to conduct its
business as currently conducted; and (iii) is in compliance, in all material respects, with all terms and conditions of such permit,
license or approval. No action, proceeding, revocation proceeding, writ, injunction or claim is pending or, to the Company’s knowledge,
threatened against any of the Company or its Subsidiaries relating to Occupational Laws, and the Company does not have knowledge of any
facts, circumstances or developments relating to its operations or cost accounting practices that would reasonably be expected to form
the basis for or give rise to such actions, suits, investigations or proceedings, except as described in the Pricing Disclosure Package
and the Prospectus.
 
jj.
Ineligible Issuer. At the time of filing the Registration Statement and any post-effective amendment thereto, at the time
of effectiveness of the Registration Statement and any amendment thereto, at the earliest time thereafter that the Company or another
offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) of the Securities Act) of any of the Securities and
at the date hereof, the Company was not and is not an “ineligible issuer,” as defined in Rule 405, without taking account
of any determination by the Commission pursuant to Rule 405 that it is not necessary that the Company be considered an ineligible issuer.
 
kk.
Business Arrangements. None of the Company or its Subsidiaries has granted rights to develop, manufacture, produce, assemble,
distribute, license, market or sell its products to any other person or is bound by any agreement that affects the exclusive right of
any of the Company or its Subsidiaries to develop, manufacture, produce, assemble, distribute, license, market or sell its products.
 
ll.
Industry Data. The statistical and market-related data included in each of the Pricing Disclosure Package and the Prospectus
are based on or derived from sources that the Company reasonably and in good faith believes are reliable and accurate or represent the
Company’s good faith estimates that are made on the basis of data derived from such sources. The Company has obtained all consents
required for the inclusion of such statistical and market-related data in each of the Pricing Disclosure Package and the Prospectus.
 
mm.
Forward-looking Statements. No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act) contained in the Pricing Disclosure Package or the Prospectus has been made or reaffirmed without a reasonable
basis or has been disclosed other than in good faith.
 
nn.
Emerging Growth Company. From the time of initial confidential submission of the Registration Statement with the Commission
(or, if earlier, the first date on which the Company engaged directly or through any person authorized to act on its behalf in any Testing-the-Waters
Communication (as defined below)) through the date hereof, the Company has been and is an “emerging growth company,” as defined
in Section 2(a) of the Securities Act (an “Emerging Growth Company”). “Testing-the-Waters Communication”
means any oral or written communication with potential investors undertaken in reliance on Section 5(d) of the Securities Act.
 

 
oo.
Testing-the-Waters Communications. The Company (i) has not alone engaged in any Testing-the-Waters Communications, other
than Testing-the-Waters Communications with the prior consent of the Representative with entities that are qualified institutional buyers
within the meaning of Rule 144A under the Securities Act or institutions that are accredited investors within the meaning of Rule 501
under the Securities Act and (ii) has not authorized anyone other than the Underwriters to engage in Testing-the-Waters Communications.
The Company reconfirms that the Underwriters has been authorized to act on its behalf in undertaking Testing-the-Waters Communications.
The Company has not distributed any Written Testing-the-Waters Communications (as defined below) other than those listed on Schedule
V hereto. “Written Testing-the-Waters Communication” means any Testing-the-Waters Communication that is a written
communication within the meaning of Rule 405 under the Securities Act. Any individual Written Testing-the-Waters Communication does not
conflict with the information contained in the Registration Statement or the Pricing Disclosure Package, complied in all material respects
with the Securities Act, and when taken together with the Pricing Disclosure Package as of the Applicable Time, did not contain any untrue
statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
 
pp.
No Other Offering Materials. The Company has not distributed and will not distribute any prospectus or other offering material
in connection with the Offering other than any Pricing Prospectus, the Pricing Disclosure Package or the Prospectus or other materials
permitted by the Securities Act to be distributed by the Company; provided, however, that, except as set forth on Schedule
II, the Company has not made and will not make any offer relating to the Securities that would constitute a free writing prospectus,
except in accordance with the provisions of Section 4(m) of this Agreement and, except as set forth on Schedule II, the
Company has not made and will not make any communication relating to the Securities that would constitute a Testing-the-Waters Communication,
except in accordance with the provisions of Section 4(m) of this Agreement.
 
