AgiiPlus (AGII) F-1/ARegistration statement (foreign) (amended)

As filed with the U.S. Securities and Exchange Commission on April 27, 2023.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

___________________________

AMENDMENT NO. 5
TO
FORM F-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933

___________________________

AGIIPLUS INC.

(Exact name of Registrant as specified in its charter)

___________________________

Not Applicable

(Translation of Registrant’s name into English)

Distrii Center,
18th Floor, Link Square 1
222 Hubin Road, Huangpu District, Shanghai 200021

People’s Republic of China
Tel: +86(21) 2250-2249

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

___________________________

Puglisi & Associates

850 Library Avenue, Suite 204

Newark, Delaware 19711

+1 (302) 738-6680

(Name, address, including zip code, and telephone number, including area code, of agent for service)

___________________________

Copies to:

___________________________

Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, or the Securities Act, check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933. 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 7(a)(2)(B) of the Securities Act. ☐

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†        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.

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, as amended, or until the registration statement shall become effective on such date as the U.S. Securities and Exchange Commission, acting pursuant to said Section 8(a) may determine.

SUBJECT TO COMPLETION, DATED APRIL 27, 2023

4,500,000 Class A Ordinary Shares

AGIIPLUS INC.

This is an initial public offering of our Class A ordinary shares. We are offering on a firm commitment basis our Class A ordinary shares, par value US$0.0001 per share. Prior to this offering, there has been no public market for our Class A ordinary shares. We expect the initial public offering price to be in the range of US$4.50 to US$6.00 per Class A ordinary share. We have reserved the symbol “AGII” for purposes of listing our Class A ordinary shares on the Nasdaq Stock Market. At this time, the Nasdaq Stock Market has not yet approved our application to list our Class A ordinary shares. The closing of this offering is conditioned upon Nasdaq’s final approval of our listing application, and there is no guarantee or assurance that our Class A ordinary shares will be approved for listing on the Nasdaq Stock Market.

Investing in our Class A ordinary shares involves a high degree of risk, including the risk of losing your entire investment. See “Risk Factors” beginning on page 23 to read about factors you should consider before buying our Class A ordinary shares.

Our issued and outstanding share capital after this offering will consist of Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting, transfer and conversion rights. Each Class A ordinary share is entitled to one vote, and each Class B ordinary share is entitled to fifteen votes and will be convertible into one Class A ordinary share. Class A ordinary shares will not be convertible into Class B ordinary shares under any circumstances. Upon the completion of this offering, we will be a “controlled company” as defined under the Nasdaq Listing Rules because Dr. Jing Hu, our founder, chief executive officer, and chairman of the board of directors, will hold, directly and indirectly, more than 50% of the voting power.

We are an “emerging growth company” as defined under applicable U.S. securities laws and are eligible for reduced public company reporting requirements. Please read the disclosures beginning on page 15 of this prospectus for more information.

AgiiPlus Inc., or AgiiPlus, is not an operating company but a Cayman Islands holding company with operations conducted by its subsidiaries, including subsidiaries in China. Investors in our securities are not purchasing equity interests in AgiiPlus’ operating entities in China but instead are purchasing equity interests in a Cayman Islands holding company. From August 16, 2021 to May 20, 2022, AgiiPlus Inc. operated a portion of its business through contractual arrangements with a variable interest entity, or VIE, and the VIE’s subsidiaries in China. The VIE structure was used to replicate foreign investment in Chinese-based companies where Chinese law prohibits or restricts direct foreign investment in the operating companies. On May 20, 2022, Tangtangjia Business Consulting Co., Ltd. (“Tangtangjia Business Consulting”), a PRC subsidiary of AgiiPlus Inc., terminated the contractual arrangements with Shanghai Tangtangjia Information Technology Co., Ltd., or the VIE, and AgiiPlus Inc. unwound its VIE structure. After this transaction, the financial results of the VIE and Shanghai Zhiban Internet of Things Technology Co., Ltd., or Shanghai Zhiban, a subsidiary of the VIE, are no longer consolidated into AgiiPlus’ consolidated financial statements. During the period when the VIE arrangements were effective, Shanghai Zhiban held the Internet Content Provider License for the Maxoffice website and maintained the website, whereas AgiiPlus, through its subsidiaries, provided office leasing and enterprise services under the brand “Tangtang” through the Maxoffice website. After the unwinding of AgiiPlus’ VIE arrangements, Shanghai Zhiban continues to maintain the Maxoffice website and hold its Internet Content Provider License. On May 20, 2022, Shanghai Huiying Real Estate Agency Co., Ltd. (“Shanghai Huiying”), a PRC subsidiary of AgiiPlus, entered into a business cooperation agreement with Shanghai Zhiban, pursuant to which Shanghai Zhiban agreed to provide website operations and maintenance services for the Maxoffice website to Shanghai Huiying as a third-party service provider, and authorize AgiiPlus to advertise its services under Tangtang through publishing posts on the Maxoffice website. Under the brand “Tangtang,” AgiiPlus’ subsidiaries offer flexible workspaces leasing and enterprise services through digital platforms, including the Maxoffice website. In consideration, Shanghai Huiying agreed to pay services fees actually incurred by Shanghai Zhiban on a monthly basis. Shanghai Huiying receives information about users and other website information in Shanghai Zhiban’s operations, including the operations of the Maxoffice website, and such information is shared with AgiiPlus and used in the operations of AgiiPlus. From June 2022 to December 2022, the monthly service fees paid by Shanghai Huiying to Shanghai Zhiban was approximately RMB300,000 (US$43,496), and AgiiPlus expects the monthly service fees to remain relatively stable for the foreseeable future.

(Prospectus cover continued from next page.)

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(1)       See “Underwriting” in this prospectus for more information regarding our arrangements with the underwriter.

(2)       We expect our total cash expenses for this offering (including cash expenses payable to our underwriter for its out-of-pocket expenses) to be approximately US$776,580, exclusive of the above discounts. In addition, we will pay additional items of value in connection with this offering that are viewed by the Financial Industry Regulatory Authority, or FINRA, as underwriting compensation. These payments will further reduce proceeds available to us before expenses. See “Underwriting.”

This offering is being conducted on a firm commitment basis. The underwriter is obligated to take and pay for all of the Class A ordinary shares if any such shares are taken. We have granted the underwriter an option for a period of 45 days after the closing of this offering to purchase up to 15% of the total number of the Class A ordinary shares to be offered by us pursuant to this offering (excluding Class A ordinary shares subject to this option), solely for the purpose of covering over-allotments, at the public offering price less the underwriting discounts. If the underwriter exercises the option in full and assuming that investors introduced by the underwriter will purchase 100% of the shares offered hereby, the total underwriting discounts payable will be US$2,037,656.25 based on an assumed offering price of US$5.25 per Class A ordinary share, and the total gross proceeds to us, before underwriting discounts and expenses, will be US$27,168,750.

The underwriter expects to deliver the Class A ordinary shares against payment as set forth under “Underwriting,” on or about            , 2023.

Neither the U.S. Securities and Exchange Commission nor any state securities commission nor any other regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

US Tiger Securities, Inc.

Prospectus dated            , 2023.

(Prospectus cover continued from preceding page.)

The business operations of AgiiPlus’ subsidiaries comprise of three main components, (i) workspace leasing services and ancillary enterprise services under the brand “Distrii,” (ii) space design, construction and decoration solutions under the brand “Spacii,” and (iii) brokerage and enterprise services under the brand “Tangtang.” The Business Cooperation Agreement and the Maxoffice website relate to the business operations of AgiiPlus’ subsidiaries under the brand “Tangtang.” For the years ended December 31, 2019, 2020, 2021 and 2022, business operations under the brand “Tangtang” generated approximately 0.57%, 2.07%, 6.01% and 5.06% of AgiiPlus’ net revenue, respectively. As such, AgiiPlus believes that the vast majority of its operations could be conducted without the Business Cooperation Agreement and it is not materially dependent upon information about users and other website information in Shanghai Zhiban’s and Maxoffice’s operations. Pursuant to the terms of the Business Cooperation Agreement, AgiiPlus may terminate the Business Cooperation Agreement upon notice to Shanghai Zhiban and does not need consent from either Shanghai Zhiban or Maxoffice if AgiiPlus seeks to transition to another third-party website services provider.

After AgiiPlus unwound the VIE structure on May 20, 2022, the financial results of the VIE and Shanghai Zhiban are no longer consolidated into AgiiPlus’ consolidated financial statements. During the fiscal years ended December 31, 2019, 2020, 2021 and 2022, the VIE and Shanghai Zhiban generated approximately 0.57%, 2.07%, 6.01% and 0% of AgiiPlus’ net revenue, respectively. As of the date of this prospectus, none of our employees or our subsidiaries’ employees are also employees of the VIE or Shanghai Zhiban, including Mr. Yong Ni. As used in this prospectus, “VIE” refers to Shanghai Tangtangjia Information Technology Co., Ltd, or Tangtangjia Information Technology, and its subsidiaries, as the context requires. As used in this prospectus, “We” or “AgiiPlus” refers to AgiiPlus Inc., and, when describing AgiiPlus’ consolidated financial information for the fiscal years ended December 31, 2022, 2021, 2020 and 2019, also includes AgiiPlus’ subsidiaries, the VIE and the VIE’s subsidiaries in China. For details on AgiiPlus’ corporate structure, see “Corporate History and Structure.”

AgiiPlus’ PRC subsidiaries face various legal and operational risks and uncertainties related to doing business in China. AgiiPlus’ business operations are conducted in China through its subsidiaries. From August 16, 2021 to May 20, 2022, AgiiPlus Inc. operated a portion of its business through the VIE and the VIE’s subsidiaries in China. AgiiPlus’ VIE and the VIE’s subsidiaries generated approximately 0.57%, 2.07%, 6.01% and 0% of AgiiPlus’ net revenue for the fiscal years ended December 31, 2019, 2020, 2021 and 2022, respectively. Approximately 0.14%, 0.29%, 0.31% and 0% of AgiiPlus’ assets were held by AgiiPlus’ VIE and the VIE’s subsidiaries for the fiscal years ended December 31, 2019, 2020, 2021 and 2022, respectively. As such, AgiiPlus’ PRC subsidiaries are subject to complex and evolving PRC laws and regulations. For instance, AgiiPlus’ PRC subsidiaries face risks associated with regulatory approvals on offshore offerings, anti-monopoly regulatory actions, and oversight on cybersecurity and data privacy, as well as the ability for the Public Company Accounting Oversight Board (United States) (“PCAOB”) to inspect AgiiPlus’ auditors, which may impact the ability of AgiiPlus’ subsidiaries to conduct certain businesses, accept foreign investors, or list on a United States or foreign exchange after this public offering. These risks could result in a material adverse change in AgiiPlus’ business operations and affect the value of our Class A ordinary shares, significantly limit or hinder our ability to offer or continue to offer securities to investors, or cause such securities to significantly decline in value or become worthless. For a detailed description of risks related to doing business in China, see “Risk Factors — Risk Factors Relating to Doing Business in China” in this prospectus.

AgiiPlus also may face risks relating to any lack of PCAOB inspection on its auditor, which may cause its securities to be delisted from a U.S. stock exchange or prohibited from being traded over-the-counter in the future under the Holding Foreign Companies Accountable Act, if the PCAOB has determined it is unable to investigate AgiiPlus’ auditor completely for three consecutive years beginning in 2021. The delisting or the cessation of trading of AgiiPlus’ securities, or the threat of their being delisted or prohibited from being traded, may materially and adversely affect the value of your investment. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act and on December 29, 2022, a legislation entitled “Consolidated Appropriations Act, 2023” (the “Consolidated Appropriations Act”) was signed into law by President Biden, which contained, among other things, an identical provision to Accelerating Holding Foreign Companies Accountable Act and amended the Holding Foreign Companies Accountable Act by reducing the period of time for foreign companies to comply with PCAOB audits to two consecutive years, instead of three, thus reducing the time period before our securities may be prohibited from trading or delisted. On December 16, 2021, the PCAOB issued a report to notify the SEC of its determinations that it is unable to inspect or investigate completely registered public accounting firms headquartered in China and Hong Kong, respectively, and identified the registered public accounting firms in China and Hong Kong that are subject to such determinations. AgiiPlus’ auditor is headquartered in Houston, Texas and has been inspected by the PCAOB on a regular basis and is therefore not subject to the determinations announced by the PCAOB on December 16, 2021. However the audit work was carried out by AgiiPlus’ auditor with the collaboration of its China-based office, the audit working papers of AgiiPlus’ financial statements were located in China. On August 26, 2022, the China Securities Regulatory Commission (the “CSRC”), the Ministry of Finance of the PRC (the “MOF”), and the PCAOB signed a Statement of Protocol (the “Protocol”), governing inspections and investigations of audit firms based in China and Hong Kong. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB Board will consider the need to issue a new determination. In such event, the audit working papers of AgiiPlus’ financial statements may not be inspected or investigated completely by the PCAOB without the approval of the PRC authorities. See “Risk Factors — Risk Factors Relating to AgiiPlus’ Business and Industry.”

The cash flows between AgiiPlus and its subsidiaries, and between AgiiPlus’ VIE and the VIE’s subsidiaries during the period when the VIE arrangements were effective, included the following: (1) Shanghai Zhiban, a subsidiary of the VIE, received capital contribution from Shanghai Shuban Technology Co., Ltd., a subsidiary of AgiiPlus, in the amount of RMB2.8 million (US$0.41 million), RMB2.2 million (US$0.32 million) for the years ended December 31, 2019 and 2020, respectively when Shanghai Zhiban was a wholly-owned subsidiary of Shanghai Shuban Technology Co., Ltd. when these transfers were made. In September 2021, Shanghai Shuban Technology Co., Ltd. transferred 100% of the equity interests in Shanghai Zhiban to the VIE. From September 2021 to the termination of the VIE arrangements in May 2022, AgiiPlus and its subsidiaries did not make any capital contributions to the VIE and its subsidiaries; (2) the subsidiaries of AgiiPlus’ VIE received cash from AgiiPlus’ subsidiaries in the amount of US$0, RMB8.5 million (US$1.23 million), RMB7.4 million (US$1.07 million), and RMB2 million (US$0.29 million) for the years ended December 31, 2019, 2020 and 2021, and in the period from January 1, 2022 to the termination of the VIE arrangements on May 20, 2022, respectively, as intercompany loans; and (3) Shanghai Fuban Enterprise Service Co., Ltd., a subsidiary of AgiiPlus, received cash in the amount of RMB7.53 million (US$1.09 million) from Shanghai Zhiban in the period from January 1, 2022 to the termination of the VIE arrangements on May 20, 2022. If needed, AgiiPlus Inc. can transfer cash to its PRC subsidiaries through loans and/or capital contributions, and AgiiPlus’ PRC subsidiaries can transfer cash to AgiiPlus Inc. through issuing dividends or other distributions. Cash transfers from our Cayman Islands holding company are subject to applicable PRC laws and regulations on loans and direct investment. For details, see “Risk Factors — Risk Factors Relating to Doing Business in China — PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay us from using the proceeds of this public offering to make loans or additional capital contributions to AgiiPlus’ PRC subsidiaries, which could materially and adversely affect AgiiPlus’ liquidity and AgiiPlus’ ability to fund and expand AgiiPlus’ business” and “Use of Proceeds.” In addition, current PRC regulations permit our PRC subsidiaries to pay dividends to their respective shareholders only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. For details, see “Risk Factors — Risk Factors Relating to Doing Business in China — AgiiPlus may rely on dividends and other distributions on equity paid by AgiiPlus’ PRC subsidiaries to fund any cash and financing requirements AgiiPlus may have, and any limitation on the ability of AgiiPlus’ PRC subsidiaries to make payments to AgiiPlus could have a material and adverse effect on AgiiPlus’ ability to conduct its business.”

AgiiPlus has not declared or paid dividends in the past, nor have any dividends or distributions been made by a subsidiary or the VIE to AgiiPlus. We do not intend to distribute dividends after our listing on Nasdaq, but we do not have a fixed dividend policy. Our board of directors has complete discretion on whether to distribute dividends, subject to applicable laws. We do not intend to distribute earnings, and as of the date of this prospectus, no distribution or settlement under the VIE agreements have been made, and no distribution has been made to U.S. investors. For details, see “Prospectus Summary — Cash Transfers and Dividend Distribution.” For selected consolidated financial data of AgiiPlus, its subsidiaries, the VIE and the VIE’s subsidiaries for the fiscal years ended December 31, 2022 and 2021, and consolidated balance sheet data as of December 31, 2022 and 2021, please see “Prospectus Summary — Condensed Consolidating Schedule” on pages 18 through 20 of this prospectus. For consolidated financial statements of AgiiPlus its subsidiaries, the VIE and the VIE’s subsidiaries for the same periods, see pages F-2 to F-48 of this prospectus. See “Risk Factors — Risk Factors Relating to Our Class A Ordinary Shares and This Offering — We currently do not expect to pay dividends in the foreseeable future after this offering and you must rely on price appreciation of our Class A ordinary shares for return on your investment.” Subject to certain contractual, legal and regulatory restrictions, cash and capital contributions may be transferred among our Cayman Islands holding company and our subsidiaries.

TABLE OF CONTENTS

You should rely on the information contained in this prospectus or in any related free writing prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus or in any related free writing prospectus. We are offering to sell, and seeking offers to buy the Class A ordinary shares, only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the Class A ordinary shares.

Neither we nor the underwriter has taken any action to permit a public offering of the Class A ordinary shares outside the United States or to permit the possession or distribution of this prospectus or any filed free-writing prospectus outside the United States. Persons outside the United States who come into possession of this prospectus or any filed free writing prospectus must inform themselves about and observe any restrictions relating to the offering of the Class A ordinary shares and the distribution of this prospectus or any filed free-writing prospectus outside the United States.

