Exhibit (a)-(1)

                                , 2020

Shareholders of Fuling Global Inc.
Re: Notice of Extraordinary General Meeting of Shareholders

Dear Shareholder:

You are cordially invited to attend an extraordinary general meeting of shareholders of Fuling Global Inc., an exempted company with limited liability incorporated under the laws of the Cayman Islands (the “Company”), to be held on                , 2020 at                 (Beijing time). The meeting will be held at [88 Jintang South Ave., East New District, Wenling, Zhejiang Province, People’s Republic of China]. The accompanying notice of the extraordinary general meeting and proxy statement provide information regarding the matters to be considered and voted on at the extraordinary general meeting, including at any adjournment thereof.

On September 1, 2020, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Fuling ParentCo Inc., an exempted company incorporated with limited liability under the laws of the Cayman Islands (“Parent”) and Fuling MergerCo Inc., an exempted company incorporated with limited liability under the laws of the Cayman Islands and a wholly owned Subsidiary of Parent (“Merger Sub”), pursuant to which Merger Sub will be merged with and into the Company (the “Merger”), with the Company continuing as the surviving company (the “Surviving Company”) resulting from the Merger and becoming a wholly owned subsidiary of Parent. The purpose of the extraordinary general meeting is for you and the other shareholders of the Company to consider and vote, amongst other things, upon a proposal to authorize and approve the Merger Agreement and the plan of merger required to be filed with the Registrar of Companies of the Cayman Islands (the “Cayman Registrar”) in connection with the Merger (the “Plan of Merger”) and the transactions contemplated by the Merger Agreement and the Plan of Merger (collectively, the “Transactions”), including the Merger. Copies of the Merger Agreement and the form of the Plan of Merger are attached as Annex A and Annex B, respectively, to the accompanying proxy statement.

Each of Parent and Merger Sub was formed solely for the purpose of the Merger. At the effective time of the Merger (the “Effective Time”), Parent will be beneficially owned by (a) Ms. Guilan Jiang (“Ms. Jiang”), founder, chairwoman of the board of directors of the Company (the “Board”) and chief operating officer of the Company, and Silver Trillion Investments Limited (“Silver Trillion” or the “Founder Entity”), a limited liability company incorporated under the laws of the British Virgin Islands and controlled by Ms. Jiang; (b) Ms. Sujuan Zhu, a director of the Company and an extended family member of Ms. Jiang, and Celestial Sun Holdings Limited, a limited liability company incorporated under the laws of the British Virgin Islands and controlled by Ms. Sujuan Zhu; (c) Mr. Qian (Eugene) Hu, a family member of Ms. Jiang, and Zheng Hui Investments Limited, a limited liability company incorporated under the laws of the British Virgin Islands and controlled by Mr. Qian (Eugene) Hu; (d) Mr. Xinzhong Wang, an extended family member of Ms. Jiang, and Charm Grow Holdings Limited, a limited liability company incorporated under the laws of the British Virgin Islands and controlled by Mr. Xinzhong Wang; (e) Mr. Jinxue Jiang, an extended family member of Ms. Jiang, and Tengyu International Limited, a limited liability company incorporated under the laws of the British Virgin Islands and controlled by Mr. Jinxue Jiang ((a) to (e) together, the “Rollover Shareholders” and Ms. Jiang, Ms. Sujuan Zhu, Mr. Qian (Eugene) Hu, Mr. Xinzhong Wang and Mr. Jinxue Jiang, collectively, the “Founder Family Members”); and (f) Mr. Qijun Huang (“Mr. Huang” or the “Sponsor’), an individual financial investor, and Harvest Wind Investment Limited (“Harvest Wind” or the “Sponsor Entity”), a corporation incorporated under the laws of Hong Kong Special Administrative Region of the People’s Republic of China and controlled by Mr. Qijun Huang (together with the Rollover Shareholders, the “Buyer Group”). Merger Sub is wholly and beneficially owned by Parent.

As of the date of the accompanying proxy statement, the Buyer Group together beneficially owns 11,129,105 shares of the Company, which represents approximately 70.4% of the Company’s issued and outstanding ordinary shares, par value US$0.001 per share (each, a “Share”). If the Merger is completed, the Company will continue its operations as a privately held company and will be wholly owned by Parent and, as a result of the Merger, the Company will no longer be listed on the NASDAQ Stock Market LLC (“NASDAQ”).

If the Merger is completed, at the Effective Time:

On September 1, 2020, a special committee of the Board, composed solely of independent and disinterested directors (the “Special Committee”) (although Mr. Hong (“Simon”) He and Mr. Jian Cao hold 12,000 Shares each), reviewed and considered the terms and conditions of (a) the Merger Agreement, (b) the Plan of Merger, (c) the support agreement (the “Support Agreement”) by and among Parent and Founder Family Members and pursuant to which the Founder Family Members promise to Parent that they will vote all of the Rollover Shares they own in favor of the Merger and the Merger Agreement at the shareholders’ meeting and restrict the transfer of such Shares, (d) the equity commitment letters (each, an “Equity Commitment Letter”) by the Founder Entity and the Sponsor Entity, pursuant to which each of the Founder Entity and the Sponsor Entity has committed to purchase, or cause the purchase of, equity securities of Parent, for cash, up to the aggregate amount set forth in their Equity Commitment Letters (the “Equity Financing”), which shall be used to finance the consummation of the Transactions, and (e) the limited guarantees (the “Limited Guarantees”) by each of the Founder Entity and the Sponsor Entity in favor of the Company, pursuant to which the Founder Entity and the Sponsor Entity will guarantee certain obligations of Parent and Merger Sub under the Merger Agreement, and the Transactions, including the Merger. The Special Committee, after consultation with its financial advisors and legal counsel and due consideration of all relevant factors, unanimously (a) determined that the Merger as contemplated in the Merger Agreement and other transaction documents is fair to and in the best interests of the Company and its shareholders, especially shareholders other than any of the Rollover Shareholders, executive officers or directors of the Company or any of their affiliates (such unaffiliated shareholders are referred to herein as the “Unaffiliated Security Holders”), (b) approved and declared it advisable for the Company to enter into the Merger Agreement and other transaction documents, and to consummate the Transactions, including the Merger, (c) recommended that the Board authorize and approve the Merger Agreement and other transaction documents, and the consummation of the Transactions, including the Merger, and (d) recommended that the Board direct that the authorization and approval of the Merger Agreement and other transaction documents, and the Transactions, including the Merger, be submitted to a vote of the shareholders of the Company for authorization and approval at an extraordinary general meeting of the shareholders of the Company, the date, time and place of which shall be determined by the Special Committee.

On September 1, 2020, the Board, acting upon the unanimous recommendation of the Special Committee, (a) determined that the Merger as contemplated in the Merger Agreement and the Plan of Merger is fair to and in the best interests of the Company and its shareholders, especially the Unaffiliated Security Holders and it is advisable for the Company to enter into the Merger Agreement, and the Plan of Merger, and to consummate the Transactions, including the Merger; the Adoption of Amended M&A and the Variation of Capital; (b) authorized and approved the execution, delivery and performance of the Merger Agreement and, the Plan of Merger, and the consummation of the Transactions, including the Merger, the Adoption of Amended M&A and the Variation of Capital; and (c) resolved to recommend the approval and authorization of the Merger Agreement, the Plan of Merger and the Transactions, including the Merger, to the shareholders of the Company and directed that the Merger Agreement, the Plan of Merger and the Transactions, including the Merger, the Adoption of Amended M&A and the Variation of Capital, be submitted to a vote of the shareholders of the Company for authorization and approval at an extraordinary general meeting of the shareholders of the Company, the date, time and place of which shall be determined by the Special Committee.

The Board recommends that you vote:

FOR the proposal to authorize and approve the Merger Agreement, the Plan of Merger, and the consummation of the Transactions, including (i) the Merger, (ii) the amendment and restatement of the existing memorandum and articles of association of the Company by replacing in their entirety with a new memorandum and articles of association, in the form attached as Appendix II to the Plan of Merger at the Effective Time (the “Adoption of Amended M&A”), and (iii) the variation of the authorized share capital of the Company from US$70,000 divided into 70,000,000 shares of a par value of US$0.001 each to US$50,000 divided into 50,000,000 shares of a par value of US$0.001 each at the Effective Time (the “Variation of Capital”);

FOR the proposal to authorize each member of the Special Committee (as defined in the notice of extraordinary general meeting), the chief executive officer of the Company, and the chief financial officer of the Company, each be authorized to do all things necessary to give effect to the Merger Agreement, the Plan of Merger, and the consummation of the Transactions, including the Merger, the Adoption of Amended M&A and the Variation of Capital; and

FOR the proposal to adjourn the extraordinary general meeting in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received at the time of the extraordinary general meeting to pass the special resolutions to be proposed at the extraordinary general meeting.

The Merger cannot be completed unless the Merger Agreement, the Plan of Merger and the consummation of the Transactions, including the Merger, are authorized and approved by a special resolution (as defined in the CICL) of the Company passed by an affirmative vote of holders of Shares representing two-thirds or more of the Shares present and voting in person or by proxy as a single class at the extraordinary general meeting. Pursuant to the Support Agreement, all Rollover Shares, in the aggregate amount of 11,083,334 Shares or approximately 70.1% of the total outstanding Shares, shall be voted in favor of the authorization and approval of the Merger Agreement, the Plan of Merger and the consummation of the Transactions, including the Merger. Accordingly, based on 15,803,763 Shares expected to be issued and outstanding on _____, 2020, being the record date for determining entitlements of shareholders to attend and vote at the extraordinary general meeting (the “Record Date”), and assuming that the Rollover Shares will be voted in favor of the special resolutions, a quorum will be present at the extraordinary general meeting and sufficient votes will be cast to authorize and approve the Merger Agreement, the Plan of Merger and the consummation of the Transactions, including the Merger, without any further vote of any other shareholder.

The accompanying proxy statement provides detailed information about the Merger and the extraordinary general meeting. We encourage you to read the entire document and all of the attachments and other documents referred to or incorporated by reference herein carefully. You may also obtain more information about the Company from documents the Company has filed with the United States Securities and Exchange Commission (the “SEC”), which are available for free at the SEC’s website www.sec.gov.

The Rollover Shareholders will exercise their rights as shareholders of the Company to demand poll voting at the extraordinary general meeting and accordingly voting will take place by poll voting. Whether or not you plan to attend the extraordinary general meeting in person, please complete, sign, date and return the accompanying proxy card, in accordance with the instructions set forth on the proxy card, as promptly as possible. The deadline to lodge your proxy card is ____, 2020 at ___ a.m. (Beijing time), being 48 hours before the time appointed for the extraordinary general meeting. Each registered holder of Shares has one vote for each Share held as of 5 p.m. Cayman Islands time on the Record Date.

If you hold your Shares through a financial intermediary such as a broker or bank, you must rely on the procedures of the financial intermediary through which you hold your Shares if you wish to vote at the extraordinary general meeting.

Registered shareholders (i.e. shareholders whose name is registered in the register of members of the Company) and wishing to dissent from the Merger will have the right to receive payment of the fair value of their Shares in accordance with Section 238 of the CICL if the Merger is completed, but only if they deliver to the Company, before the vote to authorize and approve the Merger is taken at the extraordinary general meeting, a written objection to the Merger and subsequently comply with all procedures and requirements of Section 238 of the CICL for the exercise of dissenters’ rights, a copy of which is attached as Annex E to the accompanying proxy statement. The fair value of your Shares as determined under the CICL could be more than, the same as, or less than the merger consideration you would receive pursuant to the Merger Agreement if you do not exercise dissenters’ rights with respect to your Shares.

IF YOU HOLD YOUR SHARES THROUGH A FINANCIAL INTERMEDIARY SUCH AS A BROKER OR BANK AND WISH TO DISSENT FROM THE MERGER, YOU MUST MAKE ALL NECESSARY ARRANGEMENTS WITH THE FINANCIAL INTERMEDIARY TO ENSURE THAT YOUR SHARES ARE REGISTERED IN YOUR OWN NAME IN THE REGISTER OF MEMBERS OF THE COMPANY such that you become a registered shareholder IN ORDER FOR YOU TO EXERCISE DISSENTERS’ RIGHTS. THE FINANCIAL INTERMEDIARY IS UNLIKELY TO EXERCISE OR ATTEMPT TO EXERCISE ANY DISSENTERS’ RIGHTS WITH RESPECT TO ANY OF THE SHARES THAT IT HOLDS, EVEN IF A BENEFICIAL OWNER OF THE SHARES REQUESTS THE FINANCIAL INTERMEDIARY TO DO SO. YOU MUST CONTACT YOUR FINANCIAL INTERMEDIARY PROMPTLY TO ENSURE THAT YOU BECOME A REGISTERED SHAREHOLDER IN SUFFICIENT TIME AHEAD OF THE DATE OF THE EXTRAORDINARY GENERAL MEETING, AS YOU MUST DELIVER TO THE COMPANY A WRITTEN OBJECTION TO THE MERGER BEFORE THE VOTE TO AUTHORIZE AND APPROVE THE MERGER IS TAKEN AT THE EXTRAORDINARY GENERAL MEETING. YOU MUST SUBSEQUENTLY COMPLY WITH ALL PROCEDURES AND REQUIREMENTS OF SECTION 238 OF THE CICL FOR THE EXERCISE OF DISSENTERS’ RIGHTS, A COPY OF WHICH IS ATTACHED AS ANNEX E TO THE ACCOMPANYING PROXY STATEMENT. IF THE MERGER IS NOT CONSUMMATED, THE COMPANY WILL CONTINUE TO BE A PUBLICLY TRADED COMPANY IN THE UNITED STATES AND THE SHARES WILL CONTINUE TO BE LISTED ON NASDAQ. AS A RESULT, IF YOU BECAME A REGISTERED SHAREHOLDER FOR PURPOSES OF EXERCISING DISSENTERS’ RIGHTS AND THE MERGER IS NOT CONSUMMATED, AND YOU WISH TO TRANSFER YOUR SHARES BACK TO A FINANCIAL INTERMEDIARY, YOU WILL NEED TO CONTACT THE FINANCIAL INTERMEDIARY TO MAKE ALL NECESSARY ARRANGEMENTS.

If you do not fully and precisely satisfy the procedural requirements of the CICL, you will lose your dissenters’ rights.

We encourage you to read the section of the accompanying proxy statement entitled “Dissenters’ Rights” beginning on page 78 as well as “Annex E—Companies Law, Cap. 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands—Section 238” to the accompanying proxy statement carefully and we urge you to seek your own legal advice on Section 238 or Part XVI of the CICL in general from a licensed Cayman Islands law firm if you wish to exercise your dissenters’ rights.

Neither the SEC nor any state securities regulatory agency has approved or disapproved the Merger, passed upon the merits or fairness of the Merger or passed upon the adequacy or accuracy of the disclosure in this letter or in the accompanying notice of the extraordinary general meeting or proxy statement. Any representation to the contrary is a criminal offense.

If you have any questions or need assistance voting your Shares, please call our Investor Relations Department at +86-576-8662-3803.

Thank you for your cooperation and continued support.

The accompanying proxy statement is dated _____, 2020, and is first being mailed to the Company’s shareholders on or about _____, 2020.

FULING GLOBAL INC.

NOTICE OF EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS TO BE HELD ON
_____, 2020

Dear Shareholder:

Notice is hereby given that an extraordinary general meeting of the shareholders of Fuling Global Inc. (referred to herein alternately as the “Company,” “us,” “we” or other terms correlative thereto), will be held on ____, 2020 at ____ a.m. (Beijing time) at [88 Jintang South Ave., East New District, Wenling, Zhejiang Province, People’s Republic of China].

Only registered holders of ordinary shares of the Company, par value US$0.001 per share (each, a “Share” and collectively, the “Shares”), as of 5 p.m. Cayman Islands time on _____, 2020 (the “Record Date”) or their proxy holders are entitled to attend and vote at this extraordinary general meeting or any adjournment thereof. At the extraordinary general meeting, you will be asked to consider and vote upon the following resolutions:

THAT the Agreement and Plan of Merger, dated as of September 1, 2020 (the “Merger Agreement”), as may be amended from time to time, among the Company, Fuling ParentCo Inc., an exempted company with limited liability incorporated under the laws of the Cayman Islands (“Parent”) and Fuling MergerCo Inc., an exempted company with limited liability incorporated under the laws of the Cayman Islands and a wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which Merger Sub will be merged with and into the Company (the “Merger”), with the Company continuing as the surviving company (the “Surviving Company”) resulting from the Merger and becoming a wholly owned subsidiary of Parent (such Merger Agreement being in the form attached as Annex A to the proxy statement accompanying this notice of extraordinary general meeting and which will be produced and made available for inspection at the extraordinary general meeting), the plan of merger required to be filed with the Registrar of Companies of the Cayman Islands in connection with the Merger (the “Plan of Merger”) (such Plan of Merger being substantially in the form attached as Annex B to the proxy statement accompanying this notice of extraordinary general meeting and which will be produced and made available for inspection at the extraordinary general meeting), and the consummation of transactions contemplated by the Merger Agreement and the Plan of Merger (collectively, the “Transactions”) including (i) the Merger, (ii) the amendment and restatement of the existing memorandum and articles of association of the Company by replacing in their entirety with a new memorandum and articles of association, in the form attached as Appendix II to the Plan of Merger, at the effective time of the Merger (the “Effective Time”) (the “Adoption of Amended M&A”), and (iii) the variation of the authorized share capital of the Company from US$70,000 divided into 70,000,000 shares of a par value of US$0.001 each to US$50,000 divided into 50,000,000 shares of a par value of US$0.001 each at the Effective Time (the “Variation of Capital”), be approved and authorized;

THAT each member of the Special Committee (as defined in this notice of extraordinary general meeting), the chief executive officer of the Company, and the chief financial officer of the Company, each be authorized to do all things necessary to give effect to the Merger Agreement, the Plan of Merger and the Transactions, including the Merger, the Adoption of Amended M&A and the Variation of Capital; and

THAT the extraordinary general meeting be adjourned in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received at the time of the extraordinary general meeting to pass the special resolutions to be proposed at the extraordinary general meeting.

Please refer to the accompanying proxy statement, which is attached to and made a part of this notice. A list of the Company’s shareholders will be available at its principal executive offices at 88 Jintang South Ave., East New District Wenling, Zhejiang Province, People’s Republic of China 317509, during ordinary business hours for the two business days immediately prior to the extraordinary general meeting.

All of (a) Ms. Guilan Jiang (“Ms. Jiang”), founder, chairwoman of the board of directors of the Company (the “Board”) and chief operating officer of the Company, (b) Ms. Sujuan Zhu, a director of the Board and an extended family member of Ms. Jiang, (c) Mr. Qian (Eugene) Hu, a family member of Ms. Jiang, (d) Mr. Xinzhong Wang, an extended family member of Ms. Jiang, (e) Mr. Jinxue Jiang, an extended family member of Ms. Jiang ((a) to (e), collectively, “Founder Family Members”, and together with (f) Silver Trillion Investments Limited (“Silver Trillion” or the “Founder Entity”), a limited liability company incorporated under the laws of the British Virgin Islands and controlled by Ms. Jiang, (g) Celestial Sun Holdings Limited, a limited liability company incorporated under the laws of the British Virgin Islands and controlled by Ms. Sujuan Zhu, (h) Zheng Hui Investments Limited, a limited liability company incorporated under the laws of the British Virgin Islands and controlled by Mr. Qian (Eugene) Hu, (i) Charm Grow Holdings Limited, a limited liability company incorporated under the laws of the British Virgin Islands and controlled by Mr. Xinzhong Wang and (j) Tengyu International Limited, a limited liability company incorporated under the laws of the British Virgin Islands and controlled by Mr. Jinxue Jiang, collectively, the “Rollover Shareholders,” and each, a “Rollover Shareholder”) and Parent have entered into a support agreement, dated as of September 1, 2020 (the “Support Agreement”), which provides, among other things, that the Founder Family Members will (a) vote all of certain 11,083,334 Shares beneficially owned by them (the “Rollover Shares”), in favor of the authorization and approval of the Merger Agreement, the Plan of Merger and the consummation of the Transactions, including the Merger, and (b) restrict the transfer of all the Rollover Shares owned by him or her, as appropriate, in each case in accordance with the terms of the Support Agreement. A copy of the Support Agreement is attached as Annex C to the accompanying proxy statement. As of the date of the accompanying proxy statement, the Rollover Shares represents approximately 70.1% of the total number of issued and outstanding Shares in the Company.

