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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

For the transition period from             to            

Commission file number: 001-42098

JIADE LIMITED

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English)

Cayman Islands

(Jurisdiction of incorporation or organization)

18/F, Block D, Huirong Plaza, No. 88, Section 3, Jinhua Road

Jinjiang District, Chengdu City, Sichuan Province

The People’s Republic of China, 610000

(Address of principal executive offices)

Yuan Li, Co-Chief Executive Officer

Telephone: (+86) 400-028-0776

Email: kevin@sckbkj.com

At the address of the Company set forth above

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

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Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 24,535,471 ordinary shares.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐   No ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes ☐   No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

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If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

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TABLE OF CONTENTS

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INTRODUCTION

In this annual report on Form 20-F (“Annual Report”), unless the context otherwise requires, references to:

This Annual Report includes our audited consolidated financial statements for the years ended December 31, 2022, 2023, and 2024. In this Annual Report, we refer to assets, obligations, commitments, and liabilities in our consolidated financial statements in United States dollars. These dollar references are based on the exchange rate of RMB to United States dollars, determined as of a specific date or for a specific period. Changes in the exchange rate will affect the amount of our obligations and the value of our assets in terms of United States dollars which may result in an increase or decrease in the amount of our obligations and the value of our assets.

This Annual Report contains translations of RMB amounts into U.S. dollars at specified rates. Unless otherwise stated, the following exchange rates are used in this Annual Report:

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Part I

Item 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not Applicable.

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Item 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable.

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Item 3. KEY INFORMATION

Not applicable.

Not applicable.

Risks Related to Our Business and Industry

Our PRC subsidiaries may be unable to maintain or raise the quality of their software platform and auxiliary solutions.

Our PRC subsidiaries provide one-stop comprehensive education supporting services to adult education institutions, through a wide range of software platform and auxiliary solutions. As of the date of this Annual Report, our PRC subsidiaries’ services are primarily offered through their self-developed Kebiao Technology Educational Administration Platform (the “KB Platform”), which facilitates streamlined information and data management throughout the teaching cycle of adult education services. Our PRC subsidiaries also expect to promote and utilize their other self-developed software systems among their current and future customers, along with the KB Platform. Our PRC subsidiaries’ ability to retain existing customers and attract new customers depends on the consistency and quality of their software platform and auxiliary solutions. If our PRC subsidiaries are unable to maintain or raise the quality of their software platform and auxiliary offerings, hire or train qualified technical support personnel, gather or allocate sufficient technical support resources, or respond quickly to accommodate the increases in demand for product functionality, customer services, and technical support, it could adversely affect our business, results of operations, and financial condition.

Our PRC subsidiaries may be unable to adequately respond to students’ expectations and help students achieve their learning objectives.

Our PRC subsidiaries generate revenue from providing one-stop comprehensive education supporting services to adult education institutions, and they receive service fees primarily based on the number of students serviced and the types of services they provide. Our PRC subsidiaries are responsible for maintaining the software systems provided by them and ensuring their reliability and functionality, including timely addressing any technical issues, raised by customers or their students, related to various aspects, such as live streaming, video replay, and document downloads. As such, the success of our PRC subsidiaries’ business largely depends on their ability to respond to students’ expectations and help students achieve their learning objectives. The adult education supporting service industry is characterized by rapid changes in the students’ requirements and preferences, frequent introductions of new technologies, and the emergence of new standards and practices for standardized tests. Our PRC subsidiaries may be unable to (i) respond to changes in the students’ requirements and preferences in a cost-effective and timely way; (ii) identify, develop, or acquire leading technologies useful to their business; or (iii) adapt to emerging standards and practices for standardized tests. If our PRC subsidiaries fail to adequately respond to students’ expectations or help students achieve their learning objectives, it may lead to reduced student engagement or increased challenges in attracting prospective customers, which in turn may materially and adversely affect our business, financial condition, and results of operations.

Our business, financial condition, and results of operations could be materially and adversely affected if our PRC subsidiaries face interruptions associated with their technology platforms.

The successful development and maintenance of our PRC subsidiaries’ systems, software, applications, and other platforms are crucial to the attractiveness of our PRC subsidiaries’ services to their customers. In order to achieve our PRC subsidiaries’ strategic objectives and remain competitive, our PRC subsidiaries must continue to develop and enhance their technology. However, our PRC subsidiaries’ efforts may prove to be unsuccessful. Our PRC subsidiaries’ software, systems, platforms, or applications may become inaccessible in the event of system errors, significant traffic increases, power outages, disruption or failure in the national backbone network, or damage from fire, flood, power loss, or telecommunications failure. In addition, our PRC subsidiaries’ technology platforms upon which the management systems and online programs operate, and our PRC subsidiaries’ other databases, products, systems, and source codes, could contain undetected errors or “bugs” that could adversely affect their performance. Our PRC subsidiaries’ computer networks may also be vulnerable to unauthorized access, hacking, computer viruses, and other security breaches. A user who circumvents our PRC subsidiaries’ security measures could misappropriate proprietary information or cause interruptions or malfunctions in operations. Moreover, our PRC subsidiaries may be required to expend significant resources to protect against the threat of security breaches or to alleviate problems caused by these breaches. We have taken several measures to assess, identify, and manage material risks from cybersecurity threats. Specifically, the information technology (“IT”) department of Kebiao Technology, one of our PRC subsidiaries, is responsible for the daily operation and maintenance of network equipment and infrastructure. The IT department identifies and responds to risk incidents based on the technical standards and workflows established by the department. Additionally, if the IT department cannot make independent decisions regarding a risk incident, it will report the incident to our board of directors for discussion and resolution. Our board of directors, which currently consists of Yuan Li, Xiaohui Li, Shuang Qiu, Shaoping Lu, and Shang Wu, is responsible for reviewing reports from personnel with reporting obligations, such as the head of the IT department, regarding any significant risks impacting the software operation and data security of our PRC subsidiaries that they cannot independently assess or manage. See “Item 6. Directors, Senior Management and Employees.” Our board of directors is also responsible for inquiring about the status and progress of significant matters related to such cybersecurity threats, and consulting with relevant departments and personnel in order to conduct timely, accurate, and thorough analyses, discussions, and actions pertaining to such cybersecurity threats, if any. If there are risks that may threaten national security, public interests, or the students’ lives and property, the board of directors proactively report to relevant authorities and cooperate with them in addressing the related risks. Both the IT department and the general administrative department of Kebiao Technology are responsible for overseeing, managing, and documenting data acquired during routine software operations. While the IT department is in charge of maintaining and managing basic data logs and reports related to the daily operation of the software network system, as well as the storage of personal information of students, the general administrative department is responsible for overall record management, particularly concerning the storage and management of documents related to corporate strategic development, production and operation, corporate management, and company secrets, if applicable.

As of the date of this Annual Report, our PRC subsidiaries’ technology has not encountered any material error or technical issue that could have adversely affected or disrupted our PRC subsidiaries’ operations. However, any network interruption or inadequacy in the future that causes interruptions in the availability of our PRC subsidiaries’ software, systems, applications, or other platforms could reduce customer satisfaction. If sustained or repeated, these performance issues could reduce the attractiveness of our PRC subsidiaries’ service offerings to their customers, which in turn may materially and adversely affect our business, financial condition, and results of operations.

Our PRC subsidiaries may face disruptions in technology infrastructure.

The business of our PRC subsidiaries relies on the uninterrupted functioning of their technology infrastructure. For example, our PRC subsidiaries maintain a server in Beijing, which form the backbone of their operations, facilitating the storage, processing, and delivery of data and information. Any disruption or failure of the server could result in a significant impact on the availability and performance of their software platform and service offerings, potentially affecting their reputation and financial performance.

The implementation, support, development, and upgrades of our PRC subsidiaries’ technology infrastructure may incur significant costs. In addition, such technology infrastructure is potentially vulnerable to damages or interruptions as a result of a variety of events beyond control, such as natural disasters, power or telecommunications failures, air quality issues, environmental conditions, computer viruses, malicious cyberattacks, criminal acts, and similar events. See “— Our business, financial condition, and results of operations could be materially and adversely affected if our PRC subsidiaries face interruptions associated with their technology platforms.” These and other events may lead to the disruption of our PRC subsidiaries’ technology infrastructure, the interruption of online course delivery, and the unavailability of our PRC subsidiaries’ tools and services. Any material interruption or failure in the technology infrastructure could cause disruptions in business operations and may require a significant investment to update, remediate or replace with alternatives, which may have a material adverse effect on our business, financial condition, and results of operations.

Our PRC subsidiaries may fail to protect confidential information of their users.

Our PRC subsidiaries’ business involves the collection, storage, processing, and transmission of significant amounts of data. Our PRC subsidiaries’ encryption of data and other protective measures may not prevent unauthorized access or use of sensitive data. Any failure or perceived failure by our PRC subsidiaries to prevent information security breaches or to comply with privacy policies or privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other user data, could reduce customer satisfaction, harm our PRC subsidiaries’ reputation, expose our PRC subsidiaries to legal claims and liabilities, increase their risk of regulatory scrutiny, and result in the imposition of material penalties and fines under applicable laws or regulations.

Our PRC subsidiaries may fail to comply with the regulations that govern their business operations.

Our PRC subsidiaries are required under PRC laws and regulations to obtain and maintain permits and licenses to conduct their business, including business licenses. Our PRC subsidiaries are also subject to certain supervision from the PRC government authorities, such as the SAMR. The PRC regulatory authorities have broad powers to adopt regulations and other requirements affecting or restricting our PRC subsidiaries’ operations. Moreover, these regulatory authorities possess significant powers to enforce applicable regulatory requirements in case of non-compliance by our PRC subsidiaries, including the imposition of fines, sanctions, or the revocation of licenses or permits to operate our PRC subsidiaries’ business. As of the date of this Annual Report, our PRC subsidiaries have maintained all the permits, approval, licenses, or other qualifications required for their operations and have not been subject to any review, investigation, fine, or penalty from any PRC regulatory authority. However, there can be no assurance that our PRC subsidiaries will not face administrative fines or penalties concerning their operations in the future, which, if imposed, may materially and adversely affect our business, financial condition, and results of operations.

Our PRC subsidiaries face competition in the market for adult education supporting services, and we expect competition from existing competitors and other companies that may enter the market or introduce new solutions in the future, which could result in pricing pressures and a decline in both our market share and revenue.

The adult education supporting service industry in the PRC is competitive and rapidly evolving, with new companies increasingly joining the competition in recent years. We compete with other companies that offer software and technical support services to adult education institutions. Competition may result in pricing pressures, declining revenue and profitability, or a loss of market share. Our PRC subsidiaries face competitors who are constantly seeking appealing ideas and introducing competitive products and services. Many of the existing competitors may have strong competitive advantages, including longer operating histories, larger and broader customer bases, lower operating costs, more established relationships with a broader set of suppliers and customers, greater brand recognition, and greater financial, research and development, marketing, distribution, and other resources than our PRC subsidiaries do. In addition, new companies may enter the market with innovative business models or more appealing service offerings, and disrupt the competitive landscape, making it even more challenging for us to maintain our market position. We may lose customers if our PRC subsidiaries fail to compete successfully, which could adversely affect our financial performance and business prospects. We cannot guarantee that our PRC subsidiaries’ strategies will remain competitive or successful in the future. Increasing competition may result in pricing pressures and loss of our PRC subsidiaries’ market share, either of which could have a material adverse effect on our financial condition and results of operation.

Our business, financial condition, and results of operations could be materially and adversely affected if our PRC subsidiaries are unable to enhance existing software platform and auxiliary solutions or develop new systems or platforms in order to keep pace with rapid changes in technology.

Since April 2020, our PRC subsidiaries have successfully developed and acquired software copyrights for 36 software systems or platforms, including the KB Platform, the Enrollment Information Automation Management System, the Backend Management System for Academic Administration, and the Education Service Management System. However, the adult education supporting service industry is subject to rapid technological changes, evolving industry standards, and new product and service introductions, which may render our PRC subsidiaries’ technologies insufficient or obsolete. There can be no assurance that our PRC subsidiaries will be able to anticipate technological developments, develop new enhancements for existing software platforms and services, improve existing functionality to meet rapidly evolving demands, or offer new software, systems, applications, and related services that garner market acceptance. New software products and services require significant upfront investments and there can be no assurance that our PRC subsidiaries will be able to recover such investments in new products and services. If our PRC subsidiaries fail to adapt to the rapidly changing technologies or develop suitable products and services to meet the evolving requirements, it may materially and adversely affect our business, financial condition, and results of operations.

Our PRC subsidiaries’ business may rely on a few customers that account for more than 10% of their total revenue, and interruption in their operations may have an adverse effect on our business, financial condition, and results of operations.

During the years ended December 31, 2022, 2023, and 2024, our PRC subsidiaries derived most of their revenue from a few adult education institution customers. Specifically, for the year ended December 31, 2022, the top three customers of our PRC subsidiaries, Chengdu Jinjiang New Vision Training School, New Vision Huoda (Chengdu) Educational Technology Co., Ltd., and Shenzhen Jiawen Management Consulting Co., Ltd., accounted for 50%, 19%, and 8% of our total revenue, respectively. For the year ended December 31, 2023, the top three customers of our PRC subsidiaries, Chengdu Jinjiang New Vision Training School, New Vision Huoda (Chengdu) Educational Technology Co., Ltd., and Sichuan Action Education & Technology Co., Ltd., accounted for 40%, 29%, and 18% of our total revenue, respectively. For the year ended December 31, 2024, the top three customers of our PRC subsidiaries, Chengdu Jinjiang New Vision Training School, New Vision Huoda (Chengdu) Educational Technology Co., Ltd., and Sichuan Cultural Investment Digital Culture Industry Co., Ltd accounted for 34%, 30%, and 21% of our total revenue, respectively. Pursuant to a typical service agreement entered into between Kebiao Technology, one of our PRC subsidiaries, and a major customer, Kebiao Technology is required to (i) provide a range of auxiliary solutions to the customer’s students, including enrollment, question and answer (“Q&A”) support, and tutoring services related to their courses and studies, (ii) timely respond to any question and request raised by the customer’s students regarding the enrollment, courses, and examinations; (iii) maintain the software platforms provided by Kebiao Technology and ensure their reliability and functionality, including timely responding to various technical issues raised by the customer’s students regarding live streaming, video replay, and document downloads; and (iv) keep and handle with care all information, data, and materials provided by the customer, and are prohibited from using such information outside the scope of the service agreement or disclose it to any third party. Pursuant to the service agreement, the customer is required to pay service fees, within three months after settlement confirmation by both parties, based on the actual number of students served and the type of services provided. The service agreement typically has a term of one year and may be terminated by Kebiao Technology if the customer fails to make payments or a bankruptcy, liquidation, or other similar procedure occurs with respect to the customer, or by the customer if Kebiao Technology fails to the provide the services specified by the agreement and does not rectify the issues after receiving written notice from the customer, or fails to maintain the confidentiality of the customer’s information. See “Item 4. Information of the Company — B. Business Overview — Customers.”

We believe that, in the foreseeable future, our PRC subsidiaries will continue to derive a significant portion of their revenue from a limited number of major customers. If one or more of such major customers fail to make payments, do not honor their contractual commitments, or experience a downturn in their business, our revenue and results of operations may be materially and adversely affected. Our PRC subsidiaries may lose a major customer due to a variety of factors, including their capacity to deliver reliable and stable software platforms, the quality of their customer service, as well as their competitiveness in pricing strategies. Even though our PRC subsidiaries have a strong record of performance, we cannot guarantee that they will continue to maintain their business cooperation with these major customers at the same level, or at all. If any significant customer terminates its relationship with our PRC subsidiaries, we cannot assure you that our PRC subsidiaries will be able to secure an alternative arrangement with a comparable customer in a timely manner, or at all. Losing one or more of these major customers could adversely affect our revenue and profitability.

Our PRC subsidiaries derive a majority of revenue from a limited number of cities and any event negatively affecting the adult education market in these cities could have a material adverse effect on our business and results of operations.

For the years ended December 31, 2022, 2023, and 2024, our PRC subsidiaries derived approximately 91.7%, 100.0%, and 100.0% of the total revenue from Sichuan Province, respectively, while 90.7%, 98.1%, and 98.2% was derived specifically from Chengdu City, respectively. These cities are expected to continue to be important sources of our PRC subsidiaries’ revenue. If any of these cities experience any event that would negatively affect the adult education market, including (i) the occurrence of a significant economic downturn, global recession, natural disaster, or widespread outbreak of contagious diseases, (ii) the implementation of regulations by local governments that affect the adult education market and impose additional restrictions on our PRC subsidiaries, and (iii) intensified competition due to increasing numbers of companies offering similar software and technology services in these cities, our business and results of operations may be materially and adversely affected.

If our PRC subsidiaries fail to manage their growth or execute their strategies and future plans effectively, they may not be able to take advantage of market opportunities or meet the demand of their customers.

Our PRC subsidiaries’ business has grown substantially since their inception, and they expect to continue to grow in terms of the scale and diversity of operations. For example, our PRC subsidiaries endeavor to further diversify their product and service offerings to include production safety training and related examination services, by developing software for production safety training and relevant exams, providing training and examination support services, and venturing into the vocational skills training and examination market. These endeavors increase the complexity of their operations and may cause strain on their managerial, operational, and financial resources. Our PRC subsidiaries must continue to hire, train, and effectively manage new employees. In the event that their new hires fail to perform as expected, or if our PRC subsidiaries fail to hire, train, manage, and integrate new employees, their business, financial condition, and results of operations may be materially adversely affected. Their expansion will also require them to maintain consistency in the quality of their existing adult education supporting services so that their reputation is not damaged by any deviations in quality, whether actual or perceived.

Our PRC subsidiaries’ future results of operations also depend largely on their ability to execute their future plans successfully. In particular, their continued growth may subject them to the following additional challenges and constraints:

All of these endeavors involve risks and will require significant management, financial, and human resources. We cannot assure you that our PRC subsidiaries will be able to effectively manage their growth or implement their strategies successfully. There is no assurance that the investment to be made by our PRC subsidiaries as contemplated under their future plans will be successful and generate the expected return. If our PRC subsidiaries are not able to manage their growth or execute their strategies effectively, or at all, their business, results of operations, and prospects may be materially and adversely affected.

Our PRC subsidiaries’ brand image and reputations may be adversely impacted by the misuse of our PRC subsidiaries’ platforms.

Our PRC subsidiaries’ current or future service offering may include software platforms, systems, and applications that facilitate communication between the teaching staff and students. Because our PRC subsidiaries do not have full control over how the teaching staff and students will use these platforms, systems, and applications to communicate, our PRC subsidiaries’ platforms, systems, and applications may from time to time be misused to engage in immoral, disrespectful, fraudulent or illegal activities, such as intentionally failing to comply with government regulations and improper disclosure of sensitive or classified information. Although our PRC subsidiaries are not aware of any material incidents on their platforms and such incidents have not been covered by media reports or Internet forums, any such exposure or coverage could generate negative publicity about our PRC subsidiaries’ brands and platforms. There is no guarantee that the control procedures implemented, or to be implemented, by our PRC subsidiaries will prove sufficient to prevent all such content or activities from being posted or carried out. Moreover, because our PRC subsidiaries have limited control over the real-time and offline behavior of the students and teaching staff, to the extent such behavior is associated with our PRC subsidiaries’ software platforms, systems, or applications, our PRC subsidiaries’ ability to protect their brand image and reputation may be limited. Our PRC subsidiaries’ business and the public perception of their brands may be materially and adversely affected by the misuse of their platforms. In addition, in the event that any students or teaching staff of the customers of our PRC subsidiaries experience or claim to have experienced financial, emotional, or other types of harm resulting from commutation or interaction initiated on our PRC subsidiaries’ platforms, our PRC subsidiaries may face civil lawsuits or other liabilities initiated by the affected student or teaching staff, or governmental or regulatory actions against our PRC subsidiaries.

Our PRC subsidiaries may be the subject of detrimental conducts by third parties, which could have a negative impact on their reputation.

Our PRC subsidiaries may be the target of anti-competitive, harassing, or other detrimental conduct by third parties including their competitors. Such conduct may include complaints, anonymous or otherwise, to regulatory agencies regarding our PRC subsidiaries’ operations, accounting, business relationships, business prospects, and business ethics. Additionally, anyone may post false allegations online against our PRC subsidiaries on an anonymous basis. Our PRC subsidiaries may be subject to government or regulatory investigation as a result of such third-party conduct and may be required to expend significant time and incur substantial costs to address such third-party conduct, and there can be no assurance that each of the allegations will be refuted conclusively within a reasonable period of time, or at all. Our business may also be materially negatively affected as a result of such public dissemination of anonymous allegations or malicious statements.

Any negative publicity about our PRC subsidiaries, their services, and their management may materially and adversely affect their reputation and business.

Our PRC subsidiaries may from time to time receive negative publicity about them, or their management or business. Certain of such negative publicity may be the result of malicious harassment or unfair competition acts by third parties. Our PRC subsidiaries may even be subject to government or regulatory investigation as a result of such third-party conduct and may be required to spend significant time and incur substantial costs to defend themselves against such third-party conduct, and our PRC subsidiaries may not be able to conclusively refute each of the allegations within a reasonable period of time, or at all. Harm to their reputation can also arise for other reasons, including misconduct of their employees or any third-party business partners with whom they conduct business. Our PRC subsidiaries may be materially and adversely affected as a result of any negative publicity, which in turn may cause them to lose market share, marketing customers, industry partners, and other business partnerships.

Our PRC subsidiaries may fail to protect their intellectual property.

Our PRC subsidiaries consider their copyrights, trademarks, trade names, domain names, and other intellectual property rights invaluable to their ability to continue to develop and enhance their brand recognition. In particular, as of the date of this Annual Report, our PRC subsidiaries have already acquired 36 software copyrights and 8 copyright registration certificates since their incorporation in April 2020. See “Item 4. Information of the Company — B. Business Overview — Technology.” Our PRC subsidiaries rely on a combination of copyright, trademark, and trade secret laws to protect their intellectual property rights. Nevertheless, the measures our PRC subsidiaries take to protect their intellectual property rights may be inadequate to prevent improper or unauthorized uses. The improper or unauthorized uses of our PRC subsidiaries’ intellectual property rights may decrease the brand value and cause a decline in sales. Our PRC subsidiaries could, even if by omission, fail to renew an intellectual property right in a timely manner, or third parties may challenge, and succeed in obtaining the invalidation of, any existing or future intellectual property issued to, or licensed to our PRC subsidiaries. Monitoring and preventing the improper or unauthorized uses of intellectual property rights requires significant effort, and could result in substantial costs and diversion of our PRC subsidiaries’ management’s attention and resources. There can be no assurance that the steps that have been, or will be, taken to protect intellectual property rights will be sufficient or that third parties will not infringe upon or misappropriate our PRC subsidiaries’ proprietary rights. Failure to adequately protect our PRC subsidiaries’ intellectual property could materially and adversely affect our business, financial condition, and results of operations.

Litigation may also be necessary to defend against claims of infringement or invalidity by others as our PRC subsidiaries actively pursue innovation and enhance the value of their intellectual property portfolio. An adverse outcome in litigation or any similar proceedings could adversely affect our business, financial condition, and results of operation. In addition, the diversion of management’s attention and resources while addressing any intellectual property litigation claim, regardless of whether the claim is valid, could significantly affect our business, financial condition, and results of operation.

