F-1/A: Jiade Limited Files for IPO, Aiming to List on Nasdaq Under Symbol 'JDZG'

Jiade Limited, a Cayman Islands-based company specializing in adult education support services in China, has filed an F-1/A registration statement for its initial public offering (IPO) on Nasdaq.

Summary

• Jiade Limited, an exempted company incorporated in the Cayman Islands, is pursuing an initial public offering (IPO) of 2,200,000 ordinary shares.
• The company expects the initial public offering price to be between US$4.00 and US$5.00 per Ordinary Share.
• The company has applied to list its Ordinary Shares on the Nasdaq Capital Market under the symbol JDZG.
• The closing of the offering is contingent upon Nasdaq's final approval of the listing application.
• The company conducts its operations through its PRC subsidiaries, specializing in providing one-stop comprehensive education supporting services to adult education institutions.
• The company's services are primarily offered through the Kebiao Technology Educational Administration Platform (KB Platform).
• The company's PRC subsidiaries have acquired 31 software copyrights since their incorporation in April 2020.
• For the years ended December 31, 2021 and 2022, the company had total revenue of approximately RMB5,026,000 and RMB10,239,000 (US$1,484,000), respectively.
• The company's net income was approximately RMB395,000 and RMB5,360,000 for the years ended December 31, 2021 and 2022, respectively.
• The company intends to use the proceeds from this offering to expand sales and operation teams, enhance marketing efforts, acquire vocational education and training institutions, establish examination centers, and invest in technology research and development.

Sentiment

Score: 6

Explanation: The document presents a mix of positive and negative factors. The company shows growth and innovation, but also faces regulatory and operational risks in China. The sentiment is neutral, reflecting the balanced view.

Positives

• The company's PRC subsidiaries have acquired 31 software copyrights, demonstrating a focus on technology and innovation.
• The company's revenue increased significantly from 2021 to 2022, indicating growth in its business operations.
• The company has been designated a High and New Technology Enterprise (HNTE) in Sichuan Province, which may provide certain benefits and recognition.
• The company has established controls and procedures for cash flows within its organization based on internal cash management policies.

Negatives

• The company operates through PRC subsidiaries, which are subject to legal and operational risks associated with doing business in China.
• The company's corporate structure involves unique risks to investors, as holders of Ordinary Shares do not directly own equity interests in its PRC subsidiaries.
• The Chinese regulatory authorities could disallow the company's corporate structure, which would likely result in a material change in its operations and/or a material change in the value of its Ordinary Shares.
• The company's PRC subsidiaries have not made adequate social insurance and housing fund contributions for all employees as required by PRC regulations, which may subject them to penalties.
• The company's PRC subsidiaries have had a history of limited cash and sources of working capital.

Risks

• Changes in China's economic, political, or social conditions or government policies could have a material adverse effect on the operating entities business and operations.
• Uncertainties in the interpretation and enforcement of PRC laws and regulations and changes in policies, rules, and regulations in China, which may be quick with little advance notice, could limit the legal protection available to you and us.
• You may experience difficulties in effecting service of legal process, enforcing foreign judgments, or bringing actions in China against us or our directors and officers that reside outside the United States based on foreign laws.
• Given the Chinese governments significant oversight and discretion over the conduct of our business, the Chinese government may intervene or influence our operations at any time, which could result in a material change in our operations and/or the value of our Ordinary Shares.
• Our PRC subsidiaries have not made adequate social insurance and housing fund contributions for all employees as required by PRC regulations, which may subject them to penalties.
• Recent greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business and our offering.
• The Opinions, the Trial Measures, and the revised Provisions recently issued by the PRC authorities subject us to additional compliance requirements in the future.
• To the extent cash or assets in the business are in the PRC/Hong Kong or a PRC/Hong Kong entity, the funds or assets may not be available to fund operations or for other use outside of the PRC/Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of our Company or our subsidiaries by the PRC government to transfer cash or assets.
• Increases in labor costs in the PRC may adversely affect the operating entities business and profitability.
• PRC regulations relating to offshore investment activities by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital into our PRC subsidiaries, limit our PRC subsidiaries ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us.
• PRC regulation of parent/subsidiary loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of offshore offerings to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect their liquidity and their ability to fund and expand their business.
• Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment.
• Under the PRC Enterprise Income Tax Law, we may be classified as a PRC resident enterprise for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment.
• Our PRC subsidiaries are subject to restrictions on paying dividends or making other payments to us, which may have a material adverse effect on our ability to conduct our business.
• Governmental control of currency conversion may affect the value of your investment and our payment of dividends.
• There are significant uncertainties under the EIT Law relating to the withholding tax liabilities of Shenzhen Kebiao, and dividends payable by Shenzhen Kebiao to our offshore subsidiaries may not qualify to enjoy certain treaty benefits.
• If we become directly subject to the scrutiny, criticism, and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources to investigate and resolve the matter which could harm our business operations, stock price, and reputation.
• The approval of the CSRC may be required in connection with this offering under a regulation adopted in August 2006, and, if required, we cannot assure you that we will be able to obtain such approval, in which case we may face sanctions by the CSRC or other PRC regulatory agencies for failure to seek the CSRC approval for this offering.
• The M&A Rules and certain other PRC regulations establish complex procedures for certain acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.
• Chinese regulatory authorities could disallow our holding company structure, which may result in a material change in our operations and/or a material change in the value of the securities we are registering for sale, including that it could cause the value of such securities to significantly decline or become worthless.

Future Outlook

The company intends to develop its business and strengthen brand loyalty by implementing strategies such as expanding into new markets, focusing on production safety training and vocational skills development, investing in technology research and development, and pursuing strategic acquisitions.

Industry Context

The company operates in the adult education supporting service industry in China, which is experiencing rapid growth due to supportive government policies, a talent gap, and fierce competition among job seekers.

Comparison to Industry Standards

• The adult education supporting service market is still at an early stage and is fragmented in terms of geographic coverage, the target customers, and service content.
• Kebiao Technology generated approximately RMB10.2 million in revenue in 2022, accounting for a market share of 0.286% of the adult education supporting service market in Sichuan Province.

Stakeholder Impact

• Shareholders face risks related to the company's corporate structure and operations in China.
• Employees may be affected by the company's compliance with labor laws and social insurance regulations.
• Customers (adult education institutions) may benefit from the company's one-stop comprehensive education supporting services.
• Suppliers may be affected by the company's financial performance and ability to meet its obligations.

Next Steps

• The company needs to obtain Nasdaq's final approval for its listing application.
• The company intends to expand sales and operation teams, enhance marketing efforts, acquire vocational education and training institutions, establish examination centers, and invest in technology research and development.

Key Dates

Keywords

IPO, Jiade Limited, adult education, Nasdaq, China, KB Platform, software, education support services, CSRC, PCAOB