After careful consideration and upon the unanimous recommendation of a special committee of the Board (the “Special Committee”), composed solely of directors who are unaffiliated with any member of the Buyer Group or any member of the management of the Company (although Mr. Hong (“Simon”) He and Mr. Jian Cao hold 12,000 Shares each), the Board (other than Ms. Jiang and Ms. Sujuan Zhu, who abstained from the vote due to affiliation with the Buyer Group), at a duly held meeting, has (a) determined that the execution by the Company of the Merger Agreement and the Plan of Merger and consummation of the Transactions, including the Merger, are fair to and in the best interests of the Company and its shareholders, especially shareholders other than any of the Rollover Shareholders, executive officers or directors of the Company or any of their affiliates (such unaffiliated shareholders are referred to herein as the “Unaffiliated Security Holders”); (b) authorized and approved the Merger Agreement, the Plan of Merger, the Transactions, including the Merger; and (c) resolved to recommend the approval and authorization of the Merger Agreement, the Plan of Merger and the consummation of the Transactions, including the Merger, to the shareholders of the Company and directed that the Merger Agreement, the Plan of Merger and the consummation of the Transactions, including the Merger, be submitted to a vote of the shareholders of the Company for authorization and approval at an extraordinary general meeting of the shareholders of the Company, the date, time and place of which shall be determined by the Special Committee. The Board recommends that you vote FOR the proposal to authorize and approve the Merger Agreement, the Plan of Merger and the consummation of the Transactions, including the Merger, the Adoption of Amended M&A and the Variation of Capital, FOR the proposal to authorize each member of the Special Committee, composed solely of independent and disinterested directors of the Company, the chief executive officer of the Company, and the chief financial officer of the Company, each to do all things necessary to give effect to the Merger Agreement, the Plan of Merger, and the consummation of the Transactions, including the Merger, the Adoption of Amended M&A and the Variation of Capital, and FOR the proposal to adjourn the extraordinary general meeting in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received at the time of the extraordinary general meeting to pass the special resolutions to be proposed at the extraordinary general meeting.

The Merger cannot be completed unless the Merger Agreement, the Plan of Merger and the consummation of the Transactions, including the Merger, are authorized and approved by a special resolution (as defined in the Companies Law, Cap. 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands (the “CICL”) ) of the Company passed by an affirmative vote of holders of Shares representing two-thirds or more of the Shares present and voting in person or by proxy as a single class at the extraordinary general meeting. Pursuant to the terms of the Support Agreement, 11,083,334 Shares, which represents approximately 70.1% of the total voting rights in the Company, will be voted in favor of the Merger. Accordingly, based on the total number of Shares expected to be issued and outstanding on the Record Date, and assuming that the Rollover Shares will be voted in favor of the special resolutions, a quorum will be present at the extraordinary general meeting and sufficient votes will be cast to authorize and approve the Merger Agreement, the Plan of Merger and the consummation of the Transactions, including the Merger, without any further vote of any other shareholder.

Even if you plan to attend the extraordinary general meeting in person, we request that you submit your proxy card in accordance with the instructions set forth on the proxy card as promptly as possible. To be valid, your proxy card must be completed, signed, dated and returned to the Company’s offices at 88 Jintang South Ave., East New District Wenling, Zhejiang Province, People’s Republic of China 317509, no later than ____ a.m., ____, 2020, being 48 hours before the time appointed for the extraordinary general meeting (being ____, 2020 at ____ a.m. (Beijing time)). The proxy card is the “instrument of proxy” and the “instrument appointing a proxy” as referred to in the Company’s articles of association. The Rollover Shareholders will exercise their rights as registered shareholders of the Company to demand poll voting at the extraordinary general meeting and accordingly voting will take place by poll voting. Each registered shareholder has one vote for each Share held as of 5 p.m. Cayman Islands time on the Record Date. If you receive more than one proxy card because you own Shares that are registered in different names, please vote all of your Shares shown on each of your proxy cards in accordance with the instructions set forth on the proxy card.

Completing and returning the proxy card in accordance with the instructions set forth on the proxy card will not deprive you of your right to attend the extraordinary general meeting and vote your Shares in person. If you attend the extraordinary general meeting and vote your Shares in person, the returned proxy card will be deemed to be revoked by operation of law. Please note, however, that if your Shares are registered in the name of a broker, bank or relevant financial intermediary and you wish to vote at the extraordinary general meeting in person, you must obtain from the bank, broker or relevant financial intermediary a proxy issued in your name.

If you abstain from voting, fail to cast your vote in person, fail to complete and return your proxy card in accordance with the instructions set forth on the proxy card, or fail to give voting instructions to your broker, bank or relevant financial intermediary, your vote will not be counted.

When proxy cards are properly completed, signed, dated, and returned by holders of Shares, the Shares they represent will be voted at the extraordinary general meeting in accordance with the instructions of such shareholders. If no specific instructions are given by such shareholders, such Shares will be voted “FOR” the proposals as described above, unless you appoint a person other than the chairman of the meeting as your proxy, in which case the Shares represented by your proxy card will be voted (or not submitted for voting) as your proxy determines. If you appoint a person other than the chairman of the meeting as your proxy, your proxy must attend the extraordinary general meeting in person in order to vote on your behalf.

Registered shareholders (i.e. shareholders whose name is registered in the register of members of the Company) who wish to dissent from the Merger will have the right to receive payment of the fair value of their Shares in accordance with Section 238 of the CICL if the Merger is completed, but only if they deliver to the Company, before the vote to authorize and approve the Merger is taken at the extraordinary general meeting, a written objection to the Merger and subsequently comply with all procedures and requirements of Section 238 of the CICL for the exercise of dissenters’ rights, a copy of which is attached as Annex E to the accompanying proxy statement. The fair value of their Shares as determined under the CICL could be more than, the same as, or less than the merger consideration they would receive pursuant to the Merger Agreement if they do not exercise dissenters’ rights with respect to their Shares.

IF YOU HOLD YOUR SHARES THROUGH A FINANCIAL INTERMEDIARY SUCH AS A BROKER OR BANK AND WISH TO DISSENT FROM THE MERGER, YOU MUST MAKE ALL NECESSARY ARRANGEMENTS WITH THE FINANCIAL INTERMEDIARY TO ENSURE THAT YOUR SHARES ARE REGISTERED IN YOUR OWN NAME IN THE REGISTER OF MEMBERS OF THE COMPANY such that you become a registered shareholder IN ORDER FOR YOU TO EXERCISE DISSENTERS’ RIGHTS. THE FINANCIAL INTERMEDIARY IS UNLIKELY TO EXERCISE OR ATTEMPT TO EXERCISE ANY DISSENTERS’ RIGHTS WITH RESPECT TO ANY OF THE SHARES THAT IT HOLDS, EVEN IF A BENEFICIAL OWNER OF THE SHARES REQUESTS THE FINANCIAL INTERMEDIARY TO DO SO. YOU MUST CONTACT YOUR FINANCIAL INTERMEDIARY PROMPTLY TO ENSURE THAT YOU BECOME A REGISTERED SHAREHOLDER IN SUFFICIENT TIME AHEAD OF THE DATE OF THE EXTRAORDINARY GENERAL MEETING, AS YOU MUST DELIVER TO THE COMPANY A WRITTEN OBJECTION TO THE MERGER BEFORE THE VOTE TO AUTHORIZE AND APPROVE THE MERGER IS TAKEN AT THE EXTRAORDINARY GENERAL MEETING. YOU MUST SUBSEQUENTLY COMPLY WITH ALL PROCEDURES AND REQUIREMENTS OF SECTION 238 OF THE CICL FOR THE EXERCISE OF DISSENTERS’ RIGHTS, A COPY OF WHICH IS ATTACHED AS ANNEX E TO THE ACCOMPANYING PROXY STATEMENT. IF THE MERGER IS NOT CONSUMMATED, THE COMPANY WILL CONTINUE TO BE A PUBLICLY TRADED COMPANY IN THE UNITED STATES AND THE SHARES WILL CONTINUE TO BE LISTED ON NASDAQ. AS A RESULT, IF YOU BECAME A REGISTERED SHAREHOLDER FOR PURPOSES OF EXERCISING DISSENTERS’ RIGHTS AND THE MERGER IS NOT CONSUMMATED, AND YOU WISH TO TRANSFER YOUR SHARES BACK TO A FINANCIAL INTERMEDIARY, YOU WILL NEED TO CONTACT THE FINANCIAL INTERMEDIARY TO MAKE ALL NECESSARY ARRANGEMENTS.

If you do not fully and precisely satisfy the procedural requirements of the CICL, you will lose your dissenters’ rights.

We encourage you to read the section of the accompanying proxy statement entitled “Dissenters’ Rights” beginning on page 78 as well as “Annex E—Companies Law, Cap. 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands—Section 238” to the accompanying proxy statement carefully and we urge you to seek your own legal advice on Section 238 or Part XVI of the CICL in general from a licensed Cayman Islands law firm if you wish to exercise your dissenters’ rights.

PLEASE DO NOT SEND YOUR SHARE CERTIFICATES AT THIS TIME. IF THE MERGER IS COMPLETED, YOU WILL BE SENT INSTRUCTIONS REGARDING THE SURRENDER OF YOUR SHARE CERTIFICATES.

If you have any questions or need assistance voting your Shares, please call our Investor Relations Department at +86-576-8662-3803.

The Merger Agreement, the Plan of Merger and the Transactions, including the Merger, are described in the accompanying proxy statement. Copies of the Merger Agreement and the Plan of Merger are included as Annex A and Annex B, respectively, to the accompanying proxy statement. We urge you to read the entire accompanying proxy statement carefully.

Notes:

1. In the case of joint holders, any one of such joint holder may vote, either in person or by proxy, in respect of such share as if he or she were solely entitled thereto, but if more than one of such joint holders be present at the extraordinary general meeting the vote of the senior holder who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders. For this purpose, seniority will be determined by the order in which the names stand in the register of members of the Company in respect of the joint holding.

2. The instrument appointing a proxy must be in writing under the hand of the appointer or of his or her attorney duly authorized in writing or, if the appointer is a corporation, either under its seal or under the hand of an officer, attorney or other person duly authorized to sign the same.

3. A proxy need not be a member (registered shareholder) of the Company but must attend the extraordinary general meeting in person in order to vote on your behalf.

4. The proxy card must be deposited in the manner set out in the notice of the extraordinary general meeting. A proxy card that is not deposited in the manner permitted will be invalid.

5. Votes given in accordance with the terms of a proxy card will be valid notwithstanding the previous death or insanity of the principal or revocation of the proxy or of the authority under which the proxy was executed, provided that no intimation in writing of such death, insanity or revocation was received by the Company at 88 Jintang South Ave., East New District, Wenling, Zhejiang Province, People’s Republic of China 317509, attention: Investor Relations Department, at least two hours before the commencement of the extraordinary general meeting, or adjourned meeting at which such proxy is used.

PROXY STATEMENT

Dated _______, 2020

SUMMARY VOTING INSTRUCTIONS

Ensure that your shares of Fuling Global Inc. can be voted at the extraordinary general meeting by submitting your proxy card or contacting your broker, bank or other financial intermediary.

If your shares are registered in the name of a broker, bank or other financial intermediary:    check the voting instruction card forwarded by your broker, bank or other financial intermediary to see which voting options are available or contact your broker, bank or other financial intermediary in order to obtain directions as to how to ensure that your shares are voted at the extraordinary general meeting.

If your shares are registered in your name:    submit your proxy card as soon as possible by completing, signing, dating and returning the accompanying proxy card in the enclosed postage-paid envelope, so that your shares can be voted at the extraordinary general meeting in accordance with your instructions. If you appoint a person other than the chairman of the meeting as your proxy, your proxy must attend the extraordinary general meeting in person in order to vote on your behalf.

If you submit your proxy card without indicating how you wish to vote, the shares represented by your proxy will be voted in favor of the resolutions to be proposed at the extraordinary general meeting, unless you appoint a person other than the chairman of the meeting as your proxy, in which case the shares represented by your proxy will be voted (or not submitted for voting) as your proxy determines.

If you have any questions, require assistance with voting your proxy card, or need additional copies of proxy material, please contact our Investor Relations Department at +86-576-8662-3803.

Table of Contents

Summary Term Sheet

This “Summary Term Sheet” and the “Questions and Answers About the Extraordinary General Meeting and the Merger” highlight selected information contained in this proxy statement regarding the Merger (as defined below) and may not contain all of the information that may be important to your consideration of the Merger and other transactions contemplated by the Merger Agreement and the Plan of Merger (each as defined below; collectively, the “Transactions”). You should carefully read this entire proxy statement and the other documents to which this proxy statement refers for a more complete understanding of the matters being considered at the extraordinary general meeting. In addition, this proxy statement incorporates by reference important business and financial information about the Company. You are encouraged to read all of the documents incorporated by reference into this proxy statement and you may obtain such information without charge by following the instructions in “Where You Can Find More Information” beginning on page 85. In this proxy statement, the terms “the Company,” “us,” “we” or other terms correlative thereto refer to Fuling Global Inc. All references to “dollars” and “US$” in this proxy statement are to U.S. dollars, and all references to “RMB” in this proxy statement are to Renminbi, the lawful currency of the People’s Republic of China.

The Parties Involved in the Merger

The Company

The Company is an exempted company with limited liability incorporated under the laws of the Cayman Islands and a manufacturer and distributor of environmentally friendly plastic and paper foodservice disposable products.

Our principal executive offices are located at 88 Jintang South Ave., East New District Wenling, Zhejiang Province, People’s Republic of China 317509. The Company’s telephone number at this address is +86-576-8662-3058.

For a description of the Company’s history, development, business and organizational structure, please see the Company’s Annual Report on Form 20-F for the year ended December 31, 2019 filed on April 15, 2020, which is incorporated herein by reference. Please see “Where You Can Find More Information” beginning on page 85 for a description of how to obtain a copy of the Company’s Annual Report.

Parent

Fuling ParentCo Inc. (“Parent”) is an exempted company with limited liability incorporated under the laws of the Cayman Islands. Parent was formed for the purpose of holding the equity interest in Merger Sub and entering into the Merger Agreement and consummating the Transactions. The business address of Parent is c/o Southeast Industrial Zone, Songmen Town, Wenling, Zhejiang Province, China. The telephone number at this address is +86-576-86623098.

Merger Sub

Fuling MergerCo Inc. (“Merger Sub”) is an exempted company with limited liability incorporated under the laws of the Cayman Islands wholly owned by Parent. Merger Sub was formed for the purpose of entering into the Merger Agreement and consummating the Transactions. The business address of Merger Sub is c/o Southeast Industrial Zone, Songmen Town, Wenling, Zhejiang Province, China. The telephone number at this address is +86-576-86623098.

Rollover Shareholders

Ms. Guilan Jiang; Silver Trillion Investments Limited

Ms. Guilan Jiang (“Ms. Jiang”) is the founder, chairwoman of the board of the Company (the “Board”) and chief operating officer of the Company. Ms. Jiang is a citizen of the People’s Republic of China. Silver Trillion Investments Limited (“Silver Trillion” or the “Founder Entity”) is a limited liability company incorporated under the laws of the British Virgin Islands and controlled by Ms. Jiang. The business address of Ms. Jiang and Silver Trillion is c/o Southeast Industrial Zone, Songmen Town, Wenling, Zhejiang Province, China. The telephone number at this address is +86-576-86623098. As of the date of this proxy statement, Ms. Jiang, through Silver Trillion, holds 35.1% of the equity interest in the Company.

Ms. Sujuan Zhu; Celestial Sun Holdings Limited

Ms. Sujuan Zhu (“Ms. Zhu”) is a director of the Board and an extended family member of Ms. Jiang. Ms. Zhu is a citizen of the People’s Republic of China. Celestial Sun Holdings Limited (“Celestial Sun”) is a limited liability company incorporated under the laws of the British Virgin Islands and controlled by Ms. Zhu. The business address of Ms. Zhu and Celestial Sun is c/o Southeast Industrial Zone, Songmen Town, Wenling, Zhejiang Province, China. The telephone number at this address is +86-576-86623098. As of the date of this proxy statement, Ms. Zhu, through Celestial Sun, holds 14.0% of the equity interest in the Company.

Mr. Qian (Eugene) Hu; Zheng Hui Investments Limited

Mr. Qian (Eugene) Hu (“Mr. Hu”) is a family member of Ms. Jiang and a citizen of the People’s Republic of China. Zheng Hui Investments Limited (“Zheng Hui”) is a limited liability company incorporated under the laws of the British Virgin Islands and controlled by Mr. Hu. The business address of Mr. Hu and Zheng Hui is c/o Southeast Industrial Zone, Songmen Town, Wenling, Zhejiang Province, China. The telephone number at this address is +86-576-86623098. As of the date of this proxy statement, Mr. Hu, through Zheng Hui, holds 7.3% of the equity interest in the Company.

Mr. Xinzhong Wang; Charm Grow Holdings Limited

Mr. Xinzhong Wang (“Mr. Wang”) is an extended family member of Ms. Jiang and a citizen of the People’s Republic of China. Charm Grow Holdings Limited (“Charm Grow”) is a limited liability company incorporated under the laws of the British Virgin Islands and controlled by Mr. Wang. The business address of M. Wang and Charm Grow is c/o Southeast Industrial Zone, Songmen Town, Wenling, Zhejiang Province, China. The telephone number at this address is +86-576-86623098. As of the date of this proxy statement, Mr. Wang, through Charm Grow, holds 7.0% of the equity interest in the Company.

Mr. Jinxue Jiang; Tengyu International Limited

Mr. Jinxue Jiang (“Mr. Jiang”, together with Ms. Jiang, Ms. Zhu, Mr. Qian (Eugene) Hu and Mr. Wang, collectively, the “Founder Family Members”) is an extended family member of Ms. Jiang and a citizen of the People’s Republic of China. Tengyu International Limited (“Tengyu”) is a limited liability company incorporated under the laws of the British Virgin Islands and controlled by Mr. Jiang. The business address of Mr. Jiang and Tengyu is c/o Southeast Industrial Zone, Songmen Town, Wenling, Zhejiang Province, China. The telephone number at this address is +86-576-86623098. As of the date of this proxy statement, Mr. Jiang, through Tengyu, holds 7.0% of the equity interest in the Company.

Sponsor

Mr. Qijun Huang; Harvest Wind Investment Limited

Mr. Qijun Huang (“Mr. Huang”) is an individual financial investor and a citizen of the People’s Republic of China. Harvest Wind Investment Limited (“Harvest Wind” or the “Sponsor Entity”) is a corporation incorporated under the laws of Hong Kong Special Administrative Region of the People’s Republic of China and controlled by Mr. Huang. The business address of Mr. Huang and Harvest Wind is P1-5B, Swan Castle, Overseas Chinese Town, Nanshan District, Shenzhen, Guangdong Province, China. The telephone number of Harvest Wind Investment Limited’s principal executive office is +86-755-86231682. Rollover Shareholders, Mr. Huang and the Sponsor Entity, collectively, shall be referred to in this proxy statement as the “Buyer Group”.

During the last five years, none of the persons referred to above under the heading “The Parties Involved in the Merger,” or the respective directors or executive officers of the Company, members of the Buyer Group and their affiliates as listed in Annex F of this proxy statement has been (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws.

