Ucommune had net current liabilities of RMB2,156.8 million, RMB739.4 million (US$106.0 million) and RMB673.2 million (US$95.1 million) as of December 31, 2018, December 31, 2019 and June 30, 2020, respectively. Net current liabilities expose Ucommune to liquidity risk. Ucommune has satisfied its liquidity requirements primarily through equity financing activities and short-term/long-term borrowings. Such financing might not be available to Ucommune in a timely manner or on terms that are acceptable, or at all.

Ucommune’s business will require significant amount of working capital to support its growth. Ucommune’s future liquidity and ability to make additional capital investments will depend primarily on its ability to maintain sufficient cash generated from operating activities and to obtain adequate external financing. There can be no assurance that Ucommune will be able to renew existing bank facilities or obtain equity or other sources of financing.

Ucommune’s financial condition and operational results are affected by Ucommune’s occupancy rates. Ucommune faces heightened risks as it relies on many large enterprise members to sustain its occupancy rate.

In pre-opening process, Ucommune’s spaces typically have a three to five month vacancy period to redevelop space and conduct other pre-opening preparation work. The vacancy period might also be longer than expected if Ucommune cannot attract members to its new spaces or maintain members of its existing spaces.

Ucommune relies on a limited number of key large enterprise members to sustain its occupancy rate. Ucommune’s top 25 large enterprise members accounted for approximately 29.58% of Ucommune’s tenancy in terms of workstations as of June 30, 2020 and contributed to 25.70% of Ucommune’s total revenue for the six months ended June 30, 2020. Such concentration leads to more heightened risks, for instance, if one of these key enterprises terminates their contract with Ucommune, Ucommune’s business could suffer. Large enterprise members often sign membership agreements on longer lease terms and for larger spaces or a greater number of workstations than some of Ucommune’s other members. They generally account for a high proportion of Ucommune’s net revenue at a particular community. A default by a large enterprise member under its agreement with Ucommune could cause a significant reduction in the operating cash flow generated by the community where that large enterprise member is situated. In addition, the larger amount of available space occupied by any individual large enterprise member means that the time and effort required to execute a definitive agreement tailored for such a member is greater than Ucommune’s standard membership agreements. In some instances, Ucommune agrees to varying levels of customization of the spaces Ucommune licenses to these large enterprise members. Large enterprise members may nevertheless delay commencement of their membership agreements, fail to make timely lease payments, or declare bankruptcy or otherwise default on their obligations to Ucommune. Any of these events could result in the termination of that large enterprise member’s agreement with Ucommune and, potentially, sunk costs and transaction costs that are difficult or impossible for Ucommune to recover.

In case the members choose not to continue using Ucommune’s spaces, Ucommune may experience difficulty in having new members 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 Ucommune’s operational results.

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

Ucommune continually reviews the numbers of spaces, workstations, members 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 Ucommune’s future operating performance. While these numbers are based on what Ucommune believes to be reasonable estimates for the applicable period of measurement, there are inherent challenges in measuring how Ucommune’s spaces are used across a large member base. For example, the number of Ucommune’s members may include members who do not actively use Ucommune’s spaces or services. If investors do not perceive Ucommune’s operating metrics to accurately represent Ucommune’s operating performance, or if Ucommune discovers material inaccuracies in its operating metrics, Ucommune’s business operation, financial condition and reputation may be materially and adversely affected.

Ucommune requires a significant amount of capital to fund its operations and growth. If Ucommune cannot obtain sufficient capital on acceptable terms, its business, financial condition and prospects may be materially and adversely affected.

Ucommune requires a significant amount of capital and resources for its operations and continued growth. Ucommune expects to make significant investments in the expansion and operations of its spaces, which may significantly increase Ucommune’s net cash used in operating activities. Ucommune’s sales and marketing expenses may also continue to increase in order to keep attracting members and to attract new members. In addition, Ucommune invests heavily in its technology systems, which are essential to Ucommune’s expansion and operations. It may take a long time to realize returns on such investments, if at all.

To date, Ucommune has historically funded its cash requirements primarily through capital contributions from its shareholders and short-term or long-term borrowings. If these resources are insufficient to satisfy Ucommune’s cash requirements, Ucommune may seek to raise funds through additional equity offering or debt financing or additional bank facilities. Ucommune’s ability to obtain additional capital in the future, however, is subject to a number of uncertainties, including those relating to its future business development, financial condition and results of operations, general market conditions for financing activities by companies in its industry, and macro-economic and other conditions in China and globally. If Ucommune cannot obtain sufficient capital on acceptable terms to meet its capital needs, Ucommune may not be able to execute its growth strategies, and Ucommune’s business, financial condition and prospects may be materially and adversely affected.

Ucommune’s advertising and branding services are subject to risks associated with concentration of customers.

The majority of Ucommune’s marketing and branding services revenue generated in the six months ended June 30, 2020 was attributed to one of Ucommune’s subsidiaries, Shengguang Zhongshuo, a digital marketing services provider Ucommune acquired in December 2018. For the six months ended June 30, 2020, the top four customers of Shengguang Zhongshuo accounted for approximately 90% of its total revenue. Such concentration leads to heightened risks. For example, any adverse changes or loss of one of Ucommune’s major customers of Ucommune’s advertising and branding services may result in a material decrease in Ucommune’s marketing and branding services revenue, and any interruption or adjustments of those major customers’ businesses may lead to material fluctuations of Ucommune’s marketing and branding services revenue. Due to the decreased marketing and branding spending by certain major clients in the first half of 2020, Ucommune’s marketing and branding services revenue decreased by 30.4% from RMB181.7 million for the six months ended June 30, 2019 to RMB126.5 million (US$17.9 million) for the six months ended June 30, 2020.

In addition, the historical financial results of Ucommune’s marketing and branding services may not serve as an adequate basis for evaluating the future financial results of this segment. Ucommune’s operational history of Shengguang Zhongshuo is very limited and the concentration of customers further increases the likelihood of material fluctuations of Ucommune’s marketing and branding services revenue. For example, Ucommune experienced substantial growth in net revenue from marketing and branding services in the third quarter of 2019 primarily due to the increased demand from Ucommune’s major customers. However, such growth rate may not be sustainable since Ucommune’s net revenue from marketing and branding services will be largely impacted by the fluctuation in demand for marketing and branding services of Ucommune’s major customers.

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

Ucommune also plans to expand operations in China and overseas markets. Additionally, in order to provide superior services to its members, Ucommune intends to increase the U Plus service offerings. This expansion will incur significant costs, and it inherently involves uncertainties and risks as Ucommune may encounter unexpected issues or situations for which Ucommune is unprepared.

As Ucommune’s business expands into new regions, Ucommune plans to invest substantial resources and may face new operational risks and challenges associated with the business, economic and regulatory environment with which Ucommune is not familiar. Ucommune 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 members or potential members who have different preferences. Additionally, in launching new spaces in a new region, Ucommune needs to negotiate satisfactory leasing terms with local parties, to adapt the design and features of Ucommune’s spaces and services to accommodate local conventions, and to adjust Ucommune’s pricing

and marketing approaches as per factors such as local rental prices. All these adjustments Ucommune makes may be ineffective and adversely affect Ucommune’s business. For example, for the years of 2018 and 2019 and for the six months ended June 30, 2019 and June 30, 2020, Ucommune recorded impairment loss on long-lived assets of RMB111.2 million, RMB52.0 million (US$7.5 million), RMB46.1 million and RMB33.5 million (US$4.7 million), respectively. Ucommune’s 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.

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

Ucommune has made significant investment in long-lived assets. Ucommune is required to review Ucommune’s 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 business combinations, whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. When these events occur, Ucommune 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, Ucommune 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 Ucommune’s estimates and judgments are inaccurate, the fair value determined could be inaccurate and the impairment may not be adequate, and Ucommune may need to record additional impairments in the future.

Ucommune had impairment loss on long-lived assets of RMB52.0 million (US$7.5 million) for the year ended December 31, 2019 and RMB33.5 million (US$4.7 million) for the six months ended June 30, 2020. These impairment losses primarily reflected impairment of right-of-use of assets arising from certain long-term leases, including certain long-term lease agreements with certain shareholders. For further information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Key Components of Results of Operations.” Ucommune could be required to record additional impairments on long-lived assets in the future. Any significant impairment losses charged against Ucommune’s long-lived assets could have a material adverse effect on Ucommune’s results of operations.

Ucommune faces vigorous competition. If Ucommune is not able to compete effectively with others, Ucommune’s business, financial condition and results of operations may be materially and adversely affected.

While Ucommune is a leader in the Chinese agile office space industry, the industry is still in an early stage of development with numerous opportunities. If new companies launch competing solutions in the markets in which Ucommune operates, Ucommune may face increased competition for members. Ucommune’s existing competitors include global players, up-and-coming local companies and traditional workspace operators. Some of Ucommune’s competitors may have more resources, operate in more jurisdictions and be able to provide a better member experience at a more competitive price. Ucommune may face heightened competition under certain operation models. For example, for Ucommune’s spaces under U Brand, Ucommune’s competitor may charge lower management fees and Ucommune may lose the client due to pricing or be forced to lower its fees. Ucommune’s inability to compete effectively in securing new or repeat businesses could hinder its growth or adversely impact its operating results.

In addition, some of the services Ucommune provides or plans to provide are served by companies established in their markets. Failure to compete in such services markets could damage Ucommune’s ability to cultivate the vibrant community Ucommune seeks to build.

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

Ucommune’s future success depends in a large part on the continued service of Ucommune’s key management. If Ucommune loses the services of any member of Ucommune’s key management, Ucommune 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 Ucommune’s business and growth. If any member of Ucommune’s key management joins a competitor or forms a competing business, Ucommune may lose customers, know-how and key professionals and staff members.

Ucommune’s rapid growth also requires it to continually hire, train, and retain a wide range of personnel that can adapt to a dynamic, competitive and challenging business environment and are capable of helping us conduct effective marketing, innovate new products and service offerings, and develop technological capabilities. Ucommune may need to offer attractive compensation and other benefits package, including share-based compensation, to attract and retain them. Ucommune also needs to provide Ucommune’s employees with sufficient training to help them realize their career development and grow with Ucommune. Any failure to attract, train, retain or motivate experienced and capable personnel could severely disrupt Ucommune’s business and growth.

Certain of Ucommune’s affiliated persons or entities are now or may in the future lease the building spaces they own to Ucommune or have other transactions with Ucommune. Ucommune may have conflicts of interest with Ucommune’s officers and directors for such related party transactions and Ucommune may not be able to resolve such conflicts on terms favorable to it.

Certain of Ucommune’s officers and directors are now or may in the future lease the building spaces they own to Ucommune or have other transactions with Ucommune. For example, Ucommune leases certain spaces from Youxiang Group, an affiliate of Dr. Daqing Mao, Ucommune’s founder. Those related parties negotiated satisfactory terms that are in the best interests of their businesses as a whole, which may not necessarily be aligned with Ucommune’s best interests. Although upon completion of the Business Combination, Ucommune’s audit committee, consisting of independent non-executive directors, will review and approve all proposed related party transactions, Ucommune may not be able to resolve all potential conflicts of interest in this regard.

Ucommune has engaged in transactions with related parties, and such transactions present potential conflicts of interest that could have an adverse effect on our business and results of operations.

In additional to leasing building spaces from related party, Ucommune has entered into a number of other transactions with related parties. See “Related Party Transactions” for more details. Ucommune or PubCo may in the future enter into additional transactions with its related parties. Interests of these related parties may not necessarily be aligned with Ucommune’s or PubCo’s interests and the interests of its other shareholders. For example, conflicts of interest may arise in connection with decisions regarding the transaction arrangements which may be less favorable to Ucommune or PubCo than similar arrangements negotiated with unaffiliated third parties. Conflicts of interest may also arise in connection with the exercise of contractual remedies, such as the treatment of events of default. As a result, those related party transactions, individually or in the aggregate, may have an adverse effect on our business and results of operations.

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 Ucommune’s existing premises or to renew such leases or other arrangements at acceptable terms could materially and adversely affect Ucommune’s business.

Ucommune’s ability to increase the number of spaces and to operate them profitably depends on the due execution and performance of these leases or other arrangements and whether Ucommune is 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 increases in rental rates, particularly those markets where initial terms under Ucommune’s leases are shorter, could adversely affect Ucommune’s business. Additionally, Ucommune’s ability to negotiate favorable terms to extend an lease agreement or in connection with an alternate space will depend on then-prevailing conditions in the real estate market, such as overall lease expenses increase, competition from other would-be tenants for desirable leased spaces and Ucommune’s relationships with current and prospective building owners and landlords, or other factors that are not within Ucommune’s control. If Ucommune is not able to renew or replace an expiring lease agreement, Ucommune will incur significant costs related to vacating that space or redeveloping the space, which could result in loss of members who may have chosen that space based on the design, location or other attributes of that particular space.

