Exhibit 99.4

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

You should read the following discussion and analysis of the financial condition and results of operations in conjunction with the financial statements and the related notes of Zhonglian Jinan Insurance Brokerage Co., Ltd. (“Jinan”). This discussion contains forward-looking statements that involve risks and uncertainties. The actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors. All amounts included herein with respect to the years ended June 30, 2023 and 2024 are derived from audited financial statements of Jinan, which have been prepared in accordance with U.S. Generally Accepted Accounting Principles, or U.S. GAAP.

Key Components of Results of Operations

Revenues

Jinan derives its revenue primarily from insurance brokerage business. For the years ended June 30, 2023 and 2024, the revenues were approximately RMB 191.82 million and RMB 191.71 million (US$26.26 million), respectively. The following table sets forth a breakdown of the revenue by service type for the  years indicated.

	For the Years Ended June 30,
	2023					2024
	RMB			%		RMB			US$			%
Insurance Brokerage		191,994,079			100		191,620,150			26,251,852			100
Others		461,687			-		651,379			89,239			-
Less: business taxes and surcharges		(631,436	)		-		(566,019	)		(77,544	)		-
		191,824,330			100		191,705,510			26,263,547			100

For the years ended June 30, 2023 and 2024, all insurance applications submitted by end customers were fully approved by insurance companies without any denial. The following table sets forth the breakdown of the revenues disaggregated by product types.

	For the Years Ended June 30,
	2023			2024
	RMB			RMB			US$
Insurance Brokerage
Property & casualty insurance products		176,302,439			170,849,805			23,406,326
Life insurance products		8,463,762			7,050,354			965,895
Health insurance product		6,923,633			13,457,163			1,843,624
Others		304,245			262,828			36,007
Subtotal		191,994,079			191,620,150			26,251,852
Others		461,687			651,379			89,239
Less: business taxes and surcharges		(631,436	)		(566,019	)		(77,544	)
Total		191,824,330			191,705,510			26,263,547

Insurance Brokerage

Jinan offers insurance brokerage services to end customers/the insured for placing insurance policies, and earns insurance brokerage commission from insurance carriers upon completing insurance brokerage services. The commission fees are calculated on a predetermined percentage of insurance premium of each insurance policy.

For the years ended June 30, 2023 and 2024, the revenues generated from the insurance brokerage services fees were approximately RMB 191.99 million and RMB 191.62 million (US$26.25 million), respectively. The income has remained stable over the past two years.

Others

Jinan offers various advisory services to institutional customers who seek insurance coverage for their employees, assets, and business operations. These services mainly include designing insurance plans, handling claims, and conducting risk assessments. The Company generally charges a fixed amount for service fee. For the years ended June 30, 2023 and 2024, such revenue accounts for an immaterial portion of total revenues.

Cost of Revenues

Cost of revenue consists primarily of insurance policy acquisition costs, which are service fees paid to various channels for successful sales of insurance policies and labor cost.

Selling and Marketing Expenses 

Selling and marketing expenses consist primarily of payroll and related expenses for employees involved in selling and marketing activities, rental, brokerage service-related promotion and consulting service fee and other expenses.

General and Administrative Expenses

General and administrative expenses primarily consist of employee related expenses for administrative functions, costs associated with these functions including facilities and equipment depreciation expenses, rental and other general corporate related expenses.

Taxation

China

Effective from January 1, 2008, the PRC’s statutory EIT rate is 25%.

Results of Operations

For Years ended June 30, 2023 and 2024

The following table sets forth a summary of the results of operations for the years indicated, both in dollar amounts and as percentages of total revenue. This information should be read together with financial statements and related notes included elsewhere in this filing. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.

	For the Year Ended June 30,
	2023						2024
	RMB			%			RMB			US$			%
Revenues		191,824,330			100			191,705,510			26,263,547			100
Cost of revenues		(147,153,737	)		(77	)		(143,433,635	)		(19,650,327	)		(75	)
		44,670,593			23			48,271,875			6,613,220			25
Operating expenses
Selling and marketing expenses		(17,780,712	)		(9	)		(15,706,108	)		(2,151,728	)		(8	)
General and administrative expenses		(30,792,109	)		(16	)		(32,973,455	)		(4,517,345	)		(17	)
Total operating expenses		(48,572,821	)		(25	)		(48,679,563	)		(6,669,073	)		(25	)
Loss from operations		(3,902,228	)		(2	)		(407,688	)		(55,853	)		-
Interest expense, net		78,473			-			85,193			11,671			-
Other income, net		1,033,074			1			310,316			42,513			-
Loss before Income Taxes		(2,790,681	)		(1	)		(12,179	)		(1,669	)		-
Income tax expenses		(2,491,540	)		(1	)		(1,223,385	)		(167,603	)		(1	)
Net Loss		(5,282,221	)		(3	)		(1,235,564	)		(169,272	)		(1	)

2

Revenues

The revenues slightly decreased by approximately RMB 0.11 million to approximately RMB 191.71 million (US$26.26 million) for the year ended June 30, 2024 from approximately RMB 191.82 million for the year ended June 30, 2023. The decrease was primarily driven by macroeconomic downturns and escalated competitive pressures, which in turn led to a decline in our order prices.