The Merger (Page 67)

The Company, Parent, and Merger Sub entered into an Agreement and Plan of Merger (the “Merger Agreement”) on September 1, 2020, pursuant to which Merger Sub will be merged with and into the Company and cease to exist, with the Company continuing as the surviving company (the “Surviving Company”) (the “Merger”). You are being asked to vote upon a proposal to authorize and approve the Merger Agreement, the plan of merger (the “Plan of Merger”) required to be filed with the Registrar of Companies of the Cayman Islands (the “Cayman Registrar”) in connection with the Merger, and the transactions contemplated thereby (together, the “Transactions”), including the Merger.

Pursuant to the terms of the Merger Agreement, assuming the Merger Agreement and the Plan of Merger are authorized and approved by the requisite vote of the shareholders of the Company and the other conditions to the consummation of the Merger are satisfied or waived in accordance with the terms of the Merger Agreement, the following will occur:

Copies of the Merger Agreement and the Plan of Merger are attached as Annex A and Annex B, respectively, to this proxy statement. You should read the Merger Agreement and the Plan of Merger in their entirety because they, and not this proxy statement, are the legal documents governing the Merger.

Merger Consideration (Page 67)

Under the terms of the Merger Agreement, at the Effective Time:

Treatment of ESOP Pool (Page 68)

The Company’s 2015 stock incentive plan established a pool (the “ESOP Pool”) for issuance of Shares and share options to its employees, non-employee directors, officers and consultants, under which the Company is authorized to issue shares, and share options to purchase, in the aggregate number of up to 1,570,509 Shares. As of the date of this proxy statement, no share option is outstanding under the ESOP Pool. The ESOP Pool and each Share and share option thereunder shall be automatically cancelled and cease to exist at the Effective Time.

Recommendation of the Special Committee and the Board (Page 20)

The special committee of the Board of the Company, composed solely of independent and disinterested directors (the “Special Committee”) (although Mr. Hong (“Simon”) He and Mr. Jian Cao hold 12,000 Shares each), reviewed and considered the terms and conditions of the Merger Agreement, the Plan of Merger and the Transactions, including the Merger. The Special Committee, after consultation with its financial advisor and legal counsel and due consideration, unanimously (a) determined that the Merger as contemplated in the Merger Agreement and other transaction documents is fair to and in the best interests of the Company and its shareholders, especially the unaffiliated security holders (as such term is defined in Rule 13e-3 of the Securities Exchange Act of 1934, as amended, the “Unaffiliated Security Holders”), (b) approved and declared it advisable for the Company to enter into the Merger Agreement and other transaction documents and to consummate the Transactions, including the Merger, (c) recommended that the Board authorize and approve the Merger Agreement, other transaction documents, and the consummation of the Transactions, including the Merger, and (d) recommended that the Board direct that the authorization and approval of the Merger Agreement, other transaction documents , and the Transactions, including the Merger, be submitted to a vote of the shareholders of the Company for authorization and approval at an extraordinary general meeting of the shareholders of the Company, the date, time and place of which shall be determined by the Special Committee.

The Board (other than Ms. Jiang and Ms. Zhu, who voluntarily abstained from the vote due to affiliation with the Buyer Group), acting upon the unanimous recommendation of the Special Committee, at a duly held meeting, has (a) determined that the execution by the Company of the Merger Agreement and the Plan of Merger and consummation of the Transactions, including the Merger, are fair to and in the best interests of the Company and its shareholders, especially the Unaffiliated Security Holders, (b) approved and declared advisable the Merger, the Transactions, the Merger Agreement and the Plan of Merger, and (c) resolved to recommend in favor of the authorization and approval of the Merger Agreement, the Plan of Merger and the Transactions, including the Merger, to the shareholders of the Company and to include such recommendation in this proxy statement and directed that the Merger Agreement, the Plan of Merger and the Transactions, including the Merger, be submitted to a vote of the shareholders of the Company for authorization and approval at an extraordinary general meeting of the shareholders of the Company, the date, time and place of which shall be determined by the Special Committee.

ACCORDINGLY, THE BOARD RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO AUTHORIZE AND APPROVE THE MERGER AGREEMENT, THE PLAN OF MERGER AND THE CONSUMMATION OF THE TRANSACTIONS, INCLUDING THE MERGER, THE ADOPTION OF AMENDED M&A AND VARIATION OF CAPITAL, FOR THE PROPOSAL TO AUTHORIZE EACH member of THE special committee (as defined in the notice of extraordinary general meeting), the chief executive officer of the Company, and the chief financial officer of the Company, each TO DO ALL THINGS NECESSARY TO GIVE EFFECT TO THE MERGER AGREEMENT, THE PLAN OF MERGER AND THE CONSUMMATION OF THE TRANSACTIONS, INCLUDING THE MERGER, AND FOR THE PROPOSAL TO INSTRUCT THE CHAIRMAN OF THE EXTRAORDINARY GENERAL MEETING TO ADJOURN THE EXTRAORDINARY GENERAL MEETING IN ORDER TO ALLOW THE COMPANY TO SOLICIT ADDITIONAL PROXIES IN THE EVENT THAT THERE ARE INSUFFICIENT PROXIES RECEIVED AT THE TIME OF THE EXTRAORDINARY GENERAL MEETING TO PASS THE SPECIAL RESOLUTIONS TO BE PROPOSED AT THE EXTRAORDINARY GENERAL MEETING.

For a detailed discussion of the material factors considered by the Special Committee and the Board in determining to recommend the approval of the Merger Agreement, the Plan of Merger and the Transactions, including the Merger, and in determining that the Merger is fair to and in the best interests of the Company and the Unaffiliated Security Holders, see “Special Factors—Reasons for the Merger and Recommendation of the Special Committee and the Board” beginning on page 24 and “Special Factors—Effects of the Merger on the Company—Primary Benefits and Detriments of the Merger” beginning on page 43. The foregoing summary is qualified in its entirety by reference to these sections.

Record Date and Voting (Page 63)

You are entitled to attend and vote at the extraordinary general meeting if you are a registered shareholder (i.e. your Shares are registered in the register of members of the Company in your name) as of 5 p.m. (Cayman Islands time) on [Record Date], 2020, being the record date for determining entitlements of shareholders to attend and vote at the extraordinary general meeting (the “Record Date”). Whether or not you plan to attend the extraordinary general meeting in person, we ask that you complete, sign, date and return your proxy card so that the proxy card is received by the Company no later than [     ], 2020 at ______ a.m. (Beijing Time).

If you hold your Shares through a financial intermediary such as a broker or bank, please follow the directions provided to you by your financial intermediary. If you wish to attend and vote in person at the extraordinary general meeting, please contact your financial intermediary to learn the procedures necessary to allow you to vote your shares in person.

Shareholder Vote Required to Approve the Merger Agreement and the Plan of Merger (Page 63)

In order for the Merger to be consummated, the Merger Agreement, the Plan of Merger and the consummation of the Transactions, including the Merger, must be authorized and approved by a special resolution of the Company’s shareholders, which requires an affirmative vote of holders of Shares representing two-thirds or more of the Shares present and voting in person or by proxy as a single class at the extraordinary general meeting (the “Company Shareholder Approval”).

Pursuant to the terms of the Support Agreement, an aggregate of 11,083,334 Shares, which represent approximately 70.1% in voting rights of the entire issued and outstanding Shares, will be voted in favor of the Merger. See “Security Ownership of Certain Beneficial Owners and Management of the Company” beginning on page 82 for additional information. Based on the number of Shares expected to be issued and outstanding on the Record Date, and assuming that the Rollover Shares will be voted in favor of the special resolutions, a quorum will be present at the extraordinary general meeting and sufficient votes will be cast to authorize and approve the Merger Agreement, the Plan of Merger and the consummation of the Transactions, including the Merger, without any further vote of any other shareholder.

Voting Information (Page 64)

Before voting your Shares, we encourage you to read this proxy statement in its entirety, including all of the annexes, attachments, exhibits and materials incorporated by reference, and carefully consider how the Merger will affect you. To ensure that Shares registered in your name can be voted at the extraordinary general meeting, please complete, sign, date and return the accompanying proxy card in accordance with the instructions set forth on the proxy card as soon as possible. You should lodge your proxy card so that it is received by the Company no later than [48 hours before the time appointed for the shareholder meeting], 2020, at _____ a.m. (Beijing Time). If a financial intermediary such as a broker or bank holds your Shares in “street name,” your financial intermediary should provide you with instructions on how to vote your Shares. Your financial intermediary will not vote your Shares in the absence of specific instructions from you. These non-voted Shares are referred to as “broker non-votes.”

Dissenters’ Rights of Shareholders (Page 66)

Registered shareholders (i.e. shareholders whose name is registered in the register of members of the Company) who wish to dissent from the Merger will have the right to receive payment of the fair value of their Shares (“dissenters’ rights”) in accordance with Section 238 of the CICL if the Merger is consummated, but only if they deliver to the Company, before the vote to authorize and approve the Merger is taken at the extraordinary general meeting, a written objection to the Merger and subsequently comply with all procedures and requirements of Section 238 of the CICL for the exercise of dissenters’ rights, which is attached as Annex E to this proxy statement. The fair value of your Shares as determined under the CICL could be more than, the same as, or less than the merger consideration you would receive pursuant to the Merger Agreement if you do not exercise dissenter rights with respect to your Shares.

IF YOU HOLD YOUR SHARES THROUGH A FINANCIAL INTERMEDIARY SUCH AS A BROKER OR BANK AND WISH TO DISSENT FROM THE MERGER, YOU MUST MAKE ALL NECESSARY ARRANGEMENTS WITH THE FINANCIAL INTERMEDIARY TO ENSURE THAT YOUR SHARES ARE REGISTERED IN YOUR OWN NAME IN THE REGISTER OF MEMBERS OF THE COMPANY such that you become a registered shareholder IN ORDER FOR YOU TO EXERCISE DISSENTERS’ RIGHTS. THE FINANCIAL INTERMEDIARY IS UNLIKELY TO EXERCISE OR ATTEMPT TO EXERCISE ANY DISSENTERS’ RIGHTS WITH RESPECT TO ANY OF THE SHARES THAT IT HOLDS, EVEN IF A BENEFICIAL OWNER OF THE SHARES REQUESTS THE FINANCIAL INTERMEDIARY TO DO SO. YOU MUST CONTACT YOUR FINANCIAL INTERMEDIARY PROMPTLY TO ENSURE THAT YOU BECOME A REGISTERED SHAREHOLDER IN SUFFICIENT TIME AHEAD OF THE DATE OF THE EXTRAORDINARY GENERAL MEETING, AS YOU MUST DELIVER TO THE COMPANY A WRITTEN OBJECTION TO THE MERGER BEFORE THE VOTE TO AUTHORIZE AND APPROVE THE MERGER IS TAKEN AT THE EXTRAORDINARY GENERAL MEETING. YOU MUST SUBSEQUENTLY COMPLY WITH ALL PROCEDURES AND REQUIREMENTS OF SECTION 238 OF THE CICL FOR THE EXERCISE OF DISSENTERS’ RIGHTS, A COPY OF WHICH IS ATTACHED AS ANNEX E TO THIS PROXY STATEMENT. IF THE MERGER IS NOT CONSUMMATED, THE COMPANY WILL CONTINUE TO BE A PUBLICLY TRADED COMPANY IN THE UNITED STATES AND THE SHARES WILL CONTINUE TO BE LISTED ON NASDAQ. AS A RESULT, IF YOU BECAME A REGISTERED SHAREHOLDER FOR PURPOSES OF EXERCISING DISSENTERS’ RIGHTS AND THE MERGER IS NOT CONSUMMATED, AND YOU WISH TO TRANSFER YOUR SHARES BACK TO A FINANCIAL INTERMEDIARY, YOU WILL NEED TO CONTACT THE FINANCIAL INTERMEDIARY TO MAKE ALL NECESSARY ARRANGEMENTS.

If you do not fully and precisely satisfy the procedural requirements of the CICL, you will lose your dissenters’ rights.

We encourage you to read the section of this proxy statement entitled “Dissenters’ Rights” as well as Annex E to this proxy statement carefully and we urge you to seek your own legal advice on Section 238 or Part XVI of the CICL in general from a licensed Cayman Islands law firm if you wish to exercise your dissenters’ rights.

Purposes and Effects of the Merger (Page 41)

The purpose of the Merger is to enable the Buyer Group, to acquire 100% ownership and control of the Company in a transaction in which the Company’s shareholders, other than holders of the Excluded Shares and the Dissenting Shares, will be cashed out in exchange for the Per Share Merger Consideration, as applicable, so that the Buyer Group will bear the rewards and risks of the ownership of the Company after the Merger, including any future earnings and growth of the Company as a result of improvements to the Company’s operations or acquisitions of other businesses. See “Special Factors—Purposes of and Reasons for the Merger” beginning on page 41 for additional information.

Plans for the Company after the Merger (Page 47)

After the Effective Time, the Buyer Group anticipates that the Company’s operations will be conducted substantially as they are currently being conducted, except that the Company will cease to be a publicly traded company and will instead be a wholly owned subsidiary of Parent.

Position of the Buyer Group as to Fairness of the Merger (Page 31)

Each member of the Buyer Group believes that the Merger is fair to the Unaffiliated Security Holders . Their belief is based upon the factors discussed under the section entitled “Special Factors—Position of the Buyer Group as to Fairness of the Merger” beginning on page 31.

Each member of the Buyer Group is making the statements included in this paragraph solely for the purpose of ensuring compliance with the requirements of Rule 13E-3 and related rules under the Exchange Act. The views of each member of the Buyer Group as to the fairness of the Merger are not intended to be and should not be construed as a recommendation to any shareholder of the Company as to how that shareholder should vote on the proposal to authorize and approve the Merger Agreement, the Plan of Merger and the consummation of the Transactions, including the Merger.

Financing of the Merger (Page 47)

The Company and the Buyer Group estimate that the total amount of funds necessary to complete the Merger and the related transactions, including payment of fees and expenses in connection with the Merger, is anticipated to be approximately US$12.5 million, assuming no exercise of dissenters’ rights by shareholders of the Company. In calculating this amount, the Company and the Buyer Group did not consider the value of the Rollover Shares which will be cancelled for no consideration in the Merger.

The Buyer Group expects this amount to be provided through (1) cash held by the Company and its subsidiaries, if any, through cash dividends to be declared and ultimately distributed to Parent (as at the Effective Time) by the Company through its subsidiaries, as applicable, in each case in compliance with the applicable laws of each applicable jurisdiction and the organizational documents of each relevant entities, and (2) equity financing in accordance with the documents relating to the Transactions. Each of the Founder Entity and the Sponsor Entity has committed to purchase, or cause the purchase of, for cash or contributed equity, subject to terms and conditions thereof, equity securities of Parent, up to the aggregate amount set forth in their Equity Commitment Letters (the “Equity Financing”). The proceeds of the Equity Financing shall be used to finance the consummation of the Transactions. See “Special Factors—Financing” beginning on page 47 for additional information.

Support Agreement (Page 50)

Concurrently with the execution of the Merger Agreement, Parent and Founder Family Members entered into a support agreement (the “Support Agreement”), pursuant to which such Founder Family Members will (a) vote the Rollover Shares in favor of the authorization and approval of the Merger Agreement, the Plan of Merger and the Transactions, and (b) agree, upon the terms and subject to the conditions in the Support Agreement, to receive no consideration for cancellation of the Rollover Shares in accordance with the Merger Agreement, and to subscribe for or otherwise receive newly issued shares of Parent at or immediately prior to the Effective Time.

Limited Guarantees (Page 48)

Concurrently with the execution and delivery of the Merger Agreement, each of the Founder Entity and the Sponsor Entity executed and delivered a limited guarantee in favor of the Company (the “Limited Guarantee”), pursuant to which the Founder Entity and the Sponsor Entity agreed to guarantee the payment obligations of Parent under the Merger Agreement for the Parent Termination Fee and certain costs and expenses that, in each case, may become payable to the Company by Parent under certain circumstances and subject to the terms and conditions as set forth in the Merger Agreement. See “Special Factors—Limited Guarantees” beginning on page 48 for additional information.

Opinion of the Special Committee’s Financial Advisor (Page 37)

The Special Committee retained Houlihan Lokey (China) Limited (“Houlihan Lokey”) to act as its financial advisor in connection with the Merger. On September 1, 2020, Houlihan Lokey orally rendered to the Special Committee its opinion (which was subsequently confirmed in writing by delivery on the same date of Houlihan Lokey’s written opinion addressed to the Special Committee) as to the fairness, from a financial point of view, of the Merger consideration to be received by the Unaffiliated Security Holders in the Merger pursuant to the Merger Agreement and the Plan of Merger, as of the date of such opinion, based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken, and other matters considered by Houlihan Lokey in preparing its opinion.

Houlihan Lokey’s opinion was directed to the Special Committee (in its capacity as such) and only addressed the fairness, from a financial point of view, of the Merger consideration to be received by the Unaffiliated Security Holders pursuant to the Merger Agreement, as of the date of such opinion and did not address any other aspect or implication of the Merger or any other agreement, arrangement, or understanding. The summary of Houlihan Lokey’s opinion in this proxy statement is qualified in its entirety by reference to the full text of its written opinion, which is attached as Annex D to this proxy statement and describes the procedures followed, assumptions made, qualifications and limitations on the review undertaken, and other matters considered by Houlihan Lokey in connection with the preparation of its opinion. However, neither Houlihan Lokey’s opinion nor the summary of its opinion and the related analyses set forth in this proxy statement are intended to be, and do not constitute, advice or a recommendation to the Special Committee, the Board, any shareholder or any other person as to how to act with respect to any matter relating to the Merger. See “Special Factors — Opinion of the Special Committee’s Financial Advisor” beginning on page 37 for additional information.

Interests of the Company’s Executive Officers and Directors in the Merger (Page 51)

In considering the recommendations of the Board, the Company’s shareholders should be aware that certain of the Company’s directors and executive officers have interests in the transaction that are different from, and/or in addition to, the interests of the Company’s shareholders generally. These interests include, among others:

As of the date of this proxy statement, the directors and executive officers of the Company, other than Rollover Shareholders, as a group held an aggregate of 24,000 Shares, which consists of 12,000 Shares held by Mr. Hong (“Simon”) He and 12,000 Shares held by Mr. Jian Cao. Please see “Security Ownership of Certain Beneficial Owners and Management of the Company” beginning on page 82 and “Special Factors—Interests of Certain Persons in the Merger” beginning on page 49 for additional information.

The Special Committee and the Board were aware of these potential conflicts of interest and considered them, among other matters, in reaching their decisions and recommendations with respect to the Merger Agreement and related matters. Please see “Special Factors—Interests of Certain Persons in the Merger” beginning on page 49 for additional information.

No Solicitation of Transactions (Page 73)

The Merger Agreement restricts the Company’s and its Board’s ability, until the Effective Time, or if earlier, the termination of the Merger Agreement, to solicit or engage in discussions or negotiations with third parties regarding a Competing Proposal (as defined in the section entitled “The Merger Agreement—Non-Solicit; Change in Recommendation”). See “The Merger Agreement—No Solicitation of Transactions; Change of Recommendation” beginning on page 70.

