F-1/A: Zhibao Technology Faces Going Concern Doubts Amidst Losses

Zhibao Technology Inc. filed an F-1/A for the resale of shares by Hudson Global Ventures, LLC, revealing a return to net loss and substantial doubt about its ability to continue as a going concern.

Summary

• Zhibao Technology Inc. is a Cayman Islands holding company operating primarily through its PRC Subsidiaries, focusing on InsurTech, digital insurance brokerage, and managing general underwriting (MGU) services in China.
• The company utilizes a 2B2C (business-to-business-to-customer) digital embedded insurance model, providing customized insurance solutions embedded in business entities' existing customer engagement platforms.
• As of the filing date, Zhibao China Group has developed over 40 proprietary digital insurance solutions, cooperated with more than 2,400 B channels, and secured over 24 million end customers.
• Revenue increased by 29% from RMB 142.1 million in FY2023 to RMB 183.7 million in FY2024, and further by 51% to RMB 276.9 million (US$38.7 million) in FY2025.
• The company achieved net income of RMB 13.3 million in FY2024, but incurred net losses of RMB 43.1 million in FY2023 and RMB 62.0 million (US$8.7 million) in FY2025.
• Operating cash outflows were RMB 1.1 million in FY2023, RMB 3.8 million in FY2024, and RMB 20.7 million (US$2.9 million) in FY2025.
• As of June 30, 2025, the company reported working capital of RMB 0.4 million (US$51,600) and accumulated deficits of RMB 193.9 million (US$27.1 million), raising substantial doubt about its ability to continue as a going concern.
• The filing registers for resale up to 14,985,883 Class A ordinary shares by Hudson Global Ventures, LLC, including 280,000 commitment fee shares, with the company not receiving any proceeds from this resale.
• Zhibao Technology Inc. may receive up to $15.0 million in aggregate gross proceeds from Hudson under an Equity Purchase Agreement (Hudson EPA) in connection with future sales of Class A ordinary shares to Hudson.
• The company completed the acquisition of a 51% equity interest in Zhonglian Jinan Insurance Brokers Co., Ltd. for RMB 25.5 million (approximately $3.5 million) on September 30, 2025, payable in four installments.
• A joint venture, Zhibao Yingshi Health Technology Co., Ltd., was incorporated on September 24, 2025, with Zhibao China acquiring a 51% equity interest.
• The company changed its independent registered public accounting firm from Marcum Asia CPAs LLP to HYYH CPA. LLC, effective November 24, 2025.
• Mr. Botao Ma, Chairman and CEO, holds approximately 51.5% of issued and outstanding ordinary shares and 94.0% of total voting power due to a dual-class share structure (Class B shares have 20 votes each).
• The company is subject to significant regulatory risks in China, including potential delisting under the HFCA Act, uncertainties in PRC laws, data security regulations, and CSRC New Overseas Listing Rules requiring filings for post-IPO offerings.

Sentiment

Score: 3

Explanation: The company shows strong revenue growth and an innovative business model, but the return to significant net losses, increasing operating cash outflows, and explicit 'substantial doubt about going concern' are major negative indicators. The extensive regulatory risks in China and potential for significant dilution further weigh down the sentiment, despite strategic acquisitions and global expansion plans.

Positives

• Revenue growth: 29% increase in FY2024 and 51% increase in FY2025, demonstrating strong top-line expansion.
• Pioneering 2B2C digital embedded insurance model in China, positioning the company as a market leader with a low-cost customer acquisition strategy.
• Extensive network: Cooperation with over 2,400 B channels and serving over 24 million end customers.
• Strong technology platform: Proprietary Platform as a Service (PaaS) and over 40 digital insurance solutions, leveraging big data and AI for continuous enhancement.
• Experienced management team with deep expertise in the insurance industry and digital technology, including a founder with 30+ years of experience.
• Strategic acquisitions: Acquired 51% of Zhonglian Jinan Insurance Brokers Co., Ltd. and 51% of Zhibao Yingshi Health Technology Co., Ltd. to expand business scope and market share.
• Global expansion plans: Signed an MOU with a brokerage partner in Singapore and assessing opportunities in the U.S. and European markets.
• Establishment of Zhibao Labuan Reinsurance in Malaysia, licensed in October 2024 and approved in April 2025, to support brokerage and MGU services.

