Wetour Robotics Ltd 20-F for FY2026
Wetour Robotics Ltd (WETO)
About this 20-F
Wetour Robotics Ltd filed this 20-F on November 5, 2026, covering the fiscal year ended June 30, 2026 (FY2026).
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
OR
For the fiscal year ended
OR
For the transition period from
to
OR
Date of event requiring this shell company report:
Commission file number:
(Exact name of Registrant as Specified in its Charter)
(Jurisdiction of Incorporation or Organization)
(Address of Principal Executive Offices)
Tel:
(Name, Telephone, E-mail and/or Facsimile Number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading symbol | Name of Each Exchange On Which Registered | ||
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title of Class)
The number of outstanding shares of each of the issuer’s classes of capital or common stock as of June 30, 2026 was:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐
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Yes ☐
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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer ☐ | Accelerated filer ☐ | Emerging growth company |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards † provided pursuant to Section 13(a) of the Exchange Act.
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
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Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
| ☒ | ☐ International Financial Reporting Standards as issued by the International | ☐ Other |
| Accounting Standards Board |
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Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No
Wetour Robotics Limited
FORM 20-F ANNUAL REPORT
TABLE OF CONTENTS
i
GENERAL INFORMATION
Unless otherwise indicated and except where the context otherwise requires, references in this annual report to:
| ● | “Second A&R Memorandum and Articles of Association” are to the second amended and restated memorandum and articles of association of Wetour adopted by special resolution on August 24, 2026; |
| ● | “China” or “PRC” are to the People’s Republic of China, including Hong Kong and Macau; however the only time such jurisdictions are not included in the definition of PRC and China is when we refer to the specific laws that have been adopted by the PRC. The term “Chinese” has a correlative meaning for the purpose of this report; |
| ● | “Hangzhou Shunxing” is to Hangzhou Shunxing Technology Co., Ltd., a company formed under the laws of the PRC and a wholly owned subsidiary of WFOE; |
| ● | “Individual Registered Shareholders” are to Zheng Jiahua and Wu Chunyun who collectively hold 50% of the equity interest of Youba Tech; |
| ● | “NextFood” is to NextFood Technology Inc., a company incorporated in the state of Delaware and a controlled subsidiary of Wetour Robotics; |
| ● | “Ordinary Shares” are to our Ordinary Shares, par value $0.01 per share; | |
| ● | “PRC Subsidiaries” is to WFOE, Hangzhou Shunxing, and Webus Travel Agency, our wholly owned subsidiaries in the PRC; |
| ● | “Vantrapower” is to Vantrapower LLC, formerly named as HeatBowl LLC, a company incorporated in the state of Texas and a controlled subsidiary of Wetour Robotics through Wetour; |
| ● | “Wetour” is to Wetour Travel Tech, LLC, a Delaware company and a wholly-owned subsidiary of Wetour Robotics; |
| ● | “Wetour Robotics,” “we,” “us,” “our,” “the holding company,” or the “Company” are to the registrant Wetour Robotics Limited, an exempted company incorporated under the laws of the Cayman Islands, formerly known as Webus International Limited; |
| ● | “Webus HK” is to Webus Hongkong Limited, a company formed under the laws of Hong Kong and a wholly-owned subsidiary of Youbus International; |
| ● | “Webus Travel Agency” is to Hangzhou Webus Travel Agency Co., Ltd., a company formed under the laws of the PRC and a wholly owned subsidiary of Hangzhou Shunxing; |
| ● | “WFOE” or “Xinjieni Tech” are to Zhejiang Xinjieni Technology Co., Ltd., a company formed under the laws of the PRC and a wholly owned subsidiary of Webus HK; |
| ● | “Youba Tech” or “VIE” are to Zhejiang Youba Technology Co., Ltd., a company organized under the laws of the PRC and the operating entity which has entered into the VIE Agreement with WFOE; |
| ● | “Youbus International” is to Youbus International Limited, a company formed under the laws of the British Virgin Islands and a wholly-owned subsidiary of Wetour Robotics; |
| ● | “shares”, “Shares” or “Ordinary Shares” as of the date hereof refer to our Ordinary Shares, par value $0.01 per share; |
| ● | The “Group” is to Wetour Robotics, Vantrapower, NextFood, Youbus International, Webus HK, and the WFOE, as a group; |
| ● | “RMB” or “¥” are to the legal currency of China; and |
| ● | “$”, “US$”, “USD” or “U.S. Dollars” are to the legal currency of the United States. |
A portion of our business is conducted by Youba Tech and Webus Travel Agency in the PRC using Chinese yuan (the “RMB”), the legal currency of mainland China. Our consolidated financial statements are presented in RMB. The amounts for the fiscal years ended June 30, 2024, 2025 and 2026 are presented in U.S. dollars for convenience purpose. These dollar references are based on the exchange rate of RMB to United States dollars, determined as of a specific date or for a specific period. Changes in the exchange rate will affect the amount of our obligations and the value of our assets in terms of United States dollars which may result in an increase or decrease in the amount of our obligations and the value of our assets, including accounts receivable.
For the sake of clarity, this annual report follows the Chinese naming convention of last name followed by first name. For example, the name of our Chairman will be presented as “Zheng Jiahua”.
ii
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
This Annual Report on Form 20-F (this “Report”) contains forward-looking statements that involve risks and uncertainties. You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including the reasons described in our “Business,” “Risk Factors,” and “Management Discussion and Analysis of Financial Condition and Result of Operations” sections, as well as those discussed elsewhere in this Report. In some cases, you can identify these forward-looking statements by terms such as “anticipate,” “believe,” “continue,” “could,” “depends,” “estimate,” “expects,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of those terms or other similar expressions, although not all forward-looking statements contain those words.
Our operations and business prospects are always subject to risks and uncertainties including, among others:
| ● | our goals and strategies; |
| ● | our future business development, financial conditions and results of operations; |
| ● | fluctuations in interest rates; |
| ● | our expectations regarding demand for and market acceptance of our products and services; |
| ● | projections of revenue, earnings, capital structure and other financial items; |
| ● | competition in our industry; | |
| ● | relevant government policies and regulations relating to our industry; and | |
| ● | general economic and business conditions in the markets in which we operate. |
The forward-looking statements in this Report represent our views as of the date of this Report. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention to do so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Report.
Unless the context requires otherwise, references in this Report to “we,” “us,” “our,” “our company,” “the Company” or similar terminology refer to Wetour Robotics Limited, including its subsidiaries.
iii
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not Applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not Applicable.
ITEM 3. KEY INFORMATION
We are an exempted company incorporated in the Cayman Islands. Wetour Robotics Limited began transforming into a physical artificial intelligence (“Physical AI”) infrastructure company in 2026 while continuing to operate its legacy mobility and packaged tour services. Our principal executive offices are located in Austin, Texas, and our platform research, development and commercialization activities are conducted primarily through our United States operations.
We are developing Orchestra, a hardware-software integrated operating system designed to translate human gestures and visual recognition signals into real-time command signals for connected physical devices. Orchestra is built around three components: (i) Conductor, a software pipeline that ingests surface electromyography (“sEMG”) signals from wristband, classifying real-time continuous gestures into standardized commands that drive physical device responses; (ii) Vision-Link, a visual scene recognition and execution layer that converts camera input into actuator commands; and (iii) Orchestra OS, a device-agnostic operating system comprising perception, intent, orchestration and safety engines.
During the period covered by this Report, the Group continued to operate its legacy mobility and packaged tour services business, which provided the Group’s operating revenue base for the fiscal year ended June 30, 2026. These services include (i) packaged tour service, (ii) customized chartered bus service, and (iii) commute shuttle service, operated primarily through the Group’s U.S. subsidiary and, to a lesser extent, its PRC Subsidiaries and VIE. For the fiscal year ended June 30, 2026, revenues generated by our U.S. subsidiary were RMB10,717,054, representing approximately 80.4% of total Group revenue.
As a holding company with no material operations, our operations were conducted by: (1) our subsidiaries in the United States and the PRC; (2) our direct investment in Youba Tech, the VIE in the PRC; and (3) through certain contractual arrangements with Youba Tech (the “VIE Agreements” or “Contractual Arrangements”). Through the VIE Agreements among WFOE, Youba Tech and Individual Registered Shareholders, which have not been tested in a court of law, we are regarded as the primary beneficiary of Youba Tech for accounting purposes, and, therefore, we are able to consolidate the financial results of Youba Tech in our consolidated financial statements in accordance with U.S. GAAP. However, the VIE structure cannot completely replicate a foreign investment in China-based companies, as we only hold 50% equity interest in the VIE and do not and may never hold the equity interests over 50% in the VIE. Instead, the VIE structure provides contractual exposure to foreign investment in us. See “Item 4. Information on the Company – A. History and Development of the Company” for information on our current corporate structure and the VIE Agreements.
Transfer of Cash to and From Our Subsidiaries and the VIE
Wetour Robotics is incorporated in the Cayman Islands as a holding company with no actual operations and it currently conducts its business through its subsidiary in the U.S. and the VIE in China.
We are permitted under the Cayman Islands laws to provide funding to our subsidiary in Hong Kong through loans or capital contributions without restrictions on the amount of the funds, subject to satisfaction of applicable government registration, approval and filing requirements. Webus HK is also permitted under the laws of Hong Kong to provide funding to Wetour Robotics and Youbus International through dividend distribution without restrictions on the amount of the funds.
We currently intend to retain all available funds and future earnings, if any, for the operation and expansion of our business and do not anticipate declaring or paying any dividends in the foreseeable future. Any future determination related to our dividend policy will be made at the discretion of our board of directors after considering our financial condition, results of operations, capital requirements, contractual requirements, business prospects and other factors the board of directors deems relevant, and subject to the restrictions contained in any future financing instruments.
1
Subject to the Cayman Islands Companies Act and our Second A&R Memorandum and Articles of Association, our board of directors may authorize and declare a dividend to shareholders at such time and of such an amount as they think fit if they are satisfied, on reasonable grounds, that immediately following the dividend the value of our assets will exceed our liabilities and we will be able to pay our debts as they become due.
Under the current practice of the Inland Revenue Department of Hong Kong, no tax is payable in Hong Kong in respect of dividends paid by us. The laws and regulations of the PRC do not currently have any material impact on transfer of cash from Wetour Robotics to Webus HK or from Webus HK to Wetour Robotics. There are no restrictions or limitation under the laws of Hong Kong imposed on the conversion of HK dollar into foreign currencies and the remittance of currencies out of Hong Kong or across borders and to U.S investors.
Current PRC regulations permit the VIE, Webus Travel Agency and Hangzhou Shunxing to pay dividends to Webus HK only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of the VIE, Webus Travel Agency and Hangzhou Shunxing is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each of such entity in China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation.
Under existing PRC foreign exchange regulations, payment of current account items, such as profit distributions and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. Therefore, the VIE, Webus Travel Agency and Hangzhou Shunxing are able to pay dividends in foreign currencies to us without prior approval from SAFE, subject to the condition that the remittance of such dividends outside of the PRC complies with certain procedures under PRC foreign exchange regulations, such as the overseas investment registrations by our shareholders or the ultimate shareholders of our corporate shareholders who are PRC residents. Approval from, or registration with, appropriate government authorities is, however, required where the RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. Current PRC regulations permit our PRC Subsidiaries to pay dividends to the Company only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. As of the date of this Report, there are no restrictions or limitations imposed by the Hong Kong government on the transfer of capital within, into and out of Hong Kong (including funds from Hong Kong to the PRC), except for transfer of funds involving money laundering and criminal activities. See “Risk Factors - Risks Related to Doing Business in China – To the extent cash or assets of our business, or of our PRC or Hong Kong subsidiaries, is in the PRC or Hong Kong, such cash or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong, due to interventions in or the imposition of restrictions and limitations by the PRC government to the transfer of cash or assets”.
The People’s Bank of China and SAFE have from time to time implemented capital control measures in response to capital outflows and fluctuations in the value of the RMB against the U.S. dollar, including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions, dividend payments and shareholder loan repayments. Although SAFE has since relaxed certain foreign exchange administration requirements, there can be no assurance that such measures will not be reinstated or tightened. The PRC government may continue to strengthen its capital controls and our PRC Subsidiaries’ and VIE’s dividends and other distributions may be subject to tightened scrutiny in the future. The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our profits, if any. Furthermore, if our subsidiaries in the PRC incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments. If we or our subsidiaries are unable to receive all of the revenues from our operations, we may be unable to pay dividends on our Ordinary Shares.
2
A significant portion of the Company’s business is conducted through the VIE. Funds may be paid by the VIE to the WFOE as service fees pursuant to the VIE agreements. The Company may rely on dividends paid by the WFOE for its working capital and cash needs, including the funds necessary: (i) to pay dividends or cash distributions to its shareholders, (ii) to service any debt obligations and (iii) to pay operating expenses. Cash dividends, if any, on our Ordinary Shares will be paid in U.S. dollars. If we are considered a PRC tax resident enterprise for tax purposes, any dividends we pay to our overseas shareholders may be regarded as China-sourced income and as a result may be subject to PRC withholding tax at a rate of up to 10.0%.
In order for us to pay dividends to our shareholders, we may rely on payments made from the VIE to the WFOE and from Webus Travel Agency and Hangzhou Shunxing to the WFOE, from the WFOE to Webus HK, from Webus HK to Youbus International, and finally from Youbus International to Wetour Robotics. Certain payments from the WFOE to Webus HK are subject to PRC taxes, including business taxes and VAT. As of the date of this Report, the VIE has not made any other transfers, loans, or distributions.
Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, or the Double Tax Avoidance Arrangement, the 10% withholding tax rate may be lowered to 5% if a Hong Kong resident enterprise owns no less than 25% of a PRC entity. However, the 5% withholding tax rate does not automatically apply and certain requirements must be satisfied, including, without limitation, that (a) the Hong Kong entity must be the beneficial owner of the relevant dividends; and (b) the Hong Kong entity must directly hold no less than 25% share ownership in the PRC entity during the 12 consecutive months preceding its receipt of the dividends. In current practice, a Hong Kong entity must obtain a tax resident certificate from the Hong Kong tax authority to apply for the 5% lower PRC withholding tax rate. As the Hong Kong tax authority will issue such a tax resident certificate on a case-by-case basis, we cannot assure you that we will be able to obtain the tax resident certificate from the relevant Hong Kong tax authority and enjoy the preferential withholding tax rate of 5% under the Double Taxation Arrangement with respect to dividends to be paid by the VIE or the WFOE to Webus HK. As of the date of this Report, the WFOE currently does not have any plan to declare and pay dividends to Webus HK and we have not applied for the tax resident certificate from the relevant Hong Kong tax authority. Webus HK intends to apply for the tax resident certificate when the WFOE plans to declare and pay dividends to Webus HK. When the WFOE plans to declare and pay dividends to Webus HK and when we intend to apply for the tax resident certificate from the relevant Hong Kong tax authority, we plan to inform the investors through SEC filings, such as a current report on Form 6-K, prior to such actions. See “Risk Factors - Risks Related to Our Corporate Structure - We are a holding company, and may rely on dividends paid by our subsidiaries for our cash needs. Any limitation on the ability of our subsidiaries to make dividend payments to us, or any tax implications of making dividend payments to us, could limit our ability to pay our parent company expenses or pay dividends to holders of our Ordinary Shares.”
The WFOE may rely on the service fees to be paid by the VIE pursuant to the VIE agreements, Webus Travel Agency and Hangzhou Shunxing. There has been no cash flows and transfers of other assets among the holding company, its subsidiaries, and the VIE. The cash transfer among the holding company and its subsidiaries is intended to be made through dividends, capital contributions or intercompany loans between the holding company and its subsidiaries, if needed in the future. Currently, we do not have any intentions to distribute earnings or settle amounts owed to our agreements, including the VIE agreements, except to the agreements entered under normal business operation as discussed hereof. None of our subsidiaries and the VIE has made any dividend payment or distribution to the holding company as of the date this Report, and we currently intend to retain all available funds and future earnings, if any, for the operation and expansion of our business and do not anticipate declaring or paying any dividends in the foreseeable future. Neither the Company nor any of its subsidiaries or the VIE has made any dividends or distributions to U.S. investors as of the date of this Report.
Current PRC regulations permit WFOE to pay dividends to those entities only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. Therefore, under our current corporate structure, we rely on dividend payments or other distributions from WFOE to fund any cash and financing requirements we may have, including the funds necessary to pay dividends and other cash distributions to our shareholders or to service any debt we may incur. If WFOE incurs debt on its own behalf in the future, the instruments governing such debt may restrict their ability to pay dividends to us. In addition, WFOE is permitted to pay dividends to us only out of their accumulated profits, if any, as determined in accordance with PRC accounting standards and regulations. Under PRC laws and regulations, WFOE is required to set aside a portion of its net income each year to fund a statutory surplus reserve until such reserve reaches 50% of its registered capital. This reserve is not distributable as dividends. As a result, WFOE is restricted in its ability to transfer a portion of its net assets to us in the form of dividends, loans or advances.
3
The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our profits, if any. Furthermore, if the WFOE incur debt on its own in the future, the instruments governing the debt may restrict its ability to pay dividends or make other payments. If we are unable to receive funds from WFOE, we may be unable to pay cash dividends on our Ordinary Shares.
Cash dividends, if any, on our Ordinary Shares will be paid in U.S. dollars. If we are considered a PRC tax resident enterprise for tax purposes, any dividends we pay to our overseas shareholders may be regarded as China-sourced income and as a result may be subject to PRC withholding tax at a rate of up to 10%. A 10% PRC withholding tax is applicable to dividends payable to investors that are non-resident enterprises. Any gain realized on the transfer of Ordinary Shares by such investors is also subject to PRC tax at a current rate of 10% which in the case of dividends will be withheld at source if such gain is regarded as income derived from sources within the PRC.
Transferring cash through the VIE is subject to risks due to the uncertainty of the interpretation and application of the PRC laws and regulations, including but not limited to regulatory review of oversea listing of PRC companies through a special purpose vehicle, and the validity and enforcement of the contractual arrangement with the VIE. We are also subject to the risks of the uncertainty that the PRC government could disallow the VIE structure, which would likely result in a material change in our operations, or a complete hindrance of cash flow through the VIE. The VIE Arrangements are less effective than direct ownership due to the inherent risks of the VIE structure. We may have difficulty in enforcing any rights we may have under the VIE Agreements with the Youba Tech and its founders and shareholders in the PRC since all VIE Agreements are governed by the PRC laws and require us to resolve all disputes through arbitration in the PRC, where the legal environment is uncertain and not as developed as in the United States. Moreover, the Chinese government has significant oversight and discretion over the conduct of Youba Tech’s business and may intervene or influence Youba Tech’s operations at any time with little advance notice, which could result in a material change in our operations and/or the cash flow through the VIE. Furthermore, the VIE Agreements may not be enforceable in China if the PRC authorities or courts are of the view that such VIE Agreements contravene with the PRC laws and regulations or are otherwise not enforceable for public policy reasons. In the event we are unable to enforce the VIE Agreements, we may not be able to exert effective influence over the VIE and the VIE’s ability to conduct its business may be materially and adversely affected.
As an offshore holding company, we are permitted under PRC laws and regulations to provide funding from the proceeds of our offshore fund-raising activities to WFOE and the VIE, Webus Travel Agency and Hangzhou Shunxing only through loans or capital contributions, subject to the satisfaction of the applicable government registration and approval requirements. Before providing loans to WFOE or the VIE, Webus Travel Agency and Hangzhou Shunxing, we will be required to make filings with details of the loans with the SAFE in accordance with relevant PRC laws and regulations. WFOE and the VIE, Webus Travel Agency and Hangzhou Shunxing that receive the loans are only allowed to use the loans for the purposes set forth in these laws and regulations. Under regulations of the SAFE, Renminbi is not convertible into foreign currencies for capital account items, such as loans, repatriation of investments and investments outside of China, unless the prior approval of the SAFE is obtained and prior registration with the SAFE is made.
For the years ended June 30, 2024, 2025 and 2026 and for the period from July 1, 2026 to November 5, 2026, the cash flows that have occurred between the Company, the VIE and its consolidated subsidiary, WFOE, which is the primary beneficiary of the VIE, and its consolidated subsidiary, and other subsidiaries are summarized as the following:
| For the years ended June 30 | From July 1, 2026 to November 5, | |||||||||||||||
| 2024 | 2025 | 2026 | 2026 | |||||||||||||
| RMB | RMB | RMB | RMB | |||||||||||||
| Cash paid by Wetour Robotics Limited to other subsidiaries | - | 3,223,620 | 4,172,879 | 78,157,567 | ||||||||||||
| Cash transfer from WFOE and its consolidated subsidiary to VIE and its consolidated subsidiary | - | - | 7,420,000 | 1,050,000 | ||||||||||||
| Cash transfer from VIE and its consolidated subsidiary to WFOE and its consolidated subsidiary | 4,000 | 28,000 | 13,078,095 | 4,045,996 | ||||||||||||
| Wetour Robotics Limited’s contribution of paid-in capital to other subsidiaries | - | 5,014,520 | 4,750,927 | - | ||||||||||||
| Other subsidiaries’ contribution of paid-in capital to WFOE and its consolidated subsidiary | - | 5,014,520 | 4,881,959 | - | ||||||||||||
4
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
The following summary consolidated statements of operations and comprehensive loss data and summary consolidated statements of cash flows data for the years ended June 30, 2024, 2025, and 2026, and the summary consolidated balance sheets data as of June 30, 2025, and 2026 have been derived from our audited consolidated financial statements included elsewhere in this Report. Our consolidated financial statements are prepared and presented in accordance with U.S. GAAP. Our historical results are not necessarily indicative of results expected for future periods. You should read this Summary Consolidated Financial Data and Operating Data section together with our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Report.
The following table presents our summary consolidated statements of operations and comprehensive loss for the periods indicated.
| For the years ended June 30， | ||||||||||||||||
| 2024 | 2025 | 2026 | 2026 | |||||||||||||
| RMB | RMB | RMB | $ | |||||||||||||
| Revenues | 45,976,421 | 35,593,055 | 13,336,158 | 1,965,506 | ||||||||||||
| Cost of revenues | (39,546,098 | ) | (29,692,707 | ) | (12,227,303 | ) | (1,802,081 | ) | ||||||||
| Gross profit | 6,430,323 | 5,900,348 | 1,108,855 | 163,425 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and marketing expenses | (7,468,321 | ) | (8,333,493 | ) | (6,646,082 | ) | (979,511 | ) | ||||||||
| General and administrative expenses | (5,098,450 | ) | (9,883,761 | ) | (20,008,988 | ) | (2,948,960 | ) | ||||||||
| Research and development expenses | (1,331,037 | ) | (1,056,335 | ) | (229,709 | ) | (33,855 | ) | ||||||||
| Total operating expenses | (13,897,808 | ) | (19,273,589 | ) | (26,884,779 | ) | (3,962,326 | ) | ||||||||
| Operating loss | (7,467,485 | ) | (13,373,241 | ) | (25,775,924 | ) | (3,798,901 | ) | ||||||||
| Other income/(expenses) | ||||||||||||||||
| Financial expenses, net | (1,134,713 | ) | (1,161,392 | ) | (1,521,305 | ) | (224,213 | ) | ||||||||
| Other income, net | 4,500,552 | 1,954,244 | 263,778 | 38,876 | ||||||||||||
| Impairment loss on long-lived assets | - | - | (4,074,402 | ) | (600,493 | ) | ||||||||||
| Total other income/(loss), net | 3,365,839 | 792,852 | (5,331,929 | ) | (785,830 | ) | ||||||||||
| Loss before income tax expense | (4,101,646 | ) | (12,580,389 | ) | (31,107,853 | ) | (4,584,731 | ) | ||||||||
| Income tax benefit | 46,054 | 97,342 | - | - | ||||||||||||
| Net loss | (4,055,592 | ) | (12,483,047 | ) | (31,107,853 | ) | (4,584,731 | ) | ||||||||
| Less: Net loss attributable to non-controlling interests | - | - | (1,816 | ) | (268 | ) | ||||||||||
| Net loss attributable to ordinary shareholders of Wetour Robotics Limited | (4,055,592 | ) | (12,483,047 | ) | (31,106,037 | ) | (4,584,463 | ) | ||||||||
| Other comprehensive income/(loss): | ||||||||||||||||
| Foreign currency translation adjustments, net of nil tax | 2,945 | (789,425 | ) | (1,622,541 | ) | (239,133 | ) | |||||||||
| Total other comprehensive income/(loss) | 2,945 | (789,425 | ) | (1,622,541 | ) | (239,133 | ) | |||||||||
| Total comprehensive loss | (4,052,647 | ) | (13,272,472 | ) | (32,730,394 | ) | (4,823,864 | ) | ||||||||
| Comprehensive loss attributable to non-controlling interests | - | - | (1,870 | ) | (276 | ) | ||||||||||
| Comprehensive loss attributable to ordinary shareholders of Wetour Robotics Limited | (4,052,647 | ) | (13,272,472 | ) | (32,728,524 | ) | (4,823,588 | ) | ||||||||
| Loss per ordinary share | ||||||||||||||||
| Basic and diluted* | (20.28 | ) | (60.40 | ) | (79.55 | ) | (11.73 | ) | ||||||||
| Weighted average number of ordinary shares outstanding | ||||||||||||||||
| Basic and diluted* | 200,000 | 206,685 | 391,015 | 391,015 | ||||||||||||
| * | The shares and per share data are presented on a retroactive basis to reflect the Company’s recapitalization and reverse share splits. |
5
The following table presents our summary consolidated cash flows for the periods indicated.
| For the Years Ended June 30, | ||||||||||||||||
| 2024 | 2025 | 2026 | ||||||||||||||
| RMB | RMB | RMB | $ | |||||||||||||
| Net cash provided by/(used in) operating activities | 55,031 | (58,731,377 | ) | 4,008,088 | 590,721 | |||||||||||
| Net cash used in investing activities | (1,470,287 | ) | (1,045,640 | ) | (12,793,832 | ) | (1,885,578 | ) | ||||||||
| Net cash provided by financing activities | 2,042,038 | 69,137,486 | 375,651 | 55,364 | ||||||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 2,945 | (789,424 | ) | (2,387,261 | ) | (351,840 | ) | |||||||||
| Net change in cash, cash equivalents and restricted cash | 629,727 | 8,571,045 | (10,797,354 | ) | (1,591,333 | ) | ||||||||||
| Cash, cash equivalents and restricted cash at beginning of the year | 2,151,180 | 2,780,907 | 11,351,952 | 1,673,071 | ||||||||||||
| Cash, cash equivalents and restricted cash at end of the year | 2,780,907 | 11,351,952 | 554,598 | 81,738 | ||||||||||||
The following table presents our summary consolidated balance sheets data for the dates indicated.
| As of June 30, | ||||||||||||
| 2025 | 2026 | |||||||||||
| RMB | RMB | $ | ||||||||||
| Cash, cash equivalents and restricted cash | 11,351,952 | 554,598 | 81,738 | |||||||||
| Total current assets | 56,927,375 | 53,187,786 | 7,838,911 | |||||||||
| Total non-current assets | 36,668,577 | 36,745,392 | 5,415,601 | |||||||||
| Total current liabilities | 34,293,365 | 29,135,111 | 4,293,986 | |||||||||
| Total non-current liabilities | 2,480,000 | 83,333 | 12,282 | |||||||||
| Total shareholders’ equity | 56,822,587 | 60,714,734 | 8,948,244 | |||||||||
| Total liabilities and shareholders’ equity | 93,595,952 | 89,933,178 | 13,254,512 | |||||||||
VIE Consolidation Schedule
The following table sets forth the summary consolidated balance sheets data as of June 30, 2024, 2025, and 2026, and the summary condensed consolidated statements of operations and cash flows for the years ended June 30, 2024, 2025, and 2026, of (i) the parent company, Wetour Robotics Limited; (ii) other subsidiaries, which include Youbus International Limited, Wetour Hongkong Limited, NextFood Technologies Inc., HeatBowl LLC, and Wetour Travel Tech LLC; (iii) WFOE, Zhejiang Xinjieni Technology Co., Ltd., and its subsidiaries, Hangzhou Shunxing Technology Co., Ltd. and Hangzhou Webus Travel Agency Co., Ltd., and (iv) the VIE, Youba Tech, of which WFOE owns 50% direct equity interest and another 50% variable interests through the contractual agreements that makes WFOE the primary beneficiary of the VIE to consolidate the VIE. On November 5, 2025, the Group completed an internal reorganization pursuant to which 100% equity interest of Webus Travel Agency was transferred from Youba Tech, the VIE, to the WFOE. Accordingly, Webus Travel Agency was included in the VIE financial information through November 5, 2025 and was excluded thereafter. For the years ended June 30, 2024 and 2025, Webus Travel Agency was included for the entire period. For the year ended June 30, 2026, Webus Travel Agency was included only through November 5, 2025. Consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. Our and the VIE’s historical results are not necessarily indicative of results expected for future periods. You should read this information together with our (including the consolidated VIEs’) consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Report.
6
Consolidated Balance Sheets Schedule
| As of June 30, 2026 | ||||||||||||||||||||||||
| Parent | VIE | WFOE | Other Subsidiaries | Elimination | Consolidated Total | |||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||
| Current assets: | ||||||||||||||||||||||||
| Cash and cash equivalents | 262 | 76,948 | 195,999 | 277,360 | - | 550,569 | ||||||||||||||||||
| Restricted cash | - | 34 | - | 3,995 | - | 4,029 | ||||||||||||||||||
| Stable coin | 6,771 | - | - | - | - | 6,771 | ||||||||||||||||||
| Crypto asset | 2,658,117 | - | - | - | - | 2,658,117 | ||||||||||||||||||
| Short-term investment | - | 16,093 | - | 150,000 | 166,093 | |||||||||||||||||||
| Accounts receivable | - | 3,240 | - | 87,637 | - | 90,877 | ||||||||||||||||||
| Amounts due from related parties | - | - | 75,000 | 265,292 | - | 340,292 | ||||||||||||||||||
| Amounts due from the Group’s entities | 6,547,801 | 11,101,095 | 2,068,947 | 427,402 | (20,145,245 | ) | - | |||||||||||||||||
| Prepaid expenses and other current assets | 46,310,793 | 288,994 | 2,300,211 | 471,040 | - | 49,371,038 | ||||||||||||||||||
| Total current assets | 55,523,744 | 11,486,404 | 4,640,157 | 1,682,726 | (20,145,245 | ) | 53,187,786 | |||||||||||||||||
| Non-current assets: | ||||||||||||||||||||||||
| Property and equipment, net | - | 25,124,900 | - | 639,887 | - | 25,764,787 | ||||||||||||||||||
| Other non-current assets | - | - | - | 10,980,605 | - | 10,980,605 | ||||||||||||||||||
| Investment in VIE | - | - | 6,750,000 | - | (6,750,000 | ) | - | |||||||||||||||||
| Investment in subsidiaries | 9,876,508 | - | 4,390,000 | 20,998,679 | (35,265,187 | ) | - | |||||||||||||||||
| Total non-current assets | 9,876,508 | 25,124,900 | 11,140,000 | 32,619,171 | (42,015,187 | ) | 36,745,392 | |||||||||||||||||
| TOTAL ASSETS | 65,400,252 | 36,611,304 | 15,780,157 | 34,301,897 | (62,160,432 | ) | 89,933,178 | |||||||||||||||||
| LIABILITIES | ||||||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||||||
| Short-term borrowings | - | 19,250,000 | - | - | - | 19,250,000 | ||||||||||||||||||
| Current portion of long-term borrowings | - | 2,200,000 | - | - | - | 2,200,000 | ||||||||||||||||||
| Accounts payable | - | 750 | - | 38,849 | - | 39,599 | ||||||||||||||||||
| Deferred revenue | - | - | - | 883,681 | - | 883,681 | ||||||||||||||||||
| Amounts due to a related party | - | 20,000 | - | 50,000 | - | 70,000 | ||||||||||||||||||
| Lease liabilities, current | - | - | 250,201 | - | - | 250,201 | ||||||||||||||||||
| Amounts due to the Group’s entities | - | 2,800 | 1,147,487 | 18,951,573 | (20,101,860 | ) | - | |||||||||||||||||
| Accrued expenses and other current liabilities | 4,716,895 | 1,273,848 | 253,540 | 197,347 | - | 6,441,630 | ||||||||||||||||||
| Total current liabilities | 4,716,895 | 22,747,398 | 1,651,228 | 20,121,450 | (20,101,860 | ) | 29,135,111 | |||||||||||||||||
| Non-current liabilities: | ||||||||||||||||||||||||
| Other long-term liabilities | - | - | - | 83,333 | - | 83,333 | ||||||||||||||||||
| Total non-current liabilities | - | - | - | 83,333 | - | 83,333 | ||||||||||||||||||
| TOTAL LIABILITIES | 4,716,895 | 22,747,398 | 1,651,228 | 20,204,783 | (20,101,860 | ) | 29,218,444 | |||||||||||||||||
| Commitments and Contingencies | ||||||||||||||||||||||||
| SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||
| Ordinary Shares | 55,503 | - | - | - | - | 55,503 | ||||||||||||||||||
| Additional paid-in capital | 143,897,160 | 57,713,163 | 16,656,629 | 24,692,155 | (99,061,947 | ) | 143,897,160 | |||||||||||||||||
| Share subscription receivable | (12,720 | ) | - | - | - | - | (12,720 | ) | ||||||||||||||||
| Accumulated deficits | (80,867,834 | ) | (43,849,257 | ) | (2,527,700 | ) | (10,925,596 | ) | 57,302,553 | (80,867,834 | ) | |||||||||||||
| Accumulated other comprehensive (loss) /income | (2,388,752 | ) | - | - | 299,178 | (299,178 | ) | (2,388,752 | ) | |||||||||||||||
| Total Wetour Robotics Limited shareholders’ equity | 60,683,357 | 13,863,906 | 14,128,929 | 14,065,737 | (42,058,572 | ) | 60,683,357 | |||||||||||||||||
| Non-controlling interests | - | - | - | 31,377 | - | 31,377 | ||||||||||||||||||
| Total shareholders’ equity | 60,683,357 | 13,863,906 | 14,128,929 | 14,097,114 | (42,058,572 | ) | 60,714,734 | |||||||||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 65,400,252 | 36,611,304 | 15,780,157 | 34,301,897 | (62,160,432 | ) | 89,933,178 | |||||||||||||||||
7
| As of June 30, 2025 | ||||||||||||||||||||||||
| Parent | VIE and its Consolidated subsidiary | WFOE and its subsidiary | Other Subsidiaries | Elimination | Consolidated Total | |||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||
| Current assets: | ||||||||||||||||||||||||
| Cash and cash equivalents | 4,037,883 | 998,945 | 5,028,871 | 1,286,253 | - | 11,351,952 | ||||||||||||||||||
| Short-term investment | 661,824 | 198,660 | - | - | - | 860,484 | ||||||||||||||||||
| Accounts receivable | - | 265,679 | - | 93,568 | - | 359,247 | ||||||||||||||||||
| Amounts due from related parties | - | 200,000 | - | 79,845 | - | 279,845 | ||||||||||||||||||
| Amounts due from the Group’s entities | 3,216,456 | 162,835 | - | 477,559 | (3,856,850 | ) | - | |||||||||||||||||
| Prepaid expenses and other current assets | 26,863,500 | 17,194,241 | 18,106 | - | - | 44,075,847 | ||||||||||||||||||
| Total current assets | 34,779,663 | 19,020,360 | 5,046,977 | 1,937,225 | (3,856,850 | ) | 56,927,375 | |||||||||||||||||
| Non-current assets: | ||||||||||||||||||||||||
| Property and equipment, net | - | 31,511,097 | - | - | - | 31,511,097 | ||||||||||||||||||
| Right-of-use assets, net | - | 62,624 | 163,748 | - | - | 226,372 | ||||||||||||||||||
| Other non-current assets | 4,931,108 | - | - | - | - | 4,931,108 | ||||||||||||||||||
| Investment in VIE | - | - | 6,750,000 | - | (6,750,000 | ) | - | |||||||||||||||||
| Investment in subsidiaries | 17,118,074 | - | - | 10,029,040 | (27,147,114 | ) | - | |||||||||||||||||
| Total non-current assets | 22,049,182 | 31,573,721 | 6,913,748 | 10,029,040 | (33,897,114 | ) | 36,668,577 | |||||||||||||||||
| TOTAL ASSETS | 56,828,845 | 50,594,081 | 11,960,725 | 11,966,265 | (37,753,964 | ) | 93,595,952 | |||||||||||||||||
| LIABILITIES | ||||||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||||||
| Short-term borrowings | - | 30,000,000 | - | - | - | 30,000,000 | ||||||||||||||||||
| Accounts payable | - | 42,038 | - | - | - | 42,038 | ||||||||||||||||||
| Deferred revenue | - | 30,090 | - | 1,657,227 | - | 1,687,317 | ||||||||||||||||||
| Income tax payable | - | - | - | 2 | - | 2 | ||||||||||||||||||
| Lease liabilities, current | - | 55,454 | 163,748 | - | - | 219,202 | ||||||||||||||||||
| Amounts due to the Group’s entities | - | 490,716 | 32,000 | 3,329,809 | (3,852,525 | ) | - | |||||||||||||||||
| Accrued expenses and other current liabilities | 6,258 | 2,335,985 | - | 2,563 | - | 2,344,806 | ||||||||||||||||||
| Total current liabilities | 6,258 | 32,954,283 | 195,748 | 4,989,601 | (3,852,525 | ) | 34,293,365 | |||||||||||||||||
| Non-current liabilities: | ||||||||||||||||||||||||
| Long-term borrowings | - | 2,200,000 | - | - | - | 2,200,000 | ||||||||||||||||||
| Other long-term liabilities | - | 280,000 | - | - | - | 280,000 | ||||||||||||||||||
| Total non-current liabilities | - | 2,480,000 | - | - | - | 2,480,000 | ||||||||||||||||||
| TOTAL LIABILITIES | 6,258 | 35,434,283 | 195,748 | 4,989,601 | (3,852,525 | ) | 36,773,365 | |||||||||||||||||
| Commitments and Contingencies | ||||||||||||||||||||||||
| SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||
| Ordinary Shares | 14,177 | - | - | - | - | 14,177 | ||||||||||||||||||
| Additional paid-in capital | 107,349,192 | 58,213,162 | 11,774,670 | 8,830,202 | (78,818,034 | ) | 107,349,192 | |||||||||||||||||
| Share subscription receivable | (12,720 | ) | - | - | - | - | (12,720 | ) | ||||||||||||||||
| Accumulated deficits | (49,761,797 | ) | (43,053,364 | ) | (9,693 | ) | (1,884,516 | ) | 44,947,573 | (49,761,797 | ) | |||||||||||||
| Accumulated other comprehensive (loss) /income | (766,265 | ) | - | - | 30,978 | (30,978 | ) | (766,265 | ) | |||||||||||||||
| Total shareholders’ equity | 56,822,587 | 15,159,798 | 11,764,977 | 6,976,664 | (33,901,439 | ) | 56,822,587 | |||||||||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 56,828,845 | 50,594,081 | 11,960,725 | 11,966,265 | (37,753,964 | ) | 93,595,952 | |||||||||||||||||
8
Condensed Consolidated Statements of Operations Schedule
| For the year ended June 30, 2026 | ||||||||||||||||||||||||
| Parent | VIE | WFOE and its consolidated subsidiaries | Other Subsidiaries | Elimination | Consolidated Total | |||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||
| Revenues | - | 5,264,936 | 1,632,000 | 13,016,362 | (6,577,140 | ) | 13,336,158 | |||||||||||||||||
| Cost of revenues | - | (261,709 | ) | - | (11,965,594 | ) | - | (12,227,303 | ) | |||||||||||||||
| Gross profit | - | 5,003,227 | 1,632,000 | 1,050,768 | (6,577,140 | ) | 1,108,855 | |||||||||||||||||
| Operating expenses | (18,004,951 | ) | (4,002,950 | ) | (3,809,572 | ) | (7,766,375 | ) | 6,699,069 | (26,884,779 | ) | |||||||||||||
| Share of loss in VIE | - | - | (2,979,840 | - | 2,979,840 | - | ||||||||||||||||||
| Share of loss in subsidiaries | (12,394,868 | ) | - | - | (5,497,846 | ) | 17,892,714 | - | ||||||||||||||||
| Total operating expenses | (30,399,819 | ) | (4,002,950 | ) | (6,789,412 | ) | (13,264,221 | ) | 27,571,623 | (26,884,779 | ) | |||||||||||||
| Loss from operations | (30,399,819 | ) | 1,000,277 | (5,157,412 | ) | (12,213,453 | ) | 20,994,483 | (25,775,924 | ) | ||||||||||||||
| Total other income/(expenses), net | (708,034 | ) | (3,980,117 | ) | (340,434 | ) | (181,415 | ) | (121,929 | ) | (5,331,929 | ) | ||||||||||||
| Net loss | (31,107,853 | ) | (2,979,840 | ) | (5,497,846 | ) | (12,394,868 | ) | 20,872,554 | (31,107,853 | ) | |||||||||||||
| For the year ended June 30, 2025 | ||||||||||||||||||||||||
| Parent | VIE and its consolidated subsidiary | WFOE and its consolidated subsidiary | Other Subsidiaries | Elimination | Consolidated Total | |||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||
| Revenues | - | 16,042,669 | - | 26,167,991 | (6,617,605 | ) | 35,593,055 | |||||||||||||||||
| Cost of revenues | - | (8,866,046 | ) | - | (20,826,661 | ) | - | (29,692,707 | ) | |||||||||||||||
| Gross profit | - | 7,176,623 | - | 5,341,330 | (6,617,605 | ) | 5,900,348 | |||||||||||||||||
| Operating expenses | (5,016,921 | ) | (13,160,857 | ) | (8,760 | ) | (7,582,326 | ) | 6,495,275 | (19,273,589 | ) | |||||||||||||
| Share of loss in VIE | - | - | (5,133,114 | ) | - | 5,133,114 | - | |||||||||||||||||
| Share of loss in subsidiaries | (7,673,150 | ) | - | - | (5,141,886 | ) | 12,815,036 | - | ||||||||||||||||
| Total operating expenses | (12,690,071 | ) | (13,160,857 | ) | (5,141,874 | ) | (12,724,212 | ) | 24,443,425 | (19,273,589 | ) | |||||||||||||
| Loss from operations | (12,690,071 | ) | (5,984,234 | ) | (5,141,874 | ) | (7,382,882 | ) | 17,825,820 | (13,373,241 | ) | |||||||||||||
| Total other income/(expenses), net | 207,024 | 851,120 | (12 | ) | (387,610 | ) | 122,330 | 792,852 | ||||||||||||||||
| Income tax benefit | - | - | - | 97,342 | - | 97,342 | ||||||||||||||||||
| Net loss | (12,483,047 | ) | (5,133,114 | ) | (5,141,886 | ) | (7,673,150 | ) | 17,948,150 | (12,483,047 | ) | |||||||||||||
| For the year ended June 30, 2024 | ||||||||||||||||||||||||
| Parent | VIE and its consolidated subsidiary | WFOE | Other Subsidiaries | Elimination | Consolidated Total | |||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||
| Revenues | - | 21,874,310 | - | 26,630,631 | (2,528,520 | ) | 45,976,421 | |||||||||||||||||
| Cost of revenues | - | (18,335,542 | ) | - | (21,210,556 | ) | - | (39,546,098 | ) | |||||||||||||||
| Gross profit | - | 3,538,768 | - | 5,420,075 | (2,528,520 | ) | 6,430,323 | |||||||||||||||||
| Operating expenses | - | (11,967,525 | ) | - | (4,486,538 | ) | 2,556,255 | (13,897,808 | ) | |||||||||||||||
| Share of loss in VIE | - | - | (4,432,751 | ) | - | 4,432,751 | - | |||||||||||||||||
| Share of loss in subsidiaries | (4,055,592 | ) | - | - | - | 4,055,592 | - | |||||||||||||||||
| Total operating expenses | (4,055,592 | ) | (11,967,525 | ) | (4,432,751 | ) | (4,486,538 | ) | 11,044,598 | (13,897,808 | ) | |||||||||||||
| Income/(Loss) from operations | (4,055,592 | ) | (8,428,757 | ) | (4,432,751 | ) | 933,537 | 8,516,078 | (7,467,485 | ) | ||||||||||||||
| Total other income/(expenses), net | - | 3,924,741 | (922 | ) | (557,980 | ) | - | 3,365,839 | ||||||||||||||||
| Income tax benefit/ (expense) | - | 71,265 | - | (25,211 | ) | - | 46,054 | |||||||||||||||||
| Net income/(loss) | (4,055,592 | ) | (4,432,751 | ) | (4,433,673 | ) | 350,346 | 8,516,078 | (4,055,592 | ) | ||||||||||||||
9
Condensed Consolidated Statement of Cash Flows Schedule
| For the year ended June 30, 2026 | ||||||||||||||||||||||||
| Parent | VIE | WFOE consolidated subsidiaries | Other Subsidiaries | Elimination | Consolidated Total | |||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||
| Net cash (used in) / provided by operating activities | (13,318,813 | ) | 9,634,980 | (2,582,872 | ) | 10,274,793 | - | 4,008,088 | ||||||||||||||||
| Net cash (used in) / provided by investing activities | 908,093 | 173,057 | (2,250,000 | ) | (11,624,982 | ) | - | (12,793,832 | ) | |||||||||||||||
| Net cash provided by/ (used in) financing activities | 11,072,404 | (10,730,000 | ) | - | 33,247 | - | 375,651 | |||||||||||||||||
| Effect of exchange rate changes on cash | (2,699,305 | ) | - | - | 312,044 | - | (2,387,261 | ) | ||||||||||||||||
| Net change in cash, cash equivalents and restricted cash | (4,037,621 | ) | (921,963 | ) | (4,832,872 | ) | (1,004,898 | ) | - | (10,797,354 | ) | |||||||||||||
| Cash, cash equivalents and restricted cash at beginning of the year | 4,037,883 | 998,945 | 5,028,871 | 1,286,253 | - | 11,351,952 | ||||||||||||||||||
| Cash, cash equivalents and restricted cash at end of the year | 262 | 76,982 | 195,999 | 281,355 | - | 554,598 | ||||||||||||||||||
| For the year ended June 30, 2025 | ||||||||||||||||||||||||
| Parent | VIE and its consolidated subsidiary | WFOE consolidated subsidiary | Other Subsidiaries | Elimination | Consolidated Total | |||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||
| Net cash (used in) / provided by operating activities | (39,836,955 | ) | (18,361,521 | ) | 1,123 | (534,024 | ) | - | (58,731,377 | ) | ||||||||||||||
| Net cash (used in) / provided by investing activities | (5,658,778 | ) | (347,151 | ) | - | 4,960,289 | - | (1,045,640 | ) | |||||||||||||||
| Net cash provided by / (used in) financing activities | 50,333,827 | 18,500,000 | 5,024,670 | (4,721,011 | ) | - | 69,137,486 | |||||||||||||||||
| Effect of exchange rate changes on cash | (800,211 | ) | - | - | 10,787 | - | (789,424 | ) | ||||||||||||||||
| Net change in cash and cash equivalents | 4,037,883 | (208,672 | ) | 5,025,793 | (283,959 | ) | - | 8,571,045 | ||||||||||||||||
| Cash and cash equivalents at beginning of the year | - | 1,207,617 | 3,078 | 1,570,212 | - | 2,780,907 | ||||||||||||||||||
| Cash and cash equivalents at end of the year | 4,037,883 | 998,945 | 5,028,871 | 1,286,253 | - | 11,351,952 | ||||||||||||||||||
| For the year ended June 30, 2024 | ||||||||||||||||||||||||
| Parent | VIE and its consolidated subsidiary | WFOE | Other Subsidiaries | Elimination | Consolidated Total | |||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||
| Net cash (used in) / provided by operating activities | - | (1,125,633 | ) | 3,078 | 1,177,586 | - | 55,031 | |||||||||||||||||
| Net cash used in investing activities | - | (1,470,287 | ) | - | - | - | (1,470,287 | ) | ||||||||||||||||
| Net cash provided by financing activities | - | 2,042,038 | - | - | - | 2,042,038 | ||||||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | - | - | - | 2,945 | - | 2,945 | ||||||||||||||||||
| Net change in cash and cash equivalents | - | (553,882 | ) | 3,078 | 1,180,531 | - | 629,727 | |||||||||||||||||
| Cash and cash equivalents at beginning of the year | - | 1,761,499 | - | 389,681 | - | 2,151,180 | ||||||||||||||||||
| Cash and cash equivalents at end of the year | - | 1,207,617 | 3,078 | 1,570,212 | - | 2,780,907 | ||||||||||||||||||
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| A. | [Reserved] |
| B. | Capitalization and Indebtedness |
Not Applicable
| C. | Reasons for the Offer and Use of Proceeds. |
Not Applicable.
| D. | Risk Factors |
In addition to the other information contained in this Annual Report and in other documents we file with or furnish to the U.S. Securities and Exchange Commission (the “SEC”), the following risk factors should be considered in evaluating our business. The occurrence of any of the events or developments described below could materially harm our business, financial condition, results of operations and prospects. In such an event, the market price of our ordinary shares could decline. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may materially impair our business operations.
Summary of Risk Factors
Our business is subject to a number of risks of which you should be aware before making an investment decision. Among these important risks are the following, which are more fully described below:
Risks Related to Our Business and Industry
| ● | Demonstrations, early access programs, evaluations and pilot projects involving our products may not result in commercial orders, broad deployments or recurring revenue. | |
| ● | Delays or difficulties in developing and integrating the components of Orchestra could adversely affect our ability to commercialize our products and meet customer requirements. | |
| ● | We have a limited operating history in a competitive and rapidly evolving industry; and our transition toward Physical AI products may make it difficult to evaluate our prospects and may expose us to significant execution risks. | |
| ● | We incurred net losses for the years ended June 30, 2024, 2025 and 2026. We may not be able to generate sufficient operating cash flows and working capital. Failure to manage our liquidity and cash flows may materially and adversely affect our financial condition and results of operations. As a result, we may need additional capital, and financing may not be available on terms acceptable to us, or at all. | |
| ● | The growth of our business and our transition toward Physical AI products depends on our ability to accurately anticipate market trends and customer demand and to develop and commercialize new products and services that achieve market acceptance. | |
| ● | Our processing of physiological, visual and interaction data may subject us to complex and evolving privacy, cybersecurity and data protection requirements, and any actual or perceived failure to comply with such requirements or safeguard such data could adversely affect our business and customer trust. | |
| ● | Hardware failures, component shortages and difficulties supporting initial deployments could delay the commercialization of Orchestra and increase our costs and potential liabilities. | |
| ● | The successful operation of our legacy packaged tour services business depends substantially upon the cooperation of third parties that are not under our control. | |
| ● | We rely on search engines, social networking sites and online streaming services to attract a meaningful portion of our users, and if those search engines, social networking sites and online streaming services change their listings or policies regarding advertising, or increase their pricing or suffer problems, it may limit our ability to attract new users. | |
| ● | Because we rely upon a third party to perform the payment processing for our customers, the failure or inability of the third party to provide these services could impair our ability to operate. |
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| ● | We may not be able to successfully implement our growth strategy on a timely basis or at all. | |
| ● | Any damage to our reputation or our brands may materially adversely affect our business, financial condition and results of operations. | |
| ● | We operate in a highly competitive industry and may lose market share or experience margin erosion if we are unable to compete effectively. | |
| ● | Our operations in China are concentrated in one geographic area, which increases our exposure to many of the risks enumerated herein. | |
| ● | We face risks associated with managing operations in China, any of which could decrease our sales or earnings and could significantly limit or completely hinder our ability to offer our Ordinary Shares to investors and cause the value of such securities to significantly decline or be worthless. |
See “Risk Factors — Risks Related to Our Business” for more detailed disclosures on these risks and uncertainties.
Risks Related to Corporate Structure
Risks and uncertainties related to corporate structure include, but are not limited to, the following:
| ● | Wetour Robotics is a Cayman Islands exempted company operating in the United States and in China partially through its subsidiaries and partially through contractual arrangements with the VIE. Investors thus are not purchasing, and may never directly hold, 50% VIE Interests in the VIE. There are substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations, and rules relating to the agreements that establish the VIE structure for the majority of our and the VIE’s operations in China, including potential future actions by the PRC government, which could affect the enforceability of our contractual arrangements with the VIE and, consequently, significantly affect the financial condition and results of operations of Wetour Robotics. If the PRC government finds such agreements non-compliant with relevant PRC laws, regulations, and rules, or if these laws, regulations, and rules or the interpretation thereof change in the future, we could be subject to severe penalties or be forced to relinquish our interests in the VIE, which may materially and adversely affect our and the VIE’s operations and the value of your investment. |
| ● | We are a holding company, and may rely on dividends paid by our subsidiaries for our cash needs. Any limitation on the ability of our subsidiaries to make dividend payments to us, or any tax implications of making dividend payments to us, could limit our ability to pay for the holding company expenses or pay dividends to holders of our Ordinary Shares. |
| ● | We rely on contractual arrangements with the VIE and Individual Registered Shareholders for our and the VIE’s operations in China, which may not be as effective in providing operational control as direct ownership, and the VIE’s shareholders may fail to perform their obligations under the contractual arrangements. |
| ● | The shareholders of the VIE may have conflicts of interests with us, which may materially and adversely affect our and the VIE’s business. | |
| ● | The investors may face significant liquidity risks because of the VIE structure and being based in and having the majority of the Company’s operations in China. | |
| ● | If we exercise the option to acquire equity ownership and assets of the VIE, the ownership or asset transfer may subject us to certain limitations and substantial costs. |
| ● | Certain terms of the Contractual Arrangements may not be enforceable under PRC laws. |
| ● | Substantial uncertainties exist with respect to the interpretation and implementation of the Foreign Investment Law and how it may impact the viability of the current corporate structure, corporate governance and business operations of us and the VIE. | |
| ● | Our Contractual Arrangements may be subject to scrutiny of PRC tax authorities and additional tax may be imposed which may materially and adversely affect our and the VIE’s results of operation and value of your investment. |
See “Risk Factors— Risks Related to Corporate Structure” for more detailed disclosures on these risks and uncertainties
Risks Related to Doing Business in China
| ● | 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. |
| ● | Uncertainties and quick change in the interpretation and enforcement of Chinese laws and regulations with little advance notice could result in a material and negative impact our business operation, decrease the value of our ordinary shares and limit the legal protections available to us. |
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| ● | The approval and/or other requirements of the CSRC or other PRC governmental authorities may be required in connection with future financing activities under PRC rules, regulations or policies, and, if required, Wetour Robotics 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 our PRC Subsidiaries must conduct their business activities. If the Chinese government significantly regulates these entities’ business operations in the future and they are not able to substantially comply with such regulations, these entities’ business operations may be materially adversely affected and the value of Wetour Robotics’ Ordinary Shares may significantly decrease. |
| ● | Substantial uncertainties exist with respect to the interpretation and implementation of the newly enacted PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance, business operations and financial results. |
| ● | Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions. |
| ● | If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders. | |
| ● | Regulatory bodies of the United States may be limited in their ability to conduct investigations or inspections of our operations in China. |
| ● | The Holding Foreign Companies Accountable Act, or the HFCAA, and the related regulations are evolving quickly. Further implementations and interpretations of or amendments to the HFCAA or the related regulations, or a PCOAB’s determination of its lack of sufficient access to inspect our auditors, might pose regulatory risks to and impose restrictions on us because of our operations in mainland China. A potential consequence is that our Ordinary Shares may be delisted by the exchange. The delisting of our Ordinary Shares, or the threat of our Ordinary Shares being delisted, may materially and adversely affect the value of your investment. Additionally, the inability of the PCAOB to conduct full inspections of our auditors deprives our investors of the benefits of such inspections |
| ● | Enhanced scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue in the future. |
| ● | The required filing with China Securities Regulatory Commission (“CSRC”) in connection with our initial public offering under New Overseas Listing Rules published was completed on April 2, 2024, but we cannot assure you that we will not be subject to additional requirements from the CSRC or other PRC regulatory agencies for offerings, and we may face sanctions by the CSRC or other PRC regulatory agencies for failure to timely satisfy any such additional requirements. |
See “Risk Factors—Risks Related to Doing Business in China” for more detailed disclosures on these risks and uncertainties.
Risks Related to Our Ordinary Shares
| ● |
If we fail to meet applicable listing requirements, Nasdaq may delist our Ordinary Shares from trading, in which case the liquidity and market price of our Ordinary Shares could decline. | |
| ● | The market price of our Ordinary Shares may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the public offering price. | |
| ● | 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. |
Risks Related to Our Business and Industry
Demonstrations, early access programs, evaluations and pilot projects involving our products may not result in commercial orders, broad deployments or recurring revenue.
Our commercialization activities include product demonstrations, evaluations, pilot projects and an enterprise early access program through which qualified partners may receive hardware samples, access to software development kits and engineering or co-development support. Participation in these activities does not constitute a commitment to purchase our products, enter into a commercial agreement or deploy our platform on a broader basis. Accordingly, the number of demonstrations, early access participants, evaluations or pilot projects should not be viewed as indicative of future customer demand, commercial orders or revenue.
Prospective customers and partners may evaluate our technology for extended periods and may ultimately determine not to proceed with a commercial deployment. They may also modify or defer their purchasing plans, change their technical or operational requirements, reduce the scope of a proposed deployment, develop competing capabilities internally, select an alternative technology or discontinue a project altogether. The sales and adoption cycles for enterprise customers may be lengthy and unpredictable and may depend on factors outside our control, including technical validation, integration with existing hardware and systems, budget availability, internal procurement and approval processes, safety and regulatory assessments, and the customer’s ability to demonstrate operational or economic benefits.
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We may incur substantial engineering, customization, integration, testing and customer-support costs in connection with demonstrations, evaluations and pilot projects before a prospective customer makes a purchasing decision, and we may be unable to recover these costs. Even if a demonstration or pilot is successful, the performance achieved in a limited or controlled environment may not be reproducible on a commercially viable basis across different facilities, operating conditions, use cases or customer populations. In addition, transitioning from a pilot project to a full commercial deployment may require additional product development, validation, customization and capital investment, and may take longer or cost more than anticipated.
If demonstrations, early access programs, evaluations or pilot projects do not convert into commercial orders or recurring revenue, or if such conversion occurs more slowly or at a smaller scale than expected, our revenue may be difficult to forecast and our sales and development cycles may be prolonged. As a result, we may be unable to recover our investments, achieve anticipated economies of scale or generate revenue sufficient to support our operations, which could materially and adversely affect our business, financial condition, results of operations and growth prospects.
Delays or difficulties in developing and integrating the components of Orchestra could adversely affect our ability to commercialize our products and meet customer requirements.
Orchestra integrates wearable signal processing, visual perception technologies and software that coordinates commands for connected physical devices. The development of Orchestra as a commercially viable platform requires multiple complex and interdependent hardware and software components to operate together accurately, reliably and efficiently. Advances in any individual component may not result in corresponding improvements in the performance of the platform as a whole, and the integration process may identify technical limitations, incompatibilities or performance issues that were not apparent when individual components were developed or tested independently.
We may be unable to achieve or maintain the levels of accuracy, response time, power consumption, portability, reliability, functionality, ease of use and cost required by customers or necessary for commercial adoption. Modifications to hardware, machine-learning models, software or other components may require additional testing, validation, reconfiguration or redesign of other parts of the platform, which could increase our development costs, divert engineering and management resources, and delay product development, customer deployments and other strategic priorities. In addition, customer requirements may change during our development process, and we may be unable to adapt Orchestra to those requirements within expected timeframes or at commercially acceptable costs.