Until        , 2023 (the 25th day after the date of this prospectus), all dealers that buy, sell or trade Class A ordinary shares, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

RISK FACTORS

Investment in our securities involves a high degree of risk. You should carefully consider the risks described below together with all of the other information included in this prospectus before making an investment decision. The risks and uncertainties described below represent our known material risks to our business. If any of the following risks actually occurs, our business, financial condition or results of operations could suffer. In that case, you may lose all or part of your investment. You should not invest in this offering unless you can afford to lose your entire investment.

Risk Factors Relating to AgiiPlus’ Business and Industry

The limited operating history of AgiiPlus’ subsidiaries may not be indicative of their future growth and makes it difficult to predict their future prospects, business and financial performance.

Through its subsidiaries, AgiiPlus launched its first flexible workspace under the brand “Distrii,” or Distrii workspace, in 2016 and has since experienced rapid growth in its business, with its total revenue increased by approximately 10.0% from RMB459.2 million in 2021 to RMB506.2 million (US$73.4 million) in 2022. AgiiPlus expanded its operations to Singapore in 2017. As of December 31, 2022, AgiiPlus’ subsidiaries had established a network of 65 Distrii workspaces, with 64 locations across six cities in China and one location in Singapore under its Distrii business division, increased from 61 as of December 31, 2021. However, the short operating history of AgiiPlus’ subsidiaries may not serve as an adequate basis for evaluating AgiiPlus’ prospects and future operating results, including, but not limited to, AgiiPlus’ key operating data, net revenue, cash flows and operating margins. In addition, the flexible workspace industry in China is at an early stage of development and will continue to evolve. As a result, you may not be able to fully discern the market dynamics that AgiiPlus’ subsidiaries are subject to and to assess their business prospects.

AgiiPlus’ subsidiaries have encountered, and may continue to encounter, risks, challenges and uncertainties frequently experienced by companies at an early stage, including those relating to these entities’ ability to adapt to the industry, to maintain and monetize their customer base, to introduce new offerings and services and to maintain consistent business growth. If AgiiPlus’ subsidiaries are unable to successfully address these risks, challenges and uncertainties, AgiiPlus’ business, financial condition and results of operations could be materially and adversely affected.

AgiiPlus has a history of net losses and it may not achieve profitability in the future.

AgiiPlus had net losses of RMB291.3 million in 2021 and RMB244.3 million (US$35.4 million) in 2022, respectively. AgiiPlus cannot assure you that it will be able to generate net profits or positive cash flow from its operating activities in the future. AgiiPlus’ ability to achieve profitability will depend in large part on AgiiPlus’ ability to increase its operating margin, either by growing AgiiPlus’ revenue at a rate faster than its costs and operating expenses increase, or by reducing AgiiPlus’ costs and operating expenses as a percentage of its net revenues. Accordingly, in order to increase operating margin and achieve profitability, AgiiPlus intends to continue to invest to acquire those office spaces with greater profitability potential, terminate or assign leases of office spaces generating significant negative cash flows with lower profitability potential, strategically increase the composition of smart building solutions and brokerage & enterprise services with higher profitability margins and invest in upgrading technology platform. These efforts may be more costly than AgiiPlus expects, and AgiiPlus’ net revenues may not increase sufficiently to offset the expenses. AgiiPlus may continue to take actions and make investments that do not generate optimal financial results and may even result in significantly increased operating and net losses in the short term with no assurance that AgiiPlus will eventually achieve its intended long-term benefits or profitability. These factors, among others set out in this “Risk Factors” section, may negatively affect AgiiPlus’ ability to achieve profitability in the near term, if at all.

AgiiPlus’ subsidiaries may not be able to retain existing customers, especially those who enter into short-term contracts with them, or continue to attract new customers in sufficient numbers or at sufficient rates to sustain or grow their business.

Rental fees constitute an important part of AgiiPlus’ net revenue, and AgiiPlus’ subsidiaries depend on the expansion of their customer base to build the vibrant community that they envision. Any failure to retain existing customers or bring new customers in adequate numbers may materially and adversely affect the business of AgiiPlus’ subsidiaries and AgiiPlus’ results of operations. To sustain their growth, AgiiPlus’ subsidiaries endeavor to retain their existing customers and continually add new customers to maintain or improve the occupancy rate of Distrii workspaces.

Because the flexible workspace industry is relatively new and rapidly evolving, AgiiPlus’ subsidiaries face uncertainties and challenges in maintaining and growing their customer base. A significant number of these entities’ existing and prospective customers consists of SMEs and startups. These customers frequently have limited budgets and are more vulnerable to adverse economic conditions and unfavorable changes in the regulatory environment. If these businesses experience economic hardship, they may be unwilling or unable to use the services offered by AgiiPlus’ subsidiaries, which would reduce demand for services offered by AgiiPlus’ subsidiaries, increase customer attrition and adversely affect the business of AgiiPlus’ subsidiaries, and AgiiPlus’ financial condition and results of operations. In addition, AgiiPlus’ subsidiaries may lose customers due to adverse changes in general economic conditions or the regulatory environment in the regions in which AgiiPlus, through its subsidiaries, operates or the industries in which AgiiPlus’ customers operate.

AgiiPlus’ subsidiaries have in the past experienced and expect to experience growth in their customer base. The number of these entities’ enterprise customers grew from 35,771 as of December 31, 2021 to 40,634 as of December 31, 2022. However, AgiiPlus’ subsidiaries may experience fluctuations in their customer base in the future. For example, customers may want to terminate their lease agreements for workstations or spaces and conditions to termination vary on a client by client basis and is subject to negotiation. Furthermore, the existing spaces operated by AgiiPlus’ subsidiaries may become unsuitable to customers for a number of reasons. For example, some spaces could become less attractive because of a shift in the local economic landscape, or the products and services offered by AgiiPlus’ subsidiaries could become less attractive to their customers because of a change in the customers’ business plans or operations. Launching new spaces, as mentioned above, is expensive and involves certain risks. Likewise, it would be costly and risky to develop and introduce new lines of products or service offerings.

Even if AgiiPlus’ subsidiaries attract new customers, these new customers may not maintain the same level of involvement in its community. For example, they may not use or continue to use any value-added services. In addition, AgiiPlus’ revenue generated from new customers might be impacted by the discounts and other incentives offered by AgiiPlus’ subsidiaries to attract new customers and any marketing or other expenses to attract new customers. For these and other reasons, AgiiPlus could experience a decline in its revenue growth, which could adversely affect its results of operations.

The rapid growth of AgiiPlus’ subsidiaries leads to increasing risks and uncertainties. If these entities are unable to manage their growth effectively, their business and results of operations may be materially and adversely affected.

AgiiPlus’ subsidiaries have experienced rapid growth in their business in the past few years. The total number of Distrii workspaces increased from 61 as of December 31, 2021 to 65 as of December 31, 2022. The total number of workstations increased from approximately 44,337 as of December 31, 2021 to 44,436 as of December 31, 2022. AgiiPlus cannot assure you that its subsidiaries will be able to maintain their historical growth rates. The growth rates of AgiiPlus’ subsidiaries may decline for a number of reasons, some of which are beyond their control, including declining growth of the flexible workspace industry generally in the PRC and Singapore, increasing competition within the industry, or changes in government policies or general economic conditions. If changes in policies adversely affect the growth of flexible workspace industry or customers of AgiiPlus’ subsidiaries in the future, AgiiPlus’ subsidiaries may experience declined growth rate due to the reduction in needs for flexible workspace in general.

Rapid growth leads to increasing risks and uncertainties, and any failure of AgiiPlus’ subsidiaries to manage such growth will materially and adversely affect their business. As it grows, AgiiPlus expects its subsidiaries’ need for capital and other resources to continue to increase. Among other things, AgiiPlus would need to secure significant capital to invest in the infrastructure and technology systems of its subsidiaries to attract, train and retain workforce to support the operations of its subsidiaries and to establish, manage and maintain current and additional relationships with third-party business partners to upgrade the service of AgiiPlus’ subsidiaries to their customers. If AgiiPlus is not able to secure such resources effectively for its subsidiaries, it may not be able to execute managerial, operating or financial strategies to keep pace with the historical growth of its subsidiaries. In addition, controls, systems and procedures of AgiiPlus’ subsidiaries need ongoing development in order to support their growth. In light of the fast development of AgiiPlus’ subsidiaries, failure to implement a variety of advanced systems of internal control and management would result in the erosion of AgiiPlus’ brand image in general and could materially and adversely affect the business of AgiiPlus’ subsidiaries.

AgiiPlus’ financial condition and operational results are affected by the occupancy rates of Distrii workspaces.

In the pre-opening process, Distrii workspaces typically have a one-to-four-month vacancy period to redevelop space and conduct other pre-opening preparation work. The vacancy period may be longer than expected if AgiiPlus’ subsidiaries cannot attract enough customers to the new spaces or maintain customers of their existing spaces. Additionally, if the pre-opening process takes longer than expected, AgiiPlus’ revenues, financial condition and results of operations may be adversely affected. For instance, as a result of the city-wide lockdown in Shanghai from March 2022 to May 2022, AgiiPlus’ subsidiaries experienced significant delays in completing their pre-opening preparation work, and the average time for AgiiPlus’ subsidiaries to conduct pre-opening preparation work increased from one month to two months, thereby significantly increasing AgiiPlus’ pre-opening expense for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. Such increase was caused by a delayed timeline for opening spaces as a result of zero-COVID lockdowns. As the Chinese government recently shifted its COVID policies and citywide lockdown restrictions are less likely to be reinstalled in the future, AgiiPlus expects the pre-opening expense by project to return to historical levels in the forecastable future.

In case customers choose not to continue using Distrii workspaces, AgiiPlus’ subsidiaries may experience difficulty in finding new customers to use the current space or would need additional time and cost to redevelop the space, which may result in longer vacancy periods and adversely affect AgiiPlus’ operational results.

AgiiPlus’ key operational metrics and other estimates may not accurately measure AgiiPlus’ operating performance.

AgiiPlus continually reviews the numbers of spaces, workstations, customers and occupancy rate to evaluate its growth trends, measure its performance and make strategic decisions. These metrics are calculated using internal data and may not be indicative of AgiiPlus’ future operating performance. While these numbers are based on what AgiiPlus believes to be reasonable estimates for the applicable period of measurement, there are inherent challenges in measuring how Distrii workspaces are used across a large customer base. For example, the number of customers of AgiiPlus’ subsidiaries may include customers who do not actively use Distrii workspaces or services provided by AgiiPlus’ subsidiaries. If investors do not perceive AgiiPlus’ operating metrics to accurately represent AgiiPlus’ operating performance, or if AgiiPlus discovers material inaccuracies in its operating metrics, AgiiPlus’ business operation, financial condition and reputation may be materially and adversely affected.

AgiiPlus may require a significant amount of capital to fund the operations and future growth of its subsidiaries. If AgiiPlus cannot obtain sufficient capital on reasonable terms, its business, financial conditions and prospects may be materially and adversely affected.

AgiiPlus may require a significant amount of capital and resources for the operations and continued growth of its subsidiaries. As of December 31, 2022, AgiiPlus had RMB51.5 million (US$7.5 million) of short-term borrowings and current portion of long-term borrowings. Additionally, AgiiPlus expects to make significant investments in the operations of Distrii workspaces, the operations and upgrades of technology platforms, and the acquisition of new office spaces, which may significantly increase AgiiPlus’ net cash used in operating and investing activities. AgiiPlus’ sales and marketing expenses may also increase in an effort to keep attracting new customers and retaining existing customers. It may take a long time to realize returns on such investments, if at all.

To date, AgiiPlus has historically funded its cash requirements primarily through capital contributions from its shareholders, revenues from daily operations and bank loans. AgiiPlus intends to finance its future working capital requirements and capital expenditures from cash generated from operating activities and funds raised from financing activities. AgiiPlus’ ability to obtain additional capital in the future, however, is subject to a number of uncertainties, including those relating to AgiiPlus’ future business development, AgiiPlus’ financial condition and results of operations, general market conditions for financing activities by companies in the flexible workspace industry, and macro-economic and other conditions in China, Singapore, and globally. If its existing cash is insufficient to meet its requirements, AgiiPlus may seek alternative funding sources such as equity partners, issue debt or equity securities, or obtain additional credit facilities. AgiiPlus has established relationships with a number of reputable capital partners, including property owners and real estate funds, and may reach out to them for obtaining additional funds. However, financing may be unavailable in the amounts AgiiPlus needs or on terms acceptable to it, if at all. Issuance of additional equity securities, would dilute AgiiPlus’ earnings per share. The incurrence of debt would divert cash for working capital and capital expenditures to service debt obligations and could result in operating and financial covenants that restrict AgiiPlus’ operations and its ability to pay dividends to its shareholders. If AgiiPlus cannot

obtain sufficient capital on reasonable terms to meet its capital needs, AgiiPlus may not be able to execute its growth strategies, and AgiiPlus’ business, financial condition and prospects may be materially and adversely affected. In such event, AgiiPlus will adjust its business expansion plan accordingly, including controlling its expansion speed, and such adjustment may lower the rate of AgiiPlus’ revenue growth in the short term, and take longer for us to achieve economies of scale and profitability, as a result of which AgiiPlus’ business operations and prospects may be adversely affected.

AgiiPlus’ expansion into new regions, markets and business areas may pose increased risks.

AgiiPlus also plans to expand operations in China and overseas markets through its subsidiaries. This expansion will incur significant costs, and it inherently involves uncertainties and risks as AgiiPlus may encounter unexpected issues or situations for which AgiiPlus is unprepared.

As AgiiPlus expands its business into new regions through its subsidiaries, AgiiPlus plans to invest substantial resources and may face new operational risks and challenges associated with the business, economic and regulatory environment with which AgiiPlus is not familiar. AgiiPlus will be required, among other things, to understand and comply with the local regulations, to partner with local businesses or individuals, to hire, train, manage and retain local workforce, and to cope with customers or potential customers who have different preferences. Additionally, in launching new spaces in a new region, AgiiPlus needs to negotiate satisfactory leasing terms with local parties, to adapt the design and features of workspaces and services to accommodate local conventions, and to adjust AgiiPlus’ pricing and marketing approaches as per factors such as local rental prices. All these adjustments AgiiPlus makes may be ineffective and adversely affect AgiiPlus’ business. AgiiPlus’ strategy of overseas expansion will further subject it, for instance, to different cultural norms and business practice, risks relating to fluctuations in currency exchange rates, and unpredictable disruptions as a result of security threats or political or social unrest and economic instability.

AgiiPlus has incurred, and may in the future incur, impairment loss on long-lived assets. Significant impairment of AgiiPlus’ long-lived assets could materially impact its financial position and results of its operations.

AgiiPlus has made significant investment in long-lived assets. AgiiPlus is required to review AgiiPlus’ long-lived assets, including right-of-use of assets arising from certain long-term leases, property, plant and equipment and assets recorded in connection with this public offering, whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. When these events occur, AgiiPlus measures impairment by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, AgiiPlus would recognize an impairment loss based on the fair value of the assets. The application of long-lived asset impairment test requires significant management judgment. If AgiiPlus’ estimates and judgments are inaccurate, the fair value determined could be inaccurate and the impairment may not be adequate, and AgiiPlus may need to record additional impairments in the future.

AgiiPlus had no impairment loss for the year ended December 31, 2021 and 2022. For further information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Key Components of Results of Operations.” AgiiPlus could be required to record additional impairments on long-lived assets in the future. Any significant impairment losses charged against AgiiPlus’ long-lived assets could have a material adverse effect on AgiiPlus’ results of operations.

AgiiPlus faces vigorous competition. If, through its subsidiaries, AgiiPlus is not able to compete effectively with others, AgiiPlus’ business, financial conditions and results of operations may be materially and adversely affected.

While according to the Frost & Sullivan Report, AgiiPlus has achieved, through its PRC subsidiaries, a leading market position in the flexible workspace industry in tier-one cities in the PRC, the industry is still in its early stage of development with numerous opportunities. If new companies provide competing solutions in the markets AgiiPlus operates through its PRC subsidiaries, AgiiPlus may face increased competition for customers. The current competitors of AgiiPlus include other flexible workspace operators and owners of traditional working spaces or offices in the PRC. Some of AgiiPlus’ competitors may have more resources than it does, operate in more geographic areas, be more capitalized than AgiiPlus is, have access to better lease terms than AgiiPlus does, or offer products and services at a more competitive price. The inability of AgiiPlus to compete effectively could hinder its growth or adversely impact its operating results.

AgiiPlus’ success depends on the continuing efforts of its key management and capable personnel as well as its ability to recruit new talent. If AgiiPlus fails to hire, retain or motivate its staff, its business may suffer.

AgiiPlus’ future success depends largely on the continued service of its key management members. If AgiiPlus loses the services of any key management member, AgiiPlus may not be able to hire suitable or qualified replacements, and may incur additional expenses to recruit and train new staff which could severely disrupt AgiiPlus’ business and growth. If any member of AgiiPlus’ key management joins a competitor or forms a competing business, AgiiPlus’ subsidiaries may lose customers, know-how and key professionals and staff members.

The rapid growth of AgiiPlus’ subsidiaries also requires them to continually hire, train, and retain a wide range of personnel that can adapt to a dynamic, competitive and challenging business environments and are capable of helping these entities conduct effective marketing, innovate new service offerings, and develop technological capabilities. AgiiPlus or AgiiPlus’ subsidiaries may need to offer attractive compensation and other benefits package to attract and retain them. AgiiPlus and AgiiPlus’ subsidiaries also need to provide their employees with sufficient training to help the employees realize their career development and grow with AgiiPlus. Any failure to attract, train, retain or motivate experienced and capable personnel could severely disrupt AgiiPlus’ business and growth.

Unexpected termination of leases or other arrangements, failure to negotiate satisfactory terms for or duly perform leases or other arrangements, failure to renew the leases or other arrangements of the existing premises of AgiiPlus’ subsidiaries or to renew such leases or other arrangements at acceptable terms could materially and adversely affect AgiiPlus’ business, financial condition, results of operations and prospects.