Strategic alternatives to pure leasing arrangements, such as acquisitions, strategic alliances and asset management agreements accounted for a significant percentage of the spaces Ucommune obtains. These arrangements are generally more flexible and require less direct capital expenditures than a traditional lease arrangement but also involve risks and uncertainties. For example, Ucommune has experienced delay or failure to deliver the possession of the premises with

some of the counterparties for various reasons, including the delay of completion of the construction and the change of title of the premise before the delivery. Although Ucommune has experienced such delay or failure in very limited cases, Ucommune could experience delay or failure to deliver the premises in the future. Disruption of these strategic arrangements will adversely affect Ucommune’s business.

Growth of Ucommune’s business will partially depend on the recognition of Ucommune’s brand. Failure to maintain, protect and enhance Ucommune’s brand would limit Ucommune’s ability to expand or retain Ucommune’s member base, which would materially and adversely affect Ucommune’s business, financial condition and results of operations.

Ucommune believes that recognition of Ucommune’s brand among Ucommune’s members and business partners has helped in managing Ucommune’s member acquisition costs and contributed to the growth and success of Ucommune’s business. Accordingly, maintaining, protecting and enhancing the recognition of Ucommune’s brand is critical to Ucommune’s business and market position. Maintaining, protecting and enhancing Ucommune’s brand depends on several factors, including, Ucommune’s ability to:

•        maintain the quality and attractiveness of the services Ucommune offers;

•        maintain relationships with landlords and other business partners;

•        increase brand awareness through marketing and brand promotion activities;

•        comply with relevant laws and regulations;

•        compete effectively against existing and future competitors; and

•        preserve Ucommune’s reputation and goodwill generally and in the event of any negative publicity on Ucommune’s services and data security, or other issues affecting us, and China’s agile office space industry in general.

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

Ucommune is exposed to risks associated with the redevelopment and construction of the spaces Ucommune occupies.

Opening new spaces subjects Ucommune 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 Ucommune’s construction activities. Ucommune 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 Ucommune the lost revenue from that space and may damage Ucommune’s brand and require that Ucommune leases and provides temporary space for its members.

Despite having Ucommune’s own design and building team during the development phase of spaces, Ucommune relies in part on the continued availability and satisfactory performance of third-party general contractors and subcontractors to perform the actual construction work, and in many cases to select and obtain the related building materials. As such, the timing and quality of the redevelopment of Ucommune’s occupied spaces depends on the performance of these third party contractors acting on behalf of Ucommune.

The people Ucommune engages 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. Although Ucommune is insured against many of these risks, Ucommune’s insurance coverage may be inadequate in scope or the coverage amount may be insufficient to fully compensate Ucommune for any losses arising from any such events at a construction site Ucommune operates or oversees. Despite Ucommune’s detailed specifications and Ucommune’s inspection,

project management and quality control procedures, in some cases, 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 Ucommune’s spaces and potentially lead to personal injury. Ucommune could also suffer damage to Ucommune’s reputation, and may be exposed to possible liability, if these third parties fail to comply with applicable laws.

Furthermore, for two parcels of land for which Ucommune holds land use rights, Ucommune has not commenced construction as of the date of this proxy statement/prospectus and were identified as idle lands. Pursuant to the hearing minutes issued by the local department of land and resources, Ucommune shall commence construction in accordance with the land use right assignment contracts before November 30, 2020, on condition that the local government provides required cooperation for facilitating the construction. Pursuant to relevant laws and regulations, if Ucommune doesn’t commence construction before November 30, 2020, it may be subject to charges for idle land at 20% of cost of land assignment, the maximum amount of which is approximately RMB 21.7 million.

Ucommune incurs significant costs related to the redevelopment of its spaces, which it may be unable to recover in a timely manner or at all.

Redevelopment of a space typically takes three to five months from the date Ucommune takes possession of the space under the relevant occupancy agreement to the opening date. During this time, Ucommune incurs substantial costs without generating any revenues from the space, especially the costs for spaces under its self-operated model for which Ucommune bears lease and redevelopment costs. If Ucommune is unable to complete the redevelopment and construction activities for any reason, or conditions in the real estate market or the broader economy change in ways that are unfavorable, Ucommune may be unable to recover these costs in a timely manner or at all. In addition, Ucommune’s redevelopment activities are subject to cost and schedule overruns as a result of many factors, some of which are beyond Ucommune’s control and ability to foresee, including increases in the cost of materials and labor.

Ucommune incurs costs relating to the maintenance, refurbishment and remediation of Ucommune’s spaces.

The terms of Ucommune’s lease agreements generally require that Ucommune ensures that the spaces Ucommune occupies are kept in good status throughout the term of the occupancy agreement and Ucommune typically bears the obligation of maintenance and repair for spaces Ucommune decorated during the period. The terms of Ucommune’s lease agreements for the overseas spaces may also require Ucommune to return the space to the landlord at the end of the term of the occupancy agreement in the same condition it was delivered to Ucommune, which, in such instances, will require removing all fixtures and improvements to the space. The costs associated with this maintenance, removal and repair work may be significant.

Ucommune also anticipates that Ucommune will be required to periodically refurbish Ucommune’s spaces to keep pace with the changing needs of Ucommune’s members. Extensive refurbishments may be costly and time-consuming and may negatively impact Ucommune’s operational and financial performance. Ucommune’s member experience may also be adversely affected if extensive refurbishments disrupt Ucommune’s operations at Ucommune’s spaces.

The long-term and fixed cost nature of Ucommune’s leases may limit Ucommune’s operating flexibility and could adversely affect Ucommune’s liquidity.

Ucommune currently leases a significant majority of its spaces under long-term leases with an average term of approximately eight years. Ucommune’s obligations to landlords under these agreements extend for periods that significantly exceed the length of Ucommune’s membership agreements with its members, which may be terminated by Ucommune’s members upon one-month notice. Ucommune’s leases generally provide for fixed monthly payments that are not tied to member usage or the size of Ucommune’s member base, and all of Ucommune’s leases contain minimum lease payment obligations. As a result, if members at a particular space terminate their membership agreements with Ucommune and if Ucommune is unable to attract members to actively use its spaces or services, Ucommune’s lease expenses may exceed its net revenue. In addition, in an environment where retail cost for real estate is decreasing, Ucommune may not be able to lower its fixed monthly payments under its leases to rates that are commensurate with prevailing market rates. At the same time, Ucommune would also be pressured to lower its membership fees charged to the members, potentially resulting in Ucommune’s lease expense exceeding Ucommune’s net revenue. In such events, Ucommune would not have the ability to reduce its lease expenses or otherwise terminate the lease in accordance with its terms.

If Ucommune experiences a prolonged reduction in net revenue at a particular space, Ucommune’s results of operations in respect of that space would be adversely affected unless and until either the lease expires, or Ucommune is able to assign the lease or sublease the space to a third party, or Ucommune defaults under the terms of the lease and ceases operations at the leased spaces. Ucommune’s ability to assign a lease or sublease the space to a third party may be constrained by provisions in the lease that restrict these transfers without the prior consent of the landlord. Additionally, Ucommune could incur significant costs if Ucommune decides to assign or sublease unprofitable leases, as Ucommune may incur transaction costs associated with finding and negotiating with potential transferees, and the ultimate transferee may require upfront payments or other inducements. A default under a lease could expose Ucommune to breach of contract and other claims which could result in direct and indirect costs to us, and could result in operational disruptions that could harm Ucommune’s reputation and brand.

Failure to comply with the terms of Ucommune’s indebtedness could result in default, which could have an adverse effect on Ucommune’s cash flow and liquidity.

Ucommune may from time to time enter into credit facilities and debt financing arrangements containing financial and other covenants that could, among other things, restrict Ucommune’s business and operations. If Ucommune breaches any of these covenants, including the failure to maintain certain financial ratios, Ucommune’s lenders may be entitled to accelerate Ucommune’s debt obligations. Any default under the credit facility could result in the repayment of these loans prior to maturity as well as the inability to obtain additional financing, which in turn may have a material adverse effect on Ucommune’s cash flow and liquidity.

Some of the lease agreements of Ucommune’s leased properties have not been registered with the relevant PRC government authorities as required by PRC law, which may expose Ucommune to potential fines.

Under PRC law, lease agreements of commodity housing tenancy are required to be registered with the local construction (real estate) departments. As of the date of this proxy statement/prospectus, some of Ucommune’s lease agreements for its leased properties in China, including leased properties for its spaces, have not been registered with the relevant PRC government authorities. The reasons for the incomplete registration and filing of lease agreements include (i) the relevant lessors failed to provide necessary documents for Ucommune to register the leases with the local government authorities; (ii) in practice, certain local regulatory authorities do not process certain leases registration applications; and (iii) Ucommune did not file registrations for certain of Ucommune’s lease agreements that were close to expiration. Failure to complete the registration and filing of lease agreements will not affect the validity of the lease agreements, however, in case the parties of the lease agreements fail to rectify such non-compliance within the prescribed time frame after receiving notice from the relevant PRC government authorities, they may be exposed to potential fines ranging from RMB1,000 to RMB10,000 for each unregistered lease, at the discretion of the relevant authority. As advised by Ucommune’s PRC counsel, if Ucommune fails to rectify the unregistered leases within a period required by relevant government authorities, the maximum amount of potential fines arising from the unregistered leases would be approximately RMB0.8 million, as of the date of this proxy statement/prospectus. However, to date, no material penalty has been imposed on Ucommune for the failure to register the relevant lease agreements. Ucommune has taken several steps to strengthen its compliance for registration of lease agreements, including (i) liaising with the relevant lessors to provide required documentation for completing the registration; (ii) filing registrations for lease agreements that are close to expiration if such agreements are extended; and (iii) strengthening Ucommune’s internal control procedures to ensure registration of lease agreements for the new spaces.

Ucommune’s rights to use the leased properties could be challenged by property owners, relevant government authorities or other third parties, which may disrupt Ucommune’s operations and incur relocation costs.

As of the date of this proxy statement/prospectus, certain lessors of Ucommune’s leased properties in China failed to provide Ucommune with valid property ownership certificates or authorizations from the property owners for the lessors to sublease the properties. If such lessors do not have the relevant property ownership certificates or the right to lease or sublease such properties to Ucommune, the relevant rightful title holders or other third parties may challenge Ucommune’s use of such leased properties, and Ucommune may be forced to vacate these properties and be required to seek alternative properties for lease or choose to terminate the lease earlier while bearing the penalty of early termination under the lease. The usage of Ucommune’s leased properties might also be challenged by other various reasons, such as restrictions purposed by laws, regulations or policies based on the nature or usage of certain leased properties. With respect to these properties, if the lessor was considered by competent government authorities in violation of relevant laws and regulations for providing such leased properties to Ucommune, and was penalized by such competent government

authority, Ucommune may not be able to lease and use such lease properties. In such an event, Ucommune’s business operations will be interrupted, and relocation costs will be incurred. Moreover, if Ucommune’s lease agreements are challenged by third parties, this could result in diversion of management attention and cause Ucommune to incur costs associated with defending such actions, even if such challenges are ultimately determined in Ucommune’s favor.

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

Ucommune has invested and anticipates to continue investing in sales and marketing activities to promote its brand and spaces and to deepen its relationships with members. Ucommune also pays for online advertisements to platforms to sustain its exposure and publicity. To foster the member base, Ucommune may offer discounts or other incentives, which incur costs and might not be effective for obtaining new members.

Moreover, Ucommune’s sales and marketing activities may not be well received by its existing members, and may not attract new ones as anticipated. The evolving marketing landscape may require Ucommune to experiment with new marketing methods to keep pace with industry trends and members’ preferences. Failure to refine Ucommune’s existing marketing approaches or to introduce new marketing approaches in a cost-effective manner could reduce the number of members, occupancy rate and market share. Ucommune also relies on a number of agencies, business partners and its own business development team to attract new members and thus enlarge its member base. Any disruption of Ucommune’s relationship with these intermediaries could harm Ucommune’s abilities to promote business. Therefore, there is no assurance that Ucommune will be able to recover the costs of its sales and marketing activities or that these activities will be effective in attracting new members and retaining existing ones.

A significant interruption in the operations of Ucommune’s suppliers could potentially disrupt Ucommune’s operations.