qq. Payments
of Dividends; Payments in Foreign Currency. Except as described in the Pricing Disclosure Package and the Prospectus, (i)
none of the Company or its Subsidiaries is prohibited, directly or indirectly, from (A) paying any dividends or making any other
distributions on its share capital, (B) making or repaying any loan or advance to the Company or any other Subsidiary or (C)
transferring any of its properties or assets to the Company or any other Subsidiary; and (ii) all dividends and other distributions
declared and payable upon the share capital of the Company or any of its Subsidiaries (A) may be converted into foreign currency
that may be freely transferred out of such person’s jurisdiction of incorporation, without the consent, approval,
authorization or order of, or qualification with, any court or governmental agency or body in such person’s jurisdiction of
incorporation or tax residence, and (B) are not and will not be subject to withholding, value added or other taxes under the
currently effective laws and regulations of such person’s jurisdiction of incorporation, without the necessity of obtaining
any consents, approvals, authorizations, orders, registrations, clearances or qualifications of or with any court or governmental
agency or body having jurisdiction over such person.
 
rr.
PFIC Status. Based on the Company’s current income and assets and projections as to the value of its assets and the
market value of its Shares, including the current and anticipated valuation of its assets, the Company does not believe it was a Passive
Foreign Investment Company (“PFIC”) within the meaning of Section 1297 of the United States Internal Revenue Code
of 1986, as amended, for its most recent taxable year, and does not expect to become a PFIC for its current taxable year or in the foreseeable
future.
 
ss.
Foreign Private Issuer. From the time of initial confidential submission of the Registration Statement with the Commission
(or, if earlier, the first date on which the Company engaged directly or through any person authorized to act on its behalf in any Testing-the-Waters
Communication) through the date hereof, the Company has been and is a “foreign private issuer” within the meaning of Rule
405 under the Securities Act.
 
tt.
Margin Securities. The Company owns no “margin securities” as that term is defined in Regulation U of the Board
of Governors of the Federal Reserve System (the “Federal Reserve Board”), and none of the proceeds of Offering will
be used, directly or indirectly, for the purpose of purchasing or carrying any margin security, for the purpose of reducing or retiring
any indebtedness which was originally incurred to purchase or carry any margin security or for any other purpose which might cause any
of the Ordinary Shares to be considered a “purpose credit” within the meanings of Regulation T, U or X of the Federal Reserve
Board.
 
uu.
Stock Exchange Listing. The Securities have been approved for listing on the Exchange upon official notice of issuance
and, on the date the Registration Statement became effective, the Company’s Registration Statement on Form 8-A or other applicable
form under the Exchange Act, became effective.
 
vv.
No Stop Orders, etc. Neither the Commission nor, to the Company’s knowledge, any state regulatory authority has issued
any order preventing or suspending the use of the Registration Statement, any Preliminary Prospectus or the Prospectus or has instituted
or, to the Company’s knowledge, threatened to institute, any proceedings with respect to such an order. The Company has complied
with each request (if any) from the Commission for additional information.
 

 
ww.
No Immunity. None of the Company or its Subsidiaries or any of their respective properties, assets or revenues has any
right of immunity, under the laws of the Cayman Islands, Taiwan, Hong Kong, Samoa, the PRC or the State of Florida, from any legal action,
suit or proceeding, the giving of any relief in any such legal action, suit or proceeding, set-off or counterclaim, the jurisdiction
of any Cayman Islands, Taiwan, Hong Kong, Samoa, the PRC, Florida or United States federal court, service of process, attachment upon
or prior to judgment, or attachment in aid of execution of judgment, or execution of a judgment, or other legal process or proceeding
for the giving of any relief or for the enforcement of a judgment, in any such court, with respect to its obligations, liabilities or
any other matter under or arising out of or in connection with this Agreement, the Escrow Agreement or the Representative’s Warrant;
and, to the extent that the Company or any of its Subsidiaries or any of their respective properties, assets or revenues may have or
may hereafter become entitled to any such right of immunity in any such court in which proceedings may at any time be commenced, each
of the Company and its Subsidiaries waives or will waive such right to the extent permitted by law and has consented to such relief and
enforcement as provided in this Agreement, the Escrow Agreement and the Representative’s Warrant.
 