Conditions to the Merger (Page 76)

The obligations of each party to effect the Merger are subject to the satisfaction or waiver (if permitted by law) of the following conditions (each term as defined in the section entitled “The Merger Agreement”):

The obligations of Parent and Merger Sub to effect the Merger are also subject to the satisfaction or waiver of the following conditions:

The obligations of the Company to effect the Merger are also subject to the satisfaction or waiver of the following conditions:

Termination of the Merger Agreement (Page 77)

The Merger Agreement may be terminated and the Merger and the other Transactions may be abandoned, at any time prior to the Effective Time, as follows (each term as defined in the section entitled “The Merger Agreement”):

Termination Fees (Page 75)

The Company is required to pay Parent a termination fee of $500,000 (the “Company Termination Fee”) if:

Parent is required to pay the Company a termination fee of $1,000,000 (the “Parent Termination Fee”) if:

U.S. Federal Income Tax Consequences (Page 53)

The receipt of cash pursuant to the Merger or through the exercise of dissenters’ rights in connection with the Merger will be a taxable transaction for U.S. federal income tax purposes and may also be a taxable transaction under applicable state, local and other tax laws. See “Special Factors—U.S. Federal Income Tax Consequences” beginning on page 53. The tax consequences of the Merger or the exercise of dissenters’ rights to you will depend upon your personal circumstances. You should consult your tax advisors for a full understanding of the U.S. federal, state, local, foreign and other tax consequences of the Merger to you.

PRC Income Tax Consequences (Page 56)

The Company does not believe that it should be considered a resident enterprise under the PRC Enterprise Income Tax Law (the “EIT Law”) or that the gain recognized on the receipt of cash for the Company’s Shares should otherwise be subject to PRC tax to holders of such Shares that are not PRC tax residents. However, there is uncertainty regarding whether the PRC tax authorities would deem the Company to be a resident enterprise or that PRC tax would otherwise apply. If the PRC tax authorities were to determine that the Company should be considered a resident enterprise then the gain recognized on the receipt of cash for the Company’s Shares by the holders of such Shares that are not PRC tax residents could be treated as PRC-source income that would be subject to PRC income tax at a rate of 10% in the case of enterprises or 20% in the case of individuals (subject to applicable tax treaty relief, if any), and, even in the event that the Company is not considered a resident enterprise, gain recognized on the receipt of cash for Shares are subject to PRC tax if the holders of such Shares or are PRC resident enterprises or individuals. Neither Parent or the Company intends to withhold any PRC taxes on the consideration provided to shareholders of the Company in connection with the Merger. You should consult your own tax advisor for a full understanding of the tax consequences of the Merger to you, including any PRC tax consequences. Please see “Special Factors—PRC Income Tax Consequences” beginning on page 56 for additional information.

Cayman Islands Tax Consequences (Page 56)

The Cayman Islands currently has no form of income, corporate or capital gains tax and no estate duty, inheritance tax or gift tax. No taxes, fees or charges will be payable (either by direct assessment or withholding) to the government or other taxing authority in the Cayman Islands under the laws of the Cayman Islands in respect of the Merger or the receipt of cash for the Shares under the terms of the Merger Agreement. This is subject to the qualification that (a) Cayman Islands stamp duty may be payable if any original transaction documents are brought into or executed or produced before a court in the Cayman Islands (for example, for enforcement), (b) registration fees will be payable to the Cayman Registrar to register the Plan of Merger and (c) fees will be payable to the Cayman Islands Government Gazette Office to publish the notice of the Merger in the Cayman Islands Government Gazette. See “Special Factors—Cayman Islands Tax Consequences” beginning on page 56 for additional information.

Regulatory Matters (Page 55)

The Company does not believe that any material federal or state regulatory approvals, filings or notices are required in connection with effecting the Merger other than the approvals, filings or notices required under the U.S. federal securities laws, the registration of the Plan of Merger (and supporting documentation as specified in the CICL) with the Cayman Registrar and, in the event the Merger becomes effective, a copy of the certificate of merger being given to the shareholders and creditors of the Company and Merger Sub and the notice of the Merger being published in the Cayman Islands Gazette.

Litigation Related to the Merger (Page 52)

We are not aware of any lawsuit that challenges the Merger, the Merger Agreement or any of the Transactions. See “Special Factors—Litigation Related to the Merger” beginning on page 52 for additional information.

Accounting Treatment of the Merger (Page 55)

Upon completion of the Merger, the Company will cease to be a publicly traded Company, and the Company expects to account for the Merger at historic cost.

Market Price of the Shares (Page 60)

The closing price of Shares on the NASDAQ on June 19, 2020, the last trading date immediately prior to the Company’s announcement on June 22, 2020 that it had received a going private proposal, was $2.04 per Share. The consideration of $2.35 per Share to be paid in the Merger represents a premium of approximately 15.2% over that closing price.

Fees and Expenses (Page 52)

Whether or not the Merger is consummated, all costs and expenses incurred in connection with the Merger Agreement and the Transactions including the Merger will be paid by the party incurring such costs and expenses except as otherwise provided in the Merger Agreement.

See “Special Factors—Fees and Expenses” beginning on page 52 for additional information.

Remedies (Page 50)

The parties to the Merger Agreement are entitled to specific performance and other equitable relief of the terms and provisions of the Merger Agreement, including an injunction or injunctions to prevent breaches of the Merger Agreement, in addition to any other remedy at law or in equity.

In the event that Parent or Merger Sub fails to effect the closing when required to under the Merger Agreement for any reason or no reason or they otherwise breach the Merger Agreement or otherwise fail to perform under the Merger Agreement, then, except for an order of specific performance as and only to the extent expressly permitted by the Merger Agreement, the Company’s termination of the Merger Agreement and receipt of the Parent Termination Fee and the guarantee of such obligations pursuant to the Limited Guarantees (subject to their terms, conditions and limitations) will be the sole and exclusive remedy (whether at law, in equity, in contract, in tort or otherwise) of the Company, any of its subsidiaries, any shareholder of the Company or any of its subsidiaries or any of their respective affiliates against Parent, Merger Sub, the Sponsor Entity or any of their respective affiliates for any loss or damage suffered as a result of any breach of any representation, warranty, covenant or agreement or failure to perform under the Merger Agreement or other failure of the Merger to be consummated.

If the Company pays the Company Termination Fee pursuant to the terms of the Merger Agreement, then any such payment and Parent’s right to terminate the Merger Agreement shall be the sole and exclusive remedy of any of Parent, Merger Sub, the Sponsor Entity and their respective affiliates against any of the Company, its subsidiaries, shareholders of the Company or any of its subsidiaries and any of their respective affiliates for any loss or damage suffered as a result of any breach of any representation, warranty, covenant or agreement or failure to perform under the Merger Agreement or other failure of the Merger to be consummated. See “The Merger Agreement—Remedies and Limitations on Liability” beginning on page 76 for additional information.

Questions and Answers About the Extraordinary General Meeting and the Merger

The following questions and answers address briefly some questions you may have regarding the extraordinary general meeting and the Merger. These questions and answers may not address all questions that may be important to you as a shareholder of the Company. Please refer to the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to or incorporated by reference in this proxy statement.

Q: Why am I receiving this proxy statement?

A: On September 1, 2020, the Company entered into the Merger Agreement with Parent and Merger Sub. You are receiving this proxy statement in connection with the solicitation of proxies by the Board in favor of the proposal to authorize and approve the Merger Agreement, the Plan of Merger, and the consummation of the Transactions, including the Merger, at an extraordinary general meeting or at any adjournment of such extraordinary general meeting.

Q: When and where will the extraordinary general meeting be held?

A: The extraordinary general meeting will take place on ____, 2020, at ___ a.m. (Beijing time) at 88 Jintang South Ave., East New District, Wenling, Zhejiang Province, People’s Republic of China.

Q: What am I being asked to vote on?

A: You will be asked to consider and vote on the following proposals:

Q: What is the Merger?

A:The Merger is a going-private transaction pursuant to which Merger Sub will merge with and into the Company. Once the Merger Agreement is authorized and approved by the shareholders of the Company and the other closing conditions under the Merger Agreement have been satisfied or waived, Merger Sub will merge with and into the Company, with the Company continuing as the Surviving Company resulting from the Merger. If the Merger is completed, the Company will be a privately held company beneficially owned by Parent, and as a result of the Merger, the Shares will no longer be listed on the NASDAQ, and the Company will cease to be a publicly traded company.

Q: What will I receive in the Merger if I own Shares (that are not Excluded Shares)?

A: If you are a registered shareholder (i.e. your name is entered in the register of members of the Company) and the Merger is completed, you will be entitled to receive $2.35 in cash, without interest and net of any applicable withholding taxes, for each Share you own immediately prior to the Effective Time (unless you validly exercise and have not effectively withdrawn or lost your dissenters’ rights under Section 238 of the CICL with respect to the Merger, in which case you will be entitled to receive the fair value of your Shares determined in accordance with the CICL).

If your Shares are held in “street name” by your broker, bank or other financial intermediary, you will receive instructions from your broker, bank or other nominee on how to surrender your Shares and receive the merger consideration for those Shares.

Q: When do you expect the Merger to be completed?

A: We are working toward consummating the Merger as quickly as possible and currently expect the Merger to consummate by the fourth quarter of 2020, after all conditions to the Merger have been satisfied or waived. In order to consummate the Merger, we must obtain the requisite shareholders’ approval at the extraordinary general meeting and the other closing conditions under the Merger Agreement must be satisfied or waived in accordance with the Merger Agreement.

Q: What effects will the Merger have on the Company?

A: As a result of the Merger, the Company will cease to be an independent publicly traded company and will instead become a private company beneficially owned by Parent. You will no longer have any interest in the future earnings or growth of the Company. Following the completion of the Merger, the registration of the Shares and the Company's reporting obligations with respect to the Shares under the Exchange Act will be terminated upon application to the SEC. In addition, upon the completion of the Merger, the Shares will no longer be listed or traded on any stock exchange, including the NASDAQ.

Q: What happens if the Merger is not consummated?

A: If the Company’s shareholders do not authorize and approve the Merger Agreement, the Plan of Merger and the consummation of the Transactions, including the Merger, or if the Merger is not completed for any other reason, the Company’s shareholders will not receive any payment for their Shares pursuant to the Merger Agreement. In addition, the Company will remain a publicly traded company. The Shares will continue to be listed and traded on the NASDAQ, provided that the Company continues to meet the NASDAQ’s listing requirements. In addition, the Company will remain subject to the reporting obligations of the SEC. Therefore, the Company’s shareholders will continue to be subject to similar risks and opportunities as they currently are with respect to their ownership of Shares.

Q: How does the Board recommend that I vote on the proposals?

A: After careful consideration, and upon the unanimous recommendation of the Special Committee, the Board recommends you to vote:

Q: How do I vote if my Shares are registered in my name?

A: If your Shares are registered in the register of members of the Company in your name as of 5 p.m. Cayman Islands time on ______, 2020 (the Record Date), you should complete the proxy card, indicate on your proxy card how you want to vote, sign, date and return your proxy card in the accompanying return envelope as soon as possible so that it is received by the Company no later than ___ a.m., ____, 2020, being 48 hours before the time appointed for the commencement of the extraordinary general meeting, which is the deadline to lodge your proxy card, so that your Shares may be represented and voted at the extraordinary general meeting. If you appoint a person other than the chairman of the meeting as your proxy, your proxy must attend the extraordinary general meeting in person in order to vote on your behalf.

Alternatively, you can attend the extraordinary general meeting and vote in person. To attend the extraordinary general meeting, you must present certain documents to verify your identities, such as your identification card or passport and your share certificate. If you decide to sign and send in your proxy card, and do not indicate how you want to vote, Shares represented by your proxy will be voted FOR each of the proposals to be voted on at the extraordinary general meeting, unless you appoint a person other than the chairman of the meeting as proxy, in which case Shares represented by your proxy card will be voted (or not submitted for voting) as your proxy determines.

If your Shares are held by a financial intermediary, such as a broker or bank, please see below for additional information.

Q: If my Shares are held in a brokerage, bank or other securities account, will my broker, bank or other financial intermediary vote my Shares on my behalf?

A: Your broker, bank or other financial intermediary will only vote your Shares on your behalf if you instruct it how to vote. Therefore, it is important that you promptly follow the directions provided by your broker, bank or other financial intermediary regarding how to instruct it to vote your Shares. If you do not instruct your broker, bank or other financial intermediary how to vote your Shares that it holds, those Shares will not be voted.

Q: What will happen if I abstain from voting or fail to vote on the proposal to authorize and approve the Merger Agreement?

A: If you abstain from voting, fail to cast your vote in person, fail to complete, sign, date and return your proxy card in accordance with the instructions set forth on the proxy card, or fail to give voting instructions to your broker, bank, or other financial intermediary, your vote will not be counted.

Q: May I change my vote?

A: Yes. You may change your vote in one of the following three ways:

If you hold Shares through a broker, bank or other financial intermediary and have instructed the broker, bank or other financial intermediary to vote your Shares, you must follow directions received from the broker, bank or other financial intermediary to change your instructions.

Q: What should I do if I receive more than one set of voting materials?

A: If you are a registered holder of Shares and your Shares are registered in the register of members of Company in more than one name, you will receive more than one proxy or voting instruction or voting instruction card. Please submit each proxy card that you receive.

Q: If I am a holder of certificated Shares, should I send in my share certificates now?

A: No, please do not send in your certificates. After the Merger is completed, holders of certificated Shares will be sent a form of letter of transmittal with detailed written instructions for exchanging your share certificates for the Per Share Merger Consideration.

Q: Am I entitled to dissenters’ rights?

A: Registered shareholders (i.e. shareholders whose name is registered in the register of members of the Company) who wish to dissent from the Merger will have the right to receive payment of the fair value of their Shares in accordance with Section 238 of the CICL if the Merger is consummated, but only if they deliver to the Company, before the vote to authorize and approve the Merger is taken at the extraordinary general meeting, a written objection to the Merger and subsequently comply with all procedures and requirements of Section 238 of the CICL for the exercise of dissenters’ rights, a copy of which is attached as Annex E to this proxy statement. The fair value of each of their Shares as determined under the CICL could be more than, the same as, or less than the Per Share Merger Consideration they would receive pursuant to the Merger Agreement if they do not exercise dissenters’ rights with respect to their Shares.

If you hold your Shares through a financial intermediary such as a broker or bank and wish to dissent from the Merger, you must make all necessary arrangements with the financial intermediary to ensure that your Shares are registered in your own name in the register of members of the Company such that you become a registered shareholder in order for you to exercise dissenters’ rights. The financial intermediary is unlikely to exercise or attempt to exercise any dissenters’ rights with respect to any of the Shares that it holds, even if a beneficial owner of the Shares requests the financial intermediary to do so. You must contact your financial intermediary promptly to ensure that you become a registered shareholder in sufficient time ahead of the date of the extraordinary general meeting, as you must deliver to the Company a written objection to the merger before the vote to authorize and approve the Merger is taken at the extraordinary general meeting. You must subsequently comply with all procedures and requirements of section 238 of the CICL for the exercise of dissenters’ rights, a copy of which is attached as annex E to this proxy statement. If the Merger is not consummated, the Company will continue to be a publicly traded company in the United States and the shares will continue to be listed on NASDAQ. As a result, if you became a registered shareholder for purposes of exercising dissenters’ rights and the Merger is not consummated, and you wish to transfer your Shares back to a financial intermediary, you will need to contact the financial intermediary to make all necessary arrangements.

If you do not fully and precisely satisfy the procedural requirements of the CICL, you will lose your dissenters’ rights.

We encourage you to read the section of this proxy statement entitled “Dissenters’ Rights” beginning on page 78 as well as “Annex E—Companies Law, Cap. 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands—Section 238” to this proxy statement carefully and we urge you to seek your own legal advice on Section 238 or Part XVI of the CICL in general from a licensed Cayman Islands law firm if you wish to exercise your dissenters’ rights.

Q: What do I need to do now?

A: We urge you to read this proxy statement carefully, including its annexes, exhibits, attachments and the other documents referred to or incorporated by reference herein and to consider how the Merger affects you as a shareholder. After you have done so, please complete, sign, date and return the proxy card or give voting instructions to your broker, bank or other financial intermediary as soon as possible.

Q: Will any proxy solicitors be used in connection with the extraordinary general meeting?

A: We have not retained a third-party service provider to assist in the solicitation process. We will ask banks, brokers and other financial intermediaries to forward our proxy solicitation materials to the beneficial owners of Shares registered in the name of such nominee holders. In addition, proxies may be solicited by mail, in person, by telephone, by internet or by facsimile by certain of our officers, directors and employees. These persons will receive no additional compensation for solicitation of proxies but may be reimbursed for reasonable out-of-pocket expenses. We will pay all expenses of filing, printing and mailing this proxy statement.

Q: Who can help answer my questions?

A: If you have any questions about the Merger or if you need additional copies of this proxy statement or the accompanying proxy card, you should contact our Investor Relations Department at +86-576-8662-3803.

In order for you to receive timely delivery of any additional copy of this proxy statement or the accompanying proxy card in advance of the extraordinary general meeting, you must make your request no later than ten days prior to the date of the extraordinary general meeting.

Special Factors

Background of the Merger

Most of the events leading to the execution of the Merger Agreement described in this “Background of the Merger” occurred in the PRC. As a result, all dates and times referenced in this Background of the Merger refer to Beijing Time.

The Board and senior management of the Company have reviewed periodically the Company’s long-term strategic plan with the goal of maximizing shareholder value. As part of this ongoing process, the Board and senior management also have periodically reviewed strategic alternatives that may be available to the Company.

In May 2020, Mr. Huang approached Ms. Jiang and indicated to Ms. Jiang that he would be interested in working with Ms. Jiang to take the Company private.

In June 2020, Ms. Jiang consulted with Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden”) about the process of a “going-private” transaction and decided to engage Skadden to help her consider and evaluate a going-private transaction involving the Company.

On or about June 20, 2020, Ms. Jiang, on behalf of herself and certain shareholders who are extended family members of Ms. Jiang and agreed to work with Mr. Huang, entered into the consortium agreement (the “Consortium Agreement”) with Mr. Huang pursuant to which the parties intend to cooperate in good faith to acquire all of the outstanding Shares of the Company, other than the Rollover Shares, through a going-private transaction.

On June 20, 2020, Ms. Jiang, on behalf of herself and Ms. Zhu, Mr. Hu, Mr. Wang and Mr. Jiang, and Mr. Huang jointly submitted a non-binding proposal (the “Proposal”) to the Company’s Board related to the proposed acquisition of all of the Shares not beneficially owned by the Founder Family for cash consideration equal to US$2.18 per Share (the “Proposed Transaction”).

On June 20, 2020, the Board held a telephonic meeting to discuss the Proposal. Representatives of Kaufman & Canoles, P.C. (“K&C”), as U.S. legal counsel to the Company, explained to the Board the principal terms and conditions set forth in the Proposal and answered questions regarding the general process of a going private transaction. During the meeting, the attending directors discussed the various qualifications of the directors of the Company to serve on a special committee of the Board to evaluate the Proposal. After the discussion, the Board determined that it was in the best interests of the Company and its shareholders to establish a special committee of independent and disinterested directors to consider the Proposal (although Mr. Hong (“Simon”) He and Mr. Jian Cao hold 12,000 Shares each).

Right after the Board meeting, Mr. Jian Cao and Mr. Fuyou Cai, with Mr. Hong (“Simon”) He, the three independent directors of the Company, held a telephonic meeting with K&C. During the meeting, representatives of K&C provided the independent directors with an overview of the procedures, process and duties of both the directors of the Company and the Special Committee as well as best practices in connection with the Proposed Transaction. On June 20, 2020, the Special Committee was established consisting of three independent directors of the Company, Mr. Hong (“Simon”) He, Mr. Jian Cao and Mr. Fuyou Cai with Mr. Hong (“Simon”) He serving as chairman of the Special Committee, solely to represent the interests of the Unaffiliated Security Holders, it being noted that each of Mr. Hong (“Simon”) He and Mr. Jian Cao holds 12,000 Shares. The Special Committee was granted full control, without limitation, of the negotiations with the Buyer Group and its advisors, for and on behalf of the Company, with respect to the Proposed Transaction.

On June 21, 2020 and July 1, 2020, the Special Committee held two telephonic meetings with K&C. During the meetings, representatives of K&C explained to the Special Committee indemnification to the Special Committee members, authorities of the Special Committee, compensation of the Special Committee members, the transaction structure of the Proposed Transaction, confidentiality requirements, and fee proposals for Cayman Islands counsel, U.S. counsel and financial advisor.

