F-1/A: Zhibao Technology Files Amended Prospectus, Details Private Placements and Navigates Complex Chinese Regulatory Landscape

Zhibao Technology Inc., a Cayman Islands holding company operating primarily in China's InsurTech sector, filed an amended prospectus detailing recent private placements, improved financial performance, and significant ongoing regulatory and operational risks associated with its PRC-based operations and U.S. listing.

Summary

• Zhibao Technology Inc. is a Cayman Islands holding company that conducts substantially all of its digital insurance brokerage and managing general underwriting (MGU) services through its PRC Subsidiaries in China.
• The company reported revenues of approximately RMB 183.7 million (US$25.3 million) for the fiscal year ended June 30, 2024, a 29% increase from RMB 142.1 million (US$19.6 million) in FY2023.
• Zhibao achieved a net income of approximately 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 (which included RMB 54.7 million in share-based compensation expenses).
• The company's business model, 2B2C (to-business-to-customer) digital embedded insurance, involves providing customized insurance solutions embedded in business entities' (B channels) existing customer engagement matrices to reach end customers.
• As of the prospectus date, Zhibao China Group has partnered with over 2,000 B channels and secured more than 20 million end customers.
• The company has developed over 40 proprietary digital insurance solutions built on its proprietary PaaS (Platform as a Service) and cooperates with over 100 insurance companies.
• Zhibao completed multiple tranches of a private placement with an institutional investor (L1 Capital Global Opportunities Master Fund), including the First Closing of First Tranche ($675,000 net) on September 23, 2024, Second Closing of First Tranche ($675,000 net) on October 1, 2024, and Third Closing of First Tranche ($900,000 net) on December 11, 2024.
• The First Closing of Second Tranche occurred on February 14, 2025, with the company receiving $630,000 (net of 10% OID) and issuing a Second Tranche Note with an initial principal of $700,000 and warrants.
• The Third Closing of the Second Tranche and the Third Tranche financing, totaling an additional $1.5 million and $3.0 million respectively, are unlikely to be consummated due to a missed stock price condition ($2.50 per share) within the specified timeframe.
• The company terminated a share subscription facility with GEM Global Yield LLC SCS and GEM Yield Bahamas Limited on March 11, 2025, which had an aggregate potential of up to $50,000,000.
• Zhibao is a Cayman Islands holding company with operations in China, subject to significant PRC regulatory oversight, including the HFCA Act, Cybersecurity Review Measures, and New Overseas Listing Rules.
• The CEO, Mr. Botao Ma, holds approximately 95.5% of the total voting power due to the dual-class share structure (Class A: 1 vote, Class B: 20 votes).
• The company identified two material weaknesses in its internal controls over financial reporting as of June 30, 2024: insufficient U.S. GAAP knowledge and inadequate IT control related to logical access security.
• Zhibao Labuan Reinsurance, a wholly-owned subsidiary in Labuan, Malaysia, incorporated in July 2024, received final license approval in April 2025 and intends to support brokerage and MGU services, but has not commenced operations yet.

Sentiment

Score: 6

Explanation: The company shows strong revenue growth and a significant return to profitability, indicating positive operational momentum. However, this is tempered by substantial ongoing regulatory risks in China, the failure to secure additional tranches of financing due to unmet conditions, and identified material weaknesses in internal controls. The termination of a large potential capital raise also adds a negative financial element. The overall sentiment is cautiously positive, acknowledging operational strengths but highlighting significant external and internal challenges.