Ucommune partially relies on third-party suppliers for certain equipment, furniture and other fixtures. Ucommune also depends on third-party suppliers to provide certain services to facilitate its daily operations, such as security services and maintenance services. Ucommune has limited control over the operations of its third-party suppliers, and any significant interruption in their operations may have an adverse impact on Ucommune’s operations. For example, a significant interruption in the operations of Ucommune’s internet service provider could impact the operation of Ucommune’s apps, malfunctioning of Ucommune’s security equipment could lead to safety issues of Ucommune’s spaces, and any disruption of lighting could cause poor member experience. Disruptions in the supply chain may result from weather-related events, natural disasters, trade restrictions, tariffs, border controls, acts of war, terrorist attacks, third-party strikes or ineffective cross dock operations, work stoppages or slowdowns, shipping capacity constraints, supply or shipping interruptions or other factors beyond Ucommune’s control. If Ucommune could not resolve the impact of the interruptions of operations of Ucommune’s third-party suppliers or service providers, Ucommune’s operations and financial results may be materially and adversely affected.

In some cases, Ucommune may rely on a single source for procurement of construction materials or other supplies in a given region. Any disruption in the supply of certain materials could disrupt operations at Ucommune’s existing spaces or significantly delay Ucommune’s opening of a new space, which may cause harm to Ucommune’s reputation and brand.

A large portion of Ucommune’s members are concentrated in major metropolitan areas and certain industries. An economic downturn in any of these areas or industries may result in reduction of Ucommune’s members and could adversely affect Ucommune’s results of operations.

A significant portion of Ucommune’s existing and target member base consists of SMEs who may be disproportionately affected by adverse economic conditions. In addition, the concentration of Ucommune’s operations 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, 2018 and 2019 and the six months ended June 30, 2020, Ucommune generated the majority of its net revenue from its agile office spaces located in Beijing, Shanghai and Shenzhen. 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 member base, occupancy rates and/or pricing. In addition, Ucommune’s members are concentrated in certain industries, such as technology, media and telecom industry. Therefore, the adverse changes in those industries may affect the demands of agile office spaces of Ucommune’s

members and further affect Ucommune’s operation results. Ucommune’s business may also be affected by generally prevailing economic conditions in the markets where Ucommune operates, which can result in a general decline in real estate activity, reduce demand for occupancy and Ucommune’s services and exert downward pressure on Ucommune’s pricing.

Ucommune faces risks related to natural disasters, extreme weather conditions, health epidemics and other catastrophic incidents, which could significantly disrupt its operations.

China has in the past experienced significant natural disasters, including earthquakes, extreme weather conditions, as well as health scares related to epidemic or pandemic diseases, and any similar event could materially impact Ucommune’s business in the future. If a disaster or other disruption were to occur in the future that affects the regions where Ucommune operates its business, Ucommune’s operations could be materially and adversely affected due to loss of personnel and damage to property. Even if Ucommune is not directly affected, such a disaster or disruption could affect the operations or financial condition of Ucommune’s ecosystem participants, which could harm Ucommune’s results of operations.

In addition, Ucommune’s business could be affected by public health epidemics, such as the outbreak of avian influenza, severe acute respiratory syndrome, or SARS, Zika virus, Ebola virus, COVID-19 or other disease. In December 2019, a novel strain of coronavirus (COVID-19) was reported to have surfaced in China. While initially the outbreak was largely concentrated in China and caused significant disruptions to its economy, infections have been reported globally. The World Health Organization declared COVID-19 to constitute a “Public Health Emergency of International Concern” on January 30, 2020 and then characterized it as a pandemic on March 11, 2020. With an aim to contain the COVID-19 outbreak, the PRC government imposed various strict measures across the country including, but not limited to, travel restrictions, mandatory quarantine requirements, temporary closure of business premises, and postponed resumption of business operations. Ucommune’s business operations were severely disrupted in the first quarter of 2020 but gradually resumed after April 2020. In particular, most of Ucommune’s space in China were temporarily shut down from February 2020 to April 2020 as a result of government restrictions and regulation. Due to the economic downturn in China and worldwide caused by COVID-19, the demand for Ucommune’s spaces have been adversely affected since January 2020. As some of Ucommune’s members are vulnerable to the COVID-19 outbreak and the slowdown of the macroeconomic conditions, they could not make the payment in a timely manner or stopped renewing the lease, resulting in a decreased occupancy rate. Although China has controlled COVID-19 to some extent and Ucommune’s business has started to recover in the second quarter of 2020, the potential impact brought by and the duration of the COVID-19 outbreak is difficult to assess or predict and the full impact of COVID-19 on Ucommune’s operations will depend on many factors beyond Ucommune’s control. While it is unknown how long these conditions will last and what the complete financial effect will be to Ucommune, Ucommune is closely monitoring the impact of COVID-19 on it. Ucommune’s business, results of operations, financial conditions and prospects could be materially adversely affected to the extent that COVID-19 harms the Chinese and global economy in general.

Ucommune’s business and reputation may be affected if Ucommune’s employees or members of Ucommune’s community or guests who enter Ucommune’s spaces behave badly.

Ucommune’s emphasis on its values makes its reputation particularly sensitive to allegations of violations of community rules or applicable laws by employees, members, or guests who enter Ucommune’s spaces. If employees, members or guests violate Ucommune’s policies or engage in illegal or unethical behaviors, or are perceived to do so, Ucommune may be subject to negative publicity and Ucommune’s reputation may be harmed. These sort of behaviors may also lead to existing members ceasing to use Ucommune’s spaces, which would adversely impact occupancy and revenue for the affected space.

Ucommune is exposed to risks relating to the cooperation with Ucommune’s business partners.

Ucommune selects and relies on a number of business partners to provide various services such as corporate secretary and human resources, to facilitate more service options and better experience for its members. Due to the reliance on such business partners, any interruption of their operations, any failure of them to accommodate Ucommune’s fast growing business scale, any termination or suspension of Ucommune’s partnership arrangements, any change in cooperation terms, or any deterioration of cooperative relationships with them may materially and adversely affect Ucommune’s brand image and impact Ucommune’s operations.

In addition, Ucommune has limited control over its business partners. Failure by third parties to provide satisfactory services or comply with laws and regulations could subject Ucommune to reputational harm based on their association with Ucommune and its brand. In the event that Ucommune becomes subject to claims arising from services provided by its business partners, it 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 that Ucommune claims cannot be fully recovered from business partners, Ucommune may be required to bear such losses and compensation at Ucommune’s own costs. This could have a material and adverse effect on Ucommune’s business, financial condition and results of operations.

Ucommune may not effectively identify, pursue and consummate strategic alliances, investments or acquisitions.

Ucommune may from time to time engage in evaluations of, and discussions with, possible domestic and international acquisitions, investments or alliance candidates. Ucommune cannot guarantee that it may be able to identify suitable strategic alliances, investment or acquisition opportunities. Even when Ucommune identifies an appropriate acquisition or investment target, it may not be able to negotiate the terms of the acquisition or investment successfully, obtain financing for the proposed transaction, or integrate the relevant businesses into its existing business and operations. Furthermore, as Ucommune has limited control over the companies in which it only has minority stake, it cannot ensure that these companies will always comply with applicable laws and regulations in their business operations. Non-compliance of regulatory requirements by Ucommune’s investees may cause substantial harm to Ucommune’s reputations and the value of Ucommune’s investment. In addition, there may be particular complexities, regulatory or otherwise, associated with Ucommune’s expansion into new markets. Ucommune’s strategies may not be successfully implemented beyond the current markets. If Ucommune is unable to effectively address these challenges, its ability to execute acquisitions as a component of its long-term strategy will be impaired, which could have an adverse effect on its growth.

Ucommune may not achieve the benefits Ucommune expects from recent and future investments and acquisitions and Ucommune’s operations may be materially and adversely affected by such investments and acquisitions.

Ucommune has made and may continue to make equity investments in or acquisitions of businesses that it believes may complement its existing business or may improve the experience of its members. While Ucommune believes those initiatives may produce benefit to its business in the long term, such decisions may adversely impact its short- or medium-term operating results. Further, if the businesses Ucommune acquires or in which it invests do not subsequently achieve the synergies it expects or do not generate the financial and operational benefits it expects, Ucommune’s investments and acquisitions may not benefit its business strategy or generate sufficient revenues to offset the associated investment or acquisition costs.

Investments and acquisitions present financial, managerial and operational challenges, including difficulty in integrating Ucommune’s operations with businesses Ucommune acquires or in which Ucommune invests, potential disruption of Ucommune’s ongoing business and distraction of management attention and risks associated with offering new products and services or entering additional markets. For example, Ucommune invested in or acquired certain construction and decoration services providers and companies that provide value-added services to customers of agile office spaces. Ucommune has limited experience in these new businesses and services and may fail to generate sufficient revenue or other value to justify Ucommune’s investments in these businesses and services. Ucommune’s members may not respond favorably to its new services and solutions, which could damage its public image and market reputation and adversely affect its business.

In addition, acquisitions could result in significant impairments to long-term investment, goodwill and other intangible assets. For example, Ucommune invested RMB17.3 million in a company providing consulting services, but the investment was fully impaired as of December 31, 2018 as it encountered going concern issues.

Certain industry data and information in this proxy statement/prospectus were obtained from third-party sources and were not independently verified by Ucommune.

This proxy statement/prospectus contains certain industry data and information obtained from third-party sources. Ucommune has not independently verified the data and information contained in such third-party publications and reports. Data and information contained in such third-party publications and reports may be collected using

third-party methodologies, which may differ from the data collection methods used by us. In addition, these industry publications and reports generally indicate that the information contained therein is believed to be reliable, but do not guarantee the accuracy and completeness of such information.

Statistical data in these publications also include projections based on a number of assumptions. The agile office space industry may not grow at the rates projected by market data, or at all. Furthermore, if any one or more of the assumptions underlying the market data is later found to be incorrect, actual results may differ from the projections based on these assumptions. Material slowdown of the agile office space industry against the projected rates may have material and adverse effects on Ucommune’s business.

Ucommune may not be able to adequately protect its intellectual property from unauthorized use by others.

Ucommune’s trademarks and other intellectual properties are critical to its business. Any of Ucommune’s intellectual property rights could be challenged, invalidated, circumvented or misappropriated, or such intellectual property may not be sufficient to provide us with competitive advantages. There can be no assurance that (i) Ucommune’s pending applications for intellectual property rights will be approved, (ii) all of Ucommune’s intellectual property rights will be adequately protected, or (iii) Ucommune’s intellectual property rights will not be challenged by third parties or found by a judicial authority to be invalid or unenforceable. Third parties may also take the position that Ucommune is infringing their rights, and Ucommune may not be successful in defending these claims. Additionally, Ucommune may not be able to enforce and defend its proprietary rights or prevent infringement or misappropriation, without substantial expense to Ucommune and a significant diversion of management time and attention from business strategy.

To protect Ucommune’s trademarks and other proprietary rights, Ucommune relies on and expects to continue to rely on a combination of protective agreements with its team members and third parties (including local or other strategic partners it may do business with), physical and electronic security measures, and trademark, copyright, patent and trade secret protection laws. If the measures Ucommune 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 Ucommune’s brand and other intangible assets may be diminished and Ucommune’s ability to attract and retain members may be adversely affected.

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

Ucommune uses a combination of proprietary technology and technology provided by its third-party service providers to support its business and its member experience. For example, U Bazaar, which Ucommune develops in-house but also incorporates third-party and open source software where appropriate, connects local spaces and develops and deepens connections among Ucommune’s members, both at a particular space and across Ucommune’s global network.

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

To the extent that the technologies and systems that Ucommune uses to manage the daily operations of Ucommune’s business or that Ucommune makes available to its members malfunction, Ucommune’s ability to operate its business, retain existing members and attract new members may be impaired. Ucommune may not be able to attract and retain sufficiently skilled and experienced professionals to operate and maintain these technologies and systems, and Ucommune’s current product and service offerings may not continue to be, and new product and service offerings may not be, supported by the applicable third-party service providers on commercially reasonable terms or at all. Also, any harm to Ucommune’s members’ personal computers or other devices caused by Ucommune’s software, such as Ucommune’s apps, or other sources of harm, such as hackers or computer viruses, could have an adverse effect on the member experience and Ucommune’s reputation.

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

Ucommune’s business generates and processes a large amount of data; the improper use or disclosure of such data by unauthorized persons could subject Ucommune to significant reputational, financial, legal and operational consequences.

Ucommune generates significant amount of proprietary, sensitive and otherwise confidential information relating to its business and operations. Ucommune collects and stores these personal data regarding its members, including member names and billing data in its system. The collection, protection and use of personal data are governed by privacy laws and regulations enacted in PRC and other jurisdictions around the world. These laws and regulations continue to evolve and on occasion may be inconsistent from one jurisdiction to another. Compliance with applicable privacy laws and regulations may lead to increases in Ucommune’s operating costs and adversely impact Ucommune’s ability to conduct Ucommune’s business and market Ucommune’s products and services to Ucommune’s members and potential members. Any failure or perceived failure on Ucommune’s part or Ucommune’s third-party service providers to comply with applicable privacy laws, privacy policies or privacy-related contractual obligations may result in governmental enforcement actions, fines, litigation, other claims and adverse publicity.

