F-1/A: Webus International Files for $20 Million IPO on Nasdaq, Contingent on Regulatory Approval

Webus International, a Cayman Islands-based company, is seeking to raise $20 million through an initial public offering of 4,000,000 ordinary shares, with the offering contingent on completing filing procedures with the China Securities Regulatory Commission (CSRC).

Summary

• Webus International Limited, a Cayman Islands exempted company, has filed an amendment to its Form F-1 registration statement with the SEC for an initial public offering.
• The company plans to offer 4,000,000 Ordinary Shares, with an expected price between $4.00 and $6.00 per share, aiming to raise approximately $20 million.
• Webus operates in China through a VIE structure, which involves unique risks to investors, including uncertainties in the interpretation and enforcement of PRC laws.
• The company's operations are conducted by its wholly-owned subsidiary Wetour Travel Tech, LLC in the United States, and through a 50% equity interest in Zhejiang Youba Technology Co., Ltd. (Youba Tech) in China.
• Webus has applied to list its Ordinary Shares on the Nasdaq Capital Market under the symbol WETO, but the offering is contingent on being listed.
• The company faces regulatory risks related to listings in the U.S., oversight on cybersecurity and data privacy in China.
• Webus submitted filing documents to the CSRC under the New Overseas Listing Rules, and the CSRC informed the company that it has completed the CSRC filing in compliance with the New Overseas Listing Rules on April 2, 2024.
• The company's auditor is subject to inspections by the PCAOB, and any impediments to these inspections could adversely affect the trading price of Webus's securities.
• The company plans to use the net proceeds from the offering to expand its operations in the United States and China, and for general corporate purposes.
• The offering includes an over-allotment option for the underwriters to purchase up to 15% of additional Ordinary Shares.
• The company is an emerging growth company and will be subject to reduced public company reporting requirements.

Sentiment

Score: 5

Explanation: The document presents a balanced view, highlighting both the company's growth strategies and the risks associated with its operations, particularly those related to the VIE structure and regulatory environment in China. The sentiment is neutral, reflecting the inherent uncertainties and potential rewards of investing in an emerging growth company operating in a complex regulatory landscape.

Positives

• The company is expanding its customized tour and chartered car and bus services around the world.
• The company has a high degree of digitalization and abundant and integrated resources.
• The company has a user-centered service approach and offers diverse and highly customizable travel solutions.
• The company's management team is experienced with international vision.

Negatives

• The company has a limited operating history and has incurred net losses for the years ended June 30, 2022 and 2023 and six months ended December 31, 2022 and 2023.
• The company is mainly concentrated in one geographic area and has a substantial customer concentration.
• The company's business may be negatively affected by the trend of remote working and flexible working schedules.
• Newly developed public transportation infrastructure may reduce the demand for the company's commuter shuttle and chartered bus services.

Risks

• The global coronavirus COVID-19 outbreak has caused significant disruptions to the travel industry, which we expect may have negative impact on our business, results of operations and financial condition.
• Changes in China's economic, political or social conditions or government policies could have a material adverse effect on our business and results of operations.
• The approval and/or other requirements of the CSRC or other PRC governmental authorities may be required in connection with this transaction under PRC rules, regulations or policies, and, if required, Webus cannot predict whether or how soon it will be able to obtain such approval.
• The Chinese government exerts substantial influence over the manner in which the VIE and its subsidiary must conduct their business activities.
• The Holding Foreign Companies Accountable Act, or HFCAA and the related regulations might pose regulatory risks to and impose restrictions on us because of our operations in mainland China.
• There has been no previous public market for our shares prior to this offering, and if an active trading market does not develop you may not be able to resell our shares at or above the price you paid, or at all.
• You may face difficulties in protecting your interests as a shareholder, as Cayman Islands law provides substantially less protection when compared to the laws of the United States and it may be difficult for a shareholder of ours to effect service of process or to enforce judgements obtained in the United States courts.

Future Outlook

The company intends to drive growth by further integrating its platform, enhancing big data and AI innovation, expanding customized tour and chartered car and bus services globally, improving product content innovation, broadening service coverage, and pursuing strategic alliances, acquisitions, and investments.

Industry Context

The company operates in the Collective Mobility Service (CMS) market in China, which is highly fragmented. The company also operates in the global customized chartered car and bus travel platform.

Comparison to Industry Standards

• The document mentions competition with traditional local and international travel agencies, airlines, hotels and tourist attraction sites.
• The document mentions competition with online collective mobility service platforms in China.
• The document mentions strategic collaborations with large online travel platforms as their vertical business supplier, cooperating with local bus and car rental companies, and increasing online marketing and short video traffic advertising.

Stakeholder Impact

• Shareholders face risks related to the VIE structure and regulatory environment in China.
• Shareholders may face difficulties in protecting their interests due to Cayman Islands law.
• Shareholders may experience volatility in the market price of Ordinary Shares.
• Employees may benefit from the company's growth and expansion plans.
• Customers may benefit from the company's efforts to improve user experience and diversify service offerings.

Next Steps

• Complete filing procedures with the CSRC.
• List Ordinary Shares on the Nasdaq Capital Market.
• Set up a new subsidiary or representative office in the United States.
• Expand sales and service support for customers.
• Initiate future expansion in marketing and internet sales of self-branded products.
• Acquire more talents.
• Continue to develop the Wetour brand to build a global online customized chartered car and bus travel platform.

Key Dates

Keywords

IPO, Webus International, Ordinary Shares, VIE Structure, CSRC, Nasdaq, Travel Services, China, Wetour, Initial Public Offering