Positives

• The company achieved net income of approximately RMB 13.3 million (US$1.8 million) for the fiscal year ended June 30, 2024, a significant improvement from a net loss in the prior year.
• Revenue increased by approximately 29% to RMB 183.7 million (US$25.3 million) for FY2024 compared to FY2023.
• Zhibao China Group has established a strong market position as a pioneer and leader in 2B2C embedded insurance in China, with over 2,000 B channels and 20 million end customers.
• The company's proprietary PaaS and over 40 digital insurance solutions demonstrate strong technological capabilities and innovation in the InsurTech sector.
• The management team possesses extensive experience (30+ years for CEO, 15+ years for CFO/COO, 20+ years for CTO) in the insurance industry and digital technology.
• The company successfully completed multiple tranches of private placements, securing capital from an institutional investor (L1 Capital Global Opportunities Master Fund).
• Zhibao has obtained necessary cybersecurity review clearance for its IPO and submitted required filings with the CSRC for its current offerings, indicating compliance efforts with evolving PRC regulations.
• The establishment of Zhibao Labuan Reinsurance and plans for global expansion indicate strategic growth initiatives beyond the domestic Chinese market.

Negatives

• The company incurred a net loss of approximately RMB 43.1 million (US$5.9 million) for the fiscal year ended June 30, 2023, prior to achieving profitability in FY2024.
• The Third Closing of the Second Tranche and the Third Tranche financing, potentially totaling $4.5 million, are unlikely to be consummated due to the failure to meet a stock price condition ($2.50 per share), indicating a shortfall in anticipated capital.
• The share subscription facility with GEM Global Yield LLC SCS, which could have provided up to $50,000,000 in capital, was terminated, removing a significant potential funding source.
• Cash and cash equivalents significantly decreased from RMB 9,873,678 in FY2023 to RMB 2,401,495 in FY2024.
• The company has identified two material weaknesses in its internal controls over financial reporting as of June 30, 2024, which could affect financial reporting accuracy and investor confidence.
• The company's PRC Subsidiaries have 17 lease agreements that have not been registered with PRC governmental authorities, potentially leading to fines or rectification orders.
• The PRC Subsidiaries have not fully complied with requirements for employee benefit plan contributions and individual income tax withholding in the past, which could result in penalties and late fees.

Risks

• The company's Class A ordinary shares may be delisted under the HFCA Act if the PCAOB is unable to inspect or investigate its auditor for two consecutive years, which could materially and adversely affect investment value.
• Changes in the political and economic policies of the PRC government or in relations between China and the United States may materially and adversely affect business, financial condition, and results of operations.
• 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 offerings at any time, potentially causing Class A ordinary shares to decline in value or become worthless.
• Failure to protect private or sensitive customer information or improper handling of such information could have a material adverse effect on the business due to increasing 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 offering proceeds to fund or expand business.
• The New Overseas Listing Rules by the CSRC exert more oversight and control over overseas offerings and foreign investment, potentially limiting the ability to offer Class A ordinary shares or causing their value to decline.
• Substantial uncertainties exist regarding the requirements of the National Financial Regulatory Administration (NFRA) and how they may impact 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 means the loss of any major partner could adversely affect business, financial condition, and results of operations.
• Failure to acquire new B channels or retain existing B channels in a cost-effective manner could materially and adversely affect business, financial condition, and results of operations.
• Significant reliance on a third-party MGU Partner for MGU services means non-compliance with relevant laws and regulations by this partner could adversely affect the company's business.
• The innovative insurance technology and infrastructure require continuous developments and upgrades, and there is no assurance these technologies will fully support the business or remain competitive.
• Uncertainty in the interpretation of internet information service filing requirements in China could lead to violations and penalties, harming digital insurance broker services.
• Inability to attract, incentivize, and retain talented professionals in a competitive market could adversely affect business, financial condition, and results of operations.
• The trading market for Class A ordinary shares is very new, and a consistently robust and liquid trading market may not develop or be sustained, affecting liquidity and capital raising ability.
• Nasdaq may apply additional and more stringent criteria for continued listing due to the small public offering size and large insider holdings, potentially leading to delisting.
• The CEO, Mr. Botao Ma, holds approximately 95.5% of the total voting power, giving him significant influence over corporate matters, which may not always align with other shareholders' interests.
• The trading price of Class A ordinary shares may be volatile due to broad market factors, industry factors, and company-specific factors, potentially resulting in substantial losses for investors.
• The issuance of Class A ordinary shares upon exercise of outstanding warrants and convertible notes could have a significant dilutive impact on existing shareholders.
• The company does not expect to pay dividends in the foreseeable future, meaning investors must rely on price appreciation for returns, which is not guaranteed.
• If the company is classified as a passive foreign investment company (PFIC), United States taxpayers owning Class A ordinary shares may face adverse U.S. federal income tax consequences.
• Anti-takeover provisions in the company's articles of association could have a material adverse effect on the rights of Class A ordinary shareholders.
• Difficulties may arise in effecting service of legal process, enforcing foreign judgments, or bringing actions in China against the company or its management based on foreign laws.