Cost of revenues

The cost of revenue decreased by approximately 2.53% from RMB 147.15 million for the year ended 30 June 2023 to approximately RMB 143.43 million (US$ 19.65 million) for the year ended 30 June 2024. The decrease in cost of revenue was primarily driven by certain cost optimization and efficiency enhancement initiatives.

Gross margin

As a result of foregoing, the gross margin increased from 23.29% to 25.18% for the years ended June 30, 2023 and 2024.

Selling and marketing expenses

The selling expenses decreased by approximately RMB 2.07 million, from approximately RMB 17.78 million for the year ended June 30, 2023 to approximately RMB 15.71 million (US$ 2.15 million) for the year ended June 30, 2024. The decrease was primarily driven by a decrease in salary and welfare expenses, attributable to a decrease in the number of employees.

General and administrative expenses

The general and administrative expenses increased by approximately RMB 2.18 million, from approximately RMB 30.79 million for the year ended June 30, 2023 to approximately RMB 32.97 million (US$ 4.52 million) for the year ended June 30, 2024. The increase was primarily driven by an increase in salary and welfare expenses, as a result of an increase in the headcount of employees.

Income tax expenses

Jinan operates nationwide through its established branches, each of which is required to file tax returns. Consequently, income tax expenses are incurred by several profitable branches, even though the head office’s substantial operating expenses result in an overall company loss.

The decrease in income tax expense from RMB 2.49 million for the year ended June 30, 2023 to RMB 1.22 million for the year ended June 30, 2024, primarily reflects reduced profitability among the branches.

Net loss

As a result of the foregoing, there was a net loss of approximately RMB 5.28 million for the year ended June 30, 2023, and a net loss of approximately RMB 1.24 million for the year ended June 30, 2024.

3

For the six months ended December 31, 2023 and 2024

The following table sets forth a summary of the results of operations for the years indicated, both in dollar amounts and as percentages of total revenue. This information should be read together with financial statements and related notes included elsewhere in this filing. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.

	For the Six Months Ended December 31,
	2023						2024
	RMB			%			RMB			US$			%
Revenues		94,188,367			100			91,924,671			12,593,628			100
Cost of revenues		(75,480,159	)		(80	)		(80,896,153	)		(11,082,728	)		(88	)
		18,708,208			20			11,028,518			1,510,900			12
Operating expenses
Selling and marketing expenses		(7,723,400	)		(8	)		(19,092,457	)		(2,615,656	)		(21	)
General and administrative expenses		(16,776,860	)		(18	)		(15,051,486	)		(2,062,045	)		(16	)
Total operating expenses		(24,500,260	)		(26	)		(34,143,943	)		(4,677,701	)		(37	)
Loss from operations		(5,792,052	)		(6	)		(23,115,425	)		(3,166,801	)		(25	)
Interest expense, net		35,870			-			11,142			1,526			-
Other income, net		112,660			-			151,705			20,783			-
Loss before Income Taxes		(5,643,522	)		(6	)		(22,952,578	)		(3,144,492	)		(25	)
Income tax expenses		(442,965	)		-			(111,957	)		(15,338	)		-
Net Income Loss		(6,086,487	)		(6	)		(23,064,535	)		(3,159,830	)		(25	)

Revenues

The revenues decreased by approximately RMB 2.27 million to approximately RMB 91.92 million (US$12.59 million) for the six months ended December 31, 2024 from approximately RMB 94.19 million for the six months ended December 31, 2023. The decrease was primarily driven by macroeconomic downturns and escalated competitive pressures, which in turn led to a decline in our order prices.

Cost of revenues

The cost of revenue increased by approximately 7.18% from RMB 75.48 million for the six months ended December 31, 2023 to approximately RMB 80.90 million (US$ 11.08 million) for the six months ended December 31, 2024. The increase in cost of revenue was mainly due to escalated competitive pressures which led to the sharp increase in the cost of revenues.

Gross margin

As a result of foregoing, the gross margin decreased from 19.86% to 12.00% for the six months ended December 31, 2024.

Selling and marketing expenses

The selling expenses increased by approximately RMB 11.37 million, from approximately RMB 7.72 million for the six months ended December 31, 2023 to approximately RMB 19.09 million (US$ 2.62 million) for the six months ended December 31, 2024. The increase was mainly due to increase in the expenditure on business promotion and marketing expenses.

4

General and administrative expenses

The general and administrative expenses decreased by approximately RMB 1.73 million, from approximately RMB 16.78 million for the six months ended December 31, 2023 to approximately RMB 15.05 million (US$ 2.06 million) for the six months ended December 31, 2024. The decrease was mainly due to a decrease in business entertainment expenses, which was attributed to effective cost control measures implemented in the period.

