This annual report contains “forward-looking statements” that represent our beliefs, projections and predictions about future events. All statements other than statements of historical fact are “forward-looking statements,” including any projections of financial items, any statements of the plans, strategies and objectives of management for future operations, any statements concerning proposed new projects or other developments, any statements regarding future economic conditions or performance, any statements of management’s beliefs, goals, strategies, intentions and objectives, and any statements of assumptions underlying any of the foregoing. These forward-looking statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Words such as “may,” “will,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar expressions, as well as statements in the future tense, identify forward-looking statements.
These statements are subjective. Therefore, they involve known and unknown risks.
They are based largely on our current expectations and projections about future events and financial trends, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results to differ materially from any future results, performance or achievements described in or implied by such statements. Actual results may differ materially from expected results described in our forward-looking statements, for reasons connected with measuring future developments, including:
| 1. | the correct measurement and identification of factors affecting our business; |
| 2. | the extent of their likely impact; and/or |
| 3. | the accuracy and completeness of the publicly available information regarding the factors upon which our business strategy is based. |
Forward-looking statements should not be read as a guarantee of future performance or results. They will not necessarily be accurate indications of whether, or the times by which, our performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and management’s belief as of that time regarding future events. Consequently, they are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements.
Important factors that could cause actual performance or results to differ materially from those contained in forward-looking statements include, but are not limited to, those factors discussed under Item 3.D. “Risk Factors” herein, including, among others:
Risks Related to Our Business and Industry
| ● | Regulatory scrutiny of privacy, data protection, and the collection, storage, use, and sharing of personal data is increasing around the world. There is uncertainty associated with the legal and regulatory environment relating to privacy and data protection laws, which continue to develop in ways Riches Elites cannot predict, including with respect to evolving technologies such as cloud computing, artificial intelligence, and blockchain technology. |
| ● | Riches Elites may be liable for improper use or appropriation of personal information provided by its customers under the promulgated PRC Data Security Law. |
| ● | Security breaches and attacks against Riches Elites’ systems and network, and any potentially resulting breach or failure to otherwise protect personal, confidential and proprietary information, could damage its reputation and negatively impact its business, as well as materially and adversely affect its financial condition and results of operations. |
| ● | The successful operation of Riches Elites’ business depends upon the performance, reliability and security of the internet infrastructure in the countries in which it operates. |
| ● | GFS’ and Riches Elites’ platform could be disrupted by network interruptions. |
| ● | Our strategy of acquiring complementary assets, technologies and businesses may fail and result in impairment losses. |
| ● | We may be required to record a significant charge to earnings if we are required to reassess our tangible and intangible assets. |
| ● | We are exposed to the credit risks of our customers and borrowers. |
| ● | FAF and Giant Credit are subject to greater credit risks than larger lenders, which could adversely affect our results of operations. |
| ● | FAF and Giant Credit may fail to renew its money lenders license. |
| ● | The businesses of FAF and Giant Credit is affected by fluctuations in interest rates and our credit position. |
| ● | There is intense competition in the money lending industry. |
| ● | An increase to the provision for loan losses will cause the Company’s net income to decrease and net loss to increase. |
| ● | Competition in the lending industry is growing and could cause us to lose market share and revenues in the future. |
| ● | FAF and Giant Credit may face regulatory hurdles in the future in connection with its lending business. |
| ● | The businesses of FAF and Giant Credit may be affected by changes in the Money Lenders Ordinance (Chapter 163 of the Laws of Hong Kong). |
| ● | Our property investment business is sensitive to downturns in the economy, economic uncertainty and particularly the performance of the real estate market in Hong Kong. |
| ● | Our revenue from our investment property portfolio depends on a number of factors, such as changes in market rental levels, competition for tenants and rental collection and renewal. |
| ● | We may not be able to secure financing needed for future operating needs on favorable terms, or on any terms at all. |
| ● | A severe or prolonged downturn in the global economy could materially and adversely affect our business and results of operations. |
| ● | If we fail to keep our fintech services technology updated as the industry evolves, our growth, revenues and business prospects may be materially and adversely affected. |
| ● | We may fail to protect our fintech services products from cyber - attacks, which may adversely affect our reputation, customer base and business. |
| ● | A portion of our revenue is generated from financial and insurance advisory services in cooperation with licensed companies. Cooperation with third parties subject us to risks. |
| ● | A portion of our revenue is generated from providing consultation services on foreign immigration schemes, as well as overseas education advisory and application services. Any change in immigration policies and overseas education requirements can affect our revenue and results of operations. |
| ● | A portion of our revenue is generated from providing property agency services. Economic volatility and market uncertainty may impact demand for the property market, potentially affecting our revenue streams and profitability. |
| ● | If we fail to protect customer data and privacy, our reputation, financial condition and results of operations will be materially and adversely affected. |
| ● | The audit reports for prior reporting periods included in our annual reports have been prepared by predecessor auditors whose work may not be inspected fully by the Public Company Accounting Oversight Board and, as such, you may be deprived of the benefits of such inspection. |
| ● | If we become directly subject to the recent scrutiny involving U.S. listed Chinese companies, we may have to expend significant resources to investigate and/or defend the matter, which could harm our business operations, stock price and reputation. |
Risks Related to Doing Business in Jurisdictions We Operate