Negatives

• Return to net loss: Incurred a net loss of RMB 62.0 million (US$8.7 million) in FY2025 after achieving profitability with a net income of RMB 13.3 million in FY2024.
• Negative operating cash flows: Consistent operating cash outflows of RMB 1.1 million (FY2023), RMB 3.8 million (FY2024), and RMB 20.7 million (US$2.9 million) (FY2025).
• Substantial doubt about going concern: Working capital of RMB 0.4 million (US$51,600) and accumulated deficits of RMB 193.9 million (US$27.1 million) as of June 30, 2025, raise significant concerns about the company's ability to continue operations.
• High reliance on a few key insurance companies: Three insurance companies accounted for approximately 55% of revenues in FY2025, posing concentration risk.
• Potential for significant shareholder dilution: The Hudson EPA and outstanding warrants/convertible notes could lead to substantial dilution for existing shareholders.
• Lack of dividends: No plans to pay cash dividends in the foreseeable future, meaning investors must rely solely on share price appreciation.
• Uncertainty regarding the Zhonglian Acquisition: Failure to make subsequent installments or realize anticipated benefits could adversely impact the company.
• MGU business model reliance on third-party partner: Dependence on an MGU Partner and its subsidiaries for MGU services, with compliance uncertainties under PRC laws.
• Historical non-compliance with employee benefit plans: PRC subsidiaries did not fully comply with requirements for social insurance and housing funds, potentially leading to penalties.

Risks

• Delisting risk under the HFCA Act if the PCAOB is unable to inspect the company's auditor for two consecutive years, potentially making Class A ordinary shares untradable.
• Changes in political and economic policies of the PRC government or in relations between China and the United States may materially and adversely affect business and operations.
• Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit legal protections available to the company and investors.
• Substantial influence and potential intervention by the PRC government over business activities and offerings, which could result in material changes to operations or cause shares to decline in value.
• Risks related to data security and protection, including failure to protect personal information of over 24 million end customers, potential cyberattacks, and non-compliance with evolving PRC cybersecurity laws (Cybersecurity Review Measures, PIPL, Data Security Law).
• PRC regulations on loans and direct investment in PRC Subsidiaries by offshore holding companies and governmental control in currency conversion may delay or prevent the use of offering proceeds.
• The CSRC's New Overseas Listing Rules require a filing for post-IPO offerings within three business days of SEC effectiveness, and non-compliance could lead to investigations, fines, suspension of operations, or prohibition from future offerings.
• Substantial uncertainties exist regarding the National Financial Regulatory Administration (NFRA) requirements and their impact on the viability of the current corporate structure and business operations, especially concerning foreign investment in insurance brokerage.
• Failure to make adequate contributions to various employee benefit plans and withhold individual income tax as required by PRC regulations may subject the company to penalties.
• Dependence on key insurance companies for product supply, with the loss of any major partner potentially adversely affecting business.
• Dependence on B channels to reach end customers; failure to acquire new or retain existing B channels cost-effectively could materially and adversely affect business.
• The innovative insurance technology and infrastructure require continuous development and upgrades, with no assurance that current technologies will fully support business or keep pace with competitors.
• Uncertainty in the interpretation of internet information service filing requirements in China, potentially leading to violations if a value-added telecommunications business license is deemed necessary.
• Inability to attract, incentivize, and retain talented professionals could adversely affect business.
• Operating history may not be indicative of future growth or financial results, and historical growth rates may not be sustainable.
• Difficulties and risks associated with expanding into new businesses or industries where the company may have limited experience.
• Potential involvement in legal or other proceedings in the ordinary course of business, which could result in substantial liabilities and reputational damage.
• Disruption of services due to network interruptions, system failures, security breaches, or natural disasters, as the company's computer hardware and cloud services are primarily in China.
• Infringement of intellectual property rights by third parties or loss of the company's intellectual property rights could materially and adversely affect business.
• Exposure to intellectual property infringement claims from third parties, which may be expensive to defend and disrupt business.
• Inability to manage growth or execute strategies effectively could materially and adversely affect business and prospects.
• Risks associated with accepting a wide variety of payment methods, including fraud and compliance with evolving regulations.
• Adverse effects from an economic downturn, as sales depend on customer disposable income and spending willingness.
• Substantial doubt about the company's ability to continue as a going concern due to accumulated deficits and negative operating cash flows.
• Need for additional capital, which may not be obtainable on favorable terms or at all, leading to potential dilution or cessation of operations.
• Special sensitivity to local conditions and changes in China, including laws, economic/political environments, and force majeure events.
• Difficulties for overseas shareholders and/or regulators to conduct investigations or collect evidence within China due to legal and practical obstacles.
• Tension in international trade and rising political tension, particularly between the U.S. and China, may adversely impact business.
• An active, liquid trading market for Class A ordinary shares may not develop or be sustained, limiting investors' ability to sell securities.
• Nasdaq may apply additional and more stringent criteria for continued listing due to a small public offering and significant insider holdings.
• Mr. Botao Ma's significant influence (94.0% voting power) over corporate matters, potentially misaligning with other shareholders' interests.
• Failure to meet Nasdaq continued listing standards could result in delisting, adversely affecting liquidity and market price.
• Volatility in the trading price of Class A ordinary shares, potentially unrelated to underlying performance, making valuation difficult.
• Significant dilutive impact from the issuance of Class A ordinary shares upon exercise of outstanding warrants and convertible notes, and sales under the Hudson EPA.
• Investors who buy Class A ordinary shares from Hudson at different times will likely pay different prices and experience different levels of dilution.
• Potential adverse United States federal income tax consequences if the company is classified as a passive foreign investment company (PFIC).
• Anti-takeover provisions in the amended and restated memorandum and articles of association could have an adverse effect on shareholder rights.
• Limited ability for shareholders to protect their rights through U.S. courts due to incorporation under Cayman Islands law and operations in China.
• Difficulties in presenting proposals before annual general meetings or extraordinary general meetings not called by shareholders due to Cayman Islands law and company articles.
• Certain judgments obtained against the company by shareholders may not be enforceable in China or the Cayman Islands.