Future Outlook

Zhibao Technology plans to accelerate the expansion of its B channels, including insurance companies, and grow its sales force. The company intends to strengthen its 2C business by targeting existing customers for additional insurance needs. It will continue to upgrade and enrich its digital insurance solutions and enhance its PaaS with new AI and business intelligence functionalities. Zhibao also aims to expand its MGU business by increasing MGU partners from 7 to 15 by June 2025 and broadening product lines. Furthermore, the company plans to support its brokerage and MGU services through its Labuan, Malaysia reinsurance subsidiary and seek new strategic partnerships and cooperation, including potential M&A targets. Global expansion is also a goal, with an MOU signed with a Singaporean partner and assessment of opportunities in the U.S. and European markets.

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 (to-business-to-customer) digital embedded insurance is our innovative business model, which Zhibao China Group pioneered in China."
• "We believe this presents an untapped scenario-specific opportunity for international travel accident insurance needs for a pool of 100,000 Chinese tourists as end customers."
• "Our 2B2C model thrives because our relationship with B channels is mutually beneficial and sustainable for all participants."
• "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 has extensive experience in China's insurance market; in particular, our team's 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 invest in the research and development (R&D) of new technologies to upgrade and enhance the PaaS to maintain our leadership position in China."
• "We plan to increase the number of MGU partners (insurance companies) from 7 to 15 by the end of June 2025, and expand the insurance products from the current high-end medical insurance and long-term disability lines to mid-end medical and personal accident lines in the future."
• "We are taking steps to assess opportunities of offering our products in the U.S. and European markets."
• "We believe that the Cayman Islands holding company, Zhibao Technology Inc., is not a PRC resident enterprise for PRC tax purposes."
• "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."

Industry Context

Zhibao Technology operates in China's emerging, rapidly evolving, and competitive digital insurance brokerage service industry. The company positions itself as a pioneer and market leader in the 2B2C embedded insurance model, which it believes offers a cost-effective customer acquisition strategy compared to direct-to-consumer advertising. The industry is subject to significant and evolving regulatory oversight from the PRC government, including cybersecurity, data protection, and overseas listing rules, which adds complexity and uncertainty. The company's focus on leveraging big data and AI technology for insurance solutions aligns with broader global InsurTech trends. Its expansion into MGU services and international markets indicates a strategy to diversify and grow beyond its core brokerage business in China.

Comparison to Industry Standards

• The document does not provide specific comparable companies or projects to assess results against global benchmarks. It generally states that the 2B2C model allows for customer acquisition at 'minimal cost' and 'higher efficiency compared with our industry peers, who might gain customers by investing a large amount of capital through direct-to-consumer advertisement and other marketing channels,' but does not quantify this comparison or name specific peers.
• The document mentions that 'While embedded insurance brokerage is still at an early stage of development in China, we believe it is the future of insurance brokerage industry,' implying a nascent market where direct comparisons might be limited.