Our PRC subsidiaries may be subject to intellectual property infringement disputes from time to time based on their alleged use of third-party intellectual property.

There can be no assurance that the software, technology systems, platforms, applications or other intellectual property developed or utilized by our PRC subsidiaries do not or will not infringe upon valid intellectual property rights held by third parties. Our PRC subsidiaries may encounter disputes from time to time over rights and obligations concerning intellectual property rights held by third parties, and our PRC subsidiaries may not prevail in those disputes. There could also be existing intellectual property of which we are not aware that our products and services may inadvertently infringe. There can be no assurance that our PRC subsidiaries’ personnel or other affiliates will not use third-party copyrighted materials or intellectual property without proper authorization, on our PRC subsidiaries’ websites, platforms, or applications, and users may also post unauthorized third-party content on our PRC subsidiaries’ platforms, systems, or applications without authorization. As a result, our PRC subsidiaries may incur liability for unauthorized duplication or distribution of the materials posted. As of the date of this Annual Report, our PRC subsidiaries have not been involved in claims against them alleging infringement of third-party intellectual property rights. However, our PRC subsidiaries may be subject to such claims in the future. Any such intellectual property infringement claim could result in costly litigation, harm our PRC subsidiaries’ reputation, divert their management attention and resources, and subject them to substantial financial harm. As a result, our business and financial performance may be materially and adversely affected.

Our PRC subsidiaries may face increased labor costs, inability to retain suitable employees, or unfavorable labor relations.

Our PRC subsidiaries devote significant resources to recruiting and training employees. Their ability to manage and control labor costs is subject to numerous external factors beyond control, including market pressures with respect to prevailing wage rates, unemployment levels, health and insurance expenses, as well as the impact of wage and employee benefits legislation and regulations. Any changes in these external factors could significantly increase labor costs, which would reduce our PRC subsidiaries’ net income and cash flows.

Our PRC subsidiaries aim to motivate and retain qualified employees. If the employees are unsatisfied with what our PRC subsidiaries offer, such as remuneration packages or working environment, our PRC subsidiaries may not be able to retain qualified employees or replace them with personnel of appropriate skill sets and personal attributes at comparable costs. If such an event, our PRC subsidiaries may need to expend additional resources to retain or replace suitable employees.

As of the date of this Annual Report, our PRC subsidiaries have not been subject to any employment- related claims. However, from time to time, our PRC subsidiaries may be subject to various employment- related claims, such as individual actions or government enforcement actions relating to wage-hour, labor standards, or healthcare and benefits issues. Such actions, if brought against our PRC subsidiaries and successful in whole or in part, may materially and adversely affect our business, financial condition, and results of operations.

If we fail to attract, recruit, or retain our key personnel, including our executive officers, senior management, and key employees, our ongoing operations and growth could be affected.

Our success depends, to a large extent, on the efforts of our key personnel, including Yuan Li, our founder and Chief Executive Officer, our other executive officers, senior management, and other key employees who have valuable experience, knowledge, and connections in the adult education supporting service industry. There is no assurance that these key personnel will not voluntarily terminate their employment with us. We do not carry, and do not intend to procure, key person insurance on any of our senior management team. The loss of any of our key personnel could be detrimental to our ongoing operations.

Our success will also depend on our ability to attract and retain qualified personnel to manage our existing operations as well as our future growth. We may not be able to successfully attract, recruit, or retain key personnel, and this could adversely impact our financial condition, operating results, and business prospects.

Our PRC subsidiaries face risks related to natural disasters, health epidemics, and other outbreaks, which could significantly disrupt their operations.

Our PRC subsidiaries’ business may be negatively impacted by the fear of, exposure to, or actual effects of, a disease outbreak, epidemic, pandemic, or similar widespread public health concern, including travel restrictions or recommendations or mandates from governmental authorities as a result of the COVID-19 pandemic, the threat of the virus, or the emergence of any variants. These impacts include, but are not limited to, (i) significant reductions in demand or significant volatility in demand for our PRC subsidiaries’ one- stop comprehensive education supporting services, (ii) failure of third parties on which our PRC subsidiaries rely, which may include suppliers and external business partners, (iii) periods of disruption that limit the ability to access the financial markets or which increase the cost of liquidity, and (iv) significant changes in the political conditions in regions in which our PRC subsidiaries operate.

During the years ended December 31, 2021 and 2022, our PRC subsidiaries’ business was moderately impacted by the COVID-19 pandemic. For example, the COVID-19 pandemic caused an economic downturn in the PRC, prompting adult education institutions to curtail their budgets for information technology related services, including those from our PRC subsidiaries. Furthermore, the preventive measures implemented by the PRC government discouraged many prospective students from enrolling in adult education institutions, due to the risk of not being able to attend classes. The reduced demand for adult education services, in turn, adversely affect our PRC subsidiaries’ business, as their service fees depend largely on the number of students served. Additionally, the impact of the COVID-19 pandemic on logistics and supply chains also posed challenges for the daily operations of our PRC subsidiaries. Overall, the combination of budgetary constraints among customers, reduced demand for adult education training and examinations, and disrupted logistics, moderately affected our PRC subsidiaries’ business, financial condition, and results of operations. As a result of the combined effect of the foregoing, the demand for our PRC subsidiaries’ auxiliary services, such as in-person courses, decreased, resulting in a decrease in the average service price per student from RMB811 for the year ended December 31, 2021 to RMB364 for the year ended December 31, 2022. Nevertheless, the COVID-19 pandemic had a less significant impact on the overall number of students served, which is less dependent on offline activities. The number of students served increased from 6,200 for the year ended December 31, 2021 to 28,122 for the year ended December 31, 2022, mainly due to the increased enrollment scale of each adult education institution. As a result, our total revenue increased by approximately RMB5,213,000, or 103.7%, from approximately RMB5,026,000 for the year ended December 31, 2021 to approximately RMB10,239,000 (US$1,484,000) for the year ended December 31, 2022. Since the end of 2022, the Chinese government has eased the COVID-19 restrictions.

As a result, our PRC subsidiaries gradually recovered from the negative impact of the COVID-19 pandemic on their results of operations. For the years ended December 31, 2023 and 2024, the COVID-19 pandemic did not have a material net impact on our PRC subsidiaries’ financial position and operating results. However, the emergence of regional recurrences of the COVID-19 pandemic and the corresponding restrictive measures are beyond our control. The extent to which the COVID-19 pandemic, or similar natural disasters and health epidemics and outbreaks, may impact our PRC subsidiaries will depend on future developments, which are highly uncertain and cannot be predicted, including the duration, severity, and recurrence of any such outbreak, the effectiveness of mitigation strategies, and third-party actions taken to contain its spread and mitigate its public health effects. Any of these factors may materially and adversely affect our business, financial condition, and results of operations.

Uncertain economic or social conditions may adversely impact our PRC subsidiaries’ business.

Our PRC subsidiaries’ business could be negatively impacted by reduced demand for their one-stop comprehensive education supporting services related to one or more significant local, regional, or global economic or social disruptions. These disruptions may include: a slow-down, recession or inflationary pressures in the general economy; reduced market growth rates; tighter credit markets for our PRC subsidiaries’ suppliers, vendors, or customers; a significant shift in government policies; significant social unrest; escalating trade tensions or trade wars, including between the United States and China, or the deterioration of economic relations between countries or regions. Additionally, these and other economic conditions may cause our PRC subsidiaries’ suppliers, distributors, contractors or other third-party partners to suffer financial or operational difficulties that they cannot overcome, resulting in their inability to provide our PRC subsidiaries with the needed materials and services, in which case our business and results of operations could be adversely affected.

Fluctuations in interest rates could negatively affect our reported results of operations.

Our business and financial performance could be negatively impacted by the fluctuations in interest rates. Elevated interest rates may result in increased borrowing costs, potentially diminishing our PRC subsidiaries’ profitability. While we strive to maintain competitive pricing for our PRC subsidiaries’ one-stop comprehensive adult education supporting services, an increase in interest rates may necessitate price adjustments. However, the competitive landscape within our industry may limit our ability to pass on these increased costs to customers. Our customers, primarily educational institutions and organizations, often operate within budget constraints, and any price increases may result in reduced demand or a shift towards more cost-effective alternatives. As of the date of this Annual Report, interest rates have historically shown fluctuations. While our PRC subsidiaries actively manage interest rate risks through various financial strategies, such as diversifying their debt portfolio and closely monitoring market trends, there is no guarantee that these measures will fully mitigate the potential adverse effects of interest rate fluctuations. If our PRC subsidiaries are unable to do so, our financial condition and profitability could also be materially and adversely affected.

Our PRC subsidiaries may be involved in legal and other disputes and claims arising out of their operations.

Our PRC subsidiaries may, from time to time, be involved in disputes with and subject to claims by users, customers, and students, or other parties involved in their business. There can be no assurance that when legal actions arise in the ordinary course of our PRC subsidiaries’ business, any of the legal actions will be resolved in their favor. Our PRC subsidiaries are subject to uncertainties as to the outcome of such legal proceedings and our PRC subsidiaries’ business operations may be disrupted. Legal or other proceedings involving our PRC subsidiaries may, among others, result in our PRC subsidiaries incurring significant costs, divert management’s attention and other resources, negatively affect our PRC subsidiaries’ operations, cause negative publicity against our PRC subsidiaries, or damage their reputation, regardless of whether they are successful in defending such claims or proceedings. As a result, our business, financial condition, and results of operations may be materially and adversely affected.

Our historical financial and operating results are not indicative of our future performance and our financial and operating results may fluctuate.

During the years ended December 31, 2022, 2023, and 2024, our revenue was approximately RMB10,239,000, RMB15,571,000, and RMB18,742,000 (US$2,568,000), respectively. For the same years, our net income was approximately RMB5,360,000, RMB9,562,000, and RMB5,607,000 (US$768,000), respectively. While we have achieved strong financial results in the past, these results may not be sustainable or indicative of future results, and we cannot assure you that we will achieve or maintain profitability on a consistent basis. The results of operations may vary from period to period in response to a variety of factors beyond control, including the general economic conditions, regulatory actions, changes in demand for adult education supporting services, increased competition, constantly changing industry trend, or our failure to capitalize on growth opportunities. Due to these and other factors, our historical financial performance, growth rates, profitability and operating results may not indicate future performance and you should not rely on them to predict our future performance.

Our PRC subsidiaries may not maintain adequate insurance, which could expose them to significant costs and business disruption.

We believe our PRC subsidiaries maintain insurance coverage that is customary for businesses of their sizes and types. See “Item 4. Information of the Company — B. Business Overview — Insurance.” However, there can be no assurance that such insurance coverage will always be available or will always be sufficient to cover any damages resulting from any kind of claims. In addition, there are certain types of risks that may not be covered by our PRC subsidiaries’ insurance policies, such as war, force majeure events, or certain business interruptions. In addition, there can be no assurance that when the current insurance policies expire, our PRC subsidiaries will be able to renew them at sufficient and favorable terms. Claims that are not covered by the policies or the failure to renew the insurance policies may materially adversely affect our PRC subsidiaries’ business, financial condition, and results of operations.

Future acquisitions may have an adverse effect on our PRC subsidiaries’ ability to manage their business.

Our PRC subsidiaries may acquire businesses, technologies, services, or products that are complementary to their existing adult education supporting service businesses. Future acquisitions may expose them to potential risks, including risks associated with the integration of new operations, services, and personnel, the diversion of resources from their existing businesses, failure to achieve expected growth by the acquired businesses, and the inability to generate sufficient revenue to offset the costs and expenses of acquisitions, or the potential loss of or harm to relationships with both employees and customers resulting from their integration of new businesses.

In addition, our PRC subsidiaries may be unable to identify appropriate acquisition or strategic investment targets when it is necessary or desirable to make such acquisition or investment to remain competitive or to expand our PRC subsidiaries’ business. Even if our PRC subsidiaries identify an appropriate acquisition or investment target, they may face challenges in successfully negotiating favorable terms of the acquisition or investment and financing the proposed transaction. Our PRC subsidiaries may need to raise additional debt funding or sell additional equity securities to make such acquisitions. The raising of additional debt funding by our PRC subsidiaries, if required, would result in increased debt service obligations and could result in additional operating and financing covenants, or liens on their assets, that would restrict their operations. The sale of additional equity securities could result in additional dilution to our stockholders. If any one or more of the aforementioned risks associated with acquisitions or investments materialize, the acquisitions or investments may not be beneficial to our PRC subsidiaries, which in turn may materially and adversely affect our business, financial condition, and results of operations.

We may require additional financing in the future and our PRC subsidiaries’ operations could be curtailed if we are unable to obtain required additional financing when needed.

We may need to obtain additional debt or equity financing to fund our PRC subsidiaries’ future capital expenditures and to address working capital needs that may arise in the normal course of operations. While we do not anticipate seeking additional financing in the immediate future, any additional equity financing may result in dilution to the holders of our outstanding Ordinary Shares. Additional debt financing may impose affirmative and negative covenants that restrict our freedom to operate our business. There can be no assurance that we will be able to obtain additional financing on favorable terms, or any financing at all, and the failure to obtain sufficient financing could adversely affect our business operations, particularly in a challenging or uncertain global economic environment.

Risks Relating to Doing Business in the PRC

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

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

While the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy. Any adverse changes in economic conditions in China, in the policies of the Chinese government, or in the laws and regulations in China could have a material adverse effect on the overall economic growth of China. Such developments could adversely affect our PRC subsidiaries’ business and operating results, reduce demand for their products, and weaken their competitive position. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy, but may have a negative effect on our PRC subsidiaries. For example, our PRC subsidiaries’ financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations. In addition, in the past the Chinese government has implemented certain measures, including interest rate adjustments, to control the pace of economic growth. These measures may cause decreased economic activities in China, which may adversely affect our PRC subsidiaries’ business and operating results.

Furthermore, our Company, our PRC subsidiaries, and our investors may face uncertainty about future actions by the government of China that could significantly affect our PRC subsidiaries’ financial performance and operations.

Uncertainties in the interpretation and enforcement of PRC laws and regulations and changes in policies, rules, and regulations in China, which may be quick with little advance notice, could limit the legal protection available to you and us.

The PRC legal system is based on written statutes. Unlike common law systems, it is a system in which legal cases have limited value as precedents. In the late 1970s, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The legislation over the past three decades has significantly increased the protection afforded to various forms of foreign or private- sector investment in China. Our PRC subsidiaries are subject to various PRC laws and regulations generally applicable to companies in China. Since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, however, the interpretations of many laws, regulations, and rules are not always uniform and enforcement of these laws, regulations, and rules involve uncertainties.

From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, however, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy in the PRC legal system than in more developed legal systems. Furthermore, the PRC legal system is based in part on government policies, internal rules, and regulations (some of which are not published in a timely manner or at all) that may have retroactive effect and may change quickly with little advance notice. As a result, we may not be aware of our violation of these policies and rules until sometime after the violation. Such uncertainties, including uncertainties over the scope and effect of our contractual, property (including intellectual property), and procedural rights, and any failure to respond to changes in the regulatory environment in China could materially and adversely affect our business and impede our ability to continue our operations.

You may experience difficulties in effecting service of legal process, enforcing foreign judgments, or bringing actions in China against us or our directors and officers that reside outside the United States based on foreign laws. It may also be difficult for you or overseas regulators to conduct investigations or collect evidence within China.

As an exempted company incorporated under the laws of the Cayman Islands, we conduct substantially all of our operations in China and substantially all of our assets are located in China. In addition, seven of our eight directors and officers, namely Yuan Li, Xiaohui Li, Li Tan, Xiang Lan, Hangyu Dai, Shuang Qiu, and Shang Wu, reside in the PRC; another director, Shaoping Lu, resides in the United States. All or a substantial portion of the assets of our directors and officers are located outside the United States. As a result, it may be difficult for you to effect service of process upon those persons inside mainland China. It may be difficult for you to enforce judgments obtained in U.S. courts based on civil liability provisions of the U.S. federal securities laws against us and our officers and directors who do not currently reside in the U.S. or have substantial assets in the U.S. In addition, there is uncertainty as to whether the courts of the Cayman Islands or the PRC would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the U.S. or any state.

The recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions. China does not have any treaties or other forms of written arrangement with the United States that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, the PRC courts will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC laws or national sovereignty, security, or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States. It may also be difficult for you or overseas regulators to conduct investigations or collect evidence within China. For example, in China, there are significant legal and other obstacles to obtaining information needed for shareholder investigations or litigation outside China or otherwise with respect to foreign entities. Although the authorities in China may establish a regulatory cooperation mechanism with counterparts of another country or region to monitor and oversee cross border securities activities, such regulatory cooperation with the securities regulatory authorities in the United States may not be efficient in the absence of a practical cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, or “Article 177,” which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigations or evidence collection activities within the territory of the PRC. Article 177 further provides that Chinese entities and individuals are not allowed to provide documents or materials related to securities business activities to foreign agencies without prior consent from the securities regulatory authority of the State Council and the competent departments of the State Council. While detailed interpretation of or implementing rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigations or evidence collection activities within China may further increase difficulties faced by you in protecting your interests.

Given the Chinese government’s significant oversight and discretion over the conduct of our PRC subsidiaries’ business, the Chinese government may intervene or influence their operations at any time, which could result in a material change in our PRC subsidiaries’ operations and/or the value of our Ordinary Shares.

The Chinese government has significant oversight and discretion over the conduct of our PRC subsidiaries’ business and may intervene or influence their operations at any time as the government deems appropriate to further regulatory, political, and societal goals, which could result in a material change in our PRC subsidiaries’ operations and/or the value of our Ordinary Shares.

The Chinese government has recently published new policies that significantly affected certain industries such as the education and Internet industries, and we cannot rule out the possibility that it will in the future release regulations or policies regarding the adult education supporting service industry that could adversely affect our PRC subsidiaries’ business, financial condition, and results of operations.

Furthermore, if China adopts more stringent standards with respect to certain areas such as environmental protection or corporate social responsibilities, our PRC subsidiaries’ may incur increased compliance costs or become subject to additional restrictions in their operations. Certain areas of the law, including intellectual property rights and confidentiality protections, in China may also not be as effective as in the United States or other countries. In addition, our PRC subsidiaries cannot predict the effects of future developments in the PRC legal system on their business operations, including the promulgation of new laws, or changes to existing laws or the interpretation or enforcement thereof. These uncertainties could limit the legal protections available to us and our investors, including you.

Any actions by the Chinese government, including any decision to intervene or influence the operations of our PRC subsidiaries or to exert control over any offering of securities conducted overseas and/or foreign investment in China-based issuers, may cause us to make material changes to the operations of our PRC subsidiaries, may limit or completely hinder our ability to offer or continue to offer securities to investors, and may cause the value of such securities to significantly decline or be worthless.

The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. The ability of our subsidiaries to operate in China may be impaired by changes in its laws and regulations, including those relating to taxation, environmental regulations, land use rights, foreign investment limitations, and other matters. The central or local governments of China may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts for our PRC subsidiaries to ensure their compliance with such regulations or interpretations. As such, our PRC subsidiaries may be subject to various government and regulatory interference in the provinces in which they operate. They could be subject to regulation by various political and regulatory entities, including various local and municipal agencies and government sub- divisions. They may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply.

Accordingly, government actions in the future, including any decision to intervene or influence the operations of our PRC subsidiaries at any time or to exert control over an offering of securities conducted overseas and/or foreign investment in China-based issuers, may cause us to make material changes to the operations of our PRC subsidiaries, may limit or completely hinder our ability to offer or continue to offer securities to investors, and/or may cause the value of such securities to significantly decline or be worthless.

Our PRC subsidiaries have not made adequate social insurance and housing fund contributions for all employees as required by PRC regulations, which may subject them to penalties.

According to the PRC Social Insurance Law and the Administrative Regulations on the Housing Funds, companies operating in China are required to participate in pension insurance, work-related injury insurance, medical insurance, unemployment insurance, maternity insurance (collectively known as “social insurance”), and housing funds plans, and the employers must pay all or a portion of the social insurance premiums and housing funds for their employees. For more details, please see “Item 4. Information of the Company — B. Business Overview — Regulations — Regulations Related to Social Welfare.” The requirement of social insurance and housing fund has not been implemented consistently by the local governments in China given the different levels of economic development in different locations.

Our PRC subsidiaries have not made adequate social insurance and housing fund contributions for all employees, and they may be required to make up for the shortfall in the social insurance contributions as well as to pay late fees at the rate of 0.05% per day of the outstanding amount from the due date. If they fail to make up for the shortfalls within the prescribed time limit, the relevant administrative authorities will impose a fine of one to three times the outstanding amount upon them. With respect to housing fund plans, our PRC subsidiaries may be required to pay and/or deposit housing funds in full and on time within the prescribed time limit. If they fail to do so, relevant authorities could impose a fine of not less than RMB10,000 nor more than RMB50,000 and file applications to competent courts for compulsory enforcement of payment and deposit. As of December 31, 2024, we estimate that the amount of outstanding social insurance premiums and housing funds was approximately RMB674,000 and the amount of late fees and potential fines was in the range of RMB559,000 and RMB1,455,000. We have not made accruals for the expected amounts owed, including late fees and fines that may be imposed by the relevant local government authorities in the financial statements. There are a number of policies providing that local governmental authorities shall act carefully to avoid burdensome measures over the small- and medium-size entities. For example, pursuant to the Emergency Notice on Practicing Principles of the State Council Executive Meeting and Stabilizing Work on Collecting Social Insurance Premiums, promulgated by the Ministry of Human Resources and Social Security on September 21, 2018, local authorities are prohibited from recovering the unpaid social insurance premiums from enterprises without permission in a centralized manner. Although we have not received any inquiry, notice, warning, or sanction regarding such late fees or fines, the interpretation and implementation of labor-related laws and regulations are still constantly evolving which may be further amended from time to time. Accordingly, if the relevant PRC authorities determine that our PRC subsidiaries shall make supplemental social insurance and housing fund contributions or that they are subject to fines and legal sanctions in relation to their failure to make social insurance and housing fund contributions in full for their employees, their business, financial condition, and results of operations may be adversely affected.

Greater oversight by the Cyberspace Administration of China (“CAC”) over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our PRC subsidiaries’ business and our offerings.

On December 28, 2021, 13 governmental departments of the PRC, including the CAC, jointly promulgated the Cybersecurity Review Measures, which became effective on February 15, 2022. The Cybersecurity Review Measures provide that, in addition to CIIO that intend to purchase Internet products and services, online platform operators engaging in data processing activities that affect or may affect national security must be subject to cybersecurity review by the Cybersecurity Review Office of the PRC. According to the Cybersecurity Review Measures, a cybersecurity review assesses potential national security risks that may be brought about by any procurement, data processing, or overseas listing. The Cybersecurity Review Measures require that an online platform operator which possesses the personal information of at least one million users must apply for a cybersecurity review by the CAC if it intends to be listed in foreign countries.

