U-BX Technology Ltd.

Company Overview

Business Model: U-BX Technology Ltd. operates as a holding company, conducting its core business through its PRC Operating Entities. The company provides artificial intelligence-driven value-added services to the insurance industry, primarily serving insurance carriers and brokers. Its business model encompasses three main service lines: digital promotion services, risk assessment services, and value-added bundled benefits. Digital promotion services help institutional clients gain visibility on social media platforms, generating revenue based on consumer engagement (clicks, views) or client promotion time. Risk assessment services utilize a proprietary "Magic Mirror" algorithm to calculate auto insurance payout risks, providing individualized reports to insurance carriers, with revenue tied to the number of reports delivered. Value-added bundled benefits involve selling service codes (e.g., car wash, maintenance, parking notifications) to insurance carriers, who then offer them to their customers. Additionally, the company maintains a free WeChat mini-application, "Wowobaodian," offering insurance-related information to individual consumers and brokers to enhance brand image and industry education.

Market Position: U-BX Technology Ltd. serves a client base of over 300 city-level property and auto insurance carriers nationwide in mainland China, including major corporations such as the People’s Insurance Company of China, Dajia Property Insurance Co., Ltd., China Pacific Property Insurance Co., Ltd., China Life Property Insurance Co., Ltd., Yongcheng Property Insurance Co., Ltd., and Huatai Insurance Brokers Co., Ltd. The company positions itself as a pioneer in the insurance technology industry, specifically for auto insurance carriers, by optimizing internet platform advertising strategies with AI and big data. Its competitive advantages stem from an experienced management team, data-driven market promotion strategies, advanced AI and big data technology (including the "Magic Mirror" system), and high-quality content provided through its "Wowobaodian" platform.

Recent Strategic Developments:

• Reverse Stock Split & Share Capital Increase: Completed a one-for-sixteen (1-for-16) reverse share split on November 27, 2024, to regain compliance with Nasdaq's minimum bid price requirement. Concurrently, the authorized share capital was increased to US$1,000,000, divided into 625,000,000 Ordinary Shares of par value US$0.0016 each.
• Private Placement (PIPE Offering): Closed on November 28, 2024, raising gross proceeds of $5.7 million through the issuance of 1,425,000 ordinary shares and 4,275,000 warrants. The warrants were fully exercised in March and April 2025, resulting in the issuance of 17,398,535 Warrant Shares. The Chief Executive Officer and Director, Jian Chen, participated in this offering.
• Nasdaq Compliance: Regained compliance with Nasdaq's minimum bid price requirement by December 13, 2024, and met the minimum Market Value of Listed Securities and stockholders' equity requirements by November 14, 2024.
• Employee Stock Incentive Plans: Adopted the 2024 Equity Incentive Plan on September 3, 2024, authorizing 2,700,000 Ordinary Shares, all of which have been granted. The 2025 Equity Incentive Plan was adopted on July 29, 2025, authorizing 9,500,000 Ordinary Shares, all granted by August 4, 2025.
• Corporate Restructuring & Subsidiary Changes: The Variable Interest Entity (VIE) structure was dissolved in March 2022, making U-BX Beijing a wholly-owned subsidiary of WFOE Beijing. On May 21, 2024, WFOE Beijing transferred 100% equity of U-BX Beijing to WFOE Zhejiang. Several legacy county-level entities (Jiangsu Jingmo, Jiangsu YJYC, RDYJ, Jiangsu YCHB) were dissolved between March 2022 and July 2025 due to administrative realignment. New subsidiaries, WFOE Shanghai and JCZN Hangzhou, were incorporated in May 2025.
• Office Building Acquisition: Expenditures were made for the ongoing construction of a newly acquired office building in Hangzhou City, with handover formalities completed on July 12, 2025.

Geographic Footprint: The company's primary operational region is mainland China, from which all its revenue is derived. Its headquarters are located in Beijing, People’s Republic of China, with a newly acquired office building in Hangzhou City. The company serves a nationwide client base of over 300 city-level property and auto insurance carriers across China.