If we experience significant development or integration challenges, or if Orchestra does not perform as expected in real-world environments, we may be unable to deliver sufficiently reliable, functional and commercially viable products on schedule or at all. As a result, customers and strategic partners may delay or cancel deployments, decline to adopt our products, or select competing technologies. Any of these developments could harm our reputation and customer relationships, limit the commercial adoption of Orchestra, cause our development expenditures to fail to generate the anticipated returns, and materially and adversely affect our business, financial condition and results of operations.
We have a limited operating history in a competitive and rapidly evolving industry; and our transition toward Physical AI products may make it difficult to evaluate our prospects and may expose us to significant execution risks.
We commenced our operations in August 2019 through Youba Tech and we have a limited operating history in our industry, which is competitive and rapidly evolving. We are also transitioning our strategic focus from our legacy operations toward the development and commercialization of Physical AI products, including Physical AI infrastructure focused on wearable robotics and our Orchestra platform. This transition requires us to develop technologies, products, operational capabilities, customer relationships, sales channels and delivery and support processes that differ substantially from those associated with our historical operations. We have limited experience developing and commercializing these products, and there can be no assurance that we will be able to execute this transition successfully or establish a commercially viable AI business.
Our limited operating history and evolving business model may make it difficult to evaluate our current business and future prospects. We may have limited insight into technological, competitive and market trends that could affect our business, and we may make errors in predicting or responding to changes in industry conditions, customer requirements and demand for Physical AI products. The markets for AI and wearable robotics technologies are developing rapidly and are subject to significant uncertainty, and the applications we pursue may not develop into commercially attractive markets. In addition, our Physical AI products may require further development, testing, validation, integration or customization before they can achieve meaningful customer adoption.
14
For the years ended June 30, 2024, 2025 and 2026, our revenues were RMB45,976,421, RMB35,593,055 and RMB13,336,158 ($1,965,506), respectively. Our historical results primarily reflect our legacy operations and may not be indicative of the future performance of our AI business or our company as a whole. Moreover, the decline in our revenues during these periods may continue, and revenue from our Physical AI products may not develop sufficiently or quickly enough to offset any further decline in revenue from our legacy operations. We may fail to generate meaningful revenue from our Physical AI products, achieve or maintain growth, or attain profitability. If the markets for our products and services do not develop as expected, or if we fail to anticipate and address the evolving needs of our customers, our business, financial condition and results of operations could be materially and adversely affected.
Our transition toward Physical AI products may also increase the complexity of our operations and place significant demands on our management and our operational, technical, financial and human resources. We expect to incur expenditures for research and development, engineering, personnel, business development, customer integration and technical support before the timing and amount of any related revenue can be determined. At the same time, managing this transition may divert management attention, personnel, capital and other resources from our legacy operations, which could adversely affect those operations before our AI business generates sufficient revenue to offset any resulting decline.
Our existing and planned personnel, systems, procedures and internal controls may not be adequate to support the development and commercialization of our Physical AI products or any future expansion of our business. We may also be unable to recruit and retain personnel with the technical and commercial expertise required for our new business, coordinate development across multiple technologies, or allocate resources effectively between our legacy operations and AI initiatives. If we are unable to manage our business transition and any future growth effectively, we may incur substantial expenditures that we are unable to recover, fail to realize the anticipated benefits of our investments, and experience increased losses or cash outflows, any of which could materially and adversely affect our business, financial condition, results of operations and prospects. We may have limited insight into trends that may develop and affect our business, and we may make errors in predicting and reacting to industry trends and evolving needs of our customers.
We incurred net losses for the years ended June 30, 2024, 2025 and 2026. We may not be able to generate sufficient operating cash flows and working capital. Failure to manage our liquidity and cash flows may materially and adversely affect our financial condition and results of operations. As a result, we may need additional capital, and financing may not be available on terms acceptable to us, or at all.
We recorded net loss of RMB4,055,592, RMB12,483,047 and RMB31,107,853 ($4,584,731) for the years ended June 30, 2024, 2025 and 2026, respectively. We have generated positive cash flows from operating activities of RMB55,031, negative cash flows from operating activities RMB58,731,377, and positive cash flows from operating activities of RMB4,008,088 for the years ended June 30, 2024, 2025, and 2026, respectively. We can offer no assurance that we will operate profitably or that we will generate positive cash flows in the next twelve months, given our substantial expenses in relation to our revenue at this stage of our Company. Inability to collect our accounts receivable in a timely and sufficient manner, or the inability to offset our expenses with adequate revenue, may adversely affect our liquidity, financial condition and results of operations. Although we believe that our cash on hand and anticipated cash flows from operating activities will be sufficient to meet our anticipated working capital requirements and capital expenditures in the ordinary course of business for the next 12 months, we cannot assure you this will be the case.
If and when we are unable to generate sufficient cash flows from operations to meet our working capital requirements and various operating needs, we may need to raise additional funds for our operations and such funds may not be available on commercially acceptable terms, if at all. If we are unable to raise funds on acceptable terms, we may not be able to execute our business plan, take advantage of future opportunities, or respond to competitive pressures or unanticipated requirements. This may seriously harm our business, financial condition and results of operations. If we are unable to achieve or maintain profitability, the market price of our shares may significantly decrease. In the event that the Company requires additional funding to finance its operations, the Company’s major shareholders have indicated their intent and ability to provide such financial support, however, there is no assurance such funding will be available when the Company needs it in the future.
15
The growth of our business and our transition toward Physical AI products depends on our ability to accurately anticipate market trends and customer demand and to develop and commercialize new products and services that achieve market acceptance.
The growth of our business depends, in part, on our ability to anticipate and respond to rapidly evolving market trends, technological developments and customer preferences. In our legacy mobility and packaged tour services, we must continue to identify and respond to changes in consumer travel preferences and demand. As we transition toward the development and commercialization of Physical AI products, including Physical AI infrastructure focused on wearable robotics and our Orchestra platform, we must also accurately assess potential applications, customer requirements, technological developments and the timing and scale of demand in markets in which we have limited operating experience.
The markets for Physical AI products and wearable robotics are rapidly evolving and subject to significant uncertainty. It may be difficult for us to determine which technologies, product features, use cases or applications will gain broad commercial acceptance. Customer requirements may change during our development process, and demand for our proposed products may develop more slowly than anticipated or fail to develop at all. We may incorrectly predict market opportunities, prioritize applications that do not develop into commercially attractive markets or invest in technologies or product features that customers do not value or are unwilling to purchase at prices sufficient for us to recover our costs. We may also be unable to respond to changes in market demand, technological developments or competitive products in a timely and cost-effective manner.
The development, introduction and commercialization of new or improved products and services involve substantial costs and risks. We may incur significant expenditures on research and development, engineering, product design, testing, validation, customer integration, sales and marketing, and technical support before we can determine whether a product will achieve commercial acceptance or generate meaningful revenue. Our development efforts may take longer or cost more than expected, and our new products may not meet customer requirements relating to functionality, accuracy, reliability, response time, portability, power consumption, interoperability, safety, ease of use or cost. In addition, products that perform successfully in demonstrations, evaluations or pilot projects may not be capable of deployment on a broader scale or may require additional development, customization and support that makes commercialization uneconomical.
Even if we successfully develop and introduce new or improved products and services, they may not generate sufficient customer interest, commercial orders or recurring revenue to become profitable or recover their development, commercialization and support costs. Unsuccessful product introductions could divert management attention and resources from other business priorities, result in unrecovered expenditures, delay our transition toward Physical AI products, harm our customer relationships and reputation, and adversely affect our operating results.
If we fail to anticipate or respond effectively to changing consumer preferences, customer requirements, technological developments or competitive conditions, or if our new or improved products and services do not achieve market acceptance on commercially viable terms, we may be unable to generate meaningful revenue from our Physical AI products or offset declines in our legacy operations. As a result, our revenue may decline, we may incur increased losses and cash outflows, and our business, financial condition, results of operations and prospects could be materially and adversely affected.
Our processing of physiological, visual and interaction data may subject us to complex and evolving privacy, cybersecurity and data protection requirements, and any actual or perceived failure to comply with such requirements or safeguard such data could adversely affect our business and customer trust.
Orchestra remains under development, and we are pursuing its initial commercial deployments. Our platform is designed to process surface electromyography signals, hand movements, images and contextual information relating to users and their surroundings. Our contemplated warehouse deployments are also expected to generate synchronized visual, neuromuscular, workflow and equipment-interaction data for use in training, testing and evaluating robotic systems. Depending on the nature of the information, the purposes for which it is processed and the jurisdictions in which we operate, such information may constitute personal information, sensitive personal information, biometric information or another category of protected information. Accordingly, our collection, processing, use, retention, access, disclosure, transfer and security of such information may be subject to privacy, cybersecurity, data protection and biometric privacy laws and regulations, as well as contractual obligations and industry standards.
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To the extent information generated through our platform is retained or used for model development, product improvement or the training, testing or evaluation of robotic systems, we may be required to obtain appropriate permissions and contractual rights and implement limitations relating to access, use, retention, disclosure and deletion. Authorization from a customer may not be sufficient to satisfy all requirements applicable to employees, contractors, visitors or other affected individuals. Uncertainty regarding the application of these requirements, or objections from workers, labor representatives, customers or other stakeholders, could restrict the information available to us, require changes to our products or data practices, and delay or prevent customer deployments.
Although Orchestra is designed to process certain information locally on an edge computing device, local processing does not eliminate privacy or cybersecurity risks. Edge devices, locally stored information, diagnostic records, software updates and connections to customer or third-party systems may be vulnerable to unauthorized access, cyberattacks, malicious code, employee or contractor misconduct, configuration errors, theft, loss or inadvertent disclosure. Information that is accessed, retained or transferred for customer support, testing, troubleshooting, product development or model training may create additional exposure. Our actual practices and product functionality must remain consistent with applicable requirements, contractual commitments and our representations regarding local processing, data retention, data access and permitted uses. Any actual or alleged inconsistency between our representations and our practices or product functionality could give rise to customer disputes, regulatory scrutiny or claims that our practices are unfair, deceptive or otherwise unlawful.
We may also have limited control over the manner in which customers, implementation partners, service providers and other third parties configure connected systems, operate our products or access and use information generated through our platform. A privacy or cybersecurity incident involving a third party, or a third party’s failure to obtain required permissions or comply with applicable restrictions, could nevertheless be attributed to us, expose us to contractual or legal liability, or damage confidence in Orchestra. Our contractual arrangements may not adequately allocate these responsibilities or protect us from the acts or omissions of such third parties.
Privacy, cybersecurity and data protection requirements are evolving rapidly, may differ across jurisdictions and may be subject to uncertain or inconsistent interpretations. As we add functionality, enter new markets or expand the scale and geographic scope of deployments, we may become subject to additional or conflicting requirements relating to notice, consent, data minimization, purpose limitations, individual rights, retention and deletion, security safeguards, data localization, cross-border transfers and incident reporting. Compliance may require us to modify our product architecture, limit certain functionality, alter our data practices, renegotiate contracts or implement additional technical and organizational safeguards. These measures could require substantial financial, technical and management resources, increase our development and operating costs, delay customer deployments and restrict our ability to develop or commercialize certain applications. Safeguards and compliance procedures developed during demonstrations or limited testing may also prove inadequate as our products are deployed more broadly or in more complex operating environments.
Any actual or perceived failure by us, our customers or relevant third parties to protect information or comply with applicable legal, regulatory or contractual obligations could result in governmental investigations or enforcement actions, litigation, contractual claims, fines, penalties, indemnification obligations, restrictions on processing, mandatory notifications, orders requiring changes to our products or practices, and substantial remediation costs. In addition, cybersecurity vulnerabilities could compromise the integrity or availability of control signals or software operating connected physical devices, potentially resulting in operational disruptions, unintended device actions, personal injury or property damage. Investigating an incident, remediating vulnerabilities and restoring customer and partner confidence could require substantial resources, interrupt or delay deployments and divert management and engineering attention from product development and commercialization. Any of these consequences could materially and adversely affect our business, financial condition, results of operations and prospects.
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Hardware failures, component shortages and difficulties supporting initial deployments could delay the commercialization of Orchestra and increase our costs and potential liabilities.
The development and contemplated commercial deployment of Orchestra depend on reliable access to wearable sensors, edge computing processors, cameras, batteries and other electronic components, whether supplied by us or incorporated into compatible devices supplied by customers, implementation partners or other third parties. We may rely on a limited number of suppliers for certain components, and suitable alternatives may not be available on commercially acceptable terms or within required timeframes. Component shortages, supplier delays, manufacturing defects, product discontinuations, changes in specifications, quality-control issues, logistics disruptions or increases in component prices could disrupt our development and deployment schedules, increase our costs and prevent us from satisfying customer requirements or contractual milestones.
If a component becomes unavailable or fails to meet our performance requirements, we may need to qualify an alternative component or supplier. Component substitutions or design changes may require modifications to hardware, firmware, software, interfaces or machine-learning models, as well as recalibration and additional testing and validation. Even components that appear functionally equivalent may differ in performance, reliability, power consumption, thermal characteristics or compatibility with other elements of our platform. As a result, component changes could delay product development or customer deployments, divert engineering resources from other priorities and increase the risk that a revised configuration will not perform as intended.
Our demonstrations, pilot programs and internal testing may not establish that each hardware configuration will perform accurately, reliably and safely during prolonged use in customer environments. Wearable devices must maintain signal quality, sensor positioning and reliable physical contact during repeated movement and extended operation, and their performance may vary based on individual physiology, fit, wearing position, perspiration, movement and other operating or environmental conditions. Battery life, charging performance, heat generation, durability, material quality and skin compatibility may also affect usability, performance and safety. Certain defects, degradation or integration problems may not become apparent during controlled testing and may emerge only after extended use or deployment across a larger and more diverse population.
Initial warehouse deployments may require complex coordination among Orchestra, customer equipment and information systems, and hardware and services supplied by implementation partners and other third parties. Hardware failures, software or interface incompatibilities, improper configuration or installation, and inadequate maintenance or technical support could delay deployment, customer acceptance or the achievement of contractual milestones. Such delays could defer payments, increase deployment and support costs, or result in the reduction, suspension or termination of projects. Even when the affected hardware or service is supplied, installed or maintained by a third party, customers may attribute the failure to Orchestra or expect us to identify and resolve the issue. We may have limited ability to control the quality, availability or performance of third-party hardware and services, and our contractual protections or recourse against suppliers and partners may be insufficient to compensate us for resulting losses.
If hardware supplied by us or used with Orchestra fails to meet applicable performance, quality or safety requirements, we may incur substantial costs associated with additional testing, field service, repair, replacement, warranty claims, product redesigns, software or firmware updates, deployment suspensions or product recalls. We may also become subject to customer disputes, order cancellations, indemnification obligations, product liability claims, litigation and adverse publicity. Our warranties, contractual limitations of liability, supplier indemnification rights and insurance coverage may be unavailable, unenforceable or insufficient to protect us against these costs and liabilities.
As the number and scale of our deployments increase, we may need to devote substantial additional resources to procurement, supplier qualification and oversight, inventory management, quality assurance, product tracking, spare-parts management, field service, warranty administration and technical support. Our existing personnel, systems and processes may not be sufficient to support commercial-scale deployments. Failure to establish and maintain effective supply-chain, quality-control and customer-support capabilities could result in recurring product failures, longer resolution times, increased costs and diminished customer confidence. Any significant hardware failure, supply interruption or inability to support deployments effectively could delay or prevent the commercialization of Orchestra and materially and adversely affect our business, financial condition, results of operations and prospects.
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The successful operation of our legacy packaged tour services business depends substantially upon the cooperation of third parties that are not under our control.
Although we have our proprietary mobile apps and websites for users to access our products and services, our user acquisition relies heavily on our mini programs built on platforms provided by WeChat and other third-party partners. If we lose our cooperation with third-party business partners owning the platforms where our mini programs are operated, for example, by unintentionally breaching the rules set by these third parties that lead to the suspension of our mini programs, our users may no longer access our products and services via the mini programs. Such events could damage our reputation significantly disrupt our operations, and subject us to liability, which could adversely affect our business, financial condition, and operating results.
We rely on search engines, social networking sites and online streaming services to attract a meaningful portion of our users, and if those search engines, social networking sites and online streaming services change their listings or policies regarding advertising, or increase their pricing or suffer problems, it may limit our ability to attract new users.
Many users locate our platform through internet search engines, such as Baidu, and advertisements on social networking sites and online streaming services, such as WeChat, Douyin and Xiaohongshu. If we are listed less prominently or fail to appear in search results for any reason, visits to our mini programs on WeChat and other third-party partners could decline significantly, and we may not be able to replace this traffic. Search engines revise their algorithms from time to time in an attempt to optimize their search results. If the search engines on which we rely for algorithmic listings modify their algorithms, we may appear less prominently or not at all in search results, which could result in reduced traffic to our website that we may not be able to replace. Additionally, if the costs of search engine marketing services, such as Baidu, increase, we may incur additional marketing expenses, we may be required to allocate a larger portion of our marketing spend to this channel or we may be forced to attempt to replace it with another channel (which may not be available at reasonable prices, if at all), and our business, financial condition and results of operations could be adversely affected.
Furthermore, competitors may in the future bid on our brand names and other search terms that we use to drive traffic to our website. Such actions could increase our marketing costs and result in decreased traffic to our website. In addition, search engines, social networking sites and video streaming services may change their advertising policies from time to time. If any change to these policies delays or prevents us from advertising through these channels, it could result in reduced traffic to our website and sales of our solutions. Additionally, new search engines, social networking sites, video streaming services and other popular digital engagement platforms may develop in specific jurisdictions or more broadly that reduce traffic on existing search engines, social networking sites and video streaming services. If we are not able to achieve awareness through advertising or otherwise, we may not achieve significant traffic to our website.
Because we rely upon a third party to perform the payment processing for our customers, the failure or inability of the third party to provide these services could impair our ability to operate.
Because we do not possess an internal payment method given the difficulties of obtaining and maintaining a payment license, all payments by our clients are processed by third party payment service providers such as UnionPay, Alipay and WeChat Pay. These payment service providers are used by most e-commerce platforms for their convenience, reliability and cost-effectiveness. However, the payment processing business is highly regulated, and it is subject to a number of risks that could materially and adversely affect their abilities to provide payment processing services to us, including:
| ● | increased regulatory focus and the requirement that it comply with numerous complex and evolving laws, rules and regulations; |
| ● | increases in the costs to the third party, including fees charged by banks to process funds through the third parties, which could result in increased costs to us and to our participants; |
| ● | dissatisfaction with the third parties’ services; |
| ● | a decline in the use of the third parties’ services generally which could result in increases in costs to users such as us and our participants; |
| ● | the ability of the third parties to maintain adequate security procedures to prevent the hacking or other unauthorized access to account and other information provided by us and the participants who use the system; |
| ● | system failures or failure to effectively scale the system to handle large and growing transaction volumes; |
| ● | the failure or inability of the third parties to manage funds accurately or the loss of funds by the third parties, whether due to employee fraud, security breaches, technical errors or otherwise; and |
| ● | the failure or inability of these third parties to adequately manage business and regulatory risks. |
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We rely on the convenience and ease of use that third party’s payment methods provide to our users. If the quality, utility, convenience or attractiveness of these payment services declines for any reason, the attractiveness of our services could be materially impaired. If we need to migrate to other third-party payment services for any reason, the transition could require considerable time and management resources, and the third-party payment services may not be as effective, efficient or well-received by our clients. Further, our clients may be reluctant to use a different payment system.
We may not be able to successfully implement our growth strategy on a timely basis or at all.
Our future success depends, in large part, on our ability to implement our growth strategy, including our expansion in and outside China. Our ability to implement this growth strategy depends, among other things, on our ability to:
| ● | increase our brand recognition by effectively implementing our marketing strategy and advertising initiatives; |
| ● | create and maintain brand loyalty; |
| ● | develop new products and services that appeal to consumers; |
| ● | identify and successfully enter and market our products and services in new geographic areas and market segments. |
We may not be able to successfully implement our growth strategy and may need to change our strategy from time to time. If we fail to implement our growth strategy or if we invest resources in a growth strategy that ultimately proves unsuccessful, our business, financial condition and results of operations may be materially adversely affected.
Any damage to our reputation or our brands may materially adversely affect our business, financial condition and results of operations.
In our legacy mobility and packaged tour services business, we have developed long business relationships with our customers, which primarily consist of enterprises, schools, industrial parks, families and individuals, by maintaining high quality and quick service response. Our brand “微巴士” and “Webus” have gained good reputation among the customers and suppliers of our legacy business, including fleets of buses, individual drivers, local tour agencies and online travel agencies. Our ability to strengthen our brand recognition and maintain our market position among the traditional and online travel agency platforms is critical for us to build and maintain relationships with the customers and suppliers of our legacy business. We have solidified our market position in our legacy business over the past years. In order to strengthen our brand recognition and maintain market position in our legacy business, we may need to increase our investments in marketing activities, product and service development, and user and supplier engagement, which may affect our operating margin. In contrast, our Physical AI business, including our Physical AI infrastructure focused on wearable robotics and our Orchestra platform, is at an early stage, and we have not yet established significant brand recognition or a meaningful reputation among potential customers, developers, integration partners or suppliers in that market. The reputation of our “微巴士” and “Webus” brands may not translate into recognition or acceptance of our Physical AI products, and we may need to make substantial investments to build a separate brand and reputation for our Physical AI business.
In our legacy business, our market position and our ability to attract new users and continue to retain and engage our existing users also depends on our ability to continue to provide users with superior experiences. We have been consistently enhancing our technology, product, service, and content offerings, and user interfaces to offer a personalized, convenient, enjoyable, and inspirational user experience to the users of our legacy business. We have also been continuously catering to these users’ diverse needs and evolving preferences. In our Physical AI business, our ability to establish our reputation will depend on, among other things, the performance, safety and reliability of our products and platform, the success of early deployments and integrations, and our ability to support customers and developers. Product defects, safety incidents, delays in development or unsuccessful deployments of our Physical AI products could harm our reputation in both businesses. Any damage to our reputation or our brands may materially adversely affect our business, financial condition and results of operations.
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We operate in a highly competitive industry and may lose market share or experience margin erosion if we are unable to compete effectively.
In our legacy mobility and packaged tour services business, we compete on the basis of service quality and performance, brand awareness and loyalty, offering variety, reputation, price and promotional efforts. We compete with a significant number of companies of varying sizes, including divisions or subsidiaries of larger companies who may have greater financial resources and larger customer bases than we have. As a result, these competitors may be able to identify and adapt to changes in consumer preferences more quickly than us due to their resources and scale. They may also be more successful in marketing and selling their products, better able to increase prices to reflect cost pressures and better able to increase their promotional activity, which may impact us and the entire industry. In our Physical AI business, we expect to compete with established technology companies, robotics and wearable device developers, AI platform providers and well-funded start-ups, many of which have substantially greater technical, financial, research and development and commercial resources, more established customer and developer relationships, and longer operating histories in these markets than we do. If these competitive pressures cause us to lose market share or experience margin erosion in our legacy business, or prevent us from gaining market acceptance for our Physical AI products, our business, financial conditions and results of operations may be materially adversely affected.
Our operations in China are concentrated in one geographic area, which increases our exposure to many of the risks enumerated herein.
As of June 30, 2026, our revenues from operations in China were primarily derived from operations of the VIE and Webus Travel Agency in Zhejiang Province. Operating in a concentrated area increases the potential impact that many of the risks stated herein may have upon our ability to perform. For example, we have greater exposure to regulatory actions impacting Zhejiang Province, natural disasters in the geographic area, competition for services and suppliers available in the area. Due to the concentrated nature of our operations in the Zhejiang Province, we could experience any of the same conditions at the same time, resulting in a relatively greater impact on our results of operations than they might have on other companies that have a more diversified operation geographically. Any delays or interruptions of our services could have a material adverse effect on our financial condition and results of operations.
We face risks associated with managing operations in China, any of which could decrease our sales or earnings and could significantly limit or completely hinder our ability to offer our Ordinary Shares to investors and cause the value of such securities to significantly decline or be worthless.
A significant portion of our operations currently are conducted in China. There are a number of risks inherent in doing business in China, including the following: unfavorable political or economic factors; fluctuations in foreign currency exchange rates; potentially adverse tax consequences; unexpected legal or regulatory changes; lack of sufficient protection for intellectual property rights; difficulties in recruiting and retaining personnel, and managing international operations; and less developed infrastructure. Furthermore, changes in the political, economic and social conditions in China from which these risks are derived could make it more difficult to provide products and services to our customers. Our inability to manage these risks successfully could adversely affect our business and manufacturing operations and could significantly limit or completely hinder our ability to offer our Ordinary Shares to investors and cause the value of such securities to significantly decline or be worthless.
Our operating results may fluctuate significantly and may not fully reflect the underlying performance of our business.
Our operating results, including the levels of our revenues, expenses, net (loss)/income and other key metrics, may vary significantly in the future due to a variety of factors, some of which are outside of our control, and period-to-period comparisons of our operating results may not be meaningful. Accordingly, the results for any one period are not necessarily an indication of future performance. Fluctuations in results may adversely affect the market price of our Ordinary Shares. Factors that may cause fluctuations in our financial results include:
| ● | our ability to attract new customers and retain existing customers; |
| ● | changes in our mix of products and introduction of new products; |
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| ● | the amount and timing of operating expenses related to the maintenance and expansion of our business, operations and infrastructure; |
| ● | the impact of competitors; |
| ● | increases in our costs and expenses that we may incur to grow and expand our operations and to remain competitive; |
| ● | changes in the legal or regulatory environment or proceedings, including enforcement by government regulators, fines, orders or consent decrees; |
| ● | the timing of expenses related to the development or acquisition of technologies or businesses; and |
| ● | the additional costs related to being a public company. |
Despite our marketing efforts, we may not be able to promote and maintain our brand in an effective and cost-efficient way and our business and results of operations may be harmed accordingly.
We believe that developing and maintaining awareness of our brand effectively is critical to attracting new and retaining existing customers. Successful promotion of our brand and our ability to attract quality customers depends largely on the effectiveness of our marketing efforts and the success of the channels we use to promote our products.
Increases in labor costs in the PRC may adversely affect the business and results of operations of us and the VIE.
The currently effective PRC Labor Contract Law was first adopted on June 29, 2007 and later amended on December 28, 2012. The PRC Labor Contract Law has reinforced the protection of employees who, under the PRC Labor Contract Law, have the right, among others, to have written employment contracts, to enter into employment contracts with no fixed term under certain circumstances, to receive overtime wages and to terminate or alter terms in labor contracts. Furthermore, the PRC Labor Contract Law sets forth additional restrictions and increases the costs involved with dismissing employees. To the extent that we and the VIE need to significantly reduce our and the VIE’s workforce, the PRC Labor Contract Law could adversely affect our and the VIE’s ability to do so in a timely and cost-effective manner, and our and the VIE’s results of operations could be adversely affected. In addition, for certain employees whose employment contracts include non-competition terms, the PRC Labor Contract Law requires us to pay monthly compensation after such employment is terminated, which will increase our and the VIE’s operating expenses.
We expect that our and the VIE’s labor costs, including wages and employee benefits, will continue to increase. Unless we and the VIE are able to pass on these increased labor costs to our and the VIE’s customers by increasing the prices of our and the VIE’s products and services, the financial condition and results of operations of us and the VIE would be materially and adversely affected.
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The price of oil and natural gas has historically been volatile. The ongoing Russian-Ukrainian War has increased the oil and natural gas prices substantially. If the price continues to increase, our drivers and bus fleet providers may be forced to adjust their prices upward. Our projections, budgets, and revenues would be adversely affected, potentially forcing us to make changes in our operations.
Oil and natural gas prices historically have been volatile and likely will continue to be volatile in the future, especially given current world geopolitical conditions and ongoing Russian-Ukrainian war and the recent conflicts in the Middle East. Cash flows from operations are highly dependent on the prices that we receive from our drivers and bus fleet providers. This price volatility could affect the amount of our cash flows available for capital expenditures and our ability to borrow money or raise additional capital. The volatility of the energy markets makes it difficult to predict future oil and natural gas price movements with any certainty. Increases in oil and natural gas prices affect our costs and pricing to customers. Unless we are able to pass on these increased labor costs to our and the VIE’s customers by increasing the prices of our and the VIE’s products and services, the financial condition and results of operations of us and the VIE would be materially and adversely affected.
We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position.
We regard our trademarks, trade names, know-how, proprietary technologies and similar intellectual property as critical to our success, and we rely on a combination of intellectual property laws and contractual arrangements, including confidentiality and non-compete agreements with our employees and others to protect our proprietary rights. See “Our Business—Intellectual Property” and “Regulation—Regulation on Intellectual Property Rights.” Thus, we cannot assure you that any of our intellectual property rights would not be challenged, invalidated, circumvented or misappropriated, or such intellectual property will be sufficient to provide us with competitive advantages.
It is often difficult to register, maintain and enforce intellectual property rights in China. Statutory laws and regulations are subject to judicial interpretation and enforcement and may not be applied consistently due to the lack of clear guidance on statutory interpretation. Confidentiality, invention assignment and non-compete agreements may be breached by counterparties, and there may not be adequate remedies available to us for any such breach. Accordingly, we may not be able to effectively protect our intellectual property rights or to enforce our contractual rights in China. Preventing any unauthorized use of our intellectual property is difficult and costly and the steps we take may be inadequate to prevent the misappropriation of our intellectual property. In the event that we resort to litigation to enforce our intellectual property rights, such litigation could result in substantial costs and a diversion of our managerial and financial resources. We can provide no assurance that we will prevail in such litigation. In addition, our trade secrets may be leaked or otherwise become available to, or be independently discovered by, our competitors. To the extent that our employees or consultants use intellectual property owned by others in their work for us, disputes may arise as to the rights in related know-how and inventions. Any failure in protecting or enforcing our intellectual property rights could have a material adverse effect on our business, financial condition and results of operations.
We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.
We cannot be certain that our operations or any aspects of our business do not or will not infringe upon or otherwise violate trademarks, patents, copyrights, know-how or other intellectual property rights held by third parties. We may be from time to time in the future be subject to legal proceedings and claims relating to the intellectual property rights of others. In addition, there may be third-party trademarks, patents, copyrights, know-how or other intellectual property rights that are infringed by our products, services or other aspects of our business without our awareness. Holders of such intellectual property rights may seek to enforce such intellectual property rights against us in China, the United States or other jurisdictions. If any third-party infringement claims are brought against us, we may be forced to divert management’s time and other resources from our business and operations to defend against these claims, regardless of their merits.
Additionally, the application and interpretation of China’s intellectual property right laws and the procedures and standards for granting trademarks, patents, copyrights, know-how or other intellectual property rights in China are still evolving and are uncertain, and we cannot assure you that PRC courts or regulatory authorities would agree with our analysis. If we were found to have violated the intellectual property rights of others, we may be subject to liability for our infringement activities or may be prohibited from using such intellectual property, and we may incur licensing fees or be forced to develop alternatives of our own. As a result, our business and results of operations may be materially and adversely affected.
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From time to time we may evaluate and potentially consummate strategic investments or acquisitions, which could require significant management attention, disrupt our business and adversely affect our financial results.
We may evaluate and consider strategic investments, combinations, acquisitions or alliances to further increase the value of our marketplace and better serve our customers. These transactions could be material to our financial condition and results of operations if consummated. If we are able to identify an appropriate business opportunity, we may not be able to successfully consummate the transaction and, even if we do consummate such a transaction, we may be unable to obtain the benefits or avoid the difficulties and risks of such transaction.
Strategic investments or acquisitions will involve risks commonly encountered in business relationships, including:
| ● | difficulties in assimilating and integrating the operations, personnel, systems, data, technologies, products and services of the acquired business; |
| ● | inability of the acquired technologies, products or businesses to achieve expected levels of revenue, profitability, productivity or other benefits; |
| ● | difficulties in retaining, training, motivating and integrating key personnel; |
| ● | diversion of management’s time and resources from our normal daily operations; |
| ● | difficulties in successfully incorporating licensed or acquired technology and rights into our product offerings; |
| ● | difficulties in maintaining uniform standards, controls, procedures and policies within the combined organizations; |
| ● | difficulties in retaining relationships with customers, employees and suppliers of the acquired business; |
| ● | risks of entering markets in which we have limited or no prior experience; |
| ● | regulatory risks, including remaining in good standing with existing regulatory bodies or receiving any necessary pre-closing or post-closing approvals, as well as being subject to new regulators with oversight over an acquired business; |
| ● | assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights or increase our risk for liability; |
| ● | failure to successfully further develop the acquired technology; |
| ● | liability for activities of the acquired business before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; |
| ● | potential disruptions to our ongoing businesses; and |
| ● | unexpected costs and unknown risks and liabilities associated with strategic investments or acquisitions. |
We may not make any investments or acquisitions, or any future investments or acquisitions may not be successful, may not benefit our business strategy, may not generate sufficient revenues to offset the associated acquisition costs or may not otherwise result in the intended benefits. In addition, we cannot assure you that any future investment in or acquisition of new businesses or technology will lead to the successful development of new or enhanced products or that any new or enhanced products, if developed, will achieve market acceptance or prove to be profitable.
Our business depends on the continued efforts of our senior management. If one or more of our key executives were unable or unwilling to continue in their present positions, our business may be severely disrupted.
Our business operations depend on the continued services of our senior management, particularly the executive officers named in this report. While we have the ability to provide different incentives to our management, we cannot assure you that we can continue to retain their services. If one or more of our key executives were unable or unwilling to continue in their present positions, we may not be able to replace them easily or at all, our future growth may be constrained, our business may be severely disrupted and our financial condition and results of operations may be materially and adversely affected, and we may incur additional expenses to recruit, train and retain qualified personnel. In addition, although we have entered into confidentiality and non-competition agreements with our management, there is no assurance that any member of our management team will not join our competitors or form a competing business. If any dispute arises between our current or former officers and us, we may have to incur substantial costs and expenses in order to enforce such agreements in China or we may be unable to enforce them at all.
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The relative lack of public company experience of our management team may put us at a competitive disadvantage.
Our management team lacks public company experience, which could impair our ability to comply with legal and regulatory requirements such as those imposed by the Sarbanes-Oxley Act of 2002, (“Sarbanes-Oxley”). Our senior management does not have much experience managing a publicly traded company. Such responsibilities include complying with federal securities laws and making required disclosures on a timely basis. Our senior management may be unable to implement programs and policies in an effective and timely manner or that adequately respond to the increased legal, regulatory and reporting requirements associated with being a publicly traded company. Our failure to comply with all applicable requirements could lead to the imposition of fines and penalties, distract our management from attending to the management and growth of our business, result in a loss of investor confidence in our financial reports and have an adverse effect on our business and share price.
We lease our facilities from third parties and there is no assurance that we will be able to renew our leased facilities on favorable terms, or at all.
We currently lease the properties we use to operate our business. Our principal executive offices, administrative offices, and development facilities are located at 3300 N Interstate 35, Ste 700, Room 7003, Austin, TX 78705, United States, and the lease terms on these premises expire on January 27, 2027. In addition, we maintain a customer service center and a regional sales and marketing office for the Asia-Pacific region in Hangzhou comprising office premises of approximately 127.81 m2. The lease terms on these premises expire on December 15, 2027. If we are unable to renew the leases on favorable terms, or at all, we would be required to find new leased space, which space may be more expensive to lease than our current facilities. Also, the lease may be terminated early due to unexpected change of land usage by the local government.
Competition for employees is intense, and we may not be able to attract and retain the qualified and skilled employees needed to support our business.
We believe our success depends on the efforts and talent of our employees, including engineering, risk management, information technology, financial and marketing personnel. Our future success depends on our continued ability to attract, develop, motivate and retain qualified and skilled employees. Competition for highly skilled marketing, engineering, information technology, risk management and financial personnel is extremely intense. We may not be able to hire and retain these personnel at compensation levels consistent with our existing compensation and salary structure. Some of the companies with which we compete for experienced employees have greater resources than we have and may be able to offer more attractive terms of employment.
In addition, we invest significant time and expenses in training our employees, which increases their value to competitors who may seek to recruit them. If we fail to retain our employees, we could incur significant expenses in hiring and training their replacements, and the quality of our products could diminish, resulting in a material adverse effect to our business.
If we cannot maintain our corporate culture as we grow, we could lose the innovation, collaboration and focus that contribute to our business.
We believe that a critical component of our success is our corporate culture, which we believe fosters innovation, encourages teamwork and cultivates creativity. As we develop the infrastructure of a public company and continue to grow, we may find it difficult to maintain these valuable aspects of our corporate culture. Any failure to preserve our culture could negatively impact our future success, including our ability to attract and retain employees, encourage innovation and teamwork and effectively focus on and pursue our corporate objectives.
If we fail to implement and maintain an effective system of internal control, we may be unable to accurately report our operating results, meet our reporting obligations or prevent fraud.
Prior to our initial public offering, we were a private company with limited accounting personnel and other resources with which to address our internal controls and procedures.
Upon completion of our IPO on February 27, 2025, we became a public company in the United States subject to Section 404 of the Sarbanes-Oxley Act of 2002 which requires that we include a report of management on our internal control over financial reporting in our annual report on Form 20-F beginning with our annual report for the fiscal year ending June 30, 2025. In addition, once we cease to be an “emerging growth company” as such term is defined under the JOBS Act, and if the value of our non-affiliated float of our Ordinary Shares exceeds certain amounts, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, our reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation.
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In the course of preparing and auditing our consolidated financial statements for the years ended June 30, 2024, 2025 and 2026, we and our independent registered public accounting firms identified two material weaknesses in our internal control over financial reporting as of June 30, 2024, 2025 and 2026,. According to the U.S. Public Company Accounting Oversight Board, a “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis. The material weaknesses identified relate to: (i) our lack of sufficient financial reporting and accounting personnel with appropriate knowledge of U.S. GAAP and SEC reporting requirements to properly address U.S. GAAP technical accounting issues and prepare and review financial statements and related disclosures in accordance with U.S. GAAP and reporting requirements set forth by the SEC; (ii) our lack of sufficient controls designed and implemented in IT environment and IT general control activities, mainly associated with areas of access logical security, system change management, IT operations and cyber security monitoring activities.
During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, we may identify other weaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. Generally, if we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets and harm our results of operations. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions.
A lack of insurance coverage could expose us to significant costs and business disruption.
We may not have acquired sufficient insurance to cover our business’s assets, property, and potential liability. We and the VIE do not maintain any liability insurance or property insurance policies covering equipment and facilities for injuries, death or losses due to fire, earthquake, flood or any other disaster, which we believe is consistent with market practice in China. Consistent with customary industry practice in China, we and the VIE do not maintain business interruption insurance, nor do we and the VIE maintain key-man life insurance. We do not have automobile or liability insurance coverage, and our drivers and vehicle fleet providers maintain automobile and liability insurance in compliance with PRC laws. The lack of insurance could leave our business inadequately protected from loss. If we were to incur substantial losses or liabilities due to fire, explosions, floods, other natural disasters or accidents, or business interruption, our results of operations could be materially and adversely affected.
Newly developed public transportation infrastructure may reduce the demand for our commuter shuttle and chartered bus services.
Our services provide an alternative mobility solution to traditional public transportation by offering efficient and tailor-made transportation and travel packages to our customers at competitive prices. This alternative solution may lose its appeal to our customers when public transportation like subways and high-speed trains expand its reach to places it did not touch in the past since most of our services are provided through buses and vans traveling on the increasingly crowded roads.
Because we conduct most of our operations in China, a country that constantly updates its public transportation infrastructures, we are facing serious competitions from newly established subway lanes, bus stops, and inter-city high-speed trains. Specifically, on April 26, 2022, the Central Financial and Economic Affairs Commission of China announced that the Chinese government would invest more in five areas, one of which is the transportation infrastructure. With more public transportation available to the public, our business may be negatively impacted if we cannot provide unique and irreplaceable services to our customers.
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We may face risks and uncertainties associated with the use or acceptance of digital assets, including stablecoins such as USDC, as a form of payment.
We accepted payment from one business partner in USD Coin (“USDC”), a digital asset commonly referred to as a stablecoin, which is designed to maintain a stable value relative to the U.S. dollar. Although we do not currently plan to accept digital assets as a regular means of payment, the use or holding of digital assets may expose us to various risks, including potential fluctuations in value, cybersecurity risks, technological failures, and uncertainty regarding the legal and regulatory treatment of stablecoins.
The laws and regulations governing digital assets and related activities are still evolving and may vary significantly among jurisdictions, including the Cayman Islands, the United States and other countries in which we operate. There is uncertainty as to whether the acceptance or holding of stablecoins could be deemed to involve activities subject to licensing, registration, or other regulatory requirements under the laws of such jurisdictions. If applicable regulators were to determine that our activities constitute regulated conduct, we could become subject to additional compliance obligations, penalties, or restrictions.
Moreover, there can be no assurance that the issuer of USDC or any similar stablecoin will maintain sufficient reserves or liquidity to support redemption at par value. If regulatory developments, technological disruptions, or market events adversely affect the perceived or actual stability of USDC, we could incur losses, delays, or additional costs in converting such assets into fiat currency. Any such developments could adversely affect our financial condition, results of operations, or reputation.
Risks Related to Corporate Structure
Wetour Robotics is a Cayman Islands exempted company operating in the United States and in China partially through its subsidiaries and partially through contractual arrangements with the VIE. Investors thus are not purchasing, and may never directly hold, 50% VIE Interests in the VIE. There are substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations, and rules relating to the agreements that establish the VIE structure for the majority of our and the VIE’s operations in China, including potential future actions by the PRC government, which could affect the enforceability of our contractual arrangements with the VIE and, consequently, significantly affect the financial condition and results of operations of Wetour Robotics. If the PRC government finds such agreements non-compliant with relevant PRC laws, regulations, and rules, or if these laws, regulations, and rules or the interpretation thereof change in the future, we could be subject to severe penalties or be forced to relinquish our interests in the VIE, which may materially and adversely affect our and the VIE’s operations and the value of your investment.
Current PRC laws and regulations impose certain restrictions and prohibitions on foreign ownership of companies that engage in value-added telecommunications business. Specifically, foreign ownership of a company providing value-added telecommunications services may not exceed 50%.
We are a company incorporated under the laws of the Cayman Islands, and Xinjieni Tech, our indirect wholly-owned PRC subsidiary, is considered a foreign-invested enterprise. In light of such status, it is illegal for us to hold 100% ownership of the VIE through our subsidiaries or independently operate our and the VIE’s business of information services as they constitute value-added telecommunications services. As such, Xinjieni Tech, our WFOE, entered into the Contractual Arrangements with the VIE and Individual Registered Shareholders. These agreements include: (i) an exclusive business cooperation agreement, which enables us to receive substantially all of the economic benefits of the VIE, (ii) power of attorney and a share pledge agreement, which together with 50% equity interest held by Xinjieni Tech, provide us with control over the VIE, and (iii) an exclusive call option agreement, which provides us with the option to purchase the 50% equity interests in the VIE held by the Individual Registered Shareholders. The conditions we have satisfied for consolidation of the VIE under U.S. GAAP include that (i) we control the VIE through power to govern the activities which most significantly impact the VIE’s economic performance, (ii) we are contractually obligated to absorb losses of the VIE that could potentially be significant to the VIE, and (iii) we are entitled to receive benefits from the VIE that could potentially be significant to the VIE. Only if we meet the aforementioned conditions for consolidation of the VIE under U.S. GAAP, we will be deemed as the primary beneficiary of the VIE , and the VIE will be treated as our consolidated entities for accounting purposes.
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As the Contractual Arrangements that establish the structure for operating our and the VIE’s business in the PRC have not been tested in any of the PRC courts, if the Contractual Arrangements are found to be in violation of any existing or any PRC laws or regulations in the future, or the PRC government finds that we, or any of the VIE fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities, including the MIIT, MOFCOM and STA, would have broad discretion in dealing with such violations, including:
| ● | revoking the business and operating licenses; |
| ● | discontinuing or restricting the operations; |
| ● | imposing fines or confiscating any of the income from us and the VIE that they deem to have been obtained through illegal operations; |
| ● | requiring us to restructure our and the VIE’s operations in such a way as to compel us to establish new entities, re-apply for the necessary licenses or relocate our and the VIE’s business, staff and assets; |
| ● | imposing additional conditions or requirements with which we and the VIE may not be able to comply; |
| ● | restricting or prohibiting the use of proceeds from the initial public offering or other financing activities to finance our and the VIE’s business and operations in the PRC; or |
| ● | taking other regulatory or enforcement actions that could be harmful to our and the VIE’s business. |
Any of these actions could cause significant disruption or result in a material change to our and the VIE’s business operations, and may materially and adversely affect our and the VIE’s business, financial condition and results of operations. In addition, it is unclear what impact the PRC government actions would have on us and on our ability to consolidate the financial results of the VIE in our (including the VIE) consolidated financial statements, if the PRC governmental authorities find the VIE’s legal structure and Contractual Arrangements to be in violation of PRC laws, rules and regulations. If any of these penalties results in our inability to direct the activities of the VIE that most significantly impact its economic performance and/or our failure to receive the economic benefits from the VIE, we may not be able to consolidate the VIE into our (including the consolidated VIE) consolidated financial statements in accordance with U.S. GAAP. If we are unable to claim our right to control the assets of the VIE, our Ordinary Shares may decline in value or become worthless.
We are a holding company, and may rely on dividends paid by our subsidiaries for our cash needs. Any limitation on the ability of our subsidiaries to make dividend payments to us, or any tax implications of making dividend payments to us, could limit our ability to pay for the holding company expenses or pay dividends to holders of our Ordinary Shares.
We are a Cayman Islands holding company and conduct a significant portion of our business through the VIE and our subsidiaries in China. We may rely on dividends to be paid by the WFOE to fund our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders, to service any debt we may incur and to pay our operating expenses. If the VIE and our subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to us.
Under PRC laws and regulations, the WFOE may pay dividends only out of their accumulated profits as determined in accordance with PRC accounting standards and regulations. In addition, wholly foreign-owned enterprises are required to set aside at least 10% of their accumulated after-tax profits each year, if any, to fund a certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of its registered capital.
The VIE and our subsidiaries generate primarily all of their revenue in Renminbi, which is not freely convertible into other currencies. As a result, any restriction on currency exchange may limit the ability of the VIE and our subsidiaries to use their Renminbi revenues to pay dividends to us. The PRC government may continue to strengthen its capital controls, and more restrictions and substantial vetting process may be put forward by SAFE for cross-border transactions falling under both the current account and the capital account. Any limitation on the ability of the VIE and our subsidiaries to pay dividends or make other kinds of payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.
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In addition, the Enterprise Income Tax Law, or EIT, and its implementation rules provide that a withholding tax rate of up to 10% will be applicable to dividends payable by Chinese companies to non-PRC-resident enterprises unless otherwise exempted or reduced according to treaties or arrangements between the PRC central government and governments of other countries or regions where the non-PRC resident enterprises are incorporated. Any limitation on the ability of the VIE and our subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.
Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, or the Double Tax Avoidance Arrangement, the 10% withholding tax rate may be lowered to 5% if a Hong Kong resident enterprise owns no less than 25% of a PRC entity. However, the 5% withholding tax rate does not automatically apply and certain requirements must be satisfied, including, without limitation, that (a) the Hong Kong entity must be the beneficial owner of the relevant dividends; and (b) the Hong Kong entity must directly hold no less than 25% share ownership in the PRC entity during the 12 consecutive months preceding its receipt of the dividends. In current practice, a Hong Kong entity must obtain a tax resident certificate from the Hong Kong tax authority to apply for the 5% lower PRC withholding tax rate. As the Hong Kong tax authority will issue such a tax resident certificate on a case-by-case basis, we cannot assure you that we will be able to obtain the tax resident certificate from the relevant Hong Kong tax authority and enjoy the preferential withholding tax rate of 5% under the Double Taxation Arrangement with respect to dividends to be paid by the VIE. our subsidiaries , or the WFOE, to its immediate holding company, Webus HK. As of the date of this report, the WFOE currently does not have plan to declare and pay dividends to Webus HK and we have not applied for the tax resident certificate from the relevant Hong Kong tax authority. Webus HK intends to apply for the tax resident certificate when the WFOE plans to declare and pay dividends to Webus HK. When the WFOE plans to declare and pay dividends to Webus HK and when we intend to apply for the tax resident certificate from the relevant Hong Kong tax authority, we plan to inform the investors through SEC filings, such as a current report on Form 6-K, prior to such actions.
We rely on contractual arrangements with the VIE and Individual Registered Shareholders for our and the VIE’s operations in China, which may not be as effective in providing operational control as direct ownership, and the VIE’s shareholders may fail to perform their obligations under the contractual arrangements.
Current PRC laws and regulations impose certain restrictions and prohibitions on foreign ownership of companies that engage in value-added telecommunications business. Specifically, foreign ownership of a company providing value-added telecommunications services may not exceed 50%. Due to the restrictions on foreign ownership of value-added telecommunications business in the PRC under PRC laws, we hold 50% equity interests of the VIE, and Xinjieni Tech, our WFOE, entered into the Contractual Arrangements with the VIE and the remaining two shareholder collectively owing another 50% equity interests of Youba Tech (the “Individual Registered Shareholders”) regarding the 50% VIE Interest. These agreements include: (i) an exclusive business cooperation agreement, which enables us to receive substantially all of the economic benefits of the VIE, (ii) power of attorney and a share pledge agreement, which together with 50% equity interest held by Xinjieni Tech, provide us with control over the VIE, and (iii) an exclusive call option agreement, which provides us with the option to purchase the 50% equity interests of the VIE held by Individual Registered Shareholders. The conditions we have satisfied for consolidation of the VIE under U.S. GAAP include that (i) we control the VIE through power to govern the activities which most significantly impact the VIE’s economic performance, (ii) we are contractually obligated to absorb losses of the VIE that could potentially be significant to the VIE, and (iii) we are entitled to receive benefits from the VIE that could potentially be significant to the VIE. Only if we meet the aforementioned conditions for consolidation of the VIE under U.S. GAAP, we will be deemed as the primary beneficiary of the VIE , and the VIE will be treated as our consolidated entities for accounting purposes.
Although we have been advised by our PRC legal counsel, Allbright Law Offices, that our Contractual Arrangements constitute valid and binding obligations enforceable against each party of such agreements in accordance with their terms, the Contractual Arrangements may not be as effective in providing control over the VIE as direct ownership. If we had more than 50% direct ownership of the VIE, we would be able to exercise our rights as a shareholder to effect changes in the board of directors of the VIE, which in turn could implement changes, subject to any applicable fiduciary obligations, at the management and operational level. However, under the current contractual arrangements, we rely on the performance by the VIE and its shareholders of their obligations under the contracts to exercise control over the VIE. The shareholders of the VIE may not act in the best interests of our company or may not perform their obligations under these contracts. Such risks exist throughout the period in which we intend to operate certain portion of business through the contractual arrangements with the VIE. All of these Contractual Arrangements are governed by and interpreted in accordance with PRC laws, and disputes arising from these Contractual Arrangements will be resolved through arbitration or litigation in the PRC. However, the legal system in the PRC is not as developed as in other jurisdictions, such as the United States. The Contractual Arrangements that establish the structure for operating our and the VIE’s business in the PRC have not been tested in any of the PRC courts and there are very few precedents and little official guidance as to how contractual arrangements in the context of a variable interest entity should be interpreted or enforced under PRC laws. There remain significant uncertainties regarding the outcome of arbitration or litigation. These uncertainties could limit our ability to enforce these Contractual Arrangements. In the event we are unable to enforce these Contractual Arrangements or we experience significant delays or other obstacles in the process of enforcing these Contractual Arrangements, we may not be able to exert control over the VIE and may lose control over the assets owned by the VIE. Our control over the VIE is limited to the aforementioned conditions we have satisfied for consolidation of the VIE under U.S. GAAP. Therefore, our contractual arrangements with the VIE may not be as effective in ensuring our control over the relevant portion of our business operations as direct ownership would be. Our financial performance may be adversely and materially affected as a result and we may not be eligible to consolidate the financial results of the VIE into our consolidated financial results.
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The shareholders of the VIE may have conflicts of interests with us, which may materially and adversely affect our and the VIE’s business.
We have designated individuals who are PRC nationals to be the shareholders of the VIE. These individuals may have conflicts of interest with us. As of the date of this report, the VIE was owned by Zheng Jiahua and Wu Chunyun as to 50%. Conflicts of interest may arise between the roles of Zheng Jiahua, as director and/or senior management of our Company and as shareholders of the VIE as well as director and/or senior management of the VIE.
We rely on these individuals to abide by the laws of the Cayman Islands which impose fiduciary duties upon directors and officers of our Company. Such duties include the duty to act bona fide in what they consider to be in the best interest of our Company as a whole and not to place themselves in a position in which there is a conflict between their duties to our Company and their personal interests. On the other hand, PRC laws also provide that a director or a management officer owes a loyalty and fiduciary duty to the company he or she directs or manages. We cannot assure you that when conflicts arise, individual shareholders of the VIE will act in the best interest of our Company or that conflicts will be resolved in our favor. These individuals may breach or cause the VIE to breach the Contractual Arrangements. If we cannot resolve any conflicts of interest or disputes between us and these shareholders, we would have to rely on legal proceedings, which may be expensive, time-consuming and disruptive to our and the VIE’s operations. There is also substantial uncertainty as to the outcome of any such legal proceedings.
The investors may face significant liquidity risks because of the VIE structure and being based in and having the majority of the Company’s operations in China.
The VIE hold certain assets that are important to our operations, including permits, domain names and IP rights, among others. Under Contractual Arrangements, Individual Registered Shareholders may not voluntarily liquidate the VIE or approve them to sell, transfer, mortgage or dispose of their assets or legal or beneficial interests exceeding certain threshold in the business in any manner without our prior consent. However, in the event that the Individual Registered Shareholders breach this obligation and voluntarily liquidate the VIE, or the VIE declare winding up, or all or part of their assets become subject to liens or rights of third-party creditors, we and the VIE may be unable to continue some or all of our and the VIE’s operations, which could materially and adversely affect our and the VIE’s business, financial condition and results of operations. Furthermore, if the VIE undergo a voluntary or involuntary liquidation proceeding, their shareholders or unrelated third-party creditors may claim rights to some or all of its assets, hindering our and the VIE’s ability to operate our and the VIE’s business, which could materially and adversely affect our and the VIE’s business, financial condition and results of operations. We do not have priority pledges and liens against the assets of the VIE. If the VIE undergoes an involuntary liquidation proceeding, third-party creditors may claim rights to some or all of its assets and we may not have priority against such third-party creditors on the assets of the VIE. If the VIE liquidates, we may take part in the liquidation procedures as a general creditor under the PRC Enterprise Bankruptcy Law and recover any outstanding liabilities owed by the VIE to WFOE under the applicable agreement(s). Moreover, there are uncertainties exist in the interpretation and enforcement of the laws and regulations governing our corporate structure, and given the fact that we are a China-based company with the majority of the operations in China, the investors may face significant liquidity risks if new laws, regulations, or government policies in China prohibit us from using or transferring cash or other assets in the VIE.
If we exercise the option to acquire equity ownership and assets of the VIE, the ownership or asset transfer may subject us to certain limitations and substantial costs.
According to the Regulations for the Administration of Foreign-Invested Telecommunications Enterprises (the “FITE Regulations”), foreign investors are not allowed to hold more than 50% of the equity interests in a company providing value-added telecommunications services. Consequently, we may be ineligible to operate the VIE’s value-added telecommunication enterprises directly and may be forced to suspend the operations if the Contractual Arrangements are considered as invalid, which could materially and adversely affect the business, financial condition and results of operations of us and the VIE.
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Pursuant to the Contractual Arrangements, WFOE or its designated person(s) has the irrevocable and exclusive right to purchase all or any part of the equity interests in the VIE from Individual Registered Shareholders at any time and from time to time in WFOE’s absolute discretion to the extent permitted by PRC laws. The consideration for the equity ownership shall be the higher of (a) the lowest price permitted under PRC laws and regulations or (b) the capital contribution in relation to the equity interests while the consideration for the assets shall be the higher of (a) the lowest price permitted under PRC laws and regulations or (b) the net book value of the assets.
The equity transfer may be subject to the approvals from, or filings with, the MIIT, MOFCOM and SAMR and/or their local competent branches. In addition, the equity transfer price may be subject to review and tax adjustment by the relevant tax authorities. The equity transfer price to be received by the VIE under the Contractual Arrangements may also be subject to enterprise income tax, and such tax amounts could be substantial. Accordingly, in the event that we exercise the option to acquire equity ownership and/or assets of the VIE, substantial costs may be incurred, which may adversely and materially affect our and the VIE’s financial performance.
Certain terms of the Contractual Arrangements may not be enforceable under PRC laws.
The Contractual Arrangements provide for dispute resolution by way of arbitration in accordance with the arbitration rules of the Hangzhou Arbitration Commission in Hangzhou, Zhejiang Province, the PRC. The Contractual Arrangements contain provisions to the effect that the arbitral body may award remedies over the equity interests and/or assets of the VIE, injunctive relief and/or winding up of the VIE. In addition, the Contractual Arrangements contain provisions to the effect that courts in Hong Kong and the Cayman Islands are empowered to grant interim remedies in support of the arbitration pending the formation of an arbitral tribunal. However, we have been advised by our PRC legal counsel that the above-mentioned provisions contained in the Contractual Arrangements may not be enforceable. Under PRC laws, an arbitral body does not have the power to grant any injunctive relief or provisional or final winding-up order to preserve the assets of or any equity interest in the VIE in case of disputes. Therefore, such remedies may not be available to us, notwithstanding the relevant contractual provisions contained in the Contractual Arrangements. PRC laws allow an arbitral body to award the transfer of assets of or equity interests in the VIE in favor of an aggrieved party. In the event of non-compliance with such award, enforcement measures may be sought from the court. However, the court may or may not support the award of an arbitral body when deciding whether to take enforcement measures. Under PRC laws, courts of judicial authorities in the PRC generally would not grant injunctive relief or the winding-up order against the VIE as interim remedies to preserve the assets or equity interests in favor of any aggrieved party. Our PRC legal counsel is also of the view that, even though the Contractual Arrangements provide that courts in Hong Kong and the Cayman Islands may grant and/or enforce interim remedies or in support of arbitration, such interim remedies (even if so granted by courts in Hong Kong or the Cayman Islands in favor of an aggrieved party) may not be recognized or enforced by PRC courts. As a result, in the event that the VIE or any of Individual Registered Shareholders breaches any of the Contractual Arrangements, we may not be able to obtain sufficient remedies in a timely manner or at all, and our ability to exert control over the VIE subject to the conditions we have satisfied for consolidation of the VIE under U.S. GAAP and conduct the VIE’s value-added telecommunications service could be materially and adversely affected. The conditions we have satisfied for consolidation of the VIE under U.S. GAAP include that (i) we control the VIE through power to govern the activities which most significantly impact the VIE’s economic performance, (ii) we are contractually obligated to absorb losses of the VIE that could potentially be significant to the VIE, and (iii) we are entitled to receive benefits from the VIE that could potentially be significant to the VIE.
Substantial uncertainties exist with respect to the interpretation and implementation of the Foreign Investment Law and how it may impact the viability of the current corporate structure, corporate governance and business operations of us and the VIE.
On March 15, 2019, the Foreign Investment Law was formally adopted by the National People’s Congress, or the NPC, which became effective from January 1, 2020 and replaced the Law on Sino-Foreign Equity Joint Ventures, the Law on Sino-Foreign Contractual Joint Ventures and the Law on Foreign-Capital Enterprises to become the legal foundation for foreign investment in the PRC. However, the Foreign Investment Law does not explicitly stipulate the contractual arrangements as a form of foreign investment. The Foreign Investment Law is formulated to establish regulatory principles to foreign investment within the PRC, aiming to further expand opening-up, vigorously promote foreign investment and protect the legitimate rights and interests of foreign investors. Much detailed laws, regulations and rules relating to foreign investments are to be enacted by relevant regulatory authorities. As such, there are uncertainties regarding the evolution of the regulatory regime and the interpretation and implementation of current and any future PRC laws and regulations applicable to the foreign investment.
