Rubber Leaf Inc

Concurrently with the RLSP filing mentioned above, Zhejiang Fengrong Construction Co., Ltd. (a.k.a Ningbo Rongsen) also filed a complaint against RLSP with the Ningbo Fenghua District People’s Court demanding RLSP to pay full construction costs, overdue penalty, attorney fees and other costs totaling US$7,163,361 (RMB50,844,103.89). The Ningbo Fenghua District People’s Court accepted the case filing. Ningbo Rongsen claimed that RLSP shall pay in accordance with the Settlement Payment Agreement and RLSP shall be responsible for the late payment.

On December 30, 2024, Ningbo Intermediate People’s Court made a final ruling concerning the above dispute, ordering RLSP to pay 1) US$6,956,830.46 (RMB49,378,191.44); and 2) late payment interests incurring from March 1, 2024 to the date of full payment at an interest rate of 1% per month; and 3) other expenses of US$4,226 (RMB30,000). RLSP has decided to initiate the re-trial proceeding and will file the application with Zhejiang High People’s Court of China within the statutory 6-month period upon the final ruling.

In May 2024, RLSP received a Notice of Legal Action from Taicang People’s Court of China, with RLSP being the co-defendants under a goods purchase contract dispute with case number (2024)SU0585 Minchu No. 3400. This lawsuit was initiated by Hecheng Special Rubber (Taicang) Co., Ltd. (“Taicang Hecheng”), claiming that RSLP and Yongliansen, acting as co-buyers, have purchased EPDM rubber from Taicang Hecheng since April 2023 but failed to pay purchase price for an aggregate amount of US$132,836.92 (RMB942,849.86). Taicang Hecheng therefore filed a complaint against RSLP and Yongliansen for the outstanding purchase price and the late payment fee.

In August 2024, Rubber Leaf Sealing Parts (Zhejiang) Co., Ltd. (“RLSP”) received a Notice of Legal Action from the Taicang People’s Court of China, where RLSP was named as a co-defendant alongside Shanghai Yongliansen Import & Export Co., Ltd. (“Yongliansen”) in a goods purchase contract dispute, under case number (2024) SU 0585 Minchu No. 10874. The lawsuit was initiated by Jiangsu Guanlian New Materials Technology Co., Ltd. (“Guanlian”), asserting that RLSP and Yongliansen, acting as co-buyers, had purchased goods from Guanlian since April 2023 but failed to settle the outstanding payment. The claimed amount totals RMB 823,695.12 (approximately US$116,013.40 based on exchange rates as of March 2025), representing the unpaid purchase price. Guanlian has demanded immediate payment of the overdue amount of RMB 823,695.12, along with a late payment penalty calculated at a rate of 0.3% per day on the principal amount, starting from July 4, 2023, until the date of actual payment. Additionally, Guanlian seeks to hold RLSP jointly and severally liable for the debt and requests that both defendants bear the full litigation costs.

In August 2024, Wuhan Economic and Technological Development Zone People’s Court accepted a case initiated by eGT against RLSP for refunding of part of the prepayment at US$1,063,316 (RMB7,547,203.80). RLSP argued eGT and RLSP started a business collaboration from September 2019 and signed around 29 advance payment agreements. The contract payment model was changed to a post-payment structure in June 2022. Since then, RLSP has continued to supply goods, which have not been fully settled. RLSP seeks full settlement of all outstanding amount receivable, including such outstanding amount for the transactions after June 2022, while eGT insisted that the prepayment shall not cover such purchases after June 2022. On November 4, 2024, Wuhan Economic and Technological Development Zone People’s Court ruled that RLSP shall refund eGT US$1,045,196 (RMB7,418,594.09) plus late payment interest incurring from August 2, 2024 at the rate of 3.35% per annum and RLSP shall claim any outstanding amount receivable through a separate lawsuit. An appeal has been filed by RLSP and the case is currently under review by Wuhan Intermediate People’s Court of China.

After the disposition of RLSP, and in accordance with the Share Purchase Agreement with Yongliansen, from and after the Closing, the following matters relating to the RLSP shall be solely borne by the Yongliansen and RLSP shall have no recourse against the Company: (i) all existing debts and obligations of the RLSP; (ii) all future debts, losses and obligations (including contingent matters); (iii) all ongoing, pending and potential future litigation, arbitration, administrative penalties or other disputes relating to RLSP.