Cross-Border Operations: U-BX Technology Ltd. is a Cayman Islands holding company, with its primary operating entities located in mainland China, structured through a Hong Kong subsidiary (U-BX HK) and several wholly-foreign owned enterprises (WFOEs) in the PRC. Funds are transferred from U-BX Technology Ltd. to U-BX HK, and then to the WFOEs in the PRC through capital investments or shareholder loans. These operations are subject to various PRC laws and regulations, including those governing foreign investment, capital controls, and dividend distributions, which require PRC entities to set aside statutory reserves and impose withholding taxes on dividends remitted to Hong Kong. The company completed its CSRC record filing for its initial public offering in September 2023 and is required to file for any follow-on offerings. While the company's current auditor is subject to PCAOB inspections, uncertainties remain regarding the full inspection of audit papers due to PRC regulations. U-BX Technology Ltd. plans to expand its technology and business into Southeast Asia and other international markets, with initial operations targeted for Vietnam and Indonesia next year.

Financial Performance

Revenue Analysis

Profitability Metrics (FY2025):

• Gross Margin: 0.85%
• Operating Margin: -10.46%
• Net Margin: -9.16%

Investment in Growth:

• R&D Expenditure: Not explicitly disclosed as a separate financial line item. The company has a Research & Development department with 4 employees and plans to recruit more talent in the insurance actuarial field to enhance its AI calculation capabilities.
• Capital Expenditures: $5,782,869 (FY2025), $12,766 (FY2024). This includes expenditures for the ongoing construction of a newly acquired office building.
• Strategic Investments: $83,815 (FY2025) for equity investment. The company intends to pursue strategic acquisitions and investments in technologies and businesses complementary to its insurance industry focus.

Currency Impact Analysis:

• The company's functional currency is the Chinese Yuan (RMB), while its financial statements are reported in U.S. dollars. Substantially all revenues and costs are denominated in RMB.
• Exchange rates used for translation: RMB 7.1586:1US$ (Balance Sheet, FY2025), RMB 7.2258:1US$ (Profits/Loss, FY2024), RMB 7.1839:1US$ (Profits/Loss, FY2023).
• The company has not entered into any hedging transactions to mitigate foreign currency exchange risk, citing limited options available in China. Future effectiveness of potential hedging strategies is uncertain.

Business Segment Analysis

U-BX Technology Ltd. operates and manages its business as a single segment, providing value-added services using artificial intelligence-driven technology to businesses within the insurance industry. The following breakdown reflects revenue by service type.

Digital Promotion Services

Financial Performance:

• Revenue: $25,895,399 (FY2025) (-31.56% YoY)
• Operating Margin: Not disclosed at segment level.
• Key Growth Drivers: Revenue decreased by $12.0 million (32%) from FY2024 to FY2025, primarily due to a decrease in the number of clicks (47 million in FY2025 vs. 82 million in FY2024). This decline was attributed to a decreasing number of customer orders, resulting from an overall economic downturn that led to a contraction in clients’ business activities and a decline in transaction volumes. The average price per click remained stable at $0.29 in both FY2024 and FY2023.

Product Portfolio:

• Offers pay-for-performance marketing services (based on effective clicks) and display advertising services on various website channels.
• Utilizes third-party services and platforms, including online content-based platforms (e.g., Tik-Tok, Kuaishou) and offline scene marketing platforms, to obtain traffic.
• The company is primarily responsible for planning, designing, customizing strategy schemes, and promoting content for customers, as well as selecting third-party vendors and establishing pricing.

Market Dynamics:

• The market for digital promotion services in the insurance sector is highly competitive.
• Future strategy includes enhancing the marketing team, diversifying internet marketing channels to include both online (e.g., Tik-Tok, Weibo, Baidu, Kuaishou) and offline (e.g., vehicle manufacturers and sellers) platforms.

Geographic Revenue Distribution:

• Mainland China: All revenue from digital promotion services is derived from mainland China.

Risk Assessment Services

Financial Performance:

• Revenue: $3,412,131 (FY2025) (-60.62% YoY)
• Operating Margin: Not disclosed at segment level.
• Key Growth Drivers: Revenue decreased by $5.2 million (61%) from FY2024 to FY2025. This was mainly due to a contraction in client business scale caused by macroeconomic conditions and a decreased demand and budget from insurance companies for risk assessment services.

Product Portfolio:

• Provides risk assessment reports to insurance carriers using its proprietary "Magic Mirror" algorithm.
• The algorithm calculates payout risks for auto insurance coverage, generating individualized reports based on vehicle brand, model, travel area, and vehicle age.
• Technology incorporates artificial intelligence (AI) and optical character recognition, leveraging TensorFlow Python for machine learning.
• Information sources include insurance types and rates from major carriers, public data from Autohome Inc. and the China Automobile Industry Association, and prices of common vehicle accessories.

Market Dynamics:

• This service is particularly popular among insurance carriers seeking greater predictability in underwriting decisions.
• Future plans include recruiting more talent in the insurance actuarial field to refine the AI calculation within the Magic Mirror system and expanding focus towards insurance service marketing.

Geographic Revenue Distribution:

• Mainland China: All revenue from risk assessment services is derived from mainland China.

Value-added Bundled Benefits

Financial Performance:

• Revenue: $367,004 (FY2025) (-92.79% YoY)
• Operating Margin: Not disclosed at segment level.
• Key Growth Drivers: Revenue decreased by $4.7 million (93%) from FY2024 to FY2025, primarily attributable to the overall economic downturn, which led to a contraction in clients’ business activities and a decline in transaction volumes.

Product Portfolio:

• Sells digital service codes with bundled benefits to insurance carriers, which are then passed on to vehicle owners.
• Benefits include car washing, car maintenance, driver services, and vehicle moving notification services.
• Vehicle moving notification service codes are self-created, while other service codes are procured from auto maintenance service code providers.
• The company focuses on competitively pricing its service codes to attract more users.

Market Dynamics:

• The company's ability to offer nationwide vehicle maintenance services through its codes provides a competitive advantage in China's regionally fragmented vehicle maintenance market.

Geographic Revenue Distribution:

• Mainland China: All revenue from value-added bundled benefits is derived from mainland China.

International Operations & Geographic Analysis

Revenue by Geography:

International Business Structure:

• Subsidiaries:
  • Snailinsur Group Limited (U-BX HK): Incorporated in Hong Kong, wholly-owned by U-BX Technology Ltd., serves as an investment holding company with no operations.
  • Beijing Lianghua Technology Co., Limited (WFOE Beijing): Incorporated in PRC, wholly-owned by U-BX HK, serves as an investment holding company with no operations.
  • Suzhou Lianghua Digital Technology Co., Limited (WFOE Suzhou): Incorporated in PRC, wholly-owned by U-BX HK, serves as an investment holding company with no operations.
  • Zhejiang JZSC Enterprise Management Co., Ltd (WFOE Zhejiang): Incorporated in PRC, wholly-owned by U-BX HK, serves as an investment holding company with no operations.
  • Shanghai ZLQX Technology Service Co., Ltd (WFOE Shanghai): Incorporated in PRC, wholly-owned by U-BX HK, serves as an investment holding company with no operations.
  • Youjiayoubao (Beijing) Technology Co., Limited (U-BX Beijing): Incorporated in PRC, wholly-owned by WFOE Zhejiang, provides services.
  • Suzhou Youjiayoubao Technology Co., Limited (U-BX Suzhou): Incorporated in PRC, wholly-owned by WFOE Suzhou, provides services.
  • Zhejiang JZSC Technology Co., Ltd (JZSC Technology): Incorporated in PRC, wholly-owned by WFOE Zhejiang, provides services.
  • Zhejiang Decision Intelligent Technology Co., Ltd. (JCZN Hangzhou): Incorporated in PRC, wholly-owned by WFOE Shanghai, serves as an investment holding company.

Cross-Border Trade:

• Export Markets: The company plans to expand its technology to conduct business in Southeast Asia and other international markets, aiming to provide overseas customers with online growth strategies. Initial operations are planned for Vietnam and Indonesia next year.
• Transfer Pricing: The company acknowledges the risk of PRC tax authorities scrutinizing related-party transactions, including previous contractual arrangements, for transfer pricing adjustments.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: Not disclosed.
• Dividend Payments: The company has not paid any dividends or distributions to its shareholders as of the date of this annual report and does not expect to pay cash dividends in the foreseeable future, intending to retain earnings to support operations and business growth.
• Future Capital Return Commitments: Any future dividend policy will be determined at the discretion of the board of directors, considering future earnings, capital requirements, financial conditions, and prospects.

Balance Sheet Position (as of June 30, 2025):

• Cash and Equivalents: $11,182,783
• Total Debt (Short-term loans): $389,741
• Net Cash Position: $10,793,042
• Credit Rating: Not disclosed.
• Debt Maturity Profile: Short-term loans mature within one year. For example, a RMB 3,000,000 loan from Bank of Communications (April 2024-April 2025) and a RMB 2,790,000 loan from Industrial and Commercial Bank of China (July 2024-July 2025) were fully repaid.

Cash Flow Generation:

• Operating Cash Flow: -$2,821,147 (FY2025), -$1,353,154 (FY2024), -$283,159 (FY2023).
• Free Cash Flow: -$8,604,016 (FY2025, calculated as Operating Cash Flow minus Purchases of property and equipment).
• Cash Conversion Metrics: Not disclosed.

Currency Management:

• Cash holdings are maintained in bank accounts in Mainland China and the United States.
• The company has not engaged in any hedging transactions to manage foreign currency exchange risk, noting the limited availability and effectiveness of such options in China.

Operational Excellence

Production & Service Model: U-BX Technology Ltd. employs an AI-driven service model to deliver value-added solutions to the insurance industry. For digital promotion services, it plans, designs, and customizes marketing strategies, leveraging third-party online content platforms (e.g., Tik-Tok, Kuaishou) and offline scene marketing. Its risk assessment services are powered by the proprietary "Magic Mirror" algorithm, which uses AI and optical character recognition to generate individualized auto insurance risk reports. For value-added bundled benefits, the company integrates in-house developed (e.g., vehicle moving notification) and outsourced services (e.g., auto maintenance) to create digital service codes for insurance carriers. The "Wowobaodian" WeChat mini-application serves as a free informational platform, providing articles, pictures, and videos on insurance trends and policies.

Global Supply Chain Architecture: Key Suppliers & Partners:

• Promotion Traffic Suppliers: Primarily internet technology companies in China, including online content platforms and offline scene marketing platforms, which constitute the majority of the company's procurement costs.
• Vehicle Maintenance Service Code Providers: Companies that consolidate vehicle maintenance service providers across China, enabling the company to offer nationwide services.
• Technology Development Suppliers: Internet technology companies in China.
• Information Operators: Internet technology companies in China.
• Strategic Alliances: The company plans to partner with automakers, auto distributors, and popular social platforms (e.g., Tik-Tok, Weibo, Baidu, Kuaishou) to expand its digital promotion channels.
• Supplier Concentration: In FY2025, three suppliers accounted for 25.4%, 18.3%, and 11.5% of total purchases. As of June 30, 2025, two suppliers accounted for 69.4% and 26.0% of total accounts payable, and two suppliers accounted for 76.1% and 23.6% of total advances to suppliers. The company aims to diversify its supplier pool to mitigate dependency risks.

Facility Network:

• Headquarters: Located at No.1 Linkong Er Road, Zhongguan Science and Technology Park, Shunyi District, Beijing, China, covering 1,000 square feet. This location is rent-free due to local government subsidies, with a lease term from April 15, 2021, to April 15, 2026.
• Research & Development: The company has an R&D department with 4 employees and plans to recruit more talent in the insurance actuarial field to enhance its AI calculation capabilities.
• Newly Acquired Office: An office building at No. 669, Cangxing Street, Cangqian Subdistrict, Yuhang District, Hangzhou City, is currently under construction, with handover formalities completed on July 12, 2025.

Operational Metrics:

• Digital promotion services generated 47 million clicks in FY2025, down from 82 million in FY2024 and 156 million in FY2023.
• The "Magic Mirror" system continuously strengthens its AI calculation method and risk assessment function through machine learning, based on processed information.
• The company focuses on data-driven analysis of user behavior and browsing patterns to optimize advertising strategies, improve marketing efficiency, and reduce costs.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: The company's marketing team conducts offline promotions by engaging directly with auto insurance carriers regionally. It plans to build a robust sales team to communicate with potential institutional clients.
• Channel Partners: For individual clients, primarily insurance brokers, the company intends to utilize both online and offline scene marketing, partnering with automakers, auto distributors, and popular social media platforms.
• Digital Platforms: The "Wowobaodian" WeChat mini-application serves as a key digital platform for providing free insurance-related information, attracting a large user base of insurance brokers and enhancing brand image.

