F-1/A: Zhibao Technology Amends F-1 for Resale Offering, Details Recent Financings

Zhibao Technology Inc. filed an F-1/A, detailing a resale offering of up to 14.98 million Class A ordinary shares by Hudson Global Ventures, LLC, recent L1 private placements, and the acquisition of a 51% equity interest in Zhonglian Jinan Insurance Brokers Co., Ltd.

Summary

• Zhibao Technology Inc. operates as a Cayman Islands holding company, conducting substantially all business through its PRC Subsidiaries (Zhibao China Group) in digital insurance brokerage and Managing General Underwriting (MGU) services in China.
• The company pioneered the 2B2C (to-business-to-customer) digital embedded insurance model in China, launching its first platform in 2020, powered by proprietary PaaS (Platform as a Service).
• As of the filing date, Zhibao China Group has developed over 40 proprietary digital insurance solutions, partnered with more than 2,400 B channels, and acquired over 24 million end customers.
• Revenue for the fiscal year ended June 30, 2024, increased by 29% to approximately RMB 183.7 million (US$25.2 million) from RMB 142.1 million (US$19.5 million) in fiscal year 2023.
• Net income for the fiscal year ended June 30, 2024, was approximately RMB 13.3 million (US$1.8 million), a significant improvement from a net loss of RMB 43.1 million (US$5.9 million) in fiscal year 2023 (which included RMB 54.7 million in share-based compensation).
• Revenue for the six months ended December 31, 2024, increased by 74% to RMB 146.4 million (US$20.1 million) from RMB 84.3 million in the same period of 2023.
• Net loss for the six months ended December 31, 2024, narrowed to approximately RMB 0.6 million (US$0.1 million) from RMB 8.5 million in the same period of 2023.
• The filing relates to the resale of up to 14,985,883 Class A ordinary shares by Hudson Global Ventures, LLC, from which the company will not receive direct proceeds, but may receive up to $15.0 million in aggregate gross proceeds from Hudson through future sales under the Hudson EPA.
• Zhibao China agreed to acquire a 51% equity interest in Zhonglian Jinan Insurance Brokers Co., Ltd. for a total purchase price of RMB 25.5 million (approximately $3.5 million), payable in four installments.
• The company completed a cybersecurity review for its initial public offering (IPO) closed on April 3, 2024, and is not required to undergo another for this offering.
• A filing with the CSRC is planned within three business days after the SEC declares this registration statement effective, as required by the New Overseas Listing Rules.

Sentiment

Score: 7

Explanation: The company demonstrates strong operational growth, evidenced by significant revenue increases and a return to profitability in the last fiscal year. Strategic initiatives like the Zhonglian acquisition and international expansion plans indicate a proactive approach to market leadership. However, these positives are heavily counterbalanced by substantial risks, particularly the ongoing uncertainties with PRC regulatory oversight, the potential for Nasdaq delisting under the HFCA Act, and significant dilution from current and future equity issuances. The identified material weaknesses in internal controls also warrant caution. The failure of certain L1 financing tranches also adds a note of caution.

Positives

• Strong revenue growth: 29% increase for FY2024 (RMB 183.7M / US$25.2M) and 74% increase for H1 FY2025 (RMB 146.4M / US$20.1M).
• Return to profitability: Net income of RMB 13.3 million (US$1.8 million) for FY2024, a significant turnaround from a net loss of RMB 43.1 million (US$5.9 million) in FY2023 (excluding one-off share-based compensation, FY2023 would have been RMB 11.6 million net income).
• Pioneering 2B2C digital embedded insurance model in China, leading to low customer acquisition costs and high efficiency.
• Extensive network: Cooperated with over 2,400 B channels and secured over 24 million end customers.
• Diverse and innovative product portfolio: Over 40 proprietary digital insurance solutions across various industries (travel, sports, logistics, utilities, e-commerce).
• Advanced technology platform (PaaS) utilizing big data and AI for continuous solution enhancement.
• Experienced management team with deep expertise in insurance and digital technology.
• Strategic acquisition of 51% of Zhonglian Jinan Insurance Brokers Co., Ltd. for RMB 25.5 million ($3.5 million), expanding its nationwide presence with 58 branches and partnerships with over 40 insurance providers.
• Establishment of Zhibao Labuan Reinsurance in Malaysia, licensed in October 2024 and fully approved in April 2025, to support brokerage and MGU services and global expansion.
• Successful completion of cybersecurity review for its IPO, indicating compliance with PRC regulations for that specific offering.
• Potential for up to $15.0 million in gross proceeds from Hudson under the Hudson EPA.