xx.
Validity of Choice of Law. The choice of the laws of the State of Florida as the governing law of this Agreement, the Escrow
Agreement and the Representative’s Warrant is a valid choice of law under the laws of the Cayman Islands, Taiwan, Hong Kong, Samoa
and the PRC and will be honored by courts in the Cayman Islands, Taiwan, Samoa, Hong Kong and the PRC. The Company has the power to submit,
and pursuant to this Agreement, the Escrow Agreement and the Representative’s Warrant, has legally, validly, effectively and irrevocably
submitted, to the personal jurisdiction of each the State of Florida and United States Federal court sitting in Palm Beach County (each,
a “Florida Court”) and has validly and irrevocably waived any objection to the laying of venue of any suit, action
or proceeding brought in any such court; and the Company has the power to designate, appoint and empower, and pursuant to this Agreement,
the Escrow Agreement and the Representative’s Warrant, has legally, validly, effectively and irrevocably designated, appointed
and empowered, an authorized agent for service of process in any action arising out of or relating to this Agreement, the Escrow Agreement,
any preliminary prospectus, the Pricing Disclosure Package, the Prospectus, the Registration Statement, or the offering of the Securities
in any Florida Court, and service of process effected on such authorized agent will be effective to confer valid personal jurisdiction
over the Company as provided in this Agreement, the Escrow Agreement and the Representative’s Warrant.
 
yy.
Enforceability of Judgment. Any final judgment for a fixed or readily calculable sum of money rendered by a Florida Court
having jurisdiction under its own domestic laws in respect of any suit, action or proceeding against the Company based upon this Agreement,
the Escrow Agreement or the Representative’s Warrant and any instruments or agreements entered into for the consummation of the
transactions contemplated herein and therein would be declared enforceable against the Company, without re-examination or review of the
merits of the cause of action in respect of which the original judgment was given or re-litigation of the matters adjudicated upon, by
the courts of the Cayman Islands, Taiwan, Samoa, Hong Kong and the PRC, provided that with respect to courts of the PRC, (A) adequate
service of process has been effected and the defendant has had a reasonable opportunity to be heard, (B) such judgments or the enforcement
thereof are not contrary to the law, public policy, security or sovereignty of the PRC, (C) such judgments were not obtained by fraudulent
means and do not conflict with any other valid judgment in the same matter between the same parties and (D) an action between the same
parties in the same matter is not pending in any PRC court at the time the lawsuit is instituted in a foreign court. The Company is not
aware of any reason why the enforcement in the Cayman Islands, Taiwan, Samoa, Hong Kong or the PRC of such a Florida Court judgment would
be, as of the date hereof, contrary to public policy of the Cayman Islands, Taiwan, Samoa, Hong Kong or the PRC.
 
zz.
Officer’s Certificate. Any certificate signed by any duly authorized officer of the Company and delivered to you
or to the Underwriters’ counsel shall be deemed a representation and warranty by the Company to the Underwriters as to the matters
covered thereby.
 
(4) Certain Agreements of the Company. The Company agrees with the Underwriters as follows:
 
a. Required
Filings. The Company will prepare and file a Prospectus with the Commission containing the Rule 430A Information omitted from
the Preliminary Prospectus within the time period required by, and otherwise in accordance with the provisions of, Rules 424(b) and 430A
of the Securities Act. If the Company has elected to rely upon Rule 462(b) of the Securities Act to increase the size of the offering
registered under the Securities Act and the Rule 462(b) Registration Statement has not yet been filed and become effective, the Company
will prepare and file the Rule 462(b) Registration Statement with the Commission within the time period required by, and otherwise in
accordance with the provisions of, Rule 462(b) and the Securities Act. The Company will prepare and file with the Commission, promptly
upon the Representative’s request, any amendments or supplements to the Registration Statement or Prospectus that, in the Representative’s
reasonable opinion, may be necessary or advisable in connection with the distribution of the Securities by the Underwriters; and the
Company will furnish the Representative and its counsel a copy of any proposed amendment or supplement to the Registration Statement
or Prospectus and will not file any amendment or supplement to the Registration Statement or Prospectus to which the Representative shall
reasonably object by notice to the Company after having been furnished a copy a reasonable time prior to the filing.
 

 
b. Notification
of Certain Commission Actions. The Company will advise the Representative, promptly after the Company shall receive notice or
obtain knowledge thereof, of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement,
or any post-effective amendment thereto or preventing or suspending the use of any Preliminary Prospectus, the Pricing Disclosure Package,
the Prospectus or any Issuer Free Writing Prospectus, of the suspension of the qualification of the Securities for offering or sale in
any jurisdiction, or of the initiation or threatening of any proceeding for any such purpose; and the Company will promptly use its best
efforts to prevent the issuance of any stop order or to obtain its withdrawal if such a stop order should be issued.
 