On November 14, 2021, the CAC published the Security Administration Draft, which provides that data processing operators engaging in data processing activities that affect or may affect national security must be subject to cybersecurity review by the relevant Cyberspace Administration of the PRC. According to the Security Administration Draft, data processing operators shall apply for a cybersecurity review by the relevant Cyberspace Administration of the PRC under certain circumstances, such as (i) mergers, restructurings, and divisions of Internet platform operators that hold large amount of data relating to national security, economic development, or public interest which affects or may affect the national security, (ii) overseas listings of data processors that process personal data for more than one million individuals, (iii) Hong Kong listings of data processors that affect or may affect national security, and (iv) other data processing activities that affect or may affect the national security. The deadline for public comments on the Security Administration Draft was December 13, 2021.

On February 17, 2023, the China Securities Regulatory Commission (the “CSRC”) promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”) and five supporting guidelines, which came into effect on March 31, 2023. According to the Trial Measures, a domestic enterprise involved in offering securities and listing shall comply with laws, administrative regulations, and relevant national provisions, when it comes to providing personal information and important data to foreign entities.

On March 22, 2024, the CAC promulgated the Provisions on Regulating and Facilitating Cross-Border Data Flow, together with two guideline documents separately named the “Second Version of Declaration for Security Assessment of Data Outbound” and the “Second Version of Filing for Personal Information Outbound Standard Contract.” According to the above regulations, data processors who provide important data overseas or have transferred the non-sensitive personal information of over one million individuals overseas or the sensitive personal information of over 10,000 individuals since the beginning of a given year must declare the data for security assessment. Critical information infrastructure operators must declare data when providing personal information or important data overseas. In addition, if a data processor has not been notified by relevant government departments or local authorities, or if data has not been publicly released as important data, the data processor does not need to declare its data for security assessment as important data to exit the country.

As of the date of this Annual Report, we have not received any notice from any PRC authorities identifying our PRC subsidiaries as CIIOs or requiring us to go through cybersecurity review or network data security review by the CAC. As confirmed by our PRC counsel, China Commercial Law firm, neither the operations of our PRC subsidiaries, nor our listing are expected to be affected, and that we are not subject to cybersecurity review by the CAC under the Cybersecurity Review Measures, nor will any such entity be subject to the Security Administration Draft, if it is enacted as proposed, because our PRC subsidiaries are not CIIOs or online platform operators that possess personal information of at least one million users or engage in data processing activities that affect or may affect national security. There remains uncertainty, however, as to how the Cybersecurity Review Measures and the Security Administration Draft will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the Cybersecurity Review Measures and the Security Administration Draft. If any such new laws, regulations, rules, or implementation and interpretation come into effect, we expect to take all reasonable measures and actions to comply and to minimize the adverse effect of such laws on us. We cannot guarantee, however, that our PRC subsidiaries will not be subject to cybersecurity review and network data security review in the future. During such reviews, our PRC subsidiaries may be required to suspend their operations or experience other disruptions to their operations. Cybersecurity review and network data security review could also result in negative publicity with respect to our Company and diversion of our managerial and financial resources, which could materially and adversely affect our business, financial conditions, and results of operations.

The Opinions, the Trial Measures, and the revised Provisions recently issued by the PRC authorities subject us to additional compliance requirements in the future.

The General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the “Opinions on Severely Cracking Down on Illegal Securities Activities According to Law,” or the “Opinions,”, which were made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies. The Opinions proposed to take effective measures, such as promoting the construction of relevant regulatory systems, to deal with the risks and incidents facing China-based overseas-listed companies and the demand for cybersecurity and data privacy protection. On February 17, 2023, the CSRC promulgated the Trial Measures and five supporting guidelines, which became effective on March 31, 2023. Pursuant to the Trial Measures, PRC domestic companies that seek to offer or list securities overseas, both directly and indirectly, shall complete filing procedures with the CSRC pursuant to the requirements of the Trial Measures within three working days following their submission of initial public offerings or listing applications. If a domestic company fails to complete required filing procedures or conceals any material fact or falsifies any major content in its filing documents, such domestic company may be subject to administrative penalties, such as an order to rectify, warnings, and fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines. See “Item 4. Information of the Company — B. Business Overview — Regulations — Regulations Relating to Overseas Listings”

On February 24, 2023, the CSRC, together with the Ministry of Finance of the PRC (the “MOF”), National Administration of State Secrets Protection and National Archives Administration of China, revised the Provisions issued by the CSRC and National Administration of State Secrets Protection and National Archives Administration of China in 2009, or the “Provisions”. The revised Provisions were issued under the title “Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies,” and came into effect on March 31, 2023 together with the Trial Measures. The revised Provisions require that, among other things, (i) a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level; and (ii) a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals and entities including securities companies, securities service providers and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations. As advised by our PRC counsel, China Commercial Law firm, the documents we have provided or disclosed, or plan to provide or disclose, do not contain any state secrets or working secrets of government agencies. However, there remains uncertainty as to how relevant competent authorities will define “state secrets or working secrets of government agencies.” If they recognize that the documents we have disclosed or provided, or plan to disclose or provide, contain “state secrets or working secrets of government agencies,” we or our PRC subsidiaries may be subject to the approval requirements of the revised Provisions. Any failure or perceived failure by our Company or our PRC subsidiaries to comply with the above confidentiality and archives administration requirements under the revised Provisions and other PRC laws and regulations may result in the relevant entities being held legally liable by competent authorities, and referred to the judicial organ to be investigated for criminal liability if suspected of committing a crime.

The Opinions, the Trial Measures, the revised Provisions, and any related implementing rules to be enacted may subject us to additional compliance requirements in the future. As there are still uncertainties regarding the interpretation and implementation of such regulatory guidance, we cannot assure you that we will be able to comply with any additional regulatory requirements, which may arise from the evolving interpretation of the Opinions, the Trial Measures, or any related implementing rules to be enacted, with respect to our future overseas capital-raising activities.

Recent joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and the HFCA 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 our continued listing or future offerings of our securities in the U.S.

On April 21, 2020, SEC Chairman Jay Clayton and PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a joint statement highlighting the risks associated with investing in companies based in or have substantial operations in emerging markets including China. The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers in China and higher risks of fraud in emerging markets.

On May 18, 2020, Nasdaq filed three proposals with the SEC to (i) apply a minimum offering size requirement for companies primarily operating in a “Restrictive Market,” (ii) adopt a new requirement relating to the qualification of management or the board of directors for Restrictive Market companies, and (iii) apply additional and more stringent criteria to an applicant or listed company based on the qualifications of the company’s auditor. On October 4, 2021, the SEC approved Nasdaq’s revised proposal for the rule changes.

On May 20, 2020, the U.S. Senate passed the HFCA Act requiring a foreign company to certify it is not owned or controlled by a foreign government if the PCAOB is unable to audit specified reports because the company uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect the company’s auditors for three consecutive years (two consecutive years as amended under the Consolidated Appropriations Act, as discussed below), the issuer’s securities are prohibited to trade on a national exchange. On December 2, 2020, the U.S. House of Representatives approved the Holding Foreign Companies Accountable Act. On December 18, 2020, the Holding Foreign Companies Accountable Act was signed into law.

On March 24, 2021, the SEC announced the adoption of interim final amendments to implement the submission and disclosure requirements of the HFCA Act. In the announcement, the SEC clarified that before any issuer will have to comply with the interim final amendments, the SEC must implement a process for identifying covered issuers. The announcement also stated that the SEC staff is actively assessing how best to implement the other requirements of the HFCA Act, including the identification process and the trading prohibition requirements.

On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, and on December 29, 2022, the Consolidated Appropriations Act was signed into law by former President Biden, which contained, among other things, an identical provision to the Accelerating Holding Foreign Companies Accountable Act and amended the HFCA Act by requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three, thus reducing the time period for triggering the delisting of our Company and the prohibition of trading in our securities if the PCAOB is unable to inspect our accounting firm at such future time.

On September 22, 2021, the PCAOB adopted a final rule implementing the HFCA Act, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCA Act, whether the board of directors of a company is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.

On December 2, 2021, the SEC adopted amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act.

On December 16, 2021, the PCAOB issued a report on its determinations that the Board is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions.

The lack of access to the PCAOB inspection in China prevents the PCAOB from fully evaluating audits and quality control procedures of the auditors based in China. As a result, investors may be deprived of the benefits of such PCAOB inspections. The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of these accounting firm’s audit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which could cause existing and potential investors in our Ordinary Shares to lose confidence in our audit procedures and reported financial information and the quality of our financial statements.

Our auditor prior to January 20, 2025, ZH CPA LLC, had been inspected by the PCAOB on a regular basis in the ordinary course of the audit period in which it was engaged. Our new auditor since January 20, 2025, Enrome LLP, is an independent registered public accounting firm with the PCAOB, and, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. Enrome LLP is headquartered in Singapore, and will be subject to inspection by the PCAOB on a regular basis. Neither ZH CPA LLC nor Enrome LLP is subject to the determination issued by the PCAOB on December 16, 2021. However, the recent developments may add uncertainties to our offerings and we cannot assure you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria to us since we are an emerging growth company and substantially all of our operations are conducted in China.

Furthermore, if the PCAOB is unable to inspect our accounting firm in the future, the HFCA Act, which requires that the PCAOB be permitted to inspect an issuer’s public accounting firm within two years, as amended, will prohibit trading in our securities, and, as a result, an exchange may determine to delist our securities and trading in our securities could be prohibited.

On August 26, 2022, the CSRC, the MOF, and the PCAOB signed the Protocol governing inspections and investigations of accounting firms based in mainland China and Hong Kong, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB will consider the need to issue a new determination.

To the extent cash or assets in the business are in the PRC/Hong Kong or a PRC/Hong Kong entity, the funds or assets may not be available to fund operations or for other use outside of the PRC/Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of our Company or our subsidiaries by the PRC government to transfer cash or assets.

Relevant PRC laws and regulations permit the companies in the PRC to pay dividends only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Additionally, each of the companies in the PRC are required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. The companies in the PRC are also required to further set aside a portion of their after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at their discretion. These reserves are not distributable as cash dividends. Furthermore, in order for us to pay dividends to our shareholders, we will rely on payments made from Kebiao Technology to Jiade Zhigao as dividends and the distribution of such payments to Shenzhen Kebiao or WISMASS HK as dividends from Jiade Zhigao, the distribution of such payments to Jiadezhigao HK as dividends from Shenzhen Kebiao, and then the distribution of such payments to our Company as dividends from Jiadezhigao HK and WISMASS HK. If any of our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to us.

Our cash dividends, if any, will be paid in U.S. dollars. If we are considered a tax resident enterprise of the PRC for tax purposes, any dividends we pay to our overseas shareholders may be regarded as China- sourced income and as a result may be subject to PRC withholding tax. See “— Risks Relating to Doing Business in the PRC — Under the PRC Enterprise Income Tax Law, we may be classified as a PRC ‘resident enterprise’ for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment.”

The PRC government also imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of the PRC. The majority of our PRC subsidiaries’ income is received in Renminbi and shortages in foreign currencies may restrict our ability to pay dividends or other payments, or otherwise satisfy our foreign currency denominated obligations, if any. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments, and expenditures from trade-related transactions, can be made in foreign currencies without prior approval from the State Administration of Foreign Exchange (“SAFE”) as long as certain procedural requirements are met. Approval from appropriate government authorities is required if Renminbi is converted into foreign currency and remitted out of the PRC to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may, at its discretion, impose restrictions on access to foreign currencies for current account transactions and if this occurs in the future, we may not be able to pay dividends in foreign currencies to our shareholders.

As of the date of this Annual Report, there are no restrictions or limitations imposed by the Hong Kong government on the transfer of capital within, into, and out of Hong Kong (including funds from Hong Kong to mainland China), except for the transfer of funds involving money laundering and criminal activities. However, there is no guarantee that the Hong Kong government will not promulgate new laws or regulations that may impose such restrictions in the future. There is no assurance the PRC government will not intervene in or impose restrictions on our ability to transfer cash or assets.

As a result of the above, to the extent cash or assets in the business are in the PRC/Hong Kong or a PRC/ Hong Kong entity, such funds or assets may not be available to fund operations or for other use outside of the PRC/Hong Kong, due to interventions in or the imposition of restrictions and limitations on the ability of our Company or our subsidiaries by the competent government to the transfer of cash or assets.

Increases in labor costs in the PRC may adversely affect our PRC subsidiaries’ business and profitability.

China’s economy has experienced increases in labor costs in recent years. China’s overall economy and the average wage in China are expected to continue to grow. The average wage level for our PRC subsidiaries’ employees has also increased in recent years. The average monthly wage level of our PRC subsidiaries increased from RMB7,900 in 2022 to RMB8,700 in 2023, and further to RMB9,196 in 2024. For the years ended December 31, 2022, 2023, and 2024, our PRC subsidiaries’ employee salaries and benefits were approximately RMB1,701,000, 2,188,000, and RMB2,869,000 (US$393,000), respectively. We expect that their labor costs, including wages and employee benefits, will continue to increase. Unless our PRC subsidiaries are able to pass on these increased labor costs to their customers by increasing prices for their products or services, their profitability and results of operations may be materially and adversely affected.

In addition, our PRC subsidiaries have been subject to stricter regulatory requirements in terms of entering into labor contracts with their employees and paying various statutory employee benefits, including pensions, housing fund, medical insurance, work-related injury insurance, unemployment insurance, and maternity insurance to designated government agencies for the benefit of their employees. Pursuant to the PRC Labor Contract Law, or the “Labor Contract Law,” that became effective in January 2008 and its implementing rules that became effective in September 2008 and its amendments that became effective in July 2013, employers are subject to stricter requirements in terms of signing labor contracts, minimum wages, paying remuneration, determining the term of employees’ probation, and unilaterally terminating labor contracts. In the event that our PRC subsidiaries decide to terminate some of their employees or otherwise change their employment or labor practices, the Labor Contract Law and its implementation rules may limit their ability to effect those changes in a desirable or cost-effective manner, which could adversely affect their business and results of operations.

As the interpretation and implementation of labor-related laws and regulations are still evolving, we cannot assure you that our PRC subsidiaries’ employment practices do not and will not violate labor-related laws and regulations in China, which may subject our PRC subsidiaries to labor disputes or government investigations. If our PRC subsidiaries are deemed to have violated relevant labor laws and regulations, they could be required to provide additional compensation to their employees and their business, and, in such case, our financial condition, and results of operations could be materially and adversely affected.

PRC regulations relating to offshore investment activities by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital into our PRC subsidiaries, limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us.

On July 4, 2014, SAFE issued the Circular on Issues Concerning Foreign Exchange Control over the Overseas Investment and Financing and Round-trip Investment by Domestic Residents via Special Purpose Vehicles, or “SAFE Circular 37.” According to SAFE Circular 37, prior registration with the local SAFE branch is required for PRC residents, (including PRC individuals and PRC corporate entities as well as foreign individuals that are deemed as PRC residents for foreign exchange administration purpose), in connection with their direct or indirect contribution of domestic assets or interests to offshore special purpose vehicles, or “SPVs.” SAFE Circular 37 further requires amendments to the SAFE registrations in the event of any changes with respect to the basic information of the offshore SPV, such as change of a PRC individual shareholder, name, and operation term, or any significant changes with respect to the offshore SPV, such as an increase or decrease of capital contribution, share transfer or exchange, or mergers or divisions. SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we make in the future. In February 2015, SAFE promulgated a Circular on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or “SAFE Circular 13,” effective in June 2015. Under SAFE Circular 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, will be filed with qualified banks instead of SAFE. The qualified banks will directly examine the applications and accept registrations under the supervision of SAFE.

In addition to SAFE Circular 37 and SAFE Circular 13, our ability to conduct foreign exchange activities in China may be subject to the interpretation and enforcement of the Implementation Rules of the Administrative Measures for Individual Foreign Exchange promulgated by SAFE in January 2007 (as amended and supplemented, the “Individual Foreign Exchange Rules”). Under the Individual Foreign Exchange Rules, any PRC individual seeking to make a direct investment overseas or engage in the issuance or trading of negotiable securities or derivatives overseas must make the appropriate registrations in accordance with SAFE provisions, the failure of which may subject such PRC individual to warnings, fines, or other liabilities.

As of the date of this Annual Report, our current shareholders who are subject to the SAFE Circular 37 have completed the initial registrations with the qualified banks as required by the regulations. We may not be informed of the identities of all the PRC residents holding direct or indirect interest in our Company, however, and we have no control over any of our future beneficial owners. Thus, we cannot provide any assurance that our current or future PRC resident beneficial owners will comply with our request to make or obtain any applicable registrations or continuously comply with all registration procedures set forth in these SAFE regulations. Such failure or inability of our PRC resident beneficial owners to comply with these SAFE regulations may subject us or our PRC resident beneficial owners to fines and legal sanctions, restrict our cross-border investment activities, or limit our PRC subsidiaries’ ability to distribute dividends to or obtain foreign-exchange-dominated loans from us, or prevent us from being able to make distributions or pay dividends, as a result of which our business operations and our ability to distribute profits to you could be materially and adversely affected.

PRC regulation of parent/subsidiary loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of offshore offerings to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect their liquidity and their ability to fund and expand their business.

We are an exempted company with limited liability incorporated in the Cayman Islands conducting our operations in China through our PRC subsidiaries, to which we can make loans and make additional capital contributions. Most of these loans or contributions are subject to PRC regulations and approvals or registration. For example, any loans to Shenzhen Kebiao, which is treated as a foreign-invested enterprise under PRC law, are subject to PRC regulations and foreign exchange loan registrations. Furthermore, loans made by us to Shenzhen Kebiao to finance its activities cannot exceed statutory limits and must be registered with the local counterpart of SAFE, or filed with SAFE in its information system. Pursuant to relevant PRC regulations, we may provide loans to Shenzhen Kebiao up to the larger amount of (i) the balance between the registered total investment amount and registered capital of Shenzhen Kebiao, or (ii) twice the amount of the net assets of Shenzhen Kebiao calculated in accordance with the Circular on Full-Coverage Macro-Prudent Management of Cross-Border Financing (the “PBOC Circular 9”), subsequently amended to 250% of the net asset of Shenzhen Kebiao calculated in accordance with the Circular on Foreign Exchange Adjusting Parameters of Full-coverage Macro-prudent Management of Cross-border Financing (the “Circular 64”). Moreover, any medium or long-term loan to be provided by us to Shenzhen Kebiao or other domestic PRC entities must also be filed and registered with the National Development and Reform Commission (the “NDRC”). We may also decide to finance Shenzhen Kebiao by means of capital contributions. These capital contributions are subject to registration with the SAMR or its local branch, reporting of foreign investment information with the Ministry of Commerce of the PRC (the “MOFCOM”), or registration with other governmental authorities in China.

On March 30, 2015, SAFE issued the Circular of the State Administration of Foreign Exchange on Reforming the Administrative Approach Regarding the Settlement of the Foreign Exchange Capital of Foreign-invested Enterprises, or “SAFE Circular 19,” which took effect and replaced previous regulations effective on June 1, 2015, and was amended on December 30, 2019. Pursuant to SAFE Circular 19, up to 100% of foreign currency capital of a foreign-invested enterprise may be converted into RMB capital according to the actual operation, and within the business scope, of the enterprise at its will. Although SAFE Circular 19 allows for the use of RMB converted from the foreign currency-denominated capital for equity investments in the PRC, the restrictions continue to apply as to foreign-invested enterprises’ use of the converted RMB for purposes beyond their business scope, for entrusted loans or for inter-company RMB loans. On June 9, 2016, SAFE promulgated the Circular of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or “SAFE Circular 16,” effective on June 9, 2016, which reiterates some rules set forth in SAFE Circular 19, but changes the prohibition against using RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company to issue RMB entrusted loans to a prohibition against using such capital to issue loans to non-affiliated enterprises. SAFE Circular 19 and SAFE Circular 16 may significantly limit our ability to transfer any foreign currency we hold, including the net proceeds from our offshore offerings, to Shenzhen Kebiao, which may adversely affect our liquidity and our ability to fund and expand our business in China. On October 23, 2019, SAFE issued the Notice of the State Administration of Foreign Exchange on Further Facilitating Cross-border Trade and Investment, or “SAFE Circular 28,”which, among other things, expanded the use of foreign exchange capital to domestic equity investment area. Non-investment foreign-funded enterprises are allowed to lawfully make domestic equity investments by using their capital if (i) such investments do not violate the prevailing Special Administrative Measures for Access of Foreign Investments (Edition 2022), or the “Negative List,” and (ii) the domestic investment projects are authentic and are in compliance with relevant regulations. However, since SAFE Circular 28 is newly promulgated, it is unclear how SAFE and competent banks will carry it out in practice.

In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, including SAFE Circular 19, SAFE Circular 16, and other relevant rules and regulations, we cannot assure you that we will be able to complete the necessary registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to future loans or capital contributions to Shenzhen Kebiao, Jiade Zhigao, and Kebiao Technology. As a result, uncertainties exist as to our ability to provide prompt financial support to Shenzhen Kebiao, Jiade Zhigao, and Kebiao Technology when needed. If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds we received or expect to receive from our offshore offerings and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our PRC subsidiaries’ business, including their liquidity and their ability to fund and expand their business.

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

The value of the RMB, which is the currency of the PRC, against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions in China and by China’s foreign exchange policies. On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the RMB to the U.S. dollar, and the RMB appreciated more than 20% against the U.S. dollar over the following three years. Between July 2008 and June 2010, this appreciation halted and the exchange rate between the RMB and the U.S. dollar remained within a narrow band. Since June 2010, the RMB has fluctuated against the U.S. dollar, at times significantly and unpredictably. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future.

Our business is conducted in the PRC through our PRC subsidiaries, and their books and records are maintained in RMB. The financial statements that we file with the SEC and provide to our shareholders are partly presented in U.S. dollars. Changes in the exchange rates between the RMB and U.S. dollar affect the value of our PRC subsidiaries’ assets and results of operations, when presented in U.S. dollars. The value of the RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions and perceived changes in the economy of the PRC and the United States. Any significant revaluation of the RMB may materially and adversely affect our cash flows, revenue, and financial condition. Further, our Ordinary Shares offered in the U.S. are offered in U.S. dollars, we need to convert the net proceeds we receive into RMB in order to use the funds for our PRC subsidiaries’ business. Changes in the conversion rate among the U.S. dollar and the RMB will affect the amount of proceeds we will have available for our PRC subsidiaries’ business.

Very limited hedging options are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge our exposure or at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreign currency. As a result, fluctuations in exchange rates may have a material adverse effect on your investment.

Under the PRC Enterprise Income Tax Law, we may be classified as a PRC “resident enterprise” for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment.