On June 22, 2020, the Company issued a press release regarding the establishment of the Special Committee and furnished the press release as an exhibit to its report on Form 6-K with the SEC.

On June 26, 2020, the Buyer Group filed a Schedule 13D with the SEC in connection with the Proposal.

From late June 2020 through late August 2020, representatives of K&C discussed with representatives of the Company various questions regarding process and disclosure obligations with respect to the Proposed Transaction and assisted the Company in coordinating the due diligence process regarding the Merger Agreement.

On July 6, 2020, after due consideration of the qualifications, experience, reputation and other characteristics of each potential legal advisor candidate, the Special Committee retained King & Wood Mallesons, LLP (“KWM”) as its independent U.S. legal advisor to assist the Special Committee in evaluating and negotiating the Proposed Transaction or any alternative transaction.

On July 16, 2020, after reviewing the qualifications, experience and other characteristics of three financial advisor candidates and considering the extensive experience of Houlihan Lokey in advising special committees in going private transactions, their strong reputation and their significant experience in working with China-based companies in the same industry as the Company, the Special Committee decided to retain Houlihan Lokey as its independent financial advisor in connection with the review and evaluation of the Proposal and to retain Houlihan Lokey to provide it with such financial and market related advice and assistance as may be appropriate in connection with the Proposed Transaction.

On July 20, 2020, the Special Committee convened a telephonic meeting. During the meeting, representatives of KWM provided a general overview of take-private transactions conducted by U.S. listed Cayman Islands companies, including that the Special Committee was established to represent and protect the interests of the Company and the Unaffiliated Security Holders, and other timing, transaction structure, process, and SEC filing issues and requirements. Representatives of Houlihan Lokey discussed with the Special Committee the principal areas of work that they plan to undertake in their financial analysis of the Proposed Transaction. The Special Committee raised questions and discussed key issues relating to timing and structural considerations of a going-private transaction.

On July 22, 2020, Harvest Wind and the Company entered into a confidentiality agreement so Harvest Wind could conduct due diligence. Between July 23, 2020 and the signing of the Merger Agreement, representatives of Harvest Wind had various discussions with the management of the Company regarding the business, operations and financial performance of the Company and conducted preliminary business and accounting due diligence on the Company.

On July 23, 2020, after due consideration of the qualifications, experience, reputation and other characteristics of each potential legal advisor candidate, the Special Committee retained Conyers Dill & Pearman (“Conyers”) as its special Cayman Islands legal advisor to assist the Special Committee in evaluating and negotiating the Proposed Transaction or any alternative transaction.

On July 24, 2020, the Company issued a press release regarding the retention of KWM, Houlihan Lokey and Conyers and furnished the press release as an exhibit to its report on Form 6-K with the SEC.

On July 27, 2020, Skadden provided KWM with an initial draft of the Merger Agreement for the Special Committee’s review.

On July 28, 2020, the Special Committee convened a telephonic meeting with representatives of KWM, Houlihan Lokey and Conyers. During the meeting, representatives of Conyers provided a summary of the purposes and roles of the Special Committee and its members’ fiduciary duties. The Special Committee raised questions and discussed key issues relating to its fiduciary duties, negotiation strategy and its authority to reject the Proposed Transaction and pursue an alternative transaction should the Special Committee determine that the alternative transaction would be in the best interests of the Company and the Unaffiliated Security Holders. Representatives of Conyers discussed and explained the benefits and limits of the appraisal rights afforded to the Unaffiliated Security Holders pursuant to Cayman Islands law.

On August 3, 2020, the Special Committee convened a telephonic meeting with representatives of KWM to discuss the draft of the Merger Agreement. During the meeting, representatives of KWM discussed the key issues raised in the initial draft of the Merger Agreement provided by Skadden and discussed with the Special Committee various options on the terms and potential positions to be taken by the Special Committee. Among other things, representatives of KWM walked the Special Committee through each section of the Merger Agreement, including without limitation, the proposal by the Buyer Group to require the Company to keep certain available cash upon the closing as a closing condition (the “Company Available Cash Condition”) to fund the Merger consideration, the structure of the Merger, the payment of the Merger consideration to (or the handling of) various groups of holders of equity interests in the Company and the timing of such payment(s), the rights of dissenting shareholders of the Company, the effect of the Merger, the representations and warranties, the restrictive covenants on the Company’s business conduct (including, without limitation, the “no-shop” and related provisions), closing conditions, termination and effects of termination, dispute resolution and other key items of the Merger Agreement. After much discussion, the Special Committee determined that it might potentially further negotiate the $2.18 per share merger consideration offered by the Buyer Group, pending review of the preliminary financial analysis with respect to the merger consideration of the Merger payable to the unaffiliated shareholders, being undertaken by Houlihan Lokey. The Special Committee instructed KWM to negotiate the terms of the Merger Agreement with Skadden, including without limitation, to, impose a requirement for the approval by the affirmative vote of shareholders representing more than 50% of the voting rights of the public unaffiliated shares (the “majority of the minority” vote condition) as a closing condition, reject the Company Available Cash Condition, expedite the payment of the merger consideration to the dissenting shareholders in the amount and at the time due and payable to the other unaffiliated shareholders, provide that Parent’s obligation to consummate the Proposed Transaction should not be subject to the Buyer Group-proposed condition that the dissenting shares account for no more than 5% of the Company’s outstanding share capital (the “dissenting shareholders threshold”), reject certain provisions that would require the Company to pay termination fees to the Buyer Group, impose a knowledge qualifier on the part of the Buyer Group in the representations and warranties made by the Company, and generally improve the terms of the Merger Agreement as necessary and feasible. KWM also advised that the Special Committee has the authority to not proceed with the Proposed Transaction, regardless of whether a competing proposal exists or is being considered, should it determine that doing so would be in the best interests of the Company and its Unaffiliated Security Holders.

On August 4, 2020, at the instruction of the Special Committee, KWM sent Skadden a revised draft of the Merger Agreement reflecting the Special Committee’s positions formulated in the August 3, 2020 meeting.

On August 4, 2020, at the request of Houlihan Lokey, the Company provided to representatives of KWM emails that the Company had received from its investor relations agent, PondelWilkinson Inc., with respect to concerns raised by certain Unaffiliated Security Holders regarding the Proposal. On the same date, these emails were shared with Houlihan Lokey for their review.

On August 6, 2020, the Board passed unanimous written resolutions, effective as of June 20, 2020, formally reaffirming and documenting the powers of the Special Committee, and which provided that the Special Committee was granted the power and authority to, among other things, (i) investigate, review, evaluate, discuss, and negotiate the Proposed Transaction, (ii) make reports and recommendations to the Board as the Special Committee considers appropriate with respect to the Proposed Transaction, (iii) retain any advisors, including independent legal counsel, financial advisors, and outside counsel, as the Special Committee deems appropriate to assist the Special Committee in discharging its responsibilities, (iv) consider whether there were alternatives to the Proposal that would be in the best interests of the Company and its shareholders (each an “Alternative Transaction”), and review and evaluate the terms and conditions and determine the advisability of one or more Alternative Transaction(s), (v) review, evaluate and establish the procedures to be followed with respect to (A) the negotiation of the terms and conditions of the Proposal or any Alternative Transaction and (B) supervise management in regard to the conduct of such negotiations if, and to the extent that, the Special Committee, in its sole discretion, authorized management to conduct or participate in such negotiations, and respond to any communications, inquiries, or proposals regarding the Proposal or any Alternative Transaction, (vi) if the Special Committee deemed it appropriate or advisable, negotiate, on the Company’s behalf, the price, structure, form, terms and conditions of the Proposal or any Alternative Transaction, as well as any definitive agreements in connection therewith, (vii) after obtaining full knowledge of the material facts, determine whether any such transaction is fair, just and reasonable to, and in the best interests of, the Company and the Unaffiliated Security Holders, (viii) if the Special Committee deemed it appropriate or advisable, recommend to the entire Board what action, if any, should be taken by the Company with respect to the Proposal or any Alternative Transaction, (ix) take such other action related to or arising in connection with the Proposal or any Alternative Transaction as the Special Committee deemed necessary, appropriate or advisable, (x) reject the Proposal or any Alternative Transaction if the Special Committee determined that the Proposal or any Alternative Transaction was not fair to or in the best interests of the Company or the Unaffiliated Security Holders, or if the Special Committee determined that other alternatives, including not entering into any similar transaction, were more desirable, or for any other reason as the Special Committee may determine in its sole discretion, and (xi) convene and hold meetings of the Special Committee, of which only the members of the Special Committee may attend to the exclusion of any other director or officer of the Company, to discuss, develop, negotiate and resolve to carry out any of the duties of the Special Committee as contemplated by therein, and (xii) exercise any other power that may be otherwise exercised by the Board and that the Special Committee may determine is necessary or advisable to carry out and fulfill its duties and responsibilities through the rejection, abandonment or completion of the Proposed Transaction.

On August 7, 2020, Skadden provided KWM with a further revised draft of the Merger Agreement.

On August 10, 2020, the Special Committee convened a telephonic meeting with representatives of KWM and Conyers to discuss the key open issues in the latest draft of the Merger Agreement. During the meeting, the Special Committee and representatives of KWM and Conyers discussed the positions which could be taken and/or negotiated by the Special Committee, based on the totality of the terms of the Proposed Transaction (including the pricing), including: (a) the reintroduction of the Company Available Cash Condition; (b) the removal of the majority of the minority vote condition; (c) a reversion back to the original position regarding the treatment of Dissenting Shareholders; (d) the removal of the “Knowledge” qualifier against some of the Company representations and warranties; (e) the reintroduction of certain prior positions regarding restrictions on the Company’s approach to alternative or superior proposals between signing and closing; (f) the reintroduction of the 5% dissenting shareholders threshold as a closing condition; and (g) the reintroduction of a termination fee applicable to the Company in certain circumstances. Representatives of KWM and Conyers discussed the effect and implications of these positions with the Special Committee.

On August 11, 2020, the Special Committee convened a telephonic meeting with representatives of KWM and Houlihan Lokey. During the meeting, the Company management presented to the Special Committee its financial projections for the Company (the “Management Projections”). The Company management explained the methodology of preparing the Management Projections, the underlying assumptions and other aspects of the Management Projections. The Special Committee raised questions on certain items in the Management Projections, including on the methodology and the underlying assumptions. Company management then left the meeting. Thereafter, representatives of Houlihan Lokey discussed with the Special Committee their initial thoughts on the methodology, underlying assumptions and other aspects of the Management Projections.

On August 13, 2020, representatives of Skadden confirmed to representatives of KWM that Ms. Jiang and Mr Qijun Huang were committed to fully fund the Merger consideration with 100% equity financing.

On August 14, 2020, Skadden sent initial drafts of the Equity Commitment Letter, Limited Guarantee and Support Agreement to KWM.

On August 20, 2020, the Special Committee convened a telephonic meeting with representatives of KWM, Houlihan Lokey and Conyers, to discuss, in light of receipt of the Management Projections, certain matters with respect to the status of Houlihan Lokey’s financial due diligence and analysis, and to discuss the status of their financial analysis and methodology. In particular, the Special Committee and representatives of KWM, Houlihan and Conyers, discussed certain strategies and arguments for negotiating a price increase.

On August 21, 2020, the Special Committee instructed KWM to seek an offer price of $2.50 per Share. On that date, the Special Committee instructed KWM to revise the Merger Agreement based on the following positions (some of which were negotiable subject to the Buyer Group’s acceptance of the First Price Increase): (a) a price increase to $2.50 per Share (the “First Price Increase”); (b) the removal of the Company Available Cash Condition; (c) the reintroduction of the majority of the minority vote condition; (d) the reintroduction of the “Knowledge” qualifier against the Company representations and warranties; (e) the removal of certain restrictions on the Company’s approach to alternative or superior proposals between signing and closing; (f) the reintroduction of the dissenting shareholders threshold at 15% as a closing condition; and (g) the removal of a termination fee applicable to the Company in certain circumstances.

On August 22, 2020 at the instruction of the Special Committee, KWM sent Skadden a further revised draft of the Merger Agreement, reflecting the above mentioned positions, including the First Price Increase and the inclusion of the majority of the minority vote condition, together with KWM’s comments on the Equity Commitment Letter, Limited Guarantee and Support Agreement.

On August 25, 2020, Skadden sent further revised drafts of the Merger Agreement, Equity Commitment Letters and Limited Guarantees, to KWM. In particular, the Merger Agreement provided that, amongst other things, the price per Share had been revised upwards to $2.25 per Share, from $2.18 per Share, the majority of the minority vote condition had been removed, the dissenting shareholders threshold had been lowered to 10%, and certain termination fees applicable to the Company had been reintroduced. Skadden maintained the drafts were being sent to the Special Committee as final versions acceptable to the Buyer Group for execution and that the price increase to $2.25 per share should be considered as a final and best offer on condition that the Special Committee approves the Merger within the week.

On August 25, 2020, the Special Committee convened a telephonic meeting with representatives of Houlihan Lokey and KWM to discuss certain matters with respect to the preliminary results of Houlihan Lokey’s financial due diligence and financial analysis.

On August 25, 2020, KWM received from Skadden an initial draft of the Plan of Merger, as Exhibit A to the Merger Agreement.

On August 27, 2020, KWM sent Skadden a revised draft of the Plan of Merger.

On August 28, 2020, representatives of Houlihan Lokey presented, by way of telephone meeting, to the Special Committee, its preliminary financial analyses with respect to the Company and the transaction proposed by the Buyer Group to acquire the Shares (other than the Excluded Shares and the Dissenting Shares) at a purchase price of $2.25 in cash per Share. Representatives of Houlihan Lokey then left the meeting. The Special Committee, and representatives of KWM and Conyers, continued to discuss the financial analysis as presented by Houlihan Lokey. The Special Committee discussed and considered whether to seek a further price increase. Representatives of KWM and Conyers advised the Special Committee as to the potential implications, advantages and risks, of seeking a second price increase. After much discussion, the Special Committee resolved to seek a second price increase to $2.35 per Share (the “Second Price Increase”), on the basis of the existing terms to the relevant transaction documents (including accepting the removal of the majority of the minority vote condition, the dissenting shareholders threshold at 10%, and certain termination fees applicable to the Company) and that, to the extent the price offer was rejected by the Buyer Group, the Special Committee would require additional time to consider and analyze the terms of the Merger and may insist on the majority of the minority voting condition even though, as the Special Committee noted, a majority of the minority vote condition was not required under the laws of the Cayman Islands. The same day, the Second Price Increase was communicated to the Buyer Group.

On August 29, 2020, Skadden informed KWM that the Buyer Group had rejected the Special Committee’s proposed terms, including the Second Price Increase, and sent to KWM updated drafts of the Merger Agreement (but not reflecting the Second Price Increase), Equity Commitment Letters, Limited Guarantees and Support Agreement.

Between August 29 and August 30, 2020, Mr. Hong (“Simon”) He, as Chairman of the Special Committee, continued to discuss with representatives of Houlihan Lokey its financial analysis and sought additional clarifications with respect to its key assumptions.

On August 30, 2020, the Buyer Group contacted Hong (“Simon”) He of the Special Committee to indicate its acceptance of the Second Price Increase (such that the Per Share Merger Consideration would be $2.35 per Share), its rejection of the majority of the minority voting condition and its desire to execute the Merger Agreement as soon as possible. The Special Committee immediately instructed representatives of KWM to revise, and negotiate with Skadden to finalize, the Merger Agreement, Plan of Merger, Equity Commitment Letters, Limited Guarantees, Support Agreement, to reflect the agreed terms.

From August 30, 2020 to August 31, 2020, KWM and Skadden continued to negotiate and finalize the execution versions of the Merger Agreement and the other transaction documents, including the Equity Commitment Letters and the Limited Guarantees.

On September 1, 2020, the Special Committee convened a telephonic meeting with representatives of Houlihan Lokey, KWM and Conyers. During the meeting, representatives from Houlihan Lokey presented to the Special Committee its financial analyses with respect to the Company and the transaction proposed by the Buyer Group to acquire the Shares (other than the Excluded Shares and the Dissenting Shares) at a purchase price of $2.35 in cash per Share, and then rendered its oral opinion that, as of August 31, 2020, the Per Share Merger Consideration to be paid to the Unaffiliated Security Holders in the Proposed Transaction is fair, from a financial point of view, to such Unaffiliated Security Holders, based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered in preparing its opinion. Its written fairness opinion was delivered on September 1, 2020. The full text of the written opinion of Houlihan Lokey is attached as Annex D to this proxy statement. For additional information regarding the financial analyses performed by and the opinion rendered by Houlihan Lokey, please refer to “Special Factors—Opinion of the Special Committee’s Financial Advisor” beginning on page 37. Representatives from KWM then gave the Special Committee an overview of the material terms reflected in the final draft Merger Agreement and other transaction documents. Thereafter, the Special Committee members had an extensive discussion of the updated terms of the Merger Agreement and other transaction documents, as well as Houlihan Lokey’s financial analyses and fairness opinion, following which the Special Committee unanimously (a) determined that the Merger as contemplated in the Merger Agreement and other transaction documents is fair to and in the best interests of the Company and its shareholders, especially the Unaffiliated Security Holders, (b) approved and declared it advisable for the Company to enter into the Merger Agreement and other transaction documents, and to consummate the Transactions, including the Merger, (c) recommended that the Board authorize and approve the Merger Agreement, other transaction documents , and the consummation of the Transactions, including the Merger, and (d) recommended that the Board direct that the authorization and approval of the Merger Agreement, other transaction documents, and the Transactions, including the Merger, be submitted to a vote of the shareholders of the Company for authorization and approval at an extraordinary general meeting of the shareholders of the Company, the date, time and place of which shall be determined by the Special Committee. See “Special Factors—Reasons for the Merger and Recommendation of the Special Committee and the Board” beginning on page 24 for a description of the resolutions of the Special Committee at this meeting.

On September 1, 2020, the Board held a telephonic meeting, attended by representatives of KWM, Skadden, Houlihan Lokey and Conyers, to discuss the Transactions. Ms. Jiang and Ms. Zhu disclosed their respective interest in the Transactions. Thereafter, the Special Committee presented its recommendation to the Board and representatives of KWM reviewed with the Board the key terms of the Merger Agreement, Equity Commitment Letters, Limited Guarantees, Support Agreement and other transaction documents including among others, the structure of the Merger, Merger consideration, termination rights, termination fee triggers, termination fee amounts, and the conditions to closing for the Proposed Transaction. After discussion and considering the proposed terms of the Merger Agreement and the other transaction agreements, the various presentations of the Special Committee and KWM, the fact that Houlihan Lokey had delivered its fairness opinion to the Special Committee, and taking into account the other factors described below under the caption “Reasons for the Merger and Recommendation of the Special Committee and the Board” beginning on page 24, the Board (a) resolved that the Merger Agreement, the Plan of Merger and the Transactions, including the Merger, on the terms and subject to the conditions set forth in the Merger Agreement, are fair to, and in the best interests of, the Company and its shareholders, including the Unaffiliated Security Holders, and declared it advisable for the Company to enter into the Merger Agreement and the Plan of Merger, and to consummate the Transactions, including the Merger, (b) authorized and approved the execution, delivery and performance of the Merger Agreement, the Plan of Merger and the consummation of the Transactions, including the Merger, (c) directed that the Merger Agreement, the Plan of Merger and the Transactions, including the Merger, be submitted to the shareholders of the Company for authorization and approval, and (d) subject to the terms of the Merger Agreement, resolved to recommend the approval of the Merger Agreement, the Plan of Merger and the Transactions, including the Merger, to the shareholders of the Company. Each of Ms. Jiang and Ms. Zhu abstained from voting in light of their respective interests in the Transactions, including the Merger, as a Rollover Shareholder or a related party of a Rollover Shareholder, as applicable.