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Conducting operations through contractual arrangements has been adopted by many PRC-based companies, including us, to obtain and maintain necessary licenses and permits in the industries that are currently subject to foreign investment restrictions or prohibitions in China. The Foreign Investment Law stipulates that foreign investment includes foreign investors investing in China through any other methods under laws, administrative regulations, or provisions prescribed by the State Council. Therefore, there are possibilities that future laws, administrative regulations, or provisions of the State Council may stipulate contractual arrangements as a way of foreign investments, and then whether our Contractual Arrangements will be recognized as foreign investment, whether our Contractual Arrangements will be deemed to be in violation of the foreign investment access requirements and how our Contractual Arrangements will be handled are uncertain.
In the extreme case-scenario, we and the VIE may be required to unwind the Contractual Arrangements and/or dispose of the VIE, which could have a material and adverse effect on our and the VIE’s business, financial condition and result of operations. In the event that our Company no longer has a sustainable business after the aforementioned unwinding of the Contractual Arrangements or disposal or when such measures do not comply with the Listing Rules or applicable laws, the relevant regulators may take enforcement actions against us which may have a material adverse effect on the trading of our Shares or even result in delisting of our Company.
Our Contractual Arrangements may be subject to scrutiny of PRC tax authorities and additional tax may be imposed which may materially and adversely affect our and the VIE’s results of operation and value of your investment.
Under PRC laws and regulations, arrangements and transactions among related parties may be subject to audit or challenge by the PRC tax authorities. We and the VIE could face material and adverse tax consequences if the PRC tax authorities determine that any service fees charged by us under the Exclusive Business Cooperation Agreement does not represent an arm’s length price and adjust any of the VIE’s income in the form of a transfer pricing adjustment. A transfer pricing adjustment could increase our and the VIE’s tax liabilities. In addition, the PRC tax authorities may impose late payment fees and other penalties to the VIE for under-paid taxes. Our and the VIE’s business, financial condition and results of operations may be materially and adversely affected if our and the VIE’s tax liabilities increase or if we and the VIE are found to be subject to late payment fees or other penalties.
We are a holding company and our investors will have ownership in a holding company that does not directly own all of its operation in China. We primarily rely on our WFOE, the VIE and our subsidiaries for the operation in PRC. We may rely on dividends to be paid by the WFOE to fund our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders, if needed in the future. Any limitation on the ability of WFOE to pay dividends to us could have a material adverse effect on our ability to pay dividends to our shareholders.
We are a holding company and our investors will have ownership in a holding company that does not directly own all of its operation in China. We rely on our WFOE, the VIE and our subsidiaries for the operation in PRC. Any benefits accrued to us because of the VIE are limited to the conditions we met for consolidation of the VIE under U.S. GAAP. Such conditions include that (i) we control the VIE through power to govern the activities which most significantly impact the VIE’s economic performance, (ii) we are obligated to absorb losses of the VIE that could potentially be significant to the VIE, and (iii) we are entitled to receive benefits from the VIE that could potentially be significant to the VIE. We are deemed as the primary beneficiary of the VIE, and the VIE are treated as our consolidated entities for accounting purpose. We may rely on dividends to be paid by the WFOE to fund our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders, if needed in the future. If WFOE incur debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us. In addition, the income of WFOE in turn depends on the service fees paid by the VIE and the PRC tax authorities may require us to adjust our taxable income under the Contractual Arrangements in a manner that would materially and adversely affect its ability to pay dividends and other distributions to us. Current PRC laws and regulations permit our subsidiaries in China to pay dividends to us only out of its retained earnings, if any, determined in accordance with Chinese accounting standards and regulations and WFOE shall make up its losses of previous years when conducting outward remittance. Under the applicable requirements of PRC laws and regulations, WFOE is required to set aside at least 10% of its accumulated after-tax profits based on PRC accounting standards each year to fund certain statutory reserves until the accumulated amount of such reserve reaches 50% of its registered capital. At its discretion, WFOE may allocate a portion of its after-tax profits based on PRC accounting standards to its discretionary reserve fund, or its staff welfare and bonus funds. These reserve funds and staff welfare and bonus funds are not distributable as cash dividends.
Any limitation on the ability of our PRC Subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business. See also “If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.”
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Risks Related to Doing Business in China
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.
A significant portion of our operations are located in China. Accordingly, our business, prospects, financial condition and results of operations may be influenced to a significant degree by political, economic and social conditions in China generally and by continued economic growth in China as a whole.
The Chinese economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government. In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies and change of enforcement practice of such rules and policies can change quickly with little advance notice. The Chinese government also exercises significant control over China’s economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries or companies.
While the Chinese economy has experienced significant growth over the past four decades, growth has been uneven, both geographically and among various sectors of the economy. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy but may have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations. Since 2012, China’s economic growth has slowed down. Any prolonged slowdown in the Chinese economy may reduce the demand for our products and materially and adversely affect our business and results of operations.
Uncertainties and quick change in the interpretation and enforcement of Chinese laws and regulations with little advance notice could result in a material and negative impact our business operation, decrease the value of our ordinary shares and limit the legal protections available to us.
The PRC legal system is based on written statutes, and prior court decisions have limited value as precedents. Since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involves uncertainties. The enforcement of laws and that rules and regulations in China can change quickly with little advance notice and the risk that the Chinese government may intervene or influence our operations at any time, or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers, could result in a material change in our operations and/or the value of our ordinary shares.
We cannot rule out the possibility that the PRC government will institute a licensing regime or pre-approval requirement covering our industry at some point in the future. If such a licensing regime or approval requirement were introduced, we cannot assure you that we would be able to obtain any newly required license in a timely manner, or at all, which could materially and adversely affect our business and impede our ability to continue our operations.
From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. However, since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. Furthermore, the PRC legal system is based in part on government policies and internal rules (some of which are not published in a timely manner or at all) that may have retroactive effect. As a result, we may not be aware of our violation of these policies and rules until sometime after the violation. Such uncertainties, including uncertainty over the scope and effect of our contractual, property (including intellectual property) and procedural rights, could materially and adversely affect our business and impede our ability to continue our operations.
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The approval and/or other requirements of the CSRC or other PRC governmental authorities may be required in connection with future financing activities under PRC rules, regulations or policies, and, if required, Wetour Robotics cannot predict whether or how soon it will be able to obtain such approval.
The Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, adopted by six PRC regulatory agencies in 2006 and amended in 2009, purport to require offshore special purpose vehicles that are controlled by PRC companies or individuals and that have been formed for the purpose of seeking a public listing on an overseas stock exchange through acquisitions of PRC domestic companies or assets to obtain CSRC approval prior to publicly listing their securities on an overseas stock exchange. The interpretation and implementation of the regulations remain unclear.
In addition, the PRC government authorities may strengthen oversight over offerings that are conducted overseas. For instance, on July 6, 2021, the relevant PRC governmental authorities promulgated the Opinions on Strictly Cracking Down on Illegal Securities Activities, which emphasized the need to strengthen the supervision over overseas listings by PRC companies. Effective measures, such as promoting the construction of relevant regulatory systems, are to be taken to deal with the risks and incidents of China-based overseas-listed companies, cybersecurity and data privacy protection requirements and similar matters. The Measures for Cybersecurity Review issued by the CAC and other related authorities on December 28, 2021, also required that, among others, “critical information infrastructure” or internet platform operator holding over one million users’ personal information to apply for a cybersecurity review before any listing at a foreign country. In addition, the relevant governmental authorities in the PRC may initiate cybersecurity review if such governmental authorities determine that an operator’s cyber products or services or data processing affect or may affect national security. The Measures for Security Assessment for Cross-border Data Transfer which took effect on September 1, 2022, stipulates that a data processor shall apply to the competent cyberspace department for security assessment and clearance of outbound data transfer in the event of outbound transfer of important data by a data processor, outbound transfer of personal information by an operator of critical information infrastructure or a data processor which has processed more than one million users’ personal data. These statements and regulations are recently issued and there remain substantial uncertainties about their interpretation and implementation. As of the date of this Report, Wetour Robotics does not hold personal information of over one million users. Wetour Robotics has not been considered as an “operator of critical information infrastructure” by competent authority, nor has Wetour Robotics been informed by any PRC governmental authority of any requirement that Wetour Robotics files for a cybersecurity review.
On February 17, 2023, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Enterprises (the “New Overseas Listing Rules”) with five interpretive guidelines, which came into effect on March 31, 2023. Under the New Overseas Listing Rules and the guidance, domestic companies conducting overseas securities offering and listing, either directly or indirectly, shall complete filings with the CSRC pursuant to the New Overseas Listing Rules’ requirements within three working days following the submission of an initial public offering or listing application. Enterprises that have been listed overseas or satisfy all of the following conditions shall be deemed as “Existing Issuers” and are not required to complete the overseas listing filing immediately, but shall complete filings as required if they conduct refinancing or are involved in other circumstances that require filing with the CSRC: (i) the application for indirect overseas offering or listing shall have been approved by the relevant overseas regulatory authority or stock exchange prior to March 31, 2023, (ii) the enterprise is not required to reapply for the approval of the relevant overseas regulatory authority or stock exchange, and (iii) such overseas securities offering or listing shall be completed before September 30, 2023. Starting from March 31, 2023, domestic enterprises that have submitted valid applications for overseas offerings and listing but have not obtained the approval from relevant overseas regulatory authority or overseas stock exchange before March 31, 2023 can reasonably arrange the timing of filing applications and shall complete filings with the CSRC prior to their overseas offering and listings.
On February 24, 2023, the CSRC, Ministry of Finance of the PRC, National Administration of State Secrets Protection and National Archives Administration of China jointly issued the Provisions on Strengthening the Confidentiality and Archive Management Work Relating to the Overseas Securities Offering and Listing, or the Confidentiality Provisions, which came into effect on March 31, 2023 with the New Overseas Listing Rules. The Confidentiality Provisions require that, among other things, (a) a domestic company that plans to, either directly or through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level; and (b) domestic company that plans to, either directly or through its overseas listed entity, publicly disclose or provide to relevant individuals and entities including securities companies, securities service providers and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations. Any failure or perceived failure by the company, its PRC subsidiary to comply with the above confidentiality and archives administration requirements under the Confidentiality Provisions, and other PRC laws and regulations may result in the relevant entities being held legally liable by competent authorities, and referred to the judicial organ to be investigated for criminal liability if suspected of committing a crime.
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According to the New Overseas Listing Rules, the domestic companies that have submitted valid applications for overseas offerings and listing but have not been approved from relevant overseas regulatory authorities or overseas stock exchanges before March 31, 2023 can reasonably arrange the timing of filing applications and shall complete filings with the CSRC prior to their overseas offering and listings. Based on the foregoing and the advice of our PRC counsel AllBright Law Offices, Wetour Robotics filed applications and completed filings with the CSRC prior to our initial public offering. Wetour Robotics has submitted the Filing Documents for the filing under the New Overseas Listing Rules to comply with our obligations under the New Overseas Listing Rules. On April 2, 2024, the CSRC informed us that we have completed the CSRC filing in compliance with the New Overseas Listing Rules. However, as the New Overseas Listing Rules are newly issued, there remains uncertainty as to how it will be interpreted or implemented, which may materially and adversely impact our results of operations and the value of our Ordinary Shares, may limit or completely hinder our ability to offer or continue to offer or continue to offer securities to investors, and/or may cause the value of our securities to significantly decline or be worthless. The interpretations and implementation of the New Overseas Listing Rules remain uncertain in several respects at this time, considering that the New Overseas Listing Rules has just been released. Therefore, we cannot assure you that, if any future financing activities, including securities offerings, are subject to the New Overseas Listing Rules, we will be able to complete such filings in a timely manner or even at all, which could impede our ability to offer or continue to offer securities to investors. As of the date of this report, none of Wetour Robotics and its subsidiaries or the VIE has received any notice, warning or sanctions from the CSRC or any other PRC governmental authorities. However, if Wetour Robotics later finds out that it was required to obtain such permissions or approvals in the future in connection with the listing or continued listing of Wetour Robotics’ Ordinary Shares on a stock exchange outside of China, it is uncertain how long it will take for Wetour Robotics to obtain such approval, and, even if Wetour Robotics obtains such approval, the approval could be rescinded. Any failure to obtain or a delay in obtaining the necessary permissions from the PRC authorities to conduct offerings or list outside of Hong Kong or Mainland China may subject Wetour Robotics to sanctions imposed by the PRC regulatory authorities, which could include fines and penalties, proceedings against Wetour Robotics, and other forms of sanctions, and Wetour Robotics’ ability to conduct its business, invest into China as foreign investments or accept foreign investments, or list on a U.S. or other overseas exchange may be restricted, and our business, reputation, financial condition, and results of operations may be materially and adversely affected.
The Chinese government exerts substantial influence over the manner in which the VIE and our PRC Subsidiaries must conduct their business activities. If the Chinese government significantly regulates these entities’ business operations in the future and they are not able to substantially comply with such regulations, these entities’ business operations may be materially adversely affected and the value of Wetour Robotics’ Ordinary Shares may significantly decrease.
The Chinese government exerts substantial control over virtually every sector of the Chinese economy through regulation and state ownership. The ability of the VIE and our PRC Subsidiaries to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, environmental regulations, land use rights, property and other matters. The central or local governments of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on Wetour Robotics’ part to ensure its compliance with such regulations or interpretations. Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof, and could require Wetour Robotics to divest itself of any interest Wetour Robotics then holds in Chinese properties.
As such, the business operations of Wetour Robotics, its subsidiaries, and the VIE may be subject to various government and regulatory interference in the provinces in which these entities operate. Wetour Robotics, its subsidiaries, and the VIE could be subject to regulation by various political and regulatory entities, including various local and municipal agencies and government sub-divisions. Wetour Robotics may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply. In the event that Wetour Robotics, its subsidiaries, or the VIE are not able to substantially comply with any existing or newly adopted laws and regulations, its business operations may be materially adversely affected and the value of Wetour Robotics’ Ordinary Shares may significantly decrease.
Furthermore, the PRC government may strengthen oversight and control over offerings and/or listings that are conducted overseas and/or foreign investment in China-based issuers like Wetour Robotics. Such actions taken by the PRC government authorities may intervene or influence operations of the VIE and our PRC Subsidiaries at any time, which are beyond their control. Therefore, any such action may adversely affect the operations of the VIE and our PRC Subsidiaries and result in material change in these entities’ operations and/or the value of Wetour Robotics’ securities. In addition, the PRC government has recently indicated an intent to exert more oversight over offerings that are conducted overseas and/or foreign investment in China-based issuers. Any such action could significantly limit or completely hinder Wetour Robotics’ ability to offer or continue to offer securities to you and cause the value of such securities to significantly decline or be worthless.
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PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of future offering and financing activities to make loans to or make additional capital contributions to our PRC Subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
Under PRC laws and regulations, we are permitted to utilize the proceeds from our previous offerings, including our at-the-market offering, and future offerings and financing activities to fund our PRC Subsidiaries by making loans to or additional capital contributions to our PRC Subsidiaries, subject to applicable government registration and approval requirements.
Any loans to our PRC Subsidiaries, which are treated as foreign-invested enterprises under PRC laws, are subject to PRC regulations and foreign exchange loan registrations. For example, loans by us to our PRC subsidiaries to finance its activities cannot exceed statutory limits and must be registered with the local counterpart of the State Administration of Foreign Exchange, or SAFE. The statutory limit for the total amount of foreign debts of a foreign-invested company is the difference between the amount of total investment as approved by China’s Ministry of Commerce (“MOFCOM”) or its local counterpart and the amount of registered capital of such foreign-invested company.
We may also decide to finance our PRC Subsidiaries by means of capital contributions. These capital contributions must be filed with the MOFCOM or its local counterpart. In addition, SAFE issued a circular in September 2008, SAFE Circular 142, regulating the conversion by a foreign-invested enterprise of foreign currency registered capital into RMB by restricting how the converted RMB may be used. SAFE Circular 142 provides that the RMB capital converted from foreign currency registered capital of a foreign-invested enterprise may only be used for purposes within the business scope approved by the applicable government authority and unless otherwise provided by law, may not be used for equity investments within the PRC. Although on July 4, 2014, SAFE issued the Circular of the SAFE on Relevant Issues Concerning the Pilot Reform in Certain Areas of the Administrative Method of the Conversion of Foreign Exchange Funds by Foreign-invested Enterprises, or SAFE Circular 36, which launched a pilot reform of the administration of the settlement of the foreign exchange capitals of foreign-invested enterprises in certain designated areas from August 4, 2014 and some of the restrictions under SAFE Circular 142 will not apply to the settlement of the foreign exchange capitals of the foreign-invested enterprises established within the designate areas and such enterprises mainly engaging in investment are allowed to use its RMB capital converted from foreign exchange capitals to make equity investment, our PRC Subsidiaries are not established within the designated areas. On March 30, 2015, SAFE promulgated Circular 19, to expand the reform nationwide. Circular 19 came into force and replaced both Circular 142 and Circular 36 on June 1, 2015. Circular 19 allows foreign-invested enterprises to make equity investments by using RMB funds converted from foreign exchange capital. However, Circular 19 continues to prohibit foreign-invested enterprises from, among other things, using RMB fund converted from its foreign exchange capitals for expenditure beyond its business scope, providing entrusted loans or repaying loans between non-financial enterprises. In addition, SAFE strengthened its oversight of the flow and use of the RMB capital converted from foreign currency registered capital of a foreign-invested company. The use of such RMB capital may not be altered without SAFE’s approval, and such RMB capital may not in any case be used to repay RMB loans if the proceeds of such loans have not been used. Violations of these Circulars could result in severe monetary or other penalties. On September 12, 2025, SAFE issued the Notice of the State Administration of Foreign Exchange on Deepening the Reform of Cross-Border Investment and Financing Foreign Exchange Administration (Huifa [2025] No. 43, or “SAFE Circular 43”), effective on the same date. SAFE Circular 43 cancels the domestic reinvestment registration for foreign-invested enterprises: provided that the reinvestment does not violate the Special Administrative Measures for Foreign Investment Access (Negative List) and the domestic investee project is genuine and compliant, where a foreign-invested enterprise carries out domestic reinvestment with foreign exchange capital and RMB funds derived from its settlement, the investee enterprise or the equity transferor is no longer required to complete the basic information registration and change registration for receiving domestic reinvestment, and the domestic reinvestment funds may be directly transferred to the relevant account. These circulars may significantly limit our ability to use RMB converted from the net proceeds of our initial public offering or any future offerings and financing activities to fund the establishment of new entities in China by our PRC Subsidiaries, to invest in or acquire any other PRC companies through our PRC Subsidiaries, or to establish variable interest entities in the PRC; however, following the cancellation of domestic reinvestment registration under SAFE Circular 43, the procedural obstacle at the registration stage no longer exists.
In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to future loans to our PRC Subsidiaries or future capital contributions by us to our PRC Subsidiaries. If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds we expect to receive from offerings and future financing activities to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
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PRC regulations relating to offshore investment activities by PRC residents may limit our PRC Subsidiaries’ ability to increase its registered capital or distribute profits to us or otherwise expose us or our PRC resident beneficial owners to liability and penalties under PRC law.
SAFE promulgated the Circular on Relevant Issues Relating to Domestic Resident’s Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, in July 2014 that requires PRC residents or entities to register with SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing. In addition, such PRC residents or entities must update their SAFE registrations when the offshore special purpose vehicle undergoes material events relating to any change of basic information (including change of such PRC citizens or residents, name and operation term), increases or decreases in investment amount, transfers or exchanges of shares, or mergers or divisions. SAFE Circular 37 was issued to replace the Notice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents Engaging in Financing and Roundtrip Investments via Overseas Special Purpose Vehicles, or SAFE Circular 75. SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment in February 2015, which took effect on June 1, 2015. This notice has amended SAFE Circular 37 requiring PRC residents or entities to register with qualified banks rather than SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing.
If our shareholders who are PRC residents or entities do not complete their registration as required, our PRC Subsidiaries may be prohibited from distributing its profits and proceeds from any reduction in capital, share transfer or liquidation to us, and we may be restricted in our ability to contribute additional capital to our PRC Subsidiaries. Moreover, failure to comply with the SAFE registration described above could result in liability under PRC laws for evasion of applicable foreign exchange restrictions.
To the extent cash or assets of our business, or of our PRC or Hong Kong subsidiaries, is in the PRC or Hong Kong, such cash or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong, due to interventions in or the imposition of restrictions and limitations by the PRC government to the transfer of cash or assets.
The transfer of funds and assets among Wetour Robotics, Webus HK, the WFOE, the VIE and our PRC Subdiaires is subject to restrictions. The PRC government imposes controls on the conversion of the RMB into foreign currencies and the remittance of currencies out of the PRC. In addition, the PRC Enterprise Income Tax Law and its implementation rules provide that a withholding tax at a rate of 10% will be applicable to dividends payable by Chinese companies to non-PRC-resident enterprises, unless reduced under treaties or arrangements between the PRC central government and the governments of other countries or regions where the non-PRC-resident enterprises are tax resident.
As of the date of this report, there are no restrictions or limitations imposed by the Hong Kong government on the transfer of capital within, into and out of Hong Kong (including funds from Hong Kong to the PRC), except for the transfer of funds involving money laundering and criminal activities. However, there is no guarantee that the Hong Kong government will not promulgate new laws or regulations that may impose such restrictions in the future.
Fluctuations in exchange rates could have a material adverse effect on our results of operations and the value of your investment.
A significant portion of our revenues and expenditures are denominated and presented in RMB, the amounts for the fiscal year ended June 30, 2026 are presented in U.S. dollars for convenience purposes. As a result, fluctuations in the exchange rate between the U.S. dollar and RMB do not have much impact on our operations. However, the fluctuation may affect our financials in the terms of our U.S. dollar assets and the proceeds from our previous offerings, including our at-the-market offering, or future offerings and financing activities. Should RMB appreciate against other currencies, any future financings, which are to be converted from US dollar or other currencies into RMB, would be reduced and might accordingly hinder our business development due to the lessened amount of funds raised. On the other hand, in the event of the devaluation of RMB, the dividend payments of our Company, which are to be paid in US dollars after the conversion of the distributable profit denominated in RMB, would be reduced.
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There remains significant international pressure on the PRC government to adopt a flexible currency policy. Any significant appreciation or depreciation of the RMB may materially and adversely affect our revenues, earnings and financial position, and the value of, and any dividends payable on, our Ordinary Shares in U.S. dollars. For example, to the extent that we need to convert U.S. dollars we receive from our initial public offering into RMB to pay our operating expenses, appreciation of the RMB against the U.S. dollar would have an adverse effect on the RMB amount we would receive from the conversion. Conversely, a significant depreciation of the RMB against the U.S. dollar may significantly reduce the U.S. dollar equivalent of our earnings, which in turn could adversely affect the market price of our Ordinary Shares.
Very limited hedging options are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge our exposure or at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreign currency. As a result, fluctuations in exchange rates may have a material adverse effect on your investment.
Governmental control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.
The PRC government imposes controls on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency out of China. Under our current corporate structure, our company in the Cayman Islands may rely on dividend payments from our PRC Subsidiaries to fund any cash and financing requirements we may have. Under existing PRC foreign exchange regulations, payments of current account items, such as profit distributions and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. Therefore, our PRC Subsidiaries are able to pay dividends in foreign currencies to us without prior approval from SAFE, subject to the condition that the remittance of such dividends outside of the PRC complies with certain procedures under PRC foreign exchange regulation, such as the overseas investment registrations by the beneficial owners of our Company who are PRC residents. But approval from or registration with appropriate government authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders.
Failure to make adequate contributions to various employee benefit plans as required by PRC regulations may subject us to penalties.
The VIE and our PRC Subsidiaries are required under PRC laws and regulations to participate in various government sponsored employee benefit plans, including certain social insurance, housing funds and other welfare-oriented payment obligations, and contribute to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of its employees up to a maximum amount specified by the local government from time to time at locations where operate its businesses. The requirement of employee benefit plans has not been implemented consistently by the local governments in China given the different levels of economic development in different locations. As of the date of this report, we believe that the VIE and our PRC Subsidiaries have made employee benefit payments in material aspects. If the VIE and our PRC Subsidiaries fail to make adequate payments in the future, it may be required by the social security premium collection agency to make or supplement contributions within a stipulated period, and shall be subject to a late payment fine computed from the due date at the rate of 0.05% per day; where payment is not made within the stipulated period, the relevant administrative authorities shall impose a fine ranging from one to three times the amount of the amount in arrears. If the VIE and our PRC Subsidiaries are subject to fines in relation to the underpaid employee benefits, our financial condition and results of operations may be adversely affected.
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Non-compliance with labor-related laws and regulations of the PRC may have an adverse impact on our financial condition and results of operation.
The VIE and our PRC Subsidiaries have been subject to stricter regulatory requirements in terms of entering into labor contracts with its employees and paying various statutory employee benefits, including pensions, housing fund, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance to designated government agencies for the benefit of its employees. Pursuant to the PRC Labor Contract Law, or the Labor Contract Law, that became effective in January 2008 and was amended in December 2012 and became effective on July 1, 2013, and its implementing rules that became effective in September 2008, employers are subject to stricter requirements in terms of signing labor contracts, minimum wages, paying remuneration, determining the term of employees’ probation and unilaterally terminating labor contracts. In the event that the VIE and our PRC Subsidiaries decide to terminate some of its employees or otherwise change its employment or labor practices, the Labor Contract Law and its implementation rules may limit our ability to effect those changes in a desirable or cost-effective manner, which could adversely affect our business and results of operations. We believe the VIE and our PRC Subsidiaries current practice complies with the Labor Contract Law and its amendments. However, the relevant governmental authorities may take a different view and impose fines on us.
As the interpretation and implementation of labor-related laws and regulations are still evolving, our employment practices could violate labor-related laws and regulations in China, which may subject us to labor disputes or government investigations. If the VIE and our PRC Subsidiaries are deemed to have violated relevant labor laws and regulations, the VIE and our PRC Subsidiaries could be required to provide additional compensation to its employees and our business, financial condition and results of operations could be materially and adversely affected.
Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.
In February 2012, SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly-Listed Company, replacing earlier rules promulgated in March 2007. Pursuant to these rules, PRC citizens and non-PRC citizens who reside in China for a continuous period of not less than one year who participate in any stock incentive plan of an overseas publicly listed company, subject to a few exceptions, are required to register with SAFE through a domestic qualified agent, which could be the PRC subsidiaries of such overseas listed company, and complete certain other procedures. In addition, an overseas entrusted institution must be retained to handle matters in connection with the exercise or sale of stock options and the purchase or sale of shares and interests. We and our executive officers and other employees who are PRC citizens or who have resided in the PRC for a continuous period of not less than one year and who have been granted options or other awards are subject to these regulations after our Company became an overseas listed company upon the completion of our IPO. Failure to complete the SAFE registrations may subject them to fines and legal sanctions and may also limit our ability to contribute additional capital into our PRC subsidiaries and limit our PRC Subsidiaries’ ability to distribute dividends to us. We also face regulatory uncertainties that could restrict our ability to adopt additional incentive plans for our directors, executive officers and employees under PRC law. See “Regulations — Regulations of People’s Republic of China — Employee Stock Incentive Plan.”
If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.
Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with a “de facto management body” within the PRC is considered a resident enterprise and will be subject to the enterprise income tax on its global income at the rate of 25%. The implementation rules define the term “de facto management body” as the body that exercises full and substantial control over and overall management of the business, productions, personnel, accounts and properties of an enterprise. In April 2009, the State Administration of Taxation issued a circular, known as Circular 82, which provides certain specific criteria for determining whether the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China. Although this circular only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners like us, the criteria set forth in the circular may reflect the State Administration of Taxation’s general position on how the “de facto management body” test should be applied in determining the tax resident status of all offshore enterprises. According to Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC.
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We believe we are not a PRC resident enterprise for PRC tax purposes. See “Taxation—People’s Republic of China Taxation.” However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body.” As some of our management members are based in or frequently travel to China, it remains unclear how the tax residency rule will apply to our case. If the PRC tax authorities determine that we or any of our subsidiaries outside of China is a PRC resident enterprise for PRC enterprise income tax purposes, then we or such subsidiary could be subject to PRC tax at a rate of 25% on its world-wide income, which could materially reduce our net income. In addition, we will also be subject to PRC enterprise income tax reporting obligations. Furthermore, if the PRC tax authorities determine that we are a PRC resident enterprise for enterprise income tax purposes, gains realized on the sale or other disposition of our Ordinary Shares may be subject to PRC tax, at a rate of 10% in the case of non-PRC enterprises or 20% in the case of non-PRC individuals (in each case, subject to the provisions of any applicable tax treaty), if such gains are deemed to be from PRC sources. It is unclear whether non-PRC shareholders of our Company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise. Any such tax may reduce the returns on your investment in our Ordinary Shares.
Regulatory bodies of the United States may be limited in their ability to conduct investigations or inspections of our operations in China.
From time to time, the Company may receive requests from certain US agencies to investigate or inspect the Company’s operations, or to otherwise provide information. While the Company will be compliant with these requests from these regulators, there is no guarantee that such requests will be honored by those entities who provide services to us or with whom we associate, especially as those entities are located in China. Furthermore, an on-site inspection of our facilities in China by any of these regulators may be limited or entirely prohibited. Such inspections, though permitted by the Company and its affiliates, are subject to the unpredictability of Chinese law enforcement agencies, and may therefore be impossible to facilitate. According to Article 177 of the PRC Securities Law which became effective in March 2020, the securities regulatory authority of the State Council may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region, to implement cross-border supervision and administration and no overseas securities regulator is allowed to directly conduct an investigation or evidence collection activities within the territory of the PRC. Accordingly, without the consent of the competent PRC securities regulators and relevant authorities, no organization or individual may provide the documents and materials relating to securities business activities to overseas parties.
The Holding Foreign Companies Accountable Act, or the HFCAA, and the related regulations are evolving quickly. Further implementations and interpretations of or amendments to the HFCAA or the related regulations, or a PCOAB’s determination of its lack of sufficient access to inspect our auditors, might pose regulatory risks to and impose restrictions on us because of our operations in mainland China. A potential consequence is that our Ordinary Shares may be delisted by the exchange. The delisting of our Ordinary Shares, or the threat of our Ordinary Shares being delisted, may materially and adversely affect the value of your investment. Additionally, the inability of the PCAOB to conduct full inspections of our auditors deprives our investors of the benefits of such inspections
Under the Holding Foreign Companies Accountable Act, or the HFCAA, enacted on December 18, 2020, as amended by the Consolidated Appropriations Act, 2023, trading in a registrant’s securities on a U.S. national securities exchange or over-the-counter market may be prohibited, and the securities delisted, if the PCAOB determines that it cannot inspect or fully investigate the registrant’s auditors for two consecutive years. In November and December 2021, the SEC adopted rules implementing the HFCAA, and on December 16, 2021, the PCAOB determined that it was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong.
Following its August 26, 2022 Protocol with the CSRC and MOF, the PCAOB determined on December 15, 2022 that it had secured complete access to inspect and investigate firms headquartered in mainland China and Hong Kong and vacated its prior determinations. However, the PCAOB must make this determination annually, and whether it will continue to have complete access depends on factors outside our and our auditors’ control, including positions taken by PRC authorities.
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The HFCAA and any related actions or rules could create investor uncertainty and adversely affect the market price of our Ordinary Shares, and we could be delisted if our auditors are unable to meet the PCAOB inspection requirement. In addition, a lack of PCAOB inspections would deprive investors of the benefits of such inspections and make it more difficult to evaluate the effectiveness of an auditor’s audit and quality control procedures.
Our current auditor, Edston Global PAC, is a PCAOB-registered independent registered public accounting firm headquartered in Singapore that is subject to regular PCAOB inspections, and was not included in the PCAOB’s December 16, 2021 Determination. Our prior auditor, Marcum Asia CPAs LLP (“Marcum Asia”), an independent registered public accounting firm that is headquartered in the United States, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. As of the date of this report, Marcum Asia CPAs LLP was not included in the list of identified firms in the PCAOB Determination issued on December 16, 2021. Therefore, we believe the HFCAA and related regulations do not currently affect us. However, Nasdaq or regulators may apply additional and more stringent criteria to us, and if the PCAOB later becomes unable to inspect or investigate our auditors completely, trading in our securities could be prohibited under the HFCAA and Nasdaq may delist our securities, which would substantially impair your ability to buy or sell our securities and adversely affect the price of our Ordinary Shares. New or changed laws and regulations in the United States and China could also affect our ability to list our Ordinary Shares on Nasdaq.
Enhanced scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue in the future.
The PRC tax authorities have enhanced their scrutiny over the direct or indirect transfer of certain taxable assets, including, in particular, equity interests in a PRC resident enterprise, by a non-resident enterprise by promulgating and implementing SAT Circular 59 and Circular 698, which became effective in January 2008, and Circular 698 was abolished and void as of December 1, 2017.
Under Circular 698, where a non-resident enterprise conducts an “indirect transfer” by transferring the equity interests of a PRC “resident enterprise” indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise, being the transferor, may be subject to PRC enterprise income tax, if the indirect transfer is considered to be an abusive use of company structure without reasonable commercial purposes. As a result, gains derived from such indirect transfer may be subject to PRC tax at a rate of up to 10%. Circular 698 also provides that, where a non-PRC resident enterprise transfers its equity interests in a PRC resident enterprise to its related parties at a price lower than the fair market value, the relevant tax authority has the power to make a reasonable adjustment to the taxable income of the transaction.
In February 2015, the SAT issued Circular 7 to replace the rules relating to indirect transfers in Circular 698. Circular 7 has introduced a new tax regime that is significantly different from that under Circular 698. Circular 7 extends its tax jurisdiction to not only indirect transfers set forth under Circular 698 but also transactions involving transfer of other taxable assets, through the offshore transfer of a foreign intermediate holding company. In addition, Circular 7 provides clearer criteria than Circular 698 on how to assess reasonable commercial purposes and has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market. Circular 7 also brings challenges to both the foreign transferor and transferee (or other person who is obligated to pay for the transfer) of the taxable assets. Where a non-resident enterprise conducts an “indirect transfer” by transferring the taxable assets indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise being the transferor, or the transferee, or the PRC entity which directly owned the taxable assets may report to the relevant tax authority such indirect transfer. Using a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise.
We face uncertainties on the reporting and consequences on future private equity financing transactions, share exchange or other transactions involving the transfer of shares in our Company by investors that are non-PRC resident enterprises. The PRC tax authorities may pursue such non-resident enterprises with respect to a filing or the transferees with respect to withholding obligation and request our PRC Subsidiaries to assist in the filing. As a result, we and non-resident enterprises in such transactions may become at risk of being subject to filing obligations or being taxed, under Circular 59 and Circular 7, and may be required to expend valuable resources to comply with Circular 59 and Circular 7 or to establish that we and our non-resident enterprises should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations.
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The PRC tax authorities have the discretion under SAT Circular 59, and Circular 7 to make adjustments to the taxable capital gains based on the difference between the fair value of the taxable assets transferred and the cost of investment. Although we currently have no specific plans to pursue any acquisitions in China or elsewhere in the world, we may pursue acquisitions in the future that may involve complex corporate structures. If we are considered a non-resident enterprise under the PRC Enterprise Income Tax Law and if the PRC tax authorities make adjustments to the taxable income of the transactions under SAT Circular 59 and Circular 7, our income tax costs associated with such potential acquisitions will be increased, which may have an adverse effect on our financial condition and results of operations.
Substantial uncertainties exist with respect to the interpretation and implementation of the newly enacted PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance, business operations and financial results.
On March 15, 2019, the National People’s Congress approved the Foreign Investment Law, which came into effect on January 1, 2020 and replaced the trio of existing laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations. The Foreign Investment Law embodies an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic investments. However, since it is relatively new, uncertainties still exist in relation to its interpretation and implementation and how it may impact the viability of our current corporate governance and business operations in China and financial results of the Company.
Any change of regulations and rules by Chinese government including potential additional requirements on cybersecurity review, personal information protection, moving technology in and out of the PRC, or outbound data transfer may intervene or influence our operations in China at any time and any additional control over offerings conducted overseas and/or foreign investment in issuers with Chinese operations could result in a material change in our business operations and/or the value of our Ordinary Shares and could also significantly limit or completely hinder our ability to offer our Ordinary Shares to investors and cause the value of such securities to significantly decline or be worthless.
Our operation in China may be intervened or influenced by the new regulations and policies by Chinese government. For example, between July 2 and July 6, 2021, the CAC announced cybersecurity investigations of the business operations of certain U.S.-listed Chinese companies. On July 6, 2021, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued “The Opinions on Severely Cracking Down on Illegal Securities Activities According to Law” (the “Opinions”). The Opinions emphasized the needs to strengthen the administration over illegal securities activities and the supervision over overseas listings by Chinese companies. According to the Opinions, Measures, including promoting the construction of relevant regulatory systems, will be taken to control the risks and manage the incidents from overseas listed Chinese companies.
On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “New Overseas Listing Rules”), which came to effect on March 31, 2023, pursuant to which, any direct or indirect offshore listing of PRC domestic enterprises shall be filed with the CSRC. The Measures provide that the determination as to whether a domestic company is indirectly offering and listing securities on an overseas market shall be made on a substance over form basis, and if the issuer meets the following conditions, our offering and listing shall be determined as an indirect overseas offering and listing by a Chinese domestic company: (i) the revenue, profit, total assets or net assets of the Chinese domestic entity is more than 50% of the related financials in the issuer’s audited consolidated financial statements for the most recent fiscal year; (ii) the senior managers in charge of business operation and management of the issuer are mostly Chinese citizens or with regular domicile in China, the main locations of its business operations are in China or main business activities are conducted in China.
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On December 28, 2021, the CAC and other PRC regulatory authorities published the Cybersecurity Review Measures, effective on February 15, 2022, which provides that, Critical Information Infrastructure Operators (“CIIOs”) that intend to purchase internet products and services and Data Processing Operators (“DPOs”) engaging in data processing activities that affect or may affect national security shall be subject to the cybersecurity review by the Cybersecurity Review Office. In addition, CIIOs and DPOs that possess personal data of at least one (1) million users must apply for a review by the Cybersecurity Review Office, if they plan to conduct listings in foreign countries. On September 30, 2024, the State Council promulgated the Network Data Security Administration Regulations (the “Data Security Regulations”) (State Council Decree No. 790), which took effect on January 1, 2025. We are not a CIIO as defined in the Review Measures but we are probably deemed to be a DPO engaging in data processing activities. Currently, we do not believe we are obligated to apply for a cybersecurity review pursuant to the Cybersecurity Review Measures and Data Security Regulations, as (i) we do not process personal data for more than one million individuals and (ii) as of the date of this report, we have not received any notice from applicable PRC governmental authorities that the VIE may have carried out activities that affect or may affect national security. Furthermore, based on our business patterns and development plans, the number of individuals whose personal data is held by us is unlikely to reach the threshold of one million within the upcoming two years, and the personal data held by us is unlikely to affect national security. AllBright further advises us that if in the future we reach the threshold of one million, or any competent government authorities determine that our data processing activities may affect national security, we may be subject to the cybersecurity review. If we reach such threshold we will voluntarily apply for Cybersecurity Review even though we are not explicitly required to do so, and we do not believe we will be subject to a Cybersecurity Review or must apply for such a review for any repeat registration statement, merger, restructuring, or other transaction based on AllBright’s advice.
Although we believe we would be approved by the CAC through the cybersecurity review, failure to pass such cybersecurity review and/or to comply with the data privacy and data security requirements raised during such cybersecurity review could subject us to penalties, damage its reputation and brand, and harm its business and results of operations. There may also be risks that we may not be able to continue our operations, which may lead to uncertainties of future financing by foreign investment or remaining listed and traded on an U.S. stock exchange.
Users of our US subsidiary, Wetour, are primarily overseas Chinese tourists, and the user data is stored in the United States, such data will not be subject to the Data Security Regulations and data security regulations. User of our PRC Subsidiaries, VIE , are primarily domestic Chinese, and the user data is stored in the PRC, such data will be subject to the Data Security Regulations and data security regulations.
On July 7, 2022, the CAC promulgated the Measures for Security Assessment for Outbound Data Transfer, which became effective on September 1, 2022. The Measures apply to the security assessment of Important Data and personal information collected and generated during operation within the territory of the People’s Republic of China and transferred abroad by a data handler. Specifically, the Measures for Security Assessment for Outbound Data Transfer to provide that where a data handler transfers data abroad under any of the following circumstances, it shall, through the local Cyberspace Administration at the provincial level, apply to the CAC for security assessment for the outbound data transfer: (1) a data handler who transfers Important Data abroad; (2) a critical information infrastructure operator, or a data handler processing the personal information of more than one million individuals, who, in either case, transfers personal information abroad; (3) a data handler who has, since January 1 of the previous year cumulatively transferred abroad the personal information of more than 100,000 individuals, or the sensitive personal information of more than 10,000 individuals, or (4) other circumstances where the security assessment for the outbound data transfer is required by the CAC.
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On February 22, 2023, the CAC promulgated the Measures for the Standard Contract for Outbound Transfer of Personal Information, effective on June 1, 2023, provides the basic principles and requirements on the outbound transfer of personal information outside the PRC under the standard contract provided by the CAC. Pursuant to the Measures for the Standard Contract for Outbound Transfer of Personal Information, any personal information handler transferring personal information abroad by entering into the standard contract shall meet all of the following conditions and conduct a personal information protection impact assessment: (i) it is not a critical information infrastructure operator; (ii) it processes the personal information of less than 1 million individuals; (iii) it has cumulatively transferred abroad the personal information of less than 100,000 individuals since January 1 of the previous year; and (iv) it has cumulatively transferred abroad the sensitive personal information of less than 10,000 individuals since January 1 of the previous year. The Measures also provides that the personal information handler shall not carry out the outbound transfer until the standard contract enters into force, and shall file a record with the cyberspace authority at the provincial level within 10 working days from the effective date of the standard contract executed.
As of the date of this report, we have not transferred any user information to places outside of the PRC. We do not believe we will be subject to the Measures for Security Assessment for Outbound Data Transfer and the Measures for the Standard Contract for Outbound Transfer of Personal Information (the “outbound data transfer regulations”), considering (i) we do not anticipate reaching the threshold to trigger the requirements by the outbound data transfer regulations and (ii) we do not anticipate to transfer any user information outside of the PRC. As advised by AllBright, we are not currently subject to the outbound data transfer regulations because Chinese customers using our services must provide their information on Wetour’s website and applications, which were established and maintained in the U.S. Therefore, there is no data transferred across the border of PRC by us.
Furthermore, we anticipate an increase in outbound travel by PRC residents driven by the continued recovery of international mobility and rising consumer demand for overseas experiences. Correspondingly, although we do not anticipate transferring any user information outside of the PRC, our PRC users may have the potential needs to make reservations inside PRC and enjoy travel services overseas. Under such circumstances, we may need to transfer user data outside of the PRC to Wetour or our overseas business partners to satisfy our PRC users’ needs and such user data is mainly the user’s information required for reservation such as the user’s name and contact information which we believe is not Important Data or sensitive personal information; if we cumulatively transfer abroad the personal information of PRC users, we believe we will be subject to the requirements by the outbound data transfer regulations.
In the circumstances we may be subject to such requirements, we believe we would obtain approval from the CAC. However, failure to pass such requirements and/or to comply with the data privacy and data security requirements could subject us to penalties, damage its reputation and brand, and harm its business and the results of operations.
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If we do not comply with the above regulations, including requirements on cybersecurity review, personal information protection, moving technology in and out of the PRC, or outbound data transfer, the regulatory agencies may also limit our ability to pay dividends outside of mainland China, delay or restrict the repatriation of the proceeds from our offerings into mainland China or take other actions that could have a material adverse effect on our business, financial condition, results of operations and prospects, as well as the trading price of our securities.
The PRC legal system is based in part on government policies, and new laws and regulations may be enacted from time to time, some of which may have a retroactive effect. Furthermore, substantial uncertainties exist regarding the interpretation and implementation of current and any future PRC laws and regulations. It is not certain whether any future regulations will impose restrictions on the business that we are currently engaging in China. As of the date of this report, we have not received any notice from any authorities identifying us as a CIIO, DPO or requiring us to undertake a cybersecurity review or an outbound data transfer review by the CAC.
We conduct our business primarily through our PRC Subsidiaries and the VIE, and such operations in China are governed by PRC laws and regulations. Uncertainties regarding the enforcement of laws and the fact that rules and regulations in China can change quickly with little advance notice, along with the risk that the Chinese government may intervene or influence our operations at any time, or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers could result in a material change in our operations, financial performance and/or the value of our ordinary shares or impair our ability to raise money.
The required filing with China Securities Regulatory Commission (“CSRC”) in connection with our initial public offering under New Overseas Listing Rules published was completed on April 2, 2024, but we cannot assure you that we will not be subject to additional requirements from the CSRC or other PRC regulatory agencies for offerings, and we may face sanctions by the CSRC or other PRC regulatory agencies for failure to timely satisfy any such additional requirements.
On February 17, 2023, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Enterprises (the “New Overseas Listing Rules”) with five interpretive guidelines, which came into effect on March 31, 2023. The New Overseas Listing Rules require Chinese domestic enterprises to complete filings with relevant governmental authorities and report related information under certain circumstances, such as: a) an issuer making an application for initial public offering and listing in an overseas market; b) an issuer making a subsequent overseas securities offering after having been listed on an overseas market; c) a domestic company seeking an overseas direct or indirect listing of its assets through single or multiple acquisition(s), share swap, transfer of shares or other means.
According to the Notice on Arrangements for Overseas Securities Offering and Listing by Domestic Enterprises, published by the CSRC on February 17, 2023, a company that (i) has already completed overseas listing or (ii) has already obtained the approval for the offering or listing from overseas securities regulators or exchanges but has not completed such offering or listing before effective date of the new rules and also completes the offering or listing before September 30, 2023 will be considered as an existing listed company and is not required to make any filing until it conducts a new offering in the future. For the company that has already submitted offering and listing applications but not yet obtained the approvals from overseas securities regulators or exchanges shall choose to make its filing with the CSRC at a reasonable time but before the completion of the offering/listing. For the company that has already obtained CSRC approval for overseas listing or offering can continue its process during the valid term of the CSRC approval without additional filing and it shall make the filing pursuant to the new rules if it does not complete the offering or listing before the expiration of the original approval from CSRC.
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On February 24, 2023, the CSRC, MOF, National Administration of State Secrets Protection and National Archives Administration of China jointly issued the Provisions on Strengthening the Confidentiality and Archive Management Work Relating to the Overseas Securities Offering and Listing, or the Confidentiality Provisions, which came into effect on March 31, 2023 with the New Overseas Listing Rules. The Confidentiality Provisions require that, among other things, (a) a domestic company that plans to, either directly or through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level; and (b) domestic company that plans to, either directly or through its overseas listed entity, publicly disclose or provide to relevant individuals and entities including securities companies, securities service providers and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations.
Any overseas offering and listing made by an issuer that meets both the following conditions will be determined as indirect offering and listing in overseas market and, therefore, be subject to filing requirement: (i) 50% or more of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year is accounted for by domestic companies; and (ii) the main parts of the issuer’s business activities are conducted in the Mainland China, or its main places of business are located in the Mainland China, or the senior managers in charge of its business operation and management are mostly Chinese citizens or domiciled in the Mainland China. The determination as to whether or not an overseas offering and listing by domestic companies is indirect, shall be made on substance over form basis. As of the date of this report, we meet the conditions that will be determined as indirect offering and listing in overseas market and, based on AllBright’s advice, we are subject to filing requirement pursuant to the New Overseas Listing Rules, and, our offering are therefore contingent on the timely completion of the filing procedures with the CSRC. As we are required to file with the CSRC for future offerings, if we cannot complete the filing with the CSRC in compliance with the New Overseas Listing Rules on a timely basis, the CSRC may order rectification, issue warnings, and impose a fine between RMB1 million and RMB10 million on our PRC Subsidiaries. However, as the New Overseas Listing Rules are newly issued, there remains uncertainty as to how it will be interpreted or implemented, and we may be required to obtain approval from any other PRC governmental authorities, which could adversely and materially affect our business operations and financial outlook, and significantly limit or completely hinder our ability to offer or continue to offer our ordinary shares to investors and could cause the value of our ordinary shares to significantly decline or such shares to become worthless.
If we become subject to additional scrutiny, criticism and negative publicity involving U.S.-listed China-based companies, we may have to expend significant resources to investigate and resolve the matter which could harm our business operations and our reputation and could result in a loss of your investment in our Ordinary Shares, especially if such matter cannot be addressed and resolved favorably.
Recently, U.S. public companies that have substantial operations in China have been the subject of intense scrutiny, criticism and negative publicity by investors, financial commentators and regulatory agencies. Much of the scrutiny, criticism and negative publicity has centered around financial and accounting irregularities, a lack of effective internal controls over financial accounting, inadequate corporate governance policies or a lack of adherence thereto and, in some cases, allegations of fraud. As a result of the scrutiny, criticism and negative publicity, the publicly traded stock of many U.S.-listed China-based companies has decreased in value and, in some cases, has become virtually worthless. Some of these companies have been subject to shareholder lawsuits and SEC enforcement actions and have conducted internal and external investigations into the allegations. It is not clear what effect this sector-wide scrutiny, criticism and negative publicity will have on us, our business and offering. If we become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, we will have to expend significant resources to investigate such allegations and/or defend our company. This situation may be a major distraction to our management. If such allegations are not proven to be groundless, our business operations will be severely hindered and your investment in our Ordinary Shares could be rendered worthless.
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The Chinese legal system embodies uncertainties which could negatively affect our listing on Nasdaq and limit the legal protections available to you and us.
The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential value.
In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation since then has significantly enhanced the protections afforded to various forms of foreign investments in China. However, China has not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently cover all aspects of China. In particular, the interpretation and enforcement of these laws and regulations involve uncertainties. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory provisions and contractual terms, it may be difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection Wetour Robotics enjoys. These uncertainties may affect Wetour Robotics’ judgment on the relevance of legal requirements and Wetour Robotics’ ability to enforce its contractual rights or tort claims. In addition, the regulatory uncertainties may be exploited through unmerited or frivolous legal actions or threats in attempts to extract payments or benefits from Wetour Robotics.
Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all and may have a retroactive effect. As a result, we may not be aware of its violation of any of these policies and rules until sometime after the violation. In addition, any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention.
New laws and regulations may be enacted from time to time and substantial uncertainties exist regarding the interpretation and implementation of current and any future PRC laws and regulations applicable to businesses of Wetour Robotics, the VIE and our PRC Subsidiaries. In particular, the PRC government may continue to promulgate new laws, regulations, rules and guidelines governing new economy companies with respect to a wide range of issues, such as intellectual property, unfair competition and antitrust, privacy and data protection, and other matters. Compliance with these laws, regulations, rules, guidelines, and implementations may be costly, and any incompliance or associated inquiries, investigations, and other governmental actions may divert significant management time and attention and our financial resources, bring negative publicity, subject us to liabilities or administrative penalties, or materially and adversely affect our business, financial condition, results of operations and the value of our ordinary shares.
Risks Related to Our Ordinary Shares
Our Ordinary Shares may be thinly traded and you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares.
Our Ordinary Shares may be “thinly-traded,” meaning that the number of persons interested in purchasing our Ordinary Shares at or near bid prices at any given time may be relatively small or non-existent. This situation may be attributable to a number of factors, including the fact that we are relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and might be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. A broad or active public trading market for our Ordinary Shares may not develop or be sustained.
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If we fail to meet applicable listing requirements, Nasdaq may delist our Ordinary Shares from trading, in which case the liquidity and market price of our Ordinary Shares could decline.
In order to continue listing our Ordinary Shares on the Nasdaq, we must maintain certain financial and share price levels and we may be unable to meet these requirements. We cannot assure you that our Ordinary Shares will continue to be listed on the Nasdaq in the future. The continued listing requirement of Nasdaq under Nasdaq Listing Rules 5550(a)(2) requires that a Nasdaq listed company maintain a minimum bid price of $1.00 per share.
We received a notification letter from Nasdaq dated December 30, 2025, indicating that the closing bid price of our Ordinary Shares fell below $1.00 per share for 30 consecutive trading days, which was not in compliance with Nasdaq Listing Rule 5450(a)(1). On June 23, 2026, we received a notification from Nasdaq, indicating that the closing bid price of our Ordinary Shares has been at $1.00 per share or greater for the last 10 consecutive business days, which is in compliance with Nasdaq Listing Rule 5450(a)(1), and therefore, this case was closed. However, if the closing bid price of our Ordinary Shares falls below $1.00 per share for 30 consecutive business days within one year of June 23, 2026, we will not be eligible for the 180-calendar day compliance period to regain compliance, and Nasdaq may instead issue a delisting determination with respect to our Ordinary Shares, subject to our right to request a hearing before a Nasdaq Hearings Panel.
Although we have regained compliance, we cannot assure you that we can continue to satisfy the minimum bid price requirement or other applicable Nasdaq continued listing requirements in the future. If we fail to comply with the applicable listing standards and Nasdaq delists our Ordinary Shares, we and our Shareholders could face significant material adverse consequences, including:
| ● | a limited availability of market quotations for our Ordinary Shares; |
| ● | reduced liquidity for our Ordinary Shares; |
| ● | a determination that our Ordinary Shares are “penny stock”, which would require brokers trading in our Ordinary Shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our Ordinary Shares; |
| ● | a limited amount of news about us and analyst coverage of us; and |
| ● | a decreased ability for us to issue additional equity securities or obtain additional equity or debt financing in the future. |
The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or pre-empts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because we expect that our Ordinary Shares will be listed on Nasdaq, such securities will be covered securities. Although the states are pre-empted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. Further, if we were no longer listed on Nasdaq, our securities would not be covered securities and we would be subject to regulations in each state in which we offer our securities.
The market price of our Ordinary Shares may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the public offering price.
The trading price of our Ordinary Shares is likely to continue to be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors, including the performance and fluctuation of the market prices of other companies with business operations located mainly in China that have listed their securities in the United States. The securities of some of these companies have experienced significant volatility since their initial public offerings, including, in some cases, substantial price declines in their trading prices. The trading performances of other Chinese companies’ securities after their offerings may affect the attitudes of investors toward Chinese companies listed in the United States in general and consequently may impact the trading performance of our Ordinary Shares, regardless of our actual operating performance.
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The market price of our Ordinary Shares may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:
| ● | actual or anticipated fluctuations in our revenue and other operating results; |
| ● | the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; |
| ● | actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; |
| ● | announcements by us or our competitors of significant services or features, technical innovations, acquisitions, strategic relationships, joint ventures, or capital commitments; |
| ● | price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; |
| ● | lawsuits threatened or filed against us; and |
| ● | other events or factors, including those resulting from war or incidents of terrorism, or responses to these events. |
In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have filed securities class action litigation following periods of market volatility. In the event that we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business.
We may experience extreme stock price volatility, including any stock-run up, unrelated to our actual or expected operating performance, financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Ordinary Shares.
In addition to the risks addressed above, our Ordinary Shares may be subject to extreme volatility that is seemingly unrelated to the underlying performance of our business. In particular, our Ordinary Shares may be subject to rapid and substantial price volatility, low volumes of trades and large spreads in bid and ask prices, given that we have relatively small public floats. Such volatility, including any stock-run up, may be unrelated to our actual or expected operating performance, financial condition or prospects.
Holders of our Ordinary Shares may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of our Ordinary Shares. As a result of this volatility, investors may experience losses on their investment in our Ordinary Shares. Furthermore, the potential extreme volatility may confuse the public investors of the value of our stock, distort the market perception of our stock price and our company’s financial performance and public image, negatively affect the long-term liquidity of our Ordinary Shares, regardless of our actual or expected operating performance. If we encounter such volatility, including any rapid stock price increases and declines seemingly unrelated to our actual or expected operating performance and financial condition or prospects, it will likely make it difficult and confusing for prospective investors to assess the rapidly changing value of our Ordinary Shares and understand the value thereof.
Volatility in our Ordinary Shares price may subject us to securities litigation.
The market for our Ordinary Shares may have, when compared to seasoned issuers, significant price volatility and we expect that our share price may continue to be more volatile than that of a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management’s attention and resources.
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We have broad discretion in the use of proceeds from our previous and future offerings and may not use them effectively.
Our management has broad discretion in the application of the net proceeds from our at-the-market offering conducted in 2026, as well as any remaining proceeds from our previous offerings and the proceeds from any future financing activities, including for the development and commercialization of our Physical AI products and for working capital and general corporate purposes. You do not have the opportunity, as part of your investment decision, to assess whether the net proceeds are being used appropriately. Our management may use the proceeds for purposes that do not improve our results of operations or enhance the value of our Ordinary Shares. The failure of our management to apply these funds effectively could adversely affect our business and results of operations.
In order to raise sufficient funds to enhance operations, we may have to issue additional securities at prices which may result in substantial dilution to our shareholders.
If we raise additional funds through the sale of equity or convertible debt, our current shareholders’ percentage ownership will be reduced. In addition, these transactions may dilute the value of Ordinary Shares issued and outstanding. We may have to issue securities that may have rights, preferences and privileges senior to our Ordinary Shares. We cannot provide assurance that we will be able to raise additional funds on terms acceptable to us, if at all. If future financing is not available or is not available on acceptable terms, we may not be able to fund our future needs, which would have a material adverse effect on our business plans, prospects, results of operations and financial condition.
We are not likely to pay cash dividends in the foreseeable future.
We currently intend to retain any future earnings for use in the operation and expansion of our business. Accordingly, we do not expect to pay any cash dividends in the foreseeable future but will review this policy as circumstances dictate. Should we determine to pay dividends in the future, our ability to do so will depend upon the receipt of dividends or other payments from our subsidiaries. Our subsidiaries may, from time to time, be subject to restrictions on their ability to make distributions to us, including restrictions on the conversion of RMB into US dollars or other hard currency and other regulatory restrictions.
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.
Our corporate affairs are governed by our Second A&R Memorandum and Articles of Association and by the Cayman Islands Companies Act (Revised) as may be supplemented or amended from time to time (“Companies Act”) and common law of the Cayman Islands. The rights of shareholders to take legal action against our directors and us, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law. Decisions of the Privy Council (which is the final court of appeal for British Overseas Territories such as the Cayman Islands) are binding on a court in the Cayman Islands. Decisions of the English courts, and particularly the Supreme Court of the United Kingdom and the Court of Appeal are generally of persuasive authority but are not binding on the courts of the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedents in the United States. In particular, the Cayman Islands has a different body of securities laws as compared to the United States, and provide significantly less protection to investors. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action before the United States federal courts. The Cayman Islands courts are also unlikely to impose liabilities against us in original actions brought in the Cayman Islands, based on certain civil liability provisions of United States securities laws.
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Currently, a significant portion of our operations are conducted outside the United States, and a significant portion of our assets are also located outside the United States. All of our directors and officers are nationals or residents of jurisdictions other than the United States and a substantial portion of their assets are located outside the United States. As a result, it may be difficult for a shareholder to effect service of process within the United States upon these persons, or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the federal securities laws of the United States or any state in the United States.
Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records (other than the memorandum and articles of association and any special resolutions passed by such companies, and the register of mortgages and charges of such companies) or to obtain copies of lists of shareholders of these companies. Our directors have discretion under our Second A&R Memorandum and Articles of Association of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.
As a result of all of the above, our shareholders may have more difficulty in protecting their interests through actions against us or our officers, directors or major shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States.
We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public companies.
We are a foreign private issuer within the meaning of the rules under the Exchange Act. As such, we are exempt from certain provisions applicable to United States domestic public companies. For example:
| ● | we are not required to provide as many Exchange Act reports, or as frequently, as a domestic public company; |
| ● | for interim reporting, we are permitted to comply solely with our home country requirements, which are less rigorous than the rules that apply to domestic public companies; |
| ● | we are not required to provide the same level of disclosure on certain issues, such as executive compensation; |
| ● | we are exempt from provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information; |
| ● | we are not required to comply with the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; and |
| ● | we are not required to comply with Section 16 of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and establishing insider liability for profits realized from any “short-swing” trading transaction. |
We will be required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to file reports on Form 6-K as a foreign private issuer. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. In addition, as a foreign private issuer, we are exempt from the proxy rules under Section 14 of the Securities Exchange Act of 1934, as amended, pursuant to Rule 3a12-3(b) thereunder, and we will follow the requirements of Cayman Islands and our Second A&R Memorandum and Articles of Association in connection with the calling and conduct of our annual and special shareholders’ meetings. As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer.
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We are an “emerging growth company” within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make it more difficult to compare our performance with other public companies.
We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act. Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
As an “emerging growth company” under applicable law, we will be subject to reduced disclosure requirements. Such reduced disclosure may make our Ordinary Shares less attractive to investors.
For as long as we remain an “emerging growth company”, as defined in the JOBS Act, we will elect to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies”, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. Because of these lessened regulatory requirements, our shareholders would be left without information or rights available to shareholders of more mature companies. If some investors find our Ordinary Shares less attractive as a result, there may be a less active trading market for our Ordinary Shares and our share price may be more volatile.
We will incur increased costs as a result of being a public company, particularly after we cease to qualify as an “emerging growth company.”
We will incur significant legal, accounting and other expenses as a public company that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and NASDAQ Capital Market, impose various requirements on the corporate governance practices of public companies. We are an “emerging growth company,” as defined in the JOBS Act and will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our IPO, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Ordinary Shares that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 in the assessment of the emerging growth company’s internal control over financial reporting and permission to delay adopting new or revised accounting standards until such time as those standards apply to private companies.
Compliance with these rules and regulations increases our legal and financial compliance costs and makes some corporate activities more time-consuming and costly. After we are no longer an “emerging growth company,” or until five years following the completion of our initial public offering, whichever is earlier, we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 and the other rules and regulations of the SEC. For example, as a public company, we will be required to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures. We will incur additional costs in obtaining director and officer liability insurance. In addition, we will incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.
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We may become a “controlled company” within the meaning of the NASDAQ Stock Market Rules and, as a result, may rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.
We do not believe we are a “controlled company” as defined under the NASDAQ Stock Market Rules. However, in the event that our principal shareholders who beneficially own more than 50% of our issued and outstanding Ordinary Shares in the future, decide to act as a group, we may be deemed to be a “controlled company”. For so long as we are a controlled company under that definition, we are permitted to elect to rely, and may rely, on certain exemptions from corporate governance rules, including:
| ● | an exemption from the rule that a majority of our board of directors must be independent directors; an exemption from the rule that the compensation of our chief executive officer must be determined or recommended solely by independent directors; and |
| ● | an exemption from the rule that our director nominees must be selected or recommended solely by independent directors. |
As a result, you will not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements.
Cayman Islands economic substance requirements may have an effect on our business and operations.
The International Tax Co-operation (Economic Substance) Act (Revised) (the “Economic Substance Act”) came into force in the Cayman Islands in January 2019, introducing certain economic substance and related reporting requirements for in-scope Cayman Islands entities which are engaged in certain geographically mobile business activities (“relevant activities”). As the Company is a Cayman Islands exempted company, its compliance obligations under the Economic Substance Act include filing annual notifications (and, if required, returns) with the Cayman Islands Tax Information Authority, in which the Company needs to report, among other things, whether or not it has carried out any relevant activities and, if so, whether or not it has satisfied the applicable economic substance test (as set out under the Economic Substance Act) in relation to such relevant activities (“ES Test”). It is anticipated that the Company will not be engaging in any relevant activities and will therefore not be required to meet the ES Test; or will otherwise only be engaged in a relevant activity in its capacity as a pure equity holding company such that it will be subject to a reduced ES Test under and in accordance with the Economic Substance Act. However, the Economic Substance Act has been subject to certain amendments since its commencement and, as it reflects a relatively new regime, it is anticipated that the Economic Substance Act may continue to evolve over time and may be subject to further amendments. Failure to satisfy applicable requirements as set out in the Economic Substance Act may subject the Company to enforcement action (including administrative penalties) under the Economic Substance Act.
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If securities or industry analysts do not publish research or reports about our business, or if they publish a negative report regarding our Ordinary Shares, the price of our Ordinary Shares and trading volume could decline.
The trading market for our Ordinary Shares may depend in part on the research and reports that industry or securities analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade us, the price of our Ordinary Shares would likely decline. If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price of our Ordinary Shares and the trading volume to decline.
ITEM 4. INFORMATION ON THE COMPANY
| A. | History and Development of the Company |
Corporate History
We were incorporated in the Cayman Islands on February 10, 2022 under the name Webus International Limited. Youbus International Limited (“Youbus International”), our wholly-owned subsidiary, was incorporated in the British Virgin Islands on February 16, 2022. Webus Hongkong Limited (“Webus HK”), a wholly-owned subsidiary of Youbus International, was incorporated in Hong Kong on February 22, 2022. Zhejiang Xinjieni Technology Co., Ltd. (“WFOE”), Webus HK’s wholly owned subsidiary, was organized pursuant to Hong Kong law on August 31, 2022. Our variable interest entity, Zhejiang Youba Technology Co., Ltd., which we refer to as Youba Tech, was established on August 16, 2019 in Hangzhou, Zhejiang Province pursuant to PRC laws. Webus Travel Agency Co., Ltd., previously a wholly-owned subsidiary of Youba Tech, was established on August 27, 2020 in Hangzhou, Zhejiang Province pursuant to PRC laws. We expanded its operations to United States in March 2022 through Wetour Travel Tech LLC (“Wetour”), a limited liability company established in Delaware pursuant to Delaware laws.
On September 7, 2022, the Company consummated a reorganization pursuant to which, WFOE acquired a 50% equity interests in Youba Tech and entered into a series of contractual arrangements for 50% VIE Interests with Youba Tech, as well as Individual Registered Shareholders. Wetour Robotics is a holding company with no business operation other than holding the shares in Youbus International and Wetour, and Youbus International is a pass-through entity with no business operation. WFOE is engaged in the business of managing the operation of Youba Tech and Webus Travel Agency. Hangzhou Shunxing Technology Co., Ltd., a wholly-owned subsidiary of WFOE, which we refer to as Hangzhou Shunxing, was established on June 10, 2025 in Hangzhou, Zhejiang Province pursuant to PRC laws.
On November 5, 2025, Youba Tech transferred its 100% equity interest in Webus Travel Agency to Hangzhou Shunxing for a nominal consideration of RMB1. Following the transfer, Webus Travel Agency became a wholly-owned subsidiary of Hangzhou Shunxing and an indirectly wholly-owned subsidiary of the Company, and ceased to be a subsidiary of Youba Tech.
On December 9, 2025, we established NextFood Technologies Inc. (“NextFood”) in the State of Delaware. On December 24, 2025, NextFood established HeatBowl LLC (“HeatBowl”) as its subsidiary in the State of Texas.
On March 2, 2026, our shareholders approved the change of the Company’s name Webus International Limited 微巴国际有限公司 to Wetour Robotics Limited. On March 9, 2026, the Company received from the Registrar of Companies of the Cayman Islands a Certificate of Incorporation on Change of Name confirming that the Company’s name has been changed to Wetour Robotics Limited.
On March 19, 2026, HeatBowl LLC was renamed to Vantrapower LLC to pursue transformer supply and power infrastructure opportunities for data centers, industrial facilities, energy storage projects and other high-load applications. In September 2026, NextFood Technologies LLC transferred its 51% equity interest in Vantrapower LLC to Wetour Travel Tech LLC. Following the transfer, Vantrapower LLC became a subsidiary of Wetour Travel Tech LLC and ceased to be a subsidiary of NextFood Technologies Inc.
As of the date of this report, we conduct our business operations by the VIE, Hangzhou Shunxing and Webus Travel Agency in China and our wholly owned subsidiaries Wetour, NextFood and Vantrapower in United States. Our Physical AI platform development activities are principally conducted through our United States subsidiaries including NextFood and Vantrapower.
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Controlled Subsidiaries
| Controlled Subsidiaries | Equity interest directly or indirectly held by our company |
Place of Incorporation |
Date of Incorporation | |||
| Youbus International Limited (“Youbus International”) | Wetour Robotics holds 100% equity interest | British Virgin Islands | February 16, 2022 | |||
| Webus Hongkong Limited (Webus HK) | Youbus International holds 100% equity interest | Hong Kong | February 22, 2022 | |||
| Zhejiang Xinjieni Technology Co., Ltd. (“WFOE”) | Webus HK holds 100% equity interest | PRC | August 31, 2022 | |||
| Hangzhou Shunxing Technology Co., Ltd. (“Hangzhou Shunxing”) | WFOE holds 100% equity interest | PRC | June 10, 2025 | |||
| Hangzhou Webus Travel Agency Co., Ltd. (“Webus Travel Agency”) | Hangzhou Shunxing holds 100% equity interest | PRC | August 27, 2020 | |||
| Wetour Travel Tech LLC (“Wetour”) | Wetour Robotics holds 100% equity interest | Delaware, U.S.A | March 16, 2022 | |||
| NextFood Technologies Inc. (“NextFood”) | Youbus International holds 51% equity interest | Delaware, U.S.A | December 9, 2025 | |||
| Vantrapower LLC (“Vantrapower”) | Wetour holds 51% equity interest | Austin, Texas, U.S.A | December 24, 2025 |
The VIE
| The VIE | Equity
interest directly or indirectly held by our company |
Equity
interest not directly or indirectly held by our company |
Place
of Incorporation |
Date
of Incorporation | ||||
| Zhejiang Youba Technology Co., Ltd. (“Youba Tech”) | WFOE holds 50% equity interest | Mr. Zheng Jiahua and Mr. Wu Chunyun holds 45.56% and 4.44% respectively | PRC | August 16, 2019 |
Recent Developments
On February 27, 2026, we held an extraordinary general meeting of shareholders, pursuant to the meeting our shareholders approved an increase in our authorized share capital from US$50,000, divided into 500,000,000 ordinary shares of par value US$0.0001 each, to US$100,000, divided into 1,000,000,000 ordinary shares of the same par value. Our shareholders also approved the change of our name from “Webus International Limited 微巴国际有限公司” to Wetour Robotics Limited. On March 9, 2026, we received from the Registrar of Companies of the Cayman Islands a Certificate of Incorporation on Change of Name confirming that the Company’s name has been changed to Wetour Robotics Limited. In addition, the amended and restated memorandum and articles of association reflecting the name change and increased authorized share capital was registered with the Registrar and became in effect.
On March 2, 2026, we entered into securities purchase agreements with ten purchasers for a private investment in public equity transaction in reliance on Regulation S under the Securities Act of 1933, as amended (the “Securities Act”). Under these agreements, we agreed to issue and sell 60,000,000 ordinary shares of par value US$0.0001 each at US$0.086 per share, for aggregate gross proceeds of US$5,160,000. On March 18, 2026, we completed the closing of the transaction and issued the shares on March 18, 2026.
On March 17, 2026, we filed a shelf registration statement on Form F-3 (File No. 333-294373) covering the offer and sale from time to time of up to US$100,000,000 of securities, including ordinary shares, share purchase contracts, share purchase units, warrants, debt securities, rights and units. The registration statement was declared effective on March 30, 2026.
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On April 30, 2026, we filed a separate registration statement on Form F-3 (File No. 333-295457) to register the resale of 19,000,000 ordinary shares issued in the March 2026 private placement by certain selling shareholders. The registration statement was declared effective on May 13, 2026. The resale registration did not constitute an additional issuance of shares by us, and we would not receive proceeds from sales by the selling shareholders.
On May 15, 2026, we entered into the At Market Sales Agreement with Chaince Securities, LLC (“Chaince”). In accordance with the terms of the At Market Sales Agreement, we may offer and sell our Ordinary Shares, having an aggregate offering price of up to $17,000,000 from time to time through an at the market offering under which Chaince would as sales agent and/or principal. The offering has been registered under the Securities Act pursuant to the Company’s shelf registration statement on Form F-3 (Registration No. 333-294373), as supplemented by the prospectus supplement dated May 15, 2026. For sales in which Chaince acted as sales agent, we agreed to pay a commission equal to 3.0% of gross proceeds and reimburse specified expenses. On July 6, 2026, we entered into Amendment No. 1 to the At Market Sales Agreement with Chaince, to increase the maximum aggregate offering amount from US$17,000,000 to US$50,000,000.
On August 3, 2026, we effected a 1-for-100 share consolidation, pursuant to the ordinary resolution passed by the shareholders of the Company at the extraordinary general meeting held on February 27, 2026 and the board resolutions passed by the board of directors on July 6, 2026. As a result of the share consolidation, every 100 ordinary shares of par value US$0.0001 each were consolidated into one ordinary share of par value US$0.01, with fractional entitlements rounded up to the next whole share.
On August 11, 2026, we entered into certain securities purchase agreements (the “Agreements”) with seven purchasers (the “Purchasers”) for a private investment in public equity transaction in reliance on Regulation S under the Securities Act of 1933, as amended (the “Act”). Pursuant to the Agreement, the Company agreed to issue and sell to the Purchasers an aggregate of 2,000,000 ordinary shares, par value $0.01 per share (the “Shares”), at a purchase price of $0.90 per Share, for gross proceeds to the Company of $1.8 million. Of the 2,000,000 Shares, 500,000 Shares were purchased for an aggregate purchase price of US$450,000 by Zheng Jiahua, the Chairman of the Board of directors of the Company. The Shares have not been registered under the Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
On August 19, 2026, we suspended sales of our Ordinary Shares, pursuant to that certain Sales Agreement dated May 15, 2026, as amended by the Amendment No.1 to the Sales Agreement dated July 6, 2026 (the “Sales Agreement”), between the Company and Chaince, the Company’s sales agent thereunder, and provided notice Chaince that we are terminating the Sales Agreement, which termination was become effective 5 calendar days after August 19, 2026, in accordance with the terms of the Sales Agreement. We offered and sold 25,606,595 Ordinary Shares for gross proceeds of approximately $2,290,279 pursuant to the Sales Agreement.
On August 24, 2026, we held an extraordinary general meeting of shareholders, pursuant to the meeting our shareholders approved an increase in authorized share capital from US$100,000, divided into 10,000,000 ordinary shares of par value US$0.01 each, to US$20,000,000,000, divided into 2,000,000,000,000 ordinary shares of the same par value. Our shareholders also approved the adoption of the Second A&R Memorandum and Articles of Association reflecting the share capital increase and permitting ordinary resolutions in writing to be passed by members representing a majority of total voting rights, rather than requiring the signatures of all members entitled to vote.
On August 26, 2026, we entered into a sales agreement (the “Sales Agreement”) with Rodman & Renshaw LLC (“Rodman”). In accordance with the terms of the Sales Agreement, we may offer and sell our Ordinary Shares, having an aggregate offering price of up to $75,000,000 from time to time through an at the market offering under which Rodman would act as sales agent and/or principal. The offering has been registered under the Securities Act pursuant to the Company’s shelf registration statement on Form F-3 (Registration No. 333-294373), as supplemented by the prospectus supplement dated August 26, 2026. We agreed to pay Rodman a commission of up to 3.0% of the gross proceeds from sales in which it acted as sales agent and reimburse specified expenses. On October 15, 2026, we have further paused further sales of our Ordinary Shares under the existing at-the-market equity offering program pursuant to the Sales Agreement. The decision reflects our ongoing evaluation of market conditions and capital requirements. During the pause, we will not initiate any new sales under Sale Agreement. The Sales Agreement remains in place, and we retain the flexibility to resume sales in the future, subject to applicable requirements and market conditions.
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Corporate Structure
The following diagram illustrates our corporate structure, including our subsidiaries and the VIE as of the date of this report:
Contractual Arrangements with the VIE and Individual Registered Shareholders
Current PRC laws and regulations impose certain restrictions or prohibitions on foreign ownership of companies that engage in value-added telecommunication business. We are a company registered in the Cayman Islands. Our PRC subsidiary, Xinjieni Tech, is considered a foreign-invested enterprise. To comply with PRC laws and regulations, the WFOE primarily conducts business in China through the VIE, based on a series of Contractual Arrangements. As a result of these Contractual Arrangements, we exert control over, and are deemed as the primary beneficiary of the VIE and consolidate their operating results in our financial statements subject to the conditions that we have satisfied for consolidation of the VIE under U.S. GAAP. Such conditions include that (i) we control the VIE through power to govern the activities which most significantly impact the VIE’s economic performance, (ii) we are contractually obligated to absorb losses of the VIE that could potentially be significant to the VIE, and (iii) we are entitled to receive benefits from the VIE that could potentially be significant to the VIE.
The following is a summary of the Contractual Arrangements by and among WFOE, the VIE, and Individual Registered Shareholders. These Contractual Arrangements enable us to (i) exercise control over the VIE, (ii) receive substantially all of the economic benefits of the VIE, and (iii) have an exclusive option to purchase all or part of the equity interests in the VIE held by the VIE’s shareholders other than WFOE when and to the extent permitted by PRC law. Our control over the VIE and our position of being the primary beneficiary of the VIE for the accounting purpose are limited to the aforementioned conditions that we met for consolidation of the VIE under U.S. GAAP.
Exclusive Business Cooperation Agreement
Pursuant to the Exclusive Business Cooperation Agreement, the VIE is obliged to pay service fee to WFOE for the exclusive services such as technical services, Internet technology support, business consulting, software development, information consulting, marketing consulting, product development and system maintenance. The service fee shall consist of 100% of the profit before tax of the VIE, after the deduction of all costs, expenses, taxes and other fee required under PRC laws and regulations. The VIE agrees not to accept the same or any similar services provided by any third party and shall not establish cooperation relationships similar to that formed by the Exclusive Business Cooperation Agreement with any third party, except with the prior written consent of WFOE. The VIE has unconditionally and irrevocably authorized WFOE or its designated person as its agent to (i) sign any necessary documents with third parties (including but not limited to customers and suppliers) on behalf of the VIE; and (ii) to handle all necessary documents and matters which will enable WFOE to exercise all or part of its rights under the Exclusive Business Cooperation Agreement on behalf of the VIE. WFOE shall have exclusive proprietary rights to and interests in any and all intellectual property rights developed or created by itself and the VIE. The Exclusive Business Cooperation Agreement shall remain effective unless terminated (i) in accordance with the provisions of the Exclusive Business Cooperation Agreement; or (ii) the entire equity interests held by Individual Registered Shareholders in the VIE have been transferred to WFOE or its designated person.
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Exclusive Call Option Agreement
Pursuant to the Exclusive Call Option Agreement, the Individual Registered Shareholders have unconditionally and irrevocably granted WFOE or its designated purchaser the right to purchase all or part of their equity interests in the VIE (“Equity Call Option”). The purchase price payable by WFOE in respect of the transfer of equity interests upon exercise of the Equity Call Option shall be the higher of (a) the lowest price permitted under PRC laws and regulations or (b) the capital contribution in relation to the equity interests. If appraisal is required by the PRC laws and regulations at the time when WFOE exercises the Option, WFOE and the Individual Registered Shareholders shall make necessary adjustment to purchase price so that it complies with any and all then applicable PRC laws and regulations. WFOE or its designated purchaser shall have the right to purchase such proportion of equity interests in the VIE as it decides at any time. The Individual Registered Shareholders shall return any amount of purchase price they received in the event that WFOE acquires the equity interests in the VIE.
The Individual Registered Shareholders and the VIE have jointly and severally further undertaken to WFOE that, without the prior written consent of WFOE, they shall not (i) in any manner supplement, change or amend the constitutional documents of the VIE, increase or decrease its share capital, or change the structure of its registered capital in other manner; (ii) sell, pledge, transfer or otherwise dispose of any assets, business or lawful revenue or create encumbrance over the VIE; (iii) incur, inherit, guarantee or assume any debt, except for debts incurred in the ordinary course of business other than payables incurred by a loan and for debts disclosed to and agreed in writing by WFOE; (iv) cause the VIE to execute any material contract with a value above RMB100,000, except the contracts executed in the ordinary course of business; (v) cause the VIE to provide any person with any loan, credit or guarantee; (vi) cause or permit the VIE to merge, consolidate with, acquire or invest in any person, or sell assets of the VIE with a value above RMB100,000; (vii) cause the VIE to enter into any transaction which may have substantial impact on the assets, liabilities, business operation, shareholding structure and other legal rights of the VIE, except the contracts executed in the ordinary course of business; and (viii) in any manner distribute dividends to their shareholders, provided that upon the written request of WFOE, the VIE shall immediately distribute all distributable profits to its shareholders.
The Exclusive Call Option Agreement shall remain effective unless terminated (i) in accordance with the provisions of the Exclusive Call Option Agreement or any other supplemental agreements; or (ii) the entire equity interests held by Individual Registered Shareholders in the VIE have been transferred to WFOE or its designated person.
Exclusive Assets Option Agreement
Pursuant to the Exclusive Assets Option Agreement, the VIE unconditionally and irrevocably granted an exclusive option to WFOE or its designated person to purchase all or any of its assets at the higher price of (a) the lowest price permitted under PRC laws and regulations or (b) the net book value of the assets. WFOE shall have absolute discretion as to when and in what manner to exercise the option to purchase assets of the VIE permitted by PRC laws and regulations. The Exclusive Assets Option Agreement shall remain effective unless terminated (i) in accordance with the provisions of the Exclusive Assets Option Agreement or any other supplemental agreements; or (ii) the entire equity interests held by the Individual Registered Shareholders in the VIE have been transferred to WFOE or its designated person.
Power of Attorney
Pursuant to the Power of Attorney, each of the Individual Registered Shareholders, irrevocably appoints WFOE, the authorized person or entity to exercise such shareholder’s rights in the VIE in accordance with PRC laws and the articles of the VIE, including without limitation to, the rights to (i) participate in shareholders meetings; (ii) the sale, transfer, pledge or disposition of the equity interest such shareholder holds in part or in whole; and (iii) designate and appoint, on behalf of such shareholder, the legal representative, the chairman, the executive director(s) and/or director(s), the supervisor(s), the general manger and other senior management members of the VIE. Without limiting the generality of the powers granted to WFOE, WFOE shall have the power and authority hereunder, on behalf of such shareholder, to execute the share transfer contracts stipulated in the Exclusive Call Option Agreement entered into among the VIE, WFOE and such shareholder and effect the terms of the Exclusive Call Option Agreement and Share Pledge Agreement. All the actions in connection with the equity interest held by such shareholder as conducted by WFOE shall be deemed as the actions of such shareholder, and all the documents related to the shareholding executed by WFOE shall be deemed to be executed by such shareholder.
Share Pledge Agreement
Pursuant to the Share Pledge Agreement, each of the Individual Registered Shareholders unconditionally and irrevocably pledged and granted first priority security interests over all of his/her/its equity interests in the VIE together with all related rights thereto to WFOE as security for performance of the Contractual Arrangements and all direct, indirect or consequential damages and foreseeable loss of interest incurred by WFOE as a result of any event of default on the part of the Individual Registered Shareholders, the VIE and all expenses incurred by WFOE as a result of enforcement of the obligations of the Individual Registered Shareholders and/or the VIE under the Contractual Arrangements. Upon the occurrence and during the continuance of an event of default (as defined in the Share Pledge Agreement), WFOE shall have the right to (i) require the Individual Registered Shareholders to immediately pay any amount payable under the Contractual Arrangements; or (ii) to exercise all such rights as a secured party under any applicable PRC law and the Share Pledge Agreement, including without limitations, being paid in priority with the equity interests.
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The said share pledge under the Share Pledge Agreement takes effect upon the completion of registration with the relevant administrative department of industry and commerce and shall remain valid until after all the contractual obligations of the Individual Registered Shareholders and the VIE under the relevant Contractual Arrangements have been fully performed and all the outstanding debts of the Individual Registered Shareholders and/or the VIE under the relevant Contractual Arrangements have been fully paid.
Spousal Consent
Pursuant to each Spousal Consent, the respective spouse of the Individual Registered Shareholders has irrevocably undertaken that, including without limitation to, the spouse (i) has full knowledge of and has consented to the entering into of the Contractual Arrangements by the relevant Individual Registered Shareholder; (ii) is not entitled to any right with respect to the shares in the VIE and undertakes not to make any claims on the equity interest in the VIE; (iii) confirms that the Individual Registered Shareholders’ performance of the Contractual Arrangements and further modification or termination of the Contractual Arrangements will not require the respective spouse’s separate authorization or consent;; (iv) undertakes to execute all necessary documents and take all necessary actions to ensure the Contractual Arrangements (as amended from time to time) to be properly performed; (v) undertakes that if the respective spouse obtains any equity interest in the VIE for any reason, the respective spouse shall be bound by the Contractual Arrangements and abide by the obligations of the shareholders of the VIE under the Contractual Arrangements, and upon WFOE’s or its designate third-party request, the respective spouse shall execute a series of written documents with substantially the same form and content as the Contractual Arrangements.
In the opinion of our PRC legal counsel, Allbright Law Offices,
| ● | the ownership structures of the VIE and our WFOE in China are not in violation of applicable PRC laws and regulations currently in effect; and |
| ● | the contractual arrangements among our WFOE, the VIE and its shareholders governed by PRC law are currently valid and binding in accordance with applicable PRC laws and regulations currently in effect and do not result in any violation of the applicable PRC laws or regulations currently in effect. |
However, our PRC legal counsel has also advised us that there are substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations. Accordingly, the PRC regulatory authorities may ultimately take a view contrary to or otherwise different from the opinion of our PRC legal counsel. It is uncertain whether any new PRC laws or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide.
If we or the VIE are found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures. See “Risk Factors — Risks Related to Corporate Structure — Substantial uncertainties exist with respect to the interpretation and implementation of the Foreign Investment Law and how it may impact the viability of the current corporate structure, corporate governance and business operations of us and the VIE.”
Financial Significance of VIE
Under PRC law, we may provide funding to our WFOE only through capital contributions or loans, and to only through loans, subject to satisfaction of applicable government registration and approval requirements. We may rely on dividends to be paid by the WFOE to fund our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders, if needed in the future. Our WFOE enjoys the economic interest in the operations of the VIE in the form of service fees under the contractual arrangements among our WFOE, the VIE, and shareholders of the VIE.
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| B. | Business Overview |
Overview
We are an exempted company incorporated in the Cayman Islands. Wetour Robotics Limited began transforming into a Physical AI infrastructure company in 2026 while continuing to operate its legacy mobility and packaged tour services. Our principal executive offices are located in Austin, Texas, and our platform research, development and commercialization activities are conducted primarily through our United States operations.
We are developing Orchestra, a hardware-software integrated operating system designed to translate human gestures and visual recognition signals into real-time command signals for connected physical devices. Orchestra is built around three components: (i) Conductor, a software pipeline that ingests surface electromyography (“sEMG”) signals from wristband, classifying real-time continuous gestures into standardized commands that drive physical device responses; (ii) Vision-Link, a visual scene recognition and execution layer that converts camera input into actuator commands; and (iii) Orchestra OS, a device-agnostic operating system comprising perception, intent, orchestration and safety engines.
During the period covered by this Report, the Group continued to operate its legacy mobility and packaged tour services business, which provided the Group’s operating revenue base for the year ended June 30, 2026. These services include (i) packaged tour service, (ii) customized chartered bus service, and (iii) commute shuttle service, operated primarily through the Group’s U.S. subsidiary and, to a lesser extent, its PRC Subsidiaries and VIE. For the year ended June 30, 2026, revenues generated by our U.S. subsidiary were RMB10,717,054, representing approximately 80.4% of total Group revenue.
As a holding company with no material operations, our operations were conducted by: (1) our subsidiaries in the United States and the PRC; (2) our direct investment in Youba Tech, the VIE in the PRC; and (3) through certain contractual arrangements with Youba Tech (the “VIE Agreements”). Through the VIE Agreements among WFOE, Youba Tech and Individual Registered Shareholders, which have not been tested in a court of law, we are regarded as the primary beneficiary of Youba Tech for accounting purposes, and, therefore, we are able to consolidate the financial results of Youba Tech in our consolidated financial statements in accordance with U.S. GAAP. However, the VIE structure cannot completely replicate a foreign investment in China-based companies, as we only hold 50% equity interest in the VIE and do not and may never hold the equity interests over 50% in the VIE. Instead, the VIE structure provides contractual exposure to foreign investment in us.
Orchestra platform and Physical AI services and solutions
To support and commercialize our Orchestra platform, our Physical AI business encompasses two core pillars: advanced hardware-software integration and critical power infrastructure.
1. Hardware Integration and Physical AI Platforms
We conduct our Physical AI research, development, and commercialization activities primarily through our United States subsidiaries, including NextFood and Vantapower. Through these entities, we are developing and integrating wearable sensors, edge computing processors, and robotic actuators designed to interface seamlessly with the Orchestra OS. Our goal is to provide a robust, device-agnostic infrastructure that enables enterprises to deploy connected physical devices—ranging from robotic manipulators to autonomous systems—with high precision and safety.
2. Power Infrastructure (Vantapower LLC)
The deployment of Physical AI and large-scale robotics requires immense, stable computing and operational power. To address this bottleneck, we established our presence in Austin, Texas, through Vantapower. Vantapower is dedicated to pursuing transformer supply and power infrastructure opportunities specifically tailored for data centers, industrial facilities, energy storage projects, and other high-load applications. By securing the supply chain for critical power components, we aim to provide a comprehensive Physical AI infrastructure solution that bridges the gap between advanced software intelligence and reliable physical execution.
Packaged tour service
We offer packaged tour service to customers inclusive of services like chartered bus service, itinerary route schedule, sightseeing tour guidance, accommodation arrangement, etc., and cater to different budgets and preferences. For the years ended June 30, 2024, 2025 and 2026, our revenue from the packaged tour service were RMB33,391,854, RMB32,039,060 and RMB11,592,228 ($1,708,483), respectively.
Customized chartered bus service
We also provide customized chartered bus service to support a more flexible and less preplanned group travel demand which ranges from one day to several weeks. For the years ended June 30, 2024, 2025 and 2026, our revenue from the customized chartered bus service were RMB10,730,641, RMB3,022,802 and RMB1,424,136 ($209,891), respectively.
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Commuter shuttle service
We provide customized commuter shuttle service with digital platform monitoring, delivering daily transportation service from predetermined departure to destination during the contract period. For the years ended June 30, 2024, 2025 and 2026, our revenue from the commuter shuttle service were RMB1,853,926, RMB531,193 and RMB319,794 ($47,132), respectively.
Our Competitive Strengths
We believe the following strengths have contributed to our success:
| ● | High Degree of Digitalization.
To ensure the high operation efficiency and superior consumer experience, we have applied digital technology in all our operating scenarios. Our self-developed internal business and user management platform enables all departments to better coordinate their work and effectively complete automatic online process of each order entry, order dispatch, settlement and invoicing. Our in-depth analysis of these accumulated data not only enables us to better understand user preferences and behavior and develop user-friendly products to assist users in making informed decisions, it also assists us in identifying potential target marketing and cross-selling opportunities. In addition, our unique cloud bidding dispatching system can dispatch orders to drivers in batches according to the price suggested by the system. Our car and bus drivers can make real-time feedback quotations according to their own circumstances. The process can improve car usage efficiency and adjust the sales price of the product more accurately. |
| ● | Abundant and Integrated Industry Resources.
Since we started operation in 2019, we have accumulated abundant industry resources through our strategic relationship with our key suppliers. Our online channels include mobile apps; official websites; mini programs based on WeChat and Alipay, which have the two largest user base in China; interfaces with three major online travel agency platforms in China, Ctrip, Fliggy, and Tongcheng; and certified partnership with the prominent content publishing platform Xiaohongshu. We also work with large traditional travel agencies and online platforms around the world (such as Alaska Skylar Travel LLC, Alaska Aurora Travel LLC, Expedia TAAP, Viator Partner, and Mei Tour) as well as online bus booking platform gotobus. In addition, in mainland China, we have more than 11,000 dispatchable vehicles to satisfy our customers’ demand under different scenarios. Outside China, we have around 10,000 drivers providing customized chartered bus services. Our industry resources have paved the way for our competitive position in providing mobility solutions for Chinese-speaking customers around the world. |
| ● | User-Centered Services.
It has always been our priority to provide excellent service to our customers with genuine care. Since our inception, we have continued to focus on building user trust, and constantly improving the platform interface to provide users with a smooth, efficient and transparent booking experience. We provide 24/7 Chinese and English itinerary butler support to serve users in every aspect. We also provide one-stop after-sale support, including pre-trip alerts, major accident compensation, refund policy for special circumstances, and emergency support. |
| ● | Diverse and Highly Customizable Travel Solutions for Different Service Scenarios
Our travel solutions are creative and highly customizable with a variety of themed travel routes to meet the needs of different customers. We constantly cooperate with travel enthusiasts to update thousands of customized routes in around the world and update our product contents on the platform in real time according to season changes and the actual situation of the scenic spots. Compared with traditional travel agencies and online group tour platforms, we provide users with more customization options and personalized adjustments with better, in depth, and more suitable travel experience. Unlike other travel industry participants, we provide transportation services in diverse scenarios such as chartered cars and buses with chauffeurs and tourist guides, customized small group day trips, school field trips, business travels, etc. Our diverse travel solutions can satisfy differentiated needs and requirements and assist us in attracting an increasing number of customers, particularly Chinese-speaking customers who want in-depth travel experience but face language barriers. We work closely with a wealth of drivers and tourist sites to design products that meet the individual needs of our customers and use our proprietary historical travel product pricing data, taking into account of car usage time, mileage, road conditions, and local consumption expenses to update and optimize our product pricing model in real time. |
| ● | Experienced Team.
We have a management and operation team with extensive industry experience. Our management team is experienced in corporate management with international vision and our operation team has specialized experience in providing travel and chartered vehicle services around the world. They bring their years of experiences with deep understanding of the industry and provide resources for customers and suppliers in various fields. |
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Our Strategies
We intend to drive the growth of our business by executing on the following strategies:
| ● | Further Integrate our platform to a comprehensive ecosystem.
We have built our and the VIE’s competitive advantage with an AI-augmented platform. We plan to continuously develop our platform into a comprehensive mobility ecosystem by building vertical integration within the platform for information flow and capital flow, external horizontal integration between our corporate customers, and end-to-end integration for complete product life cycle value chain. |
| ● | Enhance Big Data and AI Innovation.
Business travel is increasingly driven by technology. Strengthening technological innovation is one of our main strategic priorities to enhance the user experience. By further leveraging our growing travel-related database and powerful data analysis capabilities, we are able to more precisely analyze user behavior and intent, provide personalized service matching and help users make fast and informed decisions. We will continue to attract, train and retain more talent in technology, research and development. As technologies and means for human-machine interactions continue to advance, we will strive to adapt to new technologies and formats with a view to becoming an intelligent travel assistant for our users. |
| ● | Expand our customized tour and chartered bus services around the world.
In March 2022, we have started offering customized tour service in North America under the brand name “Wetour.” We plan to vigorously develop the “Wetour” brand to build our global online customized chartered bus travel platform. We will focus on expanding services for Chinese outbound tourists after the pandemic and meeting the needs of overseas Chinese for car use and private customized travel. To build the “Wetour” brand, we plan to (1) increase the exposure and popularity of the “Wetour” brands on new media channels such as Xiaohongshu and through precise marketing and promotion at railway stations and airport terminals; (2) build one-stop customized chartered bus platform for international travel with online booking for scenic spots around the world and local experience travel routes to integrate air travel, car service, lodging and touring for customers; (3) expand our partnership with major online travel agencies such as Ctrip, Fliggy, and Expedia to establish new online channels to attract more customers; and (4) provide more diversified international travel solutions for Chinese corporate customers by cooperating with international and local travel agencies, high-end membership organizations, bank wealth management departments and international airlines. |
| ● | Improve product content innovation capabilities.
We plan to drive continued business growth by enhancing our content production and distribution capabilities. Content is an integral part of our business, especially for customized travel business. We will launch diversified and creative content formats: images, short videos, live broadcasts, and recommend the most relevant customized product content to our users. We plan to provide innovative content production tools and an efficient content reward mechanism to encourage users, professional travelers, Internet celebrities and the third party social media platforms to jointly develop different customized travel itineraries and further increase user stickiness order rate of users on the platform. |
| ● | Geographically broaden our service coverage.
The service we provide outside of China has achieved the highest revenue growth rate. Our revenues generated from services outside China were RMB33,218,387, RMB28,118,356 and RMB12,271,747 ($1,808,632) for the year ended June 30, 2024, 2025 and 2026, respectively. It accounted for approximately 72.3%, 79.1% and 92.1% of our total revenues for the year ended June 30, 2024, 2025 and 2026, respectively. We plan to expand our global service and platform by continuing to maintain strategic collaborations with large online travel platforms as their vertical business supplier, cooperating with local fleet drivers and tourist guides, and increasing online marketing and short video traffic advertising |
| ● | Pursue strategic alliances, acquisitions and investments.
We plan to selectively seek acquisitions, investments, joint ventures and collaborations highly strategic and complementary to our business and operations. In particular, we may consider acquiring some customized travel service brands to complement our existing offerings and services. We will also strengthen our vertical integration and strategic partnerships with content providers to further expand our partner network. In an effort to further improve our user traffic, we may also consider establishing strategic partnerships with large online travel platforms such as Ctrip, Fliggy, Expedia. |
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Our Challenges
Our revenues decreased by 62.5%, or RMB22,256,897, to RMB13,336,158 ($1,965,506) for the year ended June 30, 2026, from RMB35,593,055 for the year ended June 30, 2025. This decrease was primarily attributable to a decline of RMB20,446,832 in revenues from packaged tour services and RMB1,598,666 in revenues from customized chartered bus services. The decrease in revenues from our legacy mobility and packaged tour services was mainly driven by weak market demand amid the broader economic downturn, as well as our strategic shift in business focus and resources toward developing our Physical AI infrastructure business in the United States. In 2026, we began transforming into a Physical AI infrastructure company and advancing the development and commercialization of Orchestra, our integrated hardware-software operating system designed to translate human gestures and visual recognition signals into real-time commands for connected physical devices. Our revenue decreased by 22.6% from RMB45,976,421 for the year ended June 30, 2024 to RMB35,593,055 for the year ended June 30, 2025. The decrease was mainly due to the decrease of revenue in the domestic market, which was primarily attributed to the adjustment in our strategic decision to focus more on the overseas market, and revenue from customized chartered bus service, which was primarily due to the fact that we integrated a portion of customized chartered bus service into packaged tour services in overseas markets, aiming to create a more competitive and all-inclusive tour service offering.
To expand our market around the world, we may face intensive competition on price, quality of services, and technology. We may not be able to compete with established international travel agencies for customers, driver resources, strategic partners such as travel agencies, airlines, hotels and tourist attraction sites. We may be required to invest significant capital to access customers, driver resources and quality travel product supplier information.
Overall, we require additional capital to develop new products, enter into new markets and drive our future growth. However, we have difficulty obtaining sufficient financing from commercial banks in China as these traditional commercial banks prefer having real assets as collaterals for their loans. We have also assessed the capital market of China, and we believe that it is difficult for a company like us to seek for financing in China.
Our Competition
There are approximately a hundred online collective mobility service platforms in China and online collective mobility service market is highly fragmented. The online collective mobility service platforms are categorized in two types based on their business models. Self-operated platforms like Youba Tech provide collective mobility service to end users by collaborating with fleet providers and generate revenues from transportation fares. They typically use real time travel data analytics technology to improve vehicle usage efficiency and travel safety. Dealmaking facilitation platforms, on the other hand, provide collective mobility service to end users by matching customers’ demand with vehicle supply and generate revenues from matching service fees. Their business model requires less assets and less fleet management. However, these platforms may not be able to compete with self-operated platforms in terms of consistent service quality, travel safety and vehicle usage efficiency.
Our Online Platforms
We deliver our CMS product offerings primarily through our online platforms, which predominately comprise (i) our WeChat-based mini programs and other third-party partners, (ii) our mobile apps, and (iii) our websites.
| ● | Mini programs. We primarily operate our self-developed mini programs predominantly on Tencent’s WeChat platform, which can be accessible by WeChat users from the drop-down list of the favorite or most frequently used mini programs in WeChat. WeChat is one of the largest social media platforms in China in terms of user base. Our mini programs direct WeChat users to our interfaces where the functions mirror our own mobile apps and websites, and enable WeChat users to, among other things, browse, compare and purchase our travel products, and receive push notifications such as pre-trip alerts, all within WeChat without leaving the app or downloading additional apps. Moreover, by using our mini programs, WeChat users authorize us to access, collect, and store data in our database to provide services and perform data-analysis and other functions to improve our services. We believe that the simplicity of accessing our WeChat-based mini programs not only grows our user traffic and engagement but also enriches services offered to WeChat users. We also operate our mini programs on platforms such as Taobao, Ctrip, and Xiaohongshu to tap into their users and search traffic. Our major third-party partner, WeChat, does not charge commissions on transactions initiated on its platform.
Unlike other third-party partners, Xiaohongshu serves purely as a promotion site to direct interested users to our own mini-program and does not charge commissions for that. |
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| ● | Mobile Apps and Websites.
Our users can reach us through our mobile apps which are available on both Android and iOS operating systems and our proprietary websites, www.wetourglobal.com, www.Wetour.vip, www.weixiaoba.vip, and www.ubus.vip. Both of our mobile apps and websites are built to enable access to our full travel product offerings with clear and functional interfaces. |
Our Service Offerings
Orchestra Platform and Physical AI Services and Solutions
Our Physical AI service offerings are currently in the commercialization and early-access phases. We provide comprehensive hardware-software integrated solutions designed to bridge human intent with physical device execution. Our primary service offerings in this segment include:
Orchestra Platform Integration and Software Development Kits (SDKs): We offer enterprise partners and hardware developers access to our proprietary Orchestra operating system, along with SDKs and Application Programming Interfaces (APIs). This enables third-party developers to integrate gesture recognition (Conductor) and visual perception (Vision-Link) capabilities into their own robotic and connected devices.
Wearable surface electromyography (sEMG) Sensors and Edge Devices: We design and supply specialized wearable wristbands and edge computing hardware that capture and process sEMG signals locally, ensuring low-latency, real-time control of connected machinery with enhanced privacy and safety.
Power Infrastructure Solutions (via Vantapower): Through our subsidiary Vantapower LLC, we provide power infrastructure planning and hardware solutions, specifically focusing on transformer procurement and supply for high-load applications. This includes powering data centers, industrial facilities, and energy storage projects that require robust, stable energy for AI computing and robotic operations.
Packaged Tour Service
Our packaged tour service offers tailored packages to both individuals and group travelers, which include chartered bus service, itinerary consultation, sightseeing tour guide, accommodation arrangement. Our revenues from packaged tour service were RMB33,391,854, RMB32,039,060 and RMB11,592,228 ($1,708,483) for the years ended June 30, 2024, 2025 and 2026, respectively. It accounted for approximately 72.7%, 90.2% and 87.0% of our total revenues for the corresponding fiscal years 2024, 2025 and 2026, respectively. We started the customizable travel service first in domestic market in December 2020 and expanded to the North America market in March 2022. We now provide services in a dozen more countries, including Japan, Korea, Singapore, and the United Arab Emirates. In line with our expectation, our revenues generated from international packaged tour services increased from RMB23,385,774 for the year ended June 30, 2024 to RMB25,432,232 for the year ended June 30, 2025. During this period, it accounted for 70.0% and 79.4% of our total revenues from packaged tour service, respectively. Our revenues generated from international packaged tour services decreased from RMB25,432,232 for the year ended June 30, 2025 to RMB11,075,340 ($1,632,303) for the year ended June 30, 2026. During this period, it accounted for 79.4% and 95.5% of our total revenues from packaged tour service, respectively.
Customized Chartered Bus Service
The customized chartered bus services were initially developed in response to the demand for more flexible and less preplanned group travel, ranging from one-day trips to several months of inter-province travel for both corporate and individual customers. We launched the customized chartered bus service in March 2021. Through collective business development, we successfully leveraged the industry resources of our major corporate customers, who have extensive experience in the transportation industry and access to the local customer base. We also established long-term business relationships with our vehicle fleet operators to ensure the availability of sufficient vehicles and drivers to support business growth. In recent years, however, revenues from our customized chartered bus services have declined. As a result, we plan to gradually reduce the scale of this business and reallocate resources to other service offerings that we believe present greater growth potential. We intend to continue providing limited customized chartered bus services, particularly in overseas markets where we achieve higher gross margins, while focusing our efforts on expanding other segments of our business. Our revenues from customized chartered bus service were RMB10,730,641, RMB3,022,802 and RMB1,424,136 ($209,891) for the year ended June 30, 2024, 2025, and 2026 respectively. It accounted for approximately 23.4%, 8.4%, and 10.7% of our total revenues for the corresponding fiscal years 2024, 2025 and 2026, respectively. During the year ended June 30, 2025, due to the relatively low average unit price per customer for the customized chartered bus services and intensified market competition, we integrated a portion of customized chartered bus service into packaged tour services in overseas markets, aiming to create a more competitive and all-inclusive tour service offering.
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Our revenues from customized chartered bus service provided outside of China decreased by 72.7% from RMB9,832,613 for the year ended June 30,2024 to RMB2,686,124 for the year ended June 30, 2025. Our revenues from customized chartered bus service provided outside of China decreased by 52.9% from RMB2,686,124 for the year ended June 30,2025 to RMB1,424,136 ($209,891) for the year ended June 30, 2026.
Our Mobile App
Our User Scenarios
We provide transportation services in diverse scenarios such as business travel vehicles, tourist buses, family travels, group travels, wedding travels, school field trips, etc. Our diverse travel solutions can satisfy differentiated needs and requirements and assist us to attract increasing number of customers.
China Market
To cater to different budgets and preferences, we provide different types of customized travel service by providing compressive services to cover transportation, accommodation, entertainment, meals and tour guide. Our offerings cover 5-seat cars to 55-seat buses to meet the needs for corporate conferences, school spring and fall field trips, corporate retirees entertainment and retreat events, employee team building events, business travels, weddings, exhibitions, and tournaments. In addition, as a high ranking and trusted partner with many traditional and online travel agencies, local tourist attraction sites, hotels and vehicle fleet providers, we are able to offer our tailored packages at competitive prices as compared to the prevailing market rate, which have attracted a growing number of customers.
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Our WeChat Mini Programs
Global Market
We operate our online customized chartered travel platform around the world under the brand “Wetour” and the Wetour app. We provide customized travel solutions to Chinese customers around the world, providing car services with Chinese-speaking drivers and tour guides. Our offerings include airport pickups and drop-offs in cities around the globe, single-day chartered vehicles, customized multi-day tours and premium small group tours, and. As a result, as of June 30, 2026, our Wetour platform has collaborated with more than 10,000 Chinese-speaking full-time drivers to cover over 80 popular urban areas around the world.
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Our International Travel Mobile App
Commuter Shuttle Service
The customers of our commuter shuttle service are predominately corporate entities who use our shuttle to transport their employees between predetermined starting points and destinations on a daily basis. We serve large corporate customers such as industrial parks, or enterprises in Zhejiang and its vicinity with our digitally administered shuttle buses, featuring online collection of boarding and boarding demand data, background heat map analysis, and automatic generation of optimal routes, boarding and boarding sites. Passengers purchase tickets online on the mini program or mobile app and websites, scan the QR code to check the ticket and get on the shuttle. Both our platform and customers can obtain real-time shuttle operation data to increase or decrease the number of shifts, pick-up and drop-off sites, and driving routes to optimize the operational efficiency of the bus line. Our revenues from commuter shuttle service decreased by approximately 71.3% from RMB1,853,926 for the year ended June 30, 2024 to RMB531,193 for the year ended June 30, 2025 and decreased by approximately 39.8% from RMB531,193 for the year ended June 30, 2025 to RMB319,794 for the year ended June 30, 2026, primarily attributable to the termination in collaboration with two major customers. All revenues were contributed by the VIE.
The following chart illustrates our commuter shuttle service to corporate customers:
Customers
We have a broad base of customers, which primarily consist of corporate customers such as enterprises, schools, industrial parks, and also other customers such as families and individuals. We have cultivated and maintained good relationships with our customers since our inception. We have a team of employees dedicated to enhancing our relationship with existing customers and developing relationships with prospective customers.
Suppliers
Our suppliers primarily consist of fleets of buses, individual drivers, local tour agencies, online travel agencies, high speed railway stations, airports, hotels, online and mobile payment services, data storage, server hosting and bandwidth providers, and advertising and marketing service providers.
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Marketing and Brand Awareness
Through a combination of online and offline marketing, brand promotion, and cross-marketing, we have created strong brands that are commonly associated in and outside China with customized mobility solutions. We will continue to use our focused marketing strategy to further enhance awareness of our brands and acquire new target users.
Brand Advertising
We conduct our brand campaigns through promotion activities in industrial parks, office buildings, and schools, advertising our brand on video streaming and new media platforms, logo displays on our cars and buses traveling at airports, railway stations, and bus stations, and designated parking spaces and billboards displaying our logos at our customers’ business locations. We also work with event organizers, and corporate customers in our marketing campaigns and embed our brand and travel products into event marketing channels. With these diverse channels, we believe that we have effective strategies to enhance brand awareness and user engagement and attract a new generation of users, and we have a unique advantage in our ability to develop truly multi-channel marketing solutions for global destinations.
Performance Advertising
We have contracted with Baidu, China’s leading online marketing channel, to prominently feature our websites and mobile application and to conduct public relations activities. We have also worked with prominent social media platforms to facilitate our services by redirecting their users to our mobile application and websites. In addition, we will be actively testing all kinds of innovative and rapidly growing mobile channels that may appeal to consumers.
Cross-Marketing
We have entered into cross-marketing arrangements with major PRC travel agencies and travel service platforms, e-commerce and internet companies, and other corporations. We are one of the top-rated travel service providers on Ctrip and Fliggy’s international travel segment.
Intellectual Property
Our intellectual property rights primarily include trademarks and domain names associated with the name “微巴士,” “未来巴士,” “优巴士” and “微途” and copyright and other rights associated with our websites, technology platform, booking software, and other aspects of our business. We regard our intellectual property as a critical factor contributing to our success, although we are not dependent on any patents, intellectual property related contracts or licenses other than some commercial software licenses available to the general public. We rely on trademark and copyright law, trade secret protection, and confidentiality agreements with our employees to protect our intellectual property rights. We require our employees to enter into agreements to keep confidential all information relating to our users, methods, business, and trade secrets during and after their employment with us. Our employees are required to acknowledge and recognize that all inventions, trade secrets, works of authorship, developments, and other processes made by them during their employment are our property.
As of June 30, 2026, we owned 26 registered trademarks, in various categories with the Trademark Office of the PRC Intellectual Property Administration and one registered trademark with the United States Patent and Trademark Office (“USPTO”). All of our trademarks were registered in or after 2018 and have an effective period of ten years.
As of June 30, 2026, we held 37 computer software copyrights and 1 other copyright registered with the PRC Copyright Administration. All of our copyrights were registered in or after 2020 and have an effective period of fifty years.
As of June 30, 2026, we had four registered domain names in China, including www.wetourglobal.com, www.Wetour.vip, www.weixiaoba.vip, and www.ubus.vip, and we have full legal rights over these domain names. As of the date of this report, all of our registered domain names were in effect.
Despite our and the VIEs’ efforts to protect ourselves from infringement or misappropriation of our and the VIEs’ intellectual property rights, unauthorized parties may attempt to copy or otherwise obtain and use our and the VIEs’ intellectual property. In the event of a successful claim of infringement and our and the VIEs’ failure or inability to develop non-infringing intellectual property or license the infringed or similar intellectual property on a timely basis, our and the VIEs’ business could be harmed.
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Technology
Since our inception, we have been able to support the substantial growth of our online and offline data and transactions through our technology and infrastructure. We have built an information technology system architecture based on cloud-native technology that supports various aspects of our business, including our mobile apps, official websites, mini programs, and open platforms. Advanced artificial intelligence, big data analysis and other core technologies have enabled our platform to maintain a technical advantage over competing products for more than a year. Our technology provides efficient and accurate marketing tools, and optimizes operational efficiency based on user preference analysis and accurate needs. Our system also provides standardized information input for travel departure and destination, as well as alias and pinyin associated functions, to empower quick and accurate searches for matching places.
Data Privacy and Security
Data security is critical to our operations. We and the VIE are committed to protecting our and the VIE’s customers’ personal information and privacy. We and the VIE have established and implemented policy on data collection, processing and usage. We have internal rules and policies in place to govern how we use and analyze personal information. We have established protocols, technologies and internal control systems to ensure that such information is not improperly accessed and disclosed. Before accessing our products and services, users must accept our user agreement and terms, whereby they agree to our collection, use and disclosure of their information in a manner that complies with appropriate laws and regulations. Internally, we have adopted a data encryption system to ensure the safe storage and transmission of data to prevent any unauthorized public or third-party members from accessing or using our data in any unauthorized way.
Employees
As of June 30, 2026, we had 18 employees, including 4 in management and administration, 3 in our customer service center, 6 in sales and marketing and 5 in financial.
As required by regulations in China, we participate in various employee social security plans that are organized by municipal and provincial governments for our PRC-based employees, including pension insurance, unemployment insurance, maternity insurance, work-related injury insurance, medical insurance and housing provident fund. We are required under PRC law to make contributions to employee benefit plans occasionally for our PRC-based employees at specified percentages of their salaries, bonuses and certain allowances of such employees, up to a maximum amount specified by local governments in China. We believe that we maintain a good working relationship with our employees and contract workers, and we have not experienced material labor disputes in the past. None of our employees and contract workers is represented by labor unions.
Our Facilities
Our principal executive offices, administrative offices, and development facilities are located at 3300 N Interstate 35, Ste 700, Room 7003, Austin, TX 78705, United States, and the lease terms on these premises expire on January 27, 202719. In addition, we maintain a customer service center and a regional sales and marketing office for the Asia-Pacific region on premises comprising approximately 127.81 square meters in Hangzhou, China. We currently lease our facilities in Hangzhou. The lease terms on these premises expire on December 15, 2027. Youba Tech also owns a building of approximately 172.3 square meters mainly used as customer service center. We believe that we will be able to obtain adequate facilities, principally through the leasing of appropriate properties, to accommodate our future expansion plans.
Insurance
We and the VIE do not maintain any liability insurance or property insurance policies covering equipment and facilities for injuries, death or losses due to fire, earthquake, flood or any other disaster, which we believe is consistent with market practice in China. Consistent with customary industry practice in China, we and the VIE do not maintain business interruption insurance, nor do we and the VIE maintain key-man life insurance. Our drivers and vehicle fleet suppliers provide vehicle and liability insurance in compliance with the PRC regulations.
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Licenses and Approvals
The following table sets forth licenses and approvals that our WFOE and the VIE are required to obtain for our and the VIE’s operations in China as of the date of this report:
| Name | Type | Licenses and Approvals |
PRC Regulatory Authority |
Expiration Date | ||||
| Zhejiang Xinjieni Technology Co., Ltd., |
WFOE | Business License | Hangzhou Administration for Industry and Commerce Yuhang Branch | August 30, 2052 | ||||
| Zhejiang Youba Technology Co., Ltd., |
VIE Entity | E-Hailing Business Permit | Hangzhou Transport Bureau | May 26, 2030 | ||||
| Hangzhou Webus Travel Agency Co., Ltd., |
WFOE Entity’s Principal Subsidiary | Travel Agency License | Zhejiang Department of Culture and Tourism |
Long term |
Regulations
Regulations of People’s Republic of China
This section sets forth a summary of the most significant rules and regulations that affect our business activities in China through our wholly owned subsidiary.
Regulations Relating to Foreign Investment
Negative List of Industries for Foreign Investment
Investment activities in the PRC by foreign investors are principally governed by the Catalogue of Encouraged Industries for Foreign Investment (the “Encouraged Catalogue”) and the Special Administrative Measures (Negative List) for Foreign Investment Access (the “Negative Lists”), which are promulgated and amended from time to time by the National Development and Reform Commission, or NDRC, and the Ministry of Commerce, or MOFCOM. Industries falling within the Encouraged Catalogue are encouraged for foreign investment, while the Negative Lists classify businesses into two categories with regard to foreign investment: “restricted” and “prohibited.” Industries not listed in the Negative Lists are generally deemed as falling into a third category, “permitted,” unless specifically restricted by other PRC laws. The NDRC and the MOFCOM promulgated the Catalogue of Encouraged Industries for Foreign Investment (2025 Edition), which was published on December 15, 2025 and took effect on February 1, 2026. The NDRC and the MOFCOM promulgated the Special Administrative Measures (Negative List) for Foreign Investment Access (2024 Edition) (the “2024 National Negative List”) on September 8, 2024, which took effect on November 1, 2024. The 2024 National Negative List reduced the number of restrictive measures from 31 to 29 and removed the remaining restrictions on foreign investment in the manufacturing industries. Industries listed on the 2024 National Negative List and the 2021 FTZ Negative List are divided into two categories: restricted and prohibited. Industries not listed on the Negative Lists are generally deemed as constituting a third “permitted” category. The establishment of wholly foreign-owned enterprises is generally allowed in permitted industries. Some restricted industries are limited to equity or contractual joint ventures, while in some cases, Chinese partners are required to hold the majority interests in such joint ventures. In addition, projects falling under the restricted category are subject to higher-level government approvals. Foreign investors are not allowed to invest in industries in the prohibited category. Industries not listed in the Negative Lists are generally open to foreign investment unless specifically restricted by other PRC regulations. Any domestic enterprise engaging in businesses prohibited by the Negative Lists that lists, issues securities and trades shares overseas must obtain pre-approval consent from relevant competent regulator; overseas investors must not engage in the operation and management of the enterprise, and the percentage of foreign shareholding is subject to the relevant provisions in the administrative measures for domestic securities investments by foreign investors.
To comply with PRC laws and regulations, we rely on equity investment with our subsidiary to operate our business in China.
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Foreign Investment Law
On March 15, 2019, the National People’s Congress approved the Foreign Investment Law, which became effective on January 1, 2020 and replace three existing laws on foreign investments in China, namely, the PRC Equity Joint Venture Law, the PRC Cooperative Joint Venture Law and the Wholly Foreign-owned Enterprise Law, together with their implementation rules and ancillary regulations. Furthermore, the Implementing Regulations of the Foreign Investment Law of the PRC, or the Implementing Regulations of FIL, was promulgated on December 26, 2019 and became effective on January 1, 2020. The Foreign Investment Law embodies an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic invested enterprises in China. The Foreign Investment Law establishes the basic framework for the access to, and the promotion, protection and administration of foreign investments in view of investment protection and fair competition.
According to the Foreign Investment Law and the Implement the Implementing Regulations of FIL, “foreign investment” refers to investment activities directly or indirectly conducted by one or more natural persons, business entities, or otherwise organizations of a foreign country (collectively referred to as “foreign investor”) within China, and the investment activities include the following situations: (i) a foreign investor, individually or collectively with other investors, establishes a foreign-invested enterprise within China; (ii) a foreign investor acquires stock shares, equity shares, shares in assets, or other like rights and interests of an enterprise within China; (iii) a foreign investor, individually or collectively with other investors, invests in a new project within China; and (iv) investments in other means as provided by laws, administrative regulations, or the State Council.
The NDRC and the MOFCOM promulgated the Special Administrative Measures (Negative List) for Foreign Investment Access (2024 Edition) (the “2024 National Negative List”) on September 8, 2024, which took effect on November 1, 2024, replacing the 2021 National Negative List and the 2021 FTZ Negative List promulgated on December 27, 2021, which took effect on January 1, 2022. Compared to the 2021 Negative Lists, the 2024 National Negative List cuts down the number of items restricted or prohibited to foreign investors from 31 to 29, removing the last two remaining restrictions in the manufacturing sector and thereby achieving a full removal of foreign investment restrictions in the manufacturing sector, widening access to more industries and fields. The Special Administrative Measures (Negative List) for Foreign Investment Access in Pilot Free Trade Zones (2021 Edition) (the “2021 FTZ Negative List”) remains in effect. However, the 2024 National Negative Lists prescribe that any domestic enterprise engaging in businesses prohibited by the Negative Lists that lists, issues securities and trades shares overseas must obtain pre-approval consent from relevant competent regulator; overseas investors must not engage in the operation and management of the enterprise, and the percentage of foreign shareholding is subject to the relevant provisions in the administrative measures for domestic securities investments by foreign investors. The Foreign Investment Law provides that foreign invested entities operating in foreign restricted or prohibited industries will require market entry clearance and other approvals from relevant PRC governmental authorities. The current industry entry clearance requirements governing investment activities in the PRC by foreign investors are set out in the 2024 National Negative Lists and the 2021 FTZ Negative Lists.
Furthermore, the five-year transition period under the Foreign Investment Law, which allowed foreign invested enterprises established according to the existing laws regulating foreign investment to maintain their structure and corporate governance after the implementation of the Foreign Investment Law, expired on December 31, 2024. Since January 1, 2025, for any such enterprise that has not adjusted its corporate form, organizational structure or other matters in accordance with the law and completed the relevant registration of changes, the market regulation authorities will not process its applications for other registration matters, and the relevant circumstances will be publicized.
In addition, the Foreign Investment Law also provides several protective rules and principles for foreign investors and their investments in the PRC, including, among other things, that local governments shall abide by their commitments to the foreign investors; foreign-invested enterprises are allowed to issue stocks and corporate bonds; except for special circumstances, in which case statutory procedures shall be followed and fair and reasonable compensation shall be made in a timely manner, expropriation or requisition of the investment of foreign investors is prohibited; mandatory technology transfer is prohibited; and the capital contributions, profits, capital gains, proceeds out of asset disposal, licensing fees of intellectual property rights, indemnity or compensation legally obtained, or proceeds received upon settlement by foreign investors within China, may be freely remitted inward and outward in RMB or a foreign currency. Also, foreign investors or the foreign investment enterprise should be subject to legal liabilities for failing to report investment information in accordance with the requirements.
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Regulations Relating to Cyber Security and Data Security
Cyber Security Law
The SCNPC promulgated the Cyber Security Law in November 2016, which became effective in June 2017, to protect cyberspace security and order. The Cyber Security Law was amended by the Standing Committee of the National People’s Congress on October 28, 2025, and the amended law took effect on January 1, 2026. Pursuant to the Cyber Security Law, any individual or organization using the network must comply with the Constitution and the applicable laws, follow the public order and respect social moralities, and must not endanger cyber security, or engage in activities by making use of the network that endanger the national security, honor and interests, or infringe on the fame, privacy, intellectual property and other legitimate rights and interests of others.
The Cyber Security Law sets forth various security protection obligations for network operators, which are defined as “owners and administrators of networks and network service providers”, including, among others, complying with a series of requirements of tiered cyber protection systems, verifying users’ real identity, localizing the personal information and important data gathered and produced by key information infrastructure operators during operations within the China and providing assistance and support to government authorities where necessary for protecting national security and investigating crimes.
Data Security Law
The Data Security Law of the PRC, which was promulgated by the SCNPC in June 2021 and took effect in September 2021, provides that China shall establish a data classification and grading protection system, formulate the important data catalogs to enhance the protection of important data. Processors of important data shall specify the person responsible for data security and management agencies to implement data security protection responsibilities. Relevant authorities will establish the measures for the cross-border transfer of important data. If any company violates the Data Security Law of the PRC to provide important data outside China, such company may be punished by administration sanctions, including penalties, fines, and/or suspension of relevant business or revocation of the business license.
The Opinions on Strictly Cracking Down on Illegal Securities Activities in Accordance with the Law, which were issued by the General Office of the State Council and another authority in July 2021, require to speed up the revision of legislation on strengthening the confidentiality and archives coordination between regulators related to overseas issuance and listing of securities, and improvement to the legislation on data security, cross-border data flow, and management of confidential information. On December 28, 2021, the Cyberspace Administration of China and other related authorities released the Measures for Cybersecurity Review, or the Cybersecurity Review Measures, which came into effect on February 15, 2022 and replaced the original Measures for Cybersecurity Review promulgated on April 13, 2020. The Cybersecurity Review Measures provides that, among others, an application for cyber security review shall be made by an issuer who is an internet platform operator before such issuer’s securities may be listed in a foreign country if the issuer possesses personal information of more than one million users, and that the relevant governmental authorities in the PRC may initiate cybersecurity review if such governmental authorities determine that an operator’s cyber products or services or data processing affect or may affect national security.
On September 30, 2024, the State Council promulgated the Network Data Security Administration Regulations (the “Data Security Regulations”) (State Council Decree No. 790), which took effect on January 1, 2025, to provide more detailed guidelines on the current rules on various aspects of data processing, including the processors’ announcement of data processing rules, obtaining consents and separate consents, security of important data, cross-border transfer of data, and further obligations of platform operators. Specifically, pursuant to the Cybersecurity Review Measures amended in November 2021 and effective February 15, 2022, internet platform operators possessing the personal information of more than one million users must apply for cybersecurity review before listing abroad, and cybersecurity review shall also apply to other data processing activities that affect or may affect national security. The Data Security Regulations also require processors of important data to conduct a risk assessment on their data processing activities annually and file the risk assessment report with the competent provincial-level authorities; the Measures on Network Data Security Risk Assessment promulgated by the CAC and other authorities in June 2026, which took effect on August 20, 2026, further provide detailed rules therefor.
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The Company has an internal management system responsible for data security with designated supervisors. The supervisors lead regular data security evaluations and take all necessary measures to address any risks. In addition, all employees who may have access to the Company’s data are required to sign confidentiality agreements and attend data security training regularly. The Company also subscribes to cloud-based data services with a reputable provider for data storage, backup, risk monitoring, and recovery. Additionally, the Company deployed an enterprise-level data protection system for more elevated security.
The Measures for Security Assessment for Outbound Data Transfer
On July 7, 2022, the CAC promulgated the Measures for Security Assessment for Outbound Data Transfer, which became effective on September 1, 2022. The Measures apply to the security assessment of Important Data and personal information collected and generated during operation within the territory of the People’s Republic of China and transferred abroad by a data handler. Specifically, the Measures for Security Assessment for Outbound Data Transfer to provide that where a data handler transfers data abroad under any of the following circumstances, it shall, through the local Cyberspace Administration at the provincial level, apply to the CAC for security assessment for the outbound data transfer: (1) a data handler who transfers Important Data abroad; (2) a critical information infrastructure operator, or a data handler processing the personal information of more than one million individuals, who, in either case, transfers personal information abroad; (3) a data handler who has, since January 1 of the previous year cumulatively transferred abroad the personal information of more than 100,000 individuals, or the sensitive personal information of more than 10,000 individuals, or (4) other circumstances where the security assessment for the outbound data transfer is required by the CAC. On March 22, 2024, the CAC promulgated the Provisions on Promoting and Regulating Cross-border Data Flows (the “Cross-border Data Flow Provisions”), which became effective on the same date and relaxed the requirements under the Security Assessment Measures, among other things, by exempting from security assessment the outbound transfer of non-sensitive personal information of an aggregate of fewer than 100,000 individuals (other than key information infrastructure operators) where no important data is involved, and by providing that data processors need not declare security assessment as important data processors unless they have been notified or publicly identified as such by relevant authorities.
As of the date of this report, we have not transferred any user information to places outside of the PRC. We do not believe we will be subject to the Measures for Security Assessment for Outbound Data Transfer, considering (i) we do not anticipate reaching the one million threshold to trigger the assessment by the CAC, and (ii) we do not anticipate to transfer any user information outside of the PRC. As advised by AllBright, we are not currently subject to the outbound data transfer regulations because outbound Chinese tourists using our services must provide their information on Wetour’s website and applications, which were established and maintained in the U.S. Therefore, there is no data transferred across the border of PRC by us.
Although we do not anticipate transferring any user information outside of the PRC, our PRC users may have the potential needs to make reservations inside PRC and enjoy travel services overseas. Under such circumstances, we may need to transfer user data outside of the PRC to Wetour or our overseas business partners to satisfy our PRC users’ needs and such user data is mainly the user’s information required for reservation such as the user’s name and contact information which we believe is not Important Data or sensitive personal information; if we cumulatively transfer abroad the personal information of more than 100,000 PRC users, we believe we will be subject to assessment by the CAC.
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In the circumstances we may be subject to such requirements, we believe we would obtain approval from the CAC. However, failure to pass such requirements and/or to comply with the data privacy and data security requirements could subject us to penalties, damage its reputation and brand, and harm its business and the results of operations. According to the Personal Information Protection Law, promulgated on August 20, 2021 by the Standing Committee of the National People’s Congress (“SCNPC”) and became effective on November 1, 2021, if we fail to comply with relevant regulations, regulatory agencies will order us to rectify such noncompliance, give us a warning, and the illegal gains shall be confiscated. Applications that illegally process personal information shall be ordered to suspend or terminate the provision of services. Those who refuse to make corrections shall be fined up to RMB1million; A fine of not less than RMB10,000 but not more than RMB100,000 shall be imposed on the directly responsible supervisors and other directly responsible personnel. If the regulatory agencies find the above-mentioned illegal acts to be serious, the department responsible for personal information protection at or above the provincial level shall order rectification, confiscate the illegal gains, impose a fine of not more than RMB50 million or not more than 5% of the violator’s revenue in the last fiscal year and may also order the suspension of relevant business activities or the suspension of all business activities for rectification, notify the relevant competent department to revoke the relevant business license or revoke all the business licenses possessed by the violator. Under such circumstances, the directly responsible supervisors and other directly responsible personnel shall be fined not less than RMB100,000 but not more than RMB1 million, and they may be prohibited from serving as directors, supervisors, senior management personnel, and personal information protection personnel of relevant enterprises for a certain period of time. If a crime is constituted, criminal responsibility shall be pursued in accordance with the PRC law.
If we do not comply with the above regulations, including requirements on cybersecurity review, personal information protection, moving technology in and out of the PRC, or outbound data transfer, the regulatory agencies may also limit our ability to pay dividends outside of mainland China, delay or restrict the repatriation of the proceeds from our offerings into mainland China or take other actions that could have a material adverse effect on our business, financial condition, results of operations and prospects, as well as the trading price of our securities.
Regulations on Intellectual Property Rights
The PRC has adopted comprehensive legislation governing intellectual property rights, including copyrights, patents, trademarks and domain names.
Copyright.
Copyright in the PRC, including copyrighted software, is principally protected under the Copyright Law of the PRC promulgated in February 2010 which took effect in April 2010 (the “Copyright Law”) which has been amended by SCNPC on November 11, 2020 and became effective on June 1, 2021, and related rules and regulations. Under the Copyright Law, the term of protection for copyrighted software of legal persons is 50 years and ends on December 31 of the 50th year from the date of first publishing of the software.
Patent.
The Patent Law of the PRC promulgated in December 2008, which became effective in October 2009 and recently has been amended by SCNPC on October 17, 2020 and became effective on June 1, 2021, provides for patentable inventions, utility models and designs. An invention or utility model for which patents may be granted shall have novelty, creativity and practical applicability. The State Intellectual Property Office under the State Council is responsible for examining and approving patent applications. The protection period is 20 years for inventions and 10 years for utility models and designs, all of which commence from the date of application of patent rights under current Patent Law of the PRC. The protection period has been slightly amended in recent amendment which became effective on June 1, 2021. The terms of protection for invention and utility patents will still be 20 years and 10 years, respectively, in general. The term of protection for a design patent will be extended from 10 years to 15 years. In addition, for invention patents, in case it is only granted after 4 years or more from its filing date or 3 years or more after a request for substantive examination date, the applicant can request for an extension of protection term for any unreasonable delay.
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Trademark.
The Trademark Law of the PRC promulgated in August 2013 which took effect in May 2014 (the “Trademark Law”) and it was last amended on April 23, 2019 and the amendments became effective on November 11, 2019. Its implementation rules protect registered trademarks. The Trademark Office of National Intellectual Property Administration, PRC, formerly the PRC Trademark Office of the State Administration of Market Regulation is responsible for the registration and administration of trademarks throughout the PRC. The Trademark Law has adopted a “first-to-file” principle with respect to trademark registration. The validity period of registered trademarks is 10 years from the date of approval of trademark application, and may be renewed for another 10 years provided relevant application procedures have been completed within 12 months before the end of the validity period. On June 26, 2026, the Standing Committee of the National People’s Congress revised the Trademark Law, and the revised Trademark Law, consisting of 87 articles in nine chapters, will take effect on January 1, 2027. The revised Trademark Law adds a specific chapter concentrating the conditions for trademark registration, provides that trademark applications filed without the intention to use and obviously exceeding normal business needs shall not be registered, strengthens the protection of well-known trademarks, increases the penalties for the use of registered trademarks in a misleading manner, and enhances the regulation of trademark agencies and their practitioners.
Domain Name.
Domain names are protected under the Administrative Measures for the Internet Domain Names of the PRC promulgated by the Ministry of Industry and Information Technology of the PRC effective on December 20, 2004 and the Administrative Measures for Internet Domain Names promulgated by Ministry of Industry and Information Technology(“MIIT”), effective on November 1, 2017 (the “Domain Name Measures”). MIIT is the major regulatory body responsible for the administration of the PRC internet domain names. The Domain Names Measures has adopted a “first-to-file” principle with respect to the registration of domain names.
Regulations on Environmental Protection and Work Safety
Regulations on Environmental Protection
Pursuant to the Code of Ecological and Environmental Protection of the PRC (the “Ecological and Environmental Code”), which took effect on August 15, 2026, replacing the Environmental Protection Law of the PRC promulgated by the SCNPC on December 26, 1989, amended on April 24, 2014 and effective on January 1, 2015, which was repealed upon the effectiveness of the Ecological and Environmental Code, any entity which discharges or will discharge pollutants during the course of its operations or other activities must implement effective environmental protection safeguards and procedures to control and properly treat waste gas, waste water, waste residue, dust, malodorous gases, radioactive substances, noise vibrations, electromagnetic radiation and other hazards produced during such activities. The preparation of relevant development and utilization plans and the construction of the projects having impact on environment shall be subject to environmental impact assessment in accordance with the law. Furthermore, the enterprises and business operators on which the management system for the pollutants discharge permit and registration is implemented shall discharge pollutants according to their respective pollutants discharge permits or registrations and shall not discharge pollutants without obtaining a pollutants discharge permit or registration.
The competent ecological and environmental authorities impose various administrative penalties on persons or enterprises in violation of the Ecological and Environmental Code. Such penalties include warnings, fines, orders to rectify within the prescribed period, orders to cease construction, orders to restrict or suspend production, orders to make recovery, orders to disclose relevant information or make an announcement, imposition of administrative action against relevant responsible persons, and orders to shut down enterprises. Any person or entity that pollutes the environment resulting in damage could also be held liable under the Civil Code of PRC. In addition, environmental organizations may also bring lawsuits against any entity that discharges pollutants detrimental to the public welfare. In addition, on May 28, 2020, National People’s Congress promulgated the Civil Code of PRC, which took effective on January 1, 2021, to replace the PRC Inheritance Law, Adoption Law, PRC Contract Law, the General Principles of the Civil Law of the PRC, the PRC Marriage Law, the PRC Guarantee Law, the PRC Property Law and the PRC Tort Liability Law. Seven parts are introduced in the Civil Code of PRC, including General Part, Right in Rem, Contracts, Personality Rights, Marriage and Family, Inheritance, Tort Liability.
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The Law of the PRC on the Prevention and Control of Occupational Diseases, or the Occupational Diseases Prevention Law, promulgated by the SCNPC on October 27, 2001, became effective on May 1, 2002, and latest amended on December 29, 2018 is applicable to activities for the prevention and control of diseases contracted by the workers due to their exposure in the course of work to dust, radioactive substances and other toxic and harmful substances. Pursuant to the Occupational Diseases Prevention Law, the employer shall strictly abide by the national occupational health standards and implement the measures for occupational disease prevention and control in accordance with laws and regulations. Violation of the Occupational Diseases Prevention Law may result in the imposition of fines and penalties, the suspension of operation, an order to cease operation, and/or criminal liability in severe cases.
Regulations on Work Safety
Under relevant construction safety laws and regulations, including the Work Safety Law of the PRC which was promulgated by the SCNPC on June 29, 2002, amended on August 27, 2009, August 31, 2014 and June 10, 2021, and effective as of September 1, 2021, production and operating business entities must establish objectives and measures for work safety and improve the working environment and conditions for workers in a planned and systematic way. A work safety protection scheme must also be set up to implement the work safety job responsibility system. In addition, production and operating business entities must arrange work safety training and provide their employees with protective equipment that meets the national standards or industrial standards. Automobile and components manufacturers are subject to the aforementioned environment protection and work safety requirements.
Regulations Relating to Labor Protection
Labor Contract Law
The PRC Labor Contract Law, or the Labor Contract Law, which became effective on January 1, 2008 and was amended on December 28, 2012 and became effected on July 1, 2013, is primarily aimed at regulating rights and obligations of employer and employee relationships, including the establishment, performance and termination of labor contracts. Pursuant to the Labor Contract Law, labor contracts shall be concluded in writing if labor relationships are to be or have been established between employers and the employees. Employers are prohibited from forcing employees to work above certain time limits, and employers shall pay employees for overtime work in accordance to national regulations. In addition, employee wages shall be no lower than local standards on minimum wages and must be paid to employees in a timely manner.
Interim Provisions on Labor Dispatch
Pursuant to the Interim Provisions on Labor Dispatch, or the Labor Dispatch Provisions, promulgated by the Ministry of Human Resources and Social Security on January 24, 2014, which became effective on March 1, 2014, dispatched workers are entitled to equal pay with full-time employees for equal work. Employers are allowed to use dispatched workers for temporary, auxiliary or substitutive positions, and the number of dispatched workers may not exceed 10% of the total number of employees.
Social Insurance and Housing Fund
Pursuant to the Social Insurance Law of the PRC implemented on July 1, 2011, amended on December 29, 2018 and became effective on the same day, employers are required to provide their employees in the PRC with welfare benefits covering pension insurance, unemployment insurance, maternity insurance, labor injury insurance and medical insurance. These payments are made to local administrative authorities. Any employer that fails to make social insurance contributions may be ordered to rectify the non-compliance and pay the required contributions within a prescribed time limit and be subject to a late fee. If the employer still fails to rectify the failure to make the relevant contributions within the prescribed time, it may be subject to a fine ranging from one to three times the amount overdue. In accordance with the Regulations on the Management of Housing Fund which was promulgated by the State Council in 1999 and last amended on August 10, 2026 and became effective on September 20, 2026, employers must register at the designated administrative centers and open bank accounts for depositing employees’ housing funds. Employers and employees are also required to pay and deposit housing funds, which shall be the product of employees’ average monthly salaries of the previous year multiplied by the contribution rate of the housing provident fund of the employer. Where, in violation of the provisions of these Regulations, an employer is overdue in the contribution of, or underpays, the housing provident fund, the housing provident fund management center shall order it to make the contribution within a prescribed time limit; where the contribution has not been made after the expiration of the time limit, an application may be made to a people’s court for compulsory enforcement.
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Employee Stock Incentive Plan
Pursuant to the Notice of Issues Related to the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Listed Company, or Circular 7, which was issued by the SAFE on February 15, 2012, employees, directors, supervisors, and other senior management who participate in any stock incentive plan of a publicly-listed overseas company and who are PRC citizens or non-PRC citizens residing in China for a continuous period of no less than one year, subject to a few exceptions, are required to register with SAFE through a qualified domestic agent, which may be a PRC subsidiary of such overseas listed company, and complete certain other procedures. In addition, the SAT has issued certain circulars concerning employee stock options and restricted shares. Under these circulars, employees working in the PRC who exercise stock options or are granted restricted shares will be subject to PRC individual income tax. The PRC subsidiaries of an overseas listed company are required to file documents related to employee stock options and restricted shares with relevant tax authorities and to withhold individual income taxes of employees who exercise their stock option or purchase restricted shares. If the employees fail to pay or the PRC subsidiaries fail to withhold income tax in accordance with relevant laws and regulations, the PRC subsidiaries may face sanctions imposed by the tax authorities or other PRC governmental authorities.
Regulations Relating to Taxes
Income Tax
The PRC Enterprise Income Tax Law, or the EIT Law, imposes a uniform enterprise income tax rate of 25% on all PRC resident enterprises, including foreign-invested enterprises, unless they qualify for certain exceptions. The enterprise income tax is calculated based on the PRC resident enterprise’s global income as determined under PRC tax laws and accounting standards. If a non-resident enterprise sets up an organization or establishment in the PRC, it will be subject to enterprise income tax for the income derived from such organization or establishment in the PRC and for the income derived from outside the PRC but with an actual connection with such organization or establishment in the PRC. The EIT Law and its implementation rules permit certain “high and new technology enterprises strongly supported by the state” that independently own core intellectual property and meet statutory criteria, to enjoy a reduced 15% enterprise income tax rate. In January 2016, the SAT, the Ministry of Science and Technology and the MOF jointly issued the Administrative Rules for the Certification of High and New Technology Enterprises specifying the criteria and procedures for the certification of High and New Technology Enterprises.
On April 22, 2009, the SAT issued the Circular of the State Administration of Taxation on Issues Relating to Identification of PRC-Controlled Overseas Registered Enterprises as Resident Enterprises in Accordance With the De Facto Standards of Organizational Management, or the SAT Circular 82, which provides certain specific criteria for determining whether the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China. Although this circular only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners, the criteria set forth in the circular may reflect the SAT’s general position on how the “de facto management body” text should be applied in determining the tax resident status of all offshore enterprises. According to the SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC. Further to SAT Circular 82, on July 27, 2011, the SAT issued the Announcement of the State Administration of Taxation on Printing and Distributing the Administrative Measures for Income Tax on PRC-controlled Resident Enterprises Incorporated Overseas (Trial Implementation), or the SAT Bulletin 45, which took effect in September 2011, to provide more guidance on the implementation of SAT Circular 82. SAT Bulletin 45 provides for procedures and administration details for determination of resident status and administration on post-determination matters.
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Value-added Tax
The Value-added Tax Law of the PRC (the “VAT Law”) was promulgated by the Standing Committee of the National People’s Congress on December 25, 2024 and took effect on January 1, 2026, replacing the Provisional Regulations of the PRC on Value-added Tax and their implementation rules. According to the VAT Law, all enterprises and individuals engaged in the sale of goods, services, intangible assets, real property and the importation of goods within the territory of the PRC are the taxpayers of VAT. The VAT tax rates generally applicable are 13%, 9%, 6% and 0%, and the VAT levy rate applicable to the small-scale taxpayers is 3%. The VAT Law also provides, among other things, that VAT shall be exempted for certain statutory items, such as agricultural producers selling self-produced agricultural products, and that small-scale taxpayers with small monthly sales volumes may enjoy preferential treatment such as reduced levy rates in accordance with the provisions of the State Council.
Dividend Withholding Tax
As we believe Wetour Robotics is a non-resident for PRC tax purpose, dividends paid to it out of profits earned by PRC Subsidiaries would be subject to 10% withholding tax, if no tax treaty is applicable. In addition, under the current tax treaty between the PRC and Hong Kong, if the foreign investor is incorporated in Hong Kong and qualifies as the beneficial owner, the applicable withholding tax rate may be reduced to 5%, if the investor holds at least 25% in the foreign-invested enterprise; or 10%, if the investor holds less than 25% in the foreign-invested enterprise.
Regulations relating to Foreign Exchange
General Administration of Foreign Exchange
Under the PRC Foreign Currency Administration Rules promulgated on January 29, 1996 and most recently amended on August 5, 2008 and various regulations issued by the State Administration of Foreign Exchange of the PRC, or the SAFE and other relevant PRC government authorities, Renminbi is convertible into other currencies for current account items, such as trade-related receipts and payments and payment of interest and dividends. The conversion of Renminbi into other currencies and remittance of the converted foreign currency outside the PRC for of capital account items, such as direct equity investments, loans and repatriation of investment, requires the prior approval from the SAFE or its local office.
Payments for transactions that take place within the PRC must be made in Renminbi. Unless otherwise approved, PRC companies may not repatriate foreign currency payments received from abroad or retain the same abroad. Foreign-invested enterprises may retain foreign exchange in accounts with designated foreign exchange banks under the current account items subject to a cap set by the SAFE or its local office. Foreign exchange proceeds under the current accounts may be either retained or sold to a financial institution engaged in settlement and sale of foreign exchange pursuant to relevant SAFE rules and regulations. For foreign exchange proceeds under the capital accounts, approval from the SAFE is generally required for the retention or sale of such proceeds to a financial institution engaged in settlement and sale of foreign exchange.
Pursuant to the Circular of the SAFE on Further Improving and Adjusting Foreign Exchange Administration Policies for Direct Investment, or the SAFE Circular 59, promulgated by SAFE on November 19, 2012, which became effective on December 17, 2012 and subsequently amended from time to time, approval of SAFE is not required for opening a foreign exchange account and depositing foreign exchange into the accounts relating to the direct investments. The SAFE Circular 59 also simplified foreign exchange-related registration required for the foreign investors to acquire the equity interests of Chinese companies and further improve the administration on foreign exchange settlement for foreign-invested enterprises.
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The Circular on Further Simplifying and Improving the Foreign Currency Management Policy on Direct Investment, or the SAFE Circular 13, effective from June 1, 2015, cancels the administrative approvals of foreign exchange registration of direct domestic investment and direct overseas investment and simplifies the procedure of foreign exchange-related registration. Pursuant to the SAFE Circular 13, the investors shall register with banks for direct domestic investment and direct overseas investment.
The Circular on Reforming the Management Approach regarding the Settlement of Foreign Capital of Foreign-invested Enterprise, or the SAFE Circular 19, which was promulgated by the SAFE on March 30, 2015 and became effective on June 1, 2015, provides that a foreign-invested enterprise may, according to its actual business needs, settle with a bank the portion of the foreign exchange capital in its capital account for which the relevant foreign exchange administration has confirmed monetary capital contribution rights and interests (or for which the bank has registered the injection of the monetary capital contribution into the account). Pursuant to the SAFE Circular 19, for the time being, foreign-invested enterprises are allowed to settle 100% of their foreign exchange capital on a discretionary basis; a foreign-invested enterprise shall truthfully use its capital for its own operational purposes within the scope of business; where an ordinary foreign-invested enterprise makes domestic equity investment with the amount of foreign exchanges settled, the invested enterprise must first go through domestic re-investment registration and open a corresponding account for foreign exchange settlement pending payment with the foreign exchange administration or the bank at the place where it is registered.
The Circular on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, or the SAFE Circular 16, which was promulgated by the SAFE and became effective on June 9, 2016, provides that enterprises registered in the PRC may also convert their foreign debts from foreign currency into Renminbi on self-discretionary basis. The SAFE Circular 16 also provides an integrated standard for conversion of foreign exchange under capital account items (including but not limited to foreign currency capital and foreign debts) on self-discretionary basis, which applies to all enterprises registered in the PRC.
In January 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, or Circular 3, which stipulates several capital control measures with respect to the outbound remittance of profits from domestic entities to offshore entities, including (i) banks must check whether the transaction is genuine by reviewing board resolutions regarding profit distribution, original copies of tax filing records and audited financial statements, and (ii) domestic entities must retain income to account for previous years’ losses before remitting any profits. Moreover, pursuant to Circular 3, domestic entities must explain in detail the sources of capital and how the capital will be used, and provide board resolutions, contracts and other proof as a part of the registration procedure for outbound investment.
On October 23, 2019, SAFE issued Circular of the State Administration of Foreign Exchange on Further Promoting the Facilitation of Cross-border Trade and Investment, or the Circular 28, which took effect on the same day. Circular 28 allows non-investment foreign-invested enterprises to use their capital funds to make equity investments in China, provided that such investments do not violate the effective special entry management measures for foreign investment (negative list) and the target investment projects are genuine and in compliance with laws.
Pursuant to the SAFE Circular 13 and other laws and regulations relating to foreign exchange, when setting up a new foreign invested enterprise, the foreign invested enterprise shall register with the bank located at its registered place after obtaining the business license, and if there is any change in capital or other changes relating to the basic information of the foreign-invested enterprise, including without limitation any increase in its registered capital or total investment, the foreign invested enterprise must register such changes with the bank located at its registered place after obtaining approval from or completing the filing with competent authorities. Pursuant to the relevant foreign exchange laws and regulations, the above-mentioned foreign exchange registration with the banks will typically take less than four weeks upon the acceptance of the registration application.
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According to the Foreign Investment Law, Measures for Reporting of Information on Foreign Investment, promulgated by MOFCOM, and State Administration for Market Regulation, or the SAMR on December 30, 2019 and became effective on January 1, 2020, the Regulation on the Administration of Market Entity Registration, which was promulgated by the State Council on July 27, 2021 and became effective on March 1, 2022, and other laws and regulations governing the foreign invested enterprises and company registrations, the establishment of a foreign invested enterprise and any capital increase and other major changes in a foreign invested enterprise shall be registered with the SAMR, or its local counterparts, and investment information shall be submitted to the competent commerce authorities through the enterprise registration system and the National Enterprise Credit Information Publicity System, if such foreign invested enterprise does not involve special access administrative measures prescribed by the PRC government.
Based on the forgoing, if we intend to provide funding to our wholly foreign owned subsidiaries through a capital injection at or after their establishment, we must register the establishment thereof and any follow-on capital increase in our wholly foreign owned subsidiaries with the SAMR or its local counterparts, submit such information via the enterprise registration system and the National Enterprise Credit Information Publicity System and register such with the local banks for the foreign exchange related matters.
Offshore Investment
Under the Circular of the State Administration of Foreign Exchange on Issues Concerning the Foreign Exchange Administration over the Overseas Investment and Financing and Round-trip Investment by Domestic Residents via Special Purpose Vehicles, or the SAFE Circular 37, issued by the SAFE and effective on July 4, 2014, PRC residents are required to register with the local SAFE branch prior to contributing assets or equity interests in an offshore special purpose vehicle, or SPV, which is defined as offshore enterprises directly established or indirectly controlled by PRC residents for investment and financing purposes, with the enterprise assets or interests they hold in China or overseas. The term “control” means obtain the operation rights, right to proceeds or decision-making power of a SPV through acquisition, trust, holding shares on behalf of others, voting rights, repurchase, convertible bonds or other means. An amendment to registration or subsequent filing with the local SAFE branch by such PRC resident is also required if there is any change in basic information of the offshore company or any material change with respect to the capital of the offshore company. At the same time, the SAFE has issued the Operation Guidance for the Issues Concerning Foreign Exchange Administration over Round-trip Investment regarding the procedures for SAFE registration under the SAFE Circular 37, which became effective on July 4, 2014 as an attachment of Circular 37.
Under the relevant rules, failure to comply with the registration procedures set forth in the SAFE Circular 37 may result in bans on the foreign exchange activities of the relevant onshore company, including the payment of dividends and other distributions to its offshore parent or affiliates, and may also subject relevant PRC residents to penalties under PRC foreign exchange administration regulations.
Regulations on Dividend Distribution
The principal laws and regulations regulating the dividend distribution of dividends by foreign-invested enterprises in the PRC include the PRC Company Law, which was fully revised on December 29, 2023 and the revised law took effect on July 1, 2024 (the “Company Law”), the Foreign Investment Law and the Implementing Regulations of the Foreign Investment Law. Under the current regulatory regime in the PRC, foreign-invested enterprises in the PRC may pay dividends only out of their retained earnings, if any, determined in accordance with PRC accounting standards and regulations. A PRC company is required to set aside as statutory reserve funds of at least 10% of its after-tax profit, until the cumulative amount of such reserve funds reaches 50% of its registered capital unless laws regarding foreign investment provide otherwise. A PRC company shall not distribute any profits until any losses from prior fiscal years have been offset. Profits retained from prior fiscal years may be distributed together with distributable profits from the current fiscal year.
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Regulations Relating to M&A Rule and Overseas Listing in the PRC
On August 8, 2006, six PRC governmental and regulatory agencies, including MOFCOM and CSRC, promulgated the Rules on Acquisition of Domestic Enterprises by Foreign Investors, or the M&A Rules, governing the mergers and acquisitions of domestic enterprises by foreign investors that became effective on September 8, 2006 and was revised on June 22, 2009. The M&A Rules, among other things, require that if an overseas company established or controlled by PRC companies or individuals, or PRC Citizens, intends to acquire equity interests or assets of any other PRC domestic company affiliated with the PRC Citizens, such acquisition must be submitted to MOFCOM for approval. The M&A Rules also requires that an offshore SPV that is controlled directly or indirectly by the PRC companies or individuals and that has been formed for overseas listing purposes through acquisitions of PRC domestic interest held by such PRC companies or individuals, shall obtain the approval of CSRC prior to overseas listing and trading of such SPV’s securities on an overseas stock exchange.
On February 17, 2023, the CSRC released the New Overseas Listing Rules with five interpretive guidelines, which came into effect on March 31, 2023. The New Overseas Listing Rules require Chinese domestic enterprises to complete filings with relevant governmental authorities and report related information under certain circumstances, such as: a) an issuer making an application for initial public offering and listing in an overseas market; b) an issuer making a subsequent overseas securities offering after having been listed on an overseas market; c) a domestic company seeking an overseas direct or indirect listing of its assets through single or multiple acquisition(s), share swap, transfer of shares or other means. According to the Notice on Arrangements for Overseas Securities Offering and Listing by Domestic Enterprises, published by the CSRC on February 17, 2023, a company that (i) has already completed overseas listing or (ii) has already obtained the approval for the offering or listing from overseas securities regulators or exchanges but has not completed such offering or listing before effective date of the new rules and also completes the offering or listing before September 30, 2023 will be considered as an existing listed company and is not required to make any filing until it conducts a new offering in the future. For the company that has already submitted offering and listing applications but not yet obtained the approvals from overseas securities regulators or exchanges shall choose to make its filing with the CSRC at a reasonable time but before the completion of the offering/listing. For the company that has already obtained CSRC approval for overseas listing or offering can continue its process during the valid term of the CSRC approval without additional filing and it shall make the filing pursuant to the new rules if it does not complete the offering or listing before the expiration of the original approval from CSRC.
On February 24, 2023, the CSRC, MOF, National Administration of State Secrets Protection and National Archives Administration of China jointly issued the Provisions on Strengthening the Confidentiality and Archive Management Work Relating to the Overseas Securities Offering and Listing, or the Confidentiality Provisions, which came into effect on March 31, 2023 with the New Overseas Listing Rules. The Confidentiality Provisions require that, among other things, (a) a domestic company that plans to, either directly or through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level; and (b) domestic company that plans to, either directly or through its overseas listed entity, publicly disclose or provide to relevant individuals and entities including securities companies, securities service providers and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations.
Cayman Islands Data Protection
We have certain duties under the Data Protection Act (as revised) of the Cayman Islands, or the DPA, based on internationally accepted principles of data privacy.
Privacy Notice
This privacy notice puts our shareholders on notice that through your investment into us you will provide us with certain personal information which constitutes personal data within the meaning of the DPA, or personal data.
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Investor Data
We will collect, use, disclose, retain and secure personal data to the extent reasonably required only and within the parameters that could be reasonably expected during the normal course of business. We will only process, disclose, transfer or retain personal data to the extent legitimately required to conduct our activities of on an ongoing basis or to comply with legal and regulatory obligations to which we are subject. We will only transfer personal data in accordance with the requirements of the DPA, and will apply appropriate technical and organizational information security measures designed to protect against unauthorized or unlawful processing of the personal data and against the accidental loss, destruction or damage to the personal data.
In our use of this personal data, we will be characterized as a “data controller” for the purposes of the DPA, while our affiliates and service providers who may receive this personal data from us in the conduct of our activities may either act as our “data processors” for the purposes of the DPA or may process personal information for their own lawful purposes in connection with services provided to us.
We may also obtain personal data from other public sources. Personal data includes, without limitation, the following information relating to a shareholder and/or any individuals connected with a shareholder as an investor: name, residential address, email address, contact details, corporate contact information, signature, nationality, place of birth, date of birth, tax identification, credit history, correspondence records, passport number, bank account details, source of funds details and details relating to the shareholder’s investment activity.
Who this Affects
If you are a natural person, this will affect you directly. If you are a corporate investor (including, for these purposes, legal arrangements such as trusts or exempted limited partnerships) that provides us with personal data on individuals connected to you for any reason in relation your investment in us, this will be relevant for those individuals and you should transmit the content of this Privacy Notice to such individuals or otherwise advise them of its content.
How We May Use a Shareholder’s Personal Data
We may, as the data controller, collect, store and use personal data for lawful purposes, including, in particular: (i) where this is necessary for the performance of our rights and obligations under any agreements; (ii) where this is necessary for compliance with a legal and regulatory obligation to which we are or may be subject (such as compliance with anti-money laundering and FATCA/CRS requirements); and/or (iii) where this is necessary for the purposes of our legitimate interests and such interests are not overridden by your interests, fundamental rights or freedoms.
Should we wish to use personal data for other specific purposes (including, if applicable, any purpose that requires your consent), we will contact you.
Why We May Transfer Your Personal Data
In certain circumstances we may be legally obliged to share personal data and other information with respect to your shareholding with the relevant regulatory authorities such as the Cayman Islands Monetary Authority or the Tax Information Authority. They, in turn, may exchange this information with foreign authorities, including tax authorities.
We anticipate disclosing personal data to persons who provide services to us and their respective affiliates (which may include certain entities located outside the US, the Cayman Islands or the European Economic Area), who will process your personal data on our behalf.
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The Data Protection Measures We Take
Any transfer of personal data by us or our duly authorized affiliates and/or delegates outside of the Cayman Islands shall be in accordance with the requirements of the DPA.
We and our duly authorized affiliates and/or delegates shall apply appropriate technical and organizational information security measures designed to protect against unauthorized or unlawful processing of personal data, and against accidental loss or destruction of, or damage to, personal data.
We shall notify you of any personal data breach that is reasonably likely to result in a risk to your interests, fundamental rights or freedoms or those data subjects to whom the relevant personal data relates.
Contacting the Company
For further information on the collection, use, disclosure, transfer or processing of your personal data or the exercise of any of the rights listed above, please contact us through our websites at www.wetourglobal.com, www.webus.vip, www.weixiaoba.vip, and www.ubus.vip or through phone number +86-571-58000026.
Anti-Money Laundering—Cayman Islands
In order to comply with legislation and regulations aimed at the prevention of money laundering and terrorist financing, we may be required to adopt and maintain anti-money laundering and counter terrorist financing policies and procedures, and may require subscribers to provide evidence to satisfactorily identify and verify their identity, address and source of funds. Such customer due diligence can be simplified or enhanced depending on the risk rating given to the subscriber. Where permitted, and subject to certain conditions, we may also delegate the maintenance of our anti-money laundering and counter terrorist financing policies and procedures (including the acquisition of due diligence information) to a suitable third persons based in the Cayman Islands approved equivalent jurisdictions.
We reserve the right to request such information and evidence as is necessary to identify and verify the identity, address and source of funds of a subscriber. In the event of delay or failure on the part of the subscriber in producing any information and/or evidence required for identification or verification purposes, we may refuse to accept the application, in which case any funds received will be returned without interest to the account from which they were originally debited. We will not be liable for any loss suffered by a subscriber as a result of, or delay in processing, an application from a subscriber if such information and documentation requested has not been provided by the subscriber in a timely manner.
We also reserve the right to refuse to make any redemption payment to a shareholder if our directors or officers suspect or are advised that the payment of redemption proceeds to such shareholder might result in a breach of applicable anti-money laundering, counter terrorist financing or other applicable laws, regulations or guidance by any person in any equivalent jurisdiction, or if such refusal is considered necessary or appropriate to ensure our compliance with any such laws or regulations in any applicable jurisdiction.
If any person resident in the Cayman Islands knows or suspects or has reasonable grounds for knowing or suspecting that another person is engaged in criminal conduct or is involved with terrorism or terrorist financing and property and the information for that knowledge or suspicion came to their attention in the course of their business in the regulated sector, or other trade, profession, business or employment, the person will be required to report such knowledge or suspicion to (i) a nominated officer (appointed in accordance with the Proceeds of Crime Act (Revised) of the Cayman Islands) or the Financial Reporting Authority of the Cayman Islands, pursuant to the Proceeds of Crime Act (Revised) of the Cayman Islands , if the disclosure relates to criminal conduct or money laundering or (ii) to the Financial Reporting Authority or a police constable or a nominated officer (pursuant to the Terrorism Act (Revised) of the Cayman Islands), if the disclosure relates to involvement with terrorism or terrorist financing and terrorist property. Such a report shall not be treated as a breach of confidence or of any restriction upon the disclosure of information imposed by any enactment or otherwise. By subscribing for shares, the subscriber consents to the disclosure of any information about them to regulators and others upon request in connection with money laundering and similar matters both in the Cayman Islands and in other jurisdictions.
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ITEM 4A. UNRESOLVED STAFF COMMENTS
None.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes appearing elsewhere in this Annual Report. Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business and our expectations with respect to liquidity and capital resources, includes forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those risks and uncertainties described in “Item 3. Key Information—D. Risk Factors” and “Cautionary Note on Forward-Looking Statements” sections in this Annual Report. Our actual results could differ materially from the results described in or implied by these forward-looking statements.
Overview
We are an exempted company incorporated in the Cayman Islands. We, Wetour Robotics Limited began transforming into a Physical AI infrastructure company in 2026 while continuing to operate our legacy mobility and packaged tour services. Our principal executive offices are located in Austin, Texas, and our platform research, development and commercialization activities are conducted primarily through our United States operations.
We are developing Orchestra, a hardware-software integrated operating system designed to translate human gestures and visual recognition signals into real-time command signals for connected physical devices. Orchestra is built around three components: (i) Conductor, a software pipeline that ingests surface electromyography (“sEMG”) signals from wristband, classifying real-time continuous gestures into standardized commands that drive physical device responses; (ii) Vision-Link, a visual scene recognition and execution layer that converts camera input into actuator commands; and (iii) Orchestra OS, a device-agnostic operating system comprising perception, intent, orchestration and safety engines.
During the period covered by this Report, we continued to operate our legacy mobility and packaged tour services business, which provided our operating revenue base for the year ended June 30, 2026. These services include (i) packaged tour service, (ii) customized chartered bus service, and (iii) commute shuttle service, operated primarily through our U.S. subsidiary and, to a lesser extent, our PRC subsidiaries and VIE. For the year ended June 30, 2026, revenues generated by our U.S. subsidiary were RMB10.7 million ($1.6 million), representing approximately 80.4% of our total revenue.
As a holding company with no material operations, our operations were conducted by: (1) our subsidiaries in the United States and the People’s Republic of China (the “PRC”); (2) our direct investment in Zhejiang Youba Technology Co., Ltd. (“Youba Tech” or the “VIE”) in the PRC; and (3) through certain contractual arrangements with Youba Tech (the “VIE Agreements”). Through the VIE Agreements among WFOE, Youba Tech and Individual Registered Shareholders, which have not been tested in a court of law, we are regarded as the primary beneficiary of Youba Tech for accounting purposes, and, therefore, we are able to consolidate the financial results of Youba Tech in our consolidated financial statements in accordance with U.S. GAAP. However, the VIE structure cannot completely replicate a foreign investment in China-based companies, as we only hold 50% equity interest in the VIE and do not and may never hold the equity interests over 50% in the VIE. Instead, the VIE structure provides contractual exposure to foreign investment in us.
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Key Factors Affecting Our Results
We believe the key factors affecting our financial condition and results of operations include the followings:
Our ability to develop and commercialize our Orchestra platform.
Our long-term operating results will be substantially affected by our ability to advance the development of our Orchestra platform, including the technical maturity of our Conductor gesture recognition pipeline, our Vision-Link visual execution layer, and Orchestra OS, and our ability to integrate with third-party sensor and actuator hardware. The timing of our first developer release, the quality of reference implementations we publish, and our ability to attract third-party developers and integration partners to the Orchestra ecosystem will be significant factors in our transition toward Physical AI infrastructure. Any delay in platform readiness, or inability to convert technical demonstration into commercial integration, could adversely affect the pace and outcome of this transition.
Our ability to deepen our United States operating footprint and ecosystem relationships.
Our transition toward Physical AI infrastructure is conducted primarily through our United States operations, from our principal executive offices in Austin, Texas. Our ability to access the United States developer and enterprise customer ecosystem, recruit and retain United States-based technical talent, and build relationships with United States-based research institutions and industrial partners, will materially affect our ability to execute the Orchestra strategy.
Our ability to improve user experience and diversify service offerings
We have been constantly endeavoring to improve user experience through technology and innovation capabilities, in particular in transportation. By further leveraging our growing database and powerful data analysis capabilities, we are able to more precisely analyses user behaviors and intent, provide personalized service matching and help users make fast and informed decisions. We have made, and will continue to make, significant investments to improve our technology infrastructure and enhance user experience.
Our results of operations have been, and will continue to be, affected by the size and diversity of our service offerings. Since our inception, we have introduced various value-added services built around our customers’ travel needs and expanded our service offerings in response to market opportunities. We will continue to evaluate market conditions and optimize our service portfolio to support the sustainable development of our business.
Our ability to retain and expand our collaborations with suppliers
We have developed collaborations with various suppliers that support our service offerings and market presence. As a trusted partner of traditional and online travel agencies, local tourist attraction sites, hotels and vehicle fleet providers, we have been able to offer tailored packages at competitive prices compared with prevailing market rates, which has supported customer acquisition and revenue generation.
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Our ability to control costs and expenses and enhance operational efficiency
Our results of operations have been, and will continue to be, affected by our ability to control costs and expenses and enhance our operational efficiency. Sales and marketing expenses have historically represented a large portion of our total costs and expenses. Advertising and marketing expenses, consisting primarily of online and offline advertisements, general and administrative expenses, and research and development expenses are important components of our costs. We have been always mindful of the balance between rapid business expansion and costs and expenses. We will continue to make efforts to manage our customer acquisition cost and improve our customer retention rate. In addition, as our business grows, we will continue to further improve our operational efficiency by developing technologies and infrastructure across different business functions. We expect to achieve greater operating leverage and increase the productivity of our personnel, allowing us to acquire customers and suppliers more cost-effectively and achieve higher operational efficiency.
Key Operating Metrics
Our management regularly reviews a number of metrics to evaluate our business, measure our performance, identify trends, formulate financial projections and make strategic decisions. The main metrics we consider are the results for the years ended June 30, 2024, 2025 and 2026 as set forth in the table below.
Results of Operations
The following tables set forth a summary of our consolidated results of operations for the years ended June 30, 2024, 2025 and 2026, in absolute amount and as a percentage of our revenues. This information should be read together with our consolidated financial statements and related notes included elsewhere in this report. The results of operations in any period are not necessarily indicative of the results that may be expected for any future period.
| For the years ended June 30, | ||||||||||||||||||||||||||||
| 2024 | 2025 | 2026 | ||||||||||||||||||||||||||
| RMB | % | RMB | % | RMB | $ | % | ||||||||||||||||||||||
| Net revenues | 45,976,421 | 100.0 | 35,593,055 | 100.0 | 13,336,158 | 1,965,506 | 100.0 | |||||||||||||||||||||
| Cost of revenues | (39,546,098 | ) | (86.0 | ) | (29,692,707 | ) | (83.4 | ) | (12,227,303 | ) | (1,802,081 | ) | (91.7 | ) | ||||||||||||||
| Gross profit | 6,430,323 | 14.0 | 5,900,348 | 16.6 | 1,108,855 | 163,425 | 8.3 | |||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||||
| Sales and marketing expenses | (7,468,321 | ) | (16.2 | ) | (8,333,493 | ) | (23.4 | ) | (6,646,082 | ) | (979,511 | ) | (49.8 | ) | ||||||||||||||
| General and administrative expenses | (5,098,450 | ) | (11.1 | ) | (9,883,761 | ) | (27.8 | ) | (20,008,988 | ) | (2,948,960 | ) | (150.0 | ) | ||||||||||||||
| Research and development expenses | (1,331,037 | ) | (2.9 | ) | (1,056,335 | ) | (3.0 | ) | (229,709 | ) | (33,855 | ) | (1.7 | ) | ||||||||||||||
| Total operating expenses | (13,897,808 | ) | (30.2 | ) | (19,273,589 | ) | (54.2 | ) | (26,884,779 | ) | (3,962,326 | ) | (201.5 | ) | ||||||||||||||
| Operating loss | (7,467,485 | ) | (16.2 | ) | (13,373,241 | ) | (37.6 | ) | (25,775,924 | ) | (3,798,901 | ) | (193.2 | ) | ||||||||||||||
| Other income/(expenses) | ||||||||||||||||||||||||||||
| Financial expenses, net | (1,134,713 | ) | (2.5 | ) | (1,161,392 | ) | (3.3 | ) | (1,521,305 | ) | (224,213 | ) | (11.4 | ) | ||||||||||||||
| Other income, net | 4,500,552 | 9.8 | 1,954,244 | 5.5 | 263,778 | 38,876 | 2.0 | |||||||||||||||||||||
| Impairment loss on long-lived assets | - | - | - | - | (4,074,402 | ) | (600,493 | ) | (30.6 | ) | ||||||||||||||||||
| Total other income/(expenses), net | 3,365,839 | 7.3 | 792,852 | 2.2 | (5,331,929 | ) | (785,830 | ) | (40.0 | ) | ||||||||||||||||||
| Loss before income tax expense | (4,101,646 | ) | (8.9 | ) | (12,580,389 | ) | (35.4 | ) | (31,107,853 | ) | (4,584,731 | ) | (233.2 | ) | ||||||||||||||
| Income tax benefit | 46,054 | 0.1 | 97,342 | 0.3 | - | - | - | |||||||||||||||||||||
| Net loss | (4,055,592 | ) | (8.8 | ) | (12,483,047 | ) | (35.1 | ) | (31,107,853 | ) | (4,584,731 | ) | (233.2 | ) | ||||||||||||||
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Key Components of Results of Operations
Revenues
We generate revenues primarily from packaged tour service, customized chartered bus service and commute shuttle service. We offer packaged tour service to customers inclusive of services like chartered bus service, itinerary route schedule, sightseeing tour guidance, accommodation arrangement, etc. Customized chartered bus services are provided by us to support a more flexible and less pre-planned group travel demand which ranges from one day to several months. For commute shuttle service, we provide customers with daily transportation service from predetermined departure to destination.
Cost of revenues
Our cost of packaged tour services primarily consists of the procurement cost of hotel rooms, meals and other local services such as sightseeing costs for packages, entrance fees to museums and attractions and local transportation costs. Cost of commute shuttle service and customized chartered bus service include costs directly related to delivering transportation services inclusive of payments to fleet operators for vehicle rental fees and petrol costs, and other miscellaneous expenses for operation.
Sales and marketing expenses
Our sales and marketing expenses primarily consist of advertising expenses, staff cost, depreciation expenses, entertainment fees, rent fees, etc.
General and administrative expenses
Our general and administrative expenses primarily consist of professional service expenses, staff cost, share-based compensation expenses, office fees, depreciation expenses, rent fees, etc.
Research and development expenses
Our research and development (“R&D”) expenses primarily consist of staff cost, technology service expenses, etc.
Comparison of Years Ended June 30, 2025 and 2026
Revenues
The following table sets forth a breakdown of our revenues, each expressed in the absolute amount and as a percentage of our total revenues, for the periods indicated.
| For the Years Ended June 30, | ||||||||||||||||||||||||
| 2025 | 2026 | Variance | ||||||||||||||||||||||
| RMB | % | RMB | $ | % | % | |||||||||||||||||||
| Net revenues: | ||||||||||||||||||||||||
| Packaged tour service | 32,039,060 | 90.2 | 11,592,228 | 1,708,483 | 87.0 | (63.8 | ) | |||||||||||||||||
| Domestic | 6,606,828 | 18.6 | 516,888 | 76,180 | 3.9 | (92.2 | ) | |||||||||||||||||
| Overseas | 25,432,232 | 71.6 | 11,075,340 | 1,632,303 | 83.1 | (56.5 | ) | |||||||||||||||||
| Customized chartered bus service | 3,022,802 | 8.4 | 1,424,136 | 209,891 | 10.7 | (52.9 | ) | |||||||||||||||||
| Domestic | 336,678 | 0.9 | 227,729 | 33,562 | 1.7 | (32.4 | ) | |||||||||||||||||
| Overseas | 2,686,124 | 7.5 | 1,196,407 | 176,329 | 9.0 | (55.5 | ) | |||||||||||||||||
| Commute shuttle service | 531,193 | 1.4 | 319,794 | 47,132 | 2.3 | (39.8 | ) | |||||||||||||||||
| Domestic | 531,193 | 1.4 | 319,794 | 47,132 | 2.3 | (39.8 | ) | |||||||||||||||||
| Total net revenues | 35,593,055 | 100.0 | 13,336,158 | 1,965,506 | 100.0 | (62.5 | ) | |||||||||||||||||
87
Our total revenues decreased by 62.5%, or RMB22,256,897, to RMB13,336,158 ($1,965,506) for the year ended June 30, 2026, from RMB35,593,055 for the year ended June 30, 2025. This decrease was primarily attributable to a decline of RMB20,446,832 in revenues from packaged tour services and RMB1,598,666 in revenues from customized chartered bus services. The decrease in revenues from our legacy mobility and packaged tour services was mainly driven by weak market demand amid the broader economic downturn, as well as our strategic shift in business focus and resources toward developing our Physical AI infrastructure business in the United States. In 2026, we began transforming into a Physical AI infrastructure company and advancing the development and commercialization of Orchestra, our integrated hardware-software operating system designed to translate human gestures and visual recognition signals into real-time commands for connected physical devices.
Cost of revenues
The following table sets forth a breakdown of our cost of revenues by revenue streams, expressed as an absolute amount and as a percentage of the total cost of revenues, for the periods indicated.
| For the Years Ended June 30, | ||||||||||||||||||||||||
| 2025 | 2026 | Variance | ||||||||||||||||||||||
| RMB | % | RMB | $ | % | % | |||||||||||||||||||
| Cost of revenues: | ||||||||||||||||||||||||
| Packaged tour service | 26,701,471 | 89.9 | 10,670,693 | 1,572,665 | 87.3 | (60.0 | ) | |||||||||||||||||
| Domestic | 6,446,066 | 21.7 | 534,547 | 78,782 | 4.4 | (91.7 | ) | |||||||||||||||||
| Overseas | 20,255,405 | 68.2 | 10,136,146 | 1,493,883 | 82.9 | (50.0 | ) | |||||||||||||||||
| Customized chartered bus service | 2,405,006 | 8.1 | 1,294,901 | 190,845 | 10.6 | (46.2 | ) | |||||||||||||||||
| Domestic | 266,865 | 0.9 | 200,038 | 29,482 | 1.6 | (25.0 | ) | |||||||||||||||||
| Overseas | 2,138,141 | 7.2 | 1,094,863 | 161,363 | 9.0 | (48.8 | ) | |||||||||||||||||
| Commute shuttle service | 586,230 | 2.0 | 261,709 | 38,571 | 2.1 | (55.4 | ) | |||||||||||||||||
| Domestic | 586,230 | 2.0 | 261,709 | 38,571 | 2.1 | (55.4 | ) | |||||||||||||||||
| Cost of revenues | 29,692,707 | 100.0 | 12,227,303 | 1,802,081 | 100.0 | (58.8 | ) | |||||||||||||||||
Our cost of revenues decreased by 58.8% or RMB17,465,404, from RMB29,692,707 for the year ended June 30, 2025 to RMB12,227,303 ($1,802,081) for the year ended June 30, 2026. This decrease was primarily attributable to a decline of RMB16,030,778 in our cost of revenues for packaged tour service and RMB1,110,105 in our cost of revenues for customized chartered bus service. The decrease was primarily attributable to the decrease in cost related to fleet and tour operators, generally in line with the decrease in our revenues.
Gross profit and margin
The following table sets forth a breakdown of our gross profit, margin by revenue streams, expressed as an absolute amount and as a percentage of the total gross profit for the periods indicated.
| For the Years Ended June 30, | ||||||||||||||||||||||||||||
| 2025 | 2026 | |||||||||||||||||||||||||||
| RMB | Margin | % | RMB | $ | Margin | % | ||||||||||||||||||||||
| Gross profit and margin | ||||||||||||||||||||||||||||
| Packaged tour service | 5,337,589 | 16.7 | % | 90.4 | 921,535 | 135,818 | 7.9 | % | 83.1 | |||||||||||||||||||
| Domestic | 160,762 | 2.4 | % | 2.7 | (17,659 | ) | (2,602 | ) | (3.4 | )% | (1.6 | ) | ||||||||||||||||
| Overseas | 5,176,827 | 20.4 | % | 87.7 | 939,194 | 138,420 | 8.5 | % | 84.7 | |||||||||||||||||||
| Customized chartered bus service | 617,796 | 20.4 | % | 10.4 | 129,235 | 19,046 | 9.1 | % | 11.7 | |||||||||||||||||||
| Domestic | 69,813 | 20.7 | % | 1.1 | 27,691 | 4,080 | 12.2 | % | 2.5 | |||||||||||||||||||
| Overseas | 547,983 | 20.4 | % | 9.3 | 101,544 | 14,966 | 8.5 | % | 9.2 | |||||||||||||||||||
| Commute shuttle service | (55,037 | ) | (10.4 | )% | (0.8 | ) | 58,085 | 8,561 | 18.2 | % | 5.2 | |||||||||||||||||
| Domestic | (55,037 | ) | (10.4 | )% | (0.8 | ) | 58,085 | 8,561 | 18.2 | % | 5.2 | |||||||||||||||||
| Total | 5,900,348 | 16.6 | % | 100.0 | 1,108,855 | 163,425 | 8.3 | % | 100.0 | |||||||||||||||||||
As a result of the foregoing, our gross profit decreased from RMB5,900,348 for the year ended June 30, 2025 to RMB1,108,855 ($163,425) for the year ended June 30, 2026, in line with the decrease in our total revenues. Our overall gross profit margin decreased from approximately 16.6% to 8.3%, primarily due to lower gross profit margins in our packaged tour and customized chartered bus services, partially offset by improved profitability in our commute shuttle services.
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Operating expenses
Our operating expenses increased by approximately 39.5% from RMB19,273,589 for the year ended June 30, 2025 to RMB26,884,779 ($3,962,326) for the year ended June 30, 2026, primarily due to the following:
Sales and marketing expenses
The following table sets forth a breakdown of our sales and marketing expenses by categories, expressed as an absolute amount and as a percentage of the total sales and marketing expenses, for the periods indicated.
| For the Years Ended June 30, | ||||||||||||||||||||||||
| 2025 | 2026 | Variance | ||||||||||||||||||||||
| RMB | % | RMB | $ | % | % | |||||||||||||||||||
| Sales and marketing expenses | ||||||||||||||||||||||||
| Advertising expenses | 2,691,729 | 32.3 | 1,919,890 | 282,957 | 28.9 | (28.7 | ) | |||||||||||||||||
| Staff cost | 2,155,549 | 25.9 | 1,912,759 | 281,906 | 28.8 | (11.3 | ) | |||||||||||||||||
| Depreciation expenses | 2,041,760 | 24.5 | 2,016,994 | 297,268 | 30.3 | (1.2 | ) | |||||||||||||||||
| Entertainment expenses | 830,650 | 10.0 | 400,117 | 58,970 | 6.0 | (51.8 | ) | |||||||||||||||||
| Rental expense | 97,278 | 1.2 | 53,848 | 7,936 | 0.8 | (44.6 | ) | |||||||||||||||||
| Others | 516,527 | 6.1 | 342,474 | 50,474 | 5.2 | (33.7 | ) | |||||||||||||||||
| Total sales and marketing expenses | 8,333,493 | 100.0 | 6,646,082 | 979,511 | 100.0 | (20.2 | ) | |||||||||||||||||
Our sales and marketing expenses decreased by approximately 20.2% or RMB1,687,411 from RMB8,333,493 for the year ended June 30, 2025 to RMB6,646,082 ($979,511) for the year ended June 30, 2026, primarily due to (i) a decrease of RMB771,839 (US$113,755) in advertising expenses; (ii) a decrease of RMB430,533 (US$63,453) in entertainment expenses; and (iii) a decrease of RMB242,790 (US$35,783) in staff costs. These decreases were mainly attributable to reduced marketing and promotional activities associated with our legacy mobility and packaged tour services, amid weaker market demand and our strategic shift in business focus and resources toward developing our Physical AI infrastructure business in the United States.