AgiiPlus’ subsidiaries currently lease real estate for all of their space locations. The ability of AgiiPlus’ subsidiaries to increase the number of spaces and to operate these spaces profitably depends on the due execution and performance of the leases or other arrangements AgiiPlus’ subsidiaries enter into with lessors and whether AgiiPlus’ subsidiaries are able to negotiate these leases and other arrangements on satisfactory terms. Lessors may also not duly perform their obligations under the leases or other arrangements due to various reasons, such as lessors’ failure to deliver the possession of the premises as agreed.

The length of the initial term of the leases AgiiPlus’ subsidiaries entered into with landlords ranges from three to fifteen years. The increases in rental rates, particularly those markets where initial terms under the leases are shorter, could adversely affect AgiiPlus’ business, financial condition, results of operations and prospects. Additionally, the ability of AgiiPlus’ subsidiaries to negotiate favorable terms to extend a lease agreement or in connection with an alternate space will depend on then-prevailing conditions in the real estate market, such as overall changes in lease expenses, competition from other would-be tenants for desirable leased spaces and the relationships of AgiiPlus’ subsidiaries with current and prospective building owners and landlords, or other factors that are not within their’ control. If AgiiPlus’ subsidiaries are not able to renew or replace an expiring lease agreement, they will incur significant costs related to vacating that space or redeveloping the space, which could result in loss of customers who may have chosen that space based on the design, location or other attributes of that particular space.

AgiiPlus’ access to the Maxoffice website depends on its cooperation with Shanghai Zhiban. Services offered by AgiiPlus’ subsidiaries through Tangtang may be negatively affected if Shanghai Zhiban does not continue its relationship with AgiiPlus.

Shanghai Huiying, a subsidiary of AgiiPlus, cooperates with Shanghai Zhiban through the Business Cooperation Agreement dated May 20, 2022, pursuant to which Shanghai Zhiban agreed to offer website operations and maintenance services for the Maxoffice website to Shanghai Huiying as a third-party service provider, and authorize Shanghai Huiying to advertise its services under Tangtang through publishing posts on the Maxoffice website. Under the brand “Tangtang,” AgiiPlus’ subsidiaries offer flexible workspaces leasing and enterprise services through digital platforms, including the Maxoffice website. In consideration for Shanghai Zhiban’s services, Shanghai Huiying agreed to pay Shanghai Zhiban services fees actually incurred by Shanghai Zhiban on a monthly basis. Shanghai Huiying receives information about users and other website information in Shanghai Zhiban’s operations, including the operations of the Maxoffice website, and such information is shared with AgiiPlus and used in the operations of AgiiPlus. From June 2022 to December 2022, the monthly service fees paid by Shanghai Huiying to Shanghai Zhiban was approximately RMB300,000 (US$43,496), and AgiiPlus expects the monthly service fees to remain relatively stable for the foreseeable future. The initial term of the Business Cooperation Agreement lasts for two years, and the agreement shall be automatically renewed for additional one-year terms unless timely objected by either party within five days prior to the expiration of the agreement.

The business operations of AgiiPlus’ subsidiaries under Tangtang may be adversely affected if AgiiPlus fails to renew the business cooperation agreement on terms favorable to AgiiPlus or at all, or fails to attract any new business partner to authorize Tangtang to use their digital platforms. The occurrence of any of these circumstances may hinder the ability of AgiiPlus’ subsidiaries to carry out their business operations and increase their client base, and may significantly increase AgiiPlus’ expense and thus its business, financial condition, results of operation, and prospects may be adversely affected.

Growth of AgiiPlus’ business will partially depend on AgiiPlus’ brand recognition. Failure to maintain, protect and enhance its brand could limit the ability of AgiiPlus to expand or retain their customer base and materially and adversely affect AgiiPlus’ business, financial condition and results of operations.

AgiiPlus believes that its brand recognition among the customers and business partners of its subsidiaries has helped these entities in managing their customer acquisition costs and contributed to the growth of AgiiPlus’ business. As a result, maintaining, protecting and enhancing its brand recognition is critical to AgiiPlus’ business and market position, which depends on several factors, including, AgiiPlus’ ability to, through its subsidiaries:

•        maintain and enhance the quality and attractiveness of the Distrii workspaces and services offered;

•        maintain healthy business relationships with landlords and other business partners;

•        increase brand awareness and brand image through marketing activities;

•        comply with applicable laws and regulations;

•        compete effectively against existing and future competitors; and

•        preserve AgiiPlus’ reputation and goodwill generally and in the event of any negative publicity on AgiiPlus’ services and data security, or other issues affecting it, and China’s flexible workspace industry in general.

A public perception that AgiiPlus, or other industry participants do not provide satisfactory services, even if factually incorrect or based on isolated incidents, could damage AgiiPlus’ reputation, diminish the value of its brand, undermine the trust and credibility AgiiPlus has established and have a negative impact on the ability of AgiiPlus’ subsidiaries to attract and retain customers, and AgiiPlus’ business, financial conditions and results of operations may be materially and adversely affected.

AgiiPlus’ subsidiaries are exposed to risks associated with the redevelopment and construction of the spaces they occupy.

Opening new spaces subjects AgiiPlus’ subsidiaries to risks that are associated with redevelopment projects in general, such as delays in construction, contract disputes and claims, fines or penalties levied by government authorities relating to the construction activities conducted by AgiiPlus’ subsidiaries. AgiiPlus’ subsidiaries may also experience delays when opening a new space as a result of building owners or landlords not completing their base building work on time or as a result of delays in obtaining all necessary land-use, building, occupancy and other required governmental permits and authorizations. Failure to open a space on schedule may cost AgiiPlus the lost revenue from that space and may damage AgiiPlus’ brand and cause it to incur expenses in order to rent and provide temporary space for customers.

In developing their spaces, AgiiPlus’ subsidiaries rely in part on the continued availability and satisfactory performance of third-party general contractors and subcontractors to perform the actual construction work of Distrii workspaces, and in many cases to select and obtain the related building materials. As such, the timing and quality of the redevelopment of spaces occupied by AgiiPlus’ subsidiaries depend on the performance of these third-party contractors acting on behalf of AgiiPlus’ subsidiaries.

The contractors AgiiPlus’ subsidiaries engage in connection with a construction project are subject to the usual hazards associated with providing construction and related services on construction project sites, which can cause personal injury, damage to or destruction of property, plant and equipment, and environmental damage.

Despite the detailed specifications and inspection of AgiiPlus’ subsidiaries, project management and quality control procedures, general contractors and their subcontractors may use improper construction practices or defective materials. Improper construction practices or defective materials can result in the need to perform extensive repairs to Distrii workspaces and potentially lead to personal injury. AgiiPlus could also suffer damage to its reputation, and may be exposed to possible liability, if these third parties fail to comply with applicable laws.

AgiiPlus incurs significant costs related to the redevelopment of its subsidiaries’ spaces. AgiiPlus may be unable to recover these costs in a timely manner or at all.

Redevelopment of a space typically takes one to four months from the date AgiiPlus’ subsidiaries take possession of the space under the relevant occupancy agreement to the opening date. During this time, AgiiPlus incurs substantial costs without generating any revenues from the space. If AgiiPlus’ subsidiaries are unable to complete their redevelopment and construction activities for any reason, or conditions in the real estate market or the broader economic landscape change in unfavorable ways, AgiiPlus may be unable to recover these costs in a timely manner or at all. Furthermore, the redevelopment activities of AgiiPlus’ subsidiaries are subject to cost and schedule overruns as a result of many factors, some of which are beyond AgiiPlus’ control and ability to foresee, including increases in the cost of materials and labor, inaccuracies in redevelopment planning, and errors in execution.

AgiiPlus incurs costs relating to the maintenance, refurbishment and remediation of its spaces.

The terms of the lease agreements entered into by and between AgiiPlus’ subsidiaries and landlords generally require that AgiiPlus’ subsidiaries ensure that the spaces they occupy are kept in good status throughout the term of the lease and AgiiPlus’ subsidiaries typically bear the obligation of maintenance and repair for spaces they decorate during the period. The costs associated with this maintenance, removal and repair work may be significant.

AgiiPlus also anticipates that its subsidiaries will be required to periodically refurnish their spaces to keep pace with the changing needs of its customers. Extensive refurbishments may be more costly and time-consuming than AgiiPlus expects and may adversely impact AgiiPlus’ operational results and financial performance. The customer experience of AgiiPlus may also be adversely affected if extensive refurbishments disrupt the operations of AgiiPlus’ subsidiaries at their spaces.

If AgiiPlus’ promotional and marketing plans are not effective, its business and prospects may be negatively affected.

Through its subsidiaries, AgiiPlus has invested, and it expects to continue investing, in sales and marketing activities to promote its brand and spaces and to deepen the relationship of its subsidiaries with customers. To foster their customer base, AgiiPlus’ subsidiaries may offer discounts or other incentives to certain prospective customers, which incur costs. Moreover, the sales and marketing activities of AgiiPlus’ subsidiaries may not be well received by their existing customers, and may not attract new ones as anticipated. The evolving market landscape may require AgiiPlus’ subsidiaries to experiment with new marketing methods to keep pace with industry trends and customers’ preference. Any failure of AgiiPlus’ subsidiaries to refine their existing marketing approaches or to introduce new marketing approaches in a cost-effective manner could reduce the number of their customers, occupancy rate and market share. AgiiPlus cannot assure you that AgiiPlus will be able to recover the costs of the sales and marketing activities of its subsidiaries or that these activities will be effective in attracting new customers and retaining existing ones or as successful as those of their competitors. In such events, AgiiPlus’ revenue, customer base and market share could decrease, thereby adversely impacting its results of operations.

Many customers of AgiiPlus’ subsidiaries are concentrated in major metropolitan areas. An economic downturn in any of these areas may result in reduction of these entities’ customers and could adversely affect AgiiPlus’ results of operations.

The concentration of the business operations of AgiiPlus’ subsidiaries in specific cities magnifies the risk of localized economic conditions in those cities or the surrounding regions to any business. For the years ended December 31, 2021 and 2022, AgiiPlus generated the majority of its net revenue from its subsidiaries’ spaces located in Shanghai, Beijing and other major metropolitan areas in the PRC. Adverse changes in general economic conditions or real estate market as well as relevant regulatory environment in these cities may have a disproportionate effect on the customer base of AgiiPlus’ subsidiaries, occupancy rates and/or pricing. AgiiPlus’ business may also be affected by generally prevailing economic conditions in the markets where AgiiPlus operates through its subsidiaries, which may exert significant impacts on the real estate activity, demand for occupancy and AgiiPlus’ services offered through its subsidiaries, and pricing of their spaces and services.

AgiiPlus’ subsidiaries are exposed to risks relating to their cooperation with business partners.

AgiiPlus’ subsidiaries select and rely on a number of third-party business partners to provide various value-added services, such as administration, finance, legal, human resources, tax and intellectual property registration services to meet the needs of their enterprise customers. Due to the reliance on such business partners, any interruption in the operations of such business partners, any failure of them to accommodate the fast growing business scale of AgiiPlus’ subsidiaries, any termination or suspension of the partnership arrangements between the business partners and AgiiPlus’ subsidiaries, any change in cooperation terms, or any deterioration of cooperative relationships with them may materially and adversely affect AgiiPlus’ brand image and impact its operations.

In addition, AgiiPlus’ subsidiaries have limited control over their business partners. Failure by third parties to provide satisfactory services or comply with laws and regulations could subject AgiiPlus to reputational harm based on the association of such business partners with AgiiPlus and its brand. In the event that AgiiPlus or any of its subsidiaries becomes subject to claims arising from services provided by their business partners, AgiiPlus and/or its subsidiaries may attempt to seek compensation from the relevant business partners. However, such compensation may be limited. If no claim can be asserted against a business partner, or amounts of such claims cannot be fully recovered from business partners, AgiiPlus and/or its subsidiaries may be required to bear such losses and compensation at their own costs. This could have a material and adverse effect on AgiiPlus’ business, financial condition and results of operations.

AgiiPlus has engaged in transactions with related parties, and such transactions present possible conflicts of interest that could have a material and adverse effect on AgiiPlus’ business, financial conditions and results of operations.

AgiiPlus has entered into a number of transactions with related parties. For the fiscal years ended December 31, 2021 and 2022, 0.29% and 1.46% of AgiiPlus’ total revenues generated for the respective periods were from transactions with related parties. AgiiPlus may in the future enter into additional transactions with entities in which customers of AgiiPlus’ management, board of directors and other related parties hold ownership interests.

Transactions with related parties present potential for conflicts of interest, as the interests of related parties may not align with the interests of AgiiPlus’ shareholders. Conflicts of interest may also arise in connection with the exercise of contractual remedies under these transactions, such as the treatment of events of default.

AgiiPlus’ board of directors intends to authorize the audit committee, upon its formation, to review and approve all material related party transactions. Under the laws of the Cayman Islands, AgiiPlus’ directors have a duty to act honestly, in good faith and with a view to AgiiPlus’ best interests. AgiiPlus’ directors also have a duty to exercise the care, diligence and skills that a reasonable prudent person would exercise in comparable circumstances. Nevertheless, AgiiPlus may have achieved more favorable terms if such transactions had not been entered into with related parties and these transactions, individually or in the aggregate, may have an adverse effect on AgiiPlus’ business and results of operations or may result in government enforcement actions or other litigation.

AgiiPlus faces risks arising from strategic transactions such as acquisitions and investments that it evaluates, pursues or undertakes.

From time to time, AgiiPlus evaluates potential strategic or investment opportunities, and from time to time, AgiiPlus may pursue and undertake certain of those opportunities, some of which may be material and may not create the value that AgiiPlus expects. Any transactions that AgiiPlus enters into could be material to its financial condition and results of operations. AgiiPlus has limited experience in completing and integrating major acquisitions. The process of acquiring and integrating other companies could create unforeseen difficulties and expenditures and could entail unforeseen liabilities that are not recoverable under the relevant transaction agreements or otherwise.

AgiiPlus may not be able to effectively protect its intellectual property from unauthorized use by others.

Through its subsidiaries, AgiiPlus holds trademarks and other intellectual properties that are critical to its business. Any of AgiiPlus’ intellectual property rights could be challenged, invalidated, circumvented or misappropriated, or such intellectual property may not be sufficient to provide AgiiPlus with competitive advantages. AgiiPlus cannot assure you that (i) the pending application AgiiPlus submitted for intellectual property rights will be approved, (ii) all of the intellectual property rights owned by AgiiPlus will be adequately protected, or (iii) AgiiPlus’ intellectual property rights will not be challenged by third parties or found by a judicial authority to be invalid or unenforceable. In particular, some of AgiiPlus’ trademark applications for certain categories have been rejected, and AgiiPlus has

applied for administrative reviews on such rejections. However, there can be no assurance that AgiiPlus will obtain such trademarks and any other trademarks that are crucial to AgiiPlus’ business in the future. Thus, third parties may also take the position that AgiiPlus is infringing their rights, and AgiiPlus may not be successful in defending these claims. Additionally, AgiiPlus may not be able to enforce and defend its proprietary rights or prevent infringement or misappropriation, without incurring substantial expenses to AgiiPlus and a significant diversion of management time and attention from AgiiPlus’ business strategy.

To protect AgiiPlus’ trademarks, copyrights and other proprietary rights, AgiiPlus relies on and expects to continue to rely on a combination of protective agreements with the team members and third parties including its business partners, physical and electronic security measures, and trademark, copyright, patent and trade secret protection laws. If the measures AgiiPlus has taken to protect its proprietary rights are inadequate to prevent the use or misappropriation by third parties or such rights are diminished due to successful challenges, the value of AgiiPlus’ brand and other intangible assets may be diminished and AgiiPlus’ ability to attract and retain customers may be adversely affected.

The proper functioning of technology use is essential to AgiiPlus’ business, and any difficulty experienced by such system would materially and adversely affect AgiiPlus.

AgiiPlus’ subsidiaries use a combination of proprietary technology and technology provided by their third-party service providers to support their business and customer experience, including, among others, Distrii app, the official app for Distrii workspace members and CHIPS system, an artificial intelligence-powered integrated building management system. For details, see “Business — Technology.”

The products and services offered by AgiiPlus’ subsidiaries may not continue to be supported by third-party service providers on commercially reasonable terms or at all. Moreover, AgiiPlus and its subsidiaries may be subject to claims by third parties who maintain that the technology of the service providers of AgiiPlus’ subsidiaries infringes the third party’s intellectual property rights. Although the agreements between AgiiPlus’ subsidiaries and their third-party service providers often contain indemnities in favor of AgiiPlus’ subsidiaries with respect to these eventualities, AgiiPlus’ subsidiaries may not be indemnified for these claims or these entities may not be successful in obtaining indemnification to which they are entitled.

To the extent that the technologies and systems that AgiiPlus’ subsidiaries use to manage the daily operations of their business malfunction, these entities’ ability to operate their business, retain existing customers and attract new customers may be impaired. AgiiPlus’ subsidiaries may not be able to attract and retain sufficiently skilled and experienced professionals to operate and maintain these technologies and systems, and their current service offerings may not continue to be, and new service offerings may not be, supported by the applicable third-party service providers on commercially reasonable terms or at all. In addition, any harm to the personal computers or other devices owned by the customers of AgiiPlus’ subsidiaries caused by the software owned by these entities, or other sources of harm, such as hackers or computer viruses, could have an adverse effect on the customer experience and AgiiPlus’ reputation.

AgiiPlus needs to invest heavily on its technology in order to sustain or grow its business, and the uncertainties associated with the evolving customer needs and emerging industry standards create risks with respect to such investment. On one hand, the ongoing investment in technology may not generate the expected level of returns; on the other hand, any failure of AgiiPlus to adopt new technologies to adapt to such changing environment may materially and adversely impact its business.

If the proprietary information and/or data collected and stored by AgiiPlus, particularly billing and personal data, were to be accessed by unauthorized persons, AgiiPlus’ reputation, competitive advantages and relationships with its customers could be harmed and AgiiPlus’ business could be materially and adversely affected.