c.
Continued Compliance with Securities Laws.
 
i. Within
the time during which a prospectus (assuming the absence of Rule 172) relating to the Securities is required to be delivered under the
Securities Act by the Underwriters or any dealer, the Company will comply with all requirements imposed upon it by the Securities Act,
as from time to time in force, so far as necessary to permit the continuance of sales of or dealings in the Securities as contemplated
by the provisions hereof, the Pricing Disclosure Package and the Prospectus. If during such period any event occurs as a result of which
the Prospectus (or if the Prospectus is not yet available to prospective purchasers, the Pricing Disclosure Package) would include an
untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances
then existing, not misleading, or if during such period it is necessary to amend the Registration Statement or supplement the Prospectus
(or if the Prospectus is not yet available to prospective investors, the Pricing Disclosure Package) to comply with the Securities Act,
the Company promptly will (x) notify the Underwriters of such untrue statement or omission, (y) amend the Registration Statement or supplement
the Prospectus (or, if the Prospectus is not yet available to prospective purchasers, the Pricing Disclosure Package) (at the expense
of the Company) so as to correct such statement or omission or effect such compliance, and (z) notify the Underwriters when any amendment
to the Registration Statement is filed or becomes effective or when any supplement to the Prospectus (or, if the Prospectus is not yet
available to prospective purchasers, the Pricing Disclosure Package) is filed.
 
ii. If
at any time following issuance of an Issuer Free Writing Prospectus or Written Testing-the-Waters Communication there occurred or occurs
an event or development as a result of which such Issuer Free Writing Prospectus or Written Testing-the-Waters Communication conflicted
or would conflict with the information contained in the Registration Statement, any Preliminary Prospectus or the Prospectus relating
to the Securities or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact
necessary in order to make the statements therein, in the light of the circumstances prevailing at that subsequent time, not misleading,
the Company (x) has promptly notified or promptly will notify the Underwriters of such conflict, untrue statement or omission, (y) has
promptly amended or will promptly amend or supplement, at its own expense, such Issuer Free Writing Prospectus or Written Testing-the-Waters
Communication to eliminate or correct such conflict, untrue statement or omission, and (z) has notified or promptly will notify the Underwriters
when such amendment or supplement was or is filed with the Commission to the extent required to be filed by the Securities Act.
 
d. Rule
158. The Company will make generally available to its security holders as soon as practicable, but in no event later than 16
months after the end of the Company’s current fiscal quarter, an earnings statement (which need not be audited) covering a 12-month
period beginning after the effective date of the Registration Statement (which, for purposes of this paragraph, will be deemed to be
the effective date of the Rule 462(b) Registration Statement, if applicable) that shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder. Documents filed with the Commission pursuant to its EDGAR system shall be deemed to have satisfied
the Company’s requirements under this Section.
 
e. Furnishing
of Prospectuses. The Company will furnish to the Underwriters copies of the Registration Statement, including all exhibits, each
Preliminary Prospectus relating to the Securities, the Final Prospectus and all amendments and supplements to such documents, in each
case as soon as available and in such quantities as the Underwriters reasonably requests. The Company will pay the expenses of printing
and distributing to the Underwriters all such documents.
 

 
f. Blue
Sky Qualifications. The Company shall take or cause to be taken all necessary action to qualify the Securities for sale under
the securities laws of such domestic United States or foreign jurisdictions as the Underwriters may reasonably designate and to continue
such qualifications in effect so long as required for the distribution of the Securities, except that the Company shall not be required
in connection therewith to qualify as a foreign corporation or to execute a general consent to service of process in any state.
 
g. Provision
of Documents. The Company will furnish, at its own expense, to the Underwriters and their counsel copies of the Registration
Statement (one of which will be signed and will include all consents and exhibits filed therewith), and to the Underwriters and any dealer
each Preliminary Prospectus, the Pricing Disclosure Package, the Prospectus, any Issuer Free Writing Prospectus and all amendments and
supplements to such documents, in each case as soon as available and in such quantities as the Underwriters may from time to time reasonably
request.
 
h. Reporting
Requirements. The Company shall file