Under the PRC Enterprise Income Tax Law (the “EIT Law”), which became effective in January 2008, an enterprise established outside the PRC with “de facto management bodies” within the PRC is considered a “resident enterprise” for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. Under the implementation rules to the EIT Law, a “de facto management body” is defined as a body that has material and overall management and control over the manufacturing and business operations, personnel and human resources, finances, and properties of an enterprise. In April 2009, the State Administration of Taxation (the “SAT”) issued the Circular on Issues Concerning the Identification of Chinese-Controlled Overseas Registered Enterprises as Resident Enterprises in Accordance with the Actual Standards of Organizational Management, or “SAT Circular 82,” which was amended in December 2017. SAT Circular 82 specifies that certain offshore incorporated enterprises controlled by PRC enterprises or PRC enterprise groups will be classified as PRC resident enterprises if the following are located or resident in the PRC: senior management personnel and departments that are responsible for daily production, operation and management; financial and personnel decision-making bodies; key properties, accounting books, company seal, and minutes of board meetings and shareholders’ meetings; and half or more of the senior management or directors having voting rights. In addition to SAT Circular 82, the SAT issued the Measures for the Administration of Enterprise Income Tax of Chinese- Controlled Overseas Registered Enterprises as Resident Enterprises (for Trial Implementation), or “SAT Bulletin 45,” which took effect in September 2011 and was amended in April 2015, to provide more guidance on the implementation of SAT Circular 82 and clarify the reporting and filing obligations of such “Chinese- controlled offshore incorporated resident enterprises.” SAT Bulletin 45 provides procedures and administrative details for the determination of resident status and administration on post-determination matters. Although both SAT Circular 82 and SAT Bulletin 45 only apply to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreign individuals, the determining criteria set forth in SAT Circular 82 and SAT Bulletin 45 may reflect the SAT’s general position on how the “de facto management body” test should be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises, PRC enterprise groups, or by PRC or foreign individuals.

If the PRC tax authorities determine that the actual management body of Jiade Cayman is within the territory of China, Jiade Cayman may be deemed to be a PRC resident enterprise for PRC enterprise income tax purposes and a number of unfavorable PRC tax consequences could follow. First, we will be subject to the uniform 25% enterprise income tax on our world-wide income, which could materially reduce our net income. In addition, we will also be subject to PRC enterprise income tax reporting obligations. Finally, dividends payable by us to our investors and gains on the sale of our shares may become subject to PRC withholding tax, at a rate of 10% in the case of non-PRC enterprises or 20% in the case of non-PRC individuals (in each case, subject to the provisions of any applicable tax treaty), if such gains are deemed to be from PRC sources. It is unclear whether non-PRC shareholders of our Company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise. Any such tax may reduce the returns on your investment in our shares. Although up to the date of this Annual Report, Jiade Cayman has not been notified or informed by the PRC tax authorities that it has been deemed to be a resident enterprise for the purpose of the EIT Law, we cannot assure you that it will not be deemed to be a resident enterprise in the future.

Our PRC subsidiaries are subject to restrictions on paying dividends or making other payments to us, which may have a material adverse effect on our ability to conduct our business.

We are an exempted company with limited liability incorporated in the Cayman Islands. We may need dividends and other distributions on equity from our PRC subsidiaries to satisfy our liquidity requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. If our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to us.

Current PRC regulations permit our PRC subsidiaries to pay dividends to us only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, our PRC subsidiaries are required to set aside at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of their respective registered capital. Our PRC subsidiaries may also allocate a portion of their respective after-tax profits based on PRC accounting standards to employee welfare and bonus funds at their discretion. These reserves are not distributable as cash dividends. These limitation on the ability of our PRC subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments, or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.

Governmental control of currency conversion may affect the value of your investment and our payment of dividends.

The PRC government imposes controls on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency out of China. We receive substantially all of our revenue in RMB. Under our current corporate structure, Jiade Cayman may indirectly rely on dividend payments from Shenzhen Kebiao, Jiade Zhigao, and Kebiao Technology to fund any cash and financing requirements we may have. Under existing PRC foreign exchange regulations, payments of current account items, such as profit distributions and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements.

Therefore, our PRC subsidiaries are able to pay dividends in foreign currencies to us without prior approval from SAFE, subject to the condition that the remittance of such dividends outside of the PRC complies with certain procedures under PRC foreign exchange regulation, such as the overseas investment registrations by our shareholders or the ultimate shareholders of our corporate shareholders who are PRC residents.

Approval from or registration with appropriate government authorities is, however, required where the RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demand, we may not be able to pay dividends in foreign currencies to our shareholders.

There are significant uncertainties under the EIT Law relating to the withholding tax liabilities of Shenzhen Kebiao, and dividends payable by Shenzhen Kebiao to our offshore subsidiaries may not qualify to enjoy certain treaty benefits.

Under the EIT Law and its implementation rules, the profits of a foreign-invested enterprise generated through operations, which are distributed to its immediate holding company outside the PRC, will be subject to a withholding tax rate of 10%. Pursuant to the Double Tax Avoidance Arrangement, a withholding tax rate of 10% may be lowered to 5% if the enterprise in mainland China is at least 25% held by a Hong Kong enterprise for at least 12 consecutive months prior to distribution of the dividends and is determined by the relevant PRC tax authority to have satisfied other conditions and requirements under the Double Tax Avoidance Arrangement and other applicable PRC laws.

However, based on the Circular on Certain Issues with Respect to the Enforcement of Dividend Provisions in Tax Treaties, or the “SAT Circular 81,” which became effective on February 20, 2009, if the relevant PRC tax authorities determine, in their discretion, that a company benefits from such reduced income tax rate due to a structure or arrangement that is primarily tax-driven, such PRC tax authorities may adjust the preferential tax treatment. According to the Circular on Several Issues regarding the “Beneficial Owner” in Tax Treaties, which became effective as of April 1, 2018, when determining an applicant’s status as the “beneficial owner” regarding tax treatments in connection with dividends, interests, or royalties in the tax treaties, several factors will be taken into account. Such factors include whether the business operated by the applicant constitutes actual business activities, and whether the counterparty country or region to the tax treaties does not levy any tax, grant tax exemption on relevant incomes, or levy tax at an extremely low rate. This circular further requires any applicant who intends to be proved of being the “beneficial owner” to file relevant documents with the relevant tax authorities. Our PRC subsidiaries are owned by Jiadezhigao HK and WISMASS HK, our Hong Kong subsidiaries. However, we cannot assure you that our determination regarding our qualification to enjoy the preferential tax treatment will not be challenged by the relevant PRC tax authority or we will be able to complete the necessary filings with the relevant PRC tax authority and enjoy the preferential withholding tax rate of 5% under the Double Tax Avoidance Arrangement with respect to dividends to be paid by our Shenzhen Kebiao to Jiadezhigao HK, in which case, we would be subject to the higher withdrawing tax rate of 10% on dividends received.

If we become directly subject to the scrutiny, criticism, and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources to investigate and resolve the matter which could harm our business operations, stock price, and reputation.

U.S. public companies that have substantially all of their operations in China have been the subject of intense scrutiny, criticism, and negative publicity by investors, financial commentators, and regulatory agencies, such as the SEC. Much of the scrutiny, criticism, and negative publicity has centered on financial and accounting irregularities and mistakes, a lack of effective internal controls over financial accounting, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. As a result of the scrutiny, criticism, and negative publicity, the publicly traded stock of many U.S. listed Chinese companies sharply decreased in value and, in some cases, have become virtually worthless. Many of these companies are now subject to shareholder lawsuits and SEC enforcement actions and are conducting internal and external investigations into the allegations. It is not clear what effect this sector- wide scrutiny, criticism, and negative publicity will have on us, our business, and the price of our Ordinary Shares. If we become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, we will have to expend significant resources to investigate such allegations and/or defend our Company. This situation will be costly and time consuming and could distract our management from developing our business. If such allegations are not proven to be groundless, we and our business operations will be severely affected and you could sustain a significant decline in the value of our Ordinary Shares.

The approval of the CSRC may be required in connection with our offerings under a regulation adopted in August 2006, and, if required, we cannot assure you that we will be able to obtain such approval, in which case we may face sanctions by the CSRC or other PRC regulatory agencies for failure to seek the CSRC approval for our offerings.

The Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the “M&A Rules,” adopted by six PRC regulatory agencies in 2006 and amended in 2009, require an overseas SPV formed for listing purposes through acquisitions of PRC domestic companies and controlled by PRC companies or individuals to obtain the approval of the CSRC, prior to the listing and trading of such SPV’s securities on an overseas stock exchange. In September 2006, the CSRC published a notice on its official website specifying documents and materials required to be submitted to it by an SPV seeking the CSRC approval of its overseas listings. The application of the M&A Rules remains unclear.

On December 18, 2008, the Foreign Investment Department of the Ministry of Commerce promulgated the Guidelines for the Administration of Foreign Investment Access (2008 Edition), or the Guidelines, which became effective on December 18, 2008. The Guidelines stipulate that the transfer of equity from established foreign-invested enterprises from Chinese parties to foreign parties does not refer to the M&A Rules, regardless of whether there is a related relationship between the Chinese and foreign parties nor whether the foreign parties are existing shareholders or new investors, and the domestic enterprises as the target company of the merger only includes domestic enterprises.

Our PRC legal counsel, China Commercial Law Firm, has advised us, based on their understanding of the current PRC law, rules, and regulations that neither we nor our subsidiaries are required to submit such approval application to the CSRC under the M&A Rules, because we acquired the controlling equity interests in domestic operating subsidiaries through the acquisition of Jiade Zhigao, which is a foreign- invested enterprise.

Our PRC legal counsel, however, has further advised us that there remains some uncertainty as to how the M&A Rules will be interpreted or implemented in the context of an overseas offering and its opinions summarized above are subject to any new laws, rules and regulations or detailed implementations and interpretations in any form relating to the M&A Rules. We cannot assure you that relevant PRC governmental agencies, including the CSRC, would reach the same conclusion as we have. If it is determined that the CSRC approval is required for our offerings in the U.S., we may face sanctions by the CSRC or other PRC regulatory agencies for failure to seek the CSRC approval for our offerings in the U.S. These sanctions may include fines and penalties on our operations in the PRC, limitations on our operating privileges in the PRC, delays in or restrictions on the repatriation of the proceeds from our offerings in the U.S. into the PRC, restrictions on or prohibition of the payments or remittance of dividends by our PRC subsidiaries, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation, and prospects, as well as the trading price of our Ordinary Shares.

The M&A Rules and certain other PRC regulations establish complex procedures for certain acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.

The M&A Rules and recently adopted PRC regulations and rules concerning mergers and acquisitions established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time consuming and complex. For example, the M&A Rules require that MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise, if (i) any important industry is concerned, (ii) such transaction involves factors that have or may have impact on the national economic security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark or PRC time-honored brand. Mergers or acquisitions that allow one market player to take control of or to exert decisive impact on another market player must also be notified in advance to MOFCOM when the threshold under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings, or the “Prior Notification Rules,” issued by the State Council in August 2008 is triggered. In addition, the Provisions of the Ministry of Commerce on the Implementation of the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the “Security Review Rules”) issued by MOFCOM that became effective in September 2011 specify that mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by MOFCOM, and the Security Review Rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement. In the future, we may grow our business by acquiring complementary businesses. Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactions could be time consuming, and any required approval processes, including obtaining approval from MOFCOM or its local counterparts may delay or inhibit our ability to complete such transactions. It is clear that our PRC subsidiaries’ business would not be deemed to be in an industry that raises “national defense and security” or “national security” concerns. MOFCOM or other government agencies, however, may publish explanations in the future determining that our PRC subsidiaries’ business is in an industry subject to the security review, in which case our future acquisitions in the PRC, including those by way of entering into contractual control arrangements with target entities, may be closely scrutinized or prohibited. Our PRC subsidiaries’ ability to expand their business or maintain or expand their market share through future acquisitions would as such be materially and adversely affected.

Chinese regulatory authorities could disallow our holding company structure, which may result in a material change in our operations and/or a material change in the value of the securities we are registering for sale, including that it could cause the value of such securities to significantly decline or become worthless.

We indirectly hold the equity of our PRC subsidiaries through Jiadezhigao HK and WISMASS HK, and thus our PRC subsidiaries are directly or indirectly foreign-invested enterprises. Although the PRC government has increasingly open attitude towards absorbing foreign investment in general, it still implements the Negative List, which restricts or prohibits overseas enterprises from holding the equity of Chinese companies whose operations are included in the Negative List. As the boundaries stipulated in the Negative List are relatively vague, they are subject to further determination and clarification by the Chinese government. As of the date of this Annual Report, the business operated by our PRC subsidiaries has not been included in the Negative List, but we cannot fully guarantee that the Chinese government will not make a different interpretation, so as to disallow our holding corporate structure. Moreover, the Chinese government revises the Negative List from time to time; although the scope of the Negative List is narrowing as a whole, it remains uncertain whether our existing business or future business will be included in future revisions. If the business of our PRC subsidiaries is deemed as a restricted or prohibited business based on the Negative List, our existing corporate structure may be considered illegal and required to be restructured by the Chinese government, which may adversely affect our operations and the value of the securities we are registering for sale.

On July 4, 2014, SAFE issued the SAFE Circular 37, which requires PRC residents, including PRC individuals and institutions, to register with SAFE or its local branches in connection with their direct establishment or indirect control of an offshore special purpose vehicle, for the purpose of overseas investment and financing, with such PRC residents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests. In addition, such PRC residents must update their foreign exchange registrations with SAFE or its local branches when the offshore special purpose vehicles in which such residents directly hold equity interests undergo material events relating to any changes of basic information (including changes of such PRC individual shareholders, names, and operation terms), increases or decreases in investment amount, share transfers or exchanges, or mergers or divisions. As of the date of this Annual Report, our current shareholders who are subject to the SAFE Circular 37 have completed the initial registrations with the qualified banks as required by the regulations. However, we may not be fully informed of the identities of all our shareholders or beneficial owners who are PRC residents, and therefore, we may not be able to identify all our shareholders or beneficial owners who are PRC residents to ensure their compliance with the SAFE Circular 37 or other related rules. In addition, we cannot provide any assurance that all of our shareholders and beneficial owners who are PRC residents will comply with our request to make, obtain, or update any applicable registrations or comply with other requirements required by the SAFE Circular 37 or other related rules in a timely manner. Even if our shareholders and beneficial owners who are PRC residents comply with such request, we cannot provide any assurance that they will successfully obtain or update any registration required by the SAFE Circular 37 or other related rules in a timely manner. If any of our shareholders who is a PRC resident, as determined by SAFE Circular 37, fails to fulfill the required foreign exchange registration, it will be deemed illegal for such shareholder to directly or indirectly hold our equity under the PRC laws. Furthermore, if PRC authorities disallow such shareholder to own our equity, our PRC subsidiaries may be prohibited from distributing dividends to us or from carrying out other subsequent cross-border foreign exchange activities, and we may be restricted in our ability to contribute additional capital to our PRC subsidiaries, which may adversely affect our operations and our values of the securities we are registering for sale.

Furthermore, if future laws, administrative regulations, or provisions mandate further actions to be taken by us or our PRC subsidiaries with respect to our existing corporate structure, we may face substantial uncertainties as to whether we can complete such actions in a timely manner, or at all. Failure to take timely and appropriate measures to cope with any of these or similar regulatory compliance challenges could materially and adversely affect our current corporate structure, resulting in a material change in our operations and/or a material change in the value of our Ordinary Shares, including that it could cause the value of our Ordinary Shares to significantly decline or become worthless.

Risks Relating to Our Ordinary Shares and the Trading Market

If we fail to implement and maintain an effective system of internal controls, we may be unable to accurately or timely report our results of operations or prevent fraud, and investor confidence and the market price of our Ordinary Shares may be materially and adversely affected.

We are subject to reporting obligations under U.S. securities laws. The SEC adopted rules pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 requiring every public company to include a management report on such company’s internal control over financial reporting in its annual report, which contains management’s assessment of the effectiveness of its internal control over financial reporting. In addition, if we cease to be an “emerging growth company” as such term is defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting on an annual basis. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, after we become a public company, our reporting obligations may place a burden on our management, operational and financial resources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation.

Our failure to implement and maintain effective internal controls over financial reporting could result in errors in our financial statements that could result in a restatement of our financial statements, cause us to fail to meet our reporting obligations and cause investors to lose confidence in our reported financial information, which may result in volatility in and a decline in the market price of our Ordinary Shares.

During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404, we may identify material weaknesses and deficiencies in our internal control over financial reporting. The Public Company Accounting Oversight Board, or PCAOB, has defined a material weakness as “a deficiency, or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim statements will not be prevented or detected on a timely basis.”

In addition, if we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. Generally speaking, if we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our results of operations and lead to a decline in the trading price of our Ordinary Shares. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud, misuse of corporate assets and legal actions under the United States securities laws and subject us to potential delisting from the Nasdaq Capital Market (“Nasdaq”), to regulatory investigations and to civil or criminal sanctions.

As a public company, we incur substantial increased costs as compared to when we were a private company.

We incur significant legal, accounting, and other expenses as a public company that we did not incur as a private company. These additional costs could negatively affect their financial results. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and Nasdaq, impose various requirements on the corporate governance practices of public companies.

Compliance with these laws, rules, and regulations increases our legal and financial compliance costs and makes some corporate activities more time-consuming and costlier. These laws, regulations, and standards are subject to varying interpretations and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. We intend to invest resources to comply with evolving laws, regulations, and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. We have incurred additional costs in obtaining director and officer liability insurance. In addition, we incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons to serve on our board of directors or as executive officers.

We are an “emerging growth company,” as defined in the JOBS Act and will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering (“IPO”), (b) in which we have total annual gross revenue of at least US$1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Ordinary Shares that is held by non-affiliates exceeds US$700 million as of the prior June 30, and (2) the date on which we have issued more than US$1.0 billion in non-convertible debt during the prior three-year period. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 in the assessment of the emerging growth company’s internal control over financial reporting and permission to delay adopting new or revised accounting standards until such time as those standards apply to private companies.

After we are no longer an “emerging growth company,” or until five years following the completion of our initial public offering, whichever is earlier, we expect to incur significant additional expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 and the other rules and regulations of the SEC. For example, as a public company, we have been required to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures.

We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.

Because we are an “emerging growth company,” we may not be subject to requirements that other public companies are subject to, which could affect investor confidence in us and our Ordinary Shares.

For as long as we remain an “emerging growth company,” as defined in the JOBS Act, we will elect to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of shareholder approval of any golden parachute payments not previously approved. Because of these lessened regulatory requirements, our shareholders would be left without information or rights available to shareholders of more mature companies. Further, we elected to use the extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (1) are no longer an emerging growth company or (2) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. If some investors find our Ordinary Shares less attractive as a result, there may be a less active trading market for our Ordinary Shares and our share price may be more volatile.

Substantial future sales of our Ordinary Shares or the anticipation of future sales of our Ordinary Shares in the public market could cause the price of our Ordinary Shares to decline.

An aggregate of 24,535,471 Ordinary Shares are outstanding as of the date of this Annual Report. If our existing shareholders sell, or indicate an intent to sell, substantial amounts of our Ordinary Shares in the public market, the trading price of our Ordinary Shares could decline significantly. Similarly, the perception in the public market that our shareholders might sell our Ordinary Shares could also depress the market price of our shares. A decline in the price of our Ordinary Shares might impede our ability to raise capital through the issuance of additional Ordinary Shares or other equity securities. In addition, the issuance and sale by us of additional Ordinary Shares, or securities convertible into or exercisable for our Ordinary Shares, or the perception that we will issue such securities, could reduce the trading price for our Ordinary Shares as well as make future sales of equity securities by us less attractive or not feasible.

We do not intend to pay dividends for the foreseeable future.

We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. As a result, you may only receive a return on your investment in our Ordinary Shares if the market price of our Ordinary Shares increases.

The market price of our Ordinary Shares may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the initial public offering price.

From the closing of our initial public offering on May 17, 2024 to the date of this Annual Report, the closing price of our Ordinary Shares has ranged from $0.4488 to $15.0799 per share. The trading price of our Ordinary Shares is likely to continue to be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors, including the performance and fluctuation of the market prices of other companies with business operations located mainly in China that have listed their securities in the United States. The securities of some of these companies have experienced significant volatility since their initial public offerings, including, in some cases, substantial price declines in their trading prices. The trading performances of other Chinese companies’ securities after their offerings may affect the attitudes of investors toward Chinese companies listed in the United States in general and consequently may impact the trading performance of our Ordinary Shares, regardless of our actual operating performance.

The market price of our Ordinary Shares may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have filed securities class litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business.

The price of our Ordinary Shares could be subject to rapid and substantial volatility.

There have been instances of extreme stock price run-ups followed by rapid price declines and strong stock price volatility with recent initial public offerings, especially among those with relatively smaller public floats. As a relatively small-capitalization company with a relatively small public float, we may experience greater stock price volatility, extreme price run-ups, lower trading volume, and less liquidity than large-capitalization companies. In particular, our Ordinary Shares may be subject to rapid and substantial price volatility, low volumes of trades, and large spreads in bid and ask prices. Such volatility, including any stock run-ups, may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Ordinary Shares.

In addition, if the trading volumes of our Ordinary Shares are low, persons buying or selling in relatively small quantities may easily influence the price of our Ordinary Shares. This low volume of trades could also cause the price of our Ordinary Shares to fluctuate greatly, with large percentage changes in price occurring in any trading day session. Holders of our Ordinary Shares may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of our Ordinary Shares. As a result of this volatility, investors may experience losses on their investment in our Ordinary Shares. A decline in the market price of our Ordinary Shares also could adversely affect our ability to issue additional Ordinary Shares or other of our securities and our ability to obtain additional financing in the future. No assurance can be given that an active market in our Ordinary Shares will develop or be sustained. If an active market does not develop, holders of our Ordinary Shares may be unable to readily sell the shares they hold or may not be able to sell their shares at all.

Our largest shareholder, Mr. Yuan Li, owns a significant percentage of our Ordinary Shares and may be able to exert significant influence over matters subject to shareholder approval.

As of the date of this Annual Report, our largest shareholder, Mr. Yuan Li, directly or directly controls approximately 47.21% of the aggregate voting power of the issued and outstanding Ordinary Shares. Mr. Yuan Li has the ability to have substantial influence on our Company and matters submitted to our shareholders for approval, including the election and removal of directors and the approval of any merger, consolidation, or sale of all or substantially all of our assets. As a result, our other shareholders may have little or no influence over matters submitted for shareholder approval. In addition, the ownership of our largest shareholder could preclude any unsolicited acquisition of us, and consequently, adversely affect the price of our Ordinary Shares. Our largest shareholder may make decisions that are adverse to your interests.

If we cease to qualify as a foreign private issuer, we would be required to comply fully with the reporting requirements of the Exchange Act applicable to U.S. domestic issuers, and we would incur significant additional legal, accounting and other expenses that we would not incur as a foreign private issuer.

As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as United States domestic issuers, and we are not required to disclose in our periodic reports all of the information that United States domestic issuers are required to disclose. While we currently are qualified as a foreign private issuer, we may cease to qualify as a foreign private issuer in the future, in which case we would incur significant additional expenses that could have a material adverse effect on our results of operations.

Because we are a foreign private issuer and are exempt from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer.

Nasdaq listing rules require listed companies to have, among other things, a majority of its board members be independent. As a foreign private issuer, however, we are permitted to, and we may follow home country practice in lieu of the above requirements, or we may choose to comply with the above requirement within one year of listing. The corporate governance practice in our home country, the Cayman Islands, does not require a majority of our board to consist of independent directors. Thus, although a director must act in the best interests of our Company, it is possible that fewer board members will be exercising independent judgment and the level of board oversight on the management of our Company may decrease as a result. In addition, Nasdaq listing rules also require U.S. domestic issuers to have a compensation committee, a nominating/corporate governance committee composed entirely of independent directors, and an audit committee with a minimum of three members. We, as a foreign private issuer, are not subject to these requirements. Nasdaq listing rules may require shareholder approval for certain corporate matters, such as requiring that shareholders be given the opportunity to vote on all equity compensation plans and material revisions to those plans, certain ordinary share issuances. We intend to comply with the requirements of Nasdaq listing rules in determining whether shareholder approval is required on such matters and to appoint a nominating and corporate governance committee. We may, however, consider following home country practice in lieu of the requirements under Nasdaq listing rules with respect to certain corporate governance standards which may afford less protection to investors.