Negatives

• Net loss for the six months ended December 31, 2024, of RMB 0.6 million (US$0.1 million), despite significant revenue growth.
• Significant dilution risk for existing shareholders due to the potential issuance of up to 14,985,883 Class A ordinary shares to Hudson and outstanding warrants/convertible notes (totaling over 4 million shares).
• Uncertainties in the interpretation and enforcement of PRC laws and regulations, particularly regarding foreign investment, data security, and overseas listings, which could limit legal protections and impact business operations.
• Reliance on dividends from PRC Subsidiaries for cash and financing, which are subject to PRC foreign exchange controls and restrictions on dividend payments.
• Potential for delisting from Nasdaq under the HFCA Act if the PCAOB is unable to inspect the company's auditor for two consecutive years, despite the auditor being US-based.
• Concentrated voting power: Mr. Botao Ma, CEO and Chairman, beneficially owns approximately 95.4% of total voting power, which could lead to interests not aligned with other shareholders.
• Risk of not consummating the Zhonglian acquisition or facing negative impacts if terminated, including substantial expenses and potential liquidated damages.
• The company identified two material weaknesses in internal controls over financial reporting as of June 30, 2024: (i) insufficient personnel with U.S. GAAP knowledge and experience, and (ii) inadequate IT control related to logical access security.
• Uncertainty regarding the requirement of National Financial Regulatory Administration (NFRA) approval for its direct holding structure and potential foreign investment restrictions in insurance brokerage.
• Risk of being subject to penalties for failure to make adequate contributions to employee benefit plans and withhold individual income tax in the past.
• Dependence on key insurance companies and B channels, with potential adverse effects if relationships deteriorate or new channels are not acquired cost-effectively.
• The L1 Third Closing of Second Tranche and L1 Third Tranche financing are unlikely to be consummated due to unmet stock price conditions.

Risks

• Class A ordinary shares may be delisted under the HFCA Act if the PRC prevents PCAOB inspection of auditors for two consecutive years, materially affecting investment value.
• Changes in PRC government political and economic policies or US-China relations may materially and adversely affect business, financial condition, and growth strategies.
• Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit legal protections available to the company and investors.
• The PRC government exerts substantial influence over business activities and may intervene or influence operations and this offering at any time, potentially causing Class A ordinary shares to decline in value or become worthless.
• Processing a certain quantity of personal information carries risks; failure to protect sensitive information or improper handling could have a material adverse effect due to increased oversight by the Cyberspace Administration of China (CAC) over data security.
• PRC regulation on loans to, and direct investment in, PRC Subsidiaries by offshore holding companies and governmental control in currency conversion may delay or prevent the use of future offering proceeds.
• The CSRC's New Overseas Listing Rules, effective March 31, 2023, require filings for follow-on offerings and exert more oversight, potentially limiting the ability to offer Class A ordinary shares or causing their value to decline.
• Substantial uncertainties exist regarding National Financial Regulatory Administration (NFRA) requirements and their impact on the viability of the current corporate structure and business operations.
• Failure to make adequate contributions to various employee benefit plans and withhold individual income tax on employees' salaries as required by PRC regulations may subject the company to penalties.
• Dependence on key insurance companies for the supply of insurance products; loss of these relationships could adversely affect business, financial condition, and results of operations.
• Dependence on B channels to reach end customers; failure to acquire new B channels or retain existing ones cost-effectively could materially and adversely affect business.
• Significant reliance on a third-party MGU Partner for MGU services, with risks of non-compliance with relevant laws and regulations.
• The innovative insurance technology and infrastructure require continuous developments and upgrades, with no assurance they will fully support the business.
• Uncertainty in the interpretation of regulations on internet information services in China; operations could be harmed if deemed in violation of applicable laws.
• Inability to attract, incentivize, and retain talented professionals could adversely affect business, financial condition, and results of operations.
• Potential involvement in legal or other proceedings in the ordinary course of business, which could have a material adverse effect if outcomes are unfavorable.
• Vulnerability to cyberattacks, computer viruses, physical or electronic break-ins, or similar disruptions, potentially harming reputation and business.
• Infringement of intellectual property rights by third parties or loss of own intellectual property rights may materially and adversely affect business.
• Difficulties in managing growth or executing strategies effectively could materially and adversely affect business and prospects.
• Exposure to third-party payment processing-related risks, including fraud and compliance issues.
• Business operations are sensitive to local conditions and changes in China, such as economic, social, and political environments, force majeure events, or natural disasters.
• Identified two material weaknesses in internal controls over financial reporting (insufficient U.S. GAAP knowledge, inadequate IT logical access security) that, if not remediated, could affect financial reporting accuracy and investor confidence.
• An active, liquid trading market for Class A ordinary shares may not develop or be sustained.
• Nasdaq may apply additional and more stringent criteria for continued listing due to a small public offering and high insider ownership.
• Mr. Botao Ma, CEO and Chairman, beneficially owns approximately 95.4% of the total voting power, giving him significant influence over corporate matters, potentially misaligning with other shareholders' interests.
• The trading price of Class A ordinary shares may be volatile, potentially resulting in substantial losses to investors.
• Sales or availability for sale of substantial amounts of Class A ordinary shares could adversely affect their market price.
• Initial public offerings of companies with comparable public floats have experienced extreme volatility unrelated to underlying performance, which may make it difficult to assess the value of Class A ordinary shares.
• No expected dividends in the foreseeable future; investors must rely on price appreciation for return on investment.
• Reliance on management's judgment for the use of net proceeds from future financings, which may not produce income or increase share price.
• Potential adverse United States federal income tax consequences if classified as a passive foreign investment company (PFIC).
• Anti-takeover provisions in the amended and restated memorandum and articles of association could have a material adverse effect on shareholder rights.
• Difficulties in protecting interests and enforcing rights through U.S. courts due to incorporation under Cayman Islands law.
• Limited shareholder rights to present proposals before annual general meetings or extraordinary general meetings not called by shareholders under Cayman Islands law.
• Certain judgments obtained against the company by shareholders may not be enforceable in the Cayman Islands or China.
• Tension in international trade and rising political tension, particularly between the U.S. and China, may adversely impact business.
• Risks relating to the leased properties of PRC Subsidiaries, including unregistered leases and lack of ownership certificates, potentially leading to fines or operational interruptions.