Similar to other companies, Ucommune’s information technology systems face the threat of cyber-attacks, such as security breaches, phishing scams, malware and denial-of-service attacks. Ucommune’s systems or the systems of third-parties that Ucommune relies upon could experience unauthorized intrusions or inadvertent data breaches, which could result in the exposure or erosion of Ucommune’s proprietary information and/or members’ data. This data is maintained on Ucommune’s own systems as well as the systems of third-party service providers.

As methods used to obtain unauthorized access to systems or sabotage systems change frequently and may not be known until launched against Ucommune or the third parties Ucommune relies on, Ucommune 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 Ucommune’s systems or the systems of third parties Ucommune relies on. If any such event occurs, Ucommune 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 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, Ucommune may be the subject of negative publicity and the perception of the effectiveness of Ucommune’s security measures and Ucommune’s reputation may be harmed, which could damage Ucommune’s relationships and result in the loss of existing or potential members. In addition, even if there is no compromise of member information, Ucommune could incur significant fines or lose the opportunity to support electronic payments from members, which would limit the full effectiveness and efficiency of Ucommune’s payment processing.

The wide variety of payment methods that Ucommune accepts subject Ucommune to third-party payment processing-related risks.

Ucommune accepts a variety of payment methods including WeChat Pay and Alipay through third-party payment processors. Ucommune pays these payment processors varying service fees, which may increase over time and raise Ucommune’s operating costs. Ucommune may also be subject to fraud, security breaches and other illegal activities in connection with the various payment methods Ucommune offers.

In addition, Ucommune is subject to various rules, regulations and requirements, regulatory or otherwise, governing payment processing, which could change or be reinterpreted to make it difficult or impossible for Ucommune to comply with. For example, according to Announcement No.10 (2018) of the People’s Bank of China issued in July 2018, or Announcement No.10, companies that refuse to accept cash payment should rectify such non-compliance.

According to People’s Bank of China’s interpretation of Announcement No.10, e-commence platforms, self-service counters and other companies (i) that offer products and services online and in a cashier-less manner, (ii) whose entire customer purchase process does not involve payment or receipt of cash, and (iii) who have obtained consent from customers to use electronic payment methods, may use electronic payment methods instead of accepting cash. Ucommune believes that its cashier-less operation is in compliance with Announcement No. 10. However, Ucommune cannot assure you that the relevant governmental authorities will have the same interpretation. If Ucommune fails to comply with these rules or requirements, Ucommune may be subject to fines and higher transaction fees or no longer be able to offer certain payment methods, and Ucommune’s business, financial condition and results of operations could be materially and adversely affected.

Ucommune may experience significant complaints from members, or adverse publicity involving its spaces and services.

Ucommune faces an inherent risk of complaints from its members. Most of the complaints Ucommune received from members were related to the facilities and services of Ucommune’s spaces. Ucommune takes these complaints seriously and endeavors to reduce such complaints by implementing various remedial measures. Nevertheless, Ucommune cannot assure you that Ucommune can successfully prevent or address all complaints.

Any complaints or claims against Ucommune, even if meritless and unsuccessful, may divert management attention and other resources from Ucommune’s business and adversely affect Ucommune’s business and operations. Members may lose confidence in Ucommune and its brand, which may adversely affect Ucommune’s 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 agile office spaces industry, whether or not accurate, and whether or not concerning Ucommune’s spaces, can adversely affect Ucommune’s business, results of operations and reputation.

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

From time to time, Ucommune has been, and may in the future be, subject to lawsuits brought on by its competitors, individuals, or other entities against Ucommune, in matters relating to intellectual property rights and contractual disputes. At times, the outcomes of actions Ucommune institutes may not be successful or favorable to it. Lawsuits against it may also generate negative publicity that significantly harms its reputation, which may adversely affect its ability to expand the member base. In addition to the related cost, managing and defending litigation and related indemnity obligations can significantly divert management’s attention from operating Ucommune’s business. Ucommune may also need to pay damages or settle lawsuits with a substantial amount of cash.

Upon the consummation of the Business Combination, PubCo, as the holding company of Ucommune, may face additional exposure to claims and lawsuits. These claims could divert management time and attention away from Ucommune’s business and result in significant costs to investigate and defend, regardless of the merits of the claims. In some instances, PubCo 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 share-based compensation may have an impact on Ucommune’s or its future holding company’s profit. Exercise of the share options granted will increase the number of Ucommune’s or its future holding company’s shares, which may affect the market price of Ucommune’s or its future holding company’s shares.

Ucommune adopted a share incentive plan in August 2019, which Ucommune refers to as 2019 Plan in this proxy statement/prospectus, to enhance Ucommune’s ability to attract and retain exceptionally qualified individuals and to encourage them to acquire a proprietary interest in the company’s growth and performance. The maximum aggregate number of ordinary shares Ucommune is authorized to issue pursuant to all awards under 2019 Plan is 15,028,567 ordinary shares. As of the December 31, 2019, options to purchase an aggregate number of 13,870,252 ordinary shares have been granted and outstanding under the 2019 Plan. Upon the Business Combination, PubCo will adopt the 2020 Plan, with the maximum number of 7,188,661 PubCo Class A shares authorized to issue and grant awards to purchase 1,652,000 PubCo Class A shares to replace the granted and outstanding awards under 2019 Plan.

Ucommune believes the granting of share-based awards is of significant importance to Ucommune’s ability to attract and retain key personnel and employees, and Ucommune expects that after Business Combination, PubCo will continue to grant share-based compensation to employees under the 2020 Plan. As a result, PubCo’s expenses associated with share-based compensation may increase after the Business Combination, which may have an adverse effect on PubCo’s results of operations.

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

The global macroeconomic environment is facing challenges. There is considerable uncertainty over the long-term effects of the expansionary 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. There have been concerns over unrest and terrorist threats in the Middle East, Europe and Africa and over the conflicts involving Ukraine, Syria and North Korea. There have also been concerns on regional instability and tension, as well as the relationship among China and other Asian countries, which may result in or intensify potential conflicts in relation to territorial disputes, and the trade disputes between the United States and China. For example, a growing trade dispute between the United States and China could adversely impact demand for Ucommune’s agile office spaces and services, Ucommune’s costs, Ucommune’s members, suppliers and business partners and China’s economy, which could materially and adversely affect Ucommune’s business, operating results and financial condition. 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 Ucommune’s business, results of operations and financial condition.

If Ucommune or PubCo fails to implement and maintain an effective system of internal controls to remediate its material weaknesses over financial reporting, PubCo 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 PubCo’s ordinary shares may be materially and adversely affected.

Prior to the Business Combination, Ucommune has been a private company with limited accounting and financial reporting personnel and other resources with which Ucommune 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 a proposed initial public offering of Ucommune, Ucommune previously engaged Deloitte Touche Tohmatsu Certified Public Accountants LLP (“Deloitte”) to audit its combined and consolidated financial statements for the fiscal years ended December 31, 2017 and 2018. In January 2020, Deloitte informed Ucommune Board that Deloitte became aware of certain contractual arrangements regarding shareholder transactions of Ucommune which were not previously provided to Deloitte, and raised concerns over the impact of these contracts on the subsequent event footnote to the combined and consolidated financial statements for the years ended December 31, 2017 and 2018, which omitted disclosures related to the contractual arrangements as well as Ucommune’s internal control over financial reporting. In response to the issues raised by Deloitte, the Board of Directors of Ucommune commenced an investigation (the “Internal Investigation”) of such issues with assistance from external legal advisors. On July 22, 2020, the Board of Directors of Ucommune concluded the Internal Investigation. The material weaknesses identified during the Internal Investigation includes: (i) lack of Audit & Risk Committee and Chief Compliance officer to monitor all company policies, and ensure that the policies are implemented and followed; (ii) lack of financial compliance training related to the disclosure obligation by shareholders, directors and officers during an US IPO to the Ucommune’s management personnel as well as other staff; (iii) lack of strictly implementation of Ucommune’s internal contract initiation and approval procedures to prohibit any unusual bypassing conduct of such procedures and

improve employee’s awareness of such procedures by distributing relevant policies and delivering trainings; (iv) lack of proper contract approval procedures and policies, in which all related party transactions or above a certain amount are required to be reviewed; (v) lack of internal file management procedures and lack of a more effective file records management system; (vi) lack of effective chop usage registration records with identifiable contract information, and lack of a parallel searchable chop usage registration records management system; and (vii) lack of compliance policies related to conflict of interest, related party transactions, ethics, and related matters. Ucommune has implemented relevant remedy measures and all above material weaknesses are assessed to be remediated by June 30, 2020. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Ucommune — Change in Registered Independent Public Accounting Firm” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Ucommune — Internal Control Over Financial Reporting.”

In connection with the audits of its combined and consolidated financial statements included in this proxy statement/prospectus, Ucommune and its independent registered public accounting firm identified the following material weaknesses in its internal control over financial reporting. Ucommune’s 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) lack of comprehensive accounting policies and procedures manual in accordance with U.S. GAAP and (ii) insufficient accounting personnel with appropriate experience and knowledge to address complex accounting matters in accordance with U.S. GAAP. Neither Ucommune 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, Ucommune has adopted and will adopt further measures to improve its internal control over financial reporting. Ucommune 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. Ucommune has recruited staff with knowledge of U.S. GAAP and SEC regulations in its finance and accounting department. Ucommune has also supplemented and enhanced internal training and development programs for financial reporting personnel. Additionally, when entering into complex transactions, Ucommune will utilize 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, Ucommune cannot assure you that these measures may fully address the material weaknesses and deficiencies in Ucommune’s internal control over financial reporting or that Ucommune may conclude that they have been fully remediated.

Upon completion of the Business Combination, PubCo will become subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act, or Section 404, will require that PubCo include a report from management on the effectiveness of PubCo’s internal control over financial reporting in PubCo’s annual report on Form 20-F beginning with PubCo’s annual report in PubCo’s second annual report on Form 20-F after becoming a public company. In addition, once PubCo ceases to be an “emerging growth company” as such term is defined in the JOBS Act, PubCo’s independent registered public accounting firm must attest to and report on the effectiveness of PubCo’s internal control over financial reporting. Moreover, even if PubCo’s management concludes that PubCo’s internal control over financial reporting is effective, PubCo’s 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 PubCo’s internal controls or the level at which PubCo’s controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from PubCo. In addition, after PubCo becomes a public company, PubCo’s reporting obligations may place a significant strain on PubCo’s management, operational and financial resources and systems for the foreseeable future. PubCo may be unable to timely complete its evaluation testing and any required remediation.

During the course of documenting and testing PubCo’s internal control procedures, in order to satisfy the requirements of Section 404, PubCo may identify other weaknesses and deficiencies in PubCo’s internal control over financial reporting. If PubCo fails to maintain the adequacy of its internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, PubCo 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 PubCo fails to achieve and maintain an effective internal control environment, it could result in material misstatements in PubCo’s financial statements and could also impair PubCo’s ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. As a result, PubCo’s businesses, financial condition, results of operations and prospects, as well as the trading price of the ordinary shares, may be materially and adversely affected. Additionally, ineffective internal control over financial reporting could

expose PubCo to increased risk of fraud or misuse of corporate assets and subject PubCo to potential delisting from the stock exchange on which PubCo lists, regulatory investigations and civil or criminal sanctions. PubCo may also be required to restate its financial statements from prior periods. PubCo will incur increased costs as a result of being a public company.

Upon completion of the Business Combination, PubCo 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, PubCo 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 PubCo may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. In addition, PubCo will incur additional costs associated with its public company reporting requirements. It may also be more difficult for PubCo to find qualified persons to serve on its Board of Directors or as executive officers.

After PubCo is no longer an “emerging growth company,” PubCo 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.

Ucommune has limited insurance coverage for its operations.

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 Ucommune has purchased insurances including business disruption insurance and property insurance for its space, those insurances might not be able to cover all risks. Any uninsured risks may result in substantial costs and the diversion of resources, which could adversely affect its results of operations and financial condition.

any interest in such shareholders’ equity interests in Ucommune’s VIEs, Ucommune’s ability to exercise shareholders’ rights or foreclose the share pledge according to the contractual arrangements may be impaired. If these or other disputes between the shareholders of Ucommune’s VIEs and third parties were to impair Ucommune’s control over Ucommune’s VIEs, Ucommune’s ability to consolidate the financial results of its VIEs would be affected, which would in turn result in a material adverse effect on its business, operations and financial condition.