General and administrative expenses
The following table sets forth a breakdown of our general and administrative expenses by categories, expressed as an absolute amount and as a percentage of the total general and administrative expenses, for the periods indicated.
| For the Years Ended June 30, | ||||||||||||||||||||||||
| 2025 | 2026 | Variance | ||||||||||||||||||||||
| RMB | % | RMB | $ | % | % | |||||||||||||||||||
| General and administrative expenses | ||||||||||||||||||||||||
| Professional service expenses | 7,069,894 | 71.5 | 14,814,772 | 2,183,427 | 74.0 | 109.5 | ||||||||||||||||||
| Staff cost | 1,855,683 | 18.8 | 2,733,336 | 402,844 | 13.7 | 47.3 | ||||||||||||||||||
| Share-based compensation expenses | - | - | 1,087,987 | 160,349 | 5.4 | 100.0 | ||||||||||||||||||
| Office expense | 239,363 | 2.4 | 472,897 | 69,696 | 2.4 | 97.6 | ||||||||||||||||||
| Depreciation expenses | 173,942 | 1.8 | 281,893 | 41,546 | 1.4 | 62.1 | ||||||||||||||||||
| Rental expense | 121,651 | 1.2 | 356,303 | 52,513 | 1.8 | 192.9 | ||||||||||||||||||
| Others | 423,228 | 4.3 | 261,800 | 38,585 | 1.3 | (38.1 | ) | |||||||||||||||||
| Total general and administrative expenses | 9,883,761 | 100.0 | 20,008,988 | 2,948,960 | 100.0 | 102.4 | ||||||||||||||||||
89
Our general and administrative expenses increased by 102.4% or RMB10,125,227 from RMB9,883,761 for the year ended June 30, 2025 to RMB20,008,988 ($2,948,960) for the year ended June 30, 2026. The increase was primarily attributable to (i) an increase of RMB7,744,878 (US$1,141,454) in professional service expenses, reflecting services provided under an existing strategic consulting agreement that commenced in February 2025, as well as expanded post-listing support; and (ii) an increase of RMB1,087,987 (US$160,349) in share-based compensation expenses related to equity awards granted to two external consultants during the year ended June 30, 2026.
Research and development expenses
The following table sets forth a breakdown of our research and development expenses by categories, expressed as an absolute amount and as a percentage of the total research and development expenses, for the periods indicated.
| For the Years Ended June 30, | ||||||||||||||||||||||||
| 2025 | 2026 | Variance | ||||||||||||||||||||||
| RMB | % | RMB | $ | % | % | |||||||||||||||||||
| Research and development expenses | ||||||||||||||||||||||||
| Staff cost | 849,475 | 80.4 | 52,283 | 7,706 | 22.8 | (93.8 | ) | |||||||||||||||||
| Technology service expenses | 131,917 | 12.5 | 162,008 | 23,877 | 70.5 | 22.8 | ||||||||||||||||||
| Others | 74,943 | 7.1 | 15,418 | 2,272 | 6.7 | (79.4 | ) | |||||||||||||||||
| Total research and development expenses | 1,056,335 | 100.0 | 229,709 | 33,855 | 100.0 | (78.3 | ) | |||||||||||||||||
Our research and development expenses decreased by 78.3% or RMB826,626 from RMB1,056,335 for the year ended June 30, 2025 to RMB229,709 ($33,855) for the year ended June 30, 2026, which was primarily attributable to a decrease of RMB797,192 (US$117,492) in staff costs, mainly due to a reduction in research and development headcount.
Total other income/(expenses), net
Total other income/(expenses), net decreased by RMB6,124,781 from net other income of RMB792,852 for the year ended June 30, 2025 to net other expenses of RMB5,331,929 (US$785,830) for the year ended June 30, 2026. The decrease was primarily due to (i) the recognition of an impairment loss on long-lived assets of RMB4,074,402 (US$600,493); (ii) a decrease of RMB1,335,103 (US$196,770) in government grants, mainly due to a reduction in government subsidies related to site services, partially offset by subsidies received for innovation and entrepreneurship initiatives; and (iii) an increase of RMB469,124 (US$69,140) in investment losses, primarily attributable to losses from securities trading activities.
Income tax benefit
We recognized an income tax benefit of RMB97,342 for the year ended June 30, 2025, and no income tax expense or benefit for the year ended June 30, 2026.
Net loss
As a result of the foregoing, we recorded net loss of RMB12,483,047 and RMB31,107,853 ($4,584,731) for the years ended June 30, 2025 and 2026, respectively.
Comparison of Years Ended June 30, 2024 and 2025
See “Item 5. Operating and Financial Review and Prospects—Operating Results—Discussion of Key Components of Results of Operations—Comparison of Years Ended June 30, 2024 and 2025” beginning on page 86 of our annual report on Form 20-F for the fiscal year ended June 30, 2025 filed with the SEC on October 30, 2025 (File No. 001-42536).
Non-GAAP Financial Measures
In evaluating the business, we consider and use adjusted operating loss and adjusted net loss, each a non-GAAP financial measure, in reviewing and assessing our operating performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. We present these non-GAAP financial measures because they are used by our management to evaluate operating performance and formulate business plans. We believe that the non-GAAP financial measures help identify underlying trends in our business, provide further information about our results of operations, and enhance the overall understanding of our past performance.
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The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools. Our non-GAAP financial measures do not reflect all items of income and expense that affect our operations and do not represent the residual cash flow available for discretionary expenditures. Furthermore, these non-GAAP measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited. We compensate for these limitations by reconciling the non-GAAP financial measures to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating performance. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.
We define non-GAAP operating loss as operating loss excluding share-based compensation expenses, non-GAAP net loss as net loss excluding share-based compensation expenses. The table below sets forth a reconciliation of our operating loss to non-GAAP operating loss, our net loss to non-GAAP net loss for the years indicated below:
| For the years ended June 30, | ||||||||||||||||
| 2024 | 2025 | 2026 | 2026 | |||||||||||||
| RMB | RMB | RMB | $ | |||||||||||||
| Operating loss | (7,467,485 | ) | (13,373,241 | ) | (25,775,924 | ) | (3,798,901 | ) | ||||||||
| Adjusted for: Share-based compensation | - | - | 1,087,987 | 160,349 | ||||||||||||
| Non-GAAP operating loss | (7,467,485 | ) | (13,373,241 | ) | (24,687,937 | ) | (3,638,552 | ) | ||||||||
| Net loss | (4,055,592 | ) | (12,483,047 | ) | (31,107,853 | ) | (4,584,731 | ) | ||||||||
| Adjusted for: Share-based compensation (net of tax effect of nil) | - | - | 1,087,987 | 160,349 | ||||||||||||
| Non-GAAP net loss | (4,055,592 | ) | (12,483,047 | ) | (30,019,866 | ) | (4,424,382 | ) | ||||||||
Taxation
Cayman Islands
We are incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, we are not subject to income or capital gains taxes. Additionally, upon payments of dividends by us to its shareholders, no Cayman withholding tax will be imposed.
British Virgin Islands
Our subsidiary, Youbus International Limited, is incorporated in the British Virgin Islands. Under the current laws of the British Virgin Islands, Youbus International Limited is not subject to tax on income or capital gains. Additionally, upon payments of dividends by us to its shareholders, no BVI withholding tax will be imposed.
Hong Kong
Our subsidiary, Webus Hongkong Limited, is incorporated in Hong Kong and is subject to Hong Kong profits tax rate. Under the two-tiered profits tax rates regime, the first 2,000,000 Hong Kong Dollar (“HKD”) of profits of the qualifying group entity will be taxed at 8.25%, and profits above HKD2,000,000 will be taxed at 16.5%. Additionally, upon payments of dividends by the Company to its shareholders, no HK withholding tax will be imposed.
PRC
For qualified small and low-profit enterprises, from January 1, 2023 to December 31, 2027, 25% of the first RMB3.0 million of the assessable profit before tax is subject to the tax rate of 20%. For the years ended June 30, 2024, 2025 and 2026, all of our PRC subsidiaries are qualified small and low-profit enterprises, and thus are eligible for the above preferential tax rates
91
United States
Our subsidiary, Wetour Travel Tech LLC is incorporated in the U.S. and it is subject to a combination of federal income tax rate of 21% and Delaware state income tax rate of 8.7%. Wetour Travel Tech LLC had no income from Delaware state for the years ended June 30, 2024, 2025 and 2026. As a result, Wetour Travel Tech LLC is merely subject to a federal income tax rate of 21% for the years ended June 30, 2024, 2025 and 2026. Our subsidiaries, NextFood Technologies Inc. and Vantrapower (formerly named as HeatBowl LLC), were newly established in the United States and the State of Delaware and Texas, respectively, and had not commenced operations as of June 30, 2026. Accordingly, neither subsidiary generated any operating income during the year ended June 30, 2026.
Liquidity and Capital Resources
We have been incurring losses from operations since inception. We incurred net losses of RMB4,055,592, RMB12,483,047 and RMB31,107,853 for the years ended June 30, 2024, 2025 and 2026, respectively. Our accumulated deficits were RMB49,761,797 and RMB80,867,834 as of June 30, 2025 and 2026, respectively. As of June 30, 2026, we had RMB550,569 in cash and cash equivalents and working capital of RMB24,052,675.
In March 2026, we completed a private investment in public equity (“PIPE”) transaction, with aggregate gross proceeds of RMB35,462,616 (equivalent to US$5,160,000). We had received all proceeds from the PIPE transaction as of June 30, 2026. The proceeds provided additional liquidity to support our working capital requirements and general operations.
Historically, we obtained three lines of credit totaling RMB32,200,000, with maturity dates ranging from September 5, 2026 to September 7, 2027. As of June 30, 2026, our outstanding short-term borrowings were RMB19,250,000, with maturity dates ranging from August 20, 2026 to December 19, 2026, and the current portion of our long-term borrowings was RMB2,200,000, with maturity dates ranging from August 13, 2026 to August 31, 2026. Subsequent to the repayment and renewal of certain short-term borrowings, we had outstanding short-term borrowings of RMB6,750,000 as of the date of this report, with a maturity date of December 19, 2026. We can continue to renew these borrowings within the unexpired credit limits. Thus, we do not expect to incur significant cash outflows due to the repayment obligations of our short-term borrowings.
On August 11, 2026, we entered into certain securities purchase agreements (the “Agreements”) with seven purchasers (the “Purchasers”) for a private investment in public equity transaction in reliance on Regulation S under the Securities Act of 1933, as amended (the “Act”). Pursuant to the Agreement, we agreed to issue and sell to the Purchasers an aggregate of 2,000,000 ordinary shares, par value $0.01 per share (the “Shares”), at a purchase price of $0.90 per Share, for gross proceeds of $1.8 million. The Shares have not been registered under the Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
On August 26, 2026, we entered into an at-the-market sales agreement with Rodman & Renshaw LLC, pursuant to which we may offer and sell ordinary shares having an aggregate offering price of up to US$75,000,000 from time to time. From August 27, 2026 through September 30, 2026, we sold an aggregate of 13,820,198 ordinary shares under the sales agreement for aggregate gross proceeds of approximately US$46.4 million and received aggregate net proceeds of approximately US$36.7 million, after deducting agent commissions and other offering-related expenses.
Our liquidity depends on our ability to improve our operating cash flow position, obtain equity financing from investors, and secure borrowings to fund our general operations and capital expenditures. Our ability to continue as a going concern is dependent on management’s ability to successfully execute our business plan, which includes increasing market acceptance of our products to boost sales volume and achieve economies of scale, implementing more effective marketing strategies and cost control measures to better manage our operating cash flow position, and obtaining funds from external financing sources to generate positive financing cash flows.
Given our existing cash balances and projected cash generated by, and used in, operating activities, we believe that we will have sufficient liquidity to fund our operating activities and meet our payment obligations arising from operations and debt-related commitments for the next twelve months from the date of issuance of the consolidated financial statements. Accordingly, our consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of operations.
The following table sets forth a summary of our cash flows for the periods presented:
| For the Years Ended June 30, | ||||||||||||||||
| 2024 | 2025 | 2026 | ||||||||||||||
| RMB | RMB | RMB | $ | |||||||||||||
| Summary Consolidated Cash Flow Data: | ||||||||||||||||
| Net cash provided by/ (used in) operating activities | 55,031 | (58,731,377 | ) | 4,008,088 | 590,721 | |||||||||||
| Net cash used in investing activities | (1,470,287 | ) | (1,045,640 | ) | (12,793,832 | ) | (1,885,578 | ) | ||||||||
| Net cash provided by financing activities | 2,042,038 | 69,137,486 | 375,651 | 55,364 | ||||||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 2,945 | (789,424 | ) | (2,387,261 | ) | (351,840 | ) | |||||||||
| Net change in cash, cash equivalents and restricted cash | 629,727 | 8,571,045 | (10,797,354 | ) | (1,591,333 | ) | ||||||||||
| Cash, cash equivalents and restricted cash at beginning of the year | 2,151,180 | 2,780,907 | 11,351,952 | 1,673,071 | ||||||||||||
| Cash, cash equivalents and restricted cash at end of the year | 2,780,907 | 11,351,952 | 554,598 | 81,738 | ||||||||||||
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Operating Activities
Net cash provided by operating activities was RMB4,008,088 ($590,721) for the year ended June 30, 2026, which primarily reflected our net loss of RMB31,107,853 ($4,584,731) as mainly adjusted for impairment of property, and equipment and right-of-use assets of RMB4,074,402 ($600,493), depreciation and amortization of property and equipment of RMB2,225,867 ($328,052), share-based compensation expenses of RMB1,087,987 ($160,349), and adjustment for changes in operating assets and liabilities primarily consisted of a decrease of RMB27,259,464 ($4,017,548) in prepaid expenses and other assets, mainly due to the recovery from receivables from third parties and lower prepaid service fees.
Net cash used in operating activities was RMB58,731,377 for the year ended June 30, 2025, which primarily reflected our net loss of RMB12,483,047 as mainly adjusted for depreciation and amortization of property and equipment of RMB2,218,894, and amortization of right-of-use assets of RMB244,706. Adjustment for changes in operating assets and liabilities primarily consisted of (i) an increase of RMB47,223,077 in prepaid expenses and other assets, mainly due to higher receivables from third parties and prepaid service fees, (ii) a decrease of RMB934,085 in deferred revenue, (iii) a decrease of RMB369,181 in accounts payable mainly due to the timely payment, (iv) a decrease of RMB300,929 in accrued expenses and other current liabilities, (v) a decrease of RMB180,135 in lease liabilities mainly due to the lease payment, (vi) an increase of RMB168,504 in amounts due from related parties mainly due to prepayments to Chongqing Zijing Huangcheng for marketing services and was partially offset by a decrease of RMB525,606 in accounts receivable, mainly due to the decrease in unsettled orders.
Net cash provided by operating activities was RMB55,031 for the year ended June 30, 2024, which primarily reflected our net loss of RMB4,055,592 as mainly adjusted for depreciation and amortization of property and equipment of RMB2,187,449, amortization of right-of-use assets of RMB281,066, and loss on disposal of property and equipment of RMB10,458. Adjustment for changes in operating assets and liabilities primarily consisted of (i) an increase of RMB1,755,688 in deferred revenue mainly due to the increased orders with prepayments from customers for overseas tour service, (ii) an increase of RMB584,700 in accrued expenses and other current liabilities mainly due to the increase of advertising expenses payable and refundable security deposits, (iii) a decrease of RMB307,294 in prepaid expenses and other current assets mainly due to the decrease in prepaid payments to suppliers; and was partially offset by (i) an increase of RMB588,929 in accounts receivable due to the increase in unsettled orders on the third-party travel platform, (ii) a decrease of RMB285,225 in lease liabilities mainly due to the payment for lease expenses and (iii) an increase of RMB111,341 in amounts due from a related party, due to the increase of travel service payments collected through Zheng Nan’s fund account on a digital payment platform Zelle.
Investing Activities
Net cash used in investing activities for the year ended June 30, 2026 was RMB12,793,832 ($1,885,578), primarily attributable to (i) prepayments for the purchase of property of RMB10,980,605 (US$1,618,341), (ii) purchases of short-term investments of RMB3,892,053 (US$573,618), (iii) loans to a third party of RMB2,250,000 (US$331,609), (iv) purchases of property and equipment of RMB454,377 (US$66,967), partially net off by proceeds from maturity of short-term investments of RMB4,973,203 (US$732,959).
Net cash used in investing activities for the year ended June 30, 2025 was RMB1,045,640 primarily attributable to (i) purchase of short-term investments of RMB18,312,616, (ii) the loans to related parties of RMB6,800,000, (iii) the expenditure on furniture for our client reception center of RMB149,439, and net off by (i) the redemption of short-term investments of RMB17,416,415 and (ii) the collection from loans to related parties of RMB6,800,000.
Net cash used in investing activities for the year ended June 30, 2024 was RMB1,470,287 primarily attributable to (i) the expenditure on property improvement for our client reception center and the purchase of a vehicle of RMB1,470,287, (ii) the purchase of short-term investments of RMB523,000, (iii) the loan to a related party of RMB400,000, and net off by (i) the redemption of short-term investments of RMB523,000 and (ii) the collection from loan to a related party of RMB400,000.
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Financing Activities
Net cash provided by financing activities for the year ended June 30, 2026 was RMB375,651 ($55,364), primarily attributable to (i) proceeds from short-term borrowings with banks of RMB19,250,000 ($2,837,099), (ii) proceeds from the PIPE investment of RMB7,092,523 ($1,045,309) and (iii) proceeds from short-term borrowings with a third party of RMB4,441,190 ($654,550), partially offset by repayments of short-term borrowings with banks of RMB30,000,000 ($4,421,453).
Net cash provided by financing activities for the year ended June 30, 2025 was RMB69,137,486, primarily attributable to (i) proceeds from issuance of common shares pursuant to IPO, net of issuance cost, of RMB50,648,640, (ii) proceeds from short-term borrowings with banks of RMB37,000,000, and (iii) proceeds from loans from a related party of RMB3,030,000, partially offset by (i) the repayments of short-term borrowings with banks of 17,000,000, (ii) the repayment of loans from a related party of RMB3,030,000, and (iii) the payments for deferred offering cost of RMB1,511,154.
Net cash provided by financing activities for the year ended June 30, 2024 was RMB2,042,038, primarily attributable to (i) proceeds from short-term borrowings with banks of RMB10,000,000, (ii) proceeds from long-term borrowings with banks of RMB2,200,000 and (iii) proceeds from an interest-free loan from a related party of RMB300,000, partially offset by (i) the repayments of short-term borrowings with banks of 10,000,000, (ii) the repayments of the interest-free loan from a related party of RMB300,000, and (iii) an increase of RMB157,962 in deferred offering cost.
Capital Expenditures
We had capital expenditures of RMB1,470,287, RMB149,439 and RMB454,377 ($66,967) for the years ended June 30, 2024, 2025 and 2026 mainly for vehicles, office equipment and property improvement.
Contractual Obligations
The following table sets forth our contractual obligations as of June 30, 2026:
| Payment due to schedule | ||||||||||||||||
| Total | Less than 1 year | 1-3 years | 4-5 years | |||||||||||||
| Office rental | 254,201 | 254,201 | - | - | ||||||||||||
| Bank borrowings | 21,450,000 | 21,450,000 | - | - | ||||||||||||
| Installment payment payable for Vehicles | 150,000 | 66,667 | 83,333 | - | ||||||||||||
Operating lease agreements represent non-cancellable operating leases for our office space.
Other than those shown above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of June 30, 2026.
Critical Accounting Policies, Judgments and Estimates
We prepare our financial statements in conformity with U.S. GAAP. The preparation of these financial statements requires us to make estimates, judgments, and assumptions that can have a meaningful effect on the reporting of consolidated financial statements. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experience and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations because of changes in our estimates. Critical accounting estimates are defined as those reflective of significant judgments, estimates and uncertainties, which may result in materially different results under different assumptions and conditions. For the year ended June 30, 2026, we identified no critical accounting estimates in the preparation of our financial statements.
JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We will qualify as an “emerging growth company” and under the JOBS Act will be allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
| A. | Directors and Senior Management |
The following table sets forth information regarding our executive officers and directors as of the date of this report:
| Name | Age | Position(s) | ||
| Zheng Jiahua | 52 | Chairman of the Board and Director | ||
| Zheng Nan | 25 | Chief Executive Officer, interim Chief Financial Officer, and Director | ||
| Bin Lian | 27 | Chief Technology Officer | ||
| Liu Yili (1)(2)(3) | 38 | Independent Director and Chair of Nominating and Corporate Governance Committee | ||
| Ken He (1)(2)(3) | 45 | Independent Director and Chair of Audit Committee | ||
| Tsang Hing Hang Bern (1)(2)(3) | 46 | Independent Director and Chair of Compensation Committee |
| (1) | Member of the Audit Committee |
| (2) | Member of the Compensation Committee |
| (3) | Member of the Nominating and Corporate Governance Committee |
Zheng Jiahua, Chairman of the Board of the Directors of the Company (the “Board”)
Mr. Zheng Jiahua has been the Chairman of the Board since Wetour Robotics’ inception. He is the founder of the VIE. Prior to founding the VIE, between 2011 and 2018, Mr. Zheng was the chairman of the board of Huzhou Xinhanrui Real Estate Co., Ltd., a company engaged in real estate investment, where he was in charge of the company’s development strategies. Mr. Zheng has over 30 years of business experience with extensive resources both locally and regionally. He is particularly well versed in business strategies, corporate and government relations and crisis management. Mr. Zheng received his high school diploma from Yuhuang Huanghu High School in 1991. Mr. Zheng Jiahua is the father of our CEO Mr. Zheng Nan.
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Zheng Nan, Chief Executive Officer, interim Chief Financial Officer, and Director
Mr. Zheng Nan has been the CEO of Wetour Robotics since February 2023 and interim CFO since June 2025. He accepted the appointment as the director of Wetour Robotics on February 26, 2025. Mr. Zheng has been the CEO of the VIE since January 2021 and is responsible for the VIE’s operation, product offerings and management. From June 2019 to March 2020, Mr. Zheng was the Chief Operating Officer of Uway Inc., a college student career service platform he founded in June 2019 when he was about to start college. Uway Inc. built the “Linker” platform to provide flexible employment information for students on campus. Mr. Zheng completed his middle school in China and received his high school diploma in the United States. He obtained a bachelor’s degree at Babson College in Wellesley, Massachusetts. His education in the United States, entrepreneur endeavor and extensive global traveling experience enable him an in-depth understanding of packaged tour service and customized chartered bus service. Mr. Zheng Nan is the son of our Chairman Mr. Zheng Jiahua.
Bin Lian, Chief Technology Officer
Mr. Bin Lian has served as the Chief Technology Officer of Wetour Robotics since April 8, 2026. Since 2021, Mr. Lian has served as a graduate research assistant at The University of Texas at Austin, where he led and contributed to several research projects. Mr. Lian received a bachelor’s degree in materials physics from the University of Science and Technology of China in 2021 and is currently a Ph.D. candidate in mechanical engineering at The University of Texas at Austin.
Liu Yili, Independent Director and Chair of Nominating Committee
Ms. Yili Liu has been our independent director and the Chair of Nominating and Corporate Governance Committee since September 19, 2025. Ms. Liu has managerial experience in overseas business operations and client engagement. Since September 2021, Ms. Liu has been a manager at Shenzhen Feisoo Innovation Technologies Co., Ltd. (Wuhan Branch), focusing on client engagement and business development in overseas markets. From December 2016 to July 2021, she served as a manager at Shenzhen Xingkeqi Innovation Technology Co., Ltd., where she was responsible for certain of the company’s overseas e-commerce operations. Ms. Liu received her master’s degree in Italian Language and Culture for Foreigners from the University of Bologna in July 2016.
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Ken He, Independent Director and Chair of Audit Committee
Mr. Ken He has more than 20 years of experience in the financial and accounting field. Mr. He has been our independent director and the Chair of Audit Committee since February 26, 2025. He has also been serving as an independent director of the board of directors, chairman of audit committee of Guangdong Runyu Sensor Co., Ltd. since August 2024; an independent director of the board of directors, chairman of audit committee and chairman of remuneration and appraisal committee of Fantawild Holdings Inc., a public company listed on the National Equities Exchange and Quotations of China (Ticker: 834793), since May 2022; an independent director of the board of directors, chairman of audit committee and chairman of nominating committee of 4399 Network Co., Ltd. since May 2022; an independent director of the board of directors of Moli Media Inc. since March 2021; and an independent director of the board of directors of Guangdong Sanyi Pharmaceutica Electronic Transaction Management Co., Ltd. since February 2020. Mr. He served as an independent director of the board of directors and chairman of audit committee of Hailiang Education Group Inc. from June 2015 to September 2022 and its chairman of special committee from February 2022 to September 2022. From June 2020 to November 2021, he served as independent director of the board of directors and chairman of audit committee of Ebang International Holdings Inc., a public company listed on Nasdaq (ticker: EBON). Mr. He is experienced and familiar with Chinese accounting standards, Hong Kong accounting standards, Australian accounting standards, international accounting standards and US GAAP, as well as the differences among them. Mr. He obtained a bachelor’s degree in management, majoring in accounting from Sun Yat-Sen University and obtained a master’s degree in applied finance from Macquarie University in 2003 and 2007, respectively. Mr. He is a Certified Public Accountant in US since March 2013, he also holds a Certified Public Accountant designation from the Chinese Institute of CPA since November 2007, a Certified Public Accountant designation from the Hong Kong Institute of CPA since May 2013, a Certified Practicing Accountant designation from the CPA Australia since February 2009, a Chartered Accountant designation from CA Australia and New Zealand since November 2023, and a Chartered Financial Analyst designation from the CFA Institute since September 2009.
Tsang Hing Hang Bern, Independent Director and Chair of Compensation Committee
Mr. Tsang has been our independent director and the Chair of Compensation Committee since September 19, 2025. Mr. Tsang has been a director of Fruitful Food & Beverage Company Limited since 2000 and has served as a director of Ashita International (Hong Kong) Limited since 2018. He was the Supply Chain Director of Sendo Pacific (HK) Ltd. from 2017 to 2020 and has served as Production Manager of Million (Far East) Limited since 2021. Mr. Tsang received a Higher Diploma in Food Science and Technology from the Hong Kong Technical College (Chai Wan) in July 1998.
Employment Agreements, Director Agreements and Indemnification Agreements.
We have entered into employment agreements with each of our executive officers. Under these agreements, each of our executive officers is employed for a fixed term and is renewable upon thirty-day notice to the Company by the executive officer. The executive officers are entitled to a fixed salary and social security benefits and other company benefits.
We may terminate an executive officer’s employment if (i) the executive officer is incapacitated by disease or non-worked-related injuries; (ii) he/she is incompetent to perform his/her obligations after professional training and position adjustment; and (iii) there is material change that makes it impossible to continue employment agreement. Such termination shall take effect 30 days after the delivery of the notice of termination by the Company and payment of extra one month’s salary. We may also terminate an executive officer’s employment for cause, at any time, without notice or remuneration, such as conviction or plea of guilty to a felony or grossly negligent or dishonest acts to our detriment, or material breach of any term of any employment or other services, or non-competition agreements with the Company.
An executive officer may voluntarily terminate his/her employment for any reason and such termination shall take effect 30 days after the receipt by Company of the notice of termination. An executive officer may also terminate his/her employment for cause if the Company (i) failed to pay his/her salary or social security contribution in full; (ii) material breach of any term of the employment agreement; and (iii) committed fraud or coercion to force the executive officer to enter into the employment agreement.
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During the fiscal years ended June 30, 2024, 2025, and 2026, we paid an aggregate of RMB1,115,035, RMB1,099,867, and RMB1,340,397 respectively, in cash to our directors and executive officers. The VIE and our PRC Subsidiaries are required by law to make contributions equal to certain percentages of each employee’s salary for his or her pension insurance, medical insurance, unemployment insurance and other statutory benefits and a housing provident fund.
We plan to enter into director agreements with each of our independent directors which agreements set forth the terms and provisions of their engagement.
In addition, we plan to enter into indemnification agreements with each of our directors and executive officers that provide such persons with additional indemnification beyond that provided in our Second A&R Memorandum and Articles of Association of association.
Family Relationships
Mr. Zheng Jiahua, our Chairman, is the father of Mr. Zheng Nan, our CEO. Except for the foregoing family relationship, there are no family relationships among our other directors or executive officers.
| B. | Compensation |
Overview
The following table shows the compensation paid by us for the years ended June 30, 2024, 2025 and 2026.
| Name/principal position | Year | Salary | Equity Compensation |
All Other Compensation |
Total Paid | |||||||||||||
| Zheng Jiahua / Chairman | 2024 | ¥ | 304,800 | ¥ | - | ¥ | - | ¥ | 304,800 | |||||||||
| 2025 | ¥ | 316,800 | ¥ | - | ¥ | - | ¥ | 316,800 | ||||||||||
| 2026 | ¥ | 316,800 | ¥ | - | ¥ | - | ¥ | 316,800 | ||||||||||
| Zheng Nan / CEO and interim CFO | 2024 | ¥ | 92,712 | ¥ | - | ¥ | - | ¥ | 92,712 | |||||||||
| 2025 | ¥ | 163,412 | ¥ | - | ¥ | - | ¥ | 163,412 | ||||||||||
| 2026 | ¥ | 296,412 | ¥ | - | ¥ | 144,000 | ¥ | 440,412 | ||||||||||
| Ken He / independent director | 2024 | ¥ | - | ¥ | - | ¥ | - | ¥ | - | |||||||||
| 2025 | ¥ | - | ¥ | - | ¥ | - | ¥ | - | ||||||||||
| 2026 | ¥ | 334,000 | ¥ | - | ¥ | - | ¥ | 334,000 | ||||||||||
| Tsang Hing Hang Bern/ independent director | 2024 | ¥ | - | ¥ | - | ¥ | - | ¥ | - | |||||||||
| 2025 | ¥ | - | ¥ | - | ¥ | - | ¥ | - | ||||||||||
| 2026 | ¥ | 153,185 | ¥ | - | ¥ | - | ¥ | 153,185 | ||||||||||
| Liu Yili/ independent director | 2024 | ¥ | - | ¥ | - | ¥ | - | ¥ | - | |||||||||
| 2025 | ¥ | - | ¥ | - | ¥ | - | ¥ | - | ||||||||||
| 2026 | ¥ | 96,000 | ¥ | - | ¥ | - | ¥ | 96,000 | ||||||||||
Share Incentive Plans
On January 20, 2022, the shareholders of Youba Tech, who are also the shareholders of the Company, approved the 2022 share incentive plan (the “2022 Plan”) to grant an aggregate of 470,000 restricted stock units (“RSUs”) at a unit purchase price of RMB1.00 to qualified management and employees in order to retain and motivate the management team and core employees to improve the Group’s ability to create value and long-term competitiveness. In June 2023, we have terminated the 2022 Plan.
These RSUs were considered as non-vested shares under the definition of ASC 718-10-20 and subject to service condition, that is the grantees are required to provide services during the vesting period. Upon termination of employment in the form of resignation or dismissal due to incompetence or violation of company rules and regulations, the unvested restricted shares are forfeited. The Group accounts for forfeitures as a reduction of stock-based compensation expense when the forfeiture occurs.
On June 12, 2023, the unvested RSUs among 470,000 RSUs in aggregate granted under 2022 Equity Incentive Plan is resolved, as an ordinary resolution, that the cancellation of 2022 Equity Incentive Plan is approved by the Board of Directors of the Company. For the unvested RSUs, the requisite service is expected to be rendered. The Company considered it as a repurchase for no consideration and all remaining unrecognized compensation cost should be recognized on the cancellation date.
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On November 24, 2025, our shareholders approved our 2025 Share Incentive Plan (the “2025 Plan”), at the annual general meeting. The 2025 share incentive plan provides for the grant of a variety of share-based awards, including share options, restricted shares, restricted share units (“RSUs”) and other types of share-based awards, as may be determined by the Compensation Committee or the Board of Directors. The maximum number of ordinary shares that may be issued under the 2025 Plan is 3,300,000 ordinary shares of the Company, par value $0.0001 each, subject to adjustment in the event of share splits, recapitalizations or similar events. On December 5, 2025, we filed a registration statement on Form S-8 (File No. 333-291960) to register these shares.
As of June 30, 2026, in total of two participants were granted 240,000 of restricted share units for their services provided for the Company. Each restricted share unit represents the right to receive one common share. The fair value of each restricted share unit is the market price of one common share of the Company on the date of grant. On January 1, 2026, the Company entered into consulting agreements with two external consultants, pursuant to which each consultant is eligible to receive 20,000 RSUs per calendar month over the twelve-month service period commencing January 1, 2026. The RSUs are granted monthly and vest quarterly, with all RSUs granted during each calendar quarter vesting on the last business day of such quarter, subject to the consultants’ continued service and satisfaction of the applicable service conditions through the respective vesting date. The Company determined the fair value of the RSUs granted under the 2025 Plan based on the closing market price of the Company’s ordinary shares on the respective grant date.
A summary of the Company’s RSU activity for the year ended June 30, 2026 is as follows:
| Number of RSUs | Weighted Average Grant Date Fair Value | |||||||
| RMB | ||||||||
| Unvested as of June 30, 2025 | - | - | ||||||
| Granted | 240,000 | 4.55 | ||||||
| Vested | (240,00 | ) | 4.55 | |||||
| Forfeited or expired | - | - | ||||||
| Exercisable as of June 30, 2026 | - | - | ||||||
As of June 30, 2026, 120,000 RSUs had vested but remained unsettled.
| C. | Board Practices |
Duties of Directors
Under Cayman Islands law, all of our directors owe three types of duties to us: (i) statutory duties, (ii) fiduciary duties, and (iii) common law duties. The Companies Act imposes a number of statutory duties on a director. A Cayman Islands director’s fiduciary duties are not codified, however, the courts of the Cayman Islands have held that a director owes the following fiduciary duties: (a) a duty to act in what the director bona fide considers to be in the best interests of the company, (b) a duty to exercise their powers for the purposes they were conferred, (c) a duty to avoid fettering his or her discretion in the future; and (d) a duty to avoid conflicts of interest and of duty. The common law duties owed by a director are those to act with skill, care and diligence that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company and, also, to act with the skill, care and diligence in keeping with a standard of care commensurate with any particular skill they have which enables them to meet a higher standard than a director without those skills. In fulfilling their duty of care to us, our directors must ensure compliance with our Second A&R Memorandum and Articles of Association. We have the right to seek damages where certain duties owed by any of our directors are breached. Our directors have all the powers necessary for managing, and for directing and supervising, our business affairs. The functions and powers of our board of directors include, among others:
| ● | convening shareholders’ annual and extraordinary general meetings and reporting its work to shareholders at such meetings; |
| ● | declaring dividends and distributions; |
| ● | appointing officers and determining the term of office of the officers; |
| ● | exercising the borrowing powers of our company and mortgaging the property of our company; |
| ● | approving the transfer of shares in our company, including the registration of such shares in our share register; and |
| ● | maintaining or registering a register of mortgages, charges, or other encumbrances of the company. |
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Our company has the right to seek damages if certain duties owed by our directors are breached. A shareholder may in certain limited exceptional circumstances have the right to seek damages in our name if a duty owed by our directors is breached. You should refer to “Description of Share Capital—Differences in Corporate Law” for additional information on our standard of corporate governance under Cayman Islands law.
Terms of Directors and Officers
Our officers are elected by and serve at the discretion of the Board and the shareholders voting by ordinary resolution and may be removed by the Board. Our directors are not subject to a set term of office and hold office until the next general meeting called for the election of directors and until their successor is duly elected or such time as they die, resign or are removed from office by a shareholders’ ordinary resolution or the unanimous written resolution of all shareholders. A director will be removed from office automatically if, among other things, the director becomes bankrupt or makes any arrangement or composition with his creditors generally or, in the opinion of a registered medical practitioner by whom he is being treated, he becomes physically or mentally incapable of acting as a Director.
Board of Directors and Committees
Our Board currently consists of five directors. We have also established an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Each of the committees of the Board has the composition and responsibilities described below. We have determined that Ken He, Liu Yili, and Tsang Hing Hang Bern will satisfy the “independence” requirements of Section 5605(a)(2) of the Nasdaq Listing Rules and Rule 10A-3 under the Securities Exchange Act. Each Committee’s members and functions are described below.
Audit Committee
Ken He, Liu Yili, and Tsang Hing Hang Bern are members of our Audit Committee and Ken He is the Chairman. All members of our Audit Committee satisfy the independence standards promulgated by the SEC and by Nasdaq as such standards apply specifically to members of audit committees. We have determined that Ken He upon his appointment as an independent director will possess the accounting or related financial management experience that qualifies him as an “audit committee financial expert” as defined by the rules and regulations of the SEC.
We have adopted and approved a charter for the Audit Committee. In accordance with our Audit Committee Charter, our Audit Committee shall perform several functions, including:
| ● | evaluate the independence and performance of, and assess the qualifications of, our independent auditors, and engage such independent auditors; |
| ● | approve the plan and fees for the annual audit, quarterly reviews, tax and other audit-related services, and approve in advance any non-audit service to be provided by the independent auditors; |
| ● | monitor the independence of the independent auditors and the rotation of partners of the independent auditors on our engagement team as required by law; |
| ● | review the financial statements to be included in our Annual Report on Form 20-F and Current Reports on Form 6-K and review with management and the independent auditors the results of the annual audit and reviews of our quarterly financial statements; |
| ● | oversee all aspects our systems of internal accounting control and corporate governance functions on behalf of the board; |
| ● | review and approve in advance any proposed related-party transactions and report to the full Board on any approved transactions; and |
| ● | provide oversight assistance in connection with legal, ethical and risk management compliance programs established by management and the Board, including Sarbanes-Oxley Act implementation, and make recommendations to the Board regarding corporate governance issues and policy decisions. |
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Compensation Committee
Tsang Hing Hang Bern, Ken He, and Liu Yili are members of our Compensation Committee and Tsang Hing Hang Bern is the Chairman. All members of our Compensation Committee are qualified as independent under the current definition promulgated by Nasdaq. We have adopted and approved a charter for the Compensation Committee. In accordance with the Compensation Committee’s Charter, the Compensation Committee is responsible for overseeing and making recommendations to the Board regarding the salaries and other compensation of our executive officers and general employees and providing assistance and recommendations with respect to our compensation policies and practices. The Compensation Committee is responsible for, among other things:
| ● | To approve compensation principles that apply generally to Company employees; |
| ● | To make recommendations to the board of directors with respect to incentive compensation plans and equity-based plans taking into account the results of the most recent rules to provide the shareholders with an advisory vote on executive compensation, generally known as “Say on Pay Votes” (Section 951 in The Dodd-Frank Wall Street Reform and Consumer Protection Act), if any; |
| ● | To administer and otherwise exercise the various authorities prescribed for the Compensation Committee by the Company’s incentive compensation plans and equity-based plans; |
| ● | To select a peer group of companies against which to benchmark/compare the Company’s compensation systems for principal officers elected by the board of directors; |
| ● | To annually review the Company’s compensation policies and practices and assess whether such policies and practices are reasonably likely to have a material adverse effect on the Company; |
| ● | To determine and oversee share ownership guidelines and share option holding requirements, including periodic review of compliance by principal officers and members of the board of directors; |
Nominating and Corporate Governance Committee
Liu Yili, Ken He, and Tsang Hing Hang Bern are members of our Nominating and Corporate Governance Committee and Liu Yili is the Chairwoman. All members of our Nominating and Corporate Governance Committee are qualified as “independent” under the current definition promulgated by Nasdaq. We have adopted a charter for the Nominating and Corporate Governance Committee. In accordance with its charter, the Nominating and Corporate Governance Committee is responsible for identifying and proposing new potential director nominees to the board of directors for consideration and reviewing our corporate governance policies.
The Nominating and Corporate Governance Committee is responsible for, among other things:
| ● | Identify and screen individuals qualified to become Board members consistent with the criteria approved by the board of directors, and recommend to the board of directors director nominees for election at the next annual or special meeting of shareholders at which directors are to be elected or to fill any vacancies or newly created directorships that may occur between such meetings; |
| ● | Recommend directors for appointment to Board committees; |
| ● | Make recommendations to the board of directors as to determinations of director independence; |
| ● | Oversee the evaluation of the board of directors; |
| ● | Make recommendations to the board of directors as to compensation for the Company’s directors; and |
| ● | Review and recommend to the board of directors the Corporate Governance Guidelines and Code of Business Conduct and Ethics for the Company |
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Director Independence
Our Board reviewed the materiality of any relationship that each of our directors has with us, either directly or indirectly. Based on this review, it is determined that Ken He, Tsang Hing Hang Bern and Liu Yili are “independent directors” as defined by Nasdaq.
| D. | Employees |
See the Item 4. Information on the Company — B. Business Overview — Employees.
| E. | Share Ownership |
The following table sets forth information regarding the beneficial ownership of our Ordinary Shares as of the date of this Report by our officers, directors, and 5% or greater beneficial owners of Ordinary Shares. There is no other person or group of affiliated persons known by us to beneficially own more than 5% of our Ordinary Shares.
We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Unless otherwise indicated, the person identified in this table has sole voting and investment power with respect to all shares shown as beneficially owned by him, subject to applicable community property laws.
The calculations in the table below are based on 14,897,999 Ordinary Shares issued and outstanding as of the date of this report. All share amounts presented in the table have been retroactively adjusted to reflect the Company's 1-for-100 reverse share split, which became effective on August 3, 2026.
| Beneficial Ownership | ||||||||
| Number of Shares | Percentage of Shares | |||||||
| Directors and Executive Officers: | ||||||||
| Zheng Jiahua | 81,516 | 0.547 | % | |||||
| Zheng Nan | 81,480 | 0.547 | % | |||||
| Bin Lian | ||||||||
| Tsang Hing Hang Bern | - | - | ||||||
| Ken He | - | - | ||||||
| Liu Yili | - | - | ||||||
| 5% or Greater Shareholders: | ||||||||
- | ||||||||
| (1) | Unless otherwise indicated, the business address of each of the individuals is Room 7003, 3300 N Interstate 35 Ste 700, Austin, TX 78705. |
| (2) | The number of Ordinary Shares beneficially owned represents 81,516 Ordinary Shares held by Micava Co., Ltd., a British Virgin Islands company, which is 100% owned by Zheng Jiahua. The registered address of Micava Co., Ltd. is Intershore Chambers, Road, Town, Tortola, British Virgin Islands. |
| (3) | The number of Ordinary Shares beneficially owned represents 81,480 Ordinary Shares held by Annan Tech Co., Ltd., which is 100% owned by Zheng Nan. Annan Tech Co., Ltd. is a British Virgin Islands company. The registered address of Annan Tech Co., Ltd. is Intershore Chambers, Road Town, Tortola, British Virgin Islands. |
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None of our existing shareholders have different voting rights from other shareholders. To our knowledge, we are not owned or controlled, directly or indirectly, by another corporation, by any foreign government or by any other natural or legal persons, severally or jointly. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.
To our best knowledge, as of June 30, 2026, we had 821,300 ordinary shares issued and outstanding, on a retroactively adjusted basis to reflect the Company's 1-for-100 reverse share split effective August 3, 2026, among which approximately 4.972% of those ordinary shares are held in the U.S. under CEDE & CO. The number of beneficial owners of our ordinary shares in the U.S. is likely much larger.
| F. | Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation |
Pursuant to Rule 10D-1 under the Exchange Act and Nasdaq Rule 5608, the Company adopted a Clawback Policy providing that the Company will recover reasonably promptly the amount of erroneously awarded incentive-based compensation from any “Executive Officer” (as such term is defined in Rule 10D-1 under the Exchange Act and Nasdaq Rule 5608) in the event that the Company is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.
During the fiscal year ended June 30, 2026, the Company was not required to recoup any compensation awarded under the Clawback Policy.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
| A. | Major Shareholders |
We are required by the Companies Act to keep a register of our shareholders. Under Cayman Islands law, the Ordinary Shares are deemed to be issued when the name of the shareholder is entered in the register of members. The register of members therefore is prima facie evidence of the identity of our shareholders, and the shares that they hold. The register of members generally provides limited, or no, information regarding the ultimate beneficial owners of our ordinary shares.
See “Item 6.E. — Share Ownership” for a description of our major shareholders.
| B. | Related Party Transactions |
The table below sets forth the major related parties that had transaction with the Group, and their relationships with the Group as of June 30, 2024, 2025, and 2026:
| No. | Name of Related Parties | Relationships | ||
| 1 | Zheng Nan | Chief Executive Officer and interim Chief Financial Officer | ||
| 2 | Zheng Jiahua | Chairman of the Board of Directors | ||
| 3 | Hangzhou Yinuo Technology Co., Ltd. | Entity controlled by shareholders | ||
| 4 | Chongqing Zijing Huangcheng International Co., Ltd. Hangzhou Branch (“Chongqing Zijing Huangcheng”) | Entity controlled by Zheng Nan’s immediate family |
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| (a) | The Group entered into the following transactions with related parties: |
| For the years ended June 30, | ||||||||||||
| 2024 | 2025 | 2026 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| Nature | ||||||||||||
| Loans from related parties | ||||||||||||
| Zheng Jiahua | 300,000 | 3,030,000 | - | |||||||||
| Zheng Nan | - | - | 1,320,000 | |||||||||
| Repayment of loans from related parties | ||||||||||||
| Zheng Jiahua | 300,000 | 3,030,000 | - | |||||||||
| Zheng Nan | - | - | 1,300,000 | |||||||||
| Loans to related parties | ||||||||||||
| Zheng Jiahua | 400,000 | 500,000 | - | |||||||||
| Zheng Nan | - | 6,300,000 | - | |||||||||
| Chongqing Zijing Huangcheng | - | - | 200,000 | |||||||||
| Collection from loans to related parties | ||||||||||||
| Zheng Jiahua | - | 500,000 | - | |||||||||
| Zheng Nan | 400,000 | 6,300,000 | - | |||||||||
| Chongqing Zijing Huangcheng | - | - | 10,000 | |||||||||
| Interest income of loan to a related party | ||||||||||||
| Chongqing Zijing Huangcheng | - | - | 4,000 | |||||||||
| Accounts received on behalf of the Group | ||||||||||||
| Zheng Nan | 111,341 | 191,820 | 96,230 | |||||||||
| Collection of accounts received on behalf of the Group | ||||||||||||
| Zheng Nan | - | 223,316 | 135,544 | |||||||||
| Information marketing services procured from a related party | ||||||||||||
| Chongqing Zijing Huangcheng | - | 255,000 | 708,787 | |||||||||
| Payment on behalf of a related party | ||||||||||||
| Chongqing Zijing Huangcheng | - | - | 34,845 | |||||||||
| Payment on behalf of the Group | ||||||||||||
| Zheng Nan | - | - | 50,000 | |||||||||
| (b) | The Group had the following balances with related parties: |
| As of June 30, | ||||||||||||
| 2024 | 2025 | 2026 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| Amount due from related parties: | ||||||||||||
| Zheng Nan (1) | 111,341 | 79,845 | 37,487 | |||||||||
| Chongqing Zijing Huangcheng (2) | - | 200,000 | 302,305 | |||||||||
| Total | 111,341 | 279,845 | 339,792 | |||||||||
| As of June 30, | ||||||||||||
| 2024 | 2025 | 2026 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| Amount due to a related party: | ||||||||||||
| Zheng Nan(3) | - | - | 70,000 | |||||||||
| Total | - | - | 70,000 | |||||||||
| (1) | The balance represented the travel service payments received through the platform fund account on Zelle, a digital payment platform, held by Mr. Zheng Nan, the Chief Executive Officer of the Group. |
| (2) | The balance as of June 30, 2026 represented the prepayments to Chongqing Zijing Huangcheng for marketing services and a loan of RMB200,000, which bears an interest rate consistent with the benchmark interest rate of commercial banks. The balance as of June 30, 2025 represented the prepayments to Chongqing Zijing Huangcheng for marketing services. |
| (3) | The balance represented an interest-free loan from Mr. Zheng Nan for the Group’s daily operation and reimbursement of expenses paid on the Group’s behalf. |
| C. | Interests of Experts and Counsel |
Not applicable.
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ITEM 8. FINANCIAL INFORMATION
| A. | Consolidated Statements and Other Financial Information |
The financial statements required by this item may be found at the end of this report on 20-F, beginning on page F-1.
Legal Proceedings
We are currently not a party to any material legal or administrative proceedings. We may from time to time be subject to various legal or administrative claims and proceedings arising in the ordinary course of business. Litigation or any other legal or administrative proceeding, regardless of the outcome, is likely to result in substantial cost and diversion of our resources, including our management’s time and attention.
Dividend Policy
We currently have no plans to declare or pay any dividends in the near future on our Ordinary Shares. We are an exempted company incorporated in the Cayman Islands. We may rely on the dividends and other distributions to be paid by the WFOE to fund our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders, to service any debt we may incur and to pay our operating expenses. Our subsidiaries are subject to the laws and regulations applicable to them and their articles of association in declaring and paying dividends to us. PRC regulations may restrict the ability of our PRC Subsidiaries to pay dividends to us. See “Risk Factors - Risks Related to Our Business - We may rely on dividends to be paid by the WFOE to fund our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders, if needed in the future. Any limitation on the ability of our subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business.” We currently are subject to restrictions on our ability to pay dividends. Were we able to declare dividends, such dividends could only be paid by us out of our distributable profits (that is, our accumulated realized profits less our accumulated realized losses) or other distributable reserves, as permitted under Cayman Islands law. Dividends cannot be paid out of our share capital. To the extent profits are distributed as dividends, such portion of profits will not be available to be reinvested in our operations. See “Description of Share Capital.” Dividends must be paid in accordance with the procedures and requirements specified in our Articles of Association. When recommending dividends, our directors must act in the general interest of all classes of shareholders and must not favor any one class at the expense of another in accordance with Cayman Islands law. The payment and the amount, form and frequency of any future dividends will depend on our results of operations, cash flows, financial condition, statutory, regulatory and contractual restrictions on the payment of dividends by us, future prospects and other factors that our directors may consider relevant. Our board of directors has discretion as to whether to distribute dividends and determine new dividend policies, subject to certain requirements of Cayman Islands law. Holders of our Ordinary Shares will be entitled to receive dividends pro rata according to the amounts of the Ordinary Shares they own.
| B. | Significant Changes |
Except as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our audited consolidated financial statements included in this annual report.
ITEM 9. THE OFFER AND LISTING
| A. | Offer and Listing Details |
Not Applicable.
| B. | Plan of Distribution |
Not Applicable.
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| C. | Markets |
Our Ordinary Shares are currently traded on the Nasdaq Capital Market.
| D. | Selling Shareholders |
Not Applicable.
| E. | Dilution |
Not Applicable.
| F. | Expenses of the Issuer |
Not Applicable.
ITEM 10. ADDITIONAL INFORMATION
| A. | Share Capital |
Not Applicable.
| B. | Memorandum and Articles of Association |
We are a Cayman Islands exempted company and our affairs are governed by our Second A&R Memorandum and Articles of Association, as amended and restated from time to time, and the Companies Act and the common law of the Cayman Islands.
As of the date of this Report, our authorized share capital is US$20,000,000,000 divided into 2,000,000,000,000 Ordinary Shares, par value of $0.01 each. As of the date of this report, 14,897,999 Ordinary Shares are issued and outstanding, after giving retroactive effect to the Company's 1-for-100 reverse share split effective August 3, 2026.
Our Second A&R Memorandum and Articles of Association became effective on August 3, 2026.
The following are summaries of material provisions of our Second A&R Memorandum and Articles of Association and the Companies Act insofar as they relate to the material terms of our Ordinary Shares.
The following description of our share capital and provisions of our Second A&R Memorandum and Articles of Association are summaries and are qualified by reference to Second A&R Memorandum and Articles of Association. Copies of these documents have been filed with the SEC as exhibits to our registration statement, of which this report forms a part.
Under our Second A&R Memorandum and Articles of Association, the objects of our Company are unrestricted and we have the full power and authority to carry out any object not prohibited by the law of the Cayman Islands.
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Ordinary Shares
Dividends
Subject to the provisions of the Companies Act and any rights and restrictions of any other class or series of shares and in accordance with the Second A&R Memorandum and Articles of Association: our board of directors may, from time to time, declare dividends or distributions on the shares issued and authorize payment of the dividends out of our lawfully available funds; and our shareholders may by, ordinary resolution, declare dividends but no such dividend shall exceed the amount recommended by the directors. Dividends may be declared and paid out of the profits of the Company, realized or unrealized, or from any reserve set aside from profits which the Directors determine is no longer needed. Subject to the requirements of the Companies Act regarding the application of a company’s share premium account and with the sanction of an ordinary resolution, the Board may also declare and pay dividends out of the share premium account or any other fund or account which can be authorized for this purpose in accordance with the Act, provided that in no circumstances may a dividend be paid if this would result in our company being unable to pay its debts as they fall due in the ordinary course of business. “Share premium account,” represents the excess of the price paid to our company on issue of its shares over the par or “nominal” value of those shares, which is similar to the U.S. concept of additional paid in capital. The directors when paying dividends to shareholders may make such payment either in cash or in specie.
No dividend shall bear interest against the Company.
Unclaimed Dividend
A dividend that remains unclaimed for a period of six years after it became due for payment shall be forfeited to, and shall cease to remain owing by, the Company.
Voting Rights
The holders of our Ordinary Shares are entitled to one vote per share, including the election of directors. Voting at any meeting of shareholders is by show of hands unless a poll is (before or on the declaration of the result of the show of hands) demanded by the chairman of such meeting or by at least two shareholders having the right to vote on the resolutions or one or more shareholders present who together hold not less than ten percent of the voting rights of all those who are entitled to vote on the resolution. Unless a poll is so demanded, a declaration by the chairman as to the result of a resolution and an entry to that effect in the minutes of the meeting, shall be conclusive evidence of the outcome of a show of hands, without proof of the number or proportion of the votes recorded in favor of, or against, that resolution. If a poll is duly demanded it shall be taken in such manner as the chairman directs and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place or at which the poll is demanded, shall not be entitled to a second or casting vote.
At any general meeting of the Company, shareholders may participate in person, by proxy or by telephone or other electronic means.
As a matter of Cayman Islands law, (i) an ordinary resolution requires the affirmative vote of a simple majority of the shareholders who, being entitled to do so, attend and vote at a general meeting of the company; and (ii) a resolution is deemed to be a special resolution where it has been approved by either (i) at least two-thirds (or any higher threshold specified in a company’s articles of association) of a company’s shareholders who attend and vote at a general meeting for which notice specifying the intention to propose the resolution as a special resolution has been given; or (ii) if so authorized by a company’s articles of association, by a unanimous written resolution of all of the company’s shareholders. Under Cayman Islands law, some matters, such as amending the memorandum and articles, changing the name or resolving to be registered by way of continuation in a jurisdiction outside the Cayman Islands, require approval of shareholders by a special resolution.
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There are no limitations on non-residents or foreign shareholders to hold or exercise voting rights on the Ordinary Shares imposed by foreign law or by the Second A&R Memorandum and Articles of Association of our Company. However, no person will be entitled to vote at any general meeting or at any separate meeting of the holders of the Ordinary Shares unless the person is registered as of the record date for such meeting and unless all calls or other sums presently payable by the person in respect of Ordinary Shares in the Company have been paid.
Winding Up; Liquidation
Upon the winding up of our company, after the full amount that holders of any issued shares ranking senior to the Ordinary Shares as to distribution on liquidation or winding up are entitled to receive has been paid or set aside for payment, the holders of our Ordinary Shares are entitled to receive any remaining assets of our company available for distribution as determined by the liquidator. The shareholders may, subject to our post-offering amended and restated memorandum and articles of association and any other sanction required by the Companies Act, pass a special resolution allowing the liquidator to do either or both of the following:
| (a) | to divide in specie among the shareholders the whole or any part of our assets and, for that purpose, to value any assets and to determine how the division shall be carried out as between the shareholders or different classes of shareholders; and |
| (b) | to vest the whole or any part of the assets in trustees for the benefit of shareholders and those liable to contribute to the winding up. |
The directors have the authority to present a petition for our winding up to the Grand Court of the Cayman Islands on our behalf without the sanction of a resolution passed at a general meeting.
Calls on Ordinary Shares and Forfeiture of Ordinary Shares
Subject to the terms of allotment, our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their Ordinary Shares including any premium and each shareholder shall (subject to receiving at least 14 clear days’ notice specifying when and where payment is to be made), pay to us the amount called on his shares. Shareholders registered as the joint holders of a share shall be jointly and severally liable to pay all calls in respect of the share. Any Ordinary Shares that have been called upon and remain unpaid are subject to forfeiture. No shareholder shall be entitled to vote at any general meeting unless all calls or other sums payable by such shareholder have been paid. Our board of directors may deduct from a dividend or any other amount payable to a person in respect of an ordinary share any amount due by that person to the Company on a call or otherwise in relation to an ordinary share. If a call remains unpaid after it has become due and payable the person from whom it is due and payable shall pay interest on the amount unpaid from the day it became due and payable until it is paid at the rate fixed by the terms of allotment of the share or in the notice of the call or if no rate is fixed, at the rate of ten percent per annum. The directors may, at their discretion, waive payment of the interest wholly or in part.
We have a first and paramount lien on all shares (whether fully paid up or not) registered in the name of a shareholder (whether solely or jointly with others). The lien is for all monies payable to us by the shareholder or the shareholder’s estate:
| (a) | either alone or jointly with any other person, whether or not that other person is a shareholder; and |
| (b) | whether or not those monies are presently payable. |
At any time the directors may declare any share to be wholly or partly exempt from the lien on shares provisions of the Second A&R Memorandum and Articles of Association.
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We may sell, in such manner as the directors may determine, any share on which the sum in respect of which the lien exists is presently payable, if due notice that such sum is payable has been given (as prescribed by the Second A&R Memorandum and Articles of Association) and, within 14 clear days of the date on which the notice is deemed to be given under the Second A&R Memorandum and Articles of Association, such notice has not been complied with.
Any Ordinary Shares that have been called upon and remain unpaid are subject to forfeiture.
Redemption and Purchase of Ordinary Shares
Subject to the provisions of the Companies Act and other applicable law and any rights for the time being conferred on the shareholders holding a particular class of shares, we may by action of our directors:
| (a) | issue shares that are to be redeemed or liable to be redeemed, at our option or the shareholder holding those redeemable shares, on the terms and in the manner our directors determine before the issue of those shares; |
| (b) | with the consent by special resolution of the shareholders holding shares of a particular class, vary the rights attaching to that class of shares so as to provide that those shares are to be redeemed or are liable to be redeemed at our option on the terms and in the manner which the directors determine at the time of such variation; and |
| (c) | purchase all or any of our own shares of any class including any redeemable shares on the terms and in the manner which the directors determine at the time of such purchase. |
We may make a payment in respect of the redemption or purchase of its own shares in any manner authorized by the Companies Act, including out of any combination of capital, our profits and the proceeds of a fresh issue of shares.
When making a payment in respect of the redemption or purchase of shares, the directors may make the payment in cash or in specie (or partly in one and partly in the other) if so authorized by the terms of the allotment of those shares or by the terms applying to those shares, or otherwise by agreement with the shareholder holding those shares.
Under the Companies Act, the redemption or repurchase of any share may be paid out of our Company’s profits or out of the proceeds of a new issue of shares made for the purpose of such redemption or repurchase, or out of capital (including share premium account and capital redemption reserve). If the repurchase proceeds are paid out of our Company’s capital, our Company must, immediately following such payment, be able to pay its debts as they fall due in the ordinary course of business. In addition, under the Companies Act, no such share may be redeemed or repurchased (a) unless it is fully paid up, (b) if such redemption or repurchase would result in there being no shares outstanding and (c) unless the manner of purchase (if not so authorized under the articles of association) has first been authorized by a resolution of our shareholders.
In addition, under the Companies Act, our Company may accept the surrender of any fully paid share for no consideration unless, as a result of the surrender, the surrender would result in there being no shares outstanding (other than shares held as treasury shares).
No Preemptive Rights
Holders of Ordinary Shares will have no pre-emptive or preferential right to purchase any securities of our company.
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Variation of Rights Attaching to Shares
If at any time the share capital is divided into different classes of shares, all or any of the special rights attaching to any class (unless otherwise provided by the terms of issue of the shares of that class) may, subject to the provisions of the Companies Act and the Second A&R Memorandum and Articles of Association, be modified or abrogated with the sanction of a special resolution passed at a general meeting of the holders of the shares of that class. Consequently, the rights of any class of shares cannot be detrimentally altered without (a) the shareholders holding two thirds of the issued shares in that class consenting in writing to the variation; or (b) the variation being made with the sanction of a special resolution passed at a separate general meeting of the shareholders holding the issued shares in that class by a majority of two-thirds of the vote of all of the shares in that class. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu with such existing class of shares.
Issuance of Additional Shares
Our Second A&R Memorandum and Articles of Association authorizes our board of directors to issue additional Ordinary Shares from time to time as our board of directors shall determine, to the extent of available authorized but unissued shares. The board of directors is empowered to designate and issue from time to time one or more classes and to fix and determine the relative rights, preferences, designations, qualifications, privileges, options, conversion rights, limitations and other special or relative rights of each such class or series so authorized. Such action could adversely affect the voting power and other rights of the holders of our Ordinary Shares or could have the effect of discouraging any attempt by a person or group to obtain control of us.
General Meetings of Shareholders
As a Cayman Islands exempted company, we are not obligated by the Companies Act to call shareholders’ annual general meetings; accordingly, we may, but shall not be obliged to, in each year hold a general meeting as an annual general meeting. Any annual general meeting held shall be held at such time and place as may be determined by our board of directors. All general meetings other than annual general meetings shall be called extraordinary general meetings. The directors may convene general meetings whenever they think fit. General meetings shall also be convened on the written requisition of one or more of the shareholders entitled to attend and vote at our general meetings who (together) hold at least ten percent of the rights to vote at such general meeting in accordance with the notice provisions in the Second A&R Memorandum and Articles of Association, specifying the purpose of the meeting and signed by each of the shareholders making the requisition. If the directors do not convene such meeting for a date not later than 21 clear days’ after the date of receipt of the written requisition, those shareholders who requested the meeting may convene the general meeting themselves within three months after the end of such period of 21 clear days in which case reasonable expenses incurred by them as a result of the directors failing to convene a meeting shall be reimbursed by us. At least 5 clear days’ notice of an extraordinary general meeting and 5 clear days’ notice of an annual general meeting shall be given to shareholders entitled to attend and vote at such meeting. The notice shall specify the place, the day and the hour of the meeting and the general nature of that business. In addition, if a resolution is proposed as a special resolution, the text of that resolution shall be given to all shareholders. Notice of every general meeting shall also be given to the directors and our auditors. Subject to the Companies Act and with the consent of the shareholders who, individually or collectively, hold at least 90 percent of the voting rights of all those who have a right to vote at a general meeting, a general meeting may be convened on shorter notice. A quorum shall consist of the presence (whether in person or represented by proxy) of one or more shareholders holding shares that represent not less than one-third of the outstanding shares carrying the right to vote at such general meeting. If, within 15 minutes from the time appointed for the general meeting, or at any time during the meeting, a quorum is not present, the meeting, if convened upon the requisition of shareholders, shall be cancelled. In any other case it shall stand adjourned to the same time and place seven days or to such other time or place as is determined by the directors. The chairman may, with the consent of a meeting at which a quorum is present, adjourn the meeting. When a meeting is adjourned for more than seven clear days, notice of the adjourned meeting shall be given in accordance with the articles.
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Anti-Takeover Provisions
Some provisions of our Second A&R Memorandum and Articles of Association may discourage, delay or prevent a change of control of our company or management that shareholders may consider favorable, including provisions that authorize our board of directors to issue preferred shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such shares without any further vote or action by our shareholders. However, under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our Second A&R Memorandum and Articles of Association for a proper purpose and for what they believe in good faith to be in the best interests of our Company.
Exempted Company
We are an exempted company incorporated with limited liability under the Companies Act. The Companies Act distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary company except that an exempted company:
| ● | does not have to file an annual return of its shareholders with the Registrar of Companies; |
| ● | is not required to open its register of members for inspection to the public; |
| ● | does not have to hold an annual general meeting; |
| ● | may issue shares with no par value; |
| ● | may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance); |
| ● | may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands; |
| ● | may register as a limited duration company; and |
| ● | may register as a segregated portfolio company. |
“Limited liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on the shares of the company. We are subject to reporting and other informational requirements of the Exchange Act, as applicable to foreign private issuers. We currently comply with the Nasdaq Rules in lieu of following home country practice, except that we follow home country practice in lieu of the shareholder approval requirements of Nasdaq Listing Rule 5635, including the requirement to obtain shareholder approval prior to the issuance of 20% or more of our outstanding ordinary shares or voting power at a price less than the “Minimum Price” (as defined in Nasdaq Listing Rule 5635(d)). The Nasdaq Rules require that every company listed on the Nasdaq hold an annual general meeting of shareholders.
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Register of Members
Under the Companies Act, we must keep a register of members and there should be entered therein:
| ● | the names and addresses of our members, and, a statement of the shares held by each member, which: |
| o | distinguishes each share by its number (so long as the share has a number); |
| o | confirms the amount paid, or agreed to be considered as paid, on the shares of each member; |
| o | confirms the number and category of shares held by each member; and |
| o | confirms whether each relevant category of shares held by a member carries voting rights under the articles of association of the company, and if so, whether such voting rights are conditional |
| ● | the date on which the name of any person was entered on the register as a member; and |
| ● | the date on which any person ceased to be a member. |
Under Cayman Islands law, the register of members of our Company is prima facie evidence of the matters set out therein (i.e., the register of members will raise a presumption of fact on the matters referred to above unless rebutted) and a member registered in the register of members is deemed as a matter of Cayman Islands law to have legal title to the shares as set against its name in the register of members. Once our register of members has been updated, the shareholders recorded in the register of members will be deemed to have legal title to the shares set against their name.
If the name of any person is incorrectly entered in or omitted from our register of members or if there is any default or unnecessary delay in entering on the register the fact of any person having ceased to be a member of our Company, the person or member aggrieved (or any member of our Company or our Company itself) may apply to the Grand Court of the Cayman Islands for an order that the register be rectified. The Court may either refuse such application or it may, if satisfied of the justice of the case, make an order for the rectification of the register.
| C. | Material Contracts |
We have not entered into any material contracts other than in the ordinary course of business and other than those described in this section, “Item 4. Information on the Company,” “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions” or elsewhere in this annual report.
| D. | Exchange Controls |
There are no governmental laws, decrees, regulations, or other legislation in the Cayman Islands that may affect the import or export of capital, including the availability of cash and cash equivalents for use by us, or that may affect the remittance of dividends, interest, or other payments by us to non-resident holders of our ordinary shares. There is no limitation imposed by the laws of the Cayman Islands or in our amended and restated articles of association currently in effect on the right of non-residents to hold or vote shares.
| E. | Taxation |
The following discussion of material Cayman Islands, PRC and United States federal income tax consequences of an investment in our Ordinary Shares is based upon laws and relevant interpretations thereof in effect as of the date of this report, all of which are subject to change. This discussion does not deal with all possible tax consequences relating to an investment in our Ordinary Shares, such as the tax consequences under state, local and other tax laws. To the extent that the discussion relates to matters of Cayman Islands tax law, it represents the opinion of Ogier, our Cayman Islands counsel. To the extent that the discussion relates to matters of PRC tax law, it represents the opinion of Allbright Law Offices, our PRC counsel.
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Cayman Islands Taxation
Under the law of the Cayman Islands as currently in effect, a holder of the securities who is not a resident of the Cayman Islands is not liable for Cayman Islands tax on dividends paid with respect to the securities and all holders of the securities are not liable to the Cayman Islands for tax on gains realized during that year on the sale or disposal of such Ordinary Shares. The Cayman Islands does not impose a withholding tax on dividends paid by a company incorporated or re-registered under the Companies Act.
There are no capital gains, gift or inheritance taxes levied by the Cayman Islands on companies incorporated under the Companies Act. In addition, shares of companies incorporated under the Companies Act are not subject to transfer taxes, stamp duties or similar charges.
There is no income tax treaty or convention currently in effect between the United States and the Cayman Islands or between China and the Cayman Islands.
The Company has been incorporated under the laws of the Cayman Islands as an exempted company with limited liability and, as such, has applied for and has received an undertaking from the Financial Secretary of the Cayman Islands in the following form:
The Tax Concessions Act Undertaking as to Tax Concessions
In accordance with the provision of Section 6 of The Tax Concessions Act (Revised), the following undertaking may be given to the Company:
| 1. | That no law which is thereafter enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciations shall apply to the Company or its operations; and |
| 2. | In addition, that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax shall be payable: |
| 2.1 | On or in respect of the shares, debentures or other obligations of the Company; or |
| 2.2 | by way of the withholding in whole or part, of any relevant payment as defined in Section 6(3) of the Tax Concessions Act (Revised). |
These concessions shall be for a period of 20 years from the date of the relevant certificate issued by the Financial Secretary of the Cayman Islands.
People’s Republic of China Taxation
The following brief description of Chinese enterprise laws is designed to highlight the enterprise-level taxation on our earnings, which will affect the amount of dividends, if any, we are ultimately able to pay to our shareholders. See “Dividend Policy.”
We are an exempt company incorporated in the Cayman Islands and we gain substantial income by way of dividends paid to us from our PRC Subsidiaries. The EIT Law and its implementation rules provide that China-sourced income of foreign enterprises, such as dividends paid by a PRC subsidiary to its equity holders that are non-resident enterprises, will normally be subject to PRC withholding tax at a rate of 10%, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with China that provides for a preferential tax rate or a tax exemption.
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Under the EIT Law, an enterprise established outside of China with a “de facto management body” within China is considered a “resident enterprise,” which means that it is treated in a manner similar to a Chinese enterprise for enterprise income tax purposes. Although the implementation rules of the EIT Law define “de facto management body” as a managing body that actually, comprehensively manage and control the production and operation, staff, accounting, property and other aspects of an enterprise, the only official guidance for this definition currently available is set forth in SAT Notice 82, which provides guidance on the determination of the tax residence status of a Chinese-controlled offshore incorporated enterprise, defined as an enterprise that is incorporated under the laws of a foreign country or territory and that has a PRC enterprise or enterprise group as its primary controlling shareholder. Although Wetour Robotics does not have a PRC enterprise or enterprise group as our primary controlling shareholder and is therefore not a Chinese-controlled offshore incorporated enterprise within the meaning of SAT Notice 82, in the absence of guidance specifically applicable to us, we have applied the guidance set forth in SAT Notice 82 to evaluate the tax residence status of Wetour Robotics and its subsidiaries organized outside the PRC.
According to SAT Notice 82, a Chinese-controlled offshore incorporated enterprise will be regarded as a PRC tax resident by virtue of having a “de facto management body” in China and will be subject to PRC enterprise income tax on its worldwide income only if all of the following criteria are met: (i) the places where senior management and senior management departments that are responsible for daily production, operation and management of the enterprise perform their duties are mainly located within the territory of China; (ii) financial decisions (such as money borrowing, lending, financing and financial risk management) and personnel decisions (such as appointment, dismissal and salary and wages) are decided or need to be decided by organizations or persons located within the territory of China; (iii) main property, accounting books, corporate seal, the board of directors and files of the minutes of shareholders’ meetings of the enterprise are located or preserved within the territory of China; and (iv) one half (or more) of the directors or senior management staff having the right to vote habitually reside within the territory of China.
We believe that we do not meet some of the conditions outlined in the immediately preceding paragraph. For example, as a holding company, the key assets and records of Wetour Robotics, including the resolutions and meeting minutes of our board of directors and the resolutions and meeting minutes of our shareholders, are located and maintained outside the PRC. In addition, we are not aware of any offshore holding companies with a corporate structure similar to ours that has been deemed a PRC “resident enterprise” by the PRC tax authorities. Accordingly, we believe that Wetour Robotics and its offshore subsidiaries should not be treated as a “resident enterprise” for PRC tax purposes if the criteria for “de facto management body” as set forth in SAT Notice 82 were deemed applicable to us. However, as the tax residency status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body” as applicable to our offshore entities, we will continue to monitor our tax status.
The implementation rules of the EIT Law provide that, (i) if the enterprise that distributes dividends is domiciled in the PRC or (ii) if gains are realized from transferring equity interests of enterprises domiciled in the PRC, then such dividends or gains are treated as China-sourced income. It is not clear how “domicile” may be interpreted under the EIT Law, and it may be interpreted as the jurisdiction where the enterprise is a tax resident. Therefore, if we are considered as a PRC tax resident enterprise for PRC tax purposes, any dividends we pay to our overseas shareholders which are non-resident enterprises as well as gains realized by such shareholders from the transfer of our shares may be regarded as China-sourced income and as a result become subject to PRC withholding tax at a rate of up to 10%. We are unable to provide a “will” opinion because AllBright Law Offices, our PRC counsel, believes that it is possible but highly unlikely that the Company and its offshore subsidiaries would be treated as a “resident enterprise” for PRC tax purposes because they do not meet some of the conditions outlined in SAT Notice 82. In addition, we are not aware of any offshore holding companies with a corporate structure similar to ours that has been deemed a PRC “resident enterprise” by the PRC tax authorities as of the date of the report. Therefore, it is possible but highly unlikely that the income received by our overseas shareholders will be regarded as China-sourced income.
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See “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in China — If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.”
Our company pays an EIT rate of 25% for WFOE. Any gain or loss recognized by you generally will be treated as United States source gain or loss. However, if we are treated as a PRC resident enterprise for PRC tax purposes and PRC tax were imposed on any gain, and if you are eligible for the benefits of the tax treaty between the United States and PRC, you may elect to treat such gain as PRC source gain under such treaty and, accordingly, you may be able to credit the PRC tax against your United States federal income tax liability.
United States Federal Income Tax Considerations
The following is a discussion of United States federal income tax considerations relating to the acquisition, ownership, and disposition of our Ordinary Shares by a U.S. Holder, as defined below, that acquires our Ordinary Shares and holds our Ordinary Shares as “capital assets” (generally, property held for investment) under the United States Internal Revenue Code of 1986, as amended (the “Code”). This discussion is based upon existing United States federal income tax law, which is subject to differing interpretations or change, possibly with retroactive effect. No ruling has been sought from the Internal Revenue Service (the “IRS”) with respect to any United States federal income tax consequences described below, and there can be no assurance that the IRS or a court will not take a contrary position. This discussion does not address all aspects of United States federal income taxation that may be important to particular investors in light of their individual circumstances, including investors subject to special tax rules (such as, for example, certain financial institutions, insurance companies, regulated investment companies, real estate investment trusts, broker-dealers, traders in securities that elect mark-to-market treatment, partnerships and their partners, tax-exempt organizations (including private foundations)), investors who are not U.S. Holders, investors that own (directly, indirectly, or constructively) 10% or more of our voting shares, investors that hold their Ordinary Shares as part of a straddle, hedge, conversion, constructive sale or other integrated transaction), or investors that have a functional currency other than the U.S. dollar, all of whom may be subject to tax rules that differ significantly from those summarized below. In addition, this discussion does not address any tax laws other than the United States federal income tax laws, including any state, local, alternative minimum tax or non-United States tax considerations, or the Medicare tax. Each potential investor is urged to consult its tax advisor regarding the United States federal, state, local and non-United States income and other tax considerations of an investment in our Ordinary Shares.
General
For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our Ordinary Shares that is, for United States federal income tax purposes, (i) an individual who is a citizen or treated as a tax resident of the United States, (ii) a corporation (or other entity treated as a corporation for United States federal income tax purposes) created in, or organized under the laws of, the United States or any state thereof or the District of Columbia, (iii) an estate the income of which is includible in gross income for United States federal income tax purposes regardless of its source, or (iv) a trust (A) the administration of which is subject to the primary supervision of a United States court and which has one or more United States persons who have the authority to control all substantial decisions of the trust or (B) that has otherwise elected to be treated as a United States person under the Code.
If a partnership (or other entity treated as a partnership for United States federal income tax purposes) is a beneficial owner of our Ordinary Shares, the tax treatment of a partner in the partnership will depend upon the status of the partner and the activities of the partnership. Partnerships and partners of a partnership holding our Ordinary Shares are urged to consult their tax advisors regarding an investment in our Ordinary Shares.
The discussion set forth below is addressed only to U.S. Holders that purchased Ordinary Shares. Prospective purchasers are urged to consult their own tax advisors about the application of the U.S. federal income tax rules to their particular circumstances as well as the state, local, foreign and other tax consequences to them of the purchase, ownership and disposition of our Ordinary Shares.
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Taxation of Dividends and Other Distributions on our Ordinary Shares
Subject to the passive foreign investment company rules discussed below, the gross amount of distributions made by us to you with respect to the Ordinary Shares (including the amount of any taxes withheld therefrom) will generally be includable in your gross income as dividend income on the date of receipt by you, but only to the extent that the distribution is paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). With respect to corporate U.S. Holders, the dividends will not be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from other U.S. corporations.
With respect to non-corporate U.S. Holders, including individual U.S. Holders, dividends will be taxed at the lower capital gains rate applicable to qualified dividend income, provided that (1) the Ordinary Shares are readily tradable on an established securities market in the United States, or we are eligible for the benefits of an approved qualifying income tax treaty with the United States that includes an exchange of information program, (2) we are not a passive foreign investment company (as discussed below) for either our taxable year in which the dividend is paid or the preceding taxable year, and (3) certain holding period requirements are met. Because there is no income tax treaty between the United States and the Cayman Islands, clause (1) above can be satisfied only if the Ordinary Shares are readily tradable on an established securities market in the United States. Under U.S. Internal Revenue Service authority, Ordinary Shares are considered for purpose of clause (1) above to be readily tradable on an established securities market in the United States if they are listed on Nasdaq. You are urged to consult your tax advisors regarding the availability of the lower rate for dividends paid with respect to our Ordinary Shares, including the effects of any change in law after the date of this report.
To the extent that the amount of the distribution exceeds our current and accumulated earnings and profits (as determined under U.S. federal income tax principles), it will be treated first as a tax-free return of your tax basis in your Ordinary Shares, and to the extent the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain. We do not intend to calculate our earnings and profits under U.S. federal income tax principles. Therefore, a U.S. Holder should expect that a distribution will be treated as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above.
Taxation of Dispositions of Ordinary Shares
Subject to the passive foreign investment company rules discussed below, you will recognize taxable gain or loss on any sale, exchange or other taxable disposition of a share equal to the difference between the amount realized (in U.S. dollars) for the share and your tax basis (in U.S. dollars) in the Ordinary Shares. The gain or loss will be capital gain or loss. If you are a non-corporate U.S. Holder, including an individual U.S. Holder, who has held the Ordinary Shares for more than one year, you may be eligible for reduced tax rates on any such capital gains. The deductibility of capital losses is subject to limitations.
Passive Foreign Investment Company (“PFIC”)
A non-U.S. corporation is considered a PFIC for any taxable year if either:
| ● | at least 75% of its gross income for such taxable year is passive income; or |
| ● | at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income (the “asset test”). |
Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets. We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, at least 25% (by value) of the shares. In determining the value and composition of our assets for purposes of the PFIC asset test, (1) the cash we raised in our initial public offering is generally considered to be held for the production of passive income and (2) the value of our assets must be determined based on the market value of our Ordinary Shares from time to time, which could cause the value of our non-passive assets to be less than 50% of the value of all of our assets (including the cash raised in the offering) on any particular quarterly testing date for purposes of the asset test.
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We must make a separate determination each year as to whether we are a PFIC. Given the amount of cash we raised in our initial public offering, together with any other assets held for the production of passive income, it is possible that, for subsequent taxable years, at least 50% of our assets may be assets held for the production of passive income. We will make this determination following the end of any particular tax year. Although the law in this regard is unclear, we treat our consolidated entities, as being owned by us for United States federal income tax purposes, not only because we exercise effective control over the operation of such entities but also because we are entitled to substantially all of their economic benefits, and, as a result, we consolidate their operating results in our consolidated financial statements. In particular, because the value of our assets for purposes of the asset test will generally be determined based on the market price of our Ordinary Shares and because cash is generally considered to be an asset held for the production of passive income, our PFIC status will depend in large part on the market price of our Ordinary Shares and the amount of cash we raised in our initial public offering. Accordingly, fluctuations in the market price of the Ordinary Shares may cause us to become a PFIC. In addition, the application of the PFIC rules is subject to uncertainty in several respects and the composition of our income and assets will be affected by how, and how quickly, we spend the cash we raise in our initial public offering. We are under no obligation to take steps to reduce the risk of our being classified as a PFIC, and as stated above, the determination of the value of our assets will depend upon material facts (including the market price of our Ordinary Shares from time to time and the amount of cash we raised from our initial public offering) that may not be within our control. If we are a PFIC for any year during which you hold Ordinary Shares, the shares will continue to be treated as stock in a PFIC for all succeeding years during which you hold Ordinary Shares. However, if we cease to be a PFIC and you did not previously make a timely “mark-to-market” election as described below, you may avoid some of the adverse effects of the PFIC regime by making a “purging election” (as described below) with respect to the Ordinary Shares.
If we are a PFIC for your taxable year(s) during which you hold Ordinary Shares, you will be subject to special tax rules with respect to any “excess distribution” that you receive and any gain you realize from a sale or other disposition (including a pledge) of the Ordinary Shares, unless you make a “mark-to-market” election as discussed below. Distributions you receive in a taxable year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years or your holding period for the Ordinary Shares will be treated as an excess distribution. Under these special tax rules:
| ● | the excess distribution or gain will be allocated ratably over your holding period for the Ordinary Shares;
| |
| ● | the amount allocated to your current taxable year, and any amount allocated to any of your taxable year(s) prior to the first taxable year in which we were a PFIC, will be treated as ordinary income, and |
| ● | the amount allocated to each of your other taxable year(s) will be subject to the highest tax rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year. |
The tax liability for amounts allocated to years prior to the year of disposition or “excess distribution” cannot be offset by any net operating losses for such years, and gains (but not losses) realized on the sale of the Ordinary Shares cannot be treated as capital, even if you hold the Ordinary Shares as capital assets.
A U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election for such stock to elect out of the tax treatment discussed above. If you make a mark-to-market election for first taxable year which you hold (or are deemed to hold) Ordinary Shares and for which we are determined to be a PFIC, you will include in your income each year an amount equal to the excess, if any, of the fair market value of the Ordinary Shares as of the close of such taxable year over your adjusted basis in such Ordinary Shares, which excess will be treated as ordinary income and not capital gain. You are allowed an ordinary loss for the excess, if any, of the adjusted basis of the Ordinary Shares over their fair market value as of the close of the taxable year. However, such ordinary loss is allowable only to the extent of any net mark-to-market gains on the Ordinary Shares included in your income for prior taxable years. Amounts included in your income under a mark-to-market election, as well as gain on the actual sale or other disposition of the Ordinary Shares, are treated as ordinary income. Ordinary loss treatment also applies to any loss realized on the actual sale or disposition of the Ordinary Shares, to the extent that the amount of such loss does not exceed the net mark-to-market gains previously included for such Ordinary Shares. Your basis in the Ordinary Shares will be adjusted to reflect any such income or loss amounts. If you make a valid mark-to-market election, the tax rules that apply to distributions by corporations which are not PFICs would apply to distributions by us, except that the lower applicable capital gains rate for qualified dividend income discussed above under “— Taxation of Dividends and Other Distributions on our Ordinary Shares” generally would not apply.
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The mark-to-market election is available only for “marketable stock”, which is stock that is traded in other than de minimis quantities on at least 15 days during each calendar quarter (“regularly traded”) on a qualified exchange or other market (as defined in applicable U.S. Treasury regulations), including Nasdaq. If the Ordinary Shares are regularly traded on Nasdaq and if you are a holder of Ordinary Shares, the mark-to-market election would be available to you were we to be or become a PFIC.
Alternatively, a U.S. Holder of stock in a PFIC may make a “qualified electing fund” election with respect to such PFIC to elect out of the tax treatment discussed above. A U.S. Holder who makes a valid qualified electing fund election with respect to a PFIC will generally include in gross income for a taxable year such holder’s pro rata share of the corporation’s earnings and profits for the taxable year. However, the qualified electing fund election is available only if such PFIC provides such U.S. Holder with certain information regarding its earnings and profits as required under applicable U.S. Treasury regulations. We do not currently intend to prepare or provide the information that would enable you to make a qualified electing fund election. If you hold Ordinary Shares in any taxable year in which we are a PFIC, you will be required to file U.S. Internal Revenue Service Form 8621 in each such year and provide certain annual information regarding such Ordinary Shares, including regarding distributions received on the Ordinary Shares and any gain realized on the disposition of the Ordinary Shares.
If you do not make a timely “mark-to-market” election (as described above), and if we were a PFIC at any time during the period you hold our Ordinary Shares, then such Ordinary Shares will continue to be treated as stock of a PFIC with respect to you even if we cease to be a PFIC in a future year, unless you make a “purging election” for the year we cease to be a PFIC. A “purging election” creates a deemed sale of such Ordinary Shares at their fair market value on the last day of the last year in which we are treated as a PFIC. The gain recognized by the purging election will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging election, you will have a new basis (equal to the fair market value of the Ordinary Shares on the last day of the last year in which we are treated as a PFIC) and holding period (which new holding period will begin the day after such last day) in your Ordinary Shares for tax purposes.
You are urged to consult your tax advisors regarding the application of the PFIC rules to your investment in our Ordinary Shares and the elections discussed above.
Information Reporting and Backup Withholding
Dividend payments with respect to our Ordinary Shares and proceeds from the sale, exchange or redemption of our Ordinary Shares may be subject to information reporting to the U.S. Internal Revenue Service and possible U.S. backup withholding. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification on U.S. Internal Revenue Service Form W-9 or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status generally must provide such certification on U.S. Internal Revenue Service Form W-9. U.S. Holders are urged to consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.
Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the U.S. Internal Revenue Service and furnishing any required information. We do not intend to withhold taxes for individual shareholders. However, transactions effected through certain brokers or other intermediaries may be subject to withholding taxes (including backup withholding), and such brokers or intermediaries may be required by law to withhold such taxes.
Under the Hiring Incentives to Restore Employment Act of 2010, certain U.S. Holders are required to report information relating to our Ordinary Shares, subject to certain exceptions (including an exception for Ordinary Shares held in accounts maintained by certain financial institutions), by attaching a complete Internal Revenue Service Form 8938, Statement of Specified Foreign Financial Assets, with their tax return for each year in which they hold Ordinary Shares. Failure to report the information could result in substantial penalties. You should consult your own tax advisor regarding your obligation to file Form 8938.
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| F. | Dividends and Paying Agents |
Not Applicable.
| G. | Statement by Experts |
Not Applicable.
| H. | Documents on Display |
We are subject to certain of the informational filing requirements of the Exchange Act. Since we are a “foreign private issuer,” we are exempt from the rules and regulations under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions contained in Section 16 of the Exchange Act, with respect to their purchase and sale of our shares. In addition, we are not required to file reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. However, we are required to file with the SEC an Annual Report on Form 20-F containing financial statements audited by an independent accounting firm. We also furnish to the SEC, on Form 6-K, unaudited financial information after each of our first two fiscal quarters. You can request copies of these documents, upon payment of a duplicating fee, by writing to the SEC. The SEC also maintains a website at http://www.sec.gov that contains reports and other information that we file with or furnish electronically with the SEC. Additionally, documents referred to in this Form 20-F may be inspected at our corporate offices, which are located at Room 7003, 3300 N Interstate 35 Ste 700, Austin, TX 78705.
| I. | Subsidiary Information |
Not Applicable.
| J. | Annual Report to Security Holders |
Not Applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign currency exchange rate risk
Renminbi is not a freely convertible currency. The State Administration for Foreign Exchange, under the authority of the People’s Bank of China, controls the conversion of Renminbi into other currencies. The value of Renminbi is subject to changes in central government policies, international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market. Our cash and cash equivalents denominated in Renminbi amounted to RMB6,027,789 and RMB347,628 ($51,234) as of June 30, 2025 and 2026, respectively.
Substantially all of our revenues, purchases and expenditures are denominated in RMB and U.S dollar. Changes in the exchange rate between the U.S. dollar and Renminbi will affect our financial results in Renminbi terms.
Interest rate risk
We are exposed to interest rate risk on our interest-bearing assets and liabilities. As part of our asset and liability risk management, we review and take appropriate steps to manage our interest rate exposures on our interest-bearing assets and liabilities. We have not been exposed to material risks due to changes in market interest rates, and not used any derivative financial instruments to manage the interest risk exposure during the years ended June 30, 2024, 2025 and 2026.
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Inflation risk
Inflationary factors, such as increases in personnel and overhead costs, could impair our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and operating expenses as a percentage of sales revenue if the revenues do not increase with such increased costs.
Credit Risk
Credit risk is controlled by the application of credit approvals, limits and monitoring procedures. We manage credit risk through in-house research and analysis of the Chinese economy and the underlying obligors and transaction structures. We identify credit risk collectively based on industry, geography and customer type. In measuring the credit risk of our sales to our customers, we mainly reflect the “probability of default” by the customer on its contractual obligations and consider the current financial position of the customer and the current and likely future exposures to the customer.
Liquidity Risk
We are also exposed to liquidity risk, which is risk that we will be unable to provide sufficient capital resources and liquidity to meet our commitments and business needs. Liquidity risk is controlled by the application of financial position analysis and monitoring procedures. When necessary, we will turn to other financial institutions and related parties to obtain short-term funding to cover any liquidity shortage.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
| A. | Debt Securities |
Not Applicable.
| B. | Warrants and Rights |
We issued to the representative of underwriters of our initial public offering warrants exercisable at a price equal to 125% of the initial public offering price of the Ordinary Shares to purchase 7% of the aggregate number of Ordinary Shares sold in our initial public offering.
None of the warrants have been exercised as of the date of this Report.
| C. | Other Securities |
Not Applicable.
| D. | American Depositary Shares |
Not Applicable.
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PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Not Applicable.
ITEM 15. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Our management, with the participation of our chief executive officer and chief financial officer, has performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report, as required by Rule 13a-15(b) under the Exchange Act. Based on that evaluation, our management has concluded that, due to the material weakness identified below, as of June 30, 2026, our disclosure controls and procedures were not effective to ensure that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.
Management’s Annual Report on Internal Control over Financial Reporting
As a Company with less than $1.235 billion in revenue for our last fiscal year, we qualify as an “emerging growth company” pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002, in the assessment of the emerging growth company’s internal control over financial reporting. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. We have elected to take advantage of such exemptions.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with Generally Accepted Accounting Principles (GAAP) in the United States of America and includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with GAAP, and that receipts and expenditures of our company are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of the unauthorized acquisition, use or disposition of our company’s assets that could have a material effect on the consolidated financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect all potential misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
121
In the course of preparing and auditing our consolidated financial statements included elsewhere in this report, we and our independent registered public accounting firms identified two material weaknesses in our internal control over financial reporting. The material weaknesses identified relates to: (i) our lack of sufficient financial reporting and accounting personnel with appropriate knowledge of U.S. GAAP and SEC reporting requirements to properly address U.S. GAAP technical accounting issues and prepare and review financial statements and related disclosures in accordance with U.S. GAAP and reporting requirements set forth by the SEC; (ii) our lack of sufficient controls designed and implemented in IT environment and IT general control activities, mainly associated with areas of access logical security, system change management, IT operations and cyber security monitoring activities.
We have implemented and plan to implement a number of measures to address these two material weaknesses:
| ● | We are in the process of establishing clear roles and responsibilities for accounting and financial reporting staff to address accounting and financial reporting issues, and we added additional professionals for our financial reporting team in 2027; |
| ● | We hired a consulting firm with U.S. GAAP experience to strengthen our financial reporting function; |
| ● | We are continuing to further expedite and streamline our reporting process and develop our U.S. GAAP and SEC reporting process to allow early detection, prevention and resolution of potential financial reporting and U.S. GAAP issues, and have established an ongoing program to provide sufficient and appropriate training for financial reporting and accounting personnel, especially training related to U.S. GAAP and SEC reporting requirement. |
| ● | We are strengthening the supervision and controls on the IT functions, including the enhancement of IT security policies and procedures setup, logical security, data backup and cyber security training. |
Attestation Report of the Registered Public Accounting Firm
Not Applicable.
Changes in Internal Control
Other than as described above, there were no changes in our internal controls over financial reporting that occurred during the period covered by this annual report on Form 20-F that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 16. [RESERVED]
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our board of directors has determined that Mr. Ken He, a member of our audit committee (under the standards set forth in Nasdaq Stock Market Rule 5605(a)(2) and Rule 10A-3 under the Exchange Act), is an audit committee financial expert.
ITEM 16B. CODE OF ETHICS
We have adopted a code of business conduct and ethics that applies to all of our executive officers, directors and employees. The code of ethics codifies the business and ethical principles that govern all aspects of our business.
122
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Edston Global PAC was appointed by the Company to serve as its independent registered public accounting firm for fiscal year ended June 30, 2026. Prior to Edston Global PAC’s appointment, Marcum Asia CPAs LLP was appointed by the Company to serve as its independent registered public accounting firm for fiscal years ended June 30, 2024 and 2025. Audit services provided by Edston Global PAC for the fiscal year ended June 30, 2026 and Marcum Asia CPAs LLP for the fiscal year ended June 30, 2024 and 2025, included the examination of the consolidated financial statements of the Company; and services related to periodic filings made with the SEC.
The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by Edston Global PAC and Marcum Asia CPAs LLP. We did not pay any other fees to our independent registered public accounting firm during the periods indicated below.
| For the Year Ended June 30, | ||||||||||||
| (in RMB) | 2024 | 2025 | 2026 | |||||||||
| Audit fees – Edston Global PAC | - | - | 1,085,616 | |||||||||
| Audit fees - Marcum Asia CPAs LLP | 1,515,945 | 1,616,351 | - | |||||||||
| Total | 1,515,945 | 1,616,351 | 1,085,616 | |||||||||
Our audit committee is responsible for the oversight of our independent auditors’ work. The policy of our audit committee is to pre-approve all audit and non-audit services provided by Edston Global PAC and Marcum Asia CPAs LLP, for the periods indicated respectively, including audit services, audit-related services, tax services and other services as described above, other than those for de minimis services which are approved by the audit committee prior to the completion of the audit.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not Applicable.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
None.
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
The Company dismissed Marcum Asia CPAs LLP, its independent registered public accounting firm, effective September 30, 2026, and appointed Edston Global PAC as successor auditor of the Company effective September 30, 2026 to complete the Company’s audit for fiscal year ended June 30, 2026.
The Company’s change of auditor is described on its Current Report on Form 6-K filed with the SEC on October 1, 2026, which is incorporated herein by reference.
123
ITEM 16G. CORPORATE GOVERNANCE
As a foreign private issuer with shares listed on the Nasdaq Capital Market, we are subject to corporate governance requirements imposed by Nasdaq. However, the Nasdaq Stock Market permits a foreign private issuer like us to follow the corporate governance practices of its home country.
Under Nasdaq Stock Market Rule 5615(a)(3), a foreign private issuer such as us may follow its home-country corporate governance practices in lieu of certain of the Nasdaq Stock Market Rules corporate governance requirements. We rely on home country practice in lieu of the shareholder approval requirements of Nasdaq Listing Rule 5635. Nasdaq Listing Rule 5635(d) requires shareholder approval prior to a transaction, other than a public offering, involving the sale, issuance or potential issuance of ordinary shares (or securities convertible into or exercisable for ordinary shares) equal to 20% or more of the ordinary shares or voting power outstanding before the issuance at a price less than the “Minimum Price,” which is the lower of (i) the Nasdaq Official Closing Price immediately preceding the signing of the binding agreement or (ii) the average Nasdaq Official Closing Price for the five trading days immediately preceding the signing of the binding agreement. Nasdaq Listing Rule 5635 also requires shareholder approval in connection with certain acquisitions, changes of control and equity compensation arrangements. The laws of the Cayman Islands, our home country, do not require shareholder approval for such issuances, and our board of directors may approve them without shareholder approval. Our Cayman Islands counsel has provided a letter to Nasdaq certifying that, under Cayman Islands law, we are not required to seek shareholder approval for such issuances. Other than as described above, we do not currently rely on home country practice with respect to our corporate governance practices, but we may choose to do so in the future. As a result, our shareholders may be afforded less protection than they otherwise would under the Nasdaq Stock Market’s corporate governance listing standards applicable to U.S. domestic issuers, including the dilution of their ownership interests from issuances of ordinary shares at a discount without their approval.
ITEM 16H. MINE SAFETY DISCLOSURE
Not Applicable.
Item 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not Applicable.
Item 16J. INSIDER TRADING POLICIES
We have
Item 16K. CYBERSECURITY
124
We recognize the importance of assessing, identifying, and managing material risks associated with cybersecurity threats, as such term is defined in Item 106(a) of Regulation S-K.
Upon detection of a cybersecurity incident and initial intake and validation by our cybersecurity team, our incident response team triages and evaluates the cybersecurity incident, and, depending on the severity, escalates the incident to management and a cross-functional working group. Any incident assessed as potentially being or potentially becoming material is immediately escalated for further assessment and reported to executive management. Determination of what resources are needed to address the incident, prioritizing of response activities, forming of action plans, and notification of external parties as needed are then undertaken by executive management and the cross-functional working group, led by our Chief Executive Officer and Manager of Cybersecurity. We consult with outside counsel as appropriate, including on materiality analysis and disclosure matters, and our executive management makes the final materiality and disclosure determinations, among other compliance decisions.
ITEM 17. FINANCIAL STATEMENTS
We have elected to provide financial statements pursuant to Item 18.
ITEM 18. FINANCIAL STATEMENTS
The consolidated financial statements of Wetour Robotics Limited are included at the end of this annual report
125
ITEM 19. EXHIBITS
We hereby file as part of this Report the exhibits listed in the attached Exhibit Index. Exhibits that are incorporated herein by reference can be inspected on the SEC website at www.sec.gov.
| * | Filed herewith |
| ** | Furnished herewith |
126
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing its annual report on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
| November 5, 2026 | Wetour Robotics Limited | |
| By: | /s/ Zheng Nan | |
| Zheng Nan | ||
| Chief Executive Officer and Director | ||
127
WETOUR ROBOTICS LIMITED
(Formerly known as Webus International Limited)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
| F-1 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
Wetour Robotics Limited (Formerly known as Webus International Limited)
Opinion on the Financial Statements
Basis for Opinion
These consolidated financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on the Group’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Group is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Group internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/
We have served as the Company’s auditor since 2026
November 5, 2026
| F-2 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
Wetour Robotics Limited (formerly known as “Webus International Limited”)
Opinion on the Consolidated Financial Statements
We have audited, before the effects of the adjustments to retrospectively apply the 2026 Reverse Share Split described in Note 13, the accompanying consolidated balance sheet of Wetour Robotics Limited (formerly known as “Webus International Limited”) (the “Company”) as of June 30, 2025, the related consolidated statements of operations and comprehensive loss, changes in shareholders’ equity and cash flows for each of the two years in the period ended June 30, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, based on our audits, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2025, and the results of its operations and its cash flows for each of the two years in the period ended June 30, 2025, in conformity with accounting principles generally accepted in the United States of America.
We were not engaged to audit, review or apply any procedures to the adjustments to retrospectively apply the 2026 Reverse Share Split as described in Note 13, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. The adjustments were audited by Edston Global PAC.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Marcum Asia CPAs LLP
Marcum Asia CPAs LLP
We have served as the Company’s auditor from 2022 to 2026
New York, NY
October 30, 2025
| F-3 |
WETOUR ROBOTICS LIMITED
(Formerly known as Webus International Limited)
CONSOLIDATED BALANCE SHEETS
(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”), except for share and per share data)
| As of June 30, |
As of June 30, |
|||||||||||
| 2025 | 2026 | 2026 | ||||||||||
| RMB | RMB | US$ Note 2 (e) | ||||||||||
| ASSETS | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | ||||||||||||
| Restricted cash | ||||||||||||
| Stable coins | ||||||||||||
| Crypto assets | ||||||||||||
| Short-term investment | ||||||||||||
| Accounts receivable | ||||||||||||
| Amounts due from related parties | ||||||||||||
| Prepaid expenses and other current assets | ||||||||||||
| Total current assets | ||||||||||||
| Non-current assets: | ||||||||||||
| Property and equipment, net | ||||||||||||
| Right-of-use assets, net | ||||||||||||
| Other non-current assets | ||||||||||||
| Total non-current assets | ||||||||||||
| TOTAL ASSETS | ||||||||||||
| LIABILITIES | ||||||||||||
| Current liabilities: | ||||||||||||
| Short-term borrowings (including amounts of the consolidated VIE of RMB | ||||||||||||
| Current portion of long-term borrowings (including amounts of the consolidated VIE of and RMB | ||||||||||||
| Accounts payable (including amounts of the consolidated VIE of RMB | ||||||||||||
| Deferred revenue (including amounts of the consolidated VIE of RMB | ||||||||||||
| Amounts due to a related party (including amounts of the consolidated VIE of and RMB | ||||||||||||
| Income tax payable | ||||||||||||
| Lease liabilities, current (including amounts of the consolidated VIE of RMB | ||||||||||||
| Accrued expenses and other current liabilities (including amounts of the consolidated VIE of RMB | ||||||||||||
| Total current liabilities | ||||||||||||
| Non-current liabilities: | ||||||||||||
| Long-term borrowings (including amounts of the consolidated VIE of RMB | ||||||||||||
| Other long-term liabilities (including amounts of the consolidated VIE of RMB | ||||||||||||
| Total non-current liabilities | ||||||||||||
| TOTAL LIABILITIES | ||||||||||||
| Commitments and Contingencies (Note 20) | ||||||||||||
| SHAREHOLDERS’ EQUITY | ||||||||||||
| Ordinary Shares (US$ | ||||||||||||
| Additional paid-in capital | ||||||||||||
| Share subscription receivable | ( | ) | ( | ) | ( | ) | ||||||
| Accumulated deficits | ( | ) | ( | ) | ( | ) | ||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ( | ) | ||||||
| Total Wetour Robotics Limited’s shareholders’ equity | ||||||||||||
| Non-controlling interests | ||||||||||||
| Total shareholders’ equity | ||||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| * |
The accompanying notes are an integral part of these consolidated financial statements.
| F-4 |
WETOUR ROBOTICS LIMITED
(Formerly known as Webus International Limited)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”), except for share and per share data)
| For the years ended June 30， | ||||||||||||||||
| 2024 | 2025 | 2026 | 2026 | |||||||||||||
| RMB | RMB | RMB | US$ Note 2 (e) | |||||||||||||
| Revenues | ||||||||||||||||
| Cost of revenues | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and marketing expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Research and development expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income/(expenses) | ||||||||||||||||
| Financial expenses, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income, net | ||||||||||||||||
| Impairment loss on long-lived assets | ( | ) | ( | ) | ||||||||||||
| Total other income/(loss), net | ( | ) | ( | ) | ||||||||||||
| Loss before income tax expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax benefit | ||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Less: Net loss attributable to non-controlling interests | ( | ) | ( | ) | ||||||||||||
| Net loss attributable to Wetour Robotics Limited’s shareholders | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other comprehensive income/(loss): | ||||||||||||||||
| Foreign currency translation adjustments, net of nil tax | ( | ) | ( | ) | ( | ) | ||||||||||
| Total other comprehensive income/(loss) | ( | ) | ( | ) | ( | ) | ||||||||||
| Total comprehensive loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Less: Comprehensive loss attributable to non-controlling interests | ( | ) | ( | ) | ||||||||||||
| Comprehensive loss attributable to Wetour Robotics Limited’s shareholders | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss per ordinary share | ||||||||||||||||
| Basic and diluted* | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Weighted average number of ordinary shares outstanding | ||||||||||||||||
| Basic and diluted* | ||||||||||||||||
| * |
The diluted loss per ordinary share excluded the impact of the Representative Warrants and restricted share units, as their effect was antidilutive.
The accompanying notes are an integral part of these consolidated financial statements.
| F-5 |
WETOUR ROBOTICS LIMITED
(Formerly known as Webus International Limited)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”), except for share and per share data)
| Ordinary Shares* |
Additional paid-in |
Share subscription |
Accumulated | Accumulated other comprehensive |
Total Wetour Robotics Limited Shareholder’s |
Non-Controlling | Total shareholders’ |
|||||||||||||||||||||||||||||
| Share | Amount | capital | receivable | deficits | income/(loss) | Equity | Interests | equity | ||||||||||||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||||||||||||
| Balance as of June 30, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Foreign currency translation | - | |||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Issuance of ordinary shares upon the completion of the initial public offering (“IPO”), net of issuance cost | ||||||||||||||||||||||||||||||||||||
| Deferred offering cost | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Issuance of warrants to the representative underwriter of IPO | - | - | ||||||||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Foreign currency translation | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of ordinary shares in connection with PIPE investment | ||||||||||||||||||||||||||||||||||||
| Share-based compensation | ||||||||||||||||||||||||||||||||||||
| Issuance of ordinary shares in connection with At-the-Market Offering | ||||||||||||||||||||||||||||||||||||
| Capital contributions from non-controlling interest | - | |||||||||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Foreign currency translation | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Balance as of June 30, 2026 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance as of June 30, 2026(US$) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| * |
The accompanying notes are an integral part of these consolidated financial statements.
| F-6 |
WETOUR ROBOTICS LIMITED
(Formerly known as Webus International Limited)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”), except for share and per share data)
| For the years ended June 30， | ||||||||||||||||
| 2024 | 2025 | 2026 | 2026 | |||||||||||||
| RMB | RMB | RMB | US$ Note 2 (e) | |||||||||||||
| Cash flows from operating activities: | ||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Adjustments to reconcile net loss to net cash provided by/(used in) operating activities: | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Amortization of right-of-use assets | ||||||||||||||||
| Impairment loss on long-lived assets | ||||||||||||||||
| Loss on disposal of property and equipment | ||||||||||||||||
| Share-based compensation expense | ||||||||||||||||
| Gain on early extinguishment of vehicle purchase payable | ( | ) | ( | ) | ||||||||||||
| Realized loss/(gain) of short-term investments | ( | ) | ( | ) | ||||||||||||
| Unrealized gain of short-term investments | ( | ) | ||||||||||||||
| Fair value change of Crypto assets | ||||||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||
| Accounts receivable | ( | ) | ||||||||||||||
| Amounts due from related parties | ( | ) | ( | ) | ||||||||||||
| Prepaid expenses and other current assets | ( | ) | ||||||||||||||
| Accounts payable | ( | ) | ( | ) | ( | ) | ||||||||||
| Deferred revenue | ( | ) | ( | ) | ( | ) | ||||||||||
| Amounts due to related parties | ||||||||||||||||
| Income tax payable | ( | ) | ( | ) | ( | ) | ||||||||||
| Lease liabilities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Accrued expenses and other current liabilities | ( | ) | ||||||||||||||
| Net cash provided by/(used in) operating activities | ( | ) | ||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||
| Purchase of short-term investments | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Redemption of short-term investments | ||||||||||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Prepayment for purchase of property | ( | ) | ( | ) | ||||||||||||
| Loan to a third party | ( | ) | ( | ) | ||||||||||||
| Loans to related parties | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Repayments of loans to related parties | ||||||||||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Cash flows from financing activities: | ||||||||||||||||
| Proceeds from short-term bank borrowings | ||||||||||||||||
| Repayments of short-term bank borrowings | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Proceeds from long-term bank borrowings | ||||||||||||||||
| Proceeds from short-term borrowings with a third party | ||||||||||||||||
| Proceeds from issuance of common shares pursuant to IPO, net of issuance cost | ||||||||||||||||
| Proceeds from loans from related parties | ||||||||||||||||
| Repayment of loans from related parties | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Proceeds from issuance of ordinary shares in connection with PIPE investment | ||||||||||||||||
| Proceeds from issuance of ordinary shares in connection with At-the-Market Offering | ||||||||||||||||
| Capital contributions from non-controlling interests | ||||||||||||||||
| Payments of offering cost related to IPO | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net cash provided by financing activities | ||||||||||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | ( | ) | ( | ) | ( | ) | ||||||||||
| Net change in cash, cash equivalents and restricted cash | ( | ) | ( | ) | ||||||||||||
| Cash, cash equivalents and restricted cash at beginning of the year | ||||||||||||||||
| Cash, cash equivalents and restricted cash at end of the year | ||||||||||||||||
| The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets that sum to the same amounts shown in the Consolidated Statements of Cash Flows: | ||||||||||||||||
| Cash and cash equivalents | ||||||||||||||||
| Restricted cash | ||||||||||||||||
| Total cash and restricted cash shown in the Consolidated Statements of Cash Flows | ||||||||||||||||
| Supplement disclosures of cash flow information | ||||||||||||||||
| Cash paid for income tax | ||||||||||||||||
| Refund of prepaid income tax | ( | ) | ||||||||||||||
| Cash paid for interest | ||||||||||||||||
| Supplemental schedule of non-cash item | ||||||||||||||||
| Obtaining right-of-use assets in exchange for operating lease liabilities | ||||||||||||||||
| Offering costs recognized as additional paid-in capital | ||||||||||||||||
| Accrual for capitalized offering costs | ||||||||||||||||
| Purchase of Bitcoins using USDC | ||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-7 |
Notes to Consolidated Financial Statements
1. Organization and principal activities
(a) Principal activities
Wetour Robotics Limited (the “Company” or “Wetour Robotics”) was incorporated under the law of the Cayman Islands as an exempted company with limited liability on
The Company, through its wholly-owned subsidiaries, variable interest entity (“VIE”), and Webus Travel Agency (collectively, the “Group”), is principally engaged in the operation of packaged tour service, customized chartered bus service and commute shuttle service, in the United States and the People’s Republic of China (the “PRC” or “China”). For the year ended June 30, 2026, revenues generated from the Group’s U.S. subsidiary were RMB
The Group operates on a business model of “Mobility-as-a-Service” to identify and solve inefficiencies associated with inflexible or low-quality public transportation and provide cost-efficient and customized mass transportation services under different scenarios with its comprehensive digital platforms. The Group started its business in 2019 and is in the process of expanding the services provided. The services provided by the Group mainly include: (i) packaged tour service, (ii) customized chartered bus service, and (iii) commute shuttle service.
The Group is also developing Orchestra, an operating system platform designed to translate human gesture and visual recognition signals into command signals for connected physical devices, including wearable robotics and robotic manipulators. Orchestra comprises three components: Conductor, a software pipeline for sEMG -based real-time continuous gesture recognition; Vision-Link, a visual scene recognition and execution layer; and Orchestra OS, a device-agnostic operating system. Platform development activities are principally conducted through the Group’s United States operations. No revenue was generated from Physical AI infrastructure activities during the years ended June 30, 2024, 2025 and 2026.
(b) Organization
Wetour Robotics was incorporated as an ultimate holding company in the Cayman Islands on February 10, 2022, who owns
Zhejiang Youba Technology Co., Ltd. (“Youba Tech”), which was established under the laws of the PRC on August 16, 2019. Prior to the Reorganization described below, Youba Tech was controlled by six individual shareholders, who were also the proportionate shareholders of Wetour Robotics. Hangzhou Webus Travel Agency Co., Ltd. (“Webus Travel Agency”), which was established under the laws of the PRC on August 27, 2020, is the Group’s main operating entities in China. On November 5, 2025, the Group completed an internal reorganization pursuant to which
On December 9, 2025, NextFood Technologies Inc., a
| F-8 |
1. Organization and principal activities (continued)
(c) Reorganization
Four shareholders of Youba Tech transferred their
| ● | Incorporation of Wetour Robotics, Youbus International, Webus HK and WFOE. |
| ● | Transfer of |
| ● | Transfer of |
| ● | The remaining two shareholders (“Individual Registered Shareholders”) collectively owning another |
Immediately before and after the Reorganization completed on September 7, 2022 as described above, Wetour Robotics together with its wholly-owned subsidiaries Youbus International, Webus HK and WFOE and the VIE and Webus Travel Agency were effectively controlled by the same shareholders; therefore, the reorganization was accounted for as a recapitalization. The accompanying consolidated financial statements have been prepared as if the current corporate structure has been in existence throughout the periods presented. The consolidation of the Company has been accounted for at historical cost at the beginning of the first period presented in the accompanying consolidated financial statements.
On November 5, 2025, Youba Tech transferred its
Details of the Company’s principal subsidiaries, and the VIE are as follows.
| Name: | Date of incorporation | Place of incorporation | Percentage of direct or ownership | Principal activities | ||||||
| Youbus International Limited (“Youbus International”) | Islands | % | ||||||||
| Webus Hongkong Limited (“Webus HK”) | % | |||||||||
| Wetour Travel Tech LLC (“Wetour”) | % | |||||||||
| Zhejiang Xinjieni Technology Co., Ltd. (“Xinjieni Tech” or “WFOE”) | % | |||||||||
| Zhejiang Youba Technology Co., Ltd. (“Youba Tech” or “VIE”) | % | |||||||||
| Hangzhou Webus Travel Agency Co., Ltd. (“Webus Travel Agency”) | % | |||||||||
| Hangzhou Shunxing Technology Co., Ltd. (“Hangzhou Shunxing”) | % | |||||||||
| NextFood Technologies Inc. (“NextFood”) | December 9, 2025 | The United States | % | |||||||
| Vantrapower LLC (“Vantrapower”) | % | Power Infrastructure Solutions | ||||||||
| F-9 |
1. Organization and principal activities (continued)
(c) Reorganization (continued)
The described VIE Agreements are as follows:
Exclusive Business Cooperation Agreement: Pursuant to the Exclusive Business Cooperation Agreement, the VIE is obliged to pay service fee to WFOE for the exclusive services such as technical services, internet technology support, business consulting, software development, information consulting, marketing consulting, product development and system maintenance. The service fee shall consist of
Exclusive Call Option Agreement: Pursuant to the Exclusive Call Option Agreement, the Individual Registered Shareholders have unconditionally and irrevocably granted WFOE or its designated purchaser the right to purchase all or part of their equity interests in the VIE (“Equity Call Option”). The purchase price payable by WFOE in respect of the transfer of equity interests upon exercise of the Equity Call Option shall be the higher of (a) the lowest price permitted under PRC laws and regulations or (b) the capital contribution in relation to the equity interests. If appraisal is required by the PRC laws and regulations at the time when WFOE exercises the Option, WFOE and the Individual Registered Shareholders shall make necessary adjustment to purchase price so that it complies with any and all then applicable PRC laws and regulations. WFOE or its designated purchaser shall have the right to purchase such proportion of equity interests in the VIE as it decides at any time. The Individual Registered Shareholders shall return any amount of purchase price they received in the event that WFOE acquires the equity interests in the VIE.
The Individual Registered Shareholders and the VIE have jointly and severally further undertaken to WFOE that, without the prior written consent of WFOE, they shall not (i) in any manner supplement, change or amend the constitutional documents of the VIE, increase or decrease its share capital, or change the structure of its registered capital in other manner; (ii) sell, pledge, transfer or otherwise dispose of any assets, business or lawful revenue or create encumbrance over the VIE; (iii) incur, inherit, guarantee or assume any debt, except for debts incurred in the ordinary course of business other than payables incurred by a loan and for debts disclosed to and agreed in writing by WFOE; (iv) cause the VIE to execute any material contract with a value above RMB
This agreement shall remain effective unless terminated (i) in accordance with the provisions of this agreement or any other supplemental agreements; or (ii) the entire equity interests held by the Individual Registered Shareholders in the VIE have been transferred to WFOE or its designated person.
Exclusive Assets Option Agreement: Pursuant to the Exclusive Assets Option Agreement, the VIE unconditionally and irrevocably granted an exclusive option to WFOE or its designated person to purchase
Power of Attorney: Pursuant to the Power of Attorney, each of the Individual Registered Shareholders, irrevocably appoints WFOE, the authorized person or entity to exercise such shareholder’s rights in the VIE in accordance with PRC laws and the articles of the VIE, including without limitation to, the rights to (i) participate in shareholders meetings; (ii) the sale, transfer, pledge or disposition of the equity interest such shareholder holds in part or in whole; and (iii) designate and appoint, on behalf of such shareholder, the legal representative, the chairman, the executive director(s) and/or director(s), the supervisor(s), the general manger and other senior management members of the VIE. Without limiting the generality of the powers granted to WFOE, WFOE shall have the power and authority hereunder, on behalf of such shareholder, to execute the share transfer contracts stipulated in the Exclusive Call Option Agreement entered into among the VIE, WFOE and such shareholders and effect the terms of the Exclusive Call Option Agreement and Share Pledge Agreement. All the actions in connection with the equity interest held by such shareholder as conducted by WFOE shall be deemed as the actions of such shareholder, and all the documents related to the shareholding executed by WFOE shall be deemed to be executed by such shareholder.
| F-10 |
1. Organization and principal activities (continued)
(c) Reorganization (continued)
Share Pledge Agreement: Pursuant to the Share Pledge Agreement, each of the Individual Registered Shareholders unconditionally and irrevocably pledged and granted first priority security interests over all of his/her/its equity interests in the VIE together with all related rights thereto to WFOE as security for performance of the Contractual Arrangements and all direct, indirect or consequential damages and foreseeable loss of interest incurred by WFOE as a result of any event of default on the part of the Individual Registered Shareholders, the VIE and all expenses incurred by WFOE as a result of enforcement of the obligations of the Individual Registered Shareholders and/or the VIE under the Contractual Arrangements. Upon the occurrence and during the continuance of an event of default (as defined in this agreement), WFOE shall have the right to (i) require the Individual Registered Shareholders to immediately pay any amount payable under the Contractual Arrangements; or (ii) to exercise all such rights as a secured party under any applicable PRC law and this agreement, including without limitations, being paid in priority with the equity interests.
The said Share Pledge under this agreement takes effect upon the completion of registration with the relevant administrative department of industry and commerce and shall remain valid until after all the contractual obligations of the Individual Registered Shareholders and the VIE under the relevant Contractual Arrangements have been fully performed and all the outstanding debts of the Individual Registered Shareholders and/or the VIE under the relevant Contractual Arrangements have been fully paid.
Spousal Consent: Pursuant to the Spousal Consent, the respective spouse of the Individual Registered Shareholders has irrevocably undertaken that, including without limitation to, the spouse (i) has full knowledge of and has consented to the entering into of the Contractual Arrangements by the relevant Individual Registered Shareholder; (ii) is not entitled to any right with respect to the shares in the VIE and undertakes not to make any claims on the equity interest in the VIE; (iii) confirms that the Individual Registered Shareholders’ performance of the Contractual Arrangements and further modification or termination of the Contractual Arrangements will not require the respective spouse’s separate authorization or consent; (iv) undertakes to execute all necessary documents and take all necessary actions to ensure the Contractual Arrangements to be properly performed; (v) undertakes that if the respective spouse obtains any equity interest in the VIE for any reason, the respective spouse shall be bound by the Contractual Arrangements and abide by the obligations of the shareholders of the VIE under the Contractual Arrangements, and upon WFOE’s or its designate third-party request, the respective spouse shall execute a series of written documents with substantially the same form and content as the Contractual Arrangements.
The Company believes that Youba Tech is considered a VIE under Accounting Codification Standards (“ASC”) 810 “Consolidation”, because the equity investors in Youba Tech as a group no longer have the characteristics of a controlling financial interest through their equity investments. The Company further performs a qualitative assessment to determine whether the Company, through WFOE, is the primary beneficiary of VIE. A qualitative assessment begins with an understanding of the nature of the inherent risks in the entity which creates variability and which party absorbs this variability either through equity interest or contractual agreements. The Company’s assessment of the involvement with Youba Tech through a combination of
Upon the completion of the Reorganization, Wetour Robotics became the ultimate holding company of the Group. The Group is effectively controlled by the same group of shareholders before and after the Reorganization and therefore, the Reorganization is considered as a recapitalization of these entities under common control. The consolidation of the Company and its subsidiaries, the VIE and Webus Travel Agency has been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying audited consolidated financial statements.
| F-11 |
1. Organization and principal activities (continued)
(c) Reorganization (continued)
On November 5, 2025, the Group completed an internal reorganization pursuant to which
| As of June 30, | As of June 30, | |||||||
| 2025 | 2026 | |||||||
| RMB | RMB | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | ||||||||
| Restricted cash | ||||||||
| Short-term investment | ||||||||
| Accounts receivable | ||||||||
| Amounts due from related parties | ||||||||
| Amounts due from group companies | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Property and equipment, net | ||||||||
| Right-of-use assets, net | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | ||||||||
| LIABILITIES | ||||||||
| Current liabilities: | ||||||||
| Short-term borrowings | ||||||||
| Current portion of long-term borrowings | ||||||||
| Accounts payable | ||||||||
| Deferred revenue | ||||||||
| Lease liabilities, current | ||||||||
| Amount due to group companies, current | ||||||||
| Amounts due to a related party | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities: | ||||||||
| Long-term borrowings | ||||||||
| Other long-term liabilities | ||||||||
| Total non-current liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and Contingencies (Note 20) | ||||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficits | ( | ) | ( | ) | ||||
| Total shareholders’ equity | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| F-12 |
1. Organization and principal activities (continued)
(c) Reorganization (continued)
| For the years ended June 30， | ||||||||||||
| 2024 | 2025 | 2026 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| Revenues | ||||||||||||
| Cost of revenues | ( | ) | ( | ) | ( | ) | ||||||
| Gross profit | ||||||||||||
| Operating expenses | ( | ) | ( | ) | ( | ) | ||||||
| Operating (loss)/income from operations | ( | ) | ( | ) | ||||||||
| Other income/(expenses), net | ( | ) | ||||||||||
| Income tax expense | ||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||
| For the years ended June 30， | ||||||||||||
| 2024 | 2025 | 2026 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| Net cash (used in) /provided by operating activities | ( | ) | ( | ) | ||||||||
| Net cash (used in)/provided by investing activities | ( | ) | ( | ) | ||||||||
| Net cash provided by /(used in) financing activities | ( | ) | ||||||||||
| Net change in cash and cash equivalents | ( | ) | ( | ) | ( | ) | ||||||
| Cash, cash equivalents and restricted cash at beginning of the year | ||||||||||||
| Cash, cash equivalents and restricted cash at end of the year | ||||||||||||
(d) Capital resource and liquidity
The Group has been incurring losses from operations since inception. The Group incurred net loss of RMB
In March 2026, the Group completed a private investment in public equity (“PIPE”) transaction, with aggregate gross proceeds of RMB
Historically, the Group obtained three lines of credit total amounting to RMB
The Group’s liquidity is based on its ability to enhance its operating cash flow position, obtain capital financing from equity interest investors and borrow funds to fund its general operations and capital expenditure. The Group’s ability to continue as a going concern is dependent on management’s ability to execute its business plan successfully, which includes increasing market acceptance of the Group’s products to boost its sales volume to achieve economies of scale while applying more effective marketing strategies and cost control measures to better manage operating cash flow position and obtaining funds from outside sources of financing to generate positive financing cash flows.
Given the Group’s existing cash balances and projected cash generated by, and used in, operating activities, the Group believes that it will have sufficient liquidity to fund its operating activities, and it will be able to meet its payment obligations from operations and debt related commitments for the next twelve months from the issuance of the consolidated financial statements. Accordingly, the consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities during the normal course of operations.
| F-13 |
2. Summary of significant accounting policies
(a) Basis of presentation
The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Significant accounting policies followed by the Group in the preparation of the accompanying consolidated financial statements are summarized below.
(b) Principles of consolidation
The consolidated financial statements include the financial statements of the Company, its subsidiaries, the VIE and Webus Travel Agency. All intercompany transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation.
(c) Use of estimates
The preparation of the consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities at the balance sheet date, and the reported revenues and expenses during the reported periods in the consolidated financial statements and accompanying notes. Accounting estimates include, but not limited to allowance for credit losses, fair value of warrants and crypto assets, useful lives and impairment of long-lived assets, accounting for deferred income taxes and valuation allowance for deferred tax assets. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates, and as such, differences may be material to the consolidated financial statements.
(d) Foreign currency translation
The Group uses Renminbi (“RMB”) as its reporting currency. The functional currency of the Company and the Company’s subsidiaries incorporated in the British Virgin Islands, the United States and Hong Kong is United States dollars (“$”), while the functional currency of the Company’s PRC subsidiaries is RMB. The determination of the respective functional currency is based on the criteria set out by ASC 830, Foreign Currency Matters.
Transactions denominated in foreign currencies other than functional currency are translated into the functional currency at the exchange rates prevailing on the transaction dates. Monetary assets and liabilities denominated in foreign currencies other than functional currency are remeasured into the functional currency at the exchange rates prevailing at the balance sheet date. Non-monetary items that are measured in terms of historical cost in foreign currency are remeasured using the exchange rates at the dates of the initial transactions. Exchange gains or losses arising from foreign currency transactions are recorded in the consolidated statements of operations and comprehensive loss.
The financial statements of the Group’s non-PRC entities are translated from their respective functional currency into RMB. Assets and liabilities are translated into RMB using the applicable exchange rates at the balance sheet date. Equity accounts other than earnings generated in current period are translated into RMB at the appropriate historical rates. Revenues, expenses, gains and losses are translated into RMB using the average exchange rates for the relevant period. The resulting foreign currency translation adjustments are recorded as a component of accumulated other comprehensive income/(loss) in the consolidated statements of changes in shareholders’ equity and a component of other comprehensive income/(loss) in the consolidated statement of operations and comprehensive loss.
| F-14 |
2. Summary of significant accounting policies (continued)
(e) Convenience translation
The consolidated financial statements are stated in Renminbi (“RMB”), the currency of the country in which the Group’s PRC subsidiary, the VIE and Webus Travel Agency operate. Amounts in $ are presented for the convenience of the reader and are translated at the rate of $
(f) Cash and cash equivalents
Cash and cash equivalents consists of cash on hand, cash in banks and cash in third-party platforms. As of June 30, 2025 and 2026, cash and cash equivalents balances were RMB
(g) Short-term investments
The Group’s short-term investments are equity investments with readily determinable fair value, except for those accounted for under the equity method and those that result in consolidation of the investee, are measured at fair value, and any changes in fair value are recognized in the consolidated statements of comprehensive loss. As of June 30, 2025 and 2026, the fair value of the Group’s investments in marketable securities was RMB
(h) Stable coins
The Group holds deposits in USD Coin (“USDC”) and Tether USD (“USDT”). Stable coins differ from other crypto assets in that they are designed to maintain a stable value by pegging their price to a fiat currency. USDC and USDT are each intended to maintain a value of approximately one US dollar per token. The stable coin meets the definition of a financial asset under ASC 825-10-20 because it represents a contractual claim on the issuer that obligates the issuer to deliver cash (US dollars) upon redemption. As a result, the Group accounts for these stable coin holdings as financial assets rather than as crypto intangible assets. Because the stable coins are designed to maintain a value equivalent to one U.S. dollar and are redeemable with the issuer, the carrying value of the Group’s stable coin deposits approximates fair value. As of June 30, 2025, and 2026, the balances were and RMB
(i) Crypto assets
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”). ASU 2023-08 requires in-scope crypto assets (including the Group’s bitcoin holdings) to be measured at fair value in the statement of financial position, with gains and losses from changes in the fair value of such crypto assets recognized in net loss each reporting period.
The Group accounts for its crypto assets, which are comprised solely of bitcoin, in accordance with ASU 2023-08. The Group’s crypto assets are initially recorded at cost and subsequently measured at fair value as of each reporting period. The Group determines the fair value of its bitcoin in accordance with ASC 820, Fair Value Measurement, based on quoted (unadjusted) prices in an active cryptocurrency exchange, the active exchange that the Group has determined is its principal market for bitcoin (Level 1 inputs). Changes in fair value are recognized as incurred in the Group’s consolidated statements of operations and comprehensive loss.
(j) Accounts receivable
Accounts receivable is stated at the original amount less allowance for credit losses.
Accounts receivable is recognized in the period when the Group has provided services to its customers and when its right to consideration is unconditional. On July 1, 2023, the Group adopted ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement on Credit Losses on Financial Instruments”, including certain subsequent amendments, transitional guidance and other interpretive guidance within ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-11, ASU 2020-02 and ASU 2020-03 (collectively, including ASU 2016-13, “ASC 326”). ASC 326 introduces an approach based on expected losses to estimate the allowance for credit losses, which replaces the previous incurred loss impairment model. The Group uses aging schedule method in the current expected credit loss model (“CECL model”) to estimate the expected credit losses. The Group’s estimation of allowance for credit losses considers factors such as historical credit losses experience, age of receivable balances, current market conditions, reasonable and supportable forecasts of future economic conditions, in combination with assessing receivable collectability on an individual basis, and applying current situation adjustment. The Group concludes that there is no impact over the initial adoption of CECL model, which should be treated as cumulative-effect adjustment on accumulated deficits as of July 1, 2023. Accounts receivable balances are written off after all collection efforts have been exhausted.
There was provision for credit losses provided for the years ended June 30, 2024, 2025 and 2026.
| F-15 |
2. Summary of significant accounting policies (continued)
(k) Prepaid expenses and other current assets
Prepaid expenses and other current assets primarily include receivables from third-parties, prepaid service fees, advance to suppliers, deductible input value-added tax, security deposits and staff allowance. The assets are stated at the historical carrying amount net of the allowance for credit losses. The Group reviews other receivables on a periodic basis as to the collectability. Other receivables are written off after all collection efforts have been exhausted. For the year ended June 30, 2026, the Group recognized a provision for credit losses of RMB
(l) Property and equipment, net
Property and equipment are stated at cost less accumulated depreciation and impairment, if any, and depreciated on a straight-line basis over the estimated useful lives of the assets. Salvage value rate is determined to
| Category | Estimated useful lives | |||
| Building | ||||
| Electronic equipment | ||||
| Office equipment | ||||
| Vehicles | ||||
| Leasehold and property improvement | ||||
(m) Impairment of long-lived assets
Long-lived assets are evaluated for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will affect the future use of the assets) indicate that the carrying amount may not be fully recoverable or that the useful life is shorter than the Group had originally estimated. When these events occur, the Group evaluates the impairment by comparing carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Group recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. There was impairment loss for the long-lived assets for the years ended June 30, 2024 and 2025, respectively. For the year ended June 30, 2026, the Group recognized an impairment loss of RMB
(n) Fair value measurement
The Group applies a three-level valuation hierarchy for fair value measurements. This hierarchy prioritizes the inputs into three broad levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the asset or liability. Level 3 inputs are unobservable inputs based on management’s assumptions used to measure assets and liabilities at fair value. Financial assets and liabilities of the Group primarily consist of cash and cash equivalents, restricted cash, short-term investments, crypto assets, accounts receivable, amount due from related parties, advance to suppliers, prepaid service fees, security deposits and others included in prepaid expenses and other current assets, short-term borrowings, accounts payable, deferred revenue, payroll payable, accrued security deposits and others included in accrued expenses and other current liabilities. For the aforementioned financial instruments included in current assets and liabilities, their carrying amount is approximate to their respective fair values because of the general short maturities.
The Group did not have any other financial instruments that were required to be measured at fair value on a recurring basis as of June 30, 2025 and 2026 except for short-term investments and crypto assets.
(o) Borrowings
Borrowings are initially recognized at the proceeds received, adjusted for any transaction costs directly attributable to the issuance of the borrowings. Subsequently, borrowings are stated at amortized cost using the effective interest method. The amortized cost is calculated by taking the initial carrying amount and accruing the interest expense using the effective interest rate to the redemption value over the period of the borrowings.
| F-16 |
2. Summary of significant accounting policies (continued)
(p) Accrued expenses and other current liabilities
Accrued expenses and other current liabilities primarily include loan from a third party, accrued expenses, payroll payable, refundable security deposits and vehicle payments payable. The liabilities are recognized when the Group has present obligations arising from past events and are measured at the amounts expected to be paid to settle such obligations. The Group periodically reviews accrued expenses and other current liabilities to ensure that the amounts recognized reflect its outstanding obligations as of the reporting date.
(q) Leases
The Group has elected the package of practical expedients, which allows the Group not to reassess (1) whether any expired or existing contracts as of the adoption date are or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date and (3) initial direct costs for any expired or existing leases as of the adoption date. Lastly, the Group elected the short-term lease exemption for all contracts with lease terms of 12 months or less.
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange of a consideration. To assess whether a contract is or contains a lease, the Group assess whether the contract involves the use of an identified asset, whether it has the right to obtain substantially all the economic benefits from the use of the asset and whether it has the right to control the use of the asset.
The right-of-use assets and related lease liabilities are recognized at the lease commencement date. The Group recognizes operating lease expenses for lease payments on a straight-line basis over the lease term. The Group’s lease agreements do not contain any material residual value guarantees or restricted covenants.
Operating lease right-of-use of assets
The right-of-use of asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and less any lease incentive received.
Operating lease liabilities
Lease liability is initially measured at the present value of the outstanding lease payments at the commencement date, discounted using the Group’s incremental borrowing rate. The Group’s lease payments included in the measurement of the lease liability only comprises fixed lease payments.
Lease liability is measured at amortized cost using the effective interest rate method. It is re-measured when there is a change in future lease payments.
| F-17 |
2. Summary of significant accounting policies (continued)
(r) Revenue recognition
The Group’s revenues are mainly generated from packaged tour service, customized chartered bus service, and customized shuttle services.
The Group recognizes revenues pursuant to ASC 606, Revenue from Contracts with Customers (“ASC 606”). In accordance with ASC 606, revenues from contracts with customers are recognized when control of the promised goods or services is transferred to the Group’s customers, in an amount that reflects the consideration the Group expects to be entitled to in exchange for those goods or services, reduced by value added tax. A description of the principal revenue generating activities of Group is as follows:
Packaged tour service
The Group offers packaged tour service to customers inclusive of services like chartered bus service, itinerary route schedule, sightseeing tour guidance, accommodation arrangement, etc., which can cater to different budgets and preferences. The whole packaged tour service is determined as a single performance obligation with a fixed total consideration as the customers benefit from such a series of integrated travel resources, which are also not separately identifiable within the context of contracts. The Group recognizes revenue over the period of the tours because the customers simultaneously receive and consume the benefits provided by the Group as they complete the performance obligation. The Group usually required all the consideration in advance from the individual customers and certain advance payment from corporate customers and individual customers, (for most corporate customers, usually
Customized chartered bus service
The Group contracts with customers to provide customized chartered bus service to support a more flexible and less preplanned group travel demand which ranges from one day to several months. The Group establishes enforceable right and obligations upon the receipt of each ride order placed by the customers. Each order is regarded as a contract with explicit route and fixed consideration. The Group identifies only one performance obligation to provide service and recognizes revenue from chartered bus service over the service period of the order. The Group usually required advance payment from customers (for individual customer, usually
Commute shuttle service
The Group contracts with customers to provide customized commute shuttle service, delivering daily transportation service from predetermined departure to destination during the contract period. The Group identifies only one performance obligation in commute shuttle service which is to transport the passengers from departure to destination. The contract consideration is determined at a fixed total price or calculated by fixed unit price per route times of transportation. Revenue from service fees paid by corporate customers in commute shuttle services is recognized evenly or based on the actual bus rides reconciled with the customers regularly over the contract term, and revenue from ticket fees paid by individual passengers in commute shuttle services is recognized at a point in time when each ride is completed. The Group does not offer any warranty services to customers.
Principal versus agent considerations
The Group sign contracts with independent tour operators and fleet operators to provide packaged tour services, customized charted bus service, and commute shuttle service. The Group evaluates the presentation of revenue on a gross versus net basis based on whether it controls the service provided to the customers and is the principal in the transaction.
| F-18 |
2. Summary of significant accounting policies (continued)
(r) Revenue recognition (continued)
The Group considers itself a principal and recognizes revenue on a gross basis as it controls the services through the following key considerations:
| ● | The Group reserves the right to assign the routes to the fleet operators for transportation services and directs the selected vendors to provide tour services on the Group’s behalf, and is responsible for accepting or rejecting the contracts or orders without involvement of fleet and tour operators in this process. The Group assumes responsibility for receiving and resolving the complaints over the quality of the service. |
| ● | The Group has discretion in setting up the price. The fleet and tour operators are entitled to a fixed fee irrespective of the consideration the Group collects from the customers. |
| ● | The Group bears the entire credit risk as the Group pays the consideration due to the operators irrespective of whether the customers have paid the service consideration to the Group. |
The following table disaggregates the Group’s revenue for the years ended June 30, 2024, 2025 and 2026:
| For the years ended June 30, | ||||||||||||
| 2024 | 2025 | 2026 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| By revenue type | ||||||||||||
| Packaged tour service | ||||||||||||
| Domestic | ||||||||||||
| Overseas | ||||||||||||
| Customized chartered bus service | ||||||||||||
| Domestic | ||||||||||||
| Overseas | ||||||||||||
| Commute shuttle service | ||||||||||||
| Domestic | ||||||||||||
| Total | ||||||||||||
Contract balances
The Group classifies its right to consideration in exchange for service transferred to a customer as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional as compared to a contract asset which is a right to consideration that is conditional upon factors other than the passage of time. The Group recognizes accounts receivable in its consolidated balance sheets when it performs a service in advance of receiving consideration and it has the unconditional right to receive consideration. A contract asset is recorded when the Group has transferred services to the customer before payment is received or is due. As of June 30, 2025, and 2026, the Group did not record any contract assets.
The contract liability represents the billings or cash received for services in advance of revenue recognition which is presented as deferred revenue on the consolidated balance sheets and is recognized as revenue when all of the Group’s revenue recognition criteria are met. The Group’s deferred revenue amounted to RMB
| F-19 |
2. Summary of significant accounting policies (continued)
(s) Cost of revenues
Cost of packaged tour service primarily consists of the procurement cost of hotel rooms, meals and other local services such as sightseeing costs for packages, entrance fees to museums and attractions and local transportation costs. Cost of customized chartered bus service and, commute shuttle service includes costs directly related to delivering transportation services, which include payments to fleet operators for vehicle rental fees and petrol costs, and other miscellaneous expenses for operation.
(t) Sales and marketing expenses
Sales and marketing expenses mainly consist of staff cost, depreciation expenses, advertising fees, share-based compensation expenses, rent fees, entertainment fees etc.
(u) General and administrative expenses
General and administrative expenses mainly consist of professional service fees, staff cost, depreciation expenses, share-based compensation expenses, rent fees, office fees etc.
(v) Research and development expenses
Research and development expenses consist primarily of staff cost, share-based compensation expenses and technology service fees, etc.
(w) Government subsidy
The Group receives subsidy from certain local governments. The government subsidy is recorded as other income when received with no further conditions to be met. For the years ended June 30, 2024, 2025 and 2026, the Group recognized government subsidy of RMB
(x) Share-based compensation
The Group applies ASC 718, Compensation—Stock Compensation (“ASC 718”), to account for all of its share-based payments. In accordance with ASC 718, the Group determines whether an award should be classified and accounted for as a liability award or equity award. All of the Group’s grants of share-based awards were classified as equity awards and are recognized in the financial statements based on their grant date fair values.
The Group has elected to recognize compensation expense using the straight-line method for all awards granted with graded vesting based on service conditions. The Group has also elected to account for forfeitures as they occur. Previously recognized compensation cost for the awards is reversed in the period that the award is forfeited. The Group, with the assistance of an independent third-party valuation specialist, determined the fair value of the stock options granted.
When the award is cancelled without the concurrent grant of a replacement award, the cancellation should be treated as a settlement for no consideration and all remaining unrecognized compensation cost should be accelerated.
| F-20 |
2. Summary of significant accounting policies (continued)
(y) Income taxes
The provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. The Group’s operating subsidiaries in PRC are subject to examination by the relevant tax authorities. According to PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or withholding agent. The statute of limitations will be extended five years under special circumstances, which are not clearly defined (but an underpayment of tax liability exceeding RMB
(z) Commitments and contingencies
In the normal course of business, the Group is subject to commitments and contingencies, including operating lease commitments, legal proceedings and claims arising out of its business that relate to a wide range of matters, such as government investigations and tax matters. The Group recognizes a liability for such contingency when it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Group may consider many factors in making these assessments on liability for contingencies, including historical and the specific facts and circumstances of each matter.
(aa) Loss per share
In accordance with ASC 260, Earnings per Share, basic loss per share is computed by dividing net loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. For the calculation of diluted net loss per share, the weighted average number of ordinary shares is adjusted by the effect of dilutive potential ordinary shares, including unvested restricted shares, ordinary shares issuable upon the exercise of outstanding share options using the treasury stock method. The effect mentioned above is not included in the calculation of the diluted loss per share when inclusion of such effect would be anti-dilutive.
(ab) Segment reporting
ASC 280, Segment Reporting, establishes standards for companies to report in their financial statements information about operating segments, products, services, geographic areas, and major customers.
In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The Group adopted this ASU commencing July 1, 2024 and the adoption of the ASU does not have a material effect on its consolidated financial statements.
Based on the criteria established by ASC 280, the Group’s CODM has been identified as the , who reviews consolidated results when making decisions about allocating resources and assessing performance of the Group as a whole and hence, the Group has only
The Group’s CODM uses consolidated net loss as the measures of segment profit or loss. Significant segment expenses are consistent with those reported on the consolidated statements of operations and comprehensive loss and include cost of revenues, sales and marketing expenses, general and administrative expenses, and research and development expenses. For significant segment expenses incurred during the years ended June 30, 2024, 2025 and 2026, refer to Consolidated Statements of Operations and Comprehensive Loss.
| F-21 |
2. Summary of significant accounting policies (continued)
(ac) Warrants
The Group accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) ASC 480 “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, whether they meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent annually period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter.
(ad) Recent accounting pronouncements
The Group is an “emerging growth company” (“EGC”) as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”). Under the JOBS Act, EGC can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.
In November 2024, FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”) which requires detailed disclosures in the notes to financial statements disaggregating specific expense categories and certain other disclosures to provide enhanced transparency into the nature and function of expenses. The FASB further clarified the effective date in January 2025 with the issuance of ASU 2025-01, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The requirements should be applied on a prospective basis while retrospective application is permitted. The Group is currently evaluating the impact of the adoption of this guidance.
In May 2025, the FASB issued ASU 2025-03, “Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity,” which requires an entity involved in an acquisition transaction effected primarily by exchanging equity interests when the legal acquiree is a VIE that meets the definition of a business to consider specific factors to determine the accounting acquirer and removes the requirement that the primary beneficiary always is the acquirer for certain transactions. Under the amendments, acquisition transactions in which the legal acquiree is a VIE will, in more instances, result in the same accounting outcomes as economically similar transactions in which the legal acquiree is a voting interest entity. The amendments do not change the accounting for a transaction determined to be a reverse acquisition or a transaction in which the legal acquirer is not a business and is determined to be the accounting acquiree. The new guidance is required to be applied prospectively to any acquisition transaction that occurs after the initial application date. This guidance is effective for the company for the year ending March 31, 2028. Early adoption is permitted. The Group is evaluating the impact of the adoption of this guidance.
In July 2025, the FASB issued ASU 2025-05, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets,” which provides guidance for entities that apply the practical expedient and accounting policy election, if applicable, when estimating expected credit losses on current accounts receivable and/or current contract assets arising from transactions under Topic 606, including those assets acquired in a business combination accounted for under Topic 805. The amendments will be effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Group is currently evaluating the impact of the adoption of this guidance.
In September 2025, the FASB issued ASU 2025-06, Intangibles -Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). The amendments modernize the recognition and disclosure framework for internal-use software costs, removing the previous “development stage” model and introducing a more judgment-based approach. ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027 and for interim reporting periods beginning in that fiscal year. The Group is currently evaluating the impact ASU 2025-06 will have on its future consolidated financial statements.
| F-22 |
2. Summary of significant accounting policies (continued)
(ad) Recent accounting pronouncements (continued)
In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (“Topic 815”) and Revenue from Contracts with Customers (“Topic 606”): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract (“ASU 2025-07”). ASU 2025-07 expands an existing scope exception under Topic 815 to exclude non-exchange-traded contracts where the underlying is based on the operations or activities specific to one of the contract parties. ASU 2025-07 is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years, with early adoption permitted. The Group is currently evaluating the impact ASU 2025-07 will have on its future consolidated financial statements.
In November 2025, the FASB issued ASU 2025-08, Financial Instruments—Credit Losses (“Topic 326”): Purchased Loans (“ASU 2025-08”). The amendments expand the population of acquired loans subject to the gross-up approach, treating non-credit-deteriorated loans (excluding credit cards) as “seasoned” if purchased at least 90 days after origination or acquired in a business combination. ASU 2025-08 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Group is currently evaluating the impact ASU 2025-08 will have on its future consolidated financial statements.
In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities (“ASU 2025-10”). The amendments establish the accounting for a government grant received by a business entity, including guidance for (1) a grant related to an asset and (2) a grant related to income. ASU 2025-10 is effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Group is currently evaluating the impact of adopting ASU 2025-10.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Improvements to Interim Disclosure Requirements (“ASU 2025-11”). The amendments clarify disclosure requirements for interim financial statements. ASU 2025-11 is effective for interim periods beginning after December 15, 2026. Early adoption is permitted. The Group is currently evaluating the impact of adopting ASU 2025-11.
In December 2025, the FASB issued ASU 2025-12, Codification Improvements (“ASU 2025-12”). ASU 2025-12 addresses suggestions received from stakeholders regarding the Accounting Standards Codification and makes other incremental improvements to U.S. GAAP. The update represents changes to the Codification that clarify, correct errors in or make other improvements to a variety of topics that are intended to make it easier to understand and apply. ASU 2025-12 is effective for fiscal years beginning after December 15, 2026 and interim periods within those fiscal years. Entities are required to apply the amendments to ASC 260 retrospectively. All other amendments may be applied prospectively or retrospectively. Early adoption is permitted. The Group is currently evaluating the impact of adopting ASU 2025-12.
In 2026, the FASB issued ASU 2026-01, Equity (Topic 505): Initial Measurement of Paid-in-Kind Dividends on Equity-Classified Preferred Stock, in April 2026; ASU 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818), in May 2026; and ASU 2026-03, Fair Value Measurement (Topic 820): Investment Companies with Equity Securities Subject to Contractual Sale Restrictions, in September 2026. ASU 2026-01 is effective for annual reporting periods beginning after December 15, 2026, and ASU 2026-02 and ASU 2026-03 are effective for annual reporting periods beginning after December 15, 2027, in each case including interim reporting periods within those annual reporting periods. The Group has no preferred stock in issue, does not hold environmental credits or have environmental credit obligations, and is not an investment company. It therefore does not expect these ASUs to have an impact on its consolidated financial statements.
Other accounting standards that have been issued by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Group does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its consolidated financial statements.
3. Crypto assets
The following table presents a reconciliation of the opening and closing balances of the Group’s crypto assets, including purchases and unrealized gains or losses:
| Carrying Value | Approximate Number of Bitcoins Held | |||||||
| RMB | ||||||||
| Balance as of June 30, 2025 | ||||||||
| Purchase | ||||||||
| Fair value change | ( | ) | ||||||
| Balance as of June 30, 2026 | ||||||||
| F-23 |
3. Crypto assets (continued)
The following table summarizes the Company’s digital assets holdings as of the dates indicated:
| As of June 30, | ||||||||
| 2025 | 2026 | |||||||
| RMB | RMB | |||||||
| Crypto assets cost basis | ||||||||
| Crypto assets fair value | ||||||||
| Fair value change of crypto assets | ||||||||
4. Prepaid expenses and other current assets
Prepaid expenses and other current assets consisted of the following:
| As of June 30, | ||||||||
| 2025 | 2026 | |||||||
| RMB | RMB | |||||||
| Receivables from third-parties(1) | ||||||||
| Prepaid service fees(2) | ||||||||
| Deductible input value-added tax | ||||||||
| Security deposits | ||||||||
| Staff allowance | ||||||||
| Advance to suppliers | ||||||||
| Others | ||||||||
| Total | ||||||||
| (1) | In 2025, the Group entered into three separate agreements with third parties, with details and subsequent advance payment recovery as follows: |
| (a) | A software development agreement: The Group made an advance payment of RMB |
| (b) | A market development agreement: The Group made an advance payment of RMB |
| (c) | An electric bus purchase agreement: The Group made an advance payment of RMB | |
| (d) | As of June 30, 2026, the Group had transferred | |
| (e) | On May 31, 2026, the Group advanced a loan of RMB |
| (2) |
| F-24 |
5. Property and equipment, net
Property and equipment consisted of the following:
| As of June 30, | ||||||||
| 2025 | 2026 | |||||||
| RMB | RMB | |||||||
| Building(1) | ||||||||
| Electronic equipment | ||||||||
| Office equipment | ||||||||
| Vehicles | ||||||||
| Leasehold and property improvement | ||||||||
| Total | ||||||||
| Less: accumulated depreciation and amortization | ||||||||
| Less: accumulated impairment losses | ||||||||
| Property and equipment, net | ||||||||
Depreciation expenses for the years ended June 30, 2024, 2025 and 2026 were RMB
During the year ended June 30, 2026, the Group identified indicators of impairment related to property and equipment, as a result of a recurring decline in business operations. The Group performed an impairment assessment in accordance with ASC 360 and recognized an impairment loss of RMB
| (1) |
6. Other non-current assets
Other non-current assets consisted of the following:
| As of June 30, | ||||||||
| 2025 | 2026 | |||||||
| RMB | RMB | |||||||
| Prepaid service expenses(1) | ||||||||
| Prepayments for purchase of building and renovation(2) | ||||||||
| Total | ||||||||
| (1) |
| (2) |
| F-25 |
7. Accrued expenses and other current liabilities
Accrued expenses and other current liabilities consisted of the following:
| As of June 30, | ||||||||
| 2025 | 2026 | |||||||
| RMB | RMB | |||||||
| Loan from a third party(1) | ||||||||
| Accrued expenses(2) | ||||||||
| Payroll payable | ||||||||
| Refundable security deposits | ||||||||
| Vehicle payments payable | ||||||||
| Others | ||||||||
| Total | ||||||||
| (1) | |
| (2) |
8. Borrowings
Summary of borrowings is as following:
| Creditors | Annual Interest Rate | Maturity date | As of June 30, 2025 | As of June 30, 2026 | ||||||||||
| RMB | RMB | |||||||||||||
| Zhejiang Hangzhou Rural Commercial Bank(1) | % | |||||||||||||
| Zhejiang Hangzhou Rural Commercial Bank(1) | % | |||||||||||||
| Zhejiang Hangzhou Rural Commercial Bank(2) | % | |||||||||||||
| Zhejiang Hangzhou Rural Commercial Bank(2) | % | |||||||||||||
| Hangzhou United Rural Commercial Bank(3) | % | |||||||||||||
| Hangzhou United Rural Commercial Bank(4) | % | |||||||||||||
| Hangzhou United Rural Commercial Bank(5) | % | |||||||||||||
| Hangzhou United Rural Commercial Bank(6) | % | |||||||||||||
| Total short-term borrowings | ||||||||||||||
| Zhejiang Hangzhou Rural Commercial Bank(7) | % | |||||||||||||
| Zhejiang Hangzhou Rural Commercial Bank(7) | % | |||||||||||||
| Total current portion of long-term borrowings | ||||||||||||||
| Zhejiang Hangzhou Rural Commercial Bank(7) | % | |||||||||||||
| Zhejiang Hangzhou Rural Commercial Bank(7) | % | |||||||||||||
| Total long-term borrowings | ||||||||||||||
| (1) |
| (2) |
| F-26 |
8. Borrowings (continued)
| (3) |
| (4) |
| (5) |
| (6) |
| (7) |
Interest expenses for the years ended June 30, 2024, 2025 and 2026 were RMB
9. Related party transactions
The table below sets forth the major related parties that had transactions with the Group, and their relationships with the Group:
| No. | Name of Related Parties | Relationships | ||
| 1 | Zheng Nan | |||
| 2 | Zheng Jiahua | |||
| 3 | Hangzhou Yinuo Technology Co., Ltd. | |||
| 4 | Chongqing Zijing Huangcheng International Co., Ltd. Hangzhou Branch (“Chongqing Zijing Huangcheng”) |
| (a) | The Group entered into the following transactions with related parties: |
| For the years ended June 30, | ||||||||||||
| 2024 | 2025 | 2026 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| Nature | ||||||||||||
| Loans from related parties | ||||||||||||
| Zheng Jiahua | ||||||||||||
| Zheng Nan | ||||||||||||
| Repayment of loans from related parties | ||||||||||||
| Zheng Jiahua | ||||||||||||
| Zheng Nan | ||||||||||||
| Loans to related parties | ||||||||||||
| Zheng Jiahua | ||||||||||||
| Zheng Nan | ||||||||||||
| Chongqing Zijing Huangcheng | ||||||||||||
| Collection from loans to related parties | ||||||||||||
| Zheng Jiahua | ||||||||||||
| Zheng Nan | ||||||||||||
| Chongqing Zijing Huangcheng | ||||||||||||
| Interest income of loan to a related party | ||||||||||||
| Chongqing Zijing Huangcheng | ||||||||||||
| Accounts received on behalf of the Group | ||||||||||||
| Zheng Nan | ||||||||||||
| Collection of accounts received on behalf of the Group | ||||||||||||
| Zheng Nan | ||||||||||||
| Information marketing services procured from a related party | ||||||||||||
| Chongqing Zijing Huangcheng | ||||||||||||
| Payment on behalf of a related party | ||||||||||||
| Chongqing Zijing Huangcheng | ||||||||||||
| Payment on behalf of the Group | ||||||||||||
| Zheng Nan | ||||||||||||
| F-27 |
9. Related party transactions (continued)
(b) The Group had the following balances with related parties as of June 30, 2025 and 2026:
| As of June 30, | ||||||||
| Amount due from related parties: | 2025 | 2026 | ||||||
| RMB | RMB | |||||||
| Zheng Nan(1) | ||||||||
| Chongqing Zijing Huangcheng(2) | ||||||||
| Total | ||||||||
| As of June 30, | ||||||||
| 2025 | 2026 | |||||||
| Amount due to a related party: | RMB | RMB | ||||||
| Zheng Nan(3) | ||||||||
| (1) |
| (2) |
| (3) |
10. Share-based compensation
2025 Share Incentive Plan
On October 30, 2025, the Company’s board of directors adopted, subject to approval by the shareholders, the 2025 share incentive plan (the “2025Plan”), to provide for the grant of a variety of share-based awards, including share options, restricted shares, restricted share units ( the “RSUs”) and other types of share-based awards, as may be determined by the Compensation Committee or the Board of Directors. The maximum number of ordinary shares that may be issued under the 2025 Plan is
On January 1, 2026, the Company entered into consulting agreements with two external consultants, pursuant to which each consultant is eligible to receive
A summary of the Company’s RSU activity for the year ended June 30, 2026 is as follows:
| Number of RSUs | Weighted Average Grant Date Fair Value | |||||||
| RMB | ||||||||
| Unvested as of June 30, 2025 | ||||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited or expired | ||||||||
| Exercisable as of June 30, 2026 | ||||||||
As of June 30, 2026,
| F-28 |
11. Taxation
Cayman Islands
The Company is incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, the Company is not subject to income or capital gains taxes. Additionally, upon payments of dividends by the Company to its shareholders, no Cayman withholding tax will be imposed.
British Virgin Islands (“BVI”)
Youbus International Limited is incorporated in the British Virgin Islands. Under the current laws of the British Virgin Islands, Youbus International Limited is not subject to tax on income or capital gains. Additionally, upon payments of dividends by the Company to its shareholders, no BVI withholding tax will be imposed.
Hong Kong
Webus Hongkong Limited is incorporated in Hong Kong and is subject to Hong Kong profits tax rate. Under the two-tiered profits tax rates regime, the first
PRC
For qualified small and low-profit enterprises, from January 1, 2023 to December 31, 2027,
United States
Wetour Travel Tech LLC, which is incorporated in the U.S. is subject to a combination of federal income tax rate of
Loss before provision for income taxes is attributable to the following geographic locations:
| For the years ended June 30, | ||||||||||||
| 2024 | 2025 | 2026 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| PRC | ( | ) | ( | ) | ( | ) | ||||||
| United States | ( | ) | ( | ) | ||||||||
| Hong Kong | ( | ) | ||||||||||
| Cayman | ( | ) | ||||||||||
| Total loss before income taxes | ( | ) | ( | ) | ( | ) | ||||||
The following table sets forth current and deferred portion of income tax benefit of the Group:
| For the years ended June 30, | ||||||||||||
| 2024 | 2025 | 2026 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| Current tax: | ||||||||||||
| PRC | ( | ) | ( | ) | ||||||||
| United States | ( | ) | ||||||||||
| Hong Kong | ||||||||||||
| Total current income tax benefit | ( | ) | ( | ) | ( | ) | ||||||
| Deferred tax: | ||||||||||||
| PRC | ||||||||||||
| Total deferred income tax expense | ||||||||||||
| Total income tax benefit | ( | ) | ( | ) | ||||||||
| F-29 |
11. Taxation (continued)
A reconciliation between the Group’s actual provision for income taxes and the provision at the PRC, mainland statutory rate is as follows:
| For the years ended June 30, | ||||||||||||
| 2024 | 2025 | 2026 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| Net loss before income tax | ( | ) | ( | ) | ( | ) | ||||||
| Income tax benefit at statutory tax rate of | ( | ) | ( | ) | ( | ) | ||||||
| Impact of different tax rates in other jurisdictions | ( | ) | ||||||||||
| Effect of additional deduction for R&D expenses | ( | ) | ( | ) | ||||||||
| Effect of non-deductible share-based compensation expenses | ||||||||||||
| Effect of non-deductible entertainment expense | ||||||||||||
| Effect of preferential tax rates | ||||||||||||
| Deferred tax effect of tax rate change | ||||||||||||
| Effect of deferred offering cost | ( | ) | ||||||||||
| Effect of NOL true up | ( | ) | ||||||||||
| Change in valuation allowance | ( | ) | ||||||||||
| Income tax benefit | ( | ) | ( | ) | ||||||||
Deferred Taxes
The significant components of the net deferred tax assets are summarized below:
| As of June 30, | ||||||||
| 2025 | 2026 | |||||||
| RMB | RMB | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carried forward | ||||||||
| Accrued expenses | ||||||||
| Lease liabilities | ||||||||
| Impairment loss on long-lived assets | ||||||||
| Excess advertising expense | ||||||||
| Total deferred tax assets | ||||||||
| Less: valuation allowance | ||||||||
| Total deferred tax assets, net of valuation allowance | ||||||||
| Net off against deferred tax liabilities | ( | ) | ||||||
| Net deferred tax assets | ||||||||
| Deferred tax liabilities: | ||||||||
| Right-of-use assets | ( | ) | ||||||
| Total deferred tax liabilities | ( | ) | ||||||
| Net off against deferred tax assets | ||||||||
| Net deferred tax liabilities | ||||||||
Changes in valuation allowance are as follows:
| As of June 30, | ||||||||
| 2025 | 2026 | |||||||
| RMB | RMB | |||||||
| Balance at the beginning of the year | ||||||||
| Additions of valuation allowance | ||||||||
| Reduction in due to utilization of NOL carryforwards | ( | ) | ||||||
| Balance at the end of the year | ||||||||
According to PRC tax regulations, the PRC enterprise net operating loss can generally carry forward for no longer than five years, and HNTE’s net operating losses can be carried forward for no more than ten years, starting from the year subsequent to the year in which the loss was incurred. Carry back of losses is not permitted.
Total net operating losses (NOLs) carry forwards of the Group’s entities in mainland China is RMB
| F-30 |
11. Taxation (continued)
The Group considers positive and negative evidence to determine whether some portion or all of the deferred tax assets will more likely than not be realized. This assessment considers, among other matters, the nature, frequency and severity of recent losses, forecasts of future profitability, the duration of statutory carry forward periods, the Group’s experience with tax attributes expiring unused and tax planning alternatives. Valuation allowances have been established for deferred tax assets based on a more-likely-than-not threshold. Under the applicable accounting standards, management has considered the Group’s history of losses and concluded that it is more likely than not that the Group will not generate future taxable income prior to the expiration of the majority of net operating losses. Accordingly, as of June 30, 2025 and 2026, RMB
Unrecognized Tax Benefits
The Group evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of June 30, 2025 and 2026, the Group did have any unrecognized uncertain tax positions and the Group does not believe that its unrecognized tax benefits will change over the next twelve months. For the years ended June 30, 2024, 2025 and 2026, the Company did not incur any interest and penalties related to potential underpaid income tax expenses.
According to PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or withholding agent. The statute of limitations will be extended five years under special circumstances, which are not clearly defined (but an underpayment of tax liability exceeding RMB
In the United States, the Internal Revenue Service generally has the authority to examine federal income tax filings for three years from the date of filing, with an extended six-year statute of limitations in cases where a substantial understatement of income occurs, defined as an omission exceeding
12. Leases
The Group has operating leases mainly for office spaces.
Supplemental balance sheet information related to operating lease was as follows:
| As of June 30, | ||||||||
| 2025 | 2026 | |||||||
| RMB | RMB | |||||||
| Right-of-use assets | ||||||||
| Amortization of right-of-use assets | ( | ) | ( | ) | ||||
| Impairment of right-of-use assets | ( | ) | ||||||
| Right-of-use assets, net | ||||||||
| Lease liabilities-current | ||||||||
| Total lease liabilities | ||||||||
| Weighted average remaining lease term | ||||||||
| Weighted average discount rate | % | % | ||||||
Amortization expenses of right-of-use assets for the years ended June 30, 2024, 2025 and 2026 were RMB
During the year ended June 30, 2026, the Group identified indicators of impairment related to its right-of-use assets, as a result of a recurring decline in business operations. The Group performed an impairment assessment in accordance with ASC 360 and recognized an impairment loss of RMB
| F-31 |
12. Leases (continued)
For the years ended June 30, 2024, 2025 and 2026, the lease expense was as follows:
| For the years ended June 30, | ||||||||||||
| 2024 | 2025 | 2026 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| Operating leases expense excluding short-term lease expense | ||||||||||||
| Short-term lease expense | ||||||||||||
| Total | ||||||||||||
Because most of the leases do not provide an implicit rate of return, the Group used the incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments.
The following is a schedule of future minimum payments under the Group’s operating leases as of June 30, 2026:
| RMB | ||||
| 2027 | ||||
| Total lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Total | ||||
The following is a schedule of future minimum payments under the Group’s operating leases as of June 30, 2025:
| RMB | ||||
| 2026 | ||||
| Total lease payments | ||||
| Less: imputed interest | ||||
| Total | ||||
13. Ordinary shares
(a) Reverse share splits
On October 31, 2024, the Company effected the below recapitalization: a reverse share split through the repurchase of
The Company effected reverse share splits of its ordinary shares at ratios of
| F-32 |
13. Ordinary shares (continued)
(b) Ordinary shares
As of June 30, 2023 and 2024, the Company had
On February 28, 2025, the Company issued
On February 27, 2026, the Company held an extraordinary general meeting (the “2026 EGM”), at which the shareholders approved an increase in the Company’s authorized share capital from US$
On March 2, 2026, the Company entered into securities purchase agreements with ten purchasers for a private investment in public equity (“PIPE”) transaction in reliance on Regulation S under the Securities Act of 1933, as amended. After giving retrospective effect to the 2026 Reverse Share Split, the Company agreed to issue and sell an aggregate of
On May 15, 2026, the Company entered into an At Market Sales Agreement with Chaince Securities, LLC (“Chaince”) to offer and sell its Ordinary Shares for aggregate gross proceeds of up to US$
As of June 30,2026,
As a result of the recapitalization and reverse share splits, all share and per share data in the consolidated financial statements have been retrospectively adjusted to all periods presented.
The share subscription receivable presents the receivable for the issuance of ordinary shares of the Company and is reported as a deduction of equity and presented on a retroactive basis before the incorporation of the Company. Subscription receivable has no payment terms nor any interest receivable accrual.
14. Warrants
In connection with the IPO, the Company issued warrants (the “Representative Warrants”) to its representative underwriter, Alexander Capital, L.P., to purchase a number of ordinary shares equal to
| F-33 |
14. Warrants (continued)
In accordance with ASC 815, the Company determined that the warrants meet the conditions necessary to be classified as equity because the consideration is indexed to the Company’s own equity, there are no exercise contingencies based on an observable market not based on its stock or operations, settlement is consistent with a fixed-for-fixed equity instrument, the agreement contains an explicit number of shares and there are no cash payment provisions.
The fair value of the Representative Warrants was estimated at RMB
The following table provides quantitative information regarding Level 3 fair value measurements inputs for the Company’s warrants at their measurement dates:
| As of February 28, 2025 | ||||
Exercise price* | $ | |||
Stock price* | $ | |||
| Expected life of the warrants (in years) | ||||
| Risk free rate | % | |||
| Dividend yield | % | |||
| Volatility | % | |||
| Number of warrants | Weighted average exercise price* | Weighted average remaining term (years) | ||||||||||
| Outstanding as of June 30, 2024 | ||||||||||||
| Issued | ||||||||||||
| Exercised | - | |||||||||||
| Forfeited or expired | - | |||||||||||
| Outstanding as of June 30, 2025 | ||||||||||||
| Issued | - | |||||||||||
| Exercised | - | |||||||||||
| Forfeited or expired | - | |||||||||||
| Outstanding as of June 30, 2026 | ||||||||||||
*
15. Restricted net assets
The Group’s operations are conducted through its PRC subsidiaries, and the Group’s ability to pay dividends is primarily dependent on receiving distributions of funds from its subsidiaries. Relevant PRC statutory laws and regulations permit payments of dividends by its subsidiaries only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations, and after it has met the PRC requirements for appropriation to statutory reserves. Paid-in capital and additional paid-in capital of its subsidiaries included in the Group’s consolidated net assets are also non-distributable for dividend purposes.
In accordance with the Company Law of the PRC and the PRC regulations on enterprises with foreign investment, whether a domestic enterprise or a wholly owned foreign enterprise (“WFOE”) established in the PRC are both required to provide certain statutory reserves, namely general reserve fund, the enterprise expansion fund and staff welfare and bonus fund which are appropriated from net profit as reported in the enterprise’s PRC statutory accounts. Both a domestic enterprise and a WFOE are required to allocate at least
As a result of these PRC laws and regulations, the Company’s PRC subsidiaries are restricted in their ability to transfer a portion of their net assets to the Group. As of June 30, 2026, net assets restricted in the aggregate included in the Group’s consolidated net assets was RMB
| F-34 |
16. Fair value measurements
The following table summarizes the Group’s assets that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy as of June 30, 2025 and 2026:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| RMB | RMB | RMB | RMB | |||||||||||||
| As of June 30, 2025 | ||||||||||||||||
| Short-term investments | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| RMB | RMB | RMB | RMB | |||||||||||||
| As of June 30, 2026 | ||||||||||||||||
| Crypto asset | ||||||||||||||||
| Short-term investments | ||||||||||||||||
17. Geographic information
As the Group’s long-lived assets are substantially located in the PRC, no geographical segments are presented.
| For the years ended June 30, | ||||||||||||
| 2024 | 2025 | 2026 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| North America | ||||||||||||
| China | ||||||||||||
| Japan and Korea | ||||||||||||
| Others | ||||||||||||
| Total | ||||||||||||
18. Concentration of credit risk
Financial instruments that potentially expose the Group to concentrations of credit risk consist primarily of accounts receivable. The Group conducts credit evaluations of its customers, and generally does not require collateral or other security from them. The Group evaluates its collection experience and long outstanding balances to determine the need for allowance for credit losses. The Group conducts periodic reviews of the financial condition and payment practices of its customers to minimize collection risk on accounts receivable.
The following table sets forth a summary of single customers which represent 10% or more of the Group’s total accounts receivable:
| As of June 30, | ||||||||||||||||
| 2025 | 2026 | |||||||||||||||
| RMB | RMB | |||||||||||||||
| Amount | % | Amount | % | |||||||||||||
| Percentage of the Group’s accounts receivable | ||||||||||||||||
| Customer A | ||||||||||||||||
| Customer B | ||||||||||||||||
| Customer C | ||||||||||||||||
| * |
For the years ended June 30, 2024, 2025 and 2026, no single customers accounted for 10% or more of the Group’s total revenues.
The following table sets forth a summary of single suppliers which represent 10% or more of the Group’s total accounts payable:
| As of June 30, | ||||||||||||||||
| 2025 | 2026 | |||||||||||||||
| RMB | RMB | |||||||||||||||
| Percentage of the Group’s accounts payable | ||||||||||||||||
| Supplier A | ||||||||||||||||
| Supplier B | ||||||||||||||||
| Supplier C | ||||||||||||||||
| Supplier D | ||||||||||||||||
| * | Represented the percentage below 10% |
| F-35 |
18. Concentration of credit risk (continued)
The following table sets forth a summary of single suppliers which represent 10% or more of the Group’s total purchases:
| For the years ended June 30, | ||||||||||||||||||||||||
| 2024 | 2025 | 2026 | ||||||||||||||||||||||
| RMB | RMB | RMB | ||||||||||||||||||||||
| Amount | % | Amount | % | Amount | % | |||||||||||||||||||
| Percentage of the Group’s total purchases | ||||||||||||||||||||||||
| Supplier E | ||||||||||||||||||||||||
| Supplier F | ||||||||||||||||||||||||
| Supplier G | ||||||||||||||||||||||||
| Supplier H | ||||||||||||||||||||||||
| * | Represented the percentage below 10% |
19. Condensed financial information of the parent company
The Group performed a test on the restricted net assets of consolidated subsidiary in accordance with Securities and Exchange Commission Regulation S-X Rule 4-08 (e) (3), “General Notes to Financial Statements” and concluded that it was applicable for the Group to disclose the financial statements for the parent Company.
Condensed Balance Sheets
| As of June 30, | ||||||||||||
| 2025 | 2026 | 2026 | ||||||||||
| RMB | RMB | US$ Note 2 (e) | ||||||||||
| ASSETS | ||||||||||||
| Cash | ||||||||||||
| Short-term investment | ||||||||||||
| Stable coins | ||||||||||||
| Crypto assets | ||||||||||||
| Amounts due from the Group’s entities | ||||||||||||
| Prepaid expenses and other current assets | ||||||||||||
| Other non-current assets | ||||||||||||
| Investment in subsidiaries | ||||||||||||
| TOTAL ASSETS | ||||||||||||
| LIABILITIES | ||||||||||||
| Accrued expenses and other current liabilities | ||||||||||||
| TOTAL LIABILITIES | ||||||||||||
| SHAREHOLDERS’ EQUITY | ||||||||||||
| Ordinary Shares (US$ | ||||||||||||
| Additional paid-in capital | ||||||||||||
| Share subscription receivable | ( | ) | ( | ) | ( | ) | ||||||
| Accumulated deficits | ( | ) | ( | ) | ( | ) | ||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ( | ) | ||||||
| Total Wetour Robotics Limited shareholders’ equity | ||||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| * |
| F-36 |
19. Condensed financial information of the parent company (continued)
Condensed Statements of operations
| For the years ended June 30, | ||||||||||||||||
| 2024 | 2025 | 2026 | 2026 | |||||||||||||
| RMB | RMB | RMB | US$ Note 2 (e) | |||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ||||||||||
| Total other income/(expenses), net | ( | ) | ( | ) | ||||||||||||
| Share-based compensation expenses | ( | ( | ) | |||||||||||||
| Share of loss in subsidiaries | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Condensed Statements of Cash Flows
| For the years ended June 30, | ||||||||||||||||
| 2024 | 2025 | 2026 | 2026 | |||||||||||||
| RMB | RMB | RMB | US$ Note 2 (e) | |||||||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ( | ) | ||||||||||
| Net cash (used in)/ provided by investing activities | ( | ) | ||||||||||||||
| Net cash provided by financing activities | ||||||||||||||||
| Effect of exchange rate changes on cash | ( | ) | ( | ) | ( | ) | ||||||||||
| Net change in cash | ( | ) | ( | ) | ||||||||||||
| Cash at beginning of the year | ||||||||||||||||
| Cash at end of the year | ||||||||||||||||
20. Commitments and contingencies
| Payment due to schedule | ||||||||||||||||
| Total | Less than 1 year | 1-3 years | over 3 years | |||||||||||||
| Office rental | ||||||||||||||||
| Installment payment payable for an office unit | ||||||||||||||||
| Installment payment payable for Vehicles | ||||||||||||||||
| Bank borrowings | ||||||||||||||||
| Total | ||||||||||||||||
Operating lease agreements represent non-cancellable operating leases for the office space.
Other than those shown above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of June 30, 2026.
21. Subsequent events
New bank borrowings acquired
On August 19, 2026, Youba Tech obtained two additional short-term borrowings of RMB
On August 27, 2026, Youba Tech obtained an additional borrowing of RMB
Reverse share splits
On August 3, 2026, the Company effected reverse share splits of its ordinary shares at ratios of 1-for-100, with fractional shares rounded up to the next whole share. Following the reverse share split, the Company was authorized to issue
| F-37 |
21. Subsequent events (continued)
At-the-market offering
(1) Termination of existing at-the-market offering
On August 19, 2026, the Company suspended the sale of its ordinary shares, par value US$
(2) New at-the-market offering
On August 26, 2026, the Company entered into an at-the-market sales agreement with Rodman & Renshaw LLC, pursuant to which the Company may offer and sell ordinary shares having an aggregate offering price of up to US$
Private Placement of Ordinary Shares
On August 11, 2026, the Company entered into certain securities purchase agreements (the “Agreements”) with seven purchasers (the “Purchasers”) for a private investment in public equity transaction in reliance on Regulation S under the Securities Act of 1933, as amended (the “Act”). Pursuant to the Agreement, the Company agreed to issue and sell to the Purchasers an aggregate of
Capital Expenditure
On September 7, 2026, Vantrapower LLC, a subsidiary of the Group, entered into a purchase agreement with a third-party supplier to acquire two power transformers for an aggregate purchase price of US$
Purchase of LB Tokens
As of June 30, 2026, the Group held
Loans to Third Parties
On August 31, 2026, the Company entered into two loan agreements with two third parties, pursuant to which the Company agreed to provide loans of US$
| F-38 |
Exhibit 8.1
List of Significant Subsidiaries and Variable Interest Entity of Wetour Robotics Limited
| Significant Subsidiaries | Place of Incorporation | |
| Wetour Travel Tech LLC | Delaware | |
| NextFood Technologies Inc. | Delaware | |
| Vantrapower LLC | Texas | |
| Youbus International Limited | British Virgin Islands | |
| Webus Hong Kong Limited | Hong Kong | |
| Zhejiang Xinjieni Technology Co., Ltd. | People’s Republic of China | |
| Hangzhou Shunxing Technology Co., Ltd. | People’s Republic of China | |
| Hangzhou Webus Travel Agency Co., Ltd. | People’s Republic of China |
| Variable Interest Entity and Its Subsidiaries | Place of Incorporation | |
| Zhejiang Youba Technology Co., Ltd. (50%) | People’s Republic of China |
Exhibit 12.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Nan Zheng, certify that:
| 1. | I have reviewed this annual report on Form 20-F of Wetour Robotics Limited for the period ended June 30, 2026; |
| 2. | Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly for the period in which this annual report is being prepared; |
| b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; |
| d. | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function): |
| a. | all significant deficiencies and material weaknesses in the design or operation of internal controls which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | any fraud, whether material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. |
| Date: November 5, 2026 | By: | /s/ Nan Zheng |
| Nan Zheng | ||
|
Chief Executive Officer (Principal Executive Officer) |
Exhibit 12.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Nan Zheng, certify that:
| 1. | I have reviewed this annual report on Form 20-F of Wetour Robotics Limited for the period ended June 30, 2026; |
| 2. | Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly for the period in which this annual report is being prepared; |
| b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; |
| d. | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function): |
| a. | all significant deficiencies and material weaknesses in the design or operation of internal controls which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | any fraud, whether material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. |
| Date: November 5, 2026 | By: | /s/ Nan Zheng |
| Nan Zheng | ||
|
Interim Chief Financial Officer (Principal Financial Officer) |
Exhibit 13.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 20-F of Wetour Robotics Limited (the “Company”) for the period ended June 30, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Nan Zheng, as Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: November 5, 2026 | By: | /s/ Nan Zheng |
| Nan Zheng | ||
|
Chief Executive Officer (Principal Executive Officer) |
Exhibit 13.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 20-F of Wetour Robotics Limited (the “Company”) for the period ended June 30, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Nan Zheng, as Interim Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: November 5, 2026 | By: | /s/ Nan Zheng |
| Nan Zheng | ||
|
Interim Chief Financial Officer (Principal Financial Officer) |
Exhibit 23.1
Independent Registered Public Accounting Firm’s Consent
We consent to the incorporation by reference in the Registration Statements on Form F-3 (No. 333-295457 and No. 333-294373) and Form S-8 (No. 333-291960) of our report dated October 30, 2025, before the effects of the adjustments to retrospectively apply the 2026 Reverse Share Split described in Note 13, relating to the financial statements of Wetour Robotics Limited (formerly know as “Webus International Limited”) appearing in this Annual Report on Form 20-F for the year ended June 30, 2026.
/s/ Marcum Asia CPAs LLP
Marcum Asia CPAs LLP
New York, NY
November 5, 2026
NEW YORK OFFICE • 7 Penn Plaza • Suite 830 • New York, New York • 10001
Phone 646.442.4845 • Fax 646.349.5200 • www.marcumasia.com
Exhibit 23.2
| 10 Anson Road #26-03, | |
| International Plaza, Singapore 079903 | |
| admin@edstonglobal.com | |
| www.edstonglobal.com |
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statement on Form S-8 (File No. 333-291960) and the Registration Statement on Form F-3 (File Nos. 333-294373 and 333-295457) of our report dated November 5, 2026 relating to the consolidated financial statements of Wetour Robotics Limited (formerly known as Webus International Limited), appearing in the Annual Report on its Form 20-F as of and for the year ended June 30, 2026.
/s/ Edston Global PAC
Edston Global PAC
Singapore
November 5, 2026