On September 1, 2020, Parent, Merger Sub and the Company executed the Merger Agreement (with Mr. Hong (“Simon”) He, as chairman of the Special Committee, executing the Merger Agreement on behalf of the Company). Concurrently with the execution of the Merger Agreement, Parent, the Founder Entity and the Sponsor Entity executed and delivered to the Company the Equity Commitment Letters and Limited Guarantees, as applicable. The Limited Guarantees were each executed by the Company. Also, concurrently with the execution of the Merger Agreement, the Founder Family Members and Parent entered into the Support Agreement. On September 1, 2020, the Company issued a press release announcing the execution of the Merger Agreement and furnished the press release and the Merger Agreement and Plan of Merger as exhibits to its report on Form 6-K.

On the same date, the Buyer Group filed with the SEC an amendment to its Schedule 13D announcing the execution of the Merger Agreement.

Reasons for the Merger and Recommendation of the Special Committee and the Board

The Special Committee and the Board believe that, as a privately held entity, the Company’s management may have greater flexibility to focus on improving the Company’s long-term financial performance without the pressures created by the public equity market's emphasis on short-term period-to-period financial performance.

In addition, as an SEC-reporting company, the Company’s management and accounting staff, which comprise a relatively small number of individuals, must devote significant time to SEC reporting and compliance. The Company is also required to disclose a considerable amount of business information to the public, some of which would otherwise be considered competitively sensitive and would not be disclosed by a non-reporting company. As a result, our actual or potential competitors, customers, lenders and vendors all have ready access to this information, which potentially may help them compete against us or make it more difficult for us to negotiate favorable terms with them, as the case may be.

The Special Committee and the Board also believe the limited trading volume of the Company’s Shares on NASDAQ does not justify the costs of remaining a public company, including the costs of complying with the Sarbanes-Oxley Act of 2002 and other U.S. federal securities laws. The costs of complying with the United States federal securities laws, including the Sarbanes-Oxley Act of 2002, totaled approximately US$600,000 and US$600,000 for the years ended 2018 and 2019, respectively. See “Special Factors—Effects of the Merger on the Company—Private Ownership” for further information on the costs of the Company complying with the U.S. federal securities laws.

The Special Committee and the Board believe that it is appropriate for the Company to undertake the Merger at this time due to the high costs of remaining a publicly traded company, including the cost of complying with the Sarbanes-Oxley Act of 2002 and other U.S. federal securities laws. We estimate such costs to be, on an annualized basis, an aggregate amount of approximately US$600,000. In reaching such conclusion, the Special Committee and the Board also considered the factors that (1) the Buyer Group was able to obtain requisite equity financing for the Merger at this time, and (2) the negative circumstances faced by certain Chinese plastic companies exporting to the U.S. market and the Chinese economy at this time, as more specifically discussed below.

At a meeting on September 1, 2020, the Special Committee, after consultation with its financial advisor and legal counsel and due consideration, unanimously (a) determined that the Merger as contemplated in the Merger Agreement and other transaction documents is fair to and in the best interests of the Company and its shareholders, especially the Unaffiliated Security Holders, (b) approved and declared it advisable for the Company to enter into the Merger Agreement and other transaction documents , and to consummate the Transactions, including the Merger, (c) recommended that the Board authorize and approve the Merger Agreement and other transaction documents, and the consummation of the Transactions, including the Merger, and (d) recommended that the Board direct that the authorization and approval of the Merger Agreement, other transaction documents, and the Transactions, including the Merger, be submitted to a vote of the shareholders of the Company for authorization and approval at an extraordinary general meeting of the shareholders of the Company, the date, time and place of which shall be determined by the Special Committee.

Later on September 1, 2020, the Board, acting upon the unanimous recommendation of the Special Committee and on behalf of the Company, (a) determined that the Merger as contemplated in the Merger Agreement and the Plan of Merger is fair to and in the best interests of the Company and its shareholders, especially the Unaffiliated Security Holders and it is advisable for the Company to enter into the Merger Agreement and the Plan of Merger, and to consummate the Transactions, including the Merger; the Adoption of Amended M&A and the Variation of Capital; (b) authorized and approved the execution, delivery and performance of the Merger Agreement and the Plan of Merger, and the consummation of the Transactions, including the Merger, the Adoption of Amended M&A and the Variation of Capital; and (c) resolved to recommend the approval and authorization of the Merger Agreement, the Plan of Merger and the Transactions, including the Merger, to the shareholders of the Company and directed that the Merger Agreement, the Plan of Merger and the Transactions, including the Merger, the Adoption of Amended M&A and the Variation of Capital, be submitted to a vote of the shareholders of the Company for authorization and approval at an extraordinary general meeting of the shareholders of the Company, the date, time and place of which shall be determined by the Special Committee.

In the course of reaching its determination, the Special Committee and the Board considered the following factors and potential benefits of the Merger, each of which the Special Committee and the Board believe supported their decision to recommend the Merger Agreement and that the Merger is substantively fair to the Unaffiliated Security Holders. These factors and potential benefits, which are not listed in any relative order of importance, are discussed below:

In addition, the Special Committee and the Board believed that sufficient procedural safeguards were and are present to ensure that the Merger is procedurally fair to the Unaffiliated Security Holders and to permit the Special Committee and the Board to represent effectively the interests of such Unaffiliated Security Holders, which procedural safeguards include the following, which are not listed in any relative order of importance:

The Special Committee and the Board also considered a variety of potentially negative factors concerning the Merger Agreement and the Merger, including the following, which are not listed in any relative order of importance:

The foregoing discussion of information and factors considered by the Special Committee and the Board is not intended to be exhaustive but includes all material factors considered by the Special Committee and the Board. In view of the wide variety of factors considered by the Special Committee and the Board, neither the Special Committee nor the Board found it practicable to quantify or otherwise assign relative weights to the foregoing factors in reaching its conclusions. In addition, individual members of the Special Committee and the Board may have given different weights to different factors and may have viewed some factors more positively or negatively than others. The Special Committee recommended that the Board authorize and approve, and the Board authorized and approved, the Merger Agreement, the Plan of Merger and the Transactions, including the Merger, based upon the totality of the information presented to and considered by it.

In reaching its conclusion regarding the fairness of the Merger to the Unaffiliated Security Holders and its decision to recommend the authorization and approval of the Merger Agreement, the Plan of Merger and the consummation of the Transactions, including the Merger, the Special Committee considered financial analyses presented by Houlihan Lokey. These analyses included, among others, selected companies analysis, selected transactions analysis and discounted cash flow analysis. All of the material analyses as presented to the Special Committee on September 1, 2020 are summarized below under the section entitled “Special Factors—Opinion of the Special Committee's Financial Advisor” beginning on page 37. The Special Committee and the Board expressly adopted these analyses and opinions, among other factors considered, in reaching their respective determination as to the fairness of the Transactions, including the Merger. The Special Committee and the Board noted that the financial analyses performed by Houlihan Lokey relied only on a discounted cash flows analysis while also presenting information with respect to selected companies for information purposes. The Special Committee and the Board also noted Houlihan Lokey’s view that the results derived from the selected companies analysis and selected transactions analysis do not provide a meaningful comparison to the Company. The Special Committee and the Board adopted Houlihan Lokey’s financial analyses as a whole, including its determinations that the selected companies’ information and the selected transactions analysis did not result in meaningful comparisons with respect to the Company and the proposed Merger. Accordingly, the Special Committee and the Board did not rely on such information in reaching their conclusion that the Per Share Merger Consideration to be received by holders of Shares are fair, from a financial point of view, to such holders.

Neither the Special Committee nor the Board considered the liquidation value of the Company’s assets because each considers the Company to be a viable going-concern business where value is derived from cash flows generated from its continuing operations. In addition, the Special Committee and the Board believe that the value of the Company’s assets that might be realized in a liquidation would be significantly less than its going-concern value for the reasons that (i) liquidation sales generally result in proceeds substantially less than the sales of a going concern; (ii) it is impracticable to determine a liquidation value given the significant execution risk involved in any breakup of a company; (iii) an ongoing operation has the ability to continue to earn profit, while a liquidated company does not, such that the “going-concern value” will be higher than the “liquidation value” of a company because the “going-concern value” includes the liquidation value of a Company’s tangible assets as well as the value of its intangible assets, such as goodwill; and (iv) a liquidation process would involve additional legal fees, costs of sale and other expenses that would reduce any amounts that shareholders might receive upon liquidation. Furthermore, the Company has no intention of liquidation and the Merger will not result in the liquidation of the Company. Each of the Special Committee and the Board believe the analyses and additional factors it reviewed provided an indication of the Company’s going-concern value.

Neither the Special Committee nor the Board, however, consider the Company’s net book value, which is defined as total assets minus total liabilities, attributable to the Company’s shareholders, as a factor. The Special Committee and the Board believe that net book value is not a material indicator of the value of the Company as a going concern as it does not take into account the future prospects of the Company, market conditions, trends in the industry or the business risks inherent in competing with larger companies in that industry. The Company’s net book value per Share as of December 31, 2019 was approximately US$5.00 based on 15,803,763 Shares issued and outstanding as of that date. The Company is not aware of any firm offers made by any unaffiliated person, other than the filing persons, during the past two years for (i) the Merger or consolidation of the Company with or into another company, (ii) the sale of all or a substantial part of the Company’s assets or (iii) the purchase of the Company’s voting securities that would enable the holder to exercise control over the Company.

In reaching its determination that the Merger Agreement, the Plan of Merger and the consummation of the Transactions, including the Merger, are fair to, and in the best interests of, the Company and the Unaffiliated Security Holders and its decision to authorize and approve the Merger Agreement, the Plan of Merger and the consummation of the Transactions, including the Merger, and recommend the authorization and approval of the Merger Agreement, the Plan of Merger and the consummation of the Transactions, including the Merger, by the Company’s shareholders, the Board, on behalf of the Company, considered the analysis and factors described above under this section and under “Special Factors—Background of the Merger” and expressly adopted such determination, recommendation and analysis. During its consideration of the Merger Agreement and the Transactions, including the Merger, the Board was also aware that some of the Company’s shareholders, including the Rollover Shareholders, and certain directors and employees of the Company, have interests with respect to the Merger that are, or may be, different from, or in addition to those of the Unaffiliated Security Holders generally, as described under the section entitled “Special Factors—Interests of Certain Persons in the Merger” beginning on page 49.

Except as set forth under “Special Factors—Background of the Merger” beginning on page 18, “Special Factors—Reasons for the Merger and Recommendation of the Special Committee and the Board” beginning on page 24 and “Special Factors—Opinion of the Special Committee's Financial Advisor” beginning on page 37, no director who is not an employee of the Company has retained an unaffiliated representative to act solely on behalf of the Unaffiliated Security Holders for purposes of negotiating the terms of the Transaction and/or preparing a report concerning the fairness of the Transaction.

For the foregoing reasons, the Company and the Board believe that the Merger Agreement, the Plan of Merger and the Transactions, including the Merger, are fair to, and in the best interests of, the Company and the Unaffiliated Security Holders.

Position of the Buyer Group as to the Fairness of the Merger

Under SEC rules governing going-private transactions, each member of the Buyer Group is required to express their belief as to the fairness of the Merger to the Unaffiliated Security Holders.

Each member of the Buyer Group is making the statements included in this section solely for the purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act. The views of the Buyer Group as to the fairness of the Merger are not intended to be and should not be construed as a recommendation to any shareholder as to how that shareholder should vote on the proposal to authorize and approve the Merger Agreement, the Plan of Merger and the consummation of the Transactions, including the Merger. Members of the Buyer Group have interests in the Merger that are different from, and/or in addition to, those of the other shareholders of the Company by virtue of their continuing interests in the Surviving Company after the completion of the Merger. These interests are described under the section entitled “Special Factors—Interests of Certain Persons in the Merger—Interests of the Buyer Group” beginning on page 49.

The Buyer Group believes that the interests of the Unaffiliated Security Holders were represented by the Special Committee, which negotiated the terms and conditions of the Merger Agreement with the assistance of its independent legal and financial advisors. The Buyer Group did not participate in the deliberations of the Special Committee regarding, and did not receive any advice from the Special Committee’s independent legal or financial advisors as to, the fairness of the Merger to the Unaffiliated Security Holders. Furthermore, the Buyer Group did not itself undertake a formal evaluation of the fairness of the Merger. No financial advisor provided the Buyer Group with any analysis or opinion with respect to the fairness of the Merger consideration to the Unaffiliated Security Holders.

Based on their knowledge and analysis of available information regarding the Company, as well as discussions with the Company’s senior management regarding the Company and its business and the factors considered by, and findings of, the Special Committee and the Board discussed under the section entitled “Special Factors—Reasons for the Merger and Recommendation of the Special Committee and the Board” beginning on page 24, the Buyer Group believes that the Merger is substantively fair to the Unaffiliated Security Holders based on the following factors, which are not listed in any relative order of importance:

The Buyer Group did not consider the liquidation value of the Company because the Buyer Group considers the Company to be a viable going concern and views the trading history of the Shares as an indication of the Company’s going concern value, and, accordingly, did not believe liquidation value to be relevant to a determination as to the fairness of the Merger.

The Buyer Group did not consider net book value, which is an accounting concept, as a factor because it believed that net book value is not a material indicator of the value of the Company as a going concern but rather is indicative of historical costs and therefore not a relevant measure in the determination as to the fairness of the Merger.

The Buyer Group did not establish, and did not consider, a going concern value for the Company as a public company to determine the fairness of the Merger consideration to the Unaffiliated Security Holders because, following the Merger, the Company will have a significantly different capital structure. However, to the extent the pre-Merger going concern value was reflected in the pre-announcement price of the Company’s Shares, the Per Share Merger Consideration of $2.35 represents a premium to the going concern value of the Company.

The Buyer Group is not aware of, and thus did not consider, any offers or proposals made by any unaffiliated person during the past two years for (i) a Merger or consolidation of the Company with another company, (ii) the sale or transfer of all or substantially all of the Company’s assets or (iii) the purchase of all or a substantial portion of the Shares that would enable such person to exercise control of or significant influence over the Company.

The Buyer Group did not perform or receive any independent reports, opinions or appraisals from any third party related to the Merger, and thus did not consider any such reports, opinions or appraisals in determining the substantive and procedural fairness of the Merger to the Unaffiliated Security Holders.

The Buyer Group believes that the Merger is procedurally fair to the Unaffiliated Security Holders based on the following factors, which are not listed in any relative order of importance:

The Buyer Group notes that the authorization and approval of the Merger Agreement, the Plan of Merger and the consummation of the Transactions, including the Merger, are not subject to approval by a majority of the Unaffiliated Security Holders, and that the Founder Family Members already holds approximately 70.4% voting power of the Shares which exceeds two-thirds of the Shares required to approve the Merger Agreement, the Plan of Merger, and the consummation of the Transactions, under the CICL and the current memorandum and articles of association of the Company. Nevertheless, the Buyer Group believes the Merger is procedurally fair to the Unaffiliated Security Holders because (i) the majority-of-the-minority voting requirement is not customary in going-private transactions involving Cayman Islands companies, and (ii) various safeguards and protective steps have been adopted to ensure the procedural fairness of the Transactions as discussed above.

The foregoing is a summary of the information and factors considered by the Buyer Group in connection with its evaluation of the fairness of the Merger to the Unaffiliated Security Holders, which is not intended to be exhaustive, but is believed by the Buyer Group to include all material factors considered by it. The Buyer Group did not find it practicable to assign, and did not assign, relative weights to the individual factors considered in reaching its conclusion as to the fairness of the Merger to the Unaffiliated Security Holders. Rather, its fairness determination was made after consideration of all of the foregoing factors as a whole.

The Buyer Group believes these factors provide a reasonable basis for its belief that the Merger is both substantively and procedurally fair to the Unaffiliated Security Holders. This belief, however, is not intended to be and should not be construed as a recommendation by the Buyer Group to any shareholder of the Company as to how such shareholder should vote with respect to the authorization and approval of the Merger Agreement, the Plan of Merger and the consummation of the Transactions.

Certain Financial Projections

The Company’s management does not generally make public detailed financial forecasts or internal projections as to future performance, revenues, earnings or financial condition. However, the Company’s management prepared certain financial projections for the fiscal year ending December 31, 2020 through the fiscal year ending December 31, 2024 for the Special Committee and Houlihan Lokey in connection with the financial analysis for the Merger. These financial projections, which were based on the Company management's estimates of the Company’s future financial performance as of the date provided, were prepared by the Company’s management for internal use and for use by Houlihan Lokey in their financial analyses, and were not prepared with a view toward public disclosure or compliance with published guidelines of the SEC regarding forward-looking information or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts or U.S. GAAP.

The financial projections are not a guarantee of performance. They involve significant risks, uncertainties and assumptions. In compiling the projections, the Company’s management took into account historical performance, combined with estimates regarding net revenue, gross profit, EBIT, EBITDA and net income. Although the projections are presented with numerical specificity, they were based on numerous assumptions and estimates as to future events made by our management that our management believed were prepared on a reasonable basis, reflected the best estimates and judgments available at that time and presented, to the best of the management’s knowledge and belief, the expected course of action and the expected future financial performance of the Company. However, this information is not fact and should not be relied upon as being necessarily indicative of actual future results, and shareholders are cautioned not to place undue reliance on the prospective financial information. In addition, factors such as industry performance, the market for our existing and new products, the competitive environment, expectations regarding future acquisitions or any other transactions and general business, economic, regulatory, market and financial conditions, all of which are difficult to predict and beyond the control of our management, may cause actual future results to differ materially from the results forecasted in these financial projections.

In addition, the projections generally do not take into account any circumstances or events occurring after the date that they were prepared. For instance, the projections do not give effect to completion of the Merger or any changes to the Company’s operations or strategy that may be implemented after the time the projections were prepared. As a result, there can be no assurance that the projections will be realized, and actual results may be significantly different from those contained in the projections.

Neither the Company, its independent registered public accounting firm, nor any other independent accounts have examined, compiled, or performed any procedures with respect to the financial projections or any amounts derived therefrom or built thereupon, nor have they given any opinion or any other form of assurance on such information or its achievability. The financial projections included in this proxy statement are included solely to give shareholders access to certain information that was made available to the Special Committee and Houlihan Lokey, and are not included in this proxy statement in order to induce any holder of Shares to vote in favor of approval of the Merger Agreement or to elect not to seek appraisal for his or her Shares.

The following table summarizes the financial projections prepared by the Company’s management and considered by the Special Committee and Houlihan Lokey in connection with their analysis of the Proposed Transaction:

EBIT and EBITDA are non-GAAP measures that are used by management as supplemental financial measures to evaluate the Company’s operational trends. Neither metric should be relied upon as an alternative to net income. Neither EBIT nor EBITDA is defined under U.S. GAAP and, accordingly, they may not be comparable measurements to those used by other companies.

In preparing these projections, the Company’s management necessarily made certain assumptions about future financial factors affecting the Company’s business, including, primarily:

The Management Projections do not take into account any acquisitions of new businesses or assets, as management believed that the nature, timing and amount of any such acquisitions would be too difficult to predict. In addition, the projections do not take into account any circumstances or events occurring after the date that they were prepared. For instance, the Management Projections were developed on a standalone basis without giving effect to the Merger, and therefore they do not give effect to the Merger or any changes to the Company’s operations or strategy that may be implemented after the consummation of the Merger, including any costs incurred in connection with the Merger.

Neither the Company’s independent registered public accounting firm, Friedman LLP (“Friedman”), nor any other independent accountants have examined, compiled or performed any procedures with respect to the Management Projections or any amounts derived therefrom or built thereupon and, accordingly, have not expressed any opinion or given any form of assurance on the Management Projections or their achievability. Friedman’s report accompanying the Company’s audited consolidated financial statements included in the Company’s annual report on Form 20-F for the year ended December 31, 2019 incorporated by reference in this proxy statement refers exclusively to the Company’s historical information and does not cover any other information in this proxy statement and should not be read to do so. The Management Projections included in this proxy statement are included solely to give shareholders access to certain information that was made available to the Special Committee’s financial advisor and are not included for the purpose of influencing any shareholder to make any investment decision with respect to the Merger, including whether or not to seek appraisal for his, her or its Shares pursuant to Section 238 of the CICL.