If we cannot continue to satisfy the continued listing requirements and other rules of the Nasdaq Capital Market, our securities may be delisted, which could negatively impact the price of our securities and your ability to sell them.

In order to maintain our listing on Nasdaq, we are required to comply with certain rules of Nasdaq, including those regarding minimum stockholders’ equity, minimum share price, minimum market value of publicly held shares, and various additional requirements. On December 17, 2024, we received a letter from the Listing Qualifications Department of Nasdaq notifying us that we are not in compliance with the minimum bid price requirement as set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on Nasdaq. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have been provided 180 calendar days, or until June 16, 2025, to regain compliance with Nasdaq Listing Rule 5550(a)(2). To regain compliance, the Ordinary Shares must have a closing bid price of at least US$1.00 for a minimum of 10 consecutive business days. In the event we do not regain compliance by June 16, 2025, we may be eligible for additional time to regain compliance or may face delisting.

If Nasdaq subsequently delists our securities from trading, we could face significant consequences, including:

Anti-takeover provisions in our amended and restated memorandum and articles of association may discourage, delay, or prevent a change in control.

Some provisions of our amended and restated memorandum and articles of association, may discourage, delay, or prevent a change in control of our Company or management that shareholders may consider favorable, including, among other things, the following:

The laws of the Cayman Islands may not provide our shareholders with benefits comparable to those provided to shareholders of corporations incorporated in the United States.

We are an exempted company incorporated under the laws of the Cayman Islands with limited liability. Our corporate affairs are governed by our amended and restated memorandum and articles of association, as amended from time to time, the Companies Act (As Revised) of the Cayman Islands, or the “Cayman Companies Act,” and by the common law of the Cayman Islands. The rights of shareholders to take action against our directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law in the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands and from English common law, the decisions of the English courts are generally of persuasive authority but are not binding in the courts of the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedents in the United States. In particular, the Cayman Islands has a less developed body of securities laws relative to the United States. Therefore, our public shareholders may have more difficulty protecting their interests in the face of actions by our management, directors, or controlling shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States.

Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records (other than the memorandum and articles of association, the register of mortgages and charges and any special resolutions passed by shareholders) or to obtain copies of the register of members of these companies. Under Cayman Islands law, the names of current directors can be obtained from a search conducted at the Registrar of Companies in the Cayman Islands. Our directors have discretion under our amended and restated articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by our management, members of the board of directors, or controlling shareholders than they would as public shareholders of a company incorporated in the United States.

You may be unable to present proposals before annual general meetings or extraordinary general meetings not called by shareholders.

The Cayman Companies Act provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting. These rights, however, may be provided in a company’s articles of association. Our amended and restated articles of association allow our shareholders holding shares representing in aggregate not less than 10% of our voting share capital in issue, to requisition a general meeting of our shareholders, in which case our directors are obliged to call such meeting. Advance notice of at least five clear days is required for the convening of our annual general shareholders’ meeting and any other general meeting of our shareholders. A quorum required for a meeting of shareholders consists of at least one shareholder present or by proxy, representing not less than one-third of the total issued shares carrying the right to vote at a general meeting of our Company. For these purposes, “clear days” means that period excluding (a) the day when the notice is given or deemed to be given and (b) the day for which it is given or on which it is to take effect.

If we are classified as a PFIC, United States taxpayers who own our Ordinary Shares may have adverse United States federal income tax consequences.

A non-U.S. corporation such as us will be classified as a PFIC, which is known as a PFIC, for any taxable year if, for such year, either

Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business), and gains from the disposition of passive assets.

If we are determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. taxpayer who holds our Ordinary Shares, the U.S. taxpayer may be subject to increased U.S. federal income tax liability and may be subject to additional reporting requirements.

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Depending on the amount of assets held for the production of passive income, it is possible that, for our 2022 taxable year or for any subsequent year, more than 50% of our assets may be assets which produce passive income, in which case we would be deemed a PFIC, which could have adverse U.S. federal income tax consequences for U.S. taxpayers who are shareholders. We will make this determination following the end of any particular tax year. For purposes of the PFIC analysis, in general, a non-U.S. corporation is deemed to own its pro rata share of the gross income and assets of any entity in which it is considered to own at least 25% of the equity by value.

For a more detailed discussion of the application of the PFIC rules to us and the consequences to U.S. taxpayers if we were or are determined to be a PFIC, see “Item 10. Additional Information — E. Taxation — United States Federal Income Taxation — PFIC Consequences.”

Nasdaq may apply additional and more stringent criteria for continued listing, since we plan to have a insiders hold a large portion of our listed securities.

Nasdaq Listing Rule 5101 provides Nasdaq with broad discretionary authority over the continued listing of securities on Nasdaq and Nasdaq may use such discretion to apply additional or more stringent criteria for continued listing of particular securities, or suspend or delist particular securities based on any event, condition, or circumstance that exists or occurs that makes continued listing of the securities on Nasdaq inadvisable or unwarranted in the opinion of Nasdaq, even though the securities meet all enumerated criteria for continued listing on Nasdaq. In addition, Nasdaq has used its discretion to deny initial or continued listing or to apply additional and more stringent criteria in the instances, including where the company engaged an auditor that has not been subject to an inspection by the PCAOB, an auditor that PCAOB cannot inspect, or an auditor that has not demonstrated sufficient resources, geographic reach, or experience to adequately perform the company’s audit.

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Item 4. INFORMATION ON THE COMPANY

Corporate History and Structure

Kebiao Technology was established on April 28, 2020, as a limited liability company organized under the laws of the PRC. On December 14, 2022, Kebiao Technology was acquired by Jiade Zhigao, a limited liability company organized on May 6, 2022 under the laws of the PRC, from Yuan Li and Zhirong Zhou, two previous owners of Kebiao Technology for a total consideration of RMB2,000,000. On December 2, 2022, WISMASS HK, a company incorporated in Hong Kong on October 24, 2022 and then a wholly owned subsidiary of WISMASS BVI, entered into a share transfer agreement with Yuan Li, who was then the 51.33% owner of Jiade Zhigao, to acquire 9% of the equity interests in Jiade Zhigao from Yuan Li for a total consideration of RMB180,000. Consequently, Jiade Zhigao became a foreign-invested enterprise in the PRC. On May 26, 2023, WISMASS HK entered into a share subscription agreement with Jiade Zhigao to purchase newly issued 9.8901% of the equity interests in Jiade Zhigao, for a total consideration of RMB751,648. As of the date of this Annual Report, WISMASS HK owns 18% of the equity interests in Jiade Zhigao.

In connection with our initial public offering, we have undertaken a reorganization of our corporate structure in the following steps:

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On December 2, 2024, the registered capital of Shenzhen Kebiao was increased from RMB2,075,147 to RMB38,304,147. The additional RMB 36,229,000 (approximately US$5 million) was subscribed and fully paid by its shareholder, Jiadezhigao HK. The entire amount of US$5 million was recorded as paid-in capital. Following this capital contribution, Jiadezhigao HK’s equity interest in Shenzhen Kebiao increased to 99.9472%. On June 13, 2024, Shenzhen Kebiao subscribed for an additional 2.4965% equity interest in Jade Zhigao at a price of RMB16,453,868 (approximately US$2.27 million). Of such amount, RMB56,183 (approximately US$7,751) was recorded as paid-in capital and RMB16,397,685 (approximately US$2,262,249) was recorded as capital reserve. Following the capital contribution, Shenzhen Kebiao held 82.4444% of the equity interests in Jade Zhigao, and WISMASS HK held the remaining 17.5556% of the equity interests in HK.

On December 24, 2024, Jiade Zhigao entered into an equity transfer agreement (the “Kunyuan Agreement”) with Chengdu Meirusi Technology Co., Ltd. (“Meirusi”), which is a PRC limited liability company holding 75% of the equity interests in Sichuan Kunyuan Safety Technology Services Co., Ltd. (“Kunyuan”), to acquire 75% of the equity interests in Kunyuan from Meirusi (the “First Acquisition”). In consideration for the First Acquisition, Jiade Zhigao agreed to pay RMB9,000,000 (approximately US$1,234,000) to Meirusi, subject to the satisfaction by Meirusi and Kunyuan of their obligations under the Kunyuan Agreement. On December 24, 2024, Jiade Zhigao also entered into an equity transfer agreement (the “Jiazhi Agreement”) with Meirusi, the sole shareholder of Sichuan Jiazhi Taizhang Safety Technology Co., Ltd. (“Jiazhi”), to acquire 100% of the equity interests in Jiazhi from Meirusi (the “Second Acquisition”). In consideration for the Second Acquisition, Jiade Zhigao agreed to pay RMB23,000,000 (approximately US$3,153,000) to Meirusi, subject to the satisfaction by Meirusi and Jiazhi of their obligations under the Jiazhi Agreement. As a result of the First Acquisition and the Second Acquisitions, Kunyuan and Jiazhi became the PRC operating entities of Jiade Cayman on January 9, 2025 and January 26, 2025, respectively. See “Note 19 – Subsequent Events” in the notes to our consolidated financial statements.

The following chart illustrates our corporate structure as of the date of this Annual Report.

Notes:

We are subject to certain legal and operational risks associated with the business operations of our PRC subsidiaries being based in China, which could cause the value of our securities to significantly decline or become worthless. Applicable PRC laws and regulations governing such current business operations are sometimes vague and uncertain, and as a result these risks may result in material changes in the operations of our PRC subsidiaries, significant depreciation or a complete loss of the value of our Ordinary Shares, or a complete hindrance of our ability to offer, or continue to offer, our securities to investors. Recently, the PRC government adopted a series of regulatory actions and issued statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. As confirmed by our PRC counsel, China Commercial Law Firm, we are not subject to cybersecurity review or network data security review by the CAC under the Cybersecurity Review Measures, or if the draft Regulations on the Network Data Security Administration (Draft for Comments) (the “Security Administration Draft”) are enacted as proposed, because our PRC subsidiaries are not critical information infrastructure operators (“CIIOs”) or online platform operators that possess personal information of at least one million users or engage in data processing activities that affect or may affect national security. Since these statements and regulatory actions are new, however, it is highly uncertain how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on our daily business operation, ability to accept foreign investments, and our continuous listing on the Nasdaq Stock Market. See “Item 3. Key Information — D. Risk Factors — Risks Relating to Doing Business in the PRC — Greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our PRC subsidiaries’ business and our offerings.”

In addition, our Ordinary Shares may be prohibited from trading on a national exchange under the Holding Foreign Companies Accountable Act (the “HFCA Act”) if the Public Company Accounting Oversight Board (United States) (the “PCAOB”) is unable to inspect our auditors for two consecutive years, as amended, beginning in 2022. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, and on December 29, 2022, the Consolidated Appropriations Act was signed into law by former President Biden, which contained, among other things, an identical provision to the Accelerating Holding Foreign Companies Accountable Act, which reduced the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two. On December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB- registered public accounting firms headquartered in mainland China and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions. Our auditor prior to January 20, 2025, ZH CPA LLC, had been inspected by the PCAOB on a regular basis in the ordinary course of the audit period in which it was engaged. Our auditor since January 20, 2025, Enrome LLP, is headquartered in Singapore, and will be subject to inspection by the PCAOB on a regular basis. Neither ZH CPA LLC nor Enrome LLP is subject to the determination issued by the PCAOB on December 16, 2021. However, the recent developments may add uncertainties to our offerings, and we cannot assure you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements. If trading in our Ordinary Shares is prohibited under the HFCA Act in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at such future time, Nasdaq may determine to delist our Ordinary Shares and trading in our Ordinary Shares could be prohibited. On August 26, 2022, the CSRC, the MOF, and the PCAOB signed the Protocol, governing inspections and investigations of audit firms based in mainland China and Hong Kong, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB will consider the need to issue a new determination. See “Item 3. Key Information — D. Risk Factors — Risks Relating to Doing Business in the PRC — Recent joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and the Holding Foreign Companies Accountable Act all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our continued listing or future offerings of our securities in the U.S.”

Corporate Information

Our headquarters are located at 18/F, Block D, Huirong Plaza, No. 88, Section 3, Jinhua Road, Jinjiang District, Chengdu City, Sichuan Province, China, and our phone number is (+86) 400-028-0776. Our English website address is ir.sckbkj.com. The information contained in, or accessible from, our website or any other website does not constitute a part of this Annual Report. Our agent for service of process in the United States is Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, NY 10168.

The SEC maintains a website at www.sec.gov that contains reports, proxy, and information statements, and other information regarding issuers that file electronically with the SEC using its EDGAR system.

For information regarding our principal capital expenditures, see “Item 5. Operating and Financial Review and Prospects — B. Liquidity and Capital Resources — Capital Expenditures.”

B. Business Overview

Overview

We are an exempted company with limited liability incorporated in the Cayman Islands and not a Chinese operating company, and this corporate structure involves unique risks to investors. As a holding company with no material operations of our own, we conduct all of our operations primarily through our PRC subsidiaries. Our PRC subsidiaries provide one-stop comprehensive education supporting services to adult education institutions, through a wide spectrum of software platform and auxiliary solutions, to meet the evolving needs of their customers in the rapidly changing adult education industry.

Our PRC subsidiaries’ services are primarily offered through the KB Platform, which facilitates streamlined information and data management throughout the teaching cycle of adult education services, from pre-enrollment to post-graduation. The KB Platform has enabled adult education institutions to improve student management efficiency, save labor costs, and reduce human errors in data management. The KB Platform supports a broad range of functions, such as enrollment consultation, student information collection, enrollment status management, learning progress management, grade inquiry, and graduation management.

As part of the one-stop comprehensive education supporting services, our PRC subsidiaries also provide auxiliary solutions to adult education institutions, which encompass teaching support services throughout the entire teaching cycle and related exam administration services. Specifically, our PRC subsidiaries offer pre-enrollment guidance on school/major selection and application strategy development, training for entrance exams, as well as assistance in the application process. They also provide offline tutoring, exam administration services, and guidance on graduation thesis preparation.

Our PRC subsidiaries place a great premium on technology research and development. As of the date of this Annual Report, our PRC subsidiaries have acquired 36 software copyrights and 8 copyright registration certificates since their incorporation in April 2020. In November 2022, Kebiao Technology, one of our PRC subsidiaries, was designated a High and New Technology Enterprise (“HNTE”) (No. GR202251000919) by Sichuan Provincial Department of Science and Technology, Sichuan Provincial Department of Finance, and Sichuan Provincial Tax Bureau of the State Taxation Administration. This certification is awarded to companies that have engaged in continuous research and development and technology commercialization leading to significant independent intellectual property rights within certain high-tech sectors.

Our PRC subsidiaries’ business has experienced rapid growth since their inception. For the years ended December 31, 2022, 2023, and 2024, we had total revenue of approximately RMB10,239,000, RMB15,571,000, and RMB18,742,000 (US$2,568,000), respectively. Our net income was approximately RMB5,360,000, RMB9,562,000, and RMB5,607,000 (US$768,000) for the respective years. As of December 31, 2022, 2023, and 2024, we had cash of approximately RMB2,604,000, RMB7,082,000, and RMB3,918,000 (US$537,000), respectively, and had working capital of approximately RMB6,589,000, RMB15,403,000, and RMB21,262,000 (US$2,913,000), respectively. As of December 31, 2024, our PRC subsidiaries had accumulatively provided technological support services to over 17 adult education institutions and had accumulatively provided support services to approximately 88,807 students.

Our Competitive Strengths

We believe that the following competitive strengths have contributed to our success and differentiated us from our competitors:

Wide-Ranging Software Platform and Auxiliary Solutions Spanning the Whole Teaching Cycle

Our PRC subsidiaries provide a broad spectrum of software platform and auxiliary solutions to adult education institutions, encompassing the entire teaching cycle of adult education services. From student enrollment to academic administration, our PRC subsidiaries’ offerings cover all stages of educational process, including pre-enrollment, course completion, and post-graduation. See “—One-Stop Comprehensive Education Supporting Services.” Through the broad array of software platform and auxiliary solutions, our PRC subsidiaries provide their customers with one-stop comprehensive services in support of adult education, which not only foster customer satisfaction, but also increase revenue potential by reaching a wider customer base and meeting their diverse needs. Our PRC subsidiaries’ diverse service offerings enable them to stay nimble and responsive to the rapidly evolving adult education and technology landscape, and empowers them to meet the ever-changing needs of their customers with agility and precision.

Competitive Technological Advantages Fueled by Proprietary Software and Tech-driven Strategies

Our PRC subsidiaries value technology research and development and have invested approximately RMB21,267,000 (US$2,914,000) in independent technology research and development since April 2020. They have developed and upgraded various software systems or platforms, including the KB Platform, the Enrollment Information Automation Management System, the Backend Management System for Academic Administration, and the Education Service Management System. As of the date of this Annual Report, our PRC subsidiaries have already acquired 36 software copyrights and 8 copyright registration certificates for those software systems or platforms. In 2022, Kebiao Technology, one of our PRC subsidiaries, was designated an HNTE (No. GR202251000919). Our PRC subsidiaries are tech-focused companies constantly advancing their proprietary technologies, enabling them to maintain a competitive edge in the market.

Robust Governmental Polices That Bolstered the Fast-Growing Adult Education Industry

Our PRC subsidiaries have strong growth potential as they operate within a rapidly expanding industry that is bolstered by a series of favorable governmental policies. Since 2019, the PRC government has continuously implemented regulations and policies to promote adult education. In 2020, the MOE issued the Action Plan for Improving the Quality of Vocational Education (2020-2023), which focuses on providing high-quality, equitable, and outstanding vocational education. In 2021, the MOE issued the Notice of the General Office of the Ministry of Education on Strengthening the Management of Social Adult Education, which aims to standardize and develop social adult education. In 2022, the General Office of the Central Committee of the Communist Party of China issued the Outline of the Strategic Plan for Expanding Domestic Demand (2022-2035), which encourages society to provide a variety of educational services, support and standardize off-campus educational development, and steadily reform the management of private education. In 2022, the General Office of the Central Committee of the Communist Party of China also issued the Opinions on Deepening the Construction and Reform of Modern Vocational Education System, which aim to place a more prominent position on the development of high-quality modern vocational education and promote collaborative innovation among vocational education, higher education, and continuing education. The opinions have established specific targets, including enrolling no less than 10% of higher vocational enrollment in undergraduate vocational education by 2025 and achieving a world-class level of vocational education overall by 2035. Such robust governmental policies have provided our PRC subsidiaries with significant advantages, including favorable business environment, increasing customer demand, and ample funding opportunities.

Visionary and Experienced Management and Business Teams with Strong Technical and Operational Expertise

Our senior management and business teams’ extensive industry experience, insightful perspectives, and proven track record of execution are the driving factors behind our success. Mr. Yuan Li, our founder, Chief Executive Officer, and Chairman of the Board of Directors, has over a decade of experience in the education industry. He previously served as a general manager at a prominent education institution in China. Mr. Li has spearheaded the design and development of multiple training and education software programs, and is a senior expert in education and qualification enhancement. Mr. Xiang Lan, our Chief Operating Officer, has over 13 years of experience in marketing and human resources management. Mr. Lan served as a human resource manager at a distinguished international company and a regional executive at a leading private enterprise in China. Ms. Li Tan, our Chief Financial Officer, has over five years of experience in accounting and financial management. Ms. Tan served as a management accountant at various private companies in the PRC, responsible for conducting financial analysis, reporting, and oversight. See “Item 6. Directors, Senior Management and Employees.” Under the leadership of the management, our PRC subsidiaries have successfully identified and capitalized on the opportunities for growth in the adult education supporting service industry.

Our Growth Strategy

Our PRC subsidiaries intend to develop their business and strengthen brand loyalty by implementing the following strategies:

Further Expand Our PRC subsidiaries’ Business into New Markets with Unmet Demand

The adult education industry in China is evolving rapidly. According to the industry report of Frost & Sullivan (Beijing) Inc., Shanghai Branch Co., which we commissioned, the market size of the adult education industry in China increased from approximately RMB665 billion in 2016 to approximately RMB1,216 billion in 2021, representing a compound annual growth rate (“CAGR”) of approximately 12.8%, and it is expected to further increase to approximately RMB1,880 billion in 2016, with a CAGR of approximately 9.1%. We believe the growth of the adult education market will fuel the need for adult education technology services, as adult education institutions and organizations seek to streamline their enrollment and management procedures and to optimize the learning experiences of their students, which will create an enormous opportunity for education technology service providers such as our PRC subsidiaries.

To seize the potential growth opportunities in the adult education supporting service market, our PRC subsidiaries will continue their efforts to expand into new markets. Currently, our PRC subsidiaries mainly operate in Chengdu City and serve customers throughout Sichuan Province, where they had approximately 22,000 annual student enrollments as of December 31, 2024, which accounted for approximately 3.0% of the total adult education market in Sichuan Province. Since our PRC subsidiaries have established a set of processes and standards that can be replicated and promoted among their adult education institution partners to improve the efficiency and quality of their business collaboration, our PRC subsidiaries are well positioned to expand their business into additional cities and regions in Sichuan as well as other provinces, and to take advantage of the immense growth opportunities presented by the rapidly expanding market for adult education.

Expand Our PRC Subsidiaries’ Offerings with a Focus on Production Safety Training and Vocational Skills Development

Our PRC subsidiaries endeavor to further diversify their service offerings to include production safety training and related examination services. To that end, they plan to develop software for production safety training and exams, offer training and examination support services, and venture into the vocational skills training and examination market. The PRC government has implemented robust policies and regulations to prioritize safety production, and supports institutions that provide specialized training in this field. As the PRC government continues to prioritize emergency management and safety production, it is anticipated that the number of specialized training institutions in this field will increase, in line with government policies and strategic initiatives.

In light of the PRC government’s gradual standardization of production safety training and assessment, and the mandatory certification of certain positions, there is a significant demand for training and examination services in this particular area. For example, from 2019 to 2022, the annual assessments for special operators averaged over 400,000, making it the largest proportion in safety production training and examination in Sichuan Province. Our PRC subsidiaries plan to expand their market share by developing safety training and examination software, acquiring safety production training and examination institution licenses, and establishing more safety training and examination bases. In January 2025, we completed the acquisition of the two such bases. See “Note 19 – Subsequent Events” in the notes to our consolidated financial statements. We plan to fund our PRC subsidiaries’ efforts to develop production safety training and related examination services with our working capital and the proceeds received from our initial public offering. Our PRC subsidiaries aim to achieve an annual training and examination volume of 20,000. By 2025, our PRC subsidiaries aim to significantly increase profits and the number of trainees, and to establish three additional safety training and examination bases.

Continue to Invest in Technology Research and Development to Develop and Update Existing and New Software Systems and Expand Business and Profitability

Our PRC subsidiaries intend to continually invest in technology to increase their customers’ operating efficiency and enhance students’ learning experience. For example, our PRC subsidiaries plan to further improve their technologies for tracking and analyzing massive student data in real-time to improve teaching quality and enhance learning experience. They plan to improve their data analytics by leveraging artificial intelligence, thereby providing data-driven insights that may enhance their services. Moreover, to further encourage student engagement and interactions, our PRC subsidiaries plan to optimize and develop attractive new features for their software platforms, such as an online mock exam assessment tool and a database of faculty and teaching resources for graduate thesis guidance. Additionally, our PRC subsidiaries plan to enhance their customers’ marketing and enrollment efficiency by streamlining the process for prospective students to discover suitable programs and developing new tools, such as chatbot and real-time tactical support. Our PRC subsidiaries’ continuous investment in technology research and development will support the rapid growth of their business and establishes a technology-driven growth edge for the future.

Pursue Additional Strategic and Financially Attractive Acquisitions

Our PRC subsidiaries endeavor to identify, acquire, and integrate businesses that will complement and expand their adult education technology services, such as upstream and midstream companies in the adult education industry, while achieving synergies and generating attractive returns that are well in excess of their cost of capital. We plan to fund our PRC subsidiaries’ efforts to pursue such strategic acquisitions with the proceeds received from our initial public offering. Using their disciplined approach for screening and evaluating potential opportunities, our PRC subsidiaries intend to continue to seek strategically and financially attractive acquisition targets that provide them with new capabilities. Our PRC subsidiaries have significant internal resources dedicated to tracking potential acquisition prospects which are formally reviewed by senior management on a regular basis. We believe that our PRC subsidiaries will continue to be an acquirer of choice in their industry and transact with smaller players at valuation levels that are attractive on a relative basis.

Our Business Model

Our PRC subsidiaries currently generate revenue from providing one-stop comprehensive education supporting services, through a wide spectrum of software platform and auxiliary solutions, to adult education institutions and organizations, enabling them to optimize their educational administration efficiency. Our PRC subsidiaries typically receive service fees, based on the number of the students serviced and the types of services they provide, typically ranging from RMB300 to RMB800 per person per year.

Customers

Our PRC subsidiaries primarily serve adult educational institutions in the PRC, which offer a variety of educational programs and courses for adults, including vocational training, professional development, and training courses for adult college entrance examinations and self-taught higher education examinations. As of the date of this Annual Report, our customers mainly focus on the following three areas of education: (i) National Unified Examination for College Admissions for Adults, (ii) the Open University of China, and (iii) Self-taught Higher Education Examinations. During the years ended December 31, 2022, 2023, and 2024, our PRC subsidiaries served 16, 12, and 11 customers, respectively. During the year ended December 31, 2022, the top three customers of our PRC subsidiaries, Chengdu Jinjiang New Vision Training School, New Vision Huoda (Chengdu) Educational Technology Co., Ltd., and Shenzhen Jiawen Management Consulting Co., Ltd., accounted for 50%, 19%, and 8% of our total revenue, respectively. For the year ended December 31, 2023, the top three customers of our PRC subsidiaries, Chengdu Jinjiang New Vision Training School, New Vision Huoda (Chengdu) Educational Technology Co., Ltd., and Sichuan Action Education & Technology Co., Ltd., accounted for 40%, 29%, and 18% of our total revenue, respectively. For the year ended December 31, 2024, the top three customers of our PRC subsidiaries, Chengdu Jinjiang New Vision Training School, New Vision Huoda (Chengdu) Educational Technology Co., Ltd., and Sichuan Cultural Investment Digital Culture Industry Co., Ltd, accounted for 34%, 30%, and 21% of our total revenue, respectively.

As an example of a typical transaction, under a service agreement entered into between Kebiao Technology, one of our PRC subsidiaries, and an adult education institution customer (the “Customer”), Kebiao Technology is required to (i) provide a range of auxiliary solutions to the Customer’s students, including enrollment, Q&A support, and tutoring services related to their courses and studies, (ii) timely respond to any question and request raised by the Customer’s students regarding the enrollment, courses, and examinations; (iii) maintain the software platforms provided by Kebiao Technology and ensure their reliability and functionality, including timely responding to various technical issues raised by the Customer’s students regarding live streaming, video replay, and document downloads; and (iv) keep and handle with care all information, data, and materials provided by the Customer, and are prohibited from using such information outside the scope of the service agreement or disclosing it to any third party. Pursuant to the service agreement, the Customer is required to pay service fees, within three months after settlement confirmation by both parties, based on the actual number of students served and the type of services provided, typically ranging from RMB300 to RMB800 per person per year. The service agreement typically has a term of one year and may be terminated (i) by Kebiao Technology if the Customer fails to make payments or a bankruptcy, liquidation, or other similar procedure occurs with respect to the Customer, or by (ii) the Customer if Kebiao Technology fails to the provide the services specified by the agreement and does not rectify the issues after receiving written notice from the Customer, or fails to maintain the confidentiality of the Customer’s information (including, but not limited to, personal information on the Customer’s students and other valuable data), resulting in disclosure of such information due to intentional or negligent actions.

Suppliers

The suppliers of our PRC subsidiaries consist primarily of service providers related to our offline auxiliary solutions, such as exam administration services and enrollment consulting services. No single supplier represented 10% or more of our PRC subsidiaries’ total purchases for the years ended December 31, 2022, 2023, and 2024.

One-Stop Comprehensive Education Supporting Services

Our PRC subsidiaries provide one-stop comprehensive education supporting services, through a wide range of software platforms and auxiliary solutions to adult education institutions, covering the whole teaching cycle of adult education services, from student enrollment to academic administration to graduation support.

As of the date of this Annual Report, our PRC subsidiaries’ services are primarily offered through the KB Platform, a self-developed software platform that includes multiple systems, such as (i) the enrollment assessment system, (ii) the student information management system; (iii) the marketing system; (iv) the information announcement system; and (v) the student performance management system. The KB Platform has enabled adult education institutions to improve student management efficiency, save labor costs, and avoid human errors caused by data mismanagement. Our PRC subsidiaries’ offerings cover all of the stages of the educational process, from pre-enrollment through the course of study to post-graduation.

Furthermore, as part of our one-stop comprehensive education supporting services, our PRC subsidiaries provide auxiliary solutions in addition to their services provided through the KB Platform. Auxiliary solutions encompass teaching support services throughout the entire teaching cycle and related exam administration services. Specifically, in the pre-enrollment stage, our PRC subsidiaries (i) assist institution customers in developing tailored enrollment strategies and policies, based on their specific needs and resources; (ii) offer prospective students expert guidance on selecting suitable school/majors and developing application strategies, based on their assessment results through the assessment system on the KB Platform; (iii) provide training for entrance exams for their target schools and majors, such as offering training materials and practice questions; and (iv) provide assistance in the application process, such as analyzing the standardized breakdown of the application. Throughout the course of study, our PRC subsidiaries further provide offline face-to-face tutoring support to complement their online Q&A tutoring. In addition, our PRC subsidiaries also provide exam administration services, such as facilitating exam venue rentals and supporting exam administration. Regarding graduation support, the PRC subsidiaries also offer guidance on graduation theses, with the help of their pool of cooperative experts, as well as plagiarism checks for graduation theses and social practice assistance.

Software Platform

As of the date of this Annual Report, our PRC subsidiaries’ services have been offered primarily through the KB Platform, which is a copyrighted software platform developed by our PRC subsidiaries and designed for educational institutions to efficiently manage enrollment processes and record and organize student information and data. The KB Platform includes multiple systems, including (i) the enrollment assessment system; (ii) the student information management system; (iii) the marketing system; (iv) the information announcement system; and (v) the student performance management system.

Upon successful login, the adult education institution customer is presented with the system navigation interface. By selecting the left-hand navigation menu, the relevant systems and modules, such as student management, financial management, and information announcement, are displayed on the right-hand side. Below are screenshots of the login and the system navigation interface of the KB Platform:

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Technology

The success of our PRC subsidiaries’ business depends on their proprietary technologies. As of the date of this Annual Report, our PRC subsidiaries have already acquired 36 software copyrights and 8 copyright registration certificates. In 2022, Kebiao Technology, one of our PRC subsidiaries, was designated an HNTE (No. GR202251000919). Below is a list of representative software copyrights developed by our PRC subsidiaries that have been, or are expected to be, utilized to support their technical services for adult education institutions:

Competition

The adult education supporting service industry in the PRC are competitive and rapidly evolving, with many new companies joining the competition in recent years and few leading companies. We believe that our PRC subsidiaries’ ability to compete effectively for customers depends upon many factors, including the quality, reliability, and security of their software products, the quality of customer services and support, partnerships and collaborations with adult educational institutions, and the strength of their reputation and brands in the industry. We believe that our PRC subsidiaries are well-positioned to effectively compete in the adult education supporting service industry based on the factors listed above. Some of their current or future competitors, however, may have longer operating histories, greater market reputation, broader product and service offerings, or greater financial, technical, or marketing resources than our PRC subsidiaries do. For a discussion of risks relating to competition, see “Item 3. Key Information – D. Risk Factors — Risks Relating to Our Business and Industry — Our PRC subsidiaries face competition in the market for adult education supporting services, and we expect competition from existing competitors and other companies that may enter the market or introduce new solutions in the future, which could result in pricing pressures and a decline in both our market share and revenue.”

Intellectual Property

Our PRC subsidiaries regard their software copyrights, domain names, trade secrets, and similar intellectual property as critical to their success. Our PRC subsidiaries rely on a combination of copyright and trademark law, and confidentiality and non-disclosure agreements to protect their intellectual property rights. Our PRC subsidiaries also regularly monitor any infringement or misappropriation of their intellectual property rights.

As of the date of this Annual Report, our PRC subsidiaries have registered:

As of the date of this Annual Report, our PRC subsidiaries have one pending trademark application in the PRC.

Our PRC subsidiaries implement comprehensive measures to protect their intellectual property in addition to making software copyright and trademark registration applications. Our PRC subsidiaries’ key measures to protect their intellectual property include: (i) hiring outside legal counsel to assist in the protection of their intellectual property; (ii) timely registration and filing with relevant authorities and application of intellectual property right protection for their significant technologies and self-developed software; and (iii) conducting code reviews for their self-developed software to prevent copyright infringement.

Employees

Our PRC subsidiaries had 18, 22, and 22 full-time employees as of December 31, 2022, 2023, and 2024, respectively. The following table sets forth the number of our full-time employees as of December 31, 2024:

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Our PRC subsidiaries enter into employment contracts with a confidentiality clause with our full-time employees.

We believe that our PRC subsidiaries maintain a good working relationship with their employees, and they have not experienced material labor disputes in the past. None of their employees are represented by labor unions.

Facilities

Our principal executive offices are located in 18/F, Block D, Huirong Plaza, No. 88, Section 3, Jinhua Road, Jinjiang District, Chengdu City, Sichuan Province, China, where Kebiao Technology leases an office from an independent third party, Chengdu Huichuan Hechuang Commercial Operation Management Co., Ltd., with an area of approximately 10,722 square feet, with a lease term from July 5, 2024 to July 4, 2026 and with a monthly rent of RMB49,805.

We believe that the facilities that our PRC subsidiaries currently lease are generally adequate to meet their needs for the foreseeable future.

Insurance

As required by regulations in China, our PRC subsidiaries participate in various employee social security plans that are organized by municipal and provincial governments for their full-time employees, including pension, unemployment insurance, maternity insurance, work-related injury insurance, medical insurance, and housing funds plan. Our PRC subsidiaries are required under PRC law to make contributions from time to time to employee benefit plans for their full-time employees at specified percentages of the salaries, bonuses, and certain allowances of such employees, up to a maximum amount specified by the local governments in China. Our PRC subsidiaries have not made adequate social security and housing fund contributions for all employees, and they may be required to make up for the shortfall in the social security contributions as well as to pay late fees at the rate of 0.05% per day of the outstanding amount from the due date. See “Item 3. Key Information — D. Risk Factors — Risks Relating to Doing Business in the PRC — Our PRC subsidiaries have not made adequate social insurance and housing fund contributions for all employees as required by PRC regulations, which may subject them to penalties.” Our PRC subsidiaries do not maintain directors and officers liability insurance, group comprehensive life insurance for employees, property insurance, business interruption insurance, or general third-party liability insurance. We believe the insurance coverage our PRC subsidiaries maintain is in line with the industry. See “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Business and Industry — Our PRC subsidiaries may not maintain adequate insurance, which could expose them to significant costs and business disruption.”

Seasonality

Our PRC subsidiaries’ business is not subject to seasonality.

Legal Proceedings

Our PRC subsidiaries are not currently a party to any legal proceedings that in the opinion of their management would have a material adverse effect on their business. From time to time, our PRC subsidiaries may become a party to various legal or administrative proceedings arising in the ordinary course of their business, including actions with respect to intellectual property infringement, violation of third-party licenses or other rights, breach of contract, and labor and employment claims.

Regulations

This section sets forth a summary of the principal PRC laws, regulations, and rules relevant to our PRC operating entities’ business and operations in China.

Regulations Related to Adult and Vocational Education

On July 5, 2021, the General Office of the Ministry of Education, enacted the Notice of Education on Strengthening the Management of Social Adult Education and Training (the “Notice No. 14”). The Notice No. 14 requires education administrative departments in different regions, including human resources, social security, civil affairs, market supervision, and other departments, to actively coordinate and cooperate with each other to strengthen the management of adult education and training and focus on the following aspects: ensuring the correct direction of education, standardizing the names of education institutions, enhancing enrollment management, selecting training content, optimizing teacher teams, innovating training models, improving fund management, guiding industry self-discipline, strengthening safety management, and implementing special governance measures.

On May 15, 1996, the National People’s Congress (the “NPC”) enacted the Vocational Education Law of the PRC (the “Vocational Education Law”), which was amended on April 20, 2022. The Vocational Education Law sets forth provisions on the general principles, basic system, and implementation guidelines for vocational education. The PRC government encourages the development of various levels and forms of vocational education, promotes diversified education, and supports the widespread and equal participation of social forces in vocational education. Vocational education includes vocational school education that is divided into secondary vocational school education and higher vocational school education, and vocational training includes pre-employment training, on-the-job training, reemployment training, and other vocational training offered by the corresponding vocational training institutions or vocational schools.

On September 16, 2020, the MOE and the Ministry of Human Resources and Social Security with seven other government departments jointly released and enacted the Action Plan for Improving the Quality of Vocational Education (2020-2023) (the “Action Plan No. 7”). The Action Plan No. 7 emphasizes that vocational education is as important as general education, establishes the goals of the development of vocational education, and stipulates the hierarchical structure of vocational schools, among other things.

On December 14, 2022, the Central Committee of the Communist Party of China and the State Council jointly released and enacted the Outline of the Strategic Plan for Expanding Domestic Demand (2022- 2035) (the “Outline”). The Outline aims to improve the quality of educational services and to improve the system of vocational and technical education and training to enhance the adaptability of vocational and technical education. The Outline encourages social forces to provide diversified educational services, supports and standardizes the development of private education, regulates extracurricular education and training behavior comprehensively, promotes the steady reform of classified management of private education, and carries out high-level foreign cooperative education.

On December 21, 2022, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council enacted the Opinions on Deepening the Construction and Reform of Modern Vocational Education System. The Opinions on Deepening the Construction and Reform of Modern Vocational Education System propose promoting the construction and reform of the modern vocational education system, optimizing the vocational education types, exploring new models for construction of provincial modern vocational education system, building municipal industry education consortium, building industry education integration community, enhancing the key educational capabilities of vocational schools, developing teaching teams with both theoretical and practical skills, and building open regional practice centers for industry education integration.

The educational support services provided by our PRC subsidiaries to cooperative educational institutions align with the principles advocated by the aforementioned laws and regulations. Our PRC subsidiaries have not provided vocational education and training activities yet but will carry out relevant vocational education and training activities after obtaining relevant permits for vocational school education and vocational training. Our PRC subsidiaries have obtained all permits and records required for their current business operations, including, but not limited to a business license, and have not received any notice of non-compliance from any regulatory authorities as of the date of this Annual Report.

Regulations Related to Software Services

On July 27, 2020, the State Council released and enacted the Notice of Issuing Several Policies to Promote the High-Quality Development of the Integrated Circuit Industry and Software Industry in the New Era (the “Notice in the New Era”).

The Notice in the New Era emphasizes that the integrated circuit industry and software industry are the core of the information industry and identifies them as the key force leading the new round of technological revolution and industrial transformation. The PRC government encourages eligible integrated circuit enterprises and software enterprises to list and raise funds both domestically and internationally, by providing equity financing, equity transfer, and other services to integrated circuit enterprises and software enterprises at different stages of development, expanding direct financing channels, and increasing the proportion of direct financing.

Regulations Related to Foreign Investment

On March 15, 2019, the NPC promulgated the Foreign Investment Law of the PRC (“the Foreign Investment Law”). The Foreign Investment Law aims to further open up and expand the Chinese market, promote foreign investment, and protect the legitimate rights and interests of foreign investors. The Foreign Investment Law defines foreign investment as direct or indirect investment by foreign investors in China. It includes the following categories: (i) foreign investors alone or jointly with other investors establishing a foreign-invested enterprise in China; (ii) foreign investors acquiring shares, equity, property shares, or other similar rights and interests in Chinese domestic enterprises; (iii) foreign investors alone or jointly with other investors investing in new projects in China; and (iv) legal and administrative investment in other ways specified by regulations or the State Council.

The Foreign Investment Law stipulates a pre-entry national treatment and negative list management system for foreign investment. Under the pre-entry national treatment, foreign investors enjoy at least the same level of market access to investment as domestic investors. On June 23, 2020, the MOFCOM and the NDRC jointly promulgated the Special Administrative Measures (Negative List) for Foreign Investment Access (Edition 2020), which was amended on September 6, 2024 (Edition 2024) (the “Negative List”). The Negative List stipulates that foreign investors are not allowed to invest in industries where investment is prohibited. The Negative List also stipulates industries where foreign investment is restricted, and foreign investors should meet the relevant stipulated conditions. China grants national treatment to foreign investment outside of the Negative List. The Negative List shall be approved by the State Council and published after approval. Our PRC subsidiaries’ operating businesses and industries are not on the Negative List and are not subject to restrictions or prohibitions on foreign investment, as of the date of this Annual Report.

The Foreign Investment Law stipulates that the PRC government shall not expropriate or requisition the investment of foreign investors, except under special circumstances in accordance with the existing laws and regulations. In case of expropriation or requisition, statutory procedures shall be followed, and fair and reasonable compensation shall be made in a timely manner. Foreign investors may, according to relevant laws and regulations, freely remit into or out of China, in RMB or any other foreign currency, their capital contributions, profits, capital gains, income from asset disposal, intellectual property royalties, lawfully acquired compensation, indemnity, or liquidation income, among others. The PRC government shall protect the intellectual property of foreign investors and foreign-invested enterprises, as well as their legitimate rights and interests of intellectual property.

Regulations Related to Information Security and Privacy Protection

On December 29, 2011, the Ministry of Industry and Information Technology of the PRC (the “MIIT”) issued the Several Provisions on Regulating the Market Order of Internet Information Services (the “Several Provisions), which became effective on March 15, 2012. Pursuant to the Several Provisions, Internet information service providers may not collect any users’ personal information or provide any such information to third parties without the consent of the users. An Internet information service provider shall expressly inform the users of the method, content and purpose of the collection and processing of such users’ personal information and may only collect information necessary for the provision of its services. An Internet information service provider is also required to properly maintain the users’ personal information, and in case of any leak or likely leak of the users’ personal information, the Internet information service provider must take immediate remedial measures and, in severe circumstances, immediately report to the telecommunications authority.

On December 28, 2012, the SCNPC issued and enacted the Decision on Strengthening Internet Information Protection, (the “Decision”). Pursuant to the Decision, the PRC government protects the electronic information that can identify the personal identity of citizens and that involves privacy of citizens. No organization or individual may obtain the personal electronic information of citizens by stealing or other illegal means, nor sell or illegally provide certain information to others. The Decision further sets out the requirements for the Internet service providers. When collecting or using the personal electronic information of citizens in their business activities, the Internet service providers shall follow the principle of lawfulness, properness and necessity, explicitly disclose their purposes, methods and scopes for collection and use of the information, and may collect or use information without violating the laws and regulations or the agreement of both parties upon securing consent. Where the Internet service providers collect and use the personal electronic information of citizens, they shall disclose the rules for such collection and use. The network service providers as well as their personnel must keep in strict confidence of the personal electronic information of citizens collected in their business activities. They shall not divulge, distort, or damage such information, or shall not sell or illegally provide such information to others. Furthermore, the network service providers shall take technical measures and other necessary measures to ensure information security and prevent the disclosure, damage or loss of any personal electronic information of citizens collected in their business activities. In case of occurrence or possible occurrence of such disclosure, damage or loss of information, remedial measures shall be immediately taken.

On November 7, 2016, the SCNPC promulgated the Cyber Security Law of the PRC (the “Cybersecurity Law”), which became effective on June 1, 2017, to protect cyberspace security and order. The Cyber Security Law sets forth various security protection obligations for network operators, which are defined as “owners and administrators of networks and network service providers,” including, among others, complying with a series of requirements of tiered cyber protection systems, verifying users’ real identity, localizing the personal information and important data gathered and produced by critical information infrastructure operators during operations within the China and providing assistance and support to government authorities where necessary for protecting national security and investigating crimes. Operators of critical information infrastructure who purchase network products and services that may affect national security should pass the national security review organized by the national network information department in conjunction with relevant departments of the State Council. Pursuant to the Cyber Security Law, any individual or organization using the network must comply with the Constitution and the applicable laws, follow the public order and respect social moralities, and must not endanger cyber security, or engage in activities by making use of the network that endanger the national security, honor and interests, or infringe on the fame, privacy, intellectual property and other legitimate rights and interests of others.

On June 10, 2021, the SCNPC promulgated the Data Security Law of the PRC (the “Data Security Law”), which took effect on September 1, 2021. The Data Security Law provides that the PRC government has established a data security review system to conduct national security reviews on data processing activities that affect or may affect national security. China shall establish a data classification and grading protection system, formulate important data catalogs to enhance the protection of important data. Processors of important data shall specify the person responsible for data security and management agencies to implement data security protection responsibilities. Relevant authorities will establish the measures for the cross- border transfer of important data. If any company violates the Data Security Law by providing important data outside China, such company may be punished by administration sanctions, including penalties, fines, and/or suspension of relevant business or revocation of the business license.

On August 20, 2021, the SCNPC promulgated the Personal Information Protection Law of the PRC (the “Personal Information Protection Law”), which became effective on November 1, 2021. The Personal Information Protection Law specifies the rules for processing sensitive personal information, which means personal information that, once leaked or illegally used, may easily cause harm to the dignity of natural persons or grave harm to personal or property security, including, but not limited to, information on biometric characteristics, financial accounts, and individual location tracking, as well as the personal information of minors under the age of 14. Personal information processors shall bear responsibility for their personal information handling activities and adopt the necessary measures to safeguard the security of the personal information they process. Otherwise, the personal information processors will be ordered to correct or suspend or terminate the provision of services and be subject to confiscation of illegal income, fines, or other penalties.

On December 28, 2021, 13 governmental departments of the PRC, including the CAC, jointly issued the Cybersecurity Review Measures, which became effective on February 15, 2022. The Cybersecurity Review Measures provide that in addition to CIIOs that intend to purchase Internet products and services, online platform operators engaging in data processing activities that affect or may affect national security must be subject to cybersecurity review by the Cybersecurity Review Office of the PRC. According to the Cybersecurity Review Measures, a cybersecurity review assesses potential national security risks that may be brought about by any procurement, data processing, or overseas listing. The Cybersecurity Review Measures further require that CIIOs and data processing operators that possess personal data of at least one million users must apply for a review by the Cybersecurity Review Office of the PRC before conducting listings in foreign countries.

On November 14, 2021, the CAC published the Security Administration Draft, which provides that data processing operators engaging in data processing activities that affect or may affect national security must be subject to cybersecurity review by the relevant Cyberspace Administration of the PRC. According to the Security Administration Draft, data processing operators shall apply for a cybersecurity review by the relevant Cyberspace Administration of the PRC under certain circumstances, such as (i) mergers, restructurings, and divisions of Internet platform operators that hold large amount of data relating to national security, economic development, or public interest which affects or may affect the national security, (ii) overseas listings of data processors that process personal data for more than one million individuals, (iii) Hong Kong listings of data processors that affect or may affect national security, and (iv) other data processing activities that affect or may affect the national security. The deadline for public comments on the Network Data Security Administration Draft was December 13, 2021.

As of the date of this Annual Report, our PRC subsidiaries have implemented measures, including archive management practices and confidentiality systems, to safeguard the personal information collected during their operations, and they have not experienced any incidents of improper acquisition, leakage, illegal use, or provision of users’ personal information, or received any administrative penalties for illegal or unlawful operations related to information security. Furthermore, as confirmed by our PRC counsel, China Commercial Law firm, we are not subject to cybersecurity review or network data security review by the CAC under the Cybersecurity Review Measures, or if the Security Administration Draft is enacted as proposed, because our PRC subsidiaries are not CIIOs or online platform operators that process personal information of at least one million individuals or engage in data processing activities that affect or may affect national security. Neither we nor our PRC subsidiaries have been involved in any investigations on cybersecurity reviews initiated by any PRC regulatory authority, nor have any of them received any inquiry, notice, or sanction related to cybersecurity review under the Cybersecurity Review Measures, as of the date of this Annual Report. See “Item 3. Key Information — D. Risk Factors — Risks Relating to Doing Business in the PRC —Greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our PRC subsidiaries’ business and our offerings.”

Regulations Related to Intellectual Property Rights

Trademark

Trademark are protected by the Trademark Law of the PRC, which was promulged by the SCNPC in 1982 and last amended in 2019, with its implementation rules adopted by the State Council in 2002 and most recently amended in 2014. The PRC Trademark Office of the State Administration for Industry and Commerce, currently known as the PRC State Intellectual Property Office of the State Administration for Market Regulation, or the Trademark Office, handles trademark registrations and grants a protection term of ten years to registered trademarks which may be renewed for consecutive ten-year periods upon request by the trademark owner. The PRC Trademark Law has adopted a first-to-file principle with respect to trademark registration. Where a trademark for which an application has been made is identical or similar to another trademark that has already been registered or been subject to a preliminary examination and approval for use on the same kind of or similar commodities or services, the application for registration of such trademark may be rejected. Any person applying for the registration of a trademark may not prejudice the existing right first obtained by others, nor may any person register in advance a trademark that has already been used by another party and has already gained a sufficient degree of reputation through such party’s use.

As of December 31, 2024, our PRC subsidiaries had registered three trademarks in the PRC. No trademark infringement claim has been filed against our PRC subsidiaries as of the date of this Annual Report.

Copyright

The SCNPC promulgated the Copyright Law of the PRC in 1982 and most recently amended it in 2010. Pursuant to the Copyright Law of the PRC, works of Chinese citizens, legal persons, or other organizations shall enjoy copyright pursuant to this Law regardless of whether they are published. Works shall include, among other things, literature, art, natural science, social science, engineering, and technical works created in the following forms: (1) written works; (2) oral works; (3) musical, dramatic, opera, dance, acrobatic artistic works; (4) art, architectural works; (5) photographic works; (6) film work and work created using methods similar to film making; (7) graphic works and model works such as engineering design plan, product design plan, map, schematic diagram, etc.; (8) computer software; and (9) any other works stipulated by laws and administrative regulations. Persons who have committed the infringement acts shall bear civil liability to stop the infringement, eliminate the impact, make apologies, compensate losses, etc., in accordance with the circumstances.

On June 4, 1991, the State Council formulated and enacted the Regulations on the Protection of Computer Software (the “Computer Software Protection Regulations”), which was amended most recently on January 30, 2013. The Computer Software Protection Regulations stipulate that Chinese citizens, legal persons, or other organizations shall enjoy copyright in the software developed by them, whether published or not, in accordance with these regulations. Software copyright owners may license others to exercise their software copyright and have the right to receive compensation. The software copyright of a legal person or other organization shall have a protection period of 50 years ending on December 31 of the 50th year after the first publication of the software.

As of December 31, 2024, our PRC subsidiaries had registered 36 software copyrights and 8 copyright registration certificates in the PRC. No software copyright infringement claim has been filed against our PRC subsidiaries as of the date of this Annual Report.

Domain Name

The Ministry of Industry and Information Technology promulgated the Administrative Measures on Internet Domain Names in 2017. Pursuant to such measures, the Ministry of Industry and Information Technology is in charge of the overall administration of domain names in China. Domain name registration services shall implement a first-to-file principle. A domain name applicant will become the domain name holder upon the completion of the application procedure.

As of December 31, 2024, one PRC subsidiary was the registered holder of one domain name in the PRC. No infringement claim has been filed against the domain name of our PRC subsidiaries as of the date of this Annual Report.

Regulations Related to Employment

On June 29, 2007, the SCNPC promulged the Labor Contract Law of the PRC, or the Labor Contract Law, which became effective as of January 1, 2008 and was amended in 2012. The Labor Contract Law requires employers to enter into written contracts with their employees, and restricts the use of temporary workers. Pursuant to the Labor Contract Law, employment contracts lawfully executed prior to the implementation of the Labor Contract Law and continuing as of the date of its implementation will continue to be performed. Where an employment relationship was established prior to the implementation of the Labor Contract Law but no written employment contract was concluded, a contract must be concluded within one month after the Labor Contract Law’s implementation. All PRC enterprises are generally required to implement a standard working time system of eight hours a day and forty hours a week, and if the implementation of such standard working time system is not appropriate due to the nature of the job or the characteristics of business operation, the enterprise may implement a flexible working time system or comprehensive working time system after obtaining approvals from the relevant authorities. According to the Social Insurance Law promulgated by the SCNPC effective as of July 1, 2011, the Regulation of Insurance for Work-Related Injury, the Provisional Measures on Insurance for Maternity of Employees, the Regulation of Unemployment Insurance, the Decision of the State Council on Setting Up Basic Medical Insurance System for Staff Members and Workers in Cities and Towns, the Interim Regulation on the Collection and Payment of Social Insurance Premiums and the Interim Provisions on Registration of Social Insurance, an employer is required to contribute to the social insurance for its employees in China, including the basic pension insurance, basic medical insurance, unemployment insurance, maternity insurance, and injury insurance. Under the Regulations on the Administration of Housing Funds, promulgated by the State Council on April 3, 1999 and amended on March 24, 2002, an employer is required to make contributions to a housing fund for its employees. Our PRC subsidiaries participate in various employee social security plans for some of our employees that are administered by local governments, including housing, pension, medical insurance, and unemployment insurance. Our PRC subsidiaries compensate our employees with basic salaries as well as performance-based bonuses. However, as of the date of this Annual Report, our PRC subsidiaries have not made adequate social insurance and housing fund contributions for all employees as required by relevant PRC regulations. See “Item 3. Key Information — D. Risk Factors — Risks Related to Our Business — Failure to make adequate contributions to various employee benefit plans as required by PRC regulations may subject us to penalties.”

Regulations Related to Social Welfare

Under the Social Insurance Law of the PRC, which was promulgated by the SCNPC on October 28, 2010, became effective as of July 1, 2011, and was most recently amended on December 29, 2018, and together with other laws and regulations, employers are required to pay pension insurance, unemployment insurance, medical insurance, work-related injury insurance, maternity insurance, and other social insurance for its employees at specified percentages of the salaries of the employees, up to a maximum amount specified by the local government regulations from time to time. On July 20, 2018, the General Office of the State Council issued the Plan for Reforming the State and Local Tax Collection and Administration Systems, which stipulated that the SAT is solely responsible for collecting social insurance premiums. When an employer fails to fully pay social insurance premiums, the relevant social insurance collection agency shall order it to make up for any shortfall within a prescribed time limit, and may impose a late payment fee at the rate of 0.05% per day of the outstanding amount from the due date. If such an employer still fails to make up for the shortfalls within the prescribed time limit, the relevant administrative authorities shall impose a fine of one to three times the outstanding amount upon such employer.

In accordance with the Regulations on the Management of Housing Fund which was promulgated by the State Council in 1999 and amended in 2019, employers must register at the designated administrative centers and open bank accounts for depositing employees’ housing funds. Employer and employee are also required to pay and deposit housing funds, with an amount no less than 5% of the monthly average salary of the employee in the preceding year in full and on time.

Our PRC subsidiaries have not paid the social insurance and housing funds for our employees in full and could be required to pay outstanding contributions and penalties and have not received any inquiry, notice, warning, or sanction regarding late fees, fines, or any other administrative penalties for illegal or unlawful operations in connection with social welfare as of the date of this Annual Report. See “Item 3. Key Information — D. Risk Factors — Risks Relating to Doing Business in the PRC — Our PRC subsidiaries have not made adequate social insurance and housing fund contributions for all employees as required by PRC regulations, which may subject them to penalties.”

Regulations Related to Foreign Exchange

Since 2012, the SAFE has promulgated several circulars to substantially amend and simplify the foreign exchange procedure. Pursuant to these circulars, the opening of various special purpose foreign exchange accounts, the reinvestment of RMB proceeds by foreign investors in the PRC, and the remittance of foreign exchange profits and dividends by a foreign-invested enterprise to its foreign shareholders, no longer require the SAFE’s approval or verification. In addition, domestic companies are no longer limited to extending cross-border loans only to their offshore subsidiaries but are also allowed to provide loans to their offshore parents and affiliates, and multiple capital accounts for the same entity may be opened in different provinces. The SAFE also promulgated the Circular on Printing and Distributing the Provisions on Foreign Exchange Administration over Domestic Direct Investment by Foreign Investors and the Supporting Documents in May 2013, which specifies that the administration by the SAFE or its local branches over direct investment by foreign investors in the PRC shall be conducted by way of registration and banks shall process foreign exchange business relating to the direct investment in the PRC based on the registration information provided by the SAFE and its branches. In February 2015, the SAFE promulgated the SAFE Circular 13, which took effect on June 1, 2015. The SAFE Circular 13 delegates the power to enforce the foreign exchange registration in connection with inbound and outbound direct investments under the relevant SAFE rules from the SAFE’s local branches to banks, thereby further simplifying the foreign exchange registration procedures for inbound and outbound direct investments.

The SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign-invested Enterprises (the “Circular 19”), effective on June 1, 2015, in replacement of the SAFE Circular 142 (the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises. According to the Circular 19, the flow and use of the RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company is regulated such that RMB capital may not be used for the issuance of RMB entrusted loans or the repayment of inter-enterprise loans or the repayment of banks loans that have been transferred to a third party. Although the Circular 19 allows RMB capital converted from foreign currency-denominated registered capital of a foreign-invested enterprise to be used for equity investments within the PRC, it also reiterates the principle that RMB converted from the foreign currency-denominated capital of a foreign-invested company may not be directly or indirectly used for purposes beyond its business scope. Thus, it is unclear whether the SAFE will permit such capital to be used for equity investments in the PRC in actual practice. The SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account (the “Circular 16”), effective on June 9, 2016, which reiterates some of the rules set forth in the Circular 19, but changes the prohibition against using RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company to issue RMB entrusted loans to a prohibition against using such capital to issue loans to non-associated enterprises. Violation of the SAFE Circular 19 or Circular 16 could result in administrative penalties.

On January 26, 2017, the SAFE issued the Notice of State Administration of Foreign Exchange on Improving the Check of Authenticity and Compliance to Further Promote Foreign Exchange Control (the “SAFE Circular 3”), which stipulates several capital control measures with respect to the outbound remittance of profit from domestic entities to offshore entities, including (i) under the principle of genuine transaction, banks shall check board resolutions regarding profit distribution, the original version of tax filing records and audited financial statements; and (ii) domestic entities shall hold income to account for previous years’ losses before remitting the profits. Moreover, pursuant to the SAFE Circular 3, domestic entities shall make detailed explanations of the sources of capital and utilization arrangements, and provide board resolutions, contracts and other proof when completing the registration procedures in connection with an outbound investment.

Under our current structure, our income will be primarily derived from dividend payments from our PRC subsidiaries. Even though we may remit the income outside of China, the fluctuation in exchange rates may be a disadvantage to us if RMB depreciates.

Regulations Related to Taxation

Enterprise Income Tax

On March 16, 2007, the NPC enacted the EIT Law, and the State Council promulgated the Implementing Rules of the EIT Law, or the Implementing Rules, on December 6, 2007, both of which became effective on January 1, 2008. The SCNPC further amended the EIT Law on February 24, 2017, which stimulates that corporate income tax shall be payable by a resident enterprise for income derived from or accruing in or outside China. Corporate income tax shall be payable by a non-resident enterprise, for income derived from or accruing in China by its office or premises established in China, and for income derived from or accruing outside China for which the established office or premises has a de facto relationship. The corporate income tax shall be at the rate of 25%. The applicable tax rate for income of a non-resident enterprise under the provisions of the third paragraph of Article 3 of the EIT Law shall be 20%. Corporate income tax for qualified small profit enterprises shall be at a reduced tax rate of 20%. Corporate income tax for key advanced and new technology enterprises supported by the State shall be at a reduced tax rate of 15%. The SAT provides certain specific criteria for determining whether the “de facto management body” of a PRC- controlled offshore enterprise is located in China. Simply speaking, the criteria are more focused on substance rather than format. Pursuant to its Circular 82 of 2009, the criteria to determine “de facto management body” include: (i) the senior management and core management departments in charge of its daily operations have their presence mainly in the PRC; (ii) its financial and human resources decisions are subject to determination or approval by persons or bodies in the PRC; (iii) its major assets, accounting books, company seals, and minutes and files of its board and shareholders’ meetings are located or kept in the PRC; and (iv) more than half of the enterprise’s directors or senior management with voting rights habitually reside in the PRC. Furthermore, the SAT published the Bulletin 45 in September 2011, which provides more guidance on the implementation of the definition and provides for procedures and administration details on determining resident status and administration on post-determination matters. However, the SAT Circular 82 and Bulletin 45 only apply to offshore enterprises controlled by the PRC enterprises or PRC enterprise groups rather than those controlled by the PRC individuals or foreign individuals. As of the date of this Annual Report, no further criteria or applicable legal precedents have been released, and therefore it remains unclear how the PRC tax authorities will determine the PRC tax resident treatment of a foreign company controlled by individuals. Under these existing criteria, it is possible that we will be classified as a PRC “resident enterprise” for the PRC enterprise income tax purposes. If so, it would likely result in unfavorable tax consequences to our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment. Please see “Item 3. Key Information — D. Risk Factors — Risks Relating to Doing Business in the PRC — Under the PRC Enterprise Income Tax Law, we may be classified as a PRC ‘resident enterprise’ for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment” for more details.

On August 21, 2006, China and the Hong Kong Special Administrative Region signed the Double Tax Avoidance Arrangement. When a Chinese company distributes dividends to Hong Kong residents (beneficiary owners of dividends), if the recipient directly owns at least 25% of the equity interest in the above- mentioned Chinese company, the Chinese withholding tax rate may be lowered from 10% to 5%.

On October 14, 2019, the SAT promulgated the Announcement of State Taxation Administration on Promulgation of the Administrative Measures on Non-resident Taxpayers Enjoying Treaty Benefits, which stimulate that non-resident taxpayers claiming treaty benefits shall be handled in accordance with the principles of “self-assessment, claiming benefits, retention of the relevant materials for future inspection.” Where a non-resident taxpayer self-assesses and concludes that it satisfies the criteria for claiming treaty benefits, it may enjoy treaty benefits at the time of tax declaration or at the time of withholding through the withholding agent, simultaneously gather and retain the relevant materials pursuant to the provisions of these measures for future inspection, and accept follow-up administration by the tax authorities.

Value-Added Tax

On December 13, 1993, the State Council promulgated the Provisional Regulations on Value-added Tax (VAT) of the PRC, which was most recently amended on November 19, 2017. On December 25, 1993, the MOF, promulgated the Implementation Rules for the Provisional Regulations on Value-added Tax of the PRC, which were revised on December 15, 2008 and October 28, 2011. The organizations and individuals engaging in the sale of goods or processing, repair and assembly services, sale of services, intangible assets, immovables and importation of goods in the PRC shall be taxpayers of VAT, and shall pay VAT pursuant to these regulations.

On November 16, 2011, the MOF and SAT promulgated the Pilot Plan for Imposition of Value-Added Tax to Replace Business Tax. On March 23, 2016, the MOF and SAT further promulgated the Notice on Fully Promoting the Pilot Plan for Replacing Business Tax by Value-Added Tax, which stimulate that the pilot program of replacing business tax with value-added tax herein referred to as replacing business tax with value-added tax will be comprehensively launched nationwide starting from May 1, 2016. All business tax taxpayers in the construction industry, real estate industry, financial industry, life service industry, and other industries will be included in the pilot scope with the change from paying business tax to paying value-added tax. The scope of value-added tax taxable activities includes business activities related to education supporting services, including services such as educational evaluation, exams, and enrollment.

Regulations Related to education supporting services, including services such as educational evaluation, exams, and enrollment.

Regulations Related to the PRC Corporate Establishment and Dividend Distribution

Pursuant to the Company Law of the PRC (the “Company Law”), which was promulgated on December 29, 1993 and most recently amended on December 29, 2023, companies are generally divided into two categories: limited liability companies and joint stock limited companies. The Company Law also applies to foreign-invested limited liability companies, unless otherwise provided by other relevant laws or regulations on foreign investment. The Company Law stipulates that the subscribed capital of all shareholders shall be fully paid by the shareholders within five years from the date of establishment of the company in accordance with the provisions of the company’s articles of association, unless other relevant laws, administrative regulations and decisions of the State Council may provide otherwise for companies in specific industries. In most cases, shareholders can set a time limit for capital contributions in the company’s articles of association. In addition, the first payment of the company’s registered capital is not limited by a minimum amount, the company’s business license does not need to record its paid-up capital, and the shareholders’ contribution to the registered capital does not need to be verified by a capital verification agency.

Regarding dividend distribution, the Company Law of the PRC provides that a company shall contribute at least 10% of its after-tax profits of the current year into its statutory surplus reserve unless the aggregate sum of such reserve reaches 50% of its registered capital. Where the balance of the statutory surplus reserve of a company is insufficient to make good its losses in the previous year, the company shall make good such losses using its profits of the current year before making a contribution to the statutory surplus reserve in accordance with the aforementioned provisions. Upon contribution to the statutory surplus reserve using its post-tax profits, a company may make a further contribution to the surplus reserve using its post-tax profits in accordance with a resolution of the shareholders’ meeting or the shareholders’ general meeting. Shareholders of a limited liability company are entitled to dividends in accordance with the percentage of their respective paid-in capital contribution, unless all shareholders agree that they will not be distributed with the dividends based on the percentage of their capital contribution.

Regulations Related to Foreign Exchange Registration of Offshore Investment by PRC Residents

In July 2014, the SAFE issued the SAFE Circular 37, which regulates foreign exchange matters in relation to the use of SPVs by PRC residents or entities to seek offshore investment and financing or conduct round trip investment in China. Under the SAFE Circular 37, an SPV refers to an offshore entity established or controlled, directly or indirectly, by the PRC residents or entities for the purpose of seeking offshore financing or making offshore investment, using legitimate domestic or offshore assets or interests, and round trip investment refers to the direct investment activities carried out by domestic residents directly or indirectly through special purpose companies, namely, establishing foreign-invested enterprises or projects (hereinafter referred to as foreign-invested enterprises) in China through new establishment, mergers or acquisitions to obtain the ownership, control rights, and management rights and interests.

The Circular 37 requires that, before making contributions to an SPV, the PRC residents or entities are required to complete foreign exchange registration with the SAFE or its local branch. In February 2015, the SAFE promulgated the SAFE Circular 13. The SAFE Circular 13 has amended the SAFE Circular 37 by requiring the PRC residents or entities to register with qualified banks instead of the SAFE or its local branch in connection with their establishment of an SPV.

In addition, pursuant to the SAFE Circular 37, an amendment to registration or subsequent filing with qualified banks by such PRC resident is also required if there is a material change with respect to the capital of the offshore company, such as any change of basic information (including change of such PRC residents, change of name, and operation term of the SPV), increases or decreases in investment amount, transfers or exchanges of shares, or mergers or divisions. Failure to comply with these registration requirements as set forth in the SAFE Circular 37 and the SAFE Notice 13, and misrepresentation on or failure to disclose controllers of foreign-invested enterprises that are established by round-trip investment may result in bans on the foreign exchange activities of the relevant onshore company, including the payment of dividends and other distributions to its offshore parent or affiliates, and may also subject relevant PRC residents to penalties under the Foreign Exchange Administration Regulations of the PRC.

As of the date of this Annual Report, all of our shareholders who are subject to the SAFE Circular 37 have completed the initial registrations with the qualified banks as required by the SAFE Circular 37. See “Item 3. Key Information — D. Risk Factors — Risks Relating to Doing Business in the PRC — PRC regulation of parent/subsidiary loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of offshore offerings to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect their liquidity and their ability to fund and expand their business.”

Regulations Related to Foreign Debt

As an offshore holding company, we may make additional capital contributions to Shenzhen Kebiao or Jiade Zhigao subject to approval from the local department of commerce and the SAFE, with no limitation on the amount of capital contributions. We may also make loans to Shenzhen Kebiao or Jiade Zhigao subject to the approval from the SAFE or its local office and the limitation on the amount of loans.

By means of making loans, Shenzhen Kebiao is subject to the relevant PRC laws and regulations relating to foreign debts. On January 8, 2003, the NDRC, the SAFE, and the MOF, jointly promulgated the Circular on the Interim Provisions on the Management of Foreign Debts, or the Foreign Debts Provisions, which became effective on March 1, 2003, and was partially abolished on May 10, 2015. Pursuant to the Foreign Debts Provisions, the total amount of foreign loans received by a foreign-invested enterprise shall not exceed the difference between the total investment in projects as approved by the MOFCOM or its local counterpart and the amount of registered capital of such foreign-invested enterprise. In addition, on January 12, 2017, the People’s Bank of China (the “PBOC”) issued the PBOC Circular 9, which sets out the statutory upper limit on the foreign debts for PRC non-financial entities, including both foreign-invested enterprises and domestic enterprises. Pursuant to the PBOC Circular 9, the foreign debt upper limit for both foreign- invested enterprises and domestic enterprises is calculated as twice the net assets of such enterprises. On March 11, 2020, the PBOC and the SAFE jointly promulgated the Circular 64, the risk-weighted outstanding amount of the loans, which shall be calculated based on the formula provided in the PBOC Notice No. 9 and not exceed 250% of the net asset of relevant PRC subsidiaries. As to net assets, the enterprises shall take the net assets value stated in their latest audited financial statements.