• Our certificates, permits and license are subject to governmental regulation and renewal, and the failure to obtain renewal would cause all or part of our operations to be suspended and may have a material adverse effect on our financial condition.
• Risk Related to Doing Business in Hong Kong
• While we believe that we and our subsidiaries are currently not required to obtain permissions or approvals from Mainland China authorities for our business operations and/or the listing and offering of our securities, and it is very unlikely that we or our subsidiaries will be required to do so in the future, we cannot assure you that we or our subsidiaries will be able to obtain all such permissions or approvals if they are nevertheless required.
• Compliance with Hong Kong’s Personal Data (Privacy) Ordinance and any such other existing or future data privacy related laws, regulations and governmental orders may entail significant expenses and could materially affect our business.
• If the PRC government chooses to extend the oversight and control over offerings that are conducted overseas and/or foreign investment in Mainland China-based issuers to Hong Kong-based issuers, such action may significantly limit or completely hinder our ability to offer or continue to offer Common Stock to investors and cause the value of our Common Stock to significantly decline or be worthless.
• The enforcement of laws and rules and regulations in the PRC can change quickly with little advance notice. Additionally, the PRC laws and regulations and the enforcement of such that apply or are to be applied to Hong Kong can change quickly with little or no advance notice. As a result, the Hong Kong legal system embodies uncertainties which could limit the availability of legal protections, which could result in a material change in RLHK’s operations and/or the value of the securities we are offering.
• The enactment of the law of the PRC on Safeguarding National Security in the Hong Kong Special Administrative Region (the “Hong Kong National Security Law”) could impact our Hong Kong Subsidiary, which represent a substantial part of our business.
• There are political risks associated with conducting business in Hong Kong.
• Because our business is conducted in Hong Kong dollars and the price of our Common Stock is quoted in United States dollars, changes in currency conversion rates may affect the value of your investments.
• Substantial part of our operations is concentrated in Hong Kong, and the business performance of RLHK is highly influenced by the conditions of economy and financial market in Hong Kong. Unfavorable market and economic conditions and the material deterioration of the political and regulatory environment in Hong Kong, Mainland China, and elsewhere in the world could materially and adversely affect our business, financial condition, prospects, and results of operations.
• Our international operations involve special risks.
• Failure to comply with laws and regulations applicable to our business could subject us and RLHK to fines and penalties and could also cause us to lose customers or otherwise harm our business.
• Changes in international trade policies, trade disputes, barriers to trade, or the emergence of a trade war may dampen growth in Hong Kong, China and other markets where the majority of our clients reside.
• Recent joint statement by the SEC and the PCAOB, proposed rule changes submitted by Nasdaq, and the newly enacted Holding Foreign Companies Accountable Act all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to the trading of our common stock on U.S. stock exchanges, including the possibility that our securities can be delisted if the PCAOB cannot inspect or fully investigate our auditor.
• Risks Relating to the Company’s Securities and this Offering
• Investors in this offering will experience immediate and substantial dilution in net tangible book value.
• We have identified material weaknesses in our internal control over financial reporting. Failure to maintain effective internal controls could cause our investors to lose confidence in us and adversely affect the market price of our common stock. If our internal controls are not effective, we may not be able to accurately report our financial results or prevent fraud.
• Our management will have broad discretion over the use of any net proceeds from this offering and you may not agree with how we use the proceeds, and the proceeds may not be invested successfully.
• We have a large number of authorized but unissued shares of our common stock which will dilute your ownership position when issued.
• Sales of our currently issued and outstanding shares of common stock and shares of common stock underlying warrants may become freely tradable pursuant to Rule 144 and may dilute the market for your shares and have a depressive effect on the price of the shares of our common stock.
• An active, liquid, and orderly market for our common stock may not develop.
• Shares of our common stock may continue to be subject to illiquidity because our shares may continue to be thinly traded and may never become eligible for trading on a national securities exchange.
• We may issue preferred stock in different series with terms that could dilute the voting power or reduce the value of our common stock.
• The trading prices of our common stock could be volatile and could decline following this offering at a time when you want to sell your holdings.
• Future sales or perceived sales of our common stock could depress the trading prices of our common stock.
• We currently do not intend to declare dividends on our common stock in the foreseeable future and, as a result, your returns on your investment may depend solely on the appreciation of our common stock.
• Because we initially became a reporting company under the Exchange Act by means other than a traditional underwritten initial public offering, we may not be able to attract the attention of research analysts at major brokerage firms.
• The market price of our securities may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares of common stock at or above the public offering price.
• If listed, we may not be able to satisfy the listing requirements of Nasdaq to maintain a listing of our common stock.
• We are an “emerging growth company” and a “smaller reporting company” under the JOBS Act, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies will make our common stock less attractive to investors and make it more difficult to raise capital as and when we need it.
• The elimination of personal liability against our directors and officers under Nevada law and the existence of indemnification rights held by our directors, officers and employees may result in substantial expenses.
• Existing stockholders may sell significant quantities of common stock.