| ● | A downturn in the Hong Kong, China or global economy, and economic and political policies of China could materially and adversely affect our business and financial condition. |
| ● | The Hong Kong legal system embodies uncertainties which could limit the legal protections available to us. |
| ● | Uncertainties with respect to the PRC legal system could adversely affect us. |
| ● | Changes in the policies, regulations, rules, and the enforcement of laws of the PRC government may be quick with little advance notice and could have a significant impact upon our ability to operate profitably in the PRC. |
| ● | The PRC government may intervene or influence our business operations at any time or may exert more control over offerings conducted overseas and foreign investment in China based issuers, which could result in a material change in our business operations or the value of our securities. Additionally, the governmental and regulatory interference could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless. We are also currently not required to obtain approval from Chinese authorities to list on U.S. exchanges, however, if we are required to obtain approval in the future and are denied permission from Chinese authorities to list on U.S. exchanges, we will not be able to continue listing on U.S. exchange, which would materially affect the interest of the investors. |
| ● | On December 28, 2021, the CAC, the National Development and Reform Commission (“NDRC”), and several other administrations jointly issued the revised Measures for Cybersecurity Review, or the “Revised Review Measures”, which became effective and replaced the existing Measures for Cybersecurity Review on February 15, 2022. According to the Revised Review Measures, if an “online platform operator” that is in possession of personal data of more than one million users intends to list in a foreign country, it must apply for a cybersecurity review. Based on a set of Q&A published on the official website of the State Cipher Code Administration in connection with the issuance of the Revised Review Measures, an official of the said administration indicated that an online platform operator should apply for a cybersecurity review prior to the submission of its listing application with non-PRC securities regulators. Moreover, the CAC released the draft of the Regulations on Network Data Security Management in November 2021 for public consultation, which among other things, stipulates that a data processor listed overseas must conduct an annual data security review by itself or by engaging a data security service provider and submit the annual data security review report for a given year to the municipal cybersecurity department before January 31 of the following year. Given the recency of the issuance of the Revised Review Measures and their pending effectiveness, there is a general lack of guidance and substantial uncertainties exist with respect to their interpretation and implementation. For more information, see page 24 under The PRC government may intervene or influence our business operations at any time or may exert more control over offerings conducted overseas and foreign investment in China based issuers, which could result in a material change in our business operations or the value of our securities. Additionally, the governmental and regulatory interference could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless. We are also currently not required to obtain approval from Chinese authorities to list on U.S. exchanges, however, if we are required to obtain approval in the future and are denied permission from Chinese authorities to list on U.S. exchanges, we will not be able to continue listing on U.S. exchange, which would materially affect the interest of the investors. |
| ● | Any failure of us to obtain the relevant approval or complete the filings and other relevant regulatory procedures in a timely manner could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or become worthless. |
| ● | Our corporate structure and being based in or having the majority of our operations in China, as well as changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our business and operations. |
| ● | Non-compliance with labor-related laws and regulations of the PRC may have an adverse impact on our financial condition and results of operation. |
| ● | It may be difficult, cumbersome, and time-consuming to deliver legal process documents to us or such current officers reside within China from outside of mainland China and you may experience difficulties in enforcing foreign judgments or bringing actions in China against us or our management named in the prospectus based on foreign laws. |
| ● | We may rely on dividends and other distributions on equity paid by our subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our subsidiaries to make payments to us, including PRC Governmental control of currency conversion and restriction on our ability to transfer or distribute cash within our organization or to foreign investors could have a material adverse effect on our ability to conduct our business and may affect the value of your investment |
| ● | U.S. regulatory bodies may be limited in their ability to conduct investigations or inspections of our operations in China. |
| ● | PRC regulation of loans to and direct investment in PRC entities by offshore holding companies may delay us from using the proceeds of our IPO to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business. |
| ● | Political risks associated with conducting business in Hong Kong. |
| ● | The recent joint statement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and the Holding Foreign Companies Accountable Act all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. |
Risks Related to our Shares
| ● | We are currently appealing an adverse judgment civil lawsuit in Hong Kong; if our appeal is unsuccessful, we may be unable to satisfy the judgment, which could result in the filing of a winding-up petition against us and the liquidation of our assets. |
| ● | We may fail to meet continued listing requirements on the NASDAQ Capital Market. |
| ● | A large, active trading market for our securities may not develop and the trading price for our securities may fluctuate significantly. |
| ● | The trading price of the ordinary shares is likely to be volatile, which could result in substantial losses to investors. |
| ● | Techniques employed by short sellers may drive down the market price of the ordinary shares. |
| ● | If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the market price for the ordinary shares and trading volume could decline. |
| ● | Our memorandum and articles of association contain anti-takeover provisions that could materially adversely affect the rights of holders of our ordinary shares. |
| ● | There can be no assurance we will not be a passive foreign investment company, for any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. investors in our ordinary shares or Warrants. |
| ● | As a company incorporated in the Cayman Islands, we can adopt certain home country practices regarding corporate governance matters that differ significantly from the NASDAQ Stock Market corporate governance listing standards. These practices may provide less protection to shareholders than they would enjoy if we complied fully with the NASDAQ Stock Market corporate governance listing standards. |