The PBOC Circular 9 or Circular 64 does not supersede the Foreign Debts Provisions, but rather serves as a supplement to it. It provides a one-year transitional period from January 11, 2017 for foreign-invested enterprises, during which foreign-invested enterprises, such as Shenzhen Kebiao and Jiade Zhigao, could adopt their calculation method of foreign debt upper limit based on either the Foreign Debts Provisions or the PBOC Circular 9. Following the expiration of the transitional period on January 11, 2018, pursuant to the PBOC Circular 9, the PBOC and SAFE shall re-evaluate the calculation method for foreign-invested enterprises and determine what the applicable calculation method should be. As of the date of this Annual Report, neither the PBOC nor SAFE has promulgated and made public any further rules, regulations, notices, or circulars in this regard. See “Item 3. Key Information — D. Risk Factors — Risks Relating to Doing Business in the PRC — PRC regulation of parent/subsidiary loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of offshore offerings to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect their liquidity and their ability to fund and expand their business.”

Regulations Relating to M&A

On August 8, 2006, six PRC governmental and regulatory agencies, including the CSRC and MOFCOM, promulgated the M&A Rules, which became effective on September 8, 2006 and were amended on June 22, 2009. The M&A Rules, among other things, require offshore special purpose vehicles formed for overseas listing purposes through acquisitions of PRC domestic companies (non-foreign-invested enterprises) and controlled by PRC domestic enterprises or individuals to obtain the approval of the CSRC prior to the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange. The M&A Rules also require that if an overseas company established or controlled by PRC companies or individuals, the PRC citizens individual or collectively, intends to acquire equity interests or assets of any other PRC domestic company (non-foreign-invested enterprises) affiliated with the PRC citizens, such acquisition must be submitted to the MOFCOM for approval, which is no longer required with the implementation of the Foreign Investment Law. In September 2006, the CSRC published on its official website procedures regarding its approval of overseas listings by special purpose vehicles. The CSRC approval procedures require the filing of a number of documents with the CSRC. On December 18, 2008, the Foreign Investment Department of the Ministry of Commerce promulgated the Guidelines, which became effective on December 18, 2008. The Guidelines stipulates that the transfer of equity from established foreign-invested enterprises from Chinese parties to foreign parties does not refer to the M&A Rules, regardless of whether there is a related relationship between the Chinese and foreign parties nor whether the foreign parties are existing shareholders or new investors, and the domestic enterprises as the target company of the merger only includes domestic enterprises.

According to our PRC legal counsel, China Commercial Law Firm, neither we nor our subsidiaries are required to submit such approval application to the CSRC under the M&A Rules, because we acquired the controlling equity interests in domestic operating subsidiaries through the acquisition of Jiade Zhigao, which is a foreign-invested enterprise.

Regulations Relating to Overseas Listings

On February 17, 2023, with the approval of the State Council, the CSRC released the Trial Measures, and five supporting guidelines, which became effective on March 31, 2023. According to the Trial Measures, (i) domestic companies that seek to offer or list securities overseas, both directly and indirectly, are required to complete the filing procedure and submit relevant information to the CSRC; (ii) if the issuer meets both of the following conditions, the overseas offering and listing shall be determined as an indirect overseas offering and listing by a domestic company: (a) any of the total assets, net assets, revenue, or profits of the domestic operating entities of the issuer in the most recent accounting year accounts for more than 50% of the corresponding figure in the issuer’s audited consolidated financial statements for the same period; (b) its major operational activities are carried out in China or its main places of business are located in China, or the senior managers in charge of operation and management of the issuer are mostly Chinese citizens or are domiciled in China; and (iii) where a domestic company seeks to indirectly offer and list securities in an overseas market, the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC, and where an issuer makes an application for initial public offering and listing in an overseas market, the issuer shall submit filings with the CSRC within three business days after such application is submitted.

On the same day, the CSRC issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which, among others, clarifies that (1) a six-month transition period will be granted to domestic companies which, prior to the effective date of the Trial Measures, have already obtained the approval from overseas regulatory authorities or stock exchanges, such as completion of registration in the market of the United States, but have not completed the overseas listing; and (2) domestic companies that have already submitted valid applications for overseas offering and listing but have not obtained approval from overseas regulatory authorities or stock exchanges on or prior to the effective date of the Trial Measures, may reasonably arrange the timing for submitting their filing applications with the CSRC, and shall complete the filing before the completion of their overseas offering and listing.

Along with the Trial Measures, the revised Provisions were promulgated on February 24, 2023, which apply to companies providing documents or materials involving state secrets or working secrets of government agencies. Specifically, the revised Provisions require that, among other things, (i) a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level; and (ii) a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals and entities including securities companies, securities service providers and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations. It is our understanding that the revised Provisions only apply to companies providing documents or materials involving state secrets or working secrets of government agencies. In that case, companies shall apply to the competent department with examination and approval authority for approval in accordance with relevant laws and regulations. As advised by our PRC counsel, China Commercial Law firm, the documents we have provided or disclosed, or plan to provide or disclose, do not contain any state secrets or working secrets of government agencies. However, there remains uncertainty as to how relevant competent authorities will define “state secrets or working secrets of government agencies.” If such authorities recognize that the documents we have disclosed or provided, or plan to disclose or provide, contain “state secrets or working secrets of government agencies,” we or our PRC subsidiaries may be subject to the approval requirements of the revised Provisions. See “Item 3. Key Information — D. Risk Factors — Risks Relating to Doing Business in the PRC — The Opinions, the Trial Measures, and the revised Provisions recently issued by the PRC authorities subject us to additional compliance requirements in the future.”

On August 8, 2023, our PRC subsidiaries filed with the CSRC in connection with our initial public offering and listing pursuant to the Trial Measures, and on January 2, 2024, the CSRC approved the filings submitted by our PRC subsidiaries. Except for the requirement for such CSRC approval under the Trial Measures, as of the date of this Annual Report, neither we nor our PRC subsidiaries have received any inquiry, notice, warning, or sanction regarding our planned overseas listing from the CSRC or any other PRC governmental authorities. Since these statements and regulatory actions are newly published, however, official guidance and related implementation rules have not been issued. It is highly uncertain what the potential impact such modified or new laws and regulations will have on the daily business operations of our subsidiaries, our ability to accept foreign investments, and our listing on a U.S. exchange.

C. Organizational Structure

See “—A. History and Development of the Company.”

D.

See “—B. Business Overview—Facilities.”

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Item 4A. UNRESOLVED STAFF COMMENTS

Not applicable.

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Item 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion of our financial condition and results of operations is based upon and should be read in conjunction with our consolidated financial statements and their related notes included in this annual report. This Annual Report contains forward-looking statements. In evaluating our business, you should carefully consider the information provided under the caption “Item 3. Key Information—D. Risk Factors” in this Annual Report. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties.

Factors Affecting Our Results of Operations

Property, Plants and Equipment In addition to the general factors affecting the Chinese and global economy and our industry, our results of operations and financial condition are affected by a number of industry- and company-specific factors, including those set out below:

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Comparison of Results of Operations for the Years Ended December 31, 2024 and 2023

The following table sets forth a summary of our consolidated results of operations for the periods indicated. This information should be read together with our consolidated financial statements and related notes included elsewhere in this Annual Report. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.

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Revenue

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Our PRC subsidiaries generate revenue from providing adult education supporting services. Our PRC subsidiaries enter into service contracts with adult education institutions to provide education supporting services through (i) software platform solutions, which facilitate streamlined information and data management throughout the teaching cycle of adult education services, from pre-enrollment to post- graduation, and (ii) auxiliary solutions to students designated by adult education institutions, which encompass teaching support services throughout the entire teaching cycle and related exam administration services.

Total revenue increased by approximately RMB3,171,000 (US$434,000), or 20%, to approximately RMB18,742,000 (US$2,568,000) for the year ended December 31, 2024, from approximately RMB15,571,000 for the year ended December 31, 2023. The increase in revenue was mainly attributable to: (i) an increase in revenue generated from third parties, amounting to approximately RMB4,024,000 (US$551,000), due to the growing scale of adult education institutions served by our PRC subsidiaries (for the year ended December 31, 2024, our PRC subsidiaries served 11 adult education institutions with an aggregate of 74,493 students, compared to 12 adult education institutions with approximately 49,496 students for the year ended December 31, 2023); (ii) partially offset by a decrease in revenue generated from a related party, amounting to approximately RMB853,000 (US$117,000), as a related party was reclassified as a third party effective February 20, 2023, while the overall revenue generated from the former related party, Chengdu Jinjiang New Vision Training School, increased by approximately RMB108,000 (US$15,000) for the year ended December 31, 2024, compared to the year ended December 31, 2023; and (iii) partially offset by a decrease in the average service price per student from RMB315 for the year ended December 31, 2023 to RMB252 for the year ended December 31, 2024, primarily due to the increased number of graduating students we served, for whom we charged lower fees.

The following table sets forth the breakdown of our net revenue for the periods presented:

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Revenue from providing services related to National Unified Examination for College Admissions increased by approximately RMB1,505,000 (US$206,000), or 30%, primarily due to (i) the increased number of students served from 17,171 for the year ended December 31, 2023 to 22,919 for the year ended December 31, 2024, mainly as a result of our stronger business relationships with existing adult education institution customers, and (ii) partially offset by a decrease in the average service price per student (for services related to National Unified Examination for College Admissions for Adults) from RMB294 for the year ended December 31, 2023 to RMB286 for the year ended December 31, 2024, primarily due to the increased number of graduating students we served, for whom we charged lower fees.

Revenue from providing services related to the Open University of China decreased by approximately RMB2,904,000 (US$398,000), or 31%, primarily due to (i) the decrease in the average service price per student (for services related to the Open University of China) from RMB323 for the year ended December 31, 2023 to RMB186 for the year ended December 31, 2024, and (ii) partially offset by the increased number of students served from 29,227 for the year ended December 31, 2023 to 35,146 for the year ended December 31, 2024, mainly as a result of our stronger business relationships with adult education institutions and the increase in the enrollment scale. The reduction in the service price per student was mainly due to the enhanced competition and the increased number of graduating students we served, for whom we charged lower fees.

Revenue from providing services related to Self-taught Higher Education Examinations increased by approximately RMB4,605,000 (US$631,000), or 454%, primarily due to (i) the increased number of students served from 3,031 for the year ended December 31, 2023 to 16,361 for the year ended December 31, 2024, mainly as a result of our stronger business relationships with existing adult education institution customers, and (ii) an increase in the average service price per student (for services related to National Unified Examination for College Admissions for Adults) from RMB334 for the year ended December 31, 2023 to RMB343 for the year ended December 31, 2024.

Revenue from providing services related to online education decreased by approximately RMB35,000 (US$5,000), or 50%, primarily due to the decrease in the average service price per student (for services related to the Online education) from RMB1,033 for the year ended December 31, 2023 to RMB516 for the year ended December 31, 2024, primarily due to the increased number of graduating students we served, for whom we charged lower fees.

Costs and expenses

Our costs and expenses consist of direct cost of revenue, selling expenses, general and administrative expenses, and research and development expenses.

Direct Cost of revenue

The following table sets forth the breakdown of our direct cost of revenue for the years ended December 31, 2023 and 2024:

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Total direct cost of revenue increased by approximately RMB4,846,000 (US$664,000), or 596%, from approximately RMB813,000 for the year ended December 31, 2023 to approximately RMB5,658,000 (US$775,000) for the year ended December 31, 2024, primarily due to the increase in cost of services.

Cost of services increased by approximately RMB4,843,000 (US$664,000), or 4249%, from approximately RMB114,000 for the year ended December 31, 2023 to approximately RMB4,957,000 (US$679,000) for the year ended December 31, 2024, primarily due to additional pre-enrollment services in line with the increased number of students served. Specifically, for the year ended December 31, 2024, our PRC subsidiaries invested approximately RMB4,717,000 (US$646,000) in enhanced customer support during the prior-enrollment stage through both online platforms and offline promotional activities.

Employee benefit costs remained stable from approximately RMB650,000 for the year ended December 31, 2023 to approximately RMB652,000 (US$89,000) for the year ended December 31, 2024.

Other costs primarily represented short rental expenses related to exams, student card photo production fees, travelling expenses, business taxes and surcharges and others.

Selling expenses

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Selling expenses increased by approximately RMB82,000 (US$11,000), or 18%, to approximately RMB535,000 (US$73,000) for the year ended December 31, 2024, compared to approximately RMB453,000 for the year ended December 31, 2023. The increase in selling expenses was mainly due to increased entertainment expenses and depreciation for motor vehicles, such as Company-owned cars utilized for business purposes. The increased entertainment expenses were due to more frequent client engagement activities and events aimed at building relationships with potential clients and business partners.

General and administrative expenses

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Total General and administrative expenses increased by approximately RMB3,414,000 (US$468,000), or 167%, to approximately RMB5,454,000 (US$747,000) for the year ended December 31, 2024, from approximately RMB2,041,000 for the year ended December 31, 2023. As a percentage of revenue, general and administrative expenses were approximately 13% and 29% of our total revenue for the years ended December 31, 2023 and 2024, respectively. The increase in general and administrative expenses was primarily attributable to: (i) the increase in salary and employee benefits of our PRC subsidiaries’ management department resulting from the increase in salaries of existing staff and the recruitment of additional employees for our management department and new increased independent director compensation in 2024; (ii) the increase in consulting expenses resulting from the increase in expenses related to the celebration banquet for successfully listing our Ordinary Shares on the Nasdaq Capital Market and the legal and audit fees for corporate compliance legal service fees and annual audit fees for the year ended December 31, 2024; and (iii) increased annual fees incurred as a listed company.

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Research and development expenses

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Total research and development expenses increased by approximately RMB14,000 (US$2,000), or 2%, to approximately RMB710,000 (US$97,000) for the year ended December 31, 2024 from approximately RMB696,000 for the year ended December 31, 2023. The increase in research and development expenses was primarily due to: (i) the increase in salary and employee benefits of our PRC subsidiaries’ R&D department resulting from the addition of one employee to our R&D department and the increase in depreciation and amortization related to the new increased intangible assets; and (ii) partially offset by a decrease in consulting expenses approximately amounting RMB236,000 related to a safety production training project in 2023. As a percentage of revenue, research and development expenses were approximately 4% and 4% of our total revenue for the years ended December 31, 2023 and 2024, respectively. Our PRC subsidiaries will continue to invest in research and development to maintain their competitive edge against other market participators.

Other income (expenses)

Our other income (expenses) primarily represented interest income, interest expenses, rent subsidies, tax relief, net loss on disposal of property and equipment and foreign exchange gain/loss. Other expenses decreased by approximately RMB224,000 (US$31,000), or 49%, from approximately RMB456,000 for the year ended December 31, 2023 to approximately RMB233,000 (US$32,000) net expenses for the year ended December 31, 2024, primarily due to (i) a net loss of approximately RMB251,000 from the disposal of leasehold improvements for the year ended December 31, 2023, with no such activities recorded for the year ended December 31, 2024, and (ii) a government grant of RMB305,000 for HNTE and a foreign exchange loss of approximately RMB221,000 recorded for the year ended December 31, 2024, compared to no such amounts for the year ended December 31, 2023.

Income before income taxes

Income before income taxes was approximately RMB6,152,000 (US$843,000) for the year ended December 31, 2024, a decrease of approximately RMB4,961,000 (US$680,000) as compared to approximately RMB11,113,000 for the year ended December 31, 2023. The decrease was primarily attributable to the increased costs and expenses.

Provision for income taxes

Our provision for income taxes was approximately RMB546,000 (US$75,000) for the year ended December 31, 2024, a decrease of approximately RMB1,005,000 (US$138,000) from approximately RMB1,551,000 for the year ended December 31, 2023. The decreased income tax provision was mainly due to decreased taxable income in 2024 and reversal effect due to tax period difference amounted approximately RMB882,000 (US$121,000).

Under the EIT Law, domestic enterprises and Foreign Investment Enterprises are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays, and even tax exemption may be granted on a case-by-case basis. The EIT Law grants preferential tax treatment to HNTEs. Under this preferential tax treatment, HNTEs are entitled to an income tax rate of 15%, subject to a requirement that they re-apply for HNTE status every three years. Kebiao Technology, one of our PRC subsidiaries, was approved as an HNTE on November 2, 2022. As a result, Kebiao Technology was entitled to a reduced income tax rate of 15% in 2023 and 2024.

According to the Announcement of the State Taxation Administration on the Implementation of Income Tax Preferential Policies to Support the Development of Small Low Profit Enterprises and Individual Businesses, 25% of the annual taxable income of small low profit enterprises that does not exceed RMB1 million will be included in the taxable income, and the enterprise income tax will be paid at the rate of 20%. Jiade Zhigao and Shenzhen Kebiao are eligible for the above preferential tax policies for small and micro enterprises in 2023 and 2024.

The impact of the tax holidays noted above decreased taxes by approximately RMB1,146,000 and RMB1,016,000 (US$139,000) for the years ended December 31, 2023 and 2024, respectively. The impact of the benefit of the tax holidays on net income per share (basic and diluted) was RMB0.05 and RMB0.04 for the years ended December 31, 2023 and 2024, respectively.

The following table reconciles the China statutory rates to our effective tax rate for the years ended December 31, 2023 and 2024:

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Net income

Our net income was approximately RMB5,607,000 (US$768,000) for the year ended December 31, 2024, a decrease of approximately RMB3,955,000 (US$542,000) from approximately RMB9,562,000 for the year ended December 31, 2023. The decrease in net income was primarily due to the higher costs and operating expenses in 2024, as discussed above under cost and expenses sections.

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Comparison of Results of Operations for the Years Ended December 31, 2023 and 2022

The following table sets forth a summary of our consolidated results of operations for the periods indicated. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.

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Revenue

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Our PRC subsidiaries generate revenue from providing adult education supporting services. Our PRC subsidiaries enter into service contracts with adult education institutions to provide education supporting services through (i) software platform solutions, which facilitate streamlined information and data management throughout the teaching cycle of adult education services, from pre-enrollment to post- graduation, and (ii) auxiliary solutions to students designated by adult education institutions, which encompass teaching support services throughout the entire teaching cycle and related exam administration services. Total revenue increased by approximately RMB5,332,000 (US$751,000), or 52%, to approximately RMB15,571,000 (US$2,193,000) for the year ended December 31, 2023 from approximately RMB10,239,000 for the year ended December 31, 2022. The significant increase in revenue was mainly attributable to: (i) the increased revenue generated from third parties that amounted to approximately RMB9,638,000 (US$1,357,000), due to the growing scale of adult education institutions served by our PRC subsidiaries (for the year ended December 31, 2023, our PRC subsidiaries served 12 adult education institutions with an aggregate of 49,496 students, compared to 16 adult education institutions with approximately 28,122 students for the year ended December 31, 2022); (ii) partially offset by decreased revenue generated from a related party that amounted to approximately RMB4,305,000 (US$606,000), as the related party became to a third party from February 20, 2023,while the overall revenue generated from the former related party, Chengdu Jinjiang New Vision Training School, increased by approximately RMB1,069,000 (US$151,000) for the year ended December 31, 2023 compared to the year ended December 31, 2022; and (iii) partially offset by a decrease in the average service price per student from RMB364 for the year ended December 31, 2022 to RMB315 for the year ended December 31, 2023, primarily due to discounts provided by our PRC subsidiaries to certain customer in 2023.

The following table sets forth the breakdown of our net revenue for the periods presented:

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Revenue from providing services related to National Unified Examination for College Admissions increased by approximately RMB1,207,000 (US$170,000), or 31%, primarily due to (i) the increased number of students served from 11,509 for the year ended December 31, 2022 to 17,171 for the year ended December 31, 2023, mainly as a result of our stronger business relationships with existing adult education institution customers, and (ii) partially offset by a decrease in the average service price per student (for services related to National Unified Examination for College Admissions for Adults) from RMB334 for the year ended December 31, 2022 to RMB294 for the year ended December 31, 2023, primarily due to the enhanced competition and the discounts granted by the PRC subsidiaries to certain customer and the termination of services with one high-margin customer.

Revenue from providing services related to the Open University of China increased by approximately RMB4,685,000 (US$660,000), or 99%, primarily due to (i) the increased number of students served from 13,287 for the year ended December 31, 2022 to 29,227 for the year ended December 31, 2023, mainly as a result of our stronger business relationships with adult education institutions and the increase in the enrollment scale, and (ii) partially offset by the decrease in the average service price per student (for services related to the Open University of China) from RMB358 for the year ended December 31, 2022 to RMB323 for the year ended December 31, 2023. The reduction in the service price per student was mainly due to the enhanced competition and the discounts granted by the PRC subsidiaries to certain customer and the termination of services with one customer who requires training services for its students, which we were able to charge higher fees.

Revenue from providing services related to Self-taught Higher Education Examinations remained stable for the year ended December 31, 2023 compared to the same period in 2022.

Revenue from providing services related to online education decreased by approximately RMB572,000 (US$81,000), or 89%, primarily due to the decreased number of students served from 640 for the year ended December 31, 2022 to 67 for the year ended December 31, 2023, mainly because during the year ended December 31, 2023, certain PRC universities suspended the provision of online education extracurricular learning centers, as a result of which our PRC subsidiaries suspended the services for the online education for them.

Costs and expenses

Our costs and expenses consist of direct cost of revenue, selling expenses, general and administrative expenses, and research and development expenses.

Direct Cost of revenue

The following table sets forth the breakdown of our direct cost of revenue for the years ended December 31, 2022 and 2023:

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Direct cost of revenue decreased by approximately RMB587,000 (US$83,000), or 42%, from approximately RMB1,400,000 for the year ended December 31, 2022 to approximately RMB813,000 (US$114,000) for the year ended December 31, 2023, primarily due to fewer customized services, such as training services purchased by our PRC subsidiaries in 2023.

Cost of services decreased by approximately RMB642,000 (US$90,000), or 85%, from approximately RMB756,000 for the year ended December 31, 2022 to approximately RMB114,000 (US$16,000) for the year ended December 31, 2023, primarily due to fewer examination costs and fewer training services purchased by our PRC subsidiaries to meet their students’ specific requirements, such as in-person courses.

Employee benefit costs increased by approximately RMB64,000 (US$9,000), or 11%, from approximately RMB585,000 for the year ended December 31, 2022 to approximately RMB650,000 (US$92,000) for the year ended December 31, 2023, primarily because our PRC subsidiaries increased the staff salaries and the addition of one employee to our services department.

Other costs primarily represented short rental expenses related to exams, student card photo production fees, travelling expenses, business taxes and surcharges and others.

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Selling expenses

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Selling expenses increased by approximately RMB124,000 (US$17,000), or 38%, to approximately RMB453,000 (US$64,000) for the year ended December 31, 2023, compared to approximately RMB329,000 for the year ended December 31, 2022. The increase in selling expenses was mainly due to increased employee benefits and increased depreciation for motor vehicles, such as Company-owned cars utilized for business purposes, partially offset by the decrease in entertainment and travelling expenses. The increased employee benefits were mainly due to the addition of two employees to our marketing team. The decreased entertainment expenses were due to the Company’s implementation of cost control measures and operational expenses management.

General and administrative expenses

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