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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

 

FORM 20-F/A

(Amendment No. 1)

 

 

 

(Mark One)

¨      REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934

 

OR 

 

x      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: 001-38369

 

ZEPP HEALTH CORPORATION

 

 

(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)

 

Edisonweg 44 – B08, 4207 HG Gorinchem, The Netherlands

 

 

(Address of Principal Executive Offices)

 

Leon Cheng Deng, Chief Financial Officer

Edisonweg 44 – B08, 4207 HG Gorinchem, The Netherlands

Phone: +31 (0)616 086 658

Email: ir@zepp.com

 

 

(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)

 

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

 

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

American depositary shares (each representing 16 Class A ordinary shares, par value US$0.0001 per share)*

Class A ordinary shares, par value US$0.0001 per shares**

ZEPP New York Stock Exchange

 

*Effective on September 16, 2024, the ratio of ADSs to our Class A ordinary shares was changed from one ADS representing four Class A ordinary shares to one ADS representing 16 Class A ordinary shares.

 

**Not for trading, but only in connection with the listing of the American depositary shares on the New York Stock Exchange.

 

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:

 

As of December 31, 2024, there were (i) 114,776,364 Class A ordinary shares issued and outstanding, par value US$0.0001 per share (excluding the 3,892,844 Class A ordinary shares issued to the depositary bank for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting of awards granted under the issuer’s share incentive plans and the 29,673,924 treasury shares in the form of ADSs that the issuer repurchased under its share repurchase program), and (ii) 117,208,247 Class B ordinary shares issued and outstanding, par value US$0.0001 per share.

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ¨ Yes x 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 x No

 

Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

 

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. x 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). x 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 the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x Emerging growth company ¨

 

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. ¨

 

†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

 

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:

 

U.S. GAAP x International Financial Reporting Standards as issued by the  Other ¨
  International Accounting Standards Board ¨  

 

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ¨ Item 17 ¨ Item 18

 

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 x No

 

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ¨ Yes ¨ No

 

Auditor Name 

Auditor Location 

Auditor Firm ID 

Deloitte Touche Tohmatsu Certified Public Accountants LLP Beijing, the People’s Republic of China 1113

 

 

 

 

 

 

EXPLANATORY NOTE

 

This Amendment No. 1 on Form 20-F/A (the “Amendment”) is being filed by Zepp Health Corporation (the “Company,” “we,” “our,” or “us”) to amend the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2024, originally filed with the U.S. Securities Exchange Commission on April 25, 2025 (the “Original Filing”). This Amendment is being filed for the purpose of complying with Regulation S-X, Rule 3-09. Rule 3-09 requires, among other things, that separate financial statements for unconsolidated subsidiaries and investees accounted for by the equity method to be included in the Form 20-F when such entities are individually significant.

 

We have determined that our equity method investment in Jiangsu Yitong High-tech Co., Ltd. (hereinafter referred to as “Jiangsu Yitong”), which is not consolidated in our financial statements, was significant under the investment test of Rule 1-02(w) of Regulation S-X in relation to our financial results for the year ended December 31, 2024. This Amendment is therefore filed to supplement the Original Filing with the inclusion of the financial statements and related notes of Jiangsu Yitong as of December 31, 2023 and 2024 and for the fiscal years ended December 31, 2022, 2023 and 2024 (the “Jiangsu Yitong Financial Statements”).

 

This Form 20-F/A consists of the cover page, this explanatory note, the Jiangsu Yitong Financial Statements, updated certifications of our chief executive officer and chief financial officer, and consent of the independent auditor of Jiangsu Yitong. This Amendment does not affect any other parts of, or exhibits to, the Original Filing. Accordingly, this Amendment should be read in conjunction with the Original Filing and with our filings with the U.S. Securities Exchange Commission subsequent to the Original Filing.

 

 

 

 

TABLE OF CONTENTS

 

PART III 1
   
ITEM 18.FINANCIAL STATEMENTS 1
ITEM 19.EXHIBITS 2

 

i

 

 

PART III

 

ITEM 18.FINANCIAL STATEMENTS

 

The following financial statements are included in this Form 20-F/A:

 

Consolidated financial statements of Jiangsu Yitong High-tech Co., Ltd. as of December 31, 2023 and 2024 and for the fiscal years ended December 31, 2022, 2023 and 2024.

 

1

 

 

JIANGSU YITONG HIGH-TECH CO., LTD

 

TABLE OF CONTENTS

 

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 

  Page
Report of Independent Registered Public Accounting Firm F-2
   
Consolidated Balance Sheets as of December 31, 2023 and 2024 F-4
   
Consolidated Statements of Operations for the years ended December 31, 2022, 2023 and 2024 F-6
   
Consolidated Statements of Changes in Equity for the years ended December 31, 2022, 2023 and 2024 F-7
   
Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2023 and 2024 F-8
   
Notes to Consolidated Financial Statements F-10

 

F-1

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors of Jiangsu Yitong High-tech Co., Ltd

 

We have audited the accompanying consolidated balance sheets of Jiangsu Yitong High-tech Co., Ltd. and its subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, changes in equity, and cash flows for the years ended December 31, 2024 and 2023, and the related notes.

 

Management’s Responsibility for the Consolidated Financial Statements

 

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

 

Convenience translation

 

Our audit also comprehended the translation of Renminbi amounts into United States dollar amounts and, in our opinion, such translation has been made in conformity with the basis stated in Note 2 to the financial statements. Such United States dollar amounts are presented solely for the convenience of readers outside the People’s Republic of China.

 

Auditor’ Responsibility

 

Our responsibility is to express an opinion on the consolidated financial statements based on our audits. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in consolidated financial statements. The procedures selected depend on our judgement, including the assessment of the risk of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

 

F-2

 

 

Opinion

 

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years ended December 31, 2024 and 2023, in conformity with accounting principles generally accepted in the United States of America (“US GAAP”).

 

Other Matter

 

The accompanying consolidated statements of operations, of changes in equity and of cash flow of Jiangsu High-Tech Co., Ltd. and its subsidiaries for the year then ended December 31, 2022 are presented for purposes of complying with Rule 3-09 of SEC Regulation S-X; however, Rule 3-09 does not require the 2022 financial statements to be audited and they are therefore not covered by this report.

 

/s/ BROOK & PARTNERS CPAs

 

We have served as the Company’s auditor since 2023.