Future Outlook

The company plans to accelerate the expansion of its B channels, including insurance companies, and increase its sales force. It intends to strengthen its 2C business by targeting existing customers for additional insurance needs. Continuous investment in R&D is planned to refine and upgrade its digital insurance solutions and enhance its PaaS with new AI and BI functionalities, while also strengthening data security. The MGU business is targeted for expansion, aiming to increase partners from 10 to 15 and online MGU business to 50% by June 2026, and broaden product lines. The newly incorporated Zhibao Labuan Reinsurance in Malaysia will support brokerage and MGU services. The company also seeks new strategic partnerships and potential M&A targets, particularly those with B channel resources, and plans to expand its business globally, with an MOU already signed in Singapore and assessment of opportunities in the U.S. and European markets. The company does not anticipate paying cash dividends in the foreseeable future, intending to reinvest all available funds and future earnings into business expansion.

Management Comments

• We are a leading and high growth InsurTech company primarily engaging in providing digital insurance brokerage services through Zhibao China Group in China.
• 2B2C digital embedded insurance is our innovative business model, which Zhibao China Group pioneered in China.
• We believe embedded insurance brokerage is still at an early stage of development in China, we believe it is the future of insurance brokerage industry.
• Our management team is passionate about innovation in providing digital insurance solutions to end customers.
• Our teams expertise in the insurance brokerage industry will help steer the Company to continuously maintain and extend our leading position in the digitalization of the insurance brokerage industry in China.
• We intend to keep any future earnings to re-invest in and finance the expansion of our business, and we do not anticipate that any cash dividends will be paid or any assets will be transferred in the foreseeable future.
• The Company believes that, absent subsequent agreement with L1 whereby the Company and L1 agree to waive such conditions, it will not be able to consummate either the L1 Third Closing of the Second Tranche or the L1 Third Tranche financing.

Industry Context

The digital insurance brokerage service industry in China is characterized as emerging, rapidly evolving, and competitive, with ongoing developments in business models and regulatory frameworks. Zhibao Technology Inc. positions itself as a pioneer and market leader in the 2B2C digital embedded insurance model, which allows for minimal customer acquisition costs and higher efficiency compared to traditional direct-to-consumer advertising. The company's strategic focus on leveraging technology (PaaS, AI, big data) for customized solutions and expanding its B channel network aligns with broader industry trends towards digital transformation and ecosystem integration in insurance. The acquisition of Zhonglian Jinan Insurance Brokers Co., Ltd. indicates a move towards consolidation and market share expansion within the fragmented Chinese online insurance sector. Furthermore, the establishment of a reinsurance subsidiary in Labuan, Malaysia, and plans for global expansion reflect an ambition to capitalize on international opportunities and potentially enhance control over underwriting and risk management, signaling a broader trend of Chinese InsurTech companies seeking global reach.

Comparison to Industry Standards

• The company identifies itself as a pioneer and market leader in the 2B2C embedded insurance business in China, suggesting a strong competitive position in this niche.
• Its 2B2C model is highlighted for enabling minimal customer acquisition costs and higher efficiency compared to industry peers who rely on capital-intensive direct-to-consumer advertising.
• Zhibao China Group is noted as the first to establish a PaaS (Platform as a Service) in the digital insurance brokerage market in China, indicating technological leadership.
• The filing does not provide specific comparable companies or global benchmarks for direct quantitative comparison of financial results or operational efficiency against industry standards.