Through its subsidiaries, AgiiPlus generates significant amounts of proprietary, sensitive and otherwise confidential information relating to its business and operations, and AgiiPlus collects, stores and processes confidential and personal data regarding its customers and employees of its customers, including, but not limited to, customer names, contact information of customers, and billing data. The collection, protection and use of personal data are governed by privacy laws and regulations enacted in the PRC and other countries where AgiiPlus, through its subsidiaries, operates its business. These laws and regulations continue to evolve. Compliance with applicable privacy laws and regulations may lead to an increase in AgiiPlus’ operating costs and adversely impact AgiiPlus’ ability to conduct its business and market its products and services to its customers and potential customers.

AgiiPlus’ information technology systems face the threat of cyber-attacks, such as security breaches, phishing scams, malware and denial-of-service attacks. AgiiPlus’ systems or the systems of third-parties that AgiiPlus relies upon could experience unauthorized intrusions or inadvertent data breaches, which could result in the exposure or erosion of AgiiPlus’ proprietary information and/or data of its customers and employees of its customers.

Because techniques used to obtain unauthorized access to systems or sabotage systems change frequently and may not be known until launched against AgiiPlus or the third parties AgiiPlus relies on, AgiiPlus and its partners may be unable to anticipate these attacks or implement adequate preventative measures. In addition, any party who is able to illegally obtain identification and password credentials could potentially gain unauthorized access to the systems of AgiiPlus or those of third parties AgiiPlus relies on. If any such event occurs, AgiiPlus may have to spend significant capital and other resources to mitigate the impact of the event and to develop and implement protection to prevent such future events of that nature from occurring. From time to time, employees make mistakes with respect to security policies that are not always immediately detected by AgiiPlus following compliance policies and procedures. These can include errors in software implementation or a failure to follow protocols and patch systems. Employee errors, even if promptly discovered and remediated, may disrupt operations or result in unauthorized disclosure of confidential information.

If a cybersecurity incident occurs, or is perceived to occur, AgiiPlus may be the subject of negative publicity and the perception of the effectiveness of AgiiPlus’ security measures and its reputation may be harmed, which could damage AgiiPlus’ relationships with and result in the loss of existing or potential customers. In addition, even if there is no compromise of customer information, AgiiPlus could incur significant fines or lose the opportunity to support electronic payments from customers, which would limit the full effectiveness and efficiency of AgiiPlus’ payment processing.

The wide variety of payment methods that AgiiPlus’ subsidiaries accept subjects third-party payment processing-related risks.

AgiiPlus’ subsidiaries accept a variety of payment methods including bank transfers, online payments, and WeChat Pay and Alipay through third-party payment processors. AgiiPlus’ subsidiaries pay these payment processors varying service fees, which may increase over time and raise AgiiPlus’ operating costs. AgiiPlus’ subsidiaries may also be subject to fraud, security breaches and other illegal activities in connection with the various payment methods they offer. Furthermore, AgiiPlus’ subsidiaries are subject to various applicable regulations governing electronic funds transfers, which may continue to evolve in the future. If AgiiPlus’ subsidiaries fail to comply with these applicable regulations, they may be subject to fines, higher transaction fees, or restrictions on their ability to process electronic funds transfers, which could materially and adversely affect AgiiPlus’ business, financial condition and results of operations.

AgiiPlus’ subsidiaries may receive complaints from their customers, or adverse publicity involving their spaces and services.

AgiiPlus’ subsidiaries face an inherent risk of complaints from their customers. AgiiPlus’ subsidiaries take complaints from their customers seriously and endeavor to reduce such complaints by implementing various remedial measures. Nevertheless, AgiiPlus cannot assure you that its subsidiaries can successfully prevent or address all complaints.

Any complaints or claims against AgiiPlus or its subsidiaries, even if meritless and unsuccessful, may divert management attention and other resources from AgiiPlus’ business and adversely affect its business and operations. Customers may lose confidence in AgiiPlus and its brand, which may adversely affect AgiiPlus’ reputation, business and results of operations. Furthermore, negative publicity including but not limited to negative online reviews on social media and crowd-sourced review platforms, industry findings or media reports related to flexible workspace industry, whether or not accurate, and whether or not concerning Distrii workspaces, can adversely affect AgiiPlus’ business, results of operations and reputation.

Pending or future litigation could have a material and adverse impact on AgiiPlus’ business, financial condition and results of operations.

From time to time, AgiiPlus has been, and may in the future be, subject to lawsuits or other legal proceedings brought on by its customers, competitors, third-party business partners, government agencies or other entities against AgiiPlus, in matters relating to contractual disputes, real property disputes, and other disputes related to AgiiPlus’ business. For ongoing material litigations, see “Business — Legal Proceedings.”

At times, the outcomes of actions AgiiPlus institutes may not be successful or favorable to AgiiPlus. Lawsuits against AgiiPlus may also generate negative publicity that significantly harms its reputation, which may adversely affect AgiiPlus’ ability to expand its customer base. Claims against AgiiPlus, whether meritorious or not, could require significant expenses. In addition, managing and defending litigation and related indemnity obligations can significantly divert the attention of AgiiPlus’ management from operating its business. If any of these legal proceedings were to be determined adversely to AgiiPlus, or if AgiiPlus were to enter into settlement arrangements, AgiiPlus may be exposed to monetary damages or be forced to change the way in which AgiiPlus operates its business, which could have an adverse effect on AgiiPlus’ business, financial condition, results of operations and cash flows.

Upon the effectiveness of this registration statement on Form F-1, the Company will become a publicly listed company and may face additional exposure to claims and lawsuits. These claims could divert management time and attention away from AgiiPlus’ business and result in significant costs to investigate and defend, regardless of the merits of the claims. In some instances, AgiiPlus may elect or be forced to pay substantial damages if it is unsuccessful in its efforts to defend against these claims, which could harm its business, financial condition and results of operations.

The equity interests of Shanghai Quanjiahe held by Shanghai Quanban Zhizao have been frozen by court order, and as a result, Shanghai Quanban Zhizao may experience restrictions in exercising its rights as the shareholder of Shanghai Quanjiahe.

As a result of a contractual dispute between Shanghai Quanban Zhizao Property Development Co., Ltd. (“Shanghai Quanban Zhizao”) and Jianfeng Construction Group Co., Ltd. (“Jianfeng Group”), the equity interests of Shanghai Quanjiahe Property Development Co., Ltd. (“Shanghai Quanjiahe”) held by Shanghai Quanban Zhizao have been frozen by court order. See “Business — Legal Proceedings.” Pursuant to applicable PRC laws and regulations, if a company’s equity interest is frozen by a court order, the company’s shareholders may be restricted in: (i) transferring or pledging the equity interests, (ii) receiving dividends from the company, and (iii) voting for the dissolution and winding up of the company, the forgiving of matured loans, or other decisions that may impact the value of the equity interests of the company. Therefore, as a result of the court order, certain shareholders’ rights of Shanghai Quanban Zhizao in Shanghai Quanjiahe may be restricted until the court lifts its order. As of the date of this prospectus, this case is still in the process of arbitration.

AgiiPlus was required to repurchase its previously issued Series A+ convertible redeemable participating preferred shares.

On August 16, 2021, AgiiPlus entered into share repurchase agreements with King Inspiration Limited and City Connected Communities Pte. Ltd., holders of AgiiPlus’ Series A+ convertible redeemable participating preferred shares, respectively, under which both of King Inspiration Limited and City Connected Communities Pte. Ltd. had the right to require AgiiPlus to repurchase a certain number of Series A+ convertible redeemable participating preferred shares (356,099 in the case of King Inspiration Limited, and 2,543,564 in the case of City Connected Communities Pte. Ltd., after taking into account the 1:6421 share subdivision and the Share Surrender), at the aggregate purchase price of RMB7 million (US$1.0 million) in the case of King Inspiration Limited, and RMB50 million (US$7.2 million) in the case of City Connected Communities Pte. Ltd., by issuing convertible promissory notes, provided that AgiiPlus fails to become listed on an overseas stock exchange on or before June 30, 2022.

On March 17, 2023, each of King Inspiration Limited and City Connected Communities Pte. Ltd. exercised its right under the share repurchase agreements respectively. As a result, AgiiPlus repurchased 356,099 Series A+ convertible redeemable participating preferred shares held by King Inspiration Limited by issuing RMB7 million (US$1.0 million) convertible promissory note to King Inspiration Limited, and repurchased 2,543,564 Series A+ convertible redeemable participating preferred shares held by City Connected Communities Pte. Ltd. by issuing RMB50 million (US$7.2 million) convertible promissory note to City Connected Communities Pte. Ltd.

The maturity date of the promissory note AgiiPlus issued to King Inspiration Limited and City Connected Communities Pte. Ltd. is one (1) year from the repurchase date, and may be extended for another one (1) year if mutually agreed upon by both parties. The interests for the promissory notes accrue at a rate of eight percent (8%) per annum on the outstanding principal amount until the outstanding principal and accrued interests are made in full, and shall be paid by AgiiPlus every three (3) months.

As AgiiPlus has repurchased its issued Series A+ convertible redeemable participating preferred shares from King Inspiration Limited and City Connected Communities Pte. Ltd., AgiiPlus experienced an increase in the current liabilities of RMB57 million (US$8.3 million) and the corresponding interest payments will lead to an increase in AgiiPlus’ future interest expenses. Meanwhile, such event will result in a future cash outflow. AgiiPlus plans to take certain actions to repay the promissory notes and mitigate the potential adverse impact, including: (1) slowing down business expansion plans and reserving sufficient cash for the repayment; (2) seek additional financing via equity fund raising or bank loans. As of the date of this prospectus, AgiiPlus has an aggregate of RMB50 million (US$7.2 million) in undrawn credit line to be drawn from a third-party. Additionally, AgiiPlus has entered into a letter of intent with the Bank of Shanghai, and the approval of a credit line for RMB60 million (US$8.7 million) is under negotiation. Furthermore, from September 2022 to April 2023, AgiiPlus entered into a series of shares purchase agreements with new investors for issuing ordinary shares prior to the completion of this offering, in consideration of which AgiiPlus received an aggregate consideration of US$10.6 million from the investors.

Additionally, prior to the earliest to occur of (i) the maturity date of the note, (ii) the completion of this offering, and (iii) the seventh (7th) business day following the execution of transaction documents in connection with any subsequent financing of the Company, each of King Inspiration Limited and City Connected Communities Pte. Ltd. retains the right to convert its convertible promissory note into Series A+ convertible redeemable participating preferred shares of the Company. In such event, investors of our Class A ordinary shares in this offering will experience even greater dilution. Furthermore, to secure the promissory notes issued to King Inspiration Limited and City Connected Communities Pte. Ltd., our chief executive officer and chairman of the board of directors, Dr. Jing Hu, through his wholly controlled holding company, J.distrii Global Limited, entered into equitable share mortgages with each of King Inspiration Limited and City Connected Communities Pte. Ltd., and pledged 433,705 and 3,097,893 ordinary shares held by J.distrii Global Limited to King Inspiration Limited and City Connected Communities Pte. Ltd., respectively. On March 17, 2023, in connection with the Share Surrender, each of King Inspiration Limited and City Connected Communities Pte. Ltd. entered into a deed of partial release, releasing 77,606 and 554,329 ordinary shares from their respective equitable share mortgages. As a result, as of the date of this prospectus, 356,099 and 2,543,564 ordinary shares held J.distrii Global Limited remain pledged to King Inspiration Limited and City Connected Communities Pte. Ltd., respectively, under the equitable share mortgages. Copies of the share repurchase agreements, as amended, equitable share mortgages, and deeds of partial release are filed as exhibits to this registration statement on Form F-1.

AgiiPlus’ business has been and may continue to be adversely affected by the COVID-19 pandemic.

The COVID-19 pandemic has caused lockdowns, travel restrictions, and closures of businesses. The current COVID-19 pandemic has already adversely affected AgiiPlus’ business operations. The growth of the work solution industry in China has been interrupted by the lockdowns and restrictive policies adopted in response to the COVID-19 pandemic, especially in 2022. However, in December 2022, the Chinese government unveiled a series of new COVID-related policies to loosen its zero-COVID policy, and uplifted the existing prevention and control measures that were in place for the COVID-19 pandemic. On December 26, 2022, China’s National Health Commission (“NHC”) announced that the COVID-19 infections will not be subject to the prevention and control measures of a Class A infectious disease, which means that COVID-19 infections will no longer be included in the administration of quarantinable infectious diseases. Starting from January 8, 2023, among other changes, China will no longer conduct nucleic acid tests and centralized quarantine for all inbound travelers, and measures to control the number of international passenger flights will be lifted. Based on the experience of other countries, we expect that social and business activities in China will take three to six months to return to a pre-pandemic level. Based on these latest policies and developments, we expect AgiiPlus’ operational and financial performance to gradually improve and stabilize in second half of 2023.

The intermittent lockdowns and restrictive policies in 2022 caused by the COVID-19 pandemic have adversely affected AgiiPlus’ business operations. The occupancy rate of Distrii’s mature workspaces was 85% as of December 31, 2021, but subsequently dropped to 80% as of December 31, 2022, due to the increasing COVID-19 cases and stricter restrictive policies in China in the third quarter of 2022. The intermittent lockdowns and restrictive policies have not only negatively impacted the demand from customers in the short term, but also delayed the refurbishment process for new workspaces due to strict restrictions imposed by the PRC government. From the 4th quarter of 2021 to early December 2022, the timeline of refurbishing process of several AgiiPlus’ workspaces was delayed by approximately two months on average, which subsequently postponed the opening for several workspaces. This resulted in deviations of revenue in our projection as our sales activities were impacted due to the delay in completing certain projects. At

Nevertheless, there remain significant uncertainties surrounding COVID-19, including the existing and new variants of COVID-19, and its further development as a global pandemic. The extent to which it may continue to affect AgiiPlus’ results of operations will depend on future developments of the COVID-19 pandemic, which are highly uncertain and difficult to predict. There may be potential impacts on our results of operations if the pandemic and the resulting disruption were to continue extending over a prolonged period.

In addition, if the global spread of COVID-19 and deterioration cannot be contained, risks set forth in this prospectus may be exacerbated or accelerated at a heightened level.

A severe or prolonged downturn in the PRC or global economy could materially and adversely affect AgiiPlus’ business and AgiiPlus’ financial condition.

COVID-19 had a severe and negative impact on the Chinese and the global economy. Even before the outbreak of COVID-19, the global macroeconomic environment was facing challenges, including the end of quantitative easing by the U.S. Federal Reserve, the economic slowdown in the Eurozone since 2014, uncertainties over the impact of Brexit and the ongoing global trade disputes and tariffs. The growth of the Chinese economy has slowed down since 2012 compared to the previous decade and the trend may continue. According to the National Bureau of Statistics of China, China’s gross domestic product (GDP) growth was 2.3% in 2020, 8.1% in 2021. There is considerable uncertainty over the long-term effects of the monetary and fiscal policies adopted by the central banks and financial authorities of some of the world’s leading economies, including the United States and China. In addition, there is uncertainty about the future relationship between China and the United States with respect to trade policies, treaties, government relations and tariffs between the two countries. It is unclear whether these challenges and uncertainties will be contained or resolved and what effects they may have on the global political and economic conditions in the long term.

Economic conditions in China are sensitive to global economic conditions, changes in domestic economic and political policies and the expected or perceived overall economic growth rate in China. While the economy in China has grown significantly over the past decades, growth has been uneven, both geographically and among various sectors of the economy, and the rate of growth has been slowing in recent years. Although growth of China’s economy remained relatively stable, China’s economic growth may materially decline in the near future. Any severe or prolonged slowdown in the global or PRC economy may materially and adversely affect AgiiPlus’ business, results of operations and financial condition.

If AgiiPlus fails to implement and maintain an effective system of internal controls to remediate its material weaknesses over financial reporting, AgiiPlus may be unable to accurately report its results of operations, meet its reporting obligations or prevent fraud, and investor confidence and the market price of AgiiPlus’ Class A ordinary shares may be materially and adversely affected.

AgiiPlus has been a private company with limited accounting and financial reporting personnel and other resources with which AgiiPlus addresses its internal control over financial reporting. As defined in the standards established by the U.S. Public Company Accounting Oversight Board, a “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

In connection with the audits of its consolidated financial statements included in this prospectus, AgiiPlus and its independent registered public accounting firm identified the following material weaknesses in its internal control over financial reporting. AgiiPlus’ independent registered public accounting firm has not conducted an audit of its internal control over financial reporting. The material weaknesses that have been identified relate to (i) the lack of sufficient financial reporting and accounting personnel with appropriate knowledge of U.S. GAAP and SEC reporting and compliance requirements to design, implement and operate key controls over financial reporting process to address complex technical accounting issues and related disclosures in accordance with U.S. GAAP and financial reporting requirements set forth by the SEC and (ii) the lack of internal audit function to establish formal risk assessment process and internal control framework. Neither AgiiPlus nor its independent registered public accounting firm undertook a comprehensive assessment of its internal control under the Sarbanes-Oxley Act for purposes of identifying and reporting any weakness in its internal control over financial reporting. To remedy the identified material weaknesses, AgiiPlus has adopted and will adopt further measures to improve its internal control over financial reporting. AgiiPlus has implemented, and plans to continue to develop, a full set of U.S. GAAP accounting policies and financial reporting procedures as well as related internal control policies, including implementing a comprehensive accounting manual

to guide the day-to-day accounting operation and reporting work. AgiiPlus has recruited staffs with knowledge of U.S. GAAP and SEC regulations in its finance and accounting department. AgiiPlus has also supplemented and enhanced internal training and development programs for financial reporting personnel. Additionally, when entering into complex transactions, AgiiPlus will utilize a third party consultant for accounting services as additional resources. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Internal Control Over Financial Reporting.” However, AgiiPlus cannot assure you that these measures may fully address the material weaknesses and deficiencies in AgiiPlus’ internal control over financial reporting or that AgiiPlus may conclude that they have been fully remediated.

Upon its listing on Nasdaq, the Company will become subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act, or Section 404, will require that AgiiPlus includes a report from management on the effectiveness of its internal control over financial reporting in AgiiPlus’ annual report on Form 20-F beginning with its second annual report on Form 20-F after becoming a public company. In addition, once the Company ceases to be an “emerging growth company” as such term is defined in the JOBS Act, its independent registered public accounting firm must attest to and report on the effectiveness of AgiiPlus’ internal control over financial reporting. Moreover, even if AgiiPlus’ management concludes that AgiiPlus’ internal control over financial reporting is effective, AgiiPlus’ independent registered public accounting firm, after conducting its own independent testing, may issue an adverse opinion on the effectiveness of internal control over financial reporting if it is not satisfied with the Company’s internal controls or the level at which the Company’s controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from AgiiPlus. In addition, after the Company becomes a public company, AgiiPlus’ reporting obligations may place a significant strain on its management, operational and financial resources and systems for the foreseeable future. The Company may be unable to timely complete its evaluation testing and any required remediation.

During the course of documenting and testing AgiiPlus’ internal control procedures, in order to satisfy the requirements of Section 404, AgiiPlus may identify other weaknesses and deficiencies in AgiiPlus’ internal control over financial reporting. If the Company fails to maintain the adequacy of its internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, the Company may not be able to conclude on an ongoing basis that it has effective internal control over financial reporting in accordance with Section 404. Generally speaking, if the Company fails to achieve and maintain an effective internal control environment, it could result in material misstatements in the Company’s financial statements and could also impair the Company’s ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. As a result, the Company’s businesses, financial condition, results of operations and prospects, as well as the trading price of the Class A ordinary shares, may be materially and adversely affected. Additionally, ineffective internal control over financial reporting could expose AgiiPlus to increased risk of fraud or misuse of corporate assets and subject the Company to potential delisting from the stock exchange on which AgiiPlus lists, regulatory investigations and civil or criminal sanctions. AgiiPlus may also be required to restate its financial statements from prior periods.

AgiiPlus has limited insurance coverage for the operations of its subsidiaries.

The insurance industry in China is still at an early stage of development, and insurance companies in China currently offer limited business-related insurance products. Although AgiiPlus has purchased property all-risks insurance and public liability insurance through its subsidiaries, these insurances might not be able to cover all the risks AgiiPlus is subject to, and certain insurance policies of AgiiPlus have expired and have not been renewed. Any uninsured risks may result in substantial costs and the diversion of resources, which could adversely affect AgiiPlus’ results of operations and financial condition.

The Company will incur increased costs as a result of being a public company.

Upon its listing on Nasdaq, the Company will become a public company and expect to incur significant legal, accounting and other expenses. For example, as a result of becoming a public company, the Company will need to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures. Operating as a public company will make it more difficult and more expensive for it to obtain director and officer liability insurance, and the Company may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. In addition, the Company will incur additional costs associated with its public company reporting requirements. It may also be more difficult for AgiiPlus to find qualified persons to serve on its Board of Directors or as executive officers.

After the Company is no longer an “emerging growth company,” the Company may 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.

AgiiPlus’ Class A ordinary shares may be delisted and prohibited from being traded under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect its auditors. The delisting and the cessation of trading of AgiiPlus’ Class A ordinary shares, or the treat of their being delisted and prohibited from being traded, may materially and adversely affect the value of your investment. Additionally, any inability of the PCAOB to conduct inspections deprives our investors with the benefits of such inspections.

On April 21, 2020, SEC Chairman Jay Clayton and PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a joint statement highlighting the risks associated with investing in companies based in or have substantial operations in emerging markets including China. The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers in China and higher risks of fraud in emerging markets.

On May 18, 2020, Nasdaq filed three proposals with the SEC to (i) apply minimum offering size requirement for companies primarily operating in “Restrictive Market”, (ii) adopt a new requirement relating to the qualification of management or board of director for Restrictive Market companies, and (iii) apply additional and more stringent criteria to an applicant or listed company based on the qualifications of the company’s auditors.

On May 20, 2020, the Senate passed the Holding Foreign Companies Accountable Act requiring a foreign company to certify it’s not owned or manipulated by a foreign government if the PCAOB is unable to audit specified reports because the company uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect the company’s auditors for three consecutive years, the issuer’s securities are prohibited to trade on a national exchange.

The Holding Foreign Companies Accountable Act, was enacted on December 18, 2020. Pursuant to the Holding Foreign Companies Accountable Act, if the SEC determines that AgiiPlus has filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC must prohibit AgiiPlus’ Class A ordinary shares from being traded on a national securities exchange or in the over-the-counter trading market in the United States.

On March 24, 2021, the SEC announced that it had adopted interim final amendments to implement congressionally mandated submission and disclosure requirements of the Act. The interim final amendments will apply to registrants that the SEC identifies as having filed an annual report on Forms 10-K, 20-F, 40-F or N-CSR with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by an authority in that jurisdiction. The SEC will implement a process for identifying such a registrant and any such identified registrant will be required to submit documentation to the SEC establishing that it is not owned or controlled by a governmental entity in that foreign jurisdiction, and will also require disclosure in the registrant’s annual report regarding the audit arrangements of, and governmental influence on, such a registrant.

On June 22, 2021, the U.S. Senate passed a bill and on December 29, 2022, the Consolidated Appropriations Act was signed into law by President Biden, which contained, among other things, an identical provision to Accelerating Holding Foreign Companies Accountable Act and amended the Holding Foreign Companies Accountable Act by reducing the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two, thus reducing the time period before AgiiPlus’ Class A ordinary shares may be prohibited from trading or delisted.

On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the Holding Foreign Companies Accountable Act. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions.

On December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in China and in Hong Kong because of positions taken by PRC and Hong Kong authorities in those jurisdictions. The PCAOB has made such designations as mandated under the Holding Foreign Companies Accountable Act. Pursuant to each annual determination by the PCAOB, the SEC will, on an annual basis, identify issuers that have used non-inspected audit firms and thus are at risk of such suspensions in the future.

AgiiPlus’ financial statements contained elsewhere in this prospectus have been audited by MaloneBailey, LLP, an independent registered public accounting firm that is headquartered in the United States with offices in Beijing and Shenzhen, China. MaloneBailey, LLP is a firm registered with the PCAOB, and is required by the United States laws to undergo regular inspections by the PCAOB to assess its compliance with the laws of the United States and professional standards. MaloneBailey, LLP has been inspected by the PCAOB on a regular basis and is not among the PCAOB-registered public accounting firms headquartered in China and Hong Kong that are subject to PCAOB’s determination issued on December 16, 2021 of having been unable to inspect or investigate completely. However, according to Article 177 of the PRC Securities Law (last amended in December 2019), no overseas securities regulator is allowed to directly conduct investigations or evidence collection activities in China. 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. On August 26, 2022, the CSRC, the MOF, and the PCAOB signed the Protocol, governing inspections and investigations of audit firms based in China and Hong Kong. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB Board will consider the need to issue a new determination. In such event, the audit working papers of AgiiPlus’ financial statements may not be inspected or investigated completely by the PCAOB without the approval of the PRC authorities, since the audit work was carried out by MaloneBailey, LLP with the collaboration of their China-based offices. AgiiPlus’ Class A ordinary shares may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect auditors with a presence in China.

On June 4, 2020, former U.S. President Donald J. Trump issued a memorandum ordering the President’s Working Group on Financial Markets, or the PWG, to submit a report to the President within 60 days of the memorandum that includes recommendations for actions that can be taken by the executive branch and by the SEC or PCAOB on Chinese companies listed on U.S. stock exchanges and their audit firms, in an effort to protect investors in the U.S. On August 6, 2020, the PWG released a report recommending that the SEC take steps to implement the five recommendations outlined in the report. In particular, to address companies from non-cooperating jurisdictions that do not provide the PCAOB with sufficient access to fulfil its statutory mandate, including China, the PWG recommends enhanced listing standards on U.S. stock exchanges. This would require, as a condition to initial and continued exchange listing, PCAOB access to work papers of the principal audit firm for the audit of the listed company. Companies unable to satisfy this standard as a result of governmental restrictions on access to audit work papers and practices in non-cooperating jurisdictions may satisfy this standard by providing a co-audit from an audit firm with comparable resources and experience where the PCAOB determines it has sufficient access to audit work papers and practices to conduct an appropriate inspection of the co-audit firm. The report permits the new listing standards to provide for a transition period until January 1, 2022 for listed companies, but would apply immediately to new listings once the necessary rulemaking and/or standard-setting are effective. Additionally, on December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the Holding Foreign Companies Accountable Act. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions. If AgiiPlus fails to meet the new listing standards before the deadline specified under the report released by PWG, AgiiPlus’ securities could be delisted or prohibited from being traded “over-the-counter” earlier than would be required by the Holding Foreign Companies Accountable Act. If AgiiPlus’ Class A ordinary shares are unable to be listed on another securities exchange by then, such a delisting would substantially impair your ability to sell or purchase AgiiPlus’ Class A ordinary shares when you wish to do so, and the risk and uncertainty associated with a potential delisting would have a negative impact on the price of AgiiPlus’ Class A ordinary shares.

If the PCAOB was unable to conduct inspections and evaluate the audits and quality control procedures of AgiiPlus’ independent registered public accounting firm, AgiiPlus, its investors and potential investors will be deprived of the benefits of such PCAOB inspections and could lose confidence in AgiiPlus’ reported financial information and the quality of its financial statements. If AgiiPlus fails to meet the new listing standards before the deadline specified thereunder due to factors beyond its control, it could face possible de-listing from the Nasdaq Stock Market, deregistration from the SEC and/or other risks, which may materially and adversely affect, or effectively terminate, AgiiPlus’ Class A ordinary shares from trading in the United States.

•        the future development of the COVID-19 pandemic and its impact on our business and industry; and

•        assumptions underlying or related to any of the foregoing.

These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations and our actual results could be materially different from our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations are generally set forth in “Prospectus Summary — Summary of Risk Factors,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” “Regulation” and other sections in this prospectus. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. You should read thoroughly this prospectus and the documents that we refer to with the understanding that our actual future results may be materially different from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements.

This prospectus contains information derived from government and private publications. These publications include forward-looking statements, which are subject to risks, uncertainties and assumptions. Although we believe the data and information to be reliable, we have not independently verified the accuracy or completeness of the data and information contained in these publications. Statistical data in these publications also include projections based on a number of assumptions. The work solution industry may not grow at the rate projected by market data, or at all. Failure of these markets to grow at the projected rate may have a material and adverse effect on our business and the market price of the Class A ordinary shares. In addition, the rapidly evolving nature of the work solution industry results in significant uncertainties for any projections or estimates relating to the growth prospects or future condition of our market. Furthermore, if any one or more of the assumptions underlying the market data are later found to be incorrect, actual results may differ from the projections based on these assumptions. See “Risk Factors — Risk Factors Relating to AgiiPlus’ Business and Industry — Certain industry data and information in this prospectus were obtained from third-party sources and were not independently verified by AgiiPlus.” Therefore, you should not place undue reliance on these statements.

You should not rely upon forward-looking statements as predictions of future events. The forward-looking statements in this prospectus are made based on events and information as of the date of this prospectus. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this prospectus and the documents that we refer to in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results or performance may materially differ from what we expect.

USE OF PROCEEDS

We estimate that we will receive net proceeds from this offering of approximately US$21.08 million, or approximately US$24.35 million if the underwriter exercises its over-allotment option in full, based on the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus, after deducting underwriting discounts and estimated offering expenses payable by us.

A US$1.0 increase (decrease) in the assumed initial public offering price of US$5.25 per Class A ordinary share would increase (decrease) the net proceeds to us from this offering by US$4.16 million, or by US$4.79 million if the underwriter exercises its over-allotment option in full, assuming the number of Class A ordinary shares offered by us, as set forth on the front cover of this prospectus, remains the same and after deducting the estimated underwriting discounts and estimated expenses payable by us.

We plan to use the net proceeds of this offering as follows:

•        approximately 25% to 30%, or US$5.3 million to $6.3 million for enhancing our technology capability;

•        approximately 55% to 60%, or US$11.6 million to $12.6 million for business expansion, including organic growth of our geographic coverage, and mergers and acquisitions opportunities, although we have not identified any specific investments or acquisition opportunities at this time; and

•        approximately 10% to 20%, or US$2.1 million to $4.2 million for other operating purposes.

The amounts and timing of any expenditures will vary depending on the amount of cash generated by our operations, and the rate of growth, if any, of our business, and our plans and business conditions. The foregoing represents our intentions as of the date of this prospectus based upon our current plans and business conditions to use and allocate the net proceeds of this offering. However, our management will have significant flexibility and discretion in applying the net proceeds of this offering. Unforeseen events or changed business conditions may result in application of the proceeds of this offering in a manner other than as described in this prospectus.

As an offshore holding company, under PRC laws and regulations, we are only permitted to use the net proceeds of this offering to provide loans or make capital contributions to our PRC subsidiaries. Provided that we make the necessary registrations with government authorities and obtain the required governmental approvals, we may extend inter-company loans or make additional capital contributions to our PRC subsidiaries to fund their capital expenditures or working capital requirements.

Any capital contributions we make to our PRC subsidiaries shall be registered with the PRC State Administration for Market Regulation or its local counterparts, and filed with the MOFCOM or its local counterparts. We are then required to complete a foreign exchange registration change at qualified banks. There is no upper limit as to the registered capital of our PRC subsidiaries under PRC laws and regulations, and we may contribute to our PRC subsidiaries through capital contributions as long as the amount contributed stays within the capital registered.

Any loans to our PRC subsidiaries, which are foreign-invested enterprises, cannot exceed a statutory limit, and shall be filed with the SAFE or its local counterparts. Such statutory limit for our PRC subsidiaries is two times of the net assets of our PRC subsidiaries, and such standard may vary year by year in line with changes to China’s national macro-control policy.

We plan to contribute proceeds from this offering and any future financings to our PRC subsidiaries through capital contributions and intercompany loans.

We may not be able to make such registrations or obtain such approvals in a timely manner, or at all. See “Risk Factors — Risk Factors Relating to Doing Business in China — PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay us from using the proceeds of this public offering to make loans or additional capital contributions to AgiiPlus’ PRC subsidiaries, which could materially and adversely affect AgiiPlus’ liquidity and AgiiPlus’ ability to fund and expand AgiiPlus’ business.”

DIVIDEND POLICY

Our board of directors has complete discretion as to whether to distribute dividends. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors. In either case, all dividends are subject to certain restrictions under Cayman Islands law, namely that we may only pay dividends out of profits or share premium, and provided that in no circumstances may a dividend be paid if it would result in us being unable to pay our debts as they fall due in the ordinary course of business. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that our board of directors may deem relevant.

We do not have any plan to declare or pay any cash dividends on our Class A ordinary shares in the foreseeable future after this offering. We intend to retain most, if not all, of our available funds and future earnings to operate and expand our business.

We are an exempted company with limited liability incorporated in the Cayman Islands. We rely principally on dividends distributed by our PRC subsidiaries and payments from our operating entities for our cash requirements, including distribution of dividends to our shareholders. Dividends distributed by our PRC subsidiaries are subject to PRC taxes.

In addition, PRC regulations may restrict the ability of our PRC subsidiaries to pay dividends to us and only allow a PRC company to pay dividends out of its accumulated distributable after-tax profits as determined in accordance with its articles of association and the PRC accounting standards and regulations. See “Risk Factors — Risk Factors Relating to Doing Business in China — AgiiPlus may rely on dividends and other distributions on equity paid by AgiiPlus’ PRC subsidiaries to fund any cash and financing requirements AgiiPlus may have, and any limitation on the ability of AgiiPlus’ PRC subsidiaries to make payments to AgiiPlus could have a material and adverse effect on AgiiPlus’ ability to conduct its business.”

CAPITALIZATION

The following table sets forth our capitalization as of December 31, 2022 presented on:

•        on an actual basis, except to the extent it has been retroactively adjusted to give effect to (i) the Share Surrender effective on March 16, 2023, equivalent to a consolidation of our issued and outstanding share capital of two (2) shares into one (1);

•        on a pro forma basis to reflect (i) the automatic conversion of all of our issued and outstanding preferred shares into Class A ordinary shares on a one-for-one basis immediately upon the completion of this offering; (ii) the issuance and sale of 3,495,100 shares purchased by new investors for an aggregate consideration of $10,566,015, and we expect such shares to be delivered to the investors upon the closing of this offering; and (iii) our repurchase of preferred shares from King Inspiration Limited and City Connected Communities Pte. Ltd. by issuing RMB57 million (US$8.3 million) convertible promissory note; and

•        on a pro forma as adjusted basis to reflect (i) the automatic conversion of all of our issued and outstanding preferred shares into Class A ordinary shares on a one-for-one basis immediately upon the completion of this offering; (ii) the issuance and sale of the Class A ordinary shares by us in this offering at the assumed initial public offering price of $5.25 per ordinary share, which is the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus, after deducting the estimated discounts to the underwriter and the estimated offering expenses payable by us and assuming no exercise of the underwriter’s over-allotment option; (iii) the issuance and sale of 3,495,100 shares purchased by new investors for an aggregate consideration of $10,566,015, and we expect such shares to be delivered to the investors upon the closing of this offering; and (iv) our repurchase of preferred shares from King Inspiration Limited and City Connected Communities Pte. Ltd. by issuing RMB57 million (US$8.3 million) convertible promissory note.

You should read this table in conjunction with the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus:

____________

Source: Federal Reserve Statistical Release

(1)      The pro forma information discussed above is illustrative only, reflecting (i) the automatic conversion of all of our redeemable preferred shares into 23,365,376 Class A ordinary shares and conversion of ordinary shares into 14,524,927 Class B ordinary shares immediately prior to the completion of this offering, (ii) the 3,495,100 shares purchased by new investors for an

aggregate consideration of $10,566,015, which shares are expected to be delivered to the investors upon the closing of this offering; and (iii) the repurchase of 2,899,663 Series A+ convertible redeemable participating preferred shares by issuing RMB57 million (US$8.3 million) convertible promissory notes.

(2)      On top of the pro forma information, the pro forma adjusted information reflects the sale of 4,500,000 Class A ordinary shares in this offering at an assumed initial public offering price of $5.25 per share, and after deducting the estimated underwriting discounts and estimated offering expenses payable by us. The as adjusted information is illustrative only, and we will adjust this information based on the actual initial public offering price and other terms of this offering determined at pricing. Additional paid-in capital reflects the net proceeds we expect to receive, after deducting the underwriting discounts and estimated offering expenses payable by us. We estimate that such net proceeds will be approximately $21.08 million.

A $1.0 increase (decrease) in the assumed initial public offering price of $5.25 per Class A ordinary share would increase (decrease) each of additional paid-in capital, total shareholders’ equity and total capitalization by $4,162,500, assuming the number of Class A ordinary shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and estimated expenses payable by us.

DILUTION

If you invest in our Class A ordinary shares, your interest will be diluted for each Class A ordinary share you purchase to the extent of the difference between the initial public offering price per Class A ordinary share and our net tangible book value per ordinary share (Class A and Class B) after this offering. Dilution results from the fact that the initial public offering price per Class A ordinary share is substantially in excess of the net tangible book value per ordinary share attributable to the existing shareholders for our presently outstanding ordinary shares.

Our net tangible book value as of December 31, 2022, was $(163.5) million, or $(11.26) per ordinary share. Net tangible book value represents the amount of our total consolidated tangible assets, less the amount of our total consolidated liabilities, noncontrolling interests and mezzanine equity.

Our pro forma net tangible book value as of December 31, 2022 was $(104.2) million, or $(2.52) per ordinary share. Pro forma net tangible book value per share represents total tangible assets less total liabilities, noncontrolling interests and mezzanine equity, divided by the number of ordinary shares outstanding as of December 31, 2022, after giving effect of the 3,495,100 shares, anticipated to be issued to several individual and institutional investors upon the closing of this offering, for an aggregate consideration of $10,566,015, and the repurchase of preferred shares held by King Inspiration Limited an City Connected Communities Pte. Ltd. by issuing RMB57 million (US$8.3 million) convertible promissory note. Dilution is determined by subtracting the net tangible book value per ordinary share (as adjusted for the offering) from the initial public offering price per ordinary share and after deducting the estimated discounts to the underwriter and the estimated offering expenses payable by us.

Dilution is determined by subtracting the net tangible book value per ordinary share (as adjusted for the offering) from the initial public offering price per ordinary share and after deducting the estimated discounts to the underwriter and the estimated offering expenses payable by us.

After giving effect to our sale of 4,500,000 Class A ordinary shares offered in this offering based on the initial public offering price of $5.25 per Class A ordinary share, after deduction of the estimated discounts to the underwriter and the estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of December 31, 2022, would have been $(83.1) million, or $(1.81) per outstanding ordinary share. This represents an immediate increase in net tangible book value of $9.45 per Class A ordinary share to the existing shareholders, and an immediate dilution in net tangible book value of US$7.06 per Class A ordinary share to investors purchasing Class A ordinary shares in this offering. The as adjusted information discussed above is illustrative only.

If the underwriter exercises its over-allotment option in full, the pro forma as adjusted net tangible book value per Class A ordinary share after the offering would be US$(1.71), the increase in net tangible book value to existing shareholders would be US$3.3 million, and the immediate dilution in net tangible book value per Class A ordinary share to new investors in this offering would be US$6.96.

The following table summarizes, on a pro forma as adjusted basis as of December 31, 2022, the differences between existing shareholders and the new investors with respect to the number of ordinary shares purchased from us, the total consideration paid and the average price per ordinary share and per Class A ordinary share paid before deducting underwriting discounts and estimated offering expenses payable by us.

The as adjusted information discussed above is illustrative only. Our net tangible book value following the completion of this offering is subject to adjustment based on the actual initial public offering price of the Class A ordinary shares and other terms of this offering determined at pricing.

ENFORCEABILITY OF CIVIL LIABILITIES

Cayman Islands

We are incorporated under the laws of the Cayman Islands as an exempted company with limited liability. We are incorporated in the Cayman Islands because of certain benefits associated with being a Cayman Islands exempted company, such as:

•        political and economic stability;

•        an effective judicial system;

•        a favorable tax system;

•        the absence of exchange control or currency restrictions; and

•        the availability of professional and support services.

However, certain disadvantages accompany incorporation in the Cayman Islands. These disadvantages include, but are not limited to, the following:

•        the Cayman Islands has a less developed body of securities laws as compared to the United States and these securities laws provide significantly less protection to investors; and

•        Cayman Islands companies may not have standing to sue before the federal courts of the United States.

Our memorandum and articles of association do not contain provisions requiring that disputes, including those arising under the securities laws of the United States, between us, our officers, directors and shareholders, be arbitrated.

Substantially all of our operations are conducted outside the United States, and all of our assets are 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, to bring an original action in a court in the Cayman Islands or China to enforce liabilities against our directors and executive officers based on U.S. federal securities laws, or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States. It may also be difficult for you to enforce judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors.

AgiiPlus has appointed Puglisi & Associates as its agent upon whom process may be served in any action brought against it under the securities laws of the United States.

Maples and Calder (Hong Kong) LLP, AgiiPlus’ counsel as to Cayman Islands law, and Han Kun Law Offices, AgiiPlus’ counsel as to PRC law, have advised us, respectively, that there is uncertainty as to whether the courts of the Cayman Islands and China, respectively, would:

•        recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States; or

•        entertain original actions brought in each respective jurisdiction against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.

Maples and Calder (Hong Kong) LLP has informed AgiiPlus that it is uncertain whether the courts of the Cayman Islands will allow shareholders of our company to originate actions in the Cayman Islands based upon securities laws of the United States. In addition, there is uncertainty with regard to Cayman Islands law related to whether a judgment obtained from the U.S. courts under civil liability provisions of U.S. securities laws will be determined by the courts of the Cayman Islands as penal or punitive in nature. If such a determination is made, the courts of the Cayman Islands will not recognize or enforce the judgment against a Cayman Islands company, such as our company. As the courts of the Cayman Islands have yet to rule on making such a determination in relation to judgments obtained from U.S. courts under civil liability provisions of U.S. securities laws, it is uncertain whether such judgments would be

enforceable in the Cayman Islands. Maples and Calder (Hong Kong) LLP has further informed AgiiPlus that although there is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments), the courts of the Cayman Islands will, at common law, recognize and enforce a foreign monetary judgment of a foreign court of competent jurisdiction without any re-examination of the merits of the underlying dispute based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the liquidated sum for which such judgment has been given, provided such judgment (a) is given by a foreign court of competent jurisdiction, (b) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given, (c) is final, (d) is not in respect of taxes, a fine or a penalty, and (e) was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands. However, there is uncertainty with regard to Cayman Islands law on whether judgments of courts of the United States predicated upon the civil liability provisions of the securities laws of the United States or any State will be determined by the courts of the Cayman Islands. The Cayman Islands courts are unlikely to enforce a judgment obtained from the U.S. courts under civil liability provisions of the U.S. federal securities law if such judgment is determined by the courts of the Cayman Islands to give rise to obligations to make payments that are penal or punitive in nature. If such a determination is made, the courts of the Cayman Islands will not recognize or enforce the judgment against a Cayman Islands company, such as AgiiPlus. Because such a determination in relation to judgments obtained from U.S. courts under civil liability provisions of U.S. securities laws has not yet been made by a court of the Cayman Islands, it is uncertain whether such judgments would be enforceable in the Cayman Islands. A Cayman Islands court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.

PRC

As advised by Han Kun Law Offices, AgiiPlus’ PRC legal counsel, there is uncertainty as to whether the courts of the PRC would enforce judgments of United States courts or Cayman courts obtained against us or these persons predicated upon the civil liability provisions of the United States federal and state securities laws. Han Kun Law Offices have further advised that the recognition and enforcement of foreign judgments are provided for under PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on reciprocity between jurisdictions. China does not have any treaties or other form of reciprocity with the United States or the Cayman Islands that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, courts in the PRC will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC law or national sovereignty, security or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States or in the Cayman Islands.

CORPORATE HISTORY AND STRUCTURE

AgiiPlus commenced its operations in January 2016 through Shanghai Distrii Technology Development Co., Ltd., a limited liability company formed in the PRC. Through Shanghai Distrii and its subsidiaries, AgiiPlus mainly offers customers Distrii workspaces. AgiiPlus expanded its operations beyond Greater China to Singapore in May 2017 through Distrii Singapore Pte. Ltd, a private company limited by shares organized in Singapore. AgiiPlus formed Shanghai Zhengji Information Technology Co., Ltd., or Shanghai Zhengji, as a limited liability company in the PRC in November 2017, and Shanghai Quanban Zhizao Property Development Co., Ltd., or Shanghai Quanban, as a limited liability company in the PRC in March 2018. Through Shanghai Zhengji, Shanghai Quanban, and their subsidiaries, AgiiPlus mainly develops smart building management system and provides smart building management solutions to customers. AgiiPlus formed Tangtangjia Business Consulting as a limited liability company in the PRC in May 2021. Through Tangtangjia Business Consulting and its subsidiaries, AgiiPlus operates Tangtang.

AgiiPlus underwent a series of restructuring transactions, which primarily included:

•        In February 2021, AgiiPlus Inc., AgiiPlus’ current ultimate holding company, was incorporated under the laws of the Cayman Islands.

•        In February 2021, AgiiPlus Holdings Limited was incorporated in the British Virgin Islands as a BVI business company.

•        From March 2021 through April 2021, AgiiPlus Group Limited, AgiiTech Limited, and AgiiProp Limited were formed under the laws of Hong Kong.

•        In March 2021, Shanghai Tangtangjia Information Technology Co., Ltd., or Tangtangjia Information Technology, was formed in the PRC. Shanghai Zhiban is a wholly-owned subsidiary of Tangtangjia Information Technology.

•        In May 2021, Shanghai Tangtangjia Zhizao Property Development Co., Ltd., or Tangtangjia Zhizao, was formed in the PRC as a limited liability company. Shanghai Zhengji is a wholly-owned subsidiary of Tangtangjia Zhizao.

•        In May 2021, Shanghai Tangtangjia Business Consulting Co., Ltd., or Tangtangjia Business Consulting, was formed in the PRC as a wholly-owned subsidiary of AgiiTech Limited. In August 2021, Tangtangjia Business Consulting entered into a series of contractual arrangements, with Tangtangjia Information Technology, as well as its shareholders. Through Tangtangjia Business Consulting, AgiiPlus obtained control over Tangtangjia Information Technology and its subsidiaries.

From August 16, 2021 to May 20, 2022, AgiiPlus conducted a certain portion of its operations through the VIE and the VIE’s subsidiaries. On May 20, 2022, Tangtangjia Business Consulting, Tangtangjia Information Technology, and the shareholders of Tangtangjia Information Technology terminated the VIE arrangements. As a result of this transaction, AgiiPlus no longer operates under a VIE structure and the financial results of the VIE and Shanghai Zhiban are no longer consolidated into AgiiPlus’ consolidated financial statements.

The use of the VIE structure was to comply with applicable PRC laws and regulations that prohibit or restrict foreign investment of companies involved in internet content provider services, including value-added telecommunications services in China. AgiiPlus unwound the VIE structure in order to simplify its corporate structure and be better prepared for its listing in the U.S. During the period when the VIE arrangements were effective, Shanghai Zhiban, a subsidiary of the VIE, held the Internet Content Provider License for the Maxoffice website and maintained the website, whereas AgiiPlus, through its subsidiaries, provided office leasing and enterprise services under the brand “Tangtang” through the Maxoffice website. After the unwinding of AgiiPlus’ VIE arrangements, Shanghai Zhiban continues to maintain the Maxoffice website and hold its Internet Content Provider License.

On May 20, 2022, Shanghai Huiying entered into the Business Cooperation Agreement with Shanghai Zhiban, pursuant to which Shanghai Zhiban agreed to offer website operations and maintenance services for the Maxoffice website to Shanghai Huiying as a third-party service provider, and authorize Shanghai Huiying to advertise its services under Tangtang through publishing posts on the Maxoffice website, in consideration for which Shanghai Huiying agreed to pay Shanghai Zhiban services fees actually incurred by Shanghai Zhiban on a monthly basis. Shanghai Huiying receives information about users and other website information in Shanghai Zhiban’s operations, including

the operations of the Maxoffice website, and such information is shared with AgiiPlus and used in the operations of AgiiPlus. From June 2022 to December 2022, the monthly service fees paid by Shanghai Huiying to Shanghai Zhiban was approximately RMB300,000 (US$43,496), and AgiiPlus expects the monthly service fees to remain relatively stable for the foreseeable future. The initial term of the Business Cooperation Agreement lasts for two years, and the agreement shall be automatically renewed for additional one-year terms unless timely objected by either party within five days prior to the expiration of the agreement. Under the brand “Tangtang,” AgiiPlus’ subsidiaries offer flexible workspaces leasing and enterprise services through digital platforms, including the Maxoffice website.

The business operations of AgiiPlus’ subsidiaries comprise of three main components, (i) workspace leasing services and ancillary enterprise services under the brand “Distrii,” (ii) space design, construction and decoration solutions under the brand “Spacii,” and (iii) brokerage and enterprise services under the brand “Tangtang.” The Business Cooperation Agreement and the Maxoffice website relate to the business operations of AgiiPlus’ subsidiaries under the brand “Tangtang.” For the years ended December 31, 2019, 2020, 2021 and 2022, business operations under the brand “Tangtang” generated approximately 0.57%, 2.07%, 6.01% and 5.06% of AgiiPlus’ net revenue, respectively. As such, AgiiPlus believes that the vast majority of its operations could be conducted without the Business Cooperation Agreement and it is not materially dependent upon information about users and other website information in Shanghai Zhiban’s and Maxoffice’s operations. Pursuant to the terms of the Business Cooperation Agreement, AgiiPlus may terminate the Business Cooperation Agreement upon notice to Shanghai Zhiban and does not need consent from either Shanghai Zhiban or Maxoffice if AgiiPlus seeks to transition to another third-party website services provider.

After AgiiPlus unwound the VIE corporate structure on May 20, 2022, the financial results of the VIE and Shanghai Zhiban are no longer consolidated into AgiiPlus’ consolidated financial statements. During the fiscal years ended December 31, 2019, 2020, 2021 and 2022, the VIE and Shanghai Zhiban generated approximately 0%, 0%, 0.67%, and 0% of AgiiPlus’ net revenue, respectively. As of the date of this prospectus, none of our employees or our subsidiaries’ employees are also employees of the VIE or Shanghai Zhiban, including Mr. Yong Ni.

As advised by our PRC counsel Han Kun Law Offices, as of the date of this prospectus, the operations of AgiiPlus’s PRC subsidiaries are not subject to the foreign investment restrictions or prohibitions set forth in the “negative list” currently issued by the State Council and foreign investors are allowed to hold 100% equity interests of AgiiPlus’ PRC subsidiaries. Therefore, we believe that as of the date of this prospectus, the operations of AgiiPlus’ PRC subsidiaries are not restricted or limited by PRC laws and regulations for foreign investment. While the current corporate structure is not a VIE structure and AgiiPlus has no intention of establishing any VIEs in the PRC in the future, if in the future the PRC laws and regulations were to change, and the PRC regulatory authorities were to disallow the VIE structure retroactively, it may result in an adverse change in our operations, and AgiiPlus’ Class A ordinary shares may decline significantly in value. For details, see “Risk Factors — Risk Factors Relating to Doing Business in China — Substantial uncertainties exist with respect to the interpretation and implementation of newly enacted PRC Foreign Investment Law and its Implementation Rules and how they may impact the viability of AgiiPlus’ current corporate structure, corporate governance, and operations.” in this prospectus.

AgiiPlus was regarded as the primary beneficiary of Tangtangjia Information Technology and its subsidiaries during the period when the VIE arrangements were effective. AgiiPlus treated them as its consolidated affiliated entities under U.S. GAAP, and has consolidated the financial results of these entities in its consolidated financial statements in accordance with U.S. GAAP. The VIE and its subsidiaries generated approximately 0.57%, 2.07%, 6.01% and 0% of AgiiPlus’ net revenue for the fiscal years ended December 31, 2019, 2020, 2021 and 2022, respectively. Approximately 0.14%, 0.29%, 0.31% and 0% of AgiiPlus’ assets were held by AgiiPlus’ VIE and the VIE’s subsidiaries for the fiscal years ended December 31, 2019, 2020, 2021 and 2022, respectively. After the unwinding of the VIE structure, assets held by the VIE and Shanghai Zhiban are no longer consolidated in AgiiPlus’ financial statements.

Corporate Structure

The following chart shows AgiiPlus’ corporate structure as of the date of this prospectus, including its principal subsidiaries as of the date of this prospectus.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of AgiiPlus’ financial condition and results of operations in conjunction with AgiiPlus’ consolidated financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. See “Disclosure Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks, and assumptions associated with these statements. AgiiPlus’ actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this prospectus.

Overview

Through its subsidiaries, AgiiPlus is, according to the Frost & Sullivan Report, one of the fastest-growing work solutions providers with a one-stop solution capability in China and Singapore. By leveraging its proprietary technologies, AgiiPlus, through its subsidiaries, offers transformative integrated working solutions to their customers, including brokerage and enterprise services, customizable workspace renovations with smart building solutions, and high-quality flexible workspaces with plug-in software and on-demand services.

AgiiPlus has created an integrated platform connecting onsite workspaces and digital services through technology. Through its subsidiaries, AgiiPlus offers office leasing and enterprise services under the brand “Tangtang,” and through its subsidiaries, AgiiPlus maintains the Distrii app, the official app for AgiiPlus’ Distrii workspace members, offering members a seamless experience beyond physical spaces and provided them with easy access to enterprise services offered by AgiiPlus’ subsidiaries. As of December 31, 2022, through its subsidiaries, AgiiPlus had 40,634 enterprise customers and 405,261 digitally registered members, and maintained a network of 65 Distrii workspaces that covered seven different cities, with approximately 44,436 workstations in total.

In addition, AgiiPlus’ asset-light model offers design, build, managing and operating services to landlords who bear the costs to build and launch new spaces. The asset-light model allows AgiiPlus’ subsidiaries to expand and scale up cost-efficiently, and allows landlords to turn their spaces into revenue-generating properties backed by professional services provided by AgiiPlus’ subsidiaries and AgiiPlus’ brand image. As of December 31, 2022, through its subsidiaries, AgiiPlus had six workspaces under the asset-light model, with managed area of about 15,065 square meters (approximately 162,000 square feet) and approximately 2,868 workstations available for members.

In addition to its Distrii workspaces and related enterprise services, through its subsidiaries, AgiiPlus also provides a full suite of work solutions including renovation and smart building technology to a wider group of customers. For instance, through its Spacii team, AgiiPlus offers landlords one-stop solutions for office design, build and renovation projects. Furthermore, through its subsidiaries, AgiiPlus developed its proprietary smart building management system adopting cutting-edge technologies including artificial intelligence, Internet of Things and cloud technology, featuring face recognition, QR code scanning, visitor registration and authorization, and smart elevators, which help enhance the efficiency and security of a workspace. Through its subsidiaries, AgiiPlus also offers Project Manager, a type of real estate project consulting services including space design, market research, and construction, to real estate investors, which services include space design, market research, and construction, and Building Manager space maintenance services to landlords.

Key Operating Data

AgiiPlus regularly monitors a number of operating metrics in order to measure its current performance and project its future performance. These metrics aid AgiiPlus in developing and refining its growth strategies and making strategic decisions.

____________

Notes:

(1)      The cities are Shanghai, Beijing, Nanjing, Suzhou, Jinan and Xiong’an in China, and Singapore.

(2)      Spaces on different floors of the same building count as one workspace for the purpose of the numbers presented here, unless such spaces are leased from different landlords or operated under different contracts/sub-brands.

(3)      Distrii workspaces in the pre-opening stage represent spaces with leases entered into with landlords but not yet available to customers for leasing.

(4)      Represents the total number of workspaces in operation and workspaces in the pre-opening stage.

(5)      Approximate number subject to rounding adjustments.

(6)      Mature workspaces refer to workspaces that, as of the respective dates, had opened for more than one year.

Key Factors Affecting AgiiPlus’ Results of Operations

Through its subsidiaries, AgiiPlus operates in China’s flexible workspace industry and work solution industry, and its results of operations and financial condition are influenced by the macroeconomic factors affecting these industries, such as China’s economic growth, the impact of the COVID-19 pandemic on the economy in China or worldwide, the emergence of China’s new economy and internet companies under favorable policies encouraging entrepreneurship and innovation, and urbanization of the workforce.

AgiiPlus’ financial condition and results of operations are also affected by a number of emerging market trends, such as companies’ rising needs for cost-efficient and flexible office space solutions and one-stop services for both companies and employees, and new demand for smart office systems and working environment. In addition, as AgiiPlus has historically generated, and expects to continue to generate, a portion of its net revenue from providing renovation & smart building technology, its results of operations are also affected by the general factors affecting landlord or property owners and their capital expenditure budgets.

AgiiPlus’ results of operations and financial condition are also subject to changes in the regulatory regime governing China’s flexible workspace industry and work solution industry, renovation & smart building technology, and brokerage & enterprise service provided by AgiiPlus’ subsidiaries. The PRC government regulates various aspects of the business and operations of AgiiPlus’ subsidiaries, such as leasing, design and build and the operation of office spaces and other service. See “Risk Factors — Risk Factors Relating to Doing Business in China — Regulation and censorship of information disseminated over the internet in China may adversely affect AgiiPlus’ business and reputation and subject AgiiPlus to liability for information displayed on AgiiPlus’ website.”

Additionally, AgiiPlus believes that its results of operations and financial condition are also affected by a number of company-specific factors, including the factors discussed below.

AgiiPlus’ Ability to refine its Distrii Workspace Network

AgiiPlus intends to pursue the following strategies to further grow its business:

•        Expand business operations across region and strengthen its Distrii workspace network.

•        Further develop technology and digital platforms to enhance operational efficiency.

•        Grow enterprise services to generate multiple revenue streams.

•        Expand business scale through mergers and acquisitions opportunities.

AgiiPlus believes that all of the above strategies are important for its business growth. If AgiiPlus were not able to adopt any of the above measures in an effective manner as it operates due to reasons including the COVID-19 pandemic, it’s growth rates, business operations, financial position and results of operations may be negatively and adversely affected.

Impact of the COVID-19 Pandemic

The growth of the work solution industry in China has been interrupted by the lockdowns and restrictive policies adopted in response to the COVID-19 pandemic, especially in 2022. However, in December 2022, the Chinese government unveiled a series of new COVID-related policies to loosen its zero-COVID policy, and uplifted the existing prevention and control measures that were in place for the COVID-19 pandemic. On December 26, 2022, China’s National Health Commission (“NHC”) announced that the COVID-19 infections will not be subject to the prevention and control measures of a Class A infectious disease, which means that COVID-19 infections will no longer be included in the administration of quarantinable infectious diseases. Starting from January 8, 2023, among other changes, China will no longer conduct nucleic acid tests and centralized quarantine for all inbound travelers, and measures to control the number of international passenger flights will be lifted. Based on the experience of other countries, we expect that social and business activities in China will take three to six months to return to a pre-pandemic level. Based on these latest policies and developments, we expect AgiiPlus’ operational and financial performance to gradually improve and stabilize in second half of 2023.

The intermittent lockdowns and restrictive policies in 2022 caused by the COVID-19 pandemic have adversely affected AgiiPlus’ business operations. The occupancy rate of Distrii’s mature workspaces was 87% as of December 31, 2020, and 85% as of December 31, 2021, and further to 80% as of December 31, 2022, due to the increasing COVID-19 cases and stricter restrictive policies in China in the third quarter of 2022. The intermittent lockdowns and restrictive policies have not only negatively impacted the demand from customers in the short term, but also delayed the refurbishment process for new workspaces due to strict restrictions imposed by the PRC government. From the 4th quarter of 2021 to early December 2022, the timeline of refurbishing process of several AgiiPlus’ workspaces was delayed by approximately two months on average, which subsequently postponed the opening for several workspaces. This resulted in deviations of revenue in our projection as our sales activities were impacted due to the delay in completing certain projects. At the same time, the time it takes us to lease new workspaces to customers becomes longer on average due to a softer customer demand caused by the COVID-19 restrictions over businesses and the uncertain economic outlook. Services industries, including education, tourism, sports and entertainment, are among the hardest-hit, facing significant business pressure and uncertainty. Some of AgiiPlus’ customers are among these industries, and therefore AgiiPlus’ business operations may indirectly be impacted by the uncertainties faced by customers in these industries.

The highly contagious Omicron variant had led to a citywide lockdown in Shanghai from the end of March 2022 to the end of May 2022, which significantly affected AgiiPlus’ operations. As a result of the citywide lockdown, AgiiPlus temporarily closed down all its offices and workspaces in Shanghai during that period. Although all the employees were only able to work remotely from home during the lockdown period, we experienced a decrease of overall productivity, especially in sales activities. 45 Distrii workspaces (out of a total of 61) are in Shanghai, and thus the Shanghai lockdown resulted in materially negative impact on AgiiPlus’ business operations. The occupancy rate for mature Distrii workspaces decreased from 85% as of December 31, 2021 to 80% as of December 31, 2022. AgiiPlus’ customers also experienced negative impact on their own business because of the citywide lockdown. Some of the customers were forced to terminate their leases prematurely to cut down the costs. Immediately after the lockdown was lifted on June 1, 2022, 266 workstations were terminated prematurely during that month, representing about 1.6% of the total number of leased workstations under Distrii’s operation in Shanghai. The revenue from workspaces declined by approximately RMB520,000 in June 2022 as a result of such early terminations, representing approximately 1.9% of the total monthly revenue from Distrii workspaces in Shanghai. Furthermore, in order to cut their own operational costs, some customers chose to lay off employees and move into smaller spaces. Some customers delayed their business expansion plans and withheld the expansion or office relocation plans.

To address these challenges and uncertainties, AgiiPlus has adopted active measures to mitigate the negative impact on its business operations and financial condition. Cost saving is an important measure to sustain its operations. AgiiPlus reduced its headcount by approximately 18% between April 30, 2022 and September 30, 2022, in order to reduce fixed operating costs. Despite this headcount reduction, the number of key working team members and management staff remained stable to ensure normal daily operations. If our overall business activities recover in 2023, AgiiPlus will consider hiring new employees to support future business expansion. On the revenue side, AgiiPlus strategically focused on sales and occupancy rates. For existing customers, AgiiPlus offered discounted rates to encourage customers to renew their leases as well as purchase additional enterprise services. The discounts and attractive offers effectively helped stabilize the operations when the lockdown was lifted in June 2022, with an approximate 74% lease renewal rate for Distrii workspaces in Shanghai in June 2022. For new customers, AgiiPlus enhanced their marketing activities through multiple channels, increased commission rates to brokers, and offered attractive rates and more flexible leasing terms to bring in new customers. A tenant referral program was launched as well to offer incentives to existing customers who introduced friends and contacts to purchase AgiiPlus’ products and services. The pandemic also made it harder to collect timely rents from both existing and new customers. AgiiPlus offered special discounts to customers willing to pay six months’ to one year’s rent upfront, which obtained the early rental collections and support operating cash flow. By implementing the above measures, AgiiPlus managed to get occupancy of mature Distrii workspaces at 80% as of December 31, 2022, still representing a 5% drop from 85% as of December 31, 2021. AgiiPlus’ total revenue increased by 10.2%, from RMB459.2 million in the year of 2021 to RMB506.2 million (US$73.4 million) in the year of 2022. Although the lockdown has delayed project completion, AgiiPlus managed to complete the refurbishment of four new Distrii workspaces during the year of 2022. The total number of Distrii workspaces increased from 61 as of December 31, 2021 to 65 as of December 31, 2022.

However, the COVID-19 pandemic further deteriorated in China in the 3rd quarter of 2022, with increasing infection cases being reported across many cities in China. The Chinese government imposed more restrictions and tightened controls over travels and business activities, which added further pressure and uncertainty on AgiiPlus’ overall business. To survive the post-lockdown in the short term, AgiiPlus cut costs by delaying the opening of new workspaces and putting new investment on hold. In December 2022, the uncertainty and risk associated with China’s COVID-19 policies and restrictions have been significantly mitigated. The Chinese government unveiled a series of new COVID-related policies to loosen its zero-COVID policy, uplifted the COVID prevention and control measures and provided a clear timetable to re-open the border. Considering the recent development and COVID policy adopted in December 2022, AgiiPlus expects the Chinese economy to recover in second half of 2023, which we expect will benefit businesses in the work solution industry in general.

Firstly, the border reopening is expected to stimulate international business activities, which may directly benefit the work solution industry in Tier-1 cities in China, such as Shanghai and Beijing, as plenty of enterprises in such cities historically have a tighter bond with foreign businesses and overseas presence.

Secondly, business confidence will be improved with more certainty in the future, and more businesses will be willing to lease new offices and hire more staff for future business expansion.

Although the economic outlook in 2023 seems more certain, AgiiPlus will adopt prudent business strategies to mitigate market volatility in the short term. AgiiPlus will continue to closely monitor further development of post-COVID policies, the market demand for flexible workspaces, and make timely adjustment on the future business plans.

AgiiPlus’ Ability to Achieve Higher Management and Operating Efficiency

The management team of AgiiPlus has a profound understanding and rich experience in the development and operation of office buildings, business parks and commercial real estate. Under the leadership of its management team, AgiiPlus has an experienced team of space operations and community managers, many of whom have prior work experience and industry background in commercial restate estate, hospitality management, aviation services and other service industries. Through its subsidiaries, AgiiPlus offers training to its space operations and community managers on various aspects of space operations, including reception, conducting office tour, lease negotiation, facilities and amenities maintenance, and other services.

To run its spaces more efficiently, AgiiPlus’ IT team developed its proprietary intelligent operations management system, or BSS system. See “Business — Technology — BSS” for details. The BSS system allows space operations and community managers to monitor and manage the Distrii workspaces through this digital platform, communicate with members through Distrii app, process members’ service requests, and perform other functions. AgiiPlus achieves high operating efficiency as a result of its management capabilities and proprietary BSS.

AgiiPlus expects its costs and expenses to increase in absolute amount as it expands its business and to decrease as a percentage of its net revenue as it continues to improve operational efficiency, achieve economies of scale and enhance its brand recognition.

Growth in AgiiPlus’ Client Base and Customer Retention

The specific needs of customers for their workspace may differ based on a variety of factors, including the scale and size of a customer, its stage of development, or the industry it belongs to. Through its subsidiaries, AgiiPlus specifically designs its comprehensive flexible workspace solutions to empower and accommodate customers with different needs. For instance, through its subsidiaries, AgiiPlus offers workstations, independent studios, standard offices, fully furnished workspace, and customizable workspace to help ensure that customers can find the most suitable flexible workspace solutions from its spaces.

Through its subsidiaries, AgiiPlus is also committed to continue diversifying its offerings of enterprise services and other value-added services to its customers through cooperating with more business partners and third-party service providers to bring even more value to its customers.

Through customizable and smart office design, transformation and renovation services offered by Spacii, customers can enjoy workspaces with comfortable work environments and the application of smart technology, which greatly improved customers’ day-to-day experience. In addition, through operating services offered by AgiiPlus’ subsidiaries, the occupancy rate and rental price of the property being transformed can both be significantly increased. With the help of big data, Internet of Things, artificial intelligence and cutting-edge technologies, through its subsidiaries, AgiiPlus is able to manage properties with lower material loss and labor costs as compared to the traditional management model, and increase management efficiency and profitability of a property.

AgiiPlus believes that as it continues to diversify its service offerings and develop workspace solutions through its subsidiaries to meet the needs and preferences of its customers, its brand recognition and image will continue to improve. AgiiPlus believes that it is well-positioned to grow and further strengthen its market position as the flexible workspace industry in China and Singapore continues to grow.

Key Components of Results of Operations

AgiiPlus has one operating segment with three revenue streams including (i) workspace leasing & operation revenue, (ii) renovation & smart building technology revenue, and (iii) brokerage & enterprise service revenue. An operating segment is defined as a component of an enterprise engaging in business activities for which separate financial information is available and is regularly evaluated by AgiiPlus chief operating decision makers in deciding how to allocate resources and assess performance. See AgiiPlus consolidated financial statements included elsewhere in this prospectus for additional information regarding its reportable segment.

Revenue

The following table sets forth a breakdown of AgiiPlus’ revenue, in absolute amounts and as percentages of total revenue, for the periods indicated.

Workspace leasing & operation revenue.    AgiiPlus generates the majority of its revenue from providing various flexible workspace solutions to its customers from whom it collects monthly office workstation rental fees. AgiiPlus’ workspace leasing & operation revenue primarily includes fees generated through its flexible workspaces under its direct operating model.

Renovation & smart building technology revenue.    Renovation & smart building technology revenue is mainly generated from the design, construction and renovation of customer’s properties.

Brokerage & enterprise service revenue.    Brokerage & enterprise service revenue primarily consists of (1) brokerage services revenue, (2) workspace management revenue, and (3) other service revenue. AgiiPlus recognizes brokerage services revenue at a point in time when the service is provided. Workspace management revenue is derived from managing workspaces owned by other property owners and recognized straight-line over the contract term. AgiiPlus also generates revenue through providing other services to its customers, including, but not limited to, extra conference room and printer usage and providing beverages. Revenue from other services is recognized based on actual usage when the related performance obligation is satisfied.

Cost of revenue

The following table sets forth a breakdown of AgiiPlus’ cost of revenue, in absolute amounts and as percentages of total cost of revenue, for the periods indicated.

Workspace leasing & operation cost.    The following table sets forth a breakdown of the cost for workspace leasing and operations, in absolute amounts and as percentage of total costs for workspace leasing and operations, for periods indicated.

Workspace leasing & operation cost.    Workspace leasing & operation cost primarily consists of (i) lease expenses, (ii) depreciation and amortization, (iii) employee compensation and benefits, and (iv) other workspace leasing & operation costs, such as utilities, maintenance, daily cleaning, insurance costs, office expenses, and consumables.

Renovation & smart building technology cost.    Renovation & smart building technology cost primarily consists of costs associated with the purchase of construction related services, hardware, and employee compensation and benefits.

Brokerage & enterprise service cost.    Brokerage & enterprise service cost primarily consists of costs in relation to brokerage services, enterprise services, catering services, and other services.

Pre-opening expense

Pre-opening expense is expensed as incurred and consist of expenses incurred before a workspace opens for operations. The primary component of pre-opening expense is lease expense.

Selling expense

Selling expense consists primarily of (i) commission expenses, and (ii) compensation for AgiiPlus’ sales and marketing personnel.

General and administrative expense

General and administrative expense consists primarily of (i) compensation for AgiiPlus’ management and administrative personnel, (ii) expenses in connection with AgiiPlus’ operation supporting functions such as legal, finance and human resources, (iii) expenses related to public offering and other administrative expenses.

Taxation

Cayman Islands

AgiiPlus Inc. and some of its subsidiaries are incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, these companies are tax-exempted companies and are not subject to income tax.

British Virgin Islands

AgiiPlus’ subsidiary, AgiiPlus Holdings Limited, is a tax-exempted company incorporated in the BVI and is not subject to income tax.

Hong Kong

AgiiPlus’ subsidiaries incorporated in Hong Kong are subject to progressive income tax, up to 16.5%, on the taxable income generated from operations in Hong Kong.

Singapore

AgiiPlus’ subsidiary, Distrii Singapore Pte. Ltd., is incorporated in Singapore and is subject to Singapore corporate income tax at the rate of 17%.

PRC

Effective from January 1, 2008, the new Enterprise Income Tax Law, or the New EIT Law, generalized the adoption of a unified tax rate of 25% for most enterprises with the following exceptions.

Shanghai Zhengji Information Technology Co., Ltd., a subsidiary of AgiiPlus, is certified as a High and New Technologies Enterprise, and a preferential rate of 15% is applied for three continuous years since 2019.

The New EIT Law includes a provision specifying that legal entities organized outside of the PRC will be considered residents for Chinese income tax purposes if the place of effective management or control is within the PRC. The implementation rules to the New EIT Law provide that non-resident legal entities will be considered PRC residents if substantial and overall management and control over the manufacturing and business operations, personnel, accounting, and properties occurs within the PRC.

Despite the present uncertainties resulting from the limited PRC tax guidance on the issue, AgiiPlus does not believe that the legal entities organized outside of the PRC within AgiiPlus group of companies should be treated as residents for EIT law purposes. If the PRC tax authorities subsequently determine that AgiiPlus and its subsidiaries registered outside the PRC should be deemed a resident enterprise, AgiiPlus and its subsidiaries registered outside the PRC will be subject to the PRC income tax at a rate of 25%. See “Risk Factors — Risk Factors Relating to Doing Business in China — If AgiiPlus is classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable tax consequences to AgiiPlus and its non-PRC shareholders.

The EIT Law also imposes a withholding income tax of 10% on dividends distributed by a Foreign Invested Enterprise (“FIE”) to its immediate holding company outside of China, if such immediate holding company is considered as a non-resident enterprise without any establishment or place within China or if the received dividends have no connection with the establishment or place of such immediate holding company within China, unless such immediate holding company’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement. The Cayman Islands, where AgiiPlus incorporated, does not have such tax treaty with China. 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 FIE; or 10%, if the investor holds less than 25% in the FIE.

Critical Accounting Policies, Judgments and Estimates

AgiiPlus prepares its financial statements in conformity with U.S. GAAP, which requires it to make judgments, estimates and assumptions. AgiiPlus continually evaluates these estimates and assumptions based on the most recently available information, its own historical experience and various other assumptions that AgiiPlus believes 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 AgiiPlus’ expectations as a result of changes in its estimates.

For a description of all our significant accounting policies, see Note 2 to our annual audited consolidated financial statements in this prospectus.

Results of Operations

The following table summarizes AgiiPlus’ consolidated results of operations both in absolute amounts and as percentages of its total revenue for the periods presented. This information should be read together with AgiiPlus’ consolidated financial statements and related notes included elsewhere in this prospectus. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.

____________

*        After giving effect to the Share Subdivision and Share Surrender effected respectively on Oct 28 2022 and Mar 16 2023.

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

AgiiPlus’ revenue increased by 10.2% from RMB459.2 million in, 2021 to RMB506.2 million (US$73.4 million) in 2022.

Workspace leasing & operation revenue

Workspace leasing & operation revenue increased by 15.2% from RMB374.4 million in 2021 to RMB431.1 million (US$62.5 million) in 2022. The impact of the COVID-19 pandemic on the flexible workspace industry was first felt since the middle of 2020 and AgiiPlus adopted measures to adapt to the changing macro-economic and industrial environment by continuously expanding workspace sites, especially seeking new workspaces with high growth potentiality. As of December 31, 2022, AgiiPlus had 53 Distrii workspaces in operation under the direct operating model and had 6 Distrii workspaces in operation under the asset-light model, representing an increase of 20.5% and a decrease of 25.0%, from 44 under the direct operating model and 8 under the asset-light model as of December 31, 2021, respectively. As of December 31, 2022, AgiiPlus had 223,137 m2 in managed area of Distrii workspaces in

operation under the direct operating model and had 15,065 m2 in managed area of Distrii workspaces in operation under the asset-light model, representing an increase of 12.1% and a decrease of 34.2% from 199,119 m2 under the direct operating model and 22,900 m2 under asset light model as of December 31, 2021, respectively.

Renovation & smart building technology revenue

Renovation & smart building technology revenue decreased by 26.8% from RMB36.3 million in 2021 to RMB26.5 million (US$3.8 million) in 2022. In addition to workspaces under the direct operating model, AgiiPlus also provided renovation & smart building technology service to other buildings and landlords. The decrease is mainly due to the city-wide lockdown in Shanghai from March 2022 to May 2022 and a stricter customer selection standard which led to a decreasing number of projects in 2022.

Brokerage & enterprise service revenue

Brokerage & enterprise service revenue increased by 0.1% from RMB48.5 million in 2021 to RMB48.6 million (US$7.0 million) in 2022. Revenue from brokerage service decreased from RMB14.9  million in 2021 to RMB9.2 million (US$1.3million) in 2022. Revenue from enterprise services increased from RMB33.6 million in 2021 to RMB39.4 million (US$5.7 million) in 2022. AgiiPlus has continuously made efforts to improve customer experience However, due to the city-wide lockdown in Shanghai from March 2022 to May 2022, the revenue did not increase as AgiiPlus originally expected.

Cost of revenue

AgiiPlus’ cost of revenue increased by 5.2% from RMB526.8 million in 2021 to RMB554.0 million (US$80.3 million) in 2022.

Workspace leasing & operation cost

Workspace leasing & operation cost increased by 8.1% from RMB468.4 million in 2021 to RMB506.5 million (US$73.4 million) in 2022, mainly due to the increase of leasing expense and property management fees. There were 53 workspaces under the direct operating model under operation as of December 31, 2022 as compared to 44 as of December 31, 2021. The increase was due to the increase in the number of new workspaces, and partially offset by early termination gains from some workspaces.

Renovation & smart building technology cost

Renovation & smart building technology cost decreased by 33.6% from RMB31.3 million in 2021 to RMB20.8 million (US$3.0 million) in 2022. The decrease is in line with the decreasing of revenue. Management elected to take projects with higher margin, therefore cost decreased more than revenue in percentage.

Brokerage & enterprise service cost

Brokerage & enterprise service cost decreased by 1.3% from RMB27.1 million in 2021 to RMB26.7 million (US$3.9 million) in 2022. The decrease was due to the contraction of AgiiPlus’ brokerage team.

Pre-opening expense

Pre-opening expense increased by 54.5% from RMB38.8 million in 2021 to RMB59.9 million (US$8.7 million) in 2022. The impact of city-wide lockdown in Shanghai from March 2022 to May 2022 led to a longer pre-opening time than usual, which increased from one to two months in 2021 to three months or more in 2022.

Selling expense

Selling expense increased by 5.1% from RMB47.2 million in 2021 to RMB49.6 million (US$7.2 million) in 2022, mainly due to the increase in compensation for AgiiPlus’ sales and marketing personnel in the amount of RMB3.3 million, and the increase in brokerage and consulting expenses in the amount of RMB2.1 million in response to AgiiPlus’ expansion. The percentage of selling expense compared to total revenue remained stable, and was 10.3% and 9.8% in 2021 and 2022 respectively.

General and administrative expense

General and administrative expense decreased by 21.5% from RMB125.6 million in 2021 to RMB98.6 million (US$14.3 million) in 2022. The decrease mainly attributed to i) decrease in compensation for AgiiPlus’ general and administrative personnel in the amount of RMB5.0 million due to AgiiPlus’ personnel optimization; (ii) decrease in research and development expenditure in the amount of RMB6.0 million, and iii) decrease in share-based compensation in the amount of RMB27.6 million, partially offset by increase in professional service expense in the amount of RMB10.4 million due to AgiiPlus’ public offering plan;

Loss on litigation

AgiiPlus’ loss on litigation, was nil in 2022, as compared to RMB14.1 million in 2021. The loss on litigation occurred was due to a litigation in relation to one lease termination. There was no such event in 2022.

Gain on disposal of subsidiary

Gain on disposal of subsidiary was RMB8.4 million (US$1.2 million) in 2022 as compared to nil in 2021. The gain was generated from the disposal of Distrii Technology Singapore Pte. Ltd. in January 2022.

Loss from operations

As a result of the foregoing, AgiiPlus’ loss from operations was RMB247.5 million (US$35.9 million) in 2022, as compared to RMB293.2 million in 2021.

Interest income

AgiiPlus’ interest income was RMB0.5 million (US$0.10 million) in 2022, as compared to RMB0.6 million in 2021, which was primarily generated from its bank balance.

Interest expense

AgiiPlus’ interest expense was RMB2.5 million (US$0.4 million) in 2022, as compared to RMB4.1 million in 2021, which was primarily associated with bank loans and convertible bonds from related parties.

Government subsidies

AgiiPlus received RMB1.7 million (US$0.2 million) in government subsidies in 2022, as compared to RMB0.7 million in 2021, which mainly include government subsidies for the purpose of relieving the negative impact of the COVID-19 pandemic on businesses and supporting fund from industrial zone.

Other income, net

AgiiPlus’ other income, net, was RMB3.7 million (US$0.5 million) in 2022, as compared to RMB4.6 million in 2021. Other income was primarily generated from VAT additional deduction, which may be different from time to time.

Income tax benefit (expense)

AgiiPlus’ income tax expense was RMB0.26 million (US$0.04 million) in 2022, as compared to tax benefit of RMB0.064 million in 2021. The income tax benefit in 2021 occurred was related to one of its subsidiaries operating in Singapore.

Net loss

As a result of the foregoing, AgiiPlus’ net loss was RMB244.3 million (US$35.4 million) in 2022 as compared to RMB291.3 million in 2021.

Liquidity and Capital Resources

Cash flows and working capital

AgiiPlus’ principal sources of liquidity have been cash provided from capital contributions from its shareholders, convertible bonds issued, bank loans and other borrowings. As of December 31, 2021 and 2022, AgiiPlus had RMB96.2 million and RMB35.4 million (US$5.1 million), respectively, in cash and cash equivalents. AgiiPlus’ cash and cash equivalents consist primarily of cash at bank and on hand and are primarily denominated in Renminbi. AgiiPlus had working capital (defined as total current assets deducted by total current liabilities) deficits of RMB706.3 million and RMB923.8 million (US$133.9 million), respectively, as of December 31, 2021 and 2022. The deficits are mainly caused by the obligation to pay a portion of the lease liabilities due in the next 12 months. The corresponding right-of-use assets are recorded as non-current asset.

As of December 31, 2022, AgiiPlus had RMB51.5 million (US$7.5 million) of short-term borrowings and current portion of long-term borrowings. AgiiPlus has the intention and ability to extend or renew those borrowings, or to borrow new loans from commercial banks or other institutions or entities in the next 12 months after the issuance date of the consolidated financial statements.

AgiiPlus intends to finance its future working capital requirements and capital expenditures from cash generated from operating activities and funds raised from financing activities. If its existing cash is insufficient to meet its requirements, AgiiPlus may seek to issue debt or equity securities or obtain additional credit facilities. Financing may be unavailable in the amounts AgiiPlus needs or on terms acceptable to it, if at all. Issuance of additional equity securities, including convertible debt securities, would dilute AgiiPlus’ earnings per share. The incurrence of debt would divert cash for working capital and capital expenditures to service debt obligations and could result in operating and financial covenants that restrict AgiiPlus’ operations and its ability to pay dividends to its shareholders. If AgiiPlus is unable to obtain additional equity or debt financing as required, its business operations and prospects may suffer. See “Risk Factors — Risk Factors Relating to AgiiPlus’ Business and Industry — AgiiPlus may require a significant amount of capital to fund the operations and future growth of its subsidiaries. If AgiiPlus cannot obtain sufficient capital on reasonable terms, its business, financial conditions and prospects may be materially and adversely affected.”

As a holding company with no material operations of its own, AgiiPlus conducts a substantial majority of its operations through its PRC subsidiaries in China. AgiiPlus is permitted under PRC laws and regulations to provide funding to its PRC subsidiaries in China through capital contributions or loans, subject to the approval of government authorities and limits on the amount of capital contributions and loans. See “Risk Factors — Risk Factors Relating to Doing Business in China — PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay us from using the proceeds of this public offering to make loans or additional capital contributions to AgiiPlus’ PRC subsidiaries, which could materially and adversely affect AgiiPlus’ liquidity and AgiiPlus’ ability to fund and expand AgiiPlus’ business.” The ability of AgiiPlus’ subsidiaries in China to make dividends or other cash payments to AgiiPlus is subject to various restrictions under PRC laws and regulations. See “Risk Factors — Risk Factors Relating to Doing Business in China — AgiiPlus may rely on dividends and other distributions on equity paid by AgiiPlus’ PRC subsidiaries to fund any cash and financing requirements AgiiPlus may have, and any limitation on the ability of AgiiPlus’ PRC subsidiaries to make payments to AgiiPlus could have a material and adverse effect on AgiiPlus’ ability to conduct its business.” and “Risk Factors — Risk Factors Relating to Doing Business in China — If AgiiPlus is classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable tax consequences to AgiiPlus and its non-PRC shareholders.”

The following table presents AgiiPlus’ selected consolidated cash flow data for the periods indicated.

Operating activities

Net cash used in operating activities was RMB41.8 million (US$6.1 million) in 2022. The difference between net loss of RMB244.3 million (US$35.4 million) and the net cash used in operating activities was mainly due to (i) non-cash lease expense of RMB297.1 million (US$43.1 million) primarily associated with amortization of operating lease right-of-use of AgiiPlus’ spaces, (ii) depreciation of property and equipment of RMB60.9 million (US$8.8 million), (iii) an increase of contract liabilities of RMB20.9 million (US$3.0 million), and (iv) a decrease of lease incentives receivable of RMB60.8 million (US$8.8 million), partially offset by (i) an decrease of operating lease liabilities of RMB141.2 million (US$20.5 million) in line with the expansion of AgiiPlus’ spaces, (ii) a non-cash gain of modification of lease contracts of RMB48.1 million (US$7.0 million), (iii) an increase of accounts receivable and contract assets of RMB22.6 million (US$3.3 million) and (iv) an increase of prepaid expenses and other current assets of RMB25.6 million (US$3.7 million).

Net cash provided by operating activities was RMB66.0 million (US$9.6 million) in 2021. The difference between net loss of RMB291.3 million (US$42.2 million) and the net cash provided by operating activities was mainly due to (i) non-cash lease expense of RMB238.6 million (US$34.6 million) primarily associated with amortization of operating lease right-of-use of AgiiPlus’ spaces, (ii) depreciation of property and equipment of RMB56.6 million (US$8.2 million), (iii) non-cash loss from issuance of ordinary shares to employee of RMB29.3 million (US$4.2 million), (iv) an increase of contract liabilities of RMB25.5 million (US$3.7 million), (v) a decrease of lease incentives receivable of RMB113.9 million (US$16.5 million), and (vi) an increase of rental retainer from tenants of RMB24.4 million (US$3.5 million), partially offset by an decrease of operating lease liabilities of RMB144.6 million (US$21.0 million) in line with the expansion of AgiiPlus’ spaces.

Investing activities

Net cash used in investing activities was RMB69.2 million (US$10.0 million) in 2022, which was primarily attributable to purchase of property, plant and equipment of RMB69.2 million (US$10.0 million).

Net cash used in investing activities was RMB107.0 million (US$15.5 million) in 2021, which was primarily attributable to purchase of property, plant and equipment of RMB108.3 million (US$15.7 million).

Financing activities

Net cash provided by financing activities in 2022 was RMB59.3 million (US$8.6 million), which was primarily attributable to (i) borrowings from bank loans and third-party loans of RMB86.3 million (US$12.5 million) and (ii) since September 2022, the Company entered into a series of share purchase agreements with several individual and institutional investors and received investment of RMB15.2 million (US$2.2 million), partially set off by repayment of borrowings from bank loans and third-party loans of RMB42.9 million (US$6.2 million).

Net cash provided by financing activities in 2021 was RMB50.2 million (US$7.3 million), which was primarily attributable to (i) borrowings from bank loans and third-party loans of RMB39.0 million (US$5.7 million) and (ii) issuance of restricted share awards of RMB9.2 million (US$1.3 million), partially set off by repayment of borrowings from bank loans and third-party loans of RMB5.5 million (US$0.8 million).

Capital Expenditures

AgiiPlus’ capital expenditures are incurred primarily in connection with purchase of property and equipment. AgiiPlus’ capital expenditures were RMB108.3 million in 2021 and RMB69.2 million (US$10.0 million) in 2022. AgiiPlus intends to fund its future capital expenditures with its existing cash balance and proceeds from this public offering.

Contractual Obligations

The following table sets forth AgiiPlus’ contractual obligations and commitments as of December 31, 2022.

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(1)      The short-term borrowings for working capital purpose include borrowings of RMB39.7 million from commercial banks. The annual interest rate of the short-term borrowings from commercial banks ranged from 4.0% to 5.87%.

(2)      Lease commitments relate to AgiiPlus’ obligation to pay under lease agreements.

Holding Company Structure

AgiiPlus Inc. is a holding company with no material operations of its own. AgiiPlus conducts its operations primarily through its subsidiaries. As a result, AgiiPlus’ ability to pay dividends depends upon dividends paid by its subsidiaries. If AgiiPlus’ subsidiaries or any newly formed subsidiaries incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to AgiiPlus.

In addition, AgiiPlus’ subsidiaries in China are permitted to pay dividends to AgiiPlus only out of their retained earnings, if any, as determined in accordance with the Accounting Standards for Business Enterprise as promulgated by the Ministry of Finance of the PRC, or PRC GAAP. In accordance with PRC law, AgiiPlus’ subsidiaries in China must make appropriations from their after-tax profit to non-distributable reserve funds including (i) statutory surplus fund and (ii) discretionary surplus fund. The appropriation to the statutory surplus fund must be at least 10% of the after-tax profits calculated in accordance with PRC GAAP. Appropriation is not required if the statutory surplus fund has reached 50% of the registered capital of AgiiPlus’ PRC subsidiaries. Appropriation to discretionary surplus fund is made at the discretion of AgiiPlus’ PRC subsidiaries.