 

Beijing, the People’s Republic of China

May 21, 2025

 

F-3

 

 

JIANGSU YITONG HIGH-TECH CO., LTD
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)

except for number of shares and per share data, or otherwise noted)

 

   As of December 31, 
   2023   2024   2024 
   RMB   RMB   US$ Note2 
ASSETS               
Current assets               
Cash and cash equivalents   331,532    229,364    31,423 
Restricted cash   2,384    1,259    172 
Notes receivable   305    766    105 
Accounts receivable, net (net of allowance of RMB3,884, RMB8,945 as of December 31, 2023 and 2024, respectively)   21,315    121,488    16,644 
Amounts due from related parties   11,798    18,318    2,510 
Inventories, net   18,146    23,026    3,155 
Installment payment receivables, net, current portion   24,360    33,189    4,547 
Contract assets   399    6,598    904 
Prepaid expenses and other current assets   8,536    17,853    2,446 
Total current assets   418,775    451,861    61,906 
Non-current assets               
Installment payment receivables, net   41,455    22,387    3,067 
Property and equipment, net   84,052    74,170    10,161 
Intangible assets, net   40,700    45,735    6,266 
Goodwill   -    30,954    4,241 
Deferred tax assets   10,910    15,920    2,181 
Operating lease right-of-use assets, net   787    957    131 
Other non-current assets   -    4,225    579 
Total non-current assets   177,904    194,348    26,626 
Total assets   596,679    646,209    88,532 

 

F-4

 

 

JIANGSU YITONG HIGH-TECH CO., LTD
CONSOLIDATED BALANCE SHEETS
- CONTINUED
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)

except for number of shares and per share data, or otherwise noted)

 

   As of December 31, 
   2023   2024   2024 
   RMB   RMB   US$ Note2 
LIABILITIES               
Current liabilities               
Short-term bank borrowing   -    1,103    151 
Notes payable   7,758    4,009    549 
Accounts payable   14,858    49,094    6,726 
Advance from customers   3,375    3,998    548 
Income tax payable   1,349    4,163    570 
Accrued expenses and other current liabilities   13,143    26,055    3,572 
Amounts due to related parties   30,849    43,965    6,023 
Total current liabilities   71,332    132,387    18,139 
Non-current liabilities               
Deferred revenue   4,387    3,660    501 
Amounts due to related parties, non-current   294    22    3 
Deferred tax liabilities   289    264    36 
Long-term bank borrowing   -    8,898    1,219 
Other non-current liabilities   -    736    101 
Total non-current liabilities   4,970    13,580    1,860 
Total liabilities   76,302    145,967    19,999 
Equity               
Ordinary shares   303,907    303,930    41,638 
Additional paid-in capital   54,479    55,545    7,610 
Accumulated retained earnings   161,991    123,127    16,868 
Total Jiangsu Yitong High-tech Co., Ltd shareholders’ equity   520,377    482,602    66,116 
Noncontrolling interest   -    17,640    2,417 
Total equity   520,377    500,242    68,533 
Total liabilities and equity   596,679    646,209    88,532 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-5

 

 

JIANGSU YITONG HIGH-TECH CO., LTD
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)

except for number of shares and per share data, or otherwise noted)

 

    For the year ended December 31,  
    2022
(Unaudited)
    2023     2024     2024  
    RMB     RMB     RMB     US$ Note2  
Revenues (including RMB222,174, RMB89,235 and RMB50,970 with a related party for the years ended December 31, 2022, 2023 and 2024, respectively)     336,163       179,446       99,693       13,658  
Cost of revenues (including RMB163,686, RMB62,597 and RMB33,652 resulting from related party sales for the years ended December 31, 2022, 2023 and 2024, respectively)     (245,970 )     (127,851 )     (69,702 )     (9,549 )
Gross profit     90,193       51,595       29,991       4,109  
Selling and marketing expenses     (2,330 )     (1,717 )     (2,367 )     (324 )
General and administrative expenses     (26,830 )     (18,176 )     (26,407 )     (3,618 )
Research and development expenses     (45,847 )     (53,144 )     (55,862 )     (7,653 )
Total operating expenses     (75,007 )     (73,037 )     (84,636 )     (11,595 )
Operating income/(loss)     15,186       (21,442 )     (54,645 )     (7,486 )
Interest income     7,501       9,043       6,644       910  
Interest expenses     (46 )     (31 )     (64 )     (9 )
Other income, net     5,674       5,411       7,349       1,007  
Income/(loss) before income tax expenses     28,315       (7,019 )     (40,716 )     (5,578 )
Income tax (expenses)/benefits     (3,228 )     6,463       1,852       254  
Net income/(loss)     25,087       (556 )     (38,864 )     (5,324 )
Net income/(loss) per share                                
Basic and diluted     0.083       (0.002 )     (0.128 )     (0.018 )

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-6

 

 

JIANGSU YITONG HIGH-TECH CO., LTD
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)

except for number of shares and per share data, or otherwise noted)

 

   Ordinary Shares   Additional
Paid-in
   Accumulated
Retained
   Total Jiangsu
Yitong
Shareholders’
   Noncontrolling   Total
Shareholders’
 
   Shares   Amount   Capital   Earnings   Equity   Interest   Equity 
As of January 1, 2022 (Unaudited)   302,675,973    302,676    39,955    144,427    487,058        487,058 
Net income               25,087    25,087        25,087 
Share-based compensation           9,228        9,228        9,228 
Dividend distribution               (4,237)   (4,237)       (4,237)
As of December 31, 2022 (Unaudited)   302,675,973    302,676    49,183    165,277    517,136        517,136 
Capital contribution   1,231,250    1,231    6,134        7,365        7,365 
Net loss               (556)   (556)       (556)
Share-based compensation           (838)       (838)       (838)
Dividend distribution               (2,730)   (2,730)       (2,730)
As of December 31, 2023   303,907,223    303,907    54,479    161,991    520,377        520,377 
Capital contribution   22,500    23    134        157        157 
Net (loss)/income               (38,864)   (38,864)   17,640    (21,224)
Share-based compensation           (2,014)       (2,014)       (2,014)
Other contribution           2,946        2,946        2,946 
As of December 31, 2024   303,929,723    303,930    55,545    123,127    482,602    17,640    500,242 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-7

 

 

JIANGSU YITONG HIGH-TECH CO., LTD
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)

except for number of shares and per share data, or otherwise noted)

 

   For the year ended December 31, 
   2022
(Unaudited)
   2023   2024   2024 
   RMB   RMB   RMB   US$ Note2 
Cash Flows from Operating Activities                    
Net income/(loss)   25,087    (556)   (38,864)   (5,324)
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:                    
Non-cash lease expenses   654    560    816    112 
Depreciation and amortization   12,127    17,442    20,314    2,783 
Provision for excess and obsolete inventories   601    803    1,201    165 
Gain on disposal of property, plant and equipment and others   (17)   (21)   (94)   (13)
Share-based compensation   9,228    (838)   (2,014)   (276)
Deferred income taxes   (86)   (8,738)   (2,042)   (280)
Expected credit loss   (748)   (325)   7,388    1,012 
Impairment of contract assets   (390)   (141)   338    46 
Impairment of property, plant and equipment   -    -    620    85 
Impairment of other non-current assets   -    -    121    17 
Changes in operating assets and liabilities:                    
Notes receivable   409    1,342    (461)   (63)
Accounts receivable   (97)   9,016    (105,234)   (14,417)
Contract assets   1,313    2,814    (6,537)   (896)
Amounts due from related parties   40,483    26,023    (6,520)   (893)
Inventories, net   (12,462)   23,830    (5,448)   (746)
Installment receivables, net - current   (4,484)   (11,304)   (11,520)   (1,578)
Prepayments and other current assets   2,837    (3,330)   (10,919)   (1,496)
Non-current installment receivable   (11,183)   (2,752)   17,012    2,331 
Other non-current assets   -    -    (4,225)   (579)
Notes payable   (946)   (3,900)   (3,749)   (514)
Accounts payable   (53,121)   (16,196)   34,236    4,690 
Advance from customers   (3,022)   (2,403)   623    85 
Income tax payable   1,535    (911)   2,814    386 
Accrued expenses and other current liabilities   15    (1,787)   21,169    2,900 
Amount due to related parties   846    10,386    27,713    3,797 
Deferred revenue   1,100    3,286    (727)   (100)
Other non-current liabilities   -    -    736    101 
Net Cash provided by/(used in) Operating Activities   9,679    42,300    (63,253)   (8,665)

 

F-8

 

 

JIANGSU YITONG HIGH-TECH CO., LTD
CONSOLIDATED STATEMENTS OF CASH FLOWS – CONTINUED
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)

except for number of shares and per share data, or otherwise noted)

 

   For the year ended December 31, 
   2022
(Unaudited)
   2023   2024   2024 
   RMB   RMB   RMB   US$ Note2 
Cash Flows from Investing Activities                    
Purchase of property and equipment and intangible assets   (12,222)   (7,166)   (24,323)   (3,332)
Proceeds from disposal of property and equipment   19    14    608    83 
Proceeds from investment income   315    -    473    65 
Net cash paid for acquisition of subsidiary   -    -    (17,501)   (2,398)
Net Cash used in Investing Activities   (11,888)   (7,152)   (40,743)   (5,582)
Cash Flows from Financing Activities                    
Capital contribution   4,093    3,272    157    22 
Dividend distribution   (4,237)   (2,730)   -    - 
Net Cash (used in)/ provided by Financing Activities   (144)   542    157    22 
Effects of exchange rate changes on cash and cash equivalents and restricted cash   (676)   767    546    74 
Net increase/ (decrease) in cash, cash equivalents and restricted cash   (3,029)   36,457    (103,293)   (14,151)
Cash, cash equivalents and restricted cash at beginning of the year   300,488    297,459    333,916    45,746 
Cash, cash equivalents and restricted cash at end of the year   297,459    333,916    230,623    31,595 
Reconciliation of cash and restricted cash                    
Cash and cash equivalents   293,906    331,532    229,364    31,423 
Restricted cash   3,553    2,384    1,259    172 
Total cash, cash equivalents and restricted cash   297,459    333,916    230,623    31,595 
                     
Supplemental disclosure of cash flow information                
Interest paid   63    45    -    - 
Income tax paid   2,394    2,377    1,766    242 
Non-cash investing activities                    
Acquisition of intangible assets in amounts due to a related party   -    19,748    -    - 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-9

 

 

JIANGSU YITONG HIGH-TECH CO., LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)

except for number of shares and per share data, or otherwise noted)

 

NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION

 

Jiangsu Yitong High-tech Co., Ltd (“the Company”, formerly known as Jiangsu Yitong Electronics Co., Ltd) is a company with limited liability incorporated under the laws of the People’s Republic of China (the “PRC” or the “China”) in November 1999.

 

The Company’s shares have been listed in Shenzhen Stock Exchange since May 2011 (“the Listing”).

 

On January 5, 2021, the controlling shareholder entered the agreement with Anhui Shunyuan Xinke Management Consulting Partnership (Limited Partnership) (“Anhui Shunyuan”) to transfer 29.99% equity interest of the Company with an aggregate cash consideration of RMB959.7 million. Anhui Shunyuan is a subsidiary of Zepp Health Corporation (“Zepp”). In May 2022, Anhui Shunyuan acquired another 0.01% equity interest of the Company through Stock Exchange Trading System. After the transaction, Anhui Shunyuan accounted for 30.0% equity interest of the Company. As of December 31, 2023 and 2024, Anhui Shunyuan accounted for 29.88% equity interest of the Company, respectively.

 

The Company and its subsidiaries (together “the Group”) are primarily engaged in the business of developing, manufacturing and sells of cable television network equipment, providing services to intelligent video monitoring engineering and developing, designing and sells of chips and sensors.

 

Zepp accounted for its investment in the Group using the equity method. As the Group is considered to be a significant equity method investee of Zepp for the fiscal year of 2024, its financial statements are included as an exhibit to the Annual Report of Zepp on Form 20-F in accordance with Securities and Exchange Commission (“SEC”) Rule 3-09 of Regulation S-X.

 

As of December 31, 2024, details of the Group’s major subsidiaries were as follows:

 

Name  Place of
incorporation
   Date of
Incorporation/
acquisition
  Percentage of
ownership
 
Suzhou Yiyitong Electronic Information Technology Co., Ltd (“Suzhou Yiyitong”)   PRC   September 25, 2020   100%
Whale Microelectronics Co., Ltd (“Whale Microelectronics”)   PRC   February 7, 2021   100%
Hefei Yunxi Medical Equipment Co., Ltd (“Hefei Yunxi”)   PRC   December 31, 2024   51%

 

F-10

 

 

JIANGSU YITONG HIGH-TECH CO., LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)

except for number of shares and per share data, or otherwise noted)

 

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

 

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

 

Principles of consolidation

 

The consolidated financial statements include the financial statements of the Group and its wholly-owned subsidiaries. All transactions and balances between the Group and its subsidiaries have been eliminated upon consolidation.

 

Use of estimates

 

In preparing the consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the consolidated financial statements, as well as the reported amounts of revenue and expenses during the reporting periods. Significant items subject to such estimates and assumptions include, but are not limited to, the assessment of the allowance for doubtful accounts, inventory valuation, useful lives of property and equipment and intangible assets, impairment of long-lived assets, purchase price allocations for business combination, uncertain tax position and valuation allowance for deferred tax assets. Actual results could differ from those estimates.

 

Fair value

 

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

 

Authoritative literature provides a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The level in the hierarchy within which the fair value measurement in its entirety falls is based upon the lowest level of input that is significant to the fair value measurement as follows:

 

Level 1

 

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

 

Level 2

 

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

 

F-11

 

 

JIANGSU YITONG HIGH-TECH CO., LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)

except for number of shares and per share data, or otherwise noted)

 

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

 

Fair value - continued

 

Level 3

 

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

 

The Group’s financial instruments consist primarily of cash and cash equivalents, restricted cash, accounts receivable, amounts due from a related party, installment payment receivables, notes payable, accounts payable, and amounts due to related parties. The carrying amounts of current portion of these financial instruments approximates their fair values due to the short-term maturities of these instruments.

 

The non-financial assets, such as property and equipment would be measured at FV as they were determined to be impaired.

 

Cash and cash equivalents

 

Cash and cash equivalents consist of cash on hand and demand deposits placed with commercial banks with an original maturity of three months or less, which are unrestricted from withdrawal or use, or which have original maturities of three months or less when purchases. The Group maintains all of the bank accounts in mainland China.

 

Restricted cash

 

Restricted cash consists of guarantee and deposits made to the bank for bank acceptance notes (or notes payable) issued by the Group. When the Group issues the bank acceptance notes, the banks require the Group to make a deposit for 30% of the face value of the bank acceptance notes issued as collateral. The deposits for unsettled bank acceptance notes were recorded as restricted cash in the consolidated balance sheets as of December 31, 2023 and 2024.

 

Accounts receivable

 

Accounts receivables represent those receivables derived in the ordinary course of business, net of allowance for doubtful accounts.

 

Allowance for doubtful accounts

 

The Group maintains an allowance for doubtful accounts for estimated losses on uncollected accounts receivable. Management considers the following factors when determining the collectability of specific accounts: creditworthiness of customers, aging of the receivables, past transaction history with customers and their current condition, changes in customer payment terms, specific facts and circumstances, and the overall economic climate in the industries the Group serves. The Group evaluates its receivable for expected credit losses on a regular basis. The Group maintains an estimated allowance for credit loss to reduce its receivables to the amount that it believes will be collected. The Group uses the creditworthiness of customers, aging of the receivables, past transaction history with customers and their current condition, changes in customer payment terms, specific facts and circumstances, and the overall economic climate in the industries the Group serves to monitor the Group’s receivables within the scope of expected credit losses model and use these as a basis to develop the Group’s expected loss estimates. As of December 31, 2023 and 2024, the Group had RMB3,884 and RMB8,945 allowance for doubtful account recorded in accounts receivable.

 

F-12

 

 

JIANGSU YITONG HIGH-TECH CO., LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)

except for number of shares and per share data, or otherwise noted)

 

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

 

Inventories, net

 

Inventories of the Group consist of raw materials, finished goods, work in process and inventoried costs relating to long-term contracts. Inventories are stated at the lower of cost or net realizable value on a weighted average basis. Inventory costs include expenses that are directly or indirectly incurred in the purchase, including shipping and handling costs charged to the Group by suppliers, and production of manufactured product for sale, such as include the cost of materials and supplies used in production, direct labor costs and allocated overhead costs such as depreciation, insurance, employee benefits, and indirect labor. Cost is determined using the weighted average method. The Group assesses the valuation of inventory and periodically writes down and writes off the value for estimated excess and obsolete inventory based upon the product life cycle.

 

Installment payment receivables, net

 

Installment receivables consist of receivables in relation to installment receivables resulting from engineering services provided by the Group. Installment receivables is recorded upon the revenue recognized and consists net of the unearned interest income and allowance for doubtful accounts. It is recognized as current or non-current assets in the balance sheets based on the remaining collection terms.

 

Property, plant and equipment, net

 

Property and equipment are carried at cost, net of accumulated depreciation and impairment, if any. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Expenditures for repairs and maintenance, which do not materially extend the useful lives of the assets, are expensed as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation and amortization are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition.

 

Estimated useful lives are as follows:

 

Building 5-30 years
Machinery and equipment 1.75-10 years
Vehicles 5 years
Office equipment 5 years

 

Intangible assets, net

 

Intangible assets purchased from third parties and related parties are initially recorded at cost and amortized on a straight-line basis over their estimated economic useful lives. Estimated useful lives are as follows:

 

Land use right  46-50 years
Patent  10 years
Software  5-10 years
Franchise  3-5 years
Non-patent technology  5 years

 

F-13

 

 

JIANGSU YITONG HIGH-TECH CO., LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)

except for number of shares and per share data, or otherwise noted)

 

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

 

Business combination

 

Business combinations are recorded using the acquisition method of accounting. The assets acquired, the liabilities assumed, any non-controlling interests of the acquiree as well as the contingent consideration at the acquisition date, if any, are measured at their fair values as of the acquisition date. Goodwill is recognized and measured as the excess of the total consideration transferred plus the fair value of any non-controlling interest of the acquiree and fair value of previously held equity interest in the acquiree, if any, at the acquisition date over the fair values of the identifiable net assets acquired. The determination and allocation of fair values to the identifiable net assets acquired and liabilities assumed is based on various assumptions and valuation methodologies requiring considerable judgment from management. Although the Group believes that the assumptions applied in the determination are reasonable based on information available at the date of acquisition, actual results may differ from forecasted amounts and the differences could be material.

 

Goodwill

 

Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combination. The Group’s goodwill at December 31, 2024 was related to its acquisition of Hefei Yunxi in December 2024. In accordance with ASC 350, Goodwill and Other Intangible Assets, recorded goodwill amount is not amortized but is tested for impairment annually or more frequently if events on changes in circumstance indicate that it might be impaired.

 

Goodwill is tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the stock prices, business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit.

 

Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The estimation of fair value of each reporting unit using a discounted cash flow methodology also requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for the Group’s business, estimation of the useful life over which cash flows will occur and determination of the Group’s weighted average cost of capital. The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results and market conditions. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for the reporting unit.

 

Revenue recognition

 

The Group’s revenues are derived principally from developing, manufacturing and sells of broadcasting and television equipment, providing services to intelligent video monitoring engineer and developing and sells of chips and sensors. Value added taxes (“VAT”) are presented as a reduction of revenues.

 

F-14

 

 

JIANGSU YITONG HIGH-TECH CO., LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)

except for number of shares and per share data, or otherwise noted)

 

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

 

Revenue recognition – Continued

 

Revenue recognition on product sales

 

For all products sales, the Group requires a contract or purchase order which quantifies pricing, quantity and product specifications. The Group’s sales arrangements generally do not contain variable considerations and are short-term in nature. The Group recognizes revenue at a point in time when the customer obtains control of the products. Revenue is recognized as performance obligation under the terms of a contract with the customer are satisfied and control of the product has been transferred to the customer. Sales of goods do not include multiple products and/or service elements.

 

Revenue from engineering services and others

 

The Group provides intelligent video monitoring engineering services to customers and revenue of engineering services is recognized over time by measuring the progress towards complete satisfaction of that performance obligation. The progress towards complete satisfaction of the performance obligation is measured based on the Group’s efforts or inputs to the satisfaction of the performance obligation, by reference to the contracts cost incurred up to the end of reporting period as a percentage of total estimated costs for each contract. The Group also generates other revenue from repairment and rental services, which are immaterial.

 

Cost of revenue

 

Cost of revenues consists primarily of material costs, salaries and benefits for staff engaged in production and engineering activities, depreciation and amortization, outsourced services and related expenses which are directly attributable to the production of products. The shipping and handling fees billed to the customers are presented as part of cost of revenues as well.

 

Selling and marketing expenses

 

Selling and marketing expenses consist primarily of promotion and advertising expenses, staff costs and other daily expenses which are related to the selling and marketing departments. These expenses are charged to the consolidated statement of operations as incurred.

 

General and administrative expenses

 

General and administrative expenses consist primarily of salaries and welfare expenses and related expenses for employees involved in general corporate functions, including accounting, legal and human resources; and costs associated with use by these functions of facilities and equipment, such as traveling and general expenses, professional service fees and other related expenses. These expenses are charged to the consolidated statement of operations as incurred.

 

Research and development expenses

 

Research and development expenses consist primarily of salaries and benefits for research and development personnel, materials, office expenses, amortization and depreciation expenses associated with research and development activities.

 

F-15

 

 

JIANGSU YITONG HIGH-TECH CO., LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)

except for number of shares and per share data, or otherwise noted)

 

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

 

Income taxes

 

Income taxes are provided for in accordance with the laws of the relevant tax authorities. Deferred tax assets and liabilities are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements. Net operating loss carry forwards and credits are applied using enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that a portion of or all of the deferred tax assets will not be realized.

 

The Group accounts for uncertain tax positions by reporting a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. Tax benefits are recognized from uncertain tax positions when the Group believes that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The Group recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expenses.

 

Value added tax (“VAT”)

 

The Group’s PRC subsidiaries are subject to value added tax (“VAT”) and related surcharges based on gross sales or service price depending on the type of services provided in the PRC (“output VAT”), and the VAT may be offset by VAT paid by the Group on service purchases (“input VAT”). The applicable rate of output VAT or input VAT for the Group is 2%, 5%, 6%, 9% and 13%. Gross sales or service price charged to customers is subject to output VAT at the rate and subsequently paid to PRC tax authorities after netting input VAT on purchases incurred during the period. The Group’s revenues are presented net of VAT collected on behalf of PRC tax authorities and its related surcharges; the VAT is not included in the consolidated statements of operations. All of the VAT returns filed by the Group’s subsidiaries in the PRC, have been and remain subject to examination by the tax authorities for five years from the date of filing.

 

Share-based payment

 

Share-based payment transactions with employees are measured based on the grant date value of the equity instrument. The Group that grants awards with graded, that is with multiple, vesting dates elect to recognize the awards on a straight-line basis as if it were several separate awards. The requisite service period is generally the vesting period of the award. The Group elects to recognize forfeitures then they occur.

 

Foreign currencies

 

The reporting currency of the Group is RMB. The Group’s principal country of operations is the PRC. The financial position and results of its operations are determined using the RMB, the local currency, as the functional currency.

 

Convenience translation

 

Translations of balances in the consolidated balance sheets, consolidated statements of operations and consolidated statements of cash flows from RMB into US$ as of and during the year ended December 31, 2024 is solely for the convenience of the reader and were calculated at the rate of US$1.00 = RMB7.2993, representing the rate as certified by the statistical release of the Federal Reserve Board of United States on December 31, 2024. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into U.S. dollar at that rate on December 31, 2024, or at any other rate.

 

F-16

 

 

JIANGSU YITONG HIGH-TECH CO., LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)

except for number of shares and per share data, or otherwise noted)

 

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

 

Net income (loss) per share

 

Basic net income (loss) per ordinary share is computed by dividing net income (loss) attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

 

Diluted income per ordinary share reflects the potential dilution that would occur if securities were exercised or converted into ordinary shares. The Group had restricted shares which could potentially dilute basic income per ordinary share in the future. To calculate the number of shares for diluted income per ordinary shares, the effect of the restricted shares is computed using the treasury stock method.

 

Concentration of credit risk

 

Financial instruments that potentially expose the Group to concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable. The Group places its cash and cash equivalents with financial institutions with high credit ratings and quality.

 

The Group conducts credit evaluations of third-party customers and related parties, and generally does not require collateral or other security from its third-party customers and related parties. The Group establishes an allowance for doubtful accounts primarily based upon the age of the receivables and factors surrounding the credit risk of specific third-party customers and related parties.

 

Major Customers

 

Accounts receivable concentration of credit risk is as below:

 

  As of December 31,     
   2023   2024 
   RMB   RMB 
Company A   -    -    48,956    40.3%
Company B   -    -    24,844    20.4%
Company C   -    -    17,538    14.4%
Company D   3,577    16.8%   4,205    3.5%
Company E   2,400    11.3%   1,331    1.1%
Total   5,977    28.1%   96,874    79.7%

 

F-17

 

 

JIANGSU YITONG HIGH-TECH CO., LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)

except for number of shares and per share data, or otherwise noted)

 

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

 

Concentration of credit risk – Continued

 

Major Customers - continued

 

Amounts due from related parties’ concentration of credit risk is as below:

 

    As of December 31,  
   2023   2024 
   RMB   RMB 
Company F   11,660    98.8%   18,182    99.3%
Total   11,660    98.8%   18,182    99.3%

 

Revenue concentration of credit risk is as below:

 

   For the years ended December 31, 
   2022
(Unaudited)
   2023   2024 
   RMB   RMB   RMB 
Company F   222,174    66.1%   89,235    49.7%   50,970    51.1%
Total   222,174    66.1%   89,235    49.7%   50,970    51.1%

 

Major Suppliers

 

Accounts payable concentration of credit risk is as below:

 

    As of December 31, 
   2023   2024 
   RMB   RMB 
Company G   -    -    6,782    13.8%
Company H   -    -    6,555    13.4%
Company I   1,757    11.8%   3,269    6.7%
Total   1,757    11.8%   16,606    33.9%

 

F-18

 

 

JIANGSU YITONG HIGH-TECH CO., LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)

except for number of shares and per share data, or otherwise noted)

 

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

 

Concentration of credit risk – Continued

 

Major Suppliers – continued

 

Amounts due to related parties, current and non-current concentration of credit risk is as below:

 

   As of December 31, 
   2023   2024 
   RMB   RMB 
Company J   -    -    24,656    56.1%
Company K   19,748    63.4%   12,068    27.4%
Company F   10,681    34.3%   7,018    16.0%
Total   30,429    97.7%   43,742    99.5%

 

Purchase concentration of credit risk is as below:

 

   For the years ended December 31, 
   2022
(Unaudited)
   2023   2024 
   RMB   RMB   RMB 
Company L   -    -    -    -    11,736    13.8%
Company I   25,298    10.3%   12,812    15.2%   5,531    6.5%
Company M   24,761    10.1%   7,561    8.9%   2,164    2.5%
Company N   30,246    12.4%   6,084    7.2%   2,064    2.4%
Total   80,305    32.8%   26,457    31.3%   21,495    25.2%

 

Recent accounting pronouncements

 

In November 2024, the FASB issued ASU No. 2024-03, which requires disaggregated disclosure of income statement expenses for public business entities (PBEs). The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. The guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Adoption of this guidance should be applied retrospectively to all prior periods presented. Early adoption is permitted. The Group is currently in the process of evaluating the disclosure impact of adopting ASU 2024-03.

 

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280)- Improvements to Reportable Segment Disclosures. ASU No. 2023-07 requires an enhanced disclosure of significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss, on an annual and interim basis. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of this guidance should be applied retrospectively to all prior periods presented. Early adoption is permitted. The adoption of this guidance did not have a material impact on its consolidated financial statements and related disclosures.

 

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740)- Improvements to Income Tax Disclosures. ASU No. 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The guidance is effective for annual periods beginning after December 15, 2024 on a prospective basis. Early adoption is permitted. The Group is currently in the process of evaluating the disclosure impact of adopting ASU 2023-09.

 

F-19

 

 

JIANGSU YITONG HIGH-TECH CO., LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)

except for number of shares and per share data, or otherwise noted)

 

NOTE 3 — INVENTORIES, NET

 

Inventories, net consisted of the following:

 

   As of December 31, 
   2023   2024 
   RMB   RMB 
Raw materials   2,718    654 
Work in progress   3,927    11,465 
Finished goods   10,753    9,585 
Inventoried costs relating to long-term contracts   748    1,322 
Inventories, net   18,146    23,026 

 

During the years ended December 31, 2022, 2023 and 2024, the Group recorded a provision for the excess and obsolete inventories amounting to RMB601, RMB803 and RMB1,201, respectively.

 

NOTE 4 — INSTALLMENT RECEIVABLES, NET

 

Installment receivables relating to the installment for engineering services consisted of the following:

 

   As of December 31, 
   2023   2024 
   RMB   RMB 
Current portion of Installment receivables   24,698    36,218 
Noncurrent installment receivables   41,455    24,443 
Allowance for doubtful accounts   (338)   (5,085)
Total   65,815    55,576 

 

As of December 31, 2024, the due date of installment receivables is as follows:

 

   RMB 
2025   40,029 
2026   11,277 
2027   11,723 
2028   2,813 
2029   192 
Total installment receivables   66,034 
Less: Unrealized interest income   (5,373)
Installment receivables, gross   60,661 
Less: Allowance for installment receivables   (5,085)
Installment receivables, net   55,576 

 

F-20

 

 

JIANGSU YITONG HIGH-TECH CO., LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)

except for number of shares and per share data, or otherwise noted)

 

NOTE 5 — PROPERTY, PLANT AND EQUIPMENT, NET

 

Property, plant and equipment, net consisted of the following:

 

   As of December 31, 
   2023   2024 
   RMB   RMB 
Buildings   121,591    121,224 
Machinery and equipment   166,775    157,901 
Office equipment   7,481    6,688 
Vehicles   5,767    6,102 
    301,614    291,915 
Less: accumulated depreciation and impairment   (217,814)   (217,745)
Construction in progress   252    - 
Property, plant and equipment, net   84,052    74,170 

 

The Group has recorded depreciation expenses of RMB8,986, RMB11,223 and RMB9,362 during the years ended December 31, 2022, 2023 and 2024, respectively. Impairment of nil, nil and RMB608 was recorded during the years ended December 31, 2022, 2023 and 2024.

 

NOTE 6 — INTANGIBLE ASSETS, NET

 

Intangible assets, net consisted of the following:

 

   As of December 31, 
   2023   2024 
   RMB   RMB 
Land use right   14,599    14,599 
Patent   4,584    4,584 
Software   8,187    10,161 
Franchise   17,414    31,428 
Non-patent technology   20,700    20,700 
    65,484    81,472 
Less: accumulated amortization   (24,784)   (35,737)
Intangible assets, net   40,700    45,735 

 

Amortization expenses for the intangible assets for the years ended December 31, 2022, 2023 and 2024, were RMB3,071, RMB6,219 and RMB10,952, respectively. Future amortization expenses relating to the existing intangible assets amounted to RMB14,415 for the next year, RMB12,131 for the second year, RMB6,235 for the third year, RMB3,895 for the fourth year, RMB809 for the fifth year and RMB8,250 thereafter.

 

F-21

 

 

JIANGSU YITONG HIGH-TECH CO., LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)

except for number of shares and per share data, or otherwise noted)

 

NOTE 7 – BUSINESS COMBINATION

 

In November 2024, the Company entered into an equity transfer agreement with Hefei Yunxi Medical Equipment Co., Ltd. (“Hefei Yunxi”) and its original shareholders to acquire 51% equity interest at a cash consideration of RMB18,360. Hefei Yunxi primarily engages in the business of selling medical equipment in PRC. According to the equity transfer agreement, the Group owns the right to request the transferer making the performance commitment for the three years following acquisition. On December 31, 2024, the Company completed the acquirement 51% equity interest in Hefei Yunxi. Upon completion of the transaction, Hefei Yunxi became a consolidated subsidiary of the Group.

 

The Group engaged an independent valuation firm to assist management in valuing assets acquired, liabilities assumed, contingent consideration and non-controlling interests as of acquisition day.

 

The allocation of the purchase price as of the date of acquisition is summarized as follows:

 

Fair value of consideration   18,360 
      
Recognized amounts of identifiable assets acquired and liability assumed:     
Total assets   56,274 
Total liabilities   (51,228)
Total identifiable net assets (i)   5,046 
Noncontrolling interest (ii)   17,640 
Goodwill   30,954 

 

i. All assets and liabilities carrying value approximately fair value at the time of acquisition.

 

ii. Noncontrolling interest was recognized and measured at fair value on the acquisition date by the Group.

 

NOTE 8 – GOODWILL

 

The changes in the carrying amount of goodwill are as follows:

 

   As of December 31, 
   2023   2024 
   RMB   RMB 
Balance at beginning of the year   -    - 
Additions to goodwill   -    30,954 
Balance at end of the year   -    30,954 

 

In addition, based on impairment assessment adopted as of December 31, 2024, no impairment has been noted.

 

F-22

 

 

JIANGSU YITONG HIGH-TECH CO., LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)

except for number of shares and per share data, or otherwise noted)

 

NOTE 9 — ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

 

   As of December 31, 
   2023   2024 
   RMB   RMB 
Accrued expenses   601    9,788 
Accrued payroll and welfare   6,281    6,536 
Capital contribution of restricted shares   2,093    - 
Payable for research development fee   2,153    3,224 
Other tax payables   957    2,608 
Payable for intangible assets   -    1,963 
Other payables   1,058    1,936 
Total   13,143    26,055 

 

NOTE 10 — BANK BORROWING

 

In July 2023, Hefei Yunxi entered into a RMB10,000 three-year revolving facility agreement with Bank of China Hefei Branch. The facility is guaranteed by Hefei Yunxi’s non-controlling shareholders and collateralized by property owned by them. As of December 31, 2024, the total outstanding borrowing was RMB10,000, during which RMB1,103 are repayable within one year and are included in “Short-term bank borrowing” on the consolidated balance sheets.

 

NOTE 11 — RELATED PARTY TRANSACTIONS AND BALANCES

 

Nature of relationships with related parties:

 

Name   Relationship with the Group
Anhui Huami Information Technology Co., Ltd (“Anhui Huami”)   A company controlled by principal shareholder
Hefei Huami Microelectronics Co., Ltd (“Hefei Huami”)   A company controlled by principal shareholder
Mr. Tao Zhang   A person has a significant influence on subsidiary
Anhui Xikai Medical Technology Co., Ltd (“Anhui Xikai”)   A company controlled by Mr. Tao Zhang

 

F-23

 

 

JIANGSU YITONG HIGH-TECH CO., LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)

except for number of shares and per share data, or otherwise noted)

 

NOTE 11 — RELATED PARTY TRANSACTIONS AND BALANCES - CONTINUED

 

Transactions with related parties

 

   For the years ended December 31, 
   2022
(Unaudited)
   2023   2024 
   RMB   RMB   RMB 
Sales to a related party               
Anhui Huami   222,174    89,235    60,012 
Research development services provided by a related party               
Anhui Huami (a)   2,337    10,460    6,815 
Intangible assets purchased from a related party               
Hefei Huami (b)       20,700     

 

Balances with related parties

 

As of December 31, 2023 and 2024, the balances with related parties were as follows:

 

   As of December 31, 
   2023   2024 
   RMB   RMB 
Amounts due from related parties          
Anhui Huami   11,660    18,182 
Others   138    136 
Total   11,798    18,318 
Amounts due to related parties, current and non-current          
Anhui Xikai (c)       24,656 
Hefei Huami (b)   19,748    12,068 
Anhui Huami (a)   10,681    7,018 
Others   714    245 
Total   31,143    43,987 

 

(a)The amount due to Anhui Huami primarily represents the payable in relation to the research and development supporting services provided by Anhui Huami.

 

(b)The amount due to Hefei Huami primarily represents the payable in relation to the transfer of certain intangible assets from Hefei Huami for a total consideration of RMB21,942, including VAT, in which RMB2,194 and RMB7,680 were paid by the Group during 2023 and 2024, respectively.

 

(c)The amount due to Anhui Xikai primarily represents the payable in relation to the expenses on behalf of the Group and goods purchased from Anhui Xikai.

 

F-24

 

 

JIANGSU YITONG HIGH-TECH CO., LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)

except for number of shares and per share data, or otherwise noted)

 

NOTE 12 — REVENUE

 

Disaggregation of revenue

 

The following table summarized disaggregated revenue for the years ended December 31, 2022, 2023 and 2024:

 

   For the Years Ended
December 31,
 
   2022
(Unaudited)
   2023   2024 
   RMB   RMB   RMB 
Category of Revenue            
Revenue on product sales   282,348    128,517    65,714 
Revenue from engineering services and others   53,815    50,929    33,979 
    336,163    179,446    99,693 

 

Contract balances

 

The following table provides information about receivables, contract assets, installment payment receivables and advance from customers from contracts with customers:

 

   As of December 31, 
   2023   2024 
   RMB   RMB 
Accounts receivables   21,315    121,488 
Amounts due from a related party   11,576    18,182 
Installment payment receivables, net, current portion   24,360    33,189 
Contract assets   399    6,598 
Noncurrent installment receivables   41,455    22,387 
Advance from customers   3,375    3,998 

 

The Group recognizes accounts receivable, contracts assets, amounts due from a related party, installment receivables in its consolidated balance sheets when it performs a service in advance of receiving consideration and it has the unconditional right to receive consideration. Contract assets is unbilled amount related to the progress towards complete satisfaction under engineering services agreements. Payments received from customers are based on the payment terms established in its contracts. Such payments are initially recorded to advance from customers and are recognized into revenue as the Group satisfies its performance obligations. Substantially all of advance from customers will be recognized as revenue during the Group’s following fiscal year.

 

F-25

 

 

JIANGSU YITONG HIGH-TECH CO., LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)

except for number of shares and per share data, or otherwise noted)

 

NOTE 13 — INCOME TAXES

 

The Group are subject to the 25% standard enterprise income tax rate except for the Group and Whale Microelectronics that qualify as a high and new technology enterprise (“HNTE”), which are subject to a tax rate of 15%. The Group began to qualify as HNTE in 2020 and renewed the HNTE certificate in November 2023. Accordingly, the Group was subject to a tax rate of 15% during the year ended December 31, 2022, 2023 and 2024. Whale Microelectronics qualified as a HNTE in November 2023 and is subject to a tax rate of 15% during the years ended December 31, 2023 and 2024.

 

The provision for income tax consisted of the following:

 

   For the years ended
December 31,
 
   2022
(Unaudited)
   2023   2024 
   RMB   RMB   RMB 
Current income tax expense   3,314    2,275    190 
Deferred income tax benefit   (86)   (8,738)   (2,042)
Income tax expenses/(benefit)   3,228    (6,463)   (1,852)

 

The significant components of the Group’s deferred tax assets were as follows:

 

   As of December 31, 
   2023   2024 
   RMB   RMB 
Net operating loss carry forwards   8,704    8,817 
Impairment of assets   1,229    3,627 
Accrued expenses   -    1,965 
Installment receivables   788    763 
Deferred revenue   -    549 
Others   189    199 
Total deferred tax assets   10,910    15,920 
Less: valuation allowance   -    - 
Deferred tax assets, net   10,910    15,920 

 

F-26

 

 

JIANGSU YITONG HIGH-TECH CO., LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)

except for number of shares and per share data, or otherwise noted)

 

NOTE 13 — INCOME TAXES - CONTINUED

 

Reconciliation between the tax expense computed by applying the PRC enterprise tax rate of 25% to income/(loss) before income tax and the actual tax expense were as follows:

 

   For the years ended December 31, 
   2022
(Unaudited)
   2023   2024 
   RMB   RMB   RMB 
Income/(loss) before income tax   28,315    (7,019)   (40,716)
Tax expense/(benefit) at income tax rate of 25%   7,079    (1,755)   (10,179)
Effect of preferential tax rates   (1,936)   721    4,058 
Non-deductible expenses   3,016    (369)   (53)
Additional deduction for R&D expenses   (4,931)   (4,795)   (5,505)
Operating income offset loss carryforward       (265)   9,827 
Income tax expenses/(benefit)   3,228    (6,463)   (1,852)

 

If the Group did not enjoy the tax holidays, tax expense would have increased by RMB1,936 and decreased by RMB721 and RMB4,058 for the year ended December 31, 2022, 2023 and 2024, respectively. The (decrease)/increase in basic and diluted net income per ordinary share would be RMB(0.006), RMB0.002 and RMB0.013 for the year ended December 31, 2022, 2023 and 2024, respectively.

 

NOTE 14 — SHARE-BASED COMPENSATION

 

2021 Share Incentive Plan

 

In August 2021, the Group adopted the 2021 share incentive plan (the “2021 Plan”) that provides for grant of restricted shares to employees. The maximum aggregate number of shares which may be issued pursuant to all awards under the 2021 Plan is 4,243,750 shares. The 2021 Plan permits the awards of restricted shares. The restricted shares are not transferable and may not be sold or pledged and the holder has no voting or dividend right the non-vested shares. On February 28, 2022, the Group has amended the Plan so as to increase the number of shares to 220,000 in accordance with rules of the 2021 Plan.

 

During the years ended December 31, 2022, 2023 and 2024, the Group granted 220,000, nil and nil restricted shares to personnel under the 2021 Plan.

 

2022 Share Incentive Plan

 

On April 28, 2022, the Group adopted the 2022 share incentive plan (the “2022 Plan”). The maximum aggregate number of shares which may be issued pursuant to all awards under the 2022 Plan is 5,250,000 shares. The 2022 Plan permits the awards of restricted shares. For those awards, evaluations are made as of each reporting period to assess the likelihood of performance criteria being met. On November 24, 2022, the Group has amended the Plan so as to increase the number of shares to 150,000 in accordance with the rules of the 2022 Plan.

 

F-27

 

 

JIANGSU YITONG HIGH-TECH CO., LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)

except for number of shares and per share data, or otherwise noted)

 

NOTE 14 — SHARE-BASED COMPENSATION - CONTINUED

 

2022 Share Incentive Plan – Continued

 

During the years ended December 31, 2022, 2023 and 2024, the Group granted 4,350,000, nil and nil restricted shares to personnel under the 2022 Plan.

 

The Group calculated the estimated fair value of the restricted shares on the grant dates using the Black-Scholes option pricing model. Assumptions used to determine the fair value of restricted share granted during the year ended December 31, 2022 are summarized in the following table, no shares were granted in 2023 and 2024:

 

   2022
(Unaudited)
 
   RMB 
Risk-free interest rate   1.50-2.75
Expected volatility   19.70-25.18
Expected life of share (years)   1-4 
Expected dividend yield   0.08%
Fair value per ordinary share   RMB0.64-5.83 

 

(i)Risk-free interest rate

 

Risk-free interest was estimated based on the yield to maturity of China international government bonds with a maturity period close to the contractual term of the shares.

 

(ii)Expected life of share (years)

 

Expected life of option (years) represents the expected years to vest the restricted shares.

 

(iii)Volatility

 

The volatility of the underlying restricted share during the life of the shares was estimated based on the historical stock price volatility of comparable listed companies over a period comparable to the contractual term of the shares.

 

(iv)Dividend yield

 

The dividend yield was estimated by the Group based on its expected dividend policy over the contractual term of the restricted shares.

 

(v)Fair value of underlying restricted share

 

During the years ended December 31, 2024, the fair value of the underlying restricted share was determined based on the Black-Scholes option pricing model of the shares.

 

F-28

 

 

JIANGSU YITONG HIGH-TECH CO., LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)

except for number of shares and per share data, or otherwise noted)

 

NOTE 14 — SHARE-BASED COMPENSATION - CONTINUED

 

A summary of the restricted shares activity during the year ended December 31, 2024 is presented below:

 

       Weighted average 
       exercise price 
   Number of shares   per share 
       US$ 
Outstanding at January 1, 2024   2,142,750    0.29 
Granted        
Exercised   (22,500)    
F Forfeited   (1,357,750)    
Outstanding at December 31, 2024   762,500    0.96 

 

The following table summarizes information regarding the restricted share as of December 31, 2024:

 

   December 31, 2024 
           Weighted     
           average remaining     
       Weighted   exercise     
       average exercise   contractual   Aggregate 
   Shares Number   price per share   life (years)   intrinsic value 
       US$       US$ 
Shares                    
Outstanding   762,500    0.96    1.34    200,881 
Exercisable                
Expected to vest   762,500    0.96    1.34    200,881 

 

The total intrinsic value of restricted shares exercised during the years ended December 31, 2022, 2023 and 2024 amounted nil, RMB3,045 and RMB1,466, respectively.

 

The weighted average grant date fair value of restricted share granted during the year ended December 31, 2022, 2023 and 2024 was RMB0.95, nil and nil per share, respectively.

 

As of December 31, 2024, there was RMB178 of unrecognized compensation expenses related to the shares which will be recognized within two years.

 

F-29

 

 

JIANGSU YITONG HIGH-TECH CO., LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)

except for number of shares and per share data, or otherwise noted)

 

NOTE 14 — SHARE-BASED COMPENSATION – CONTINUED

 

Total share-based compensation recognized during the years ended December 31, 2022, 2023 and 2024 was as follows:

 

    For the years ended
December 31,
 
    2022
(Unaudited)
    2023     2024  
    RMB     RMB     RMB  
Selling and marketing expenses     234       -       -  
General and administrative     2,329       16       (703 )
Research and development     6,665       (854 )     (1,311 )
Total share-based compensation expenses     9,228       (838 )     (2,014 )

 

NOTE 15 — ORDINARY SHARES

 

In 2024, the exercise of restricted share was 22,500 ordinary shares with the total amount of RMB157. As a result, the ordinary shares of the Group are 303,907,223 and 303,929,723 as of December 31, 2023 and 2024, respectively.

 

NOTE 16 — STATUTORY RESERVE

 

In accordance with the PRC Company Laws, the Group’s subsidiaries in the PRC are required to provide for statutory reserves, which are appropriated from net profit as reported in the Group’s PRC statutory accounts. They are required to allocate 10% of their after-tax profits to fund statutory reserves until such reserves have reached 50% of their respective registered capital. These reserve funds, however, may not be distributed as cash dividends. During the years ended December 31, 2022, 2023 and 2024, the Group accrued an additional RMB2,509, RMB1,396 and nil statutory reserve from the new appropriable profit earned by certain PRC entities.

 

F-30

 

 

ITEM 19.EXHIBITS

 

Exhibit 
Number

 

Description of Document

12.1*   CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
12.2*   CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
13.1**   CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.2**   CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15.3*   Consent of BROOK & PARTNERS CPAs

 

 

*            Filed with this Amendment No. 1 to Annual Report on Form 20-F. 

**          Furnished with this Amendment No. 1 to Annual Report on Form 20-F.

 

2

 

 

SIGNATURES

 

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F, and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

 

  Zepp Health Corporation
   
  By: /s/ Wang Wayne Huang
  Name: Wang Wayne Huang
  Title: Chairman of the Board of Directors and Chief Executive Officer

 

Date: May 21, 2025

 

3