Corporate Governance

Related Party Transactions

• Shanghai Anyi was originally 100% controlled by Shanghai Xinhui Investment Consulting Co., Ltd., a related party controlled by CEO Mr. Botao Ma. All equity was transferred to Zhibao China on July 12, 2016, for RMB 10 million.
• Mr. Botao Ma, CEO and Chairman, beneficially holds 16,816,692 Class B ordinary shares, representing approximately 95.4% of total voting power.
• Mr. Xiao Luo, COO, is the sole shareholder of Tianze Zihan Holdings Limited, which holds 156,108 Class A ordinary shares.
• Mr. Yugang Wang, CTO, is the sole shareholder of ElecJoys Holdings Limited, which holds 44,601 Class A ordinary shares.

Stakeholder Impact

• Shareholders: Potential for significant dilution from the Hudson EPA and outstanding warrants/convertible notes. Risk of delisting from Nasdaq. Concentrated voting power of the CEO may limit the influence of other shareholders. Potential for price volatility. No expected dividends in the foreseeable future.
• Employees: Risks related to compliance with PRC labor laws, including adequate contributions to employee benefit plans and income tax withholding. Competition for talented professionals could impact retention.
• Customers (B channels and end customers): Continued development of innovative solutions and expansion of B channels aims to benefit customers with tailored insurance products and services. Risks exist if the company fails to meet customer needs or if technology does not fully support the business.
• Regulators (SEC, PCAOB, CSRC, CAC, NFRA): The company is subject to extensive regulatory scrutiny, particularly from PRC authorities regarding data security and overseas listings, and from U.S. authorities (SEC, PCAOB) regarding auditing and listing standards. Compliance efforts are ongoing.
• Creditors (L1): L1 has security interests in the company's assets in the U.S. and a DACA account. An event of default occurred but was cured. Some future financing tranches with L1 are unlikely to proceed, potentially impacting future funding from this source.

Next Steps

• Accelerate the expansion of B channels, including insurance companies as a special type of B channel.
• Increase the number of sales teams and develop more independent sales partners.
• Strengthen the 2C business by targeting existing customer base for additional insurance needs.
• Refine, upgrade, and develop new digital insurance solutions across various economic sectors.
• Invest in R&D to upgrade and enhance the PaaS, introducing new AI and BI functionalities, and strengthening data security.
• Expand the MGU business by increasing MGU partners from 10 to 15 and online MGU business to 50% by June 2026, and broadening product lines.
• Support brokerage and MGU services through the new subsidiary reinsurance company in Labuan, Malaysia.
• Seek new strategic partnerships and cooperation, including potential M&A targets, especially those with new B channel resources.
• Expand business globally, with an MOU already signed in Singapore and assessment of opportunities in the U.S. and European markets.
• Submit a filing to the CSRC within three business days after the SEC's declaration of effectiveness for this F-1 registration statement.
• Continue to take additional measures to remediate identified material weaknesses in internal controls, including hiring qualified accounting personnel, setting up a financial and system control framework, implementing formal access and change controls, and improving governance.
• Appoint a third independent director as part of corporate governance improvements.

Key Dates

Recommendation

The company demonstrates strong operational growth, evidenced by significant revenue increases and a return to profitability in the last fiscal year. Strategic initiatives like the Zhonglian acquisition and international expansion plans indicate a proactive approach to market leadership. However, these positives are heavily counterbalanced by substantial risks, particularly the ongoing uncertainties with PRC regulatory oversight, the potential for Nasdaq delisting under the HFCA Act, and significant dilution from current and future equity issuances. The identified material weaknesses in internal controls also warrant caution. The failure of certain L1 financing tranches also adds a note of caution. Given the high growth potential alongside high regulatory and dilution risks, a 'hold' recommendation is appropriate for investors to monitor the company's ability to navigate these challenges and successfully execute its growth strategies without further adverse impacts on shareholder value.

Keywords

InsurTech, Digital Insurance Brokerage, MGU Services, China, SEC Filing, F-1/A, Resale Offering, Hudson Global Ventures, Zhonglian Jinan Insurance Brokers, Acquisition, Capital Raise, PRC Regulations, Cybersecurity Review, Nasdaq, Class A Ordinary Shares, Cayman Islands, Emerging Growth Company, Foreign Private Issuer, Controlled Company, Financial Performance, Risk Factors, Corporate Governance, Equity Purchase Agreement, Convertible Notes, Warrants, PaaS, 2B2C Model, Financial Reporting, Internal Controls, Share Dilution, Investment