Future Outlook

The company plans to accelerate the expansion of its B channels, increase its sales force, drive additional conversions for existing end customers (2C business), upgrade and enrich its digital insurance solutions, enhance its PaaS technology, expand its MGU business, support services through its Labuan reinsurance subsidiary, seek new strategic partnerships and M&A targets, and expand its business globally, including assessing opportunities in the U.S. and European markets. However, the company acknowledges substantial doubt about its ability to continue as a going concern and plans to seek extensions for bank loans, improve operational efficiency, implement strict cost controls, and pursue further equity offerings.

Management Comments

• "We are a pioneer and market leader through Zhibao China Group in 2B2C embedded insurance business in China."
• "Our 2B2C model is key to enable us to acquire end customers at minimal cost and therefore to achieve higher efficiency compared with our industry peers."
• "While 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."
• "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."
• "We believe that the Cayman Islands holding company, Zhibao Technology Inc., is not a PRC resident enterprise for PRC tax purposes."

Industry Context

Zhibao Technology operates in the rapidly evolving and competitive InsurTech industry in China, pioneering the 2B2C digital embedded insurance model. This model aims to differentiate the company by acquiring customers at minimal cost through existing business channels, contrasting with traditional direct-to-consumer advertising. The industry is subject to significant and evolving regulatory oversight from the PRC government, particularly concerning data security, overseas listings, and foreign investment, which introduces substantial operational and legal uncertainties. The company's expansion into MGU services and health management, along with global ambitions, reflects broader trends in insurance innovation and market diversification.

Comparison to Industry Standards

• The company's 2B2C embedded insurance model is presented as a pioneering and market-leading approach in China, suggesting a differentiation from traditional insurance brokerage models that might rely on higher-cost direct-to-consumer advertising.
• The company's PaaS (Platform as a Service) is highlighted as the first in China's digital insurance brokerage market, indicating a potential technological advantage over competitors.
• No specific comparable companies or global benchmarks are explicitly mentioned in the filing for direct performance comparison, making a detailed assessment against industry standards difficult based solely on the provided text.

Management Changes

Corporate Governance

Legal Proceedings

• The company is not currently subject to any labor disputes or related query, investigation or interference by a PRC governing body.
• The company is not aware of any claim or challenge brought by any third parties concerning the use of leased properties without obtaining proper ownership proof.
• The company may be subject to legal disputes or regulatory and other proceedings in the ordinary course of business, including contractual disputes, product liability claims, and employee claims, which could result in substantial liabilities and reputational damage.

Related Party Transactions

• Mr. Botao Ma, Chairman and CEO, beneficially holds 16,816,692 Class B ordinary shares, representing approximately 94.0% of the total voting power as of January 5, 2026, through entities like Mavy Holdings Limited, Maximum Global Holdings Limited, Shenbao Limited Partnership, and Shanghai Xinhui Investment Consulting Co., Ltd., all of which he controls or is a majority shareholder of.
• Historically, one PRC operating entity provided financial support for other entities' operations by inter-company loans. After reorganization, cash transfers among Zhibao and its subsidiaries of less than RMB1 million (US$0.14 million) must be reported to, reviewed, and approved by the CFO, while transfers equal to or exceeding RMB1 million (US$0.14 million) require approval from the CEO and CFO of Zhibao.

Stakeholder Impact

• **Shareholders:** Potential for significant dilution from the Hudson EPA and exercise of outstanding warrants/convertible notes. No anticipated cash dividends mean returns depend on share price appreciation. Concentrated voting power with Mr. Botao Ma limits influence of minority shareholders. Delisting risk under HFCA Act and Nasdaq rules could severely impact liquidity and share value. Substantial doubt about going concern raises risk of losing entire investment.
• **Employees:** The company's failure to make adequate contributions to various employee benefit plans and withhold individual income tax as required by PRC regulations could lead to penalties, potentially affecting employee welfare. Competition for talented professionals is intense, and failure to retain them could impact service quality and business operations.
• **Customers (B channels & End Customers):** Dependence on B channels for customer acquisition means any adverse changes in these relationships could harm the company's image and business. Failure to protect private or sensitive information could damage reputation and deter customers. Continuous development of insurance solutions and technology aims to benefit customers with improved services.
• **Suppliers/Partners (Insurance Companies):** Dependence on key insurance companies for product supply means loss of cooperation could adversely affect business. The MGU business model relies on third-party partners, introducing compliance and operational risks.
• **Creditors:** The 'substantial doubt about going concern' indicates increased risk for creditors, as the company's ability to meet its financial obligations is uncertain without additional financing or improved cash flows.

Next Steps

• Submit the CSRC filing in connection with this offering within three business days after the SEC's declaration of effectiveness of the registration statement on Form F-1.
• Accelerate the expansion of B channels to penetrate new markets and increase market share.
• Expand the sales force by increasing sales teams and developing more independent sales partners.
• Strengthen the 2C business by targeting the existing customer base for additional insurance needs through personalized consultations and targeted services.
• Refine, upgrade, and develop new digital insurance solutions across various scenarios and sectors.
• Invest in R&D to upgrade and enhance the PaaS, including enriching technology infrastructure tools and introducing new AI and BI functionalities.
• Increase the number of MGU partners from 10 to 15 and the proportion of MGU online business to 50% of total MGU business by June 2026.
• Expand MGU insurance products from high-end medical and long-term disability to mid-end medical and personal accident lines.
• Support brokerage and MGU services through the wholly-owned subsidiary reinsurance company, Zhibao Labuan Reinsurance.
• Seek new strategic partnerships and cooperation, including potential M&A targets, especially those bringing new B channel resources.
• Expand business footprint outside of China by cooperating with partners in other countries and assessing opportunities in the U.S. and European markets.
• Seek an extension of terms for bank loans and corresponding interest payments.
• Focus on improving operational efficiency, implementing strict cost control and budget, and enhancing internal controls.
• Seek more private and public equity offerings in 2026 to fund operations and capital expansion needs.
• Remediate identified material weaknesses in internal controls over financial reporting by hiring qualified accounting personnel, setting up a financial and system control framework, implementing formal access and change controls, and improving governance.

Key Dates

Recommendation

The filing presents a highly concerning financial picture, with a return to significant net losses in FY2025 (RMB 62.0 million), consistently negative operating cash flows, and a stark admission of 'substantial doubt about our ability to continue as a going concern.' While revenue growth is positive, it has not translated into sustainable profitability or positive cash flow. The company's reliance on future equity raises to address liquidity issues, coupled with the potential for significant dilution from the Hudson EPA and outstanding warrants, creates substantial downside risk for existing shareholders. Furthermore, the complex and evolving regulatory environment in China, including the risk of delisting under the HFCA Act and uncertainties surrounding data security and overseas listing rules, adds a layer of unpredictable and severe operational and financial risk. The concentrated voting power of the CEO also raises corporate governance concerns. Given these severe financial and regulatory headwinds, a seasoned investor would likely recommend selling the stock to mitigate exposure to a company facing existential challenges.

Keywords

InsurTech, Digital Insurance Brokerage, China, SEC Filing, F-1/A, Hudson Global Ventures, Equity Line of Credit, Dilution, Going Concern, PRC Regulation, Cybersecurity, Data Protection, CSRC, HFCA Act, Nasdaq, ZBAO, Financial Performance, Net Loss, Revenue Growth, MGU Services, 2B2C Model, PaaS, Strategic Acquisition, Zhonglian, Zhibao Yingshi, Auditor Change, Corporate Governance, Dual-Class Shares, Botao Ma, Foreign Private Issuer, Emerging Growth Company