The shareholders of Ucommune’s VIEs may have actual or potential conflicts of interest with Ucommune, which may materially and adversely affect Ucommune’s business and financial condition.

As of the date of this proxy statement/prospectus, Ucommune is not aware of any conflicts between the shareholders of Ucommune’s VIEs and Ucommune. However, the shareholders of Ucommune’s VIEs may have actual or potential conflicts of interest with Ucommune in the future. These shareholders may refuse to sign or breach, or cause Ucommune’s VIEs to breach, or refuse to renew, the existing contractual arrangements Ucommune has with them and Ucommune’s VIEs, which would have a material and adverse effect on Ucommune’s ability to effectively control its VIEs and receive economic benefits from them. For example, the shareholders may be able to cause Ucommune’s agreements with its VIEs to be performed in a manner adverse to Ucommune by, among other things, failing to remit payments due under the contractual arrangements to Ucommune on a timely basis. Ucommune cannot assure you that when conflicts of interest arise any or all of these shareholders will act in the best interests of Ucommune or such conflicts will be resolved in Ucommune’s favor, particularly given the relatively large number of shareholders of Ucommune Venture, one of Ucommune’s VIEs. Currently, Ucommune does not have any arrangements to address potential conflicts of interest between these shareholders and Ucommune. If Ucommune cannot resolve any conflict of interest or dispute between us and these shareholders, Ucommune would have to rely on legal proceedings, which could result in disruption of Ucommune’s business and subject Ucommune to substantial uncertainty as to the outcome of any such legal proceedings.

Ucommune’s contractual arrangements are governed by PRC law. Accordingly, these contracts would be interpreted in accordance with PRC law, and any disputes would be resolved in accordance with PRC legal procedures.

The legal system in the PRC is not as developed as in some other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit Ucommune’s ability to enforce these contractual arrangements. Meanwhile, there are very few precedents and little formal guidance as to how contractual arrangements in the context of a VIE should be interpreted or enforced under PRC law. There remain significant uncertainties regarding the ultimate outcome of such arbitration should legal action become necessary. In addition, under PRC law, rulings by arbitrators are final, parties cannot appeal the arbitration results in courts except that parties may apply for a cancellation of such rulings before an intermediate people’s court at the place where the arbitration commission is located under certain circumstances, and if the losing parties fail to carry out the arbitration awards within a prescribed time limit, the prevailing parties may only enforce the arbitration awards in PRC courts, which would require additional expenses and delay. In the event Ucommune is unable to enforce these contractual arrangements, or if Ucommune suffers significant delays or other obstacles in the process of enforcing these contractual arrangements, Ucommune may not be able to exert effective control over its VIEs, and Ucommune’s ability to conduct its business may be negatively affected.

Substantial uncertainties existing with the PRC foreign investment legal regime may have a significant impact on Ucommune’s corporate structure and business operations.

On March 15, 2019, the PRC National People’s Congress approved the Foreign Investment Law, which came into effect on January 1, 2020 and replaced the existing laws regulating foreign investment in the PRC, namely, the Sino-Foreign Equity Joint Venture Enterprise Law, the Sino-Foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-Invested Enterprise Law, and become the legal foundation for foreign investment in the PRC. Meanwhile, the Implementation Regulation of the Foreign Investment Law came into effect as of January 1, 2020, which clarified and elaborated the relevant provisions of the Foreign Investment Law. The Foreign Investment Law stipulates three forms of foreign investment. However, the Foreign Investment Law does not explicitly stipulate the contractual arrangements as a form of foreign investment.

Notwithstanding the above, the Foreign Investment Law stipulates that foreign investment includes “foreign investors invest through any other methods under laws, administrative regulations or provisions prescribed by the State Council”. Therefore, there are possibilities that future laws, administrative regulations or provisions prescribed by the State Council may regard contractual arrangements as a form of foreign investment, and then whether Ucommune’s

contractual arrangement will be recognized as foreign investment, whether Ucommune’s contractual arrangement will be deemed to be in violation of the foreign investment access requirements and how the above-mentioned contractual arrangement will be handled are uncertain. Therefore, there is no guarantee that Ucommune’s contractual arrangement and the business of Consolidated Affiliated Entities will not be materially and adversely affected in the future.

In the extreme case-scenario, Ucommune may be required to unwind the contractual arrangement and/or dispose of the VIEs or their subsidiaries, which could have a material and adverse effect on Ucommune’s business, financial conditions and result of operations.

Contractual arrangements in relation to Ucommune’s VIEs may be subject to scrutiny by the PRC tax authorities and they may determine that Ucommune or Ucommune’s VIEs owe additional taxes, which could negatively affect Ucommune’s financial condition and the value of your investment.

Under applicable PRC laws and regulations, arrangements and transactions among related parties may be subject to audit or challenge by the PRC tax authorities within ten years after the taxable year when the transactions are conducted. Ucommune could face material and adverse tax consequences if the PRC tax authorities determine that the VIE contractual arrangements were not entered into on an arm’s-length basis in such a way as to result in an impermissible reduction in taxes under applicable PRC laws, rules and regulations, and adjust the income of Ucommune’s VIEs in the form of a transfer pricing adjustment. A transfer pricing adjustment could, among other things, result in a reduction of expense deductions recorded by Ucommune’s VIEs for PRC tax purposes, which could in turn increase their tax liabilities without reducing Ucommune’s PRC subsidiaries’ tax expenses. In addition, the PRC tax authorities may impose late payment fees and other penalties on Ucommune’s VIEs for the adjusted but unpaid taxes according to the applicable regulations. Ucommune’s financial position could be materially and adversely affected if the tax liabilities of its VIEs increase or if they are required to pay late payment fees and other penalties.

Ucommune may lose the ability to use, or otherwise benefit from, the licenses, approvals and assets held by its VIEs, which could severely disrupt its business, render us unable to conduct some or all of its business operations and constrain its growth.

Ucommune relies on contractual arrangements with its VIEs to use, or otherwise benefit from, certain foreign restricted licenses and permits that it needs or may need in the future as its business continues to expand, such as the internet content provider license, or the ICP license held by one of its VIEs.

The contractual arrangements contain terms that specifically obligate the VIEs’ shareholders to ensure the valid existence of the VIEs and restrict the disposal of material assets of the VIEs. However, in the event the VIEs’ shareholders breach the terms of these contractual arrangements and voluntarily liquidate Ucommune’s VIEs, or Ucommune’s VIEs declare bankruptcy and all or part of their assets become subject to liens or rights of third-party creditors, or are otherwise disposed of without Ucommune’s consent, Ucommune may be unable to conduct some or all of Ucommune’s business operations or otherwise benefit from the assets held by the VIEs, which could have a material adverse effect on Ucommune’s business, financial condition and results of operations. Furthermore, if Ucommune’s VIEs undergo a voluntary or involuntary liquidation proceeding, their shareholders or unrelated third-party creditors may claim rights to some or all of the assets of the VIEs, thereby hindering Ucommune’s ability to operate its business as well as constrain its growth.

Certain of Ucommune’s existing shareholders have substantial influence over Ucommune, and their interests may not be aligned with the interests of Ucommune’s other stockholders.

Dr. Daqing Mao, Ucommune’s founder, currently holds approximately 35.27% voting power of Ucommune, including his sole voting power and the shared voting power resulting from arrangement under acting-in-concert agreement dated November 13, 2019. Upon the completion of the Business Combination, due to dual-class share structure of PubCo at that time, Dr. Mao is expected to own approximately 69.81% of PubCo’s voting power by holding 9,452,407 PubCo Class B Ordinary Shares. Dr. Mao is expected to continue to have significant influence over Ucommune and PubCo’s business, including decisions regarding mergers, consolidations, liquidations and the sale of all or substantially all of Ucommune or PubCo’s assets, election of directors and other significant corporate actions. This concentration of ownership may also have the effect of discouraging, delaying or preventing a future change of control, which could deprive PubCo’s stockholders of an opportunity to receive a premium for their shares as part of a sale of PubCo.

Furthermore, in case that Dr. Mao controls a majority of PubCo’s voting stock upon the completion of the Business Combination and he may pursue corporate opportunities independent of PubCo and Ucommune, and the sale of his shares could constitute a change of control under Ucommune’s debt instruments.

Risks Factors Relating to Doing Business in China

Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on Ucommune’s business and operations.

Substantially all of Ucommune’s assets and operations are located in China. Accordingly, Ucommune’s business, financial condition, results of operations and prospects may be influenced to a significant degree by political, economic and social conditions in China generally. The Chinese economy differs from the economies of most developed countries in many respects, including the level of government involvement, level of development, growth rate, foreign exchange control and allocation of resources. Although the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government. In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies. The Chinese government also exercises significant control over China’s economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies.

While the Chinese economy has experienced significant growth over past decades, growth has been uneven, both geographically and among various sectors of the economy. Any adverse changes in economic conditions in China, in the policies of the Chinese government or in the laws and regulations in China could have a material adverse effect on the overall economic growth of China. Such developments could adversely affect Ucommune’s business and operating results, leading to a reduction in demand for Ucommune’s services and adversely affect Ucommune’s competitive position. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy, but may have a negative effect on us. For example, Ucommune’s financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations. In addition, in the past the Chinese government has implemented certain measures, including interest rate adjustment, to control the pace of economic growth. These measures may cause decreased economic activity in China, which may adversely affect Ucommune’s business and operating results. In addition, many of Ucommune’s members are concentrated in major metropolitan areas, therefore an economic downturn in any of these areas may materially and adversely affect Ucommune’s business.

Uncertainties with respect to the PRC legal system could adversely affect us.

The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential value.

In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation since then has significantly enhanced the protections afforded to various forms of foreign investments in China. However, China has not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. In particular, the interpretation and enforcement of these laws and regulations involve uncertainties. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory provisions and contractual terms, it may be difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection Ucommune enjoys. These uncertainties may affect Ucommune’s judgment on the relevance of legal requirements and Ucommune’s ability to enforce its contractual rights or tort claims. In addition, the regulatory uncertainties may be exploited through unmerited or frivolous legal actions or threats in attempts to extract payments or benefits from us.

Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all and may have a retroactive effect. As a result, Ucommune may not be aware of its violation of any of these policies and rules until sometime after the violation. In addition, any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention.

Regulation and censorship of information disseminated over the internet in China may adversely affect Ucommune’s business and reputation and subject PubCo to liability for information displayed on Ucommune’s website.

The PRC government has adopted regulations governing internet access and the distribution of news and other information over the internet. Under these regulations, internet content providers and internet publishers are prohibited from posting or displaying over the internet content that, among other things, violates PRC laws and regulations, impairs the national dignity of China, or is reactionary, obscene, superstitious, fraudulent or defamatory. Failure to comply with these requirements may result in the revocation of licenses to provide internet content and other licenses, and the closure of the concerned websites or other internet platforms. The website or platform operator may also be held liable for such censored information displayed on or linked to the websites or platforms. If Ucommune’s website or internet platform is found to be in violation of any such requirements, Ucommune may be penalized by relevant authorities, and Ucommune’s operations or reputation could be adversely affected.

Fluctuations in exchange rates could have a material and adverse effect on Ucommune’s results of operations and the value of your investment.

The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions and the foreign exchange policy adopted by the PRC government. On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the Renminbi to the U.S. dollar, and the Renminbi appreciated more than 20% against the U.S. dollar over the following three years. Between July 2008 and June 2010, this appreciation halted and the exchange rate between the Renminbi and the U.S. dollar remained within a narrow band. Since June 2010, the Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. On November 30, 2015, the Executive Board of the International Monetary Fund (IMF) completed the regular five-year review of the basket of currencies that make up the Special Drawing Right, or the SDR, and decided that with effect from October 1, 2016, Renminbi is determined to be a freely usable currency and will be included in the SDR basket as a fifth currency, along with the U.S. dollar, the Euro, the Japanese yen and the British pound. In the fourth quarter of 2016, the Renminbi depreciated significantly in the backdrop of a surging U.S. dollar and persistent capital outflows of China. In 2017, the RMB appreciated approximately 6.3% against the U.S. dollar. In 2018, however, the RMB depreciated approximately 5.7% against the U.S. dollar. In 2019, the RMB has continued to depreciate against the U.S. dollar. With the development of the foreign exchange market and progress towards interest rate liberalization and Renminbi internationalization, the PRC government may in the future announce further changes to the exchange rate system and Ucommune cannot assure you that the Renminbi will not appreciate or depreciate significantly in value against the U.S. dollar in the future. It is difficult to predict how market forces, international relations especially the trade tensions between U.S. and China, or government policies of PRC or U.S. may impact the exchange rate between the Renminbi and the U.S. dollar in the future.

A significant majority of Ucommune’s net revenue and costs are denominated in Renminbi. Ucommune is a holding company and Ucommune relies on dividends paid by its subsidiaries in China for its cash needs. Any significant revaluation of Renminbi may materially and adversely affect Ucommune’s results of operations and financial position reported in Renminbi when translated into U.S. dollars, and the value of, and any dividends payable in U.S. dollars. To the extent that Ucommune needs to convert U.S. dollars Ucommune receive from the Business Combination, into Renminbi for Ucommune’s operations, appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount Ucommune would receive. Conversely, if Ucommune decides to convert Ucommune’s Renminbi into U.S. dollars for the purpose of making payments for dividends on Ucommune’s ordinary shares or for other business purposes, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar amount.

Any lack of requisite approvals, licenses or permits applicable to Ucommune’s business may have a material and adverse impact on Ucommune’s business, financial condition and results of operations.

In accordance with the relevant laws and regulations in jurisdictions in which Ucommune operates, Ucommune is required to maintain various approvals, licenses and permits to operate Ucommune’s business, including but not limited to business license, fire prevention as-built acceptance check and filing for Ucommune’s spaces, and value-added telecommunications license. These approvals, licenses and permits are obtained upon satisfactory compliance with, among other things, the applicable laws and regulations.

If Ucommune fails to obtain the necessary licenses, permits and approvals, Ucommune may be subject to fines, confiscation of revenues generated from incompliance operations or the suspension of relevant operations. Ucommune may also experience adverse publicity arising from such non-compliance with government regulations that negatively impact its brand. Ucommune may experience difficulties or failures in obtaining the necessary approvals, licenses and permits for new spaces or new service offerings. If Ucommune fails to obtain the material licenses, Ucommune’s space launching and expansion plan may be delayed. In addition, there can be no assurance that Ucommune will be able to obtain, renew and/or convert all of the approvals, licenses and permits required for its existing business operations upon their expiration in a timely manner or at all, which could adversely affect Ucommune’s business operations.

As of the date of this proxy statement/prospectus, a small number of spaces under of Ucommune’s self-operated model have not completed the required as-built acceptance check on fire prevention or fire safety filing. Ucommune’s spaces that fail to complete such as-built acceptance check on fire prevention as required by relevant laws and regulations may be ordered by the relevant government authorities to cease business and may be subject to a fine ranging from RMB30,000 to RMB300,000 per space, and Ucommune’s spaces that fail to complete such fire safety filing as required may be subject to a fine of up to RMB5,000 per space. Based on relevant laws and regulations and Ucommune’s consultation with relevant government authorities, and as advised by Ucommune’s PRC counsel, the maximum amount of potential fines arising from the incompletion of the required as-built acceptance check on fire prevention and fire safety filing is approximately RMB0.9 million, as of the date of this proxy statement/prospectus. However, Ucommune has not received any material fines or penalties for such non-compliance. Ucommune has taken several steps to strengthen Ucommune’s management over fire prevention or fire safety, including (i) consulting with local regulatory authorities for completing the required as-built acceptance checks on fire prevention or fire safety filings; (ii) equipping the relevant spaces with proper fire safety facilities, equipment and safety signs; (iii) engaging several fire safety consulting institutions to conduct fire safety inspection on the fire safety equipment and system of the -relevant spaces and; (iv) the adoption and implementation of Ucommune’s fire safety internal control policy in accordance with applicable laws and regulations and providing fire safety related training to Ucommune’s employees.

The custodians or authorized users of Ucommune’s controlling non-tangible assets, including stamps and seals, may fail to fulfil their responsibilities, or misappropriate or misuse these assets.

Under PRC law, legal documents for corporate transactions, including agreements and contracts are executed using the stamps or seals of the signing entity or with the signature of a legal representative whose designation is registered and filed with relevant PRC industry and commerce authorities.

In order to secure the use of Ucommune’s stamps and seals, Ucommune has established internal control procedures and rules for using these stamps and seals. In any event that the stamps and seals are intended to be used, the responsible personnel will submit the application through Ucommune’s office automation system and the application will be verified and approved by authorized employees in accordance with Ucommune’s internal control procedures and rules. In addition, in order to maintain the physical security of Ucommune’s stamps, Ucommune generally has them stored in secured locations accessible only to authorized employees. Although Ucommune monitors such authorized employees, the procedures may not be sufficient to prevent all instances of abuse or negligence. There is a risk that Ucommune’s employees could abuse their authority, for example, by entering into a contract not approved by us or seeking to gain control of one of Ucommune’s subsidiaries or consolidated VIEs.

If any employee obtains, misuses or misappropriates Ucommune’s stamps and seals or other controlling non-tangible assets for whatever reason, Ucommune could experience disruption to Ucommune’s normal business operations, and Ucommune may have to take corporate or legal actions, which could involve significant time and resources to resolve and divert management from Ucommune’s operations.

Ucommune’s operations depend on the performance of the mobile based systems, telecommunications networks and digital infrastructure in China.

Ucommune’s operations rely heavily on mobile based systems, telecommunications networks and digital infrastructure. Almost all access to the internet in China is maintained through state-owned telecommunication operators under the administrative control and regulatory supervision of the Ministry of Industry and Information Technology. Moreover, Ucommune primarily relies on a limited number of telecommunication service providers to provide Ucommune with data communications capacity through local telecommunications lines and internet data centers to host Ucommune’s servers. Ucommune has limited access to alternative networks or services in the event of

disruptions, failures or other problems with China’s internet infrastructure or the fixed telecommunications networks provided by telecommunication service providers. With the expansion of Ucommune’s business, Ucommune may be required to upgrade Ucommune’s technology and infrastructure to keep up with the increasing traffic on Ucommune’s apps. Ucommune cannot assure you that the digital infrastructure and the telecommunications networks in China will be able to support the demands associated with the continued growth in digital usage.

In addition, Ucommune has no control over the costs of the services provided by telecommunication service providers. If the prices Ucommune pays for telecommunications and digital services rise significantly, Ucommune’s results of operations may be materially and adversely affected. Furthermore, if data access fees or other charges to mobile members increase, Ucommune’s member traffic may decline and Ucommune’s business may be harmed.

Ucommune may rely on dividends and other distributions on equity paid by Ucommune’s PRC subsidiaries to fund any cash and financing requirements Ucommune may have, and any limitation on the ability of Ucommune’s PRC subsidiaries to make payments to Ucommune could have a material and adverse effect on Ucommune’s ability to conduct its business.

Ucommune is a Cayman Islands holding company and Ucommune relies principally on dividends and other distributions on equity from its PRC subsidiaries for its cash requirements, including for services of any debt Ucommune may incur.

Ucommune’s PRC subsidiaries’ ability to distribute dividends is based upon its distributable earnings. Current PRC regulations permit Ucommune’s PRC subsidiaries to pay dividends to its respective shareholders only out of its accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, Ucommune’s PRC subsidiaries and Ucommune’s VIEs are required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Ucommune’s PRC subsidiaries as a Foreign Invested Enterprise, or FIE, are also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at its discretion. These reserves are not distributable as cash dividends. If Ucommune’s PRC subsidiaries incur debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other payments to Ucommune. Any limitation on the ability of Ucommune’s PRC subsidiaries to distribute dividends or other payments to its respective shareholders could materially and adversely limit Ucommune’s ability to grow, make investments or acquisitions that could be beneficial to Ucommune’s business, pay dividends or otherwise fund and conduct Ucommune’s business.

In addition, the Enterprise Income Tax Law and its implementation rules provide that a withholding tax rate of up to 10% will be applicable to dividends payable by Chinese companies to non-PRC-resident enterprises unless otherwise exempted or reduced according to treaties or arrangements between the PRC central government and governments of other countries or regions where the non-PRC resident enterprises are incorporated.

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 the Business Combination to make loans or additional capital contributions to Ucommune’s PRC subsidiaries, which could materially and adversely affect Ucommune’s liquidity and Ucommune’s ability to fund and expand Ucommune’s business.

Any funds Ucommune transfer to its PRC subsidiaries, either as a shareholder loan or as an increase in registered capital, are subject to approval by or registration with relevant governmental authorities in China. According to the relevant PRC regulations on FIEs in China, capital contributions to Ucommune’s PRC subsidiaries are subject to the approval of or report investment information to the MOFCOM or their respective local branches and registration with a local bank authorized by the SAFE. In addition, any foreign loan procured by Ucommune’s PRC subsidiaries cannot exceed statutory limits and is required to be registered with SAFE or its respective local branches. Any medium or long-term loan to be provided by Ucommune to its VIEs must be registered with the National Development and Reform Commission, or NDRC, and the SAFE or its local branches. Ucommune may not be able to complete such registrations on a timely basis, with respect to future capital contributions or foreign loans by Ucommune to its PRC subsidiaries. If Ucommune fails to complete such registrations, its ability to use the proceeds to be received from the Business Combination and to capitalize its PRC operations may be negatively affected, which could adversely affect its liquidity and its ability to fund and expand business.

On March 30, 2015, the SAFE promulgated the Circular on Reforming the Management Approach Regarding the Foreign Exchange Capital Settlement of Foreign-Invested Enterprises, or SAFE Circular 19, which took effect on June 1, 2015. SAFE Circular 19 launched a nationwide reform of the administration of the settlement of the foreign exchange capitals of FIEs and allows FIEs to settle their foreign exchange capital at their discretion, but continues to prohibit FIEs from using the Renminbi fund converted from their foreign exchange capital for expenditure beyond their business scopes, providing entrusted loans or repaying loans between nonfinancial enterprises. The SAFE issued the Circular on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, or SAFE Circular 16, effective in June 2016. Pursuant to SAFE Circular 16, enterprises registered in China may also convert their foreign debts from foreign currency to Renminbi on a self-discretionary basis. SAFE Circular 16 provides an integrated standard for conversion of foreign exchange under capital account items (including but not limited to foreign currency capital and foreign debts) on a self-discretionary basis which applies to all enterprises registered in China. SAFE Circular 16 reiterates the principle that Renminbi converted from foreign currency-denominated capital of a company may not be directly or indirectly used for purposes beyond its business scope or prohibited by PRC laws or regulations, while such converted Renminbi shall not be provided as loans to its non-affiliated entities. As this circular is relatively new, there remains uncertainty as to its interpretation and application and any other future foreign exchange related rules. Violations of these Circulars could result in severe monetary or other penalties. SAFE Circular 19 and SAFE Circular 16 may significantly limit Ucommune’s ability to use Renminbi converted from the proceeds to be received from the Business Combination, to fund the establishment of new entities in China by Ucommune’s VIEs, to invest in or acquire any other PRC companies through Ucommune’s PRC subsidiaries, or to establish new consolidated VIEs in China, which may adversely affect Ucommune’s business, financial condition and results of operations.

Governmental control of currency conversion may limit Ucommune’s ability to utilize Ucommune’s net revenue effectively and affect the value of your investment.

The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. Ucommune receives substantially all of Ucommune’s net revenue in Renminbi. Under Ucommune’s current corporate structure, Ucommune, as a Cayman Islands holding company, primarily relies on dividend payments from Ucommune’s PRC subsidiaries to fund any cash and financing requirements Ucommune may have. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of SAFE by complying with certain procedural requirements. Specifically, under the existing exchange restrictions, without prior approval of SAFE, cash generated from the operations of Ucommune’s PRC subsidiaries in China may be used to pay dividends. However, approval from or registration with appropriate government authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. As a result, Ucommune needs to obtain SAFE approval to use cash generated from the operations of Ucommune’s PRC subsidiaries and VIEs to pay off their respective debt in a currency other than Renminbi owed to entities outside China, or to make other capital expenditure payments outside China in a currency other than Renminbi. The PRC government may at its discretion restrict access to foreign currencies for current account transactions in the future. If the foreign exchange control system prevents Ucommune from obtaining sufficient foreign currencies to satisfy its foreign currency demands, Ucommune may not be able to pay dividends in foreign currencies to its shareholders.

PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject Ucommune’s PRC resident beneficial owners or Ucommune’s PRC subsidiaries to liability or penalties, limit Ucommune’s ability to inject capital into Ucommune’s PRC subsidiaries, limit Ucommune’s PRC subsidiaries’ ability to increase its registered capital or distribute profits to us, or may otherwise adversely affect us.

In July 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles, or SAFE Circular 37, to replace the Notice on Relevant Issues Concerning Foreign Exchange Administration for Domestic Residents’ Financing and Roundtrip Investment Through Offshore Special Purpose Vehicles, or SAFE Circular 75, which ceased to be effective upon the promulgation of SAFE Circular 37. SAFE Circular 37 requires PRC residents (including PRC individuals and PRC corporate entities) to register with SAFE or its local branches in connection with their direct or indirect offshore investment activities. SAFE Circular 37 is applicable to Ucommune’s shareholders who are PRC residents and may be applicable to any offshore acquisitions that Ucommune make in the future.

Under SAFE Circular 37, PRC residents who make, or have prior to the implementation of SAFE Circular 37 made, direct or indirect investments in offshore special purpose vehicles, or SPVs, will be required to register such investments with SAFE or its local branches. In addition, any PRC resident who is a direct or indirect shareholder of an SPV is required to update its filed registration with the local branch of SAFE with respect to that SPV, to reflect any material change. If Ucommune’s shareholders who are PRC residents or entities fail to make the required registration or to update the previously filed registration, Ucommune’s PRC subsidiaries may be prohibited from distributing their profits and any proceeds from any reduction in capital, share transfer or liquidation to us, and Ucommune may be restricted in its ability to contribute additional capital to its PRC subsidiaries. On February 13, 2015, the SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13, which became effective on June 1, 2015. Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, will be filed with qualified banks instead of SAFE. The qualified banks will directly examine the applications and accept registrations under the supervision of SAFE.

Ucommune has requested PRC residents who Ucommune knows hold direct or indirect interest in the Company to make the necessary applications, filings and registrations as required under SAFE Circular 37, and Ucommune is aware that most of these shareholders have completed the initial foreign exchange registrations with relevant banks. Ucommune cannot assure you, however, that all of these individuals may continue to make required filings or updates in a timely manner, or at all. Ucommune can provide no assurance that Ucommune is or will in the future continue to be informed of identities of all PRC residents holding direct or indirect interest in Ucommune. Any failure or inability by such individuals to comply with SAFE regulations may subject Ucommune to fines or legal sanctions, restrict Ucommune’s cross-border investment activities, and limit Ucommune’s PRC subsidiaries’ ability to distribute dividends to us. As a result, Ucommune’s business operations and Ucommune’s ability to make distributions to you could be materially and adversely affected.

Furthermore, as these foreign exchange regulations are still relatively new and their interpretation and implementation have been constantly evolving, it is unclear how these regulations, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended and implemented by the relevant government authorities. For example, Ucommune may be subject to a more stringent review and approval process with respect to its foreign exchange activities, such as remittance of dividends and foreign-currency-denominated borrowings, which may adversely affect Ucommune’s financial condition and results of operations. In addition, if Ucommune decides to acquire a PRC domestic company, Ucommune cannot assure you that Ucommune or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete the necessary filings and registrations required by the foreign exchange regulations. This may restrict Ucommune’s ability to implement its acquisition strategy and could adversely affect its business and prospects.

Ucommune faces uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.

On February 3, 2015, the SAT issued the Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Tax Resident Enterprises, or SAT Bulletin 7. SAT Bulletin 7 extends its tax jurisdiction to transactions involving the transfer of taxable assets through offshore transfer of a foreign intermediate holding company. In addition, SAT Bulletin 7 has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market. SAT Bulletin 7 also brings challenges to both foreign transferor and transferee (or other person who is obligated to pay for the transfer) of taxable assets, as such persons need to determine whether their transactions are subject to these rules and whether any withholding obligation applies.

On October 17, 2017, the SAT issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, or SAT Bulletin 37, which came into effect on December 1, 2017. The SAT Bulletin 37 further clarifies the practice and procedure of the withholding of non-resident enterprise income tax.

Where a non-resident enterprise transfers taxable assets indirectly by disposing of the equity interests of an overseas holding company, which is an Indirect Transfer, the non-resident enterprise as either transferor or transferee, or the PRC entity that directly owns the taxable assets, may report such Indirect Transfer to the relevant tax authority. Using a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or

deferring PRC tax. As a result, gains derived from such Indirect Transfer may be subject to PRC enterprise income tax, and the transferee or other person who pays for the transfer is obligated to withhold the applicable taxes currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise. Both the transferor and the transferee may be subject to penalties under PRC tax laws if the transferee fails to withhold the taxes and the transferor fails to pay the taxes.

Ucommune faces uncertainties as to the reporting and other implications of certain past and future transactions where PRC taxable assets are involved, such as offshore restructuring, sale of the shares in Ucommune’s offshore subsidiaries and investments. Ucommune may be subject to filing obligations or taxed if Ucommune is transferor in such transactions, and may be subject to withholding obligations if Ucommune is transferee in such transactions, under SAT Bulletin 7 and/or SAT Bulletin 37. For transfer of shares in Ucommune by investors who are non-PRC resident enterprises, Ucommune’s PRC subsidiaries may be requested to assist in the filing under SAT Bulletin 7 and/or SAT Bulletin 37. As a result, Ucommune may be required to expend valuable resources to comply with SAT Bulletin 7 and/or SAT Bulletin 37 or to request the relevant transferors from whom Ucommune purchases taxable assets to comply with these circulars, or to establish that Ucommune should not be taxed under these circulars, which may have a material adverse effect on Ucommune’s financial condition and results of operations.

Certain PRC regulations may make it more difficult for Ucommune to pursue growth through acquisitions.

The Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, adopted by six PRC regulatory agencies in 2006 and amended in 2009, and some other regulations and rules concerning mergers and acquisitions established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time consuming and complex. Moreover, the Anti-Monopoly Law of the PRC requires that MOFCOM be notified in advance of any concentration of undertaking if certain thresholds are triggered.

In addition, the Circular of the General Office of the State Council on the Establishment of Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors that became effective in March 2011, and the Rules on Implementation of Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors issued by the Ministry of Commerce that became effective in September 2011 specify that mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by the MOFCOM, and the rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement.

Ucommune may grow its business by acquiring complementary businesses. Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactions could be time consuming, and any required approval processes, including obtaining approval from the Ministry of Commerce or its local counterparts may delay or inhibit Ucommune’s ability to complete such transactions, which could affect Ucommune’s ability to expand its business or maintain its market share.

Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or PubCo to fines and other legal or administrative sanctions.

In February 2012, SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly Listed Company, replacing earlier rules promulgated in 2007. Pursuant to these rules, PRC citizens and non-PRC citizens who reside in China for a continuous period of not less than one year who participate in any stock incentive plan of an overseas publicly listed company, subject to a few exceptions, are required to register with SAFE through a domestic qualified agent, which could be the PRC subsidiaries of such overseas-listed company, and complete certain other procedures. In addition, an overseas-entrusted institution must be retained to handle matters in connection with the exercise or sale of stock options and the purchase or sale of shares and interests. PubCo and its executive officers and other employees who are PRC citizens or who reside in the PRC for a continuous period of not less than one year and who have been granted options will be subject to these regulations when PubCo becomes an overseas-listed company upon completion of the Business Combination. Failure to complete the SAFE registrations may subject them to fines and legal sanctions, there may be additional restrictions on the ability of them to exercise their stock options or remit proceeds gained from the sale of their stock into the PRC. PubCo also faces regulatory uncertainties that could restrict its ability to adopt incentive plans for its directors, executive officers and employees under PRC law.

Ucommune may be subject to liability for placing advertisements with content that is deemed inappropriate or misleading under PRC laws.

PRC laws and regulations prohibit advertising companies from producing, distributing or publishing any advertisement with content that violates PRC laws and regulations, impairs the national dignity of the PRC, involves designs of the PRC national flag, national emblem or national anthem or the music of the national anthem, is considered reactionary, obscene, superstitious or absurd, is fraudulent, or disparages similar products. Ucommune cannot assure you that all the content contained in its advertisements is true and accurate as required by, and complies in all aspects with, the advertising laws and regulations, including but not limited to the Advertising Law of the People’s Republic of China and the Interim Measures for the Administration of Internet Advertising, especially given the uncertainty in the interpretation of these PRC laws and regulations. If Ucommune is found to be in violation of applicable PRC advertising laws and regulations, Ucommune may be subject to penalties and Ucommune’s reputation may be harmed, which may negatively affect Ucommune’s business, financial condition, results of operations and prospects.

Under PRC advertising laws and regulations, Ucommune is obligated to monitor the advertising content shown on Ucommune’s platform to ensure that such content is true, accurate and in full compliance with applicable laws and regulations. In addition, where a special government review is required for specific types of advertisements prior to posting, such as advertisements relating to pharmaceuticals, medical instruments, agrochemicals and veterinary pharmaceuticals, Ucommune is obligated to confirm that such review has been performed and approval has been obtained from competent governmental authority. Violation of these laws and regulations may subject Ucommune to penalties, including fines, confiscation of Ucommune’s advertising income, orders to cease dissemination of the advertisements and orders to publish an announcement correcting the misleading information. In circumstances involving serious violations, PRC governmental authorities may force Ucommune to terminate its advertising operation or revoke its licenses.

A majority of the advertisements shown on Ucommune’s platform are provided to Ucommune by third parties. Although Ucommune has implemented manual monitoring systems and significant efforts have been made to ensure that the advertisements shown on its platform are in full compliance with applicable laws and regulations, Ucommune cannot assure you that all the content contained in such advertisements is true and accurate as required by the advertising laws and regulations. Although Ucommune has not been subject to material penalties or administrative sanctions in the past for the advertisements shown on its platform, if Ucommune is found to be in violation of applicable PRC advertising laws and regulations in the future, Ucommune may be subject to penalties and its reputation may be harmed, which may have a material and adverse effect on its business, financial condition, results of operations and prospects.

Ucommune may also be subject to claims by customers misled by information on its apps, website or other portals where Ucommune puts its advertisements on. Ucommune may not be able to recover its losses from advertisers by enforcing the indemnification provisions in the contracts, which may result Ucommune in diverting management’s time and other resources from Ucommune’s business and operations to defend against these infringement claims. As a result, Ucommune’s business, financial condition and results of operations could be materially and adversely affected.

Ucommune’s employment practices may be adversely impacted under the labor contract law of the PRC.

The PRC National People’s Congress promulgated the Labor Contract Law which became effective on January 1, 2008 and was amended on December 28, 2012, and the State Council promulgated implementing rules for the labor contract law on September 18, 2008. The labor contract law and the implementing rules impose requirements concerning, among others, the execution of written contracts between employers and employees, the time limits for probationary periods, and the length of employment contracts. The interpretation and implementation of these regulations are still evolving, Ucommune’s employment practices may violate the labor contract law and related regulations and Ucommune could be subject to penalties, fines or legal fees as a result. If Ucommune violates relevant laws and regulations, Ucommune may be subject to severe penalties or incur significant legal fees in connection with labor law disputes or investigations, Ucommune’s business, financial condition and results of operations may be adversely affected.

The audit report included in this proxy statement/prospectus is prepared by an auditor who is not inspected by the Public Company Accounting Oversight Board and, as such, you are deprived of the benefits of such inspection.

Ucommune’s independent registered public accounting firm that issues the audit reports included in this proxy statement/prospectus filed with the US Securities and Exchange Commission and is expected to issue audit reports with respect to PubCo’s financial statements, as auditors of companies that are traded publicly in the United States and a firm registered with the US Public Company Accounting Oversight Board (United States), or the PCAOB, is required by the laws of the United States to undergo regular inspections by the PCAOB to assess its compliance with the laws of the United States and professional standards. Because Ucommune’s auditors are located in the Peoples’ Republic of China, a jurisdiction where the PCAOB is currently unable to conduct inspections without the approval of the Chinese authorities, Ucommune’s auditors are not currently inspected by the PCAOB. On May 24, 2013, PCAOB announced that it had entered into a Memorandum of Understanding on Enforcement Cooperation with the China Securities Regulatory Commission, or the CSRC, and the Ministry of Finance which establishes a cooperative framework between the parties for the production and exchange of audit documents relevant to investigations in the United States and China. PCAOB continues to be in discussions with the CSRC and the Ministry of Finance to permit joint inspections in the PRC of audit firms that are registered with PCAOB and audit Chinese companies that trade on U.S. exchanges. On December 7, 2018, the SEC and the PCAOB issued a joint statement highlighting continued challenges faced by the U.S. regulators in their oversight of financial statement audits of U.S.-listed companies with significant operations in China. The joint statement reflects a heightened interest in this issue. 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, reiterating past SEC and PCAOB statements on matters including the difficulty associated with inspecting accounting firms and audit work papers in China and higher risks of fraud in emerging markets and the difficulty of bringing and enforcing SEC, Department of Justice and other U.S. regulatory actions, including in instances of fraud, in emerging markets generally. However, it remains unclear what further actions the SEC and PCAOB will take to address these problems and the impact of such actions on Chinese companies listed in the U.S.