Management Changes

Corporate Governance

Legal Proceedings

• The company's PRC Subsidiaries have 17 lease agreements for offices in China that have not been registered with PRC governmental authorities as required by PRC law, potentially leading to rectification orders and fines ranging from RMB1,000 to RMB10,000 per agreement.
• The company is subject to governmental regulations and other legal obligations related to privacy, information security, and data protection, and any security breaches or failure to comply could lead to governmental enforcement actions, litigation, or negative publicity.
• The company may be subject to legal or other proceedings in the ordinary course of business, including contractual disputes, product liability claims, and employee claims, which could result in substantial liabilities and adversely affect reputation and financial condition.

Related Party Transactions

• The company's PRC subsidiary, Shanghai Anyi, was originally 100% controlled by Shanghai Xinhui Investment Consulting Co., Ltd., a related party controlled by CEO Mr. Botao Ma, before its equity was transferred to Zhibao China on July 12, 2016, for RMB 10 million.
• Mr. Botao Ma, the Chairman and CEO, beneficially holds 16,816,692 Class B ordinary shares, representing approximately 95.5% of the total voting power of the issued and outstanding ordinary shares, giving him significant influence over corporate matters.
• 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.
• For the fiscal year ended June 30, 2023, RMB 54.7 million (US$7.5 million) in share-based compensation expenses arose from the issuance of ordinary shares to a related party (not explicitly named in this excerpt, but referenced as a one-off expense).

Stakeholder Impact

• **Shareholders**: Potential dilution from conversion of notes and exercise of warrants. Risk of delisting due to HFCA Act or Nasdaq listing standards. Significant voting power concentrated with the CEO may limit influence of other shareholders. Potential for adverse tax consequences if classified as a PRC resident enterprise. Failure to secure full anticipated capital raises could impact future growth and share value.
• **Employees**: Increased labor costs due to enhanced enforcement of labor laws. Potential penalties for past non-compliance with employee benefit contributions and income tax withholding. Competition for talented professionals may affect retention and hiring.
• **Customers (End Customers & B Channels)**: Continued development of innovative digital insurance solutions and expansion of B channels aims to provide better and more convenient services. However, failure to meet evolving needs or security breaches could damage trust and reduce customer base.
• **Suppliers/Partners (Insurance Companies)**: Dependence on key insurance companies means loss of cooperation could adversely affect business. Expansion of MGU business and strategic partnerships could strengthen relationships and create new opportunities.
• **Creditors**: The company has granted a senior security interest in its U.S. assets and DACA account to the Investor for the Notes, providing collateral for debt obligations. Failure to meet financing conditions could impact ability to repay debt or raise future capital.

Next Steps

• Accelerate the expansion of B channels, including cooperation with more insurance companies.
• Expand the sales force by increasing sales teams and developing more independent sales partners.
• Drive additional conversions for existing end customers (2C business) through personalized consultations and targeted services.
• Upgrade and enrich digital insurance solutions to meet evolving customer needs and market trends.
• Upgrade and enhance the PaaS by investing in R&D, enriching technology infrastructure tools, and introducing new AI and BI functionalities.
• Expand the scale of the MGU business by increasing MGU partners from 7 to 15 by June 2025 and broadening product lines.
• Support brokerage and MGU services through the newly incorporated Zhibao Labuan Reinsurance subsidiary.
• Seek new strategic partnerships and cooperation, including potential M&A targets, especially those bringing new B channel resources.
• Expand the business globally, assessing opportunities in the U.S. and European markets following an MOU with a Singaporean partner.
• Continue to take additional measures to remediate identified material weaknesses in internal control over financial reporting, including hiring qualified accounting personnel, setting up financial and system control frameworks, implementing formal access and change controls, and improving governance.

Key Dates

Recommendation

Keywords

InsurTech, Digital Insurance Brokerage, China, SEC Filing, F-1/A, Convertible Notes, Warrants, Private Placement, PRC Regulation, Cybersecurity Review Measures, New Overseas Listing Rules, HFCA Act, Corporate Governance, Financial Performance, Risk Management, Nasdaq, ZBAO, 2B2C, PaaS, MGU Services