NONE OF THE COMPANY OR ITS AFFILIATES, ADVISORS, OFFICERS, DIRECTORS OR REPRESENTATIVES HAS MADE OR MAKES ANY REPRESENTATION TO ANY SHAREHOLDER OR OTHER PERSON REGARDING THE ULTIMATE PERFORMANCE OF THE COMPANY COMPARED TO THE INFORMATION CONTAINED IN THE PROJECTIONS OR THAT PROJECTED RESULTS WILL BE ACHIEVED.

BY INCLUDING IN THIS PROXY STATEMENT A SUMMARY OF ITS INTERNAL FINANCIAL PROJECTIONS, THE COMPANY UNDERTAKES NO OBLIGATIONS TO UPDATE, OR PUBLICLY DISCLOSE ANY UPDATE TO, THESE FINANCIAL PROJECTIONS TO REFLECT CIRCUMSTANCES OR EVENTS, INCLUDING UNANTICIPATED EVENTS, THAT MAY HAVE OCCURRED OR THAT MAY OCCUR AFTER THE PREPARATION OF THESE PROJECTIONS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE FINANCIAL PROJECTIONS ARE SHOWN TO BE IN ERROR OR CHANGE, EXCEPT TO THE EXTENT REQUIRED BY APPLICABLE FEDERAL SECURITIES LAW.

Opinion of the Special Committee’s Financial Advisor

The Special Committee retained Houlihan Lokey to act as its financial advisor in connection with the Merger, and on September 1, 2020, Houlihan Lokey rendered its oral opinion, which it subsequently confirmed in writing, to the Special Committee as to the fairness, from a financial point of view, of the Merger consideration to be received by the Unaffiliated Security Holders in the Merger pursuant to the Merger Agreement and the Plan of Merger, as of the date of such opinion, based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken, and other matters considered by Houlihan Lokey in preparing its opinion.

Houlihan Lokey’s opinion was directed to the Special Committee (in its capacity as such) and only addressed the fairness, from a financial point of view, of the Merger consideration to be received by the Unaffiliated Security Holders in the Merger pursuant to the Merger Agreement and the Plan of Merger, as of the date of such opinion and did not address any other aspect or implication of the Merger or any other agreement, arrangement, or understanding. The summary of Houlihan Lokey’s opinion in this proxy statement is qualified in its entirety by reference to the full text of its written opinion, which is attached as Annex D to this proxy statement and describes the procedures followed, assumptions made, qualifications and limitations on the review undertaken, and other matters considered by Houlihan Lokey in connection with the preparation of its opinion. However, neither Houlihan Lokey’s opinion nor the summary of its opinion and the related analyses set forth in this proxy statement are intended to be, and do not constitute, advice or a recommendation to the Special Committee, the Board, any shareholder or any other person as to how to act or vote with respect to any matter relating to the Merger.

In arriving at its opinion, Houlihan Lokey, among other things:

In giving its opinion, Houlihan Lokey relied upon and assumed, without independent verification, the accuracy and completeness of all data, material and other information furnished, or otherwise made available, to Houlihan Lokey, discussed with or reviewed by Houlihan Lokey, or publicly available, and did not assume any responsibility with respect to such data, material and other information. In addition, management of the Company advised Houlihan Lokey, and Houlihan Lokey assumed, that the Management Projections (and adjustments thereto) reviewed by it were reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of such management as to the future financial results and condition of the Company and the other matters covered thereby, which estimates and judgements include, without limitation, the management’s expectation that the Company will focus its efforts on growing its business in China as opposed to the U.S. due to the ongoing trade conflicts and geopolitical tensions between China and the U.S. and the negative impact on the Company’s business growth from the decreasing demand for single-use plastic products. Houlihan Lokey expressed no opinion with respect to such projections or the assumptions on which they were based. Houlihan Lokey relied upon and assumed, without independent verification, that there had been no change in the businesses, assets, liabilities, financial condition, results of operations, cash flows or prospects of the Company since the respective dates of the most recent financial statements and other information, financial or otherwise, provided to Houlihan Lokey that would be material to its analyses or its opinion, and that there was no information or any facts that would make any of the information reviewed by Houlihan Lokey incomplete or misleading. The credit, financial and stock markets have recently been experiencing unusual volatility and Houlihan Lokey expressed no opinion or view as to any potential effects of such volatility on the Merger, and its opinion did not purport to address potential developments in any such markets. In addition, Houlihan Lokey expressed no view as to, and its opinion did not address, foreign currency exchange risks (if any) associated with the Merger, the Management Projections or otherwise.

Houlihan Lokey relied upon and assumed, without independent verification, that (a) the representations and warranties of all parties to the Merger Agreement and all other related documents and instruments that were referred to therein were true and correct, (b) each party to the Merger Agreement and such other related documents and instruments would fully and timely perform all of the covenants and agreements required to be performed by such party, and (c) the Merger would be consummated in a timely manner in accordance with the terms described in the Merger Agreement and such other related documents and instruments, without any amendments or modifications thereto. Houlihan Lokey relied upon and assumed, without independent verification, that (i) the Merger would be consummated in a manner that complies in all respects with all applicable foreign, federal, and state statutes, rules and regulations, and (ii) all governmental, regulatory, and other consents and approvals necessary for the consummation of the Merger would be obtained and that no delay, limitations, restrictions or conditions would be imposed or amendments, modifications or waivers made that would have an effect on the Merger or the Company that would be material to Houlihan Lokey’s analyses or its opinion. Houlihan Lokey also relied upon and assumed, without independent verification, at the direction of the Company, that any adjustments to the Merger consideration pursuant to the Merger Agreement would not be material to its analyses or its opinion. In addition, Houlihan Lokey relied upon and assumed, without independent verification, that the final form of the Plan of Merger would not differ in any respect from the form attached as an annex to the Merger Agreement.

Furthermore, in connection with such opinion, Houlihan Lokey was not requested to make and did not make any physical inspection or independent appraisal or evaluation of any of the assets, properties, or liabilities (fixed, contingent, derivative, off-balance-sheet or otherwise) of the Company, or any other party, nor was Houlihan Lokey provided with any such appraisal or evaluation. Houlihan Lokey did not estimate, and expressed no opinion regarding, the liquidation value of any entity or business. Houlihan Lokey undertook no independent analysis of any potential or actual litigation, regulatory action, possible unasserted claims, or other contingent liabilities, to which the Company was or may have been a party or was or may have been subject, or of any governmental investigation of any possible unasserted claims or other contingent liabilities to which the Company was or may have been a party or was or may have been subject.

Houlihan Lokey was not requested to, and did not, (a) initiate any discussions or negotiations with, or solicit any indications of interest from, third parties with respect to the Merger, or the securities, assets, business or operations of the Company or any other party, or any alternatives to the Merger, (b) negotiate the terms of the Merger, or (c) advise the Special Committee, the Board, the Company, or any other party with respect to alternatives to the Merger. Houlihan Lokey’s opinion was necessarily based on financial, economic, market, and other conditions as in effect on, and the information made available to Houlihan Lokey as of, the date of such opinion. Except as set forth in Houlihan Lokey’s engagement letter, Houlihan Lokey did not undertake, and is under no obligation, to update, revise, reaffirm, or withdraw its opinion, or otherwise comment on or consider events occurring or coming to its attention after the date of such opinion.

Houlihan Lokey’s opinion was furnished for the use of the Special Committee (in its capacity as such) in connection with the Special Committee’s evaluation of the Merger, and may not be used for any other purpose without Houlihan Lokey’s prior written consent. Houlihan Lokey’s opinion was not intended to be, and did not constitute, a recommendation to the Special Committee, the Board, any security holder, or any other party as to how to act or vote with respect to any matter relating to the Merger or otherwise.

Houlihan Lokey was not requested to opine as to, and its opinion did not express an opinion as to or otherwise address, among other things: (i) the underlying business decision of the Special Committee, the Board, the Company, or Parent, their respective security holders, or any other party to proceed with or effect the Merger, (ii) the terms of any arrangements, understandings, agreements, or documents related to, or the form, structure, or any other portion or aspect of, the Merger or otherwise (other than the Merger consideration to the extent expressly specified in Houlihan Lokey’s opinion), (iii) the fairness of any portion or aspect of the Merger to the holders of any class of securities, creditors, or other constituencies of the Company, or to any other party, except if and only to the extent expressly set forth in the last sentence of Houlihan Lokey’s opinion, (iv) the relative merits of the Merger as compared to any alternative business strategies or transactions that might be available for the Company, Parent or any other party, (v) the fairness of any portion or aspect of the Merger to any one class or group of the Company’s, Parent’s or any other party’s security holders or other constituents vis-à-vis any other class or group of the Company’s, Parent’s or such other party’s security holders or other constituents (including, without limitation, the allocation of any consideration amongst or within such classes or groups of security holders or other constituents), (vi) whether or not the Company or its security holders, Parent, or its security holders, or any other party is receiving or paying reasonably equivalent value in the Merger, (vii) the solvency, creditworthiness, or fair value of the Company, Parent, or any other participant in the Merger, or any of their respective assets, under any applicable laws relating to bankruptcy, insolvency, fraudulent conveyance, or similar matters, (viii) the fairness, financial or otherwise, of the amount, nature, or any other aspect of any compensation to or consideration payable to or received by any officers, directors, or employees of any party to the Merger, any class of such persons or any other party, relative to the Merger consideration or otherwise. Furthermore, no opinion, counsel, or interpretation was intended in matters that require legal, regulatory, accounting, insurance, tax, or other similar professional advice. Houlihan Lokey assumed that such opinions, counsel, or interpretations were or would be obtained from appropriate professional sources. Furthermore, Houlihan Lokey relied, with the consent of the Special Committee, on the assessments by the Special Committee, the Board, the Company, Parent, and their respective advisors as to all legal, regulatory, accounting, insurance, tax, and other similar matters with respect to the Company and the Merger or otherwise.

In performing its analyses, Houlihan Lokey considered general business, economic, industry, and market conditions, financial and otherwise, and other matters as they existed on, and could be evaluated as of, the date of its opinion. No company, transaction or business used in Houlihan Lokey’s analyses for comparative purposes is identical to the Company or the proposed Merger and an evaluation of the results of those analyses is not entirely mathematical. The estimates contained in the Management Projections prepared by members of the management of the Company and the implied reference range values indicated by Houlihan Lokey’s analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by the analyses. In addition, any analyses relating to the value of assets, businesses, or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold, which may depend on a variety of factors, many of which are beyond the control of the Company. Much of the information used in, and accordingly the results of, Houlihan Lokey’s analyses are inherently subject to substantial uncertainty.

Houlihan Lokey’s opinion was only one of many factors considered by the Special Committee and the Board in evaluating the proposed Merger. Neither Houlihan Lokey’s opinion nor its analyses were determinative of the Merger consideration or of the views of the Special Committee or the Board with respect to the Merger or the Merger consideration. Under the terms of its engagement by the Company, neither Houlihan Lokey’s opinion nor any other advice or services rendered by it in connection with the proposed Merger or otherwise should be construed as creating, and Houlihan Lokey should not be deemed to have, any fiduciary duty to, or agency relationships with, the Special Committee, the Board, the Company, Parent, any security holder or creditor of the Company, Parent, or any other person, regardless of any prior or ongoing advice or relationships. The type and amount of consideration payable in the Merger were determined through negotiation between the Special Committee on the one hand and the Buyer Group on the other hand, and the decision to enter into the Merger Agreement was solely that of the Special Committee and the Board.

Financial Analyses

In preparing its opinion to the Special Committee, Houlihan Lokey performed a variety of analyses. The summary of Houlihan Lokey’s analyses is not a complete description of the analyses underlying Houlihan Lokey’s opinion. The preparation of such an opinion is a complex process involving various quantitative and qualitative judgments and determinations with respect to the financial, comparative, and other analytical methods employed and the adaptation and application of these methods to the unique facts and circumstances presented. As a consequence, neither Houlihan Lokey’s opinion nor its underlying analyses are readily susceptible to summary description. Houlihan Lokey arrived at its opinion based on the results of all analyses undertaken by it and assessed as a whole and did not draw, in isolation, conclusions from or with regard to any individual analysis, methodology, or factor. While the results of each analysis were taken into account in reaching Houlihan Lokey’s overall conclusion with respect to fairness, Houlihan Lokey did not make separate or quantifiable judgments regarding individual analyses. Accordingly, Houlihan Lokey believes that its analyses and the following summary must be considered as a whole and that selecting portions of its analyses, methodologies, and factors, without considering all analyses, methodologies, and factors, could create a misleading or incomplete view of the processes underlying Houlihan Lokey’s analyses and opinion.

The following is a summary of the material financial analyses performed by Houlihan Lokey in connection with the preparation of its opinion and reviewed with the Special Committee on September 1, 2020. The order of the analyses does not represent relative importance or weight given to those analyses by Houlihan Lokey.

For purposes of its analyses, Houlihan Lokey reviewed a number of financial metrics, including:

The estimates of the future financial performance of the Company relied upon for the financial analyses described below were based on the Management Projections.

Selected Companies Analysis. Houlihan Lokey considered performing a selected Companies analysis. However, due to the limited comparability of the Company to other public companies, Houlihan Lokey concluded that it would not be able to derive a meaningful result for which an implied valuation range could be concluded based on an analysis of comparable companies.

Selected Transactions Analysis. Houlihan Lokey considered performing a selected transactions analysis. However, due to the limited comparability of the Company to other companies subject to transactions for which financial information was made publicly available, Houlihan Lokey concluded that it would not be able to derive a meaningful result for which an implied valuation range could be concluded based on an analysis of comparable transactions.

Discounted Cash Flow Analysis. Houlihan Lokey performed a discounted cash flow analysis of the Company by calculating the estimated net present value of the projected unlevered, after-tax free cash flows of the Company based on the Management Projections. Houlihan Lokey calculated terminal values for the Company by applying a range of perpetuity growth rates of 0.0% to 2.0% to the Company’s normalized 2024 unlevered free cash flows. The net present values of the Company’s projected future cash flows and terminal values were then calculated using discount rates ranging from 16.0% to 19.0%. The discounted cash flow analysis indicated an implied per Share reference range of $1.96 to $2.72 per Share, as compared to Merger consideration of $2.35 per Share. 

Houlihan Lokey was engaged by the Special Committee to act as its financial advisor in connection with the Merger and provide financial advisory services to the Special Committee, including an opinion as to the fairness from a financial point of view of the Merger consideration to be received by the Unaffiliated Security Holders. The Special Committee engaged Houlihan Lokey based on Houlihan Lokey’s experience and reputation. Houlihan Lokey is regularly engaged to provide financial advisory services in connection with mergers and acquisitions, financings, and financial restructurings. Pursuant to its engagement by the Special Committee, Houlihan Lokey is entitled to a fixed fee of US$400,000, US$100,000 of which became payable upon execution of Houlihan Lokey’s engagement letter, US$250,000 of which became payable upon the delivery of Houlihan Lokey’s opinion at the request of the Special Committee, and the remaining US$50,000 balance of which will become payable upon the consummation of the Merger. No portion of Houlihan Lokey’s fee is contingent upon any conclusions set forth in Houlihan Lokey’s opinion. The Company has also agreed to reimburse Houlihan Lokey for certain expenses and to indemnify Houlihan Lokey, its affiliates, and certain related parties against certain liabilities and expenses, including certain liabilities under the federal securities laws, arising out of or related to Houlihan Lokey’s engagement.

In the ordinary course of business, certain of Houlihan Lokey’s employees and affiliates, as well as investment funds in which they may have financial interests or with which they may co-invest, may acquire, hold, or sell long or short positions, or trade, in debt, equity, and other securities and financial instruments (including loans and other obligations) of, or investments in, the Company, Parent, or any other party that may be involved in the Merger and their respective affiliates or security holders or any currency or commodity that may be involved in the Merger.

Neither Houlihan Lokey nor any of its affiliates has in the past two years provided or is currently providing any investment banking, financial advisory and/or other financial or consulting services to the Company, Parent and their respective affiliates. Houlihan Lokey and certain of its affiliates may provide investment banking, financial advisory and/or other financial or consulting services to the Company, Parent, other participants in the Merger or certain of their respective affiliates or security holders in the future, for which Houlihan Lokey and its affiliates may receive compensation. In addition, Houlihan Lokey and certain of its affiliates and certain of our and their respective employees may have committed to invest in private equity or other investment funds managed or advised by the Company, Parent, other participants in the Merger or certain of their respective affiliates or security holders, and in portfolio companies of such funds, and may have co-invested with the Company, Parent, other participants in the Merger or certain of their respective affiliates or security holders, and may do so in the future. Furthermore, in connection with bankruptcies, restructurings, distressed situations and similar matters, Houlihan Lokey and certain of its affiliates may have in the past acted, may currently be acting and may in the future act as financial advisor to debtors, creditors, equity holders, trustees, agents and other interested parties (including, without limitation, formal and informal committees or groups of creditors) that may have included or represented and may include or represent, directly or indirectly, or may be or have been adverse to, the Company, Parent, other participants in the Merger or certain of their respective affiliates or security holders, for which advice and services Houlihan Lokey and its affiliates have received and may receive compensation.

Purposes of and Reasons for the Merger

The Buyer Group

Under SEC rules governing going-private transactions, each member of the Buyer Group is required to express their reasons for the Merger to the Company’s Unaffiliated Security Holders, as defined in Rule 13e-3 of the Exchange Act.

Each member of the Buyer Group is making the statements included in this section solely for the purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act. For the Buyer Group, the purpose of the Merger is to enable Parent to acquire 100% of the Company, in a transaction in which the Shares (other than the Excluded Shares and the Dissenting Shares) will be cancelled in exchange for $2.35 per Share, so Parent will bear the rewards and risks of the sole ownership of the Company after the Shares are cancelled, including any increases in value of the Company as a result of improvements to the Company’s operations or acquisitions of other businesses. In addition, the Merger will allow Rollover Shareholders, together with their affiliates, to increase their ownership percentage in the Company through indirect ownership in Parent, as further described in this proxy statement under the section entitled “Special Factors—Interests of Certain Persons in the Merger—Interests of the Buyer Group.” 

The Buyer Group believes the operating environment has changed in a significant manner since the Company’s initial public offering and these changes have increased the uncertainty and volatility inherent in the business model of the Company. As a result, the Buyer Group is of the view that there is potential for considerably greater short- and medium-term volatility in the Company’s earnings. Responding to current market challenges will require tolerance for volatility in the performance of the Company’s business and a willingness to make business decisions focused on improving the Company’s long-term profitability. The Buyer Group believes that these strategies would be most effectively implemented in the context of a private company structure. As a privately held entity, the Company’s management will have greater flexibility to focus on improving long-term profitability without the pressures exerted by the public market’s valuation of the Company and its emphasis on short-term period-to-period performance. Further, as a privately held entity, the Company will be relieved of many of the expenses, burdens and constraints imposed on companies that are subject to the public reporting requirements under the U.S. federal securities laws, including the Exchange Act and the Sarbanes-Oxley Act of 2002. The Buyer Group decided to undertake the going-private transaction at this time because it wants to take advantage of the benefits of the Company being a privately held company as described above. In the course of considering the going-private transaction, the Buyer Group did not consider alternative transaction structures because the Buyer Group believed the Merger was the most direct and effective way to enable the Buyer Group to acquire ownership and control of the Company.