Inspections of other firms that the PCAOB has conducted outside China have identified deficiencies in those firms’ audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. This lack of PCAOB inspections in China prevents the PCAOB from regularly evaluating Ucommune’s auditor’s audits and its quality control procedures. As a result, investors may be deprived of the benefits of PCAOB inspections.

The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of Ucommune’s auditor’s audit procedures or quality control procedures as compared to auditors outside of China that are subject to PCAOB inspections. Investors may lose confidence in Ucommune’s reported financial information and procedures and the quality of Ucommune’s financial statements.

Additional remedial measures could be imposed on certain PRC-based accounting firms, including Ucommune’s independent registered public accounting firm, in administrative proceedings instituted by the SEC, as a result of which Ucommune’s financial statements may be determined to not be in compliance with the requirements of the Exchange Act, if at all.

In December 2012, the SEC brought administrative proceedings against the PRC-based affiliates of the Big Four accounting firms, including Ucommune’s independent registered public accounting firm, alleging that they had violated U.S. securities laws by failing to provide audit work papers and other documents related to certain other PRC-based companies under investigation by the SEC. On January 22, 2014, an initial administrative law decision was issued, censuring and suspending these accounting firms from practicing before the SEC for a period of six months. The decision was neither final nor legally effective until reviewed and approved by the SEC, and on February 12, 2014, the PRC-based accounting firms appealed to the SEC against this decision. In February 2015, each of the four PRC-based accounting firms agreed to a censure and to pay a fine to the SEC to settle the dispute and avoid suspension of their ability to practice before the SEC. The settlement requires the firms to follow detailed procedures to seek to provide the SEC with access to such firms’ audit documents via the CSRC. If the firms do not follow these procedures or if there is a failure in the process between the SEC and the CSRC, the SEC could impose penalties such as suspensions, or it could restart the administrative proceedings.

In the event that the SEC restarts the administrative proceedings, depending upon the final outcome, listed companies in the United States with major PRC operations may find it difficult or impossible to retain auditors in respect of their operations in the PRC, which could result in financial statements being determined to not be in compliance with the requirements of the Exchange Act, including possible delisting. Moreover, any negative news about the proceedings against these audit firms may cause investor uncertainty regarding PRC-based, United States-listed companies and the market price of the ordinary shares may be adversely affected.

If Ucommune’s independent registered public accounting firm was denied, even temporarily, the ability to practice before the SEC and PubCo were unable to timely find another registered public accounting firm to audit and issue an opinion on its financial statements, PubCo’s financial statements could be determined not to be in compliance with the requirements of the Exchange Act. Such a determination could ultimately lead to the delisting of PubCo’s ordinary shares from the Nasdaq or deregistration from the SEC, or both, which would substantially reduce or effectively terminate the trading of the ordinary shares in the United States.

Any distributions received by Orisun’s stockholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, Orisun was unable to pay its debts as they fell due in the ordinary course of business and the value of its assets does not exceed its liabilities.

Orisun’s amended and restated certificate of incorporation provides that it will continue in existence only until May 6, 2021 (assuming the deadline for consummation is extended in accordance with the amended and restated certificate of incorporation). If Orisun is unable to consummate a transaction within the required time period, upon notice from Orisun, the trustee of the trust account will distribute the amount in its trust account to its public stockholders. Concurrently, Orisun shall pay, or reserve for payment, from funds not held in trust, its liabilities and obligations, although Orisun cannot assure you that there will be sufficient funds for such purpose. If there are insufficient funds held outside the trust account for such purpose, Wei Chen, Orisun’s Chief Executive Officer and President, contractually agreed that, if it liquidates prior to the consummation of a business combination, she will be liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Orisun for services rendered or contracted for or products sold to it, but only if such a vendor or prospective target business does not execute such a waiver. However, we cannot assure you that the liquidator will not determine that he or she requires additional time to evaluate creditors’ claims (particularly if there is uncertainty over the validity or extent of the claims of any creditors). We also cannot assure you that a creditor or stockholder will not file a petition with the Delaware court which, if successful, may result in our liquidation being subject to the supervision of that court. Such events might delay distribution of some or all of Orisun’s assets to its public stockholders.

Thereafter, Orisun’s sole business purpose will be to voluntarily liquidate and dissolve in accordance with Delaware law. In such a situation under Delaware law, a liquidator would be appointed and, subject to the terms of the required plan of liquidation, the liquidator would give at least 21 days’ notice to creditors of his intention to make a distribution by notifying known creditors (if any) and by placing a public advertisement. However, in practice the procedure to be followed by the liquidator will be subject to the terms of the plan of liquidation and the certificate of incorporation of the company and the mentioned notice may not necessarily delay the distribution of assets particularly if the liquidator is satisfied that no creditors would be adversely affected as a consequence of a distribution before this time period has expired. In practice, as soon as the affairs of the company are fully-wound up, the liquidator would normally lay a final report and accounts before a final general meeting which must be called by a public notice at least one month before it takes place. After the final meeting, the liquidator must make a return to the registrar confirming the date on which the meeting was held and three months after the date of such filing the company is dissolved. It is Orisun’s intention to liquidate the trust account to its public stockholders as soon as reasonably possible and Orisun’s initial stockholders have agreed to take any such action necessary to liquidate the trust account and to dissolve the company as soon as reasonably practicable if Orisun does not complete a business combination within the required time period. Pursuant to Orisun’s amended and restated certificate of incorporation, failure to consummate a business combination by November 6, 2020 or by the date that is 21 months from the closing of the IPO, or May 6, 2021, if we extend additional three months twice to consummate the Business Combination, will trigger an automatic winding up of the company.

If Orisun is forced to enter into an insolvent liquidation, any distributions received by Orisun stockholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, Orisun was unable to pay its debts as they fall due in the ordinary course of business. As a result, a liquidator could seek to recover all amounts received by Orisun stockholders. Furthermore, Orisun board of directors may be viewed as having breached its fiduciary duties to its creditors and/or may have acted in bad faith, and thereby exposing itself and Orisun to claims of damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. Orisun cannot assure you that claims will not be brought against it for these reasons.

If Orisun’s due diligence investigation of Ucommune was inadequate, then Orisun stockholders following the Business Combination could lose some or all of their investment.

Even though Orisun conducted a due diligence investigation of Ucommune, it cannot be sure that this diligence uncovered all material issues that may be present inside Ucommune or its business, or that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of Ucommune and its business and outside of its control will not later arise.

All of Orisun’s officers and directors own ORSN Common Stock, ORSN Warrants and ORSN Rights and will not participate in liquidation distributions and, therefore, they may have a conflict of interest in determining whether the Business Combination is appropriate.

All of Orisun’s officers and directors collectively own an aggregate of [1,321,001] shares of ORSN Common Stock and 211,001 ORSN Units (Chardan owns 22,200 ORSN Units). Such individuals/entities have waived their rights to redeem these shares (including shares underlying the units), or to receive distributions with respect to these shares upon the liquidation of the trust account if Orisun is unable to consummate a business combination. Accordingly, the ORSN Common Stock, as well as the ORSN Units purchased by our officers and directors, will be worthless if Orisun does not consummate a business combination. Based on a market price of $[•] per share of ORSN Common Stock, $[•] per ORSN Warrant, $[•] per ORSN Right, and $[•] per ORSN Unit on [•], 2020, the aggregate value of these shares, warrants, rights and units was approximately $[•]. The ORSN Common Stock acquired prior to the IPO, as well as the ORSN Units will be worthless if Orisun does not consummate a business combination. Consequently, our directors’ and officers’ discretion in identifying and selecting Ucommune as a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of the Business Combination are appropriate and in Orisun stockholders’ best interest.

Orisun is requiring stockholders who wish to redeem their shares of common stock in connection with the Business Combination to comply with specific requirements for redemption that may make it more difficult for them to exercise their redemption rights prior to the deadline for exercising their rights.

Orisun is requiring public stockholders who wish to redeem their shares of common stock to either tender their certificates to Orisun’s transfer agent or deliver their shares to the transfer agent electronically using the Depository Trust Company’s, or DTC, DWAC System two (2) business days before the Special Meeting. In order to obtain a physical certificate, a stockholder’s broker and/or clearing broker, DTC and Orisun’s transfer agent will need to act to facilitate this request. It is Orisun’s understanding that stockholders should generally allot at least two weeks to obtain physical certificates from the transfer agent. However, because Orisun does not have any control over this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain a physical stock certificate. While Orisun has been advised that it takes a short time to deliver shares through the DWAC System, Orisun cannot assure you of this fact. Accordingly, if it takes longer than Orisun anticipates for stockholders to deliver their shares, stockholders who wish to redeem may be unable to meet the deadline for exercising their redemption rights and thus may be unable to redeem their shares of common stock.

Orisun will require its public stockholders who wish to redeem their shares of common stock in connection with the Business Combination to comply with specific requirements for redemption described above, such redeeming stockholders may be unable to sell their securities when they wish to in the event that the Business Combination is not consummated.

If Orisun requires public stockholders who wish to redeem their shares of common stock in connection with the proposed Business Combination to comply with specific requirements for redemption as described above and the Business Combination is not consummated, Orisun will promptly return such certificates to its public stockholders. Accordingly, investors who attempted to redeem their shares of common stock in such a circumstance will be unable to sell their securities after the failed acquisition until Orisun has returned their securities to them. The market price for Orisun’s ordinary shares may decline during this time and you may not be able to sell your securities when you wish to, even while other stockholders that did not seek redemption may be able to sell their securities.

The initial stockholders, including the officers and directors, control a substantial interest in Orisun and thus may influence certain actions requiring a stockholder vote.

Orisun’s initial stockholders, including the officers and directors, collectively own approximately [22.84]% of its issued and outstanding shares of common stock. However, if a significant number of Orisun stockholders vote, or indicate an intention to vote, against the Business Combination, Orisun’s initial stockholders or the affiliates, could make such purchases in the open market or in private transactions in order to influence the vote. Orisun’s initial stockholders or the affiliates and Chardan have agreed to vote any shares they own in favor of the Business Combination.

If the current Orisun’s security holders exercise their registration rights with respect to their securities, it may have an adverse effect on the market price of PubCo’s securities.

Orisun’s initial stockholders are entitled to make a demand that it registers the resale of their insider shares at any time commencing three months prior to the date on which their shares may be released from escrow. Additionally, our initial stockholders, including Sponsor, and Chardan are entitled to demand that we register the resale of the shares underlying the Private Units and private rights and any securities our initial stockholders, officers, directors or their affiliates may be issued in payment of working capital loans made to us at any time upon or after we consummate a business combination. If such persons exercise their registration rights with respect to all of their securities, then there will be an additional [1,366,531] PubCo Class A Ordinary Shares eligible for trading in the public market. The presence of these additional ordinary shares trading in the public market may have an adverse effect on the market price of PubCo Class A Ordinary Shares after the consummation of the Business Combination.

Orisun will not obtain an opinion from an unaffiliated third party as to the fairness of the Business Combination to its stockholders.

Orisun is not required to obtain an opinion from an unaffiliated third party that the price it is paying is fair to its public stockholders from a financial point of view. Although Orisun board of directors did receive a valuation report from Chardan that the valuation offered by Ucommune is favorable to Orisun, such report is not deemed as an opinion to the fairness of Business Combination and is for reference only. Orisun public stockholders therefore, must rely solely on the judgment of Orisun board of directors.

If the Business Combination’s benefits do not meet the expectations of financial or industry analysts, the market price of PubCo’s securities may decline after the Business Combination.

The market price of PubCo’s securities may decline as a result of the Business Combination if:

•        PubCo does not achieve the perceived benefits of the acquisition as rapidly as, or to the extent anticipated by, financial or industry analysts; or

•        The effect of the Business Combination on the financial statements is not consistent with the expectations of financial or industry analysts.

Accordingly, investors may experience a loss as a result of decreasing stock prices.

Orisun’s directors and officers may have certain conflicts in determining to recommend the acquisition of Ucommune, since certain of their interests, and certain interests of their affiliates and associates, are different from, or in addition to, your interests as a stockholder.

Orisun’s management and directors have interests in and arising from the Business Combination that are different from, or in addition to, your interests as a stockholder, which could result in a real or perceived conflict of interest. These interests include the fact that certain of the Orisun’s securities owned by Orisun’s management and directors, or their affiliates and associates, would become worthless if the Business Combination is not approved and Orisun otherwise fails to consummate a Business Combination prior to its liquidation.

Orisun will incur significant transaction costs in connection with transactions contemplated by the Merger Agreement.

Orisun will incur significant transaction costs in connection with the Business Combination. If the Business Combination is not consummated, Orisun may not have sufficient funds to seek an alternative business combination and may be forced to voluntarily liquidate and subsequently dissolve.