Customer Portfolio: Enterprise Customers:

• Tier 1 Clients: The company's client base includes over 300 city-level property and auto insurance carriers nationwide, such as the People’s Insurance Company of China, Dajia Property Insurance Co., Ltd., China Pacific Property Insurance Co., Ltd., China Life Property Insurance Co., Ltd., Yongcheng Property Insurance Co., Ltd., and Huatai Insurance Brokers Co., Ltd.
• Customer Concentration: In FY2025, one customer accounted for 37.9% of total revenues. As of June 30, 2025, two customers represented 42.2% and 16.5% of the total accounts receivable balance, respectively.

Regional Market Penetration:

• Mainland China: The company has established a strong presence across mainland China, serving over 300 city-level property and auto insurance carriers.
• Growth Markets: U-BX Technology Ltd. plans to expand its technology and business operations into Southeast Asia and other international markets, with initial focus on Vietnam and Indonesia within the next year. This expansion includes recruiting an international business development team familiar with local languages and business cultures.

Competitive Intelligence

Global Market Structure & Dynamics

Industry Characteristics: The company operates within the insurance technology sector, primarily focused on the auto insurance industry in the PRC. The industry is characterized by an ongoing trend towards digitization, which is expected to increase demand for AI technology and online traffic promotion methods. The market for the company's services is highly competitive, with competition centered on factors such as user coverage, engagement, brand awareness, and customer attraction and retention. The Chinese government exerts substantial influence over the economy, including the internet and foreign investment sectors, with evolving cybersecurity and data protection regulations.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: The filing does not name specific direct competitors. However, it notes that the company faces competition from other players in the insurance technology sector and the traditional insurance industry. Competitors may possess longer operating histories, greater funding, and more extensive managerial, technical, and marketing resources. Some competitors may also form partnerships with search engines, potentially impacting market access. U-BX Technology Ltd. differentiates itself by focusing more heavily on internet technology and online traffic promotion, in contrast to competitors primarily involved in client acquisition or policy issuance processes.

Regional Competitive Dynamics: The competitive landscape is primarily described within the context of mainland China, where the company aims to expand its market share by offering specialized insurance technology solutions and promoting the digitization of the insurance industry.

Risk Assessment Framework

Strategic & Market Risks

Global Market Dynamics: The company's business is significantly affected by China's overall economic conditions and the development of the automotive and insurance industries. An overall economic downturn in China has led to decreased customer demand and a contraction in client business activities, negatively impacting revenue from digital promotion and value-added bundled benefits. Technology Disruption: The company faces risks from intense competition, including competitors with superior resources or strategic partnerships. Failure to continuously innovate or introduce new services as quickly as competitors could lead to a loss of market share. Customer Concentration: A significant portion of the company's revenue and accounts receivable is concentrated among a small number of customers. In FY2025, one customer accounted for 37.9% of total revenues, and two customers represented 42.2% and 16.5% of accounts receivable, respectively. The loss of any major client could materially and adversely affect the company's revenue. Brand and Reputation: Negative publicity or perceptions, whether justified or not, regarding user experience, service quality, or the insurance carriers on its platform, could harm the company's brand and reputation, impacting its ability to attract and retain customers.

Operational & Execution Risks

Global Supply Chain Vulnerabilities: The company relies on a limited number of suppliers for promotion traffic, vehicle maintenance service codes, technology development, and information operations. In FY2025, three suppliers accounted for 25.4%, 18.3%, and 11.5% of total purchases. This dependency creates a risk of disruption if suppliers fail to perform or if alternative suppliers cannot be found in a timely manner or at a reasonable price. Regional Disruptions: Natural disasters, health epidemics (e.g., COVID-19), or other public safety concerns in China, particularly in Beijing where the headquarters are located, could severely disrupt operations, leading to system failures, data loss, or adverse impacts on the insurance industry. Technology System Disruptions: The company's reliance on its scalable technology infrastructure, websites, and WeChat mini-programs exposes it to risks such as telecommunications failures, cyberattacks (e.g., DDoS), software/hardware malfunctions, and power outages, which could cause service interruptions, data loss, and affect business operations. Intellectual Property Protection: Maintaining and enforcing intellectual property rights in China is challenging due to evolving legal interpretations. There is a risk that IP rights could be challenged, invalidated, or misappropriated, and that the company may not be able to effectively protect its proprietary technology, including the "Magic Mirror" system. Talent Management: The company's success is highly dependent on its senior management and key employees. Competition for skilled personnel in insurance, sales, marketing, technology, and risk management in China is intense. The loss of key personnel or the inability to attract and retain talent could severely disrupt business and growth prospects. Internal Controls: The company has identified material weaknesses in its internal control over financial reporting, specifically a lack of sufficient skilled staff with U.S. GAAP knowledge and a lack of formal accounting policies. These deficiencies pose a risk of inaccuracies in financial statements, failure to meet reporting obligations, or fraud.

Financial & Regulatory Risks

Currency & Financial Risks: Substantially all revenues and costs are denominated in RMB, exposing the company to foreign exchange risk. Significant revaluation of the RMB could materially affect revenues, earnings, and the U.S. dollar value of dividends. The company currently does not use hedging strategies, and available options in China are limited. Credit & Liquidity: The company's cash holdings in Chinese banks include approximately $2,333,899 of uninsured funds as of June 30, 2025, posing a credit risk in the event of bank failure. A history of net losses and negative cash flows from operating activities indicates a potential need for additional capital, which, if raised through equity, could dilute shareholders. Regulatory & Compliance Risks: The company operates under substantial government influence in China, with evolving laws and regulations impacting foreign investment, internet businesses, and data security. Uncertainties in the interpretation and implementation of the PRC Foreign Investment Law, M&A Rules, and cybersecurity regulations (e.g., Measures for Cybersecurity Review) could lead to sanctions, fines, or restrictions on operations or overseas listings. PRC regulations also impose restrictions on dividend payments from subsidiaries and require SAFE registration for offshore investments by PRC residents. HFCA Act: The company faces the risk of its Ordinary Shares being prohibited from trading on a national exchange under the Holding Foreign Companies Accountable Act (HFCA Act) if the PCAOB is unable to inspect its auditors for two consecutive years. While the current auditor is subject to PCAOB inspection, Article 177 of the PRC Securities Law could potentially restrict the full inspection of audit papers without PRC approval, leading to delisting risk.

Innovation & Technology Leadership

Research & Development Focus: Global R&D Network: The company's Research & Development department, comprising 4 employees, is central to its innovation efforts.

• Innovation Pipeline:
  • Magic Mirror System: Ongoing development and optimization of the AI-based "Magic Mirror" algorithm for auto insurance risk assessment. The company plans to apply for patent protection for its core calculating formula.
  • Wowobaodian Mini-program: Focus on enriching content and functions, including adding video-based tutorials for insurance brokers and developing interactive features to allow user-generated content, potentially introducing paid content.
  • Technology Enhancement: Continuous development of AI and big data capabilities, including data processing technology and machine learning algorithms, to strengthen data mining and analysis.
  • Service Expansion: Plans to expand its service scope into the life insurance and health insurance industries, starting with short-term health insurance due to its similarities with vehicle insurance sales tactics, and gradually developing a business model for long-term health insurance.

Intellectual Property Portfolio:

• Patent Strategy: The company is planning to apply for patent protection for its "Magic Mirror" system and its auto insurance risk calculating formula.
• Copyright Strategy: Holds two pending software copyrights: "Youjia Insurance Quick Order System V1.0" and "Youjia Insurance Merchant System V1.0" in the PRC.
• Trademark Strategy: Owns one registered trademark (Trademark Number 34109461, Class 42) in the PRC under U-BX Beijing. The company has applied for administrative reviews on rejected trademark applications.
• Domain Names: Possesses rights to use nine registered domain names in the PRC, including u-bx.com, Youjiabaoxian.com, and Feisu.chat, held by U-BX Beijing and its subsidiaries.

Technology Partnerships: The "Magic Mirror" system utilizes TensorFlow Python technology, a free and open-source software library for machine learning and artificial intelligence developed by Google. The company also collaborates with third-party vendors for digital promotion and risk assessment services.

Leadership & Governance

Executive Leadership Team

Board Composition: The board of directors consists of four members: Jian Chen (Chief Executive Officer, Director), Xu Xie (Independent Director), Da Yang (Independent Director), and Shaolan Ma (Independent Director). Mr. Xu Xie, Ms. Shaolan Ma, and Mr. Da Yang meet the independence requirements of Nasdaq and Rule 10A-3 under the Exchange Act. Mr. Xu Xie is designated as an "audit committee financial expert." The board has established an Audit Committee (chaired by Mr. Xu Xie), a Compensation Committee (chaired by Ms. Shaolan Ma), and a Nominating and Corporate Governance Committee (chaired by Mr. Da Yang). The board adopted an executive compensation recovery policy on December 7, 2023, in compliance with new Nasdaq listing standards.

Regulatory Environment & Compliance

Multi-Jurisdictional Regulatory Framework: Primary Regulatory Environments:

• Cayman Islands: U-BX Technology Ltd. is incorporated as an exempted company. It is not subject to taxes on profits, income, gains, or appreciation, nor inheritance tax or estate duty. There are no exchange control regulations.
• Hong Kong: U-BX HK is subject to a 16.5% Hong Kong profits tax on taxable income generated from operations in Hong Kong. Dividends paid by U-BX HK to U-BX Technology Ltd. are not subject to Hong Kong withholding tax.
• People’s Republic of China (PRC): The company's primary operations are governed by a complex and evolving PRC legal and regulatory framework.
  • Foreign Investment: The PRC Foreign Investment Law and its implementation rules govern foreign investment activities. The company believes its business is not in a "restricted" or "prohibited" industry under the 2022 Negative List.
  • Foreign Exchange Control: The PRC government imposes controls on the convertibility of RMB into foreign currencies. Capital contributions and loans to PRC subsidiaries require registration or approval from SAFE.
  • Dividend Distribution: PRC subsidiaries can only pay dividends from accumulated after-tax profits, and are required to allocate at least 10% of after-tax income to a statutory general reserve fund until it reaches 50% of registered capital; these reserves are not distributable as cash dividends. Dividends from WFOEs to U-BX HK are subject to a 10% PRC withholding tax, potentially reduced to 5% under the Double Tax Avoidance Arrangement if specific conditions are met.
  • Taxation: PRC subsidiaries are generally subject to a 25% Enterprise Income Tax (EIT) rate, with some entities qualifying for a preferential 5% rate as "small enterprises with low profit." Value-Added Tax (VAT) applies to sales of goods and services. The company faces uncertainties regarding the interpretation and application of rules on indirect transfers of equity interests by non-PRC resident enterprises.
  • Labor Laws: The company is required to comply with PRC Labor Contract Law and contribute to various government-sponsored employee benefit plans, including social insurance and housing funds.
  • Overseas Listing Regulations: The company completed the CSRC record filing for its initial public offering in September 2023, as required by the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies. Future follow-on offerings will also require CSRC filing.
  • Cybersecurity and Data Protection: The company is subject to evolving PRC laws such as the Cyber Security Law and Data Security Law. While it does not collect personal information from users and does not expect to be subject to cybersecurity review for overseas listings, it may be required to perform annual data security assessments if draft regulations are adopted.

Cross-Border Compliance:

• PCAOB Inspections: The company's current auditor, HTL International, LLC, is headquartered in Houston, Texas, and is subject to PCAOB inspections. However, Article 177 of the PRC Securities Law introduces uncertainty regarding the full inspection of audit papers by the PCAOB without prior consent from PRC authorities, which could lead to delisting risk under the HFCA Act.

Innovation & Technology Leadership

Research & Development Focus: Global R&D Network: The company's Research & Development department, consisting of 4 employees, is dedicated to advancing its technology.

• Innovation Pipeline: The primary focus is on enhancing its artificial intelligence and big data capabilities. This includes continuous optimization of the "Magic Mirror" algorithm for auto insurance risk assessment, with plans to recruit more talent in the insurance actuarial field to perfect its AI calculation. The company also aims to develop more digital products for institutional clients and to strengthen its data mining and analysis capabilities through advancements in data processing technology and machine learning algorithms. Furthermore, it plans to enrich the content and functionality of its "Wowobaodian" WeChat mini-application, including the introduction of video-based tutorials and interactive user-generated content.

Intellectual Property Portfolio:

• Patent Strategy: The company is actively planning to apply for patent protection for its "Magic Mirror" system and its auto insurance risk calculating formula, recognizing their core value.
• Copyright Strategy: U-BX Beijing holds two pending software copyrights in the PRC: "Youjia Insurance Quick Order System V1.0" and "Youjia Insurance Merchant System V1.0."
• Trademark Strategy: U-BX Beijing owns one registered trademark (Trademark Number 34109461, Class 42) in the PRC. The company has also initiated administrative reviews for certain rejected trademark applications.
• Domain Names: The company and its subsidiaries hold rights to use nine registered domain names in the PRC, including u-bx.com, Youjiabaoxian.com, and Feisu.chat.

Technology Partnerships: The "Magic Mirror" system integrates TensorFlow Python technology, an open-source software library for machine learning and artificial intelligence. The company also engages in collaborations with third-party vendors for various aspects of its digital promotion and risk assessment services.

Leadership & Governance

Executive Leadership Team

Board Composition: The board of directors comprises four members: Jian Chen (Chief Executive Officer, Director), Xu Xie (Independent Director), Da Yang (Independent Director), and Shaolan Ma (Independent Director). Mr. Xu Xie, Ms. Shaolan Ma, and Mr. Da Yang are deemed independent under Nasdaq rules and Exchange Act Rule 10A-3. Mr. Xu Xie is qualified as an "audit committee financial expert." The board has established an Audit Committee (chaired by Mr. Xu Xie), a Compensation Committee (chaired by Ms. Shaolan Ma), and a Nominating and Corporate Governance Committee (chaired by Mr. Da Yang). The company adopted an executive compensation recovery policy on December 7, 2023, in accordance with new Nasdaq listing standards.

Regulatory Environment & Compliance

Multi-Jurisdictional Regulatory Framework: Primary Regulatory Environments:

• Cayman Islands: U-BX Technology Ltd. is incorporated as an exempted company, benefiting from no income, capital gains, or inheritance taxes. There are no exchange control regulations.
• Hong Kong: U-BX HK is subject to a 16.5% Hong Kong profits tax on its taxable income. Dividends from U-BX HK to U-BX Technology Ltd. are not subject to Hong Kong withholding tax.
• People’s Republic of China (PRC): The company's core operations are subject to extensive and evolving PRC laws and regulations.
  • Foreign Investment: Governed by the PRC Foreign Investment Law, which employs a "negative list" approach. The company believes its business does not fall into "restricted" or "prohibited" categories under the 2022 Negative List.
  • Foreign Exchange Control: The PRC government maintains controls on RMB convertibility. Capital contributions and intercompany loans to PRC subsidiaries require registration or approval from the State Administration of Foreign Exchange (SAFE).
  • Dividend Distribution: PRC subsidiaries can only distribute profits determined by PRC accounting standards. They are mandated to allocate at least 10% of after-tax income to a statutory reserve fund until it reaches 50% of registered capital; these reserves are not distributable as cash dividends. Dividends from PRC WFOEs to U-BX HK are subject to a 10% PRC withholding tax, potentially reduced to 5% under the Mainland China-Hong Kong Double Tax Avoidance Arrangement if specific conditions are met.
  • Taxation: PRC subsidiaries are generally subject to a 25% Enterprise Income Tax (EIT) rate, with some qualifying for a preferential 5% rate. Value-Added Tax (VAT) is also applicable. Uncertainties exist regarding the interpretation and application of rules on indirect transfers of equity interests by non-PRC resident enterprises.
  • Labor Laws: Compliance with the PRC Labor Contract Law and mandatory contributions to social insurance and housing funds for employees are required.
  • Overseas Listing Regulations: The company completed the CSRC record filing for its initial public offering in September 2023, as per the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies. Subsequent follow-on offerings will also necessitate CSRC filing within three business days of completion.
  • Cybersecurity and Data Protection: The company operates within the scope of the Cyber Security Law and Data Security Law. While it does not collect personal user information and does not anticipate being subject to cybersecurity review for overseas listings, it may be required to perform annual data security assessments if draft regulations on network data security are adopted.

Cross-Border Compliance:

• PCAOB Inspections: The company's current auditor, HTL International, LLC, is headquartered in the U.S. and is subject to PCAOB inspections. However, Article 177 of the PRC Securities Law introduces a risk that audit papers may not be fully inspected by the PCAOB without prior consent from PRC authorities, potentially leading to delisting under the HFCA Act.

Currency Management & Financial Strategy

Multi-Currency Operations: Currency Exposure: The company's operations are predominantly in mainland China, with substantially all revenues and costs denominated in Chinese Yuan (RMB). Cash holdings are maintained in both Mainland China (RMB) and the United States (U.S. Dollar). The net exposure is primarily to RMB.

Hedging Strategies: The company has not entered into any hedging transactions to mitigate foreign currency exchange risk. It notes that very limited hedging options are available in China, and the availability and effectiveness of any future hedging efforts are uncertain.