The Company

The Company’s purpose for engaging in the Merger is to enable its shareholders to receive $2.35 per Share in cash, without interest and net of any applicable withholding taxes. The Company has determined to undertake the Merger at this time based on the analyses, determinations and conclusions of the Special Committee and the Board described in detail under the caption “Special Factors—Reasons for the Merger and Recommendation of the Special Committee and the Board” beginning on page 24.

Effects of the Merger on the Company

Private Ownership

The Shares are currently listed on the NASDAQ with the symbol “FORK.” It is expected that, following the consummation of the Merger, the Company will cease to be a publicly traded company and will instead become a private company beneficially owned by the Buyer Group. Following the consummation of the Merger, the Shares will not be listed on the NASDAQ or any securities exchange or quotation system, and price quotations with respect to sales of the Shares in the public market will no longer be available. In addition, registration of Shares under the Exchange Act may be terminated upon the Company’s application to the SEC if Shares are not listed on a national securities exchange and there are fewer than 300 record holders of Shares. Ninety days after the filing of Form 15 in connection with the consummation of the Merger or such longer period as may be determined by the SEC, registration of Shares under the Exchange Act will be terminated and the Company will no longer be required to file periodic reports with the SEC or otherwise be subject to the U.S. federal securities laws, including the Sarbanes-Oxley Act of 2002, applicable to public companies. The costs of complying with the United States federal securities laws, including the Sarbanes-Oxley Act of 2002, totaled approximately $600,000 and $600,000 for the years ended December 31, 2018 and December 31, 2019, respectively. After the consummation of the Merger, the Company’s shareholders will no longer enjoy the rights or protections that the U.S. federal securities laws provide, including reporting obligations for directors, officers and principal securities holders of the Company.

Treatment of Company’s Issued and Outstanding Shares

Upon completion of the Merger, each issued and outstanding Share (other than the Excluded Shares and the Dissenting Shares) will be cancelled in exchange for the right to receive the Per Share Merger Consideration in cash, without interest and net of any applicable withholding taxes.

Each Rollover Share issued and outstanding immediately prior to the Effective Time, will automatically be cancelled and cease to exist, without payment of any consideration or distribution therefor. Shares held by Parent, the Company or any of their respective subsidiaries issued and outstanding immediately prior to the Effective Time will be cancelled and cease to exist without payment of any consideration or distribution therefor. Each Dissenting Share will be cancelled and cease to exist at the Effective Time, but the Dissenting Shareholders will not be entitled to the right to receive the merger consideration pursuant to the Merger Agreement, and the Dissenting Shareholders will instead be entitled to receive only payment of the fair value of such Dissenting Shares determined in accordance with Section 238 of the CICL.

Treatment of ESOP Pool

The Company is authorized to issue shares, and share options to purchase, in the aggregate number of up to 1,570,509 Shares under the ESOP Pool. As of the date of this proxy statement, no share option is outstanding under the ESOP Pool. The ESOP Pool and each Share and share option thereunder shall be automatically cancelled and cease to exist at the Effective Time.

Directors and Management of the Surviving Company

If the Merger is completed, the current memorandum and articles of association of the Company will be replaced in its entirety by the memorandum and articles of association in the form attached as Appendix II to the Plan of Merger (which is substantially the form of the memorandum and articles of association of Merger Sub, as in effect prior to the completion of the Merger except that at the effective time of the Merger, the memorandum and articles of association shall refer to the name of the Surviving Company as “Fuling Global Inc. (富岭环球有限公司)”). In addition, the sole director of Merger Sub immediately prior to the Effective Time will become the director of the Surviving Company and the officers of the Company immediately prior to the effective time will become the officers of the Surviving Company.

Primary Benefits and Detriments of the Merger

The primary benefits of the Merger to the Unaffiliated Security Holders include, without limitation, the following:

The primary detriments of the Merger to the Unaffiliated Security Holders include, without limitation, the following:

The primary benefits of the Merger to the Company’s directors and executive officers (other than members of the Buyer Group) include, without limitation, the following:

The primary detriments of the Merger to the Company’s directors and executive officers (other than members of the Buyer Group) include, without limitation, the following:

The primary benefits of the Merger to the Buyer Group include the following:

The primary detriments of the Merger to the Buyer Group include the following:

The Company’s Net Book Value and Net Earnings

Parent does not currently own any interest in the Company. Immediately after the closing of the Merger, Parent will own 100% of the outstanding Shares and will have a corresponding share in the Company’s net book value and net earnings. The Company’s net earnings attributable to its shareholders for the year ended December 31, 2019 was approximately $15 million and net book value attributable to the Company’s shareholders as of December 31, 2019 was approximately $79 million.

The table below sets out the direct or indirect share in the Company’s net book value and net earnings for the parties listed below before and immediately after the Merger, based on the historical net book value and net earnings of the Company as of and for the year ended December 31, 2019:

Plans for the Company after the Merger

Following the completion of the Merger, Parent will own 100% of the equity interest in the Surviving Company. The Buyer Group anticipates that the Company will continue to conduct its operations substantially as they are currently being conducted, except that the Company will cease to be a publicly traded company and will instead be a wholly owned subsidiary of Parent.

Following the completion of the Merger and the anticipated deregistration of the Shares, the Company will no longer be subject to the Exchange Act and the compliance and reporting requirements of NASDAQ and the related direct and indirect costs and expenses, and may experience positive effects on profitability as a result of the elimination of such costs and expenses.

Except as set forth in this proxy statement and transactions already under consideration by the Company, there are no present plans or proposals that relate to or would result in an extraordinary corporate transaction involving the Company's corporate structure, business, or management, such as a merger, reorganization, liquidation, relocation of any material operations, or sale or transfer of a material amount of assets. However, the Buyer Group will continue to evaluate the Company’s entire business and operations from time to time, and may propose or develop plans and proposals which they consider to be in the best interests of the Company and its equity holders, including the disposition or acquisition of material assets, alliances, joint ventures, and other forms of cooperation with third parties or other extraordinary transactions, including the possibility of relisting the Company or a substantial part of its business on another stock exchange. The Buyer Group expressly reserves the right to make any changes they deem appropriate to the operation of the Surviving Company in light of such evaluation and review as well as any future developments.

Alternatives to the Merger

The Board did not independently determine to initiate a process for the sale of the Company. The Special Committee was formed on June 20, 2020 in response to the receipt of the Proposal from the Buyer Group on June 20, 2020.

In light of (i) the Buyer Group’s beneficial ownership of approximately 11,129,105 ordinary shares, representing approximately 70.4% of the entire issued and outstanding Shares (as of the date of this proxy statement) and (ii) the fact that, since the announcement of the Proposed Transaction and prior to the entry into the Merger Agreement, no person other than the members of the Buyer Group has contacted the Company or the Special Committee expressing an interest in exploring an alternative transaction with the Company, the Special Committee determined that there was no viable alternative transaction to the proposed sale of the Company to the Buyer Group.

The Special Committee also took into account that, subject to compliance with the terms and conditions of the Merger Agreement, including, if applicable, the payment of a Company Termination Fee: (i) prior to the receipt of the Company Shareholder Approval, the Board (upon recommendation of the Special Committee) is permitted to effect a company Adverse Recommendation Change with respect to an alternative acquisition proposal that is not withdrawn and the Board (upon recommendation of the Special Committee) concludes in good faith constitutes a Superior Proposal and (ii) prior to the receipt of the Company Shareholder Approval, can terminate the Merger Agreement in order to enter into an agreement in connection with an alternative transaction proposed by a third party that is a Superior Proposal. In this regard, the Special Committee recognized that it has flexibility under the Merger Agreement to respond to an alternative transaction proposed by a third party that is or is reasonably likely to result in a Superior Proposal, including the ability to provide information to and engage in discussions and negotiations with such party (and, if such proposal is a Superior Proposal, recommend such proposal to the Company’s shareholders). 

In addition, the Special Committee also considered other alternatives available to the Company to enhance shareholder value, including remaining as a public company. However, the Special Committee did not believe such options to be equally or more favorable in enhancing shareholder value, after considering factors such as the forecasts of future financial performance prepared by the management, the offer premium implied by the Merger consideration, the possibility of additional costs and burden of regulatory compliance, the challenges to the Company’s efforts to increase shareholder value as an independent publicly traded company, and the requirement, as an SEC-reporting company, to disclose a considerable amount of business information to the public which will limit the Company’s ability to compete in the market.

Except as set forth above, no other alternatives were considered by the Special Committee.

Effects on the Company if the Merger Is Not Completed

If the Merger Agreement and the Plan of Merger are not authorized and approved by the Company’s shareholders or if the Merger is not completed for any other reason, shareholders will not receive any payment for their Shares in connection with the Merger. Instead, the Company will remain a publicly traded company and the Company will remain subject to SEC reporting obligations. Therefore, the Company’s shareholders will continue to be subject to similar risks and opportunities as they currently are with respect to their ownership of our Shares.

If the Merger is not completed, from time to time, the Board will evaluate and review, among other things, the business, operations, dividend policy and capitalization of the Company and make such changes as are deemed appropriate and continue to seek to identify strategic alternatives to enhance shareholder value. If the Merger Agreement is not authorized and approved by the Company’s shareholders or if the Merger is not completed for any other reason, there can be no assurance that any other transaction acceptable to the Company will be offered, or that the business, prospects or results of operations of the Company will not be adversely impacted.

Financing of the Merger

The Company and the Buyer Group estimate that the total amount of funds necessary to complete the Transactions is anticipated to be approximately $12.5 million as of the date of this proxy statement, assuming no exercise of dissenters’ rights by shareholders of the Company. In calculating this amount, the Company and the Buyer Group did not consider the value of the Excluded Shares, which will be cancelled for no consideration pursuant to the Merger Agreement. This amount includes the cash to be paid to the Unaffiliated Security Holders as well as certain related costs and expenses, in connection with the Transactions.

The Buyer Group expects to provide this amount through a combination of cash contributions contemplated by the Equity Commitment Letters, dated as of September 1, 2020, among Parent and each of the Sponsor Entity and the Founder Entity, and cash held by the Company and its subsidiaries, if any, through cash dividends to be declared and ultimately distributed to Parent (as at the Effective Time) by the Company through its subsidiaries, as applicable, in each case in compliance with the applicable laws of each applicable jurisdiction and the organizational documents of each relevant entities.

Under the terms and subject to the conditions of the Equity Commitment Letters, the Sponsor Entity and the Founder Entity will provide equity financing in an aggregate amount of up to $11.2 million to Parent to fund the payment of the Merger consideration. The Merger is not subject to any funding condition and the Buyer Group expects that the Merger consideration and costs and expenses in connection with the Transactions will be fully funded through (1) cash held by the Company and its subsidiaries, if any, through cash dividends to be declared and ultimately distributed to Parent (as at the Effective Time) by the Company through its subsidiaries, as applicable, in each case in compliance with the applicable laws of each applicable jurisdiction and the organizational documents of each relevant entities, and (2) equity financing in accordance with the documents relating to the Transactions.

Equity Financing

Pursuant to the Equity Commitment Letters, the Sponsor Entity and the Founder Entity have committed, subject to the terms and conditions therein, to purchase, or cause the purchase of, equity securities of Parent, at or prior to the Effective Time, in an aggregate cash amount of $11.2 million. The amount of Sponsor Entity’s equity commitment under its Equity Commitment Letter is $5.6 million, and the amount of Founder Entity’s equity commitment is $5.6 million (which can be reduced to the level sufficient to fully fund the aggregate Per Share Merger Consideration and pay related fees and expenses related to the Transactions). Such funds will be used by Parent solely for the purpose of financing the consummation of the Transactions, including the Merger.

The funding of each of the Sponsor Entity’s and Founder Entity’s equity commitment under its Equity Commitment Letter is conditioned upon the satisfaction, or waiver by Parent, of each of the conditions to Parent and Merger Sub’s obligations to effect the Merger set forth in the Merger Agreement as in effect from time to time (other than those conditions that by their nature are to be satisfied at the closing of the Merger).

The obligation of each of the Sponsor Entity or the Founder Entity to fund the equity commitment under its Equity Commitment Letter will terminate automatically and immediately upon the earliest to occur of (i) the Effective Time; provided that the Sponsor Entity or the Founder Entity, as appropriate, shall at or prior to the Effective Time have fully funded and paid to Parent their respective equity commitment and fully performed their other obligations thereunder, and (ii) the valid termination of the Merger Agreement in accordance with its terms.

The Company is an express third-party beneficiary of each of the Equity Commitment Letters to the extent of its right to seek specific performance of each of the equity commitments pursuant to the terms and subject to the conditions of the Equity Commitment Letters.

Limited Guarantee

Concurrently with the execution and delivery of the Merger Agreement, the Sponsor Entity and the Founder Entity executed and delivered the Limited Guarantees, each dated as of September 1, 2020, in favor of the Company. Under the Limited Guarantees, each of the Sponsor Entity and the Founder Entity has guaranteed in favor of the Company a portion of the payment obligations of Parent under the Merger Agreement for the termination fee that may become payable to the Company by Parent under certain circumstances as set forth in the Merger Agreement, and all reasonable and documented out-of-pocket costs and expenses incurred by the Guaranteed Party in connection with the enforcement of its rights under the Limited Guarantees. Each Limited Guarantee will terminate on the earliest to occur of (a) the closing of the Merger under the Merger Agreement, (b) in the case of a termination of the Merger Agreement in a circumstance which does not result in any obligation on the part of Parent and/or Merger Sub to make any payment or performance of any obligations and no obligation is payable at the time of such termination, upon such termination, (c) all amounts payable under the respective Limited Guarantees have been paid in full, and (d) in the case of a termination of the Merger Agreement in a circumstance which results in any obligation on the part of Parent and/or Merger Sub to make any payments or performance of any obligations or there is otherwise any outstanding obligation at the time of such termination, the date falling 120 days after such termination (unless, in this case of this sub-clause (d) only, the Company has presented or previously made a written claim by such date, in which case such Limited Guarantee shall terminate upon the date that such claim is finally resolved and payment in full of any amounts required to be paid in respect of such final resolution).

Support Agreement

Concurrently with the execution and delivery of the Merger Agreement, the Founder Family Members entered into the Support Agreement with Parent. Pursuant to the Support Agreement, among other things, (i) each Founder Family Member will vote, or cause to be voted, all of the Rollover Shares owned directly and indirectly by him or her in favor of the authorization and approval of the Merger Agreement, the Plan of Merger and the Transactions, including the Merger, and (ii) the Rollover Shares held by the Founder Family Members will, in connection with and at the Effective Time, be cancelled without any payment of, or the right to receive, the Per Share Merger Consideration. Each of the Founder Family Members will instead receive a number of newly issued ordinary shares of Parent equal to their respective number of the Rollover Shares immediately prior to the closing of the Merger.

A copy of the Support Agreement is attached as Annex C to this proxy statement and is incorporated herein by reference.

As of the date of this proxy statement, the Founder Family Members collectively beneficially own 11,083,334 Rollover Shares, which represent approximately 70.1% of the total issued and outstanding Shares.

Consortium Agreement

On or about June 20, 2020, Ms. Jiang, on behalf of herself and certain shareholders who are extended family members of Ms. Jiang and agreed to work with Mr. Huang, entered into the Consortium Agreement with Mr. Huang pursuant to which the parties intend to cooperate in good faith to acquire all of the outstanding Shares of the Company, other than the Rollover Shares, through a going-private transaction.

Remedies

The parties to the Merger Agreement may be entitled to specific performance of the terms of the Merger Agreement, including an injunction or injunctions to prevent breaches of the Merger Agreement, in addition to any other remedy at law or equity.

The Company’s right to obtain an injunction or injunctions, or other appropriate form of specific performance or equitable relief, in each case with respect to causing the equity financing from the Sponsor Entity and the Founder Entity to be funded or to effect the closing of the Merger, is, however, subject to (i) the satisfaction in full or waiver, if permissible, at or prior to the closing of the Merger, of each of the mutual conditions to the parties’ obligations to complete the Merger and the conditions to Parent’s and Merger Sub’s obligations to complete the Merger (other than those conditions that by their nature are to be satisfied at the closing of the Merger), and (ii) the Company having irrevocably confirmed by notice to Parent that all of the conditions to the Company’s obligations to complete the Merger have been satisfied or that it has waived any unsatisfied conditions.

While the parties may pursue both a grant of specific performance and monetary damages, none of them will be permitted or entitled to receive both a grant of specific performance that results in the closing of the Merger and monetary damages.

The maximum aggregate liabilities of Parent and Merger Sub, on the one hand, and the Company, on the other hand, for monetary damages in connection with the Merger Agreement are limited to a termination fee of $1,000,000 and $500,000, respectively.

Interests of Certain Persons in the Merger

In considering the recommendation of the Special Committee and the Board with respect to the Merger, you should be aware that each member of the Buyer Group has interests in the transaction that are different from, and/or in addition to, the interests of the Unaffiliated Security Holders generally. The Board and the Special Committee were aware of such interests and considered them, among other matters, in reaching their decisions to authorize and approve the Merger Agreement, the Plan of Merger and the consummation of the Transactions contemplated by the Merger Agreement, including the Merger, and recommend that our shareholders vote in favor of authorizing and approving the Merger Agreement, the Plan of Merger and the Transaction, including the Merger.

Interests of the Buyer Group

As a result of the Merger, Parent will own 100% of the equity interest in the Surviving Company and the Buyer Group will own, directly or indirectly, 100% of the equity interest in Parent immediately following the completion of the Merger. Prior to or concurrently with the execution and delivery of the Merger Agreement, the Founder Family Members entered into the Support Agreement with Parent. Pursuant to the Support Agreement, the Founder Family Members have agreed to (i) vote all of the Rollover Shares held directly or indirectly by them in favor of the approval and authorization of the Merger Agreement, the Plan of Merger and the Transactions; and (ii) receive no consideration for cancellation of the Rollover Shares in accordance with the Merger Agreement, and to subscribe for or otherwise receive newly issued shares of Parent at or immediately prior to the Effective Time. Immediately following the completion of the Merger, Rollover Shareholders and Ms. Huang will own 85% and 15% of the equity interest in Parent, respectively.

Because of Parent’s equity interest in the Surviving Company, each member of the Buyer Group will directly or indirectly enjoy the benefits from any future earnings and growth of the Company after the Merger which, if the Company is successfully managed, could exceed the value of their original investments in the Company. The Buyer Group will also directly bear the corresponding risks of any possible decreases in the future earnings, growth or value of the Company. The investment by the Buyer Group in the Surviving Company will be illiquid, with no public trading market for the Surviving Company’s shares and no certainty that an opportunity to sell its shares in the Surviving Company at an attractive price, or that dividends paid by the Surviving Company will be sufficient to recover its investment.

The Merger may also provide additional means to enhance shareholder value for the Buyer Group, including improved profitability due to the elimination of the expenses associated with public company reporting and compliance, increased flexibility and responsiveness in management of the business to achieve growth and respond to competition without the restrictions of short-term earnings comparisons, and additional means for making liquidity available to the Buyer Group, such as through dividends or other distributions.

Interests of the Company’s Executive Officers and Directors in the Merger

In considering the recommendations of the Board, the Company’s shareholders should be aware that certain of the Company’s directors and executive officers have interests in the transaction that are different from, and/or in addition to, the interests of the Company’s shareholders generally. These interests include, among others:

As of the date of this proxy statement, the directors and executive officers of the Company, other than Rollover Shareholders, as a group held an aggregate of 24,000 Shares.

The Special Committee and the Board were aware of these potential conflicts of interest and considered them, among other matters, in reaching their decisions and recommendations with respect to the Merger Agreement and related matters.

Treatment of Shares Issued to Officers and Directors (Other than Rollover Shares)

At the effective time of the Merger, each Share granted to the officers and directors (other than the Rollover Shares) outstanding immediately prior to the Effective Time will be cancelled in exchange for the right to receive a cash amount equal to US$2.35, without interest and net of any applicable withholding taxes.

The table below sets forth, as of the date of this proxy statement, for each of our directors and officers: