F-1/A: Zhibao Technology Inc. Files Amendment for Resale of Class A Ordinary Shares

Zhibao Technology Inc. has filed an amendment to its registration statement for the resale of Class A ordinary shares issuable upon conversion of a note and exercise of warrants by an institutional investor.

Summary

• Zhibao Technology Inc., a Cayman Islands holding company, has filed an amendment to its registration statement for the resale of up to 4,421,382 Class A ordinary shares.
• These shares are issuable upon the conversion of a senior secured convertible promissory note, the exercise of outstanding warrants, and the exercise of pre-funded warrants held by an institutional investor.
• The company will not receive any proceeds from the resale of these shares, but may receive proceeds from the cash exercise of the warrants, estimated to be approximately $0.7 million.
• The company's Class A ordinary shares are traded on the Nasdaq Capital Market under the symbol ZBAO, with the last reported sale price on November 5, 2024, at $3.68 per share.
• Zhibao Technology Inc. is both an emerging growth company and a foreign private issuer, which allows it to comply with certain reduced public company reporting requirements.

Sentiment

Score: 6

Explanation: The document is primarily factual and descriptive, outlining the terms of a share resale and related financial instruments. While it highlights the company's growth and market position, it also acknowledges significant risks and uncertainties, particularly those related to operating in China. The sentiment is neutral to slightly positive due to the potential for future revenue from warrant exercises, but tempered by the numerous risk factors.

Positives

• The company has the potential to receive approximately $0.7 million from the cash exercise of warrants.
• The company is listed on the Nasdaq Capital Market, providing liquidity for its shares.
• The company is an emerging growth company and a foreign private issuer, allowing for reduced reporting requirements.

Negatives

• The company will not receive any proceeds from the resale of the Class A ordinary shares by the selling shareholder.
• The pre-funded warrants are only exercisable upon the occurrence of an Event of Default, indicating potential financial risk.
• The company is a controlled company under Nasdaq rules, which may limit corporate governance protections for shareholders.

Risks

• The company's Class A ordinary shares may be delisted under the HFCA Act if the PCAOB cannot inspect the company's auditor.
• Changes in political and economic policies of the PRC government or in relations between China and the United States may adversely affect the company.
• Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to the company.
• The PRC government exerts substantial influence over the manner in which the company conducts its business activities.
• The company processes a certain quantity of personal information, and failure to protect it could have a material adverse effect on the business.
• The company may rely on dividends from its PRC subsidiaries, which may be restricted.
• The company is subject to the New Overseas Listing Rules, which could limit its ability to offer shares to investors.
• The company's auditor's China affiliate is located in the PRC, which may be subject to PCAOB inspection issues.
• The company's CEO has significant influence over the company, which may not align with other shareholders' interests.

Future Outlook

The company intends to use the net proceeds from any cash exercise of the Warrants for working capital and general corporate purposes. The company plans to expand its B channels, sales force, and MGU business, and upgrade its digital insurance solutions and PaaS.

Management Comments

• The management team is passionate about innovation in providing digital insurance solutions to end customers.
• The management team has extensive experience in China's insurance market, which will help steer the company to maintain and extend its leading position.

Industry Context

The document highlights the company's position in the rapidly growing 2B2C digital insurance brokerage services sector in China, which is estimated to reach approximately RMB 6.2 billion in 2027. The company is a market leader in this sector, with a market share of approximately 17.4% in 2022.

Comparison to Industry Standards

• The document states that the 2B2C digital insurance brokerage services sector is the fastest growing segment within the digital insurance brokerage service industry, with a historical CAGR of approximately 54.6% from 2018 to 2022.
• Zhibao China Group ranked number one in the 2B2C digital insurance brokerage services sector in China, with a market share of approximately 17.4% and a revenue of approximately RMB140.6 million in 2022.
• The document estimates the 2B2C digital insurance brokerage services sector to reach approximately RMB6.2 billion in 2027, with an estimated CAGR of approximately 50.1% from 2022 to 2027.
• The document mentions that the total market size of the Chinese insurance industry in terms of insurance premium is expected to reach approximately RMB 5.8 trillion by 2027, at a CAGR of 4.3% from 2022 to 2027.
• The insurance brokerage services industry in terms of revenue is estimated to grow at a CAGR of 13.9% from 2022 to 2027.
• The market size of the digital insurance brokerage services industry in terms of revenue is estimated to substantially grow at a CAGR of 28.2% from 2022 to 2027.

Stakeholder Impact

• Shareholders may experience volatility in the share price due to market conditions and the nature of the offering.
• Shareholders may face risks related to the company's operations in China and potential regulatory changes.
• The company's employees may benefit from the company's growth and expansion plans.
• Customers may benefit from the company's innovative digital insurance solutions.

Next Steps

• The company will report share issuance status to the CSRC upon completion of all subsequent closings in compliance with New Overseas Listing Rules.
• The company intends to expand its B channels, sales force, and MGU business, and upgrade its digital insurance solutions and PaaS.

Key Dates

Keywords

Class A ordinary shares, convertible note, warrants, resale, China, Nasdaq, HFCA Act, emerging growth company, foreign private issuer, cybersecurity, CSRC, PCAOB