Income tax expenses

Jinan operates nationwide through its established branches, each of which is required to file tax returns. Consequently, income tax expenses are incurred by several profitable branches, even though the head office’s substantial operating expenses result in an overall company-level loss.

The decrease in income tax expense from RMB 0.44 million for the six months ended December 31, 2023 to RMB 0.11 million for the six months ended December 31, 2024, primarily reflects reduced profitability among the branches.

Net loss

As a result of the foregoing, there was a net loss of approximately RMB 6.09 million for the six months ended December 31, 2023, and a net loss of approximately RMB 23.06 million for the six months ended December 31, 2024.

Discussion of Certain Balance Sheet Items

For Years ended June 30, 2023 and 2024

The following table sets forth selected information from the balance sheets as of June 30, 2023 and 2024. This information should be read together with the financial statements and related notes included elsewhere in this filing.

	June 30, 2023		June 30, 2024		June 30, 2024
	RMB		RMB		US$
ASSETS
Current Assets
Cash and cash equivalents		23,512,267		22,825,452		3,127,074
Restricted cash		12,964,831		3,770,651		516,577
Accounts receivable, net		15,323,982		16,236,635		2,224,410
Due from related parties		450,000		3,427,899		469,620
Prepaid expenses and other current assets, net		9,551,102		9,635,826		1,320,103
Total Current Assets		61,802,182		55,896,463		7,657,784
Property and equipment, net		7,277,357		6,121,029		838,578
Operating lease right of use assets		323,751		397,399		54,443
Restricted cash, noncurrent		5,000,000		5,000,000		684,997
Total Non-Current Assets		12,601,108		11,518,428		1,578,018
Total Assets		74,403,290		67,414,891		9,235,802
LIABILITIES
Current Liabilities
Accounts payable		26,008,204		28,526,879		3,908,166
Income tax payable		957,839		1,671,692		229,021
Due to related parties		6,000		-		-
Operating lease liabilities, current		194,564		213,988		29,316
Accrued expenses and other liabilities		31,027,874		22,182,490		3,038,989
Total Current Liabilities		58,194,481		52,595,049		7,205,492
Operating lease liabilities, noncurrent		108,617		124,911		17,113
Deferred tax liabilities		1,594,020		1,424,323		195,131
Total Non-Current Liabilities		1,702,637		1,549,234		212,244
Total Liabilities		59,897,118		54,144,283		7,417,736

5

Cash and Cash Equivalents and Restricted Cash, Current and Noncurrent

Cash and cash equivalents consist of funds deposited with banks, which are highly liquid and are unrestricted as to withdrawal or use. Restricted cash mainly represents cash and cash equivalents legally or contractually restricted as to withdrawal or usage. In addition, restricted cash, noncurrent represented guarantee deposits are required by China Banking and Insurance Regulatory Commission (“CBIRC”) in order to protect insurance premium appropriation by insurance broker.

The total balance of cash and cash equivalents and restricted cash (current and non-current) were approximately RMB 41.47 million and RMB 31.60 million (US$4.33 million) as of June 30, 2023 and 2024, respectively. The change in the balances of cash and cash equivalents and restricted cash (current and non-current) for the financial year ended 30 June 2024 was due to approximately RMB 9.79 million used in operating activities and approximately RMB 0.09 million used in investing activities.

Accounts Receivable, Net

Jinan generally grants credit term of up to 60 days for its customers. As of June 30, 2023 and 2024, the turnover days of accounts receivable were approximately 35 days and 32 days, respectively. The turnover remained relatively stable with no significant changes. The turnover days for accounts receivable as of June 30, 2023 and 2024 was calculated as the average of the beginning and ending balance of the gross carrying amount of accounts receivable for the year, divided by the revenues for the year, multiplied by 365 days.

For the years ended June 30, 2023 and 2024, the balance of allowance for accounts receivable were approximately RMB 1.66 million and RMB 0.30 million (US$ 0.04 million), respectively. For the years ended June 30, 2023 and 2024, Jinan wrote off doubtful allowance of approximately RMB 0.02 million and RMB 1.95 million, respectively, against accounts receivable whose collection of which was remote.

Due from Related Parties

As of June 30, 2023 and 2024, The balances due from related parties represented fund advance to director and senior management of Jinan, which are unsecured and interest-free. Refer to Note 10 – Related Party Transactions in the financial statements as of June 30, 2023 and 2024.

Prepaid Expenses and Other Current Assets, Net

The increase in prepaid expenses and other current assets, net from RMB 9.55 million as of June 30, 2023, to RMB 9.64 million (US$ 1.32 million) as of June 30, 2024, was primarily due to an RMB 1.86 million increase in advances to staff. This aligns with the strategic initiatives to enhance employee engagement and operational efficiency. However, this increase was offset by a decrease of RMB 1.86 million in prepaid expenses and a decrease of RMB 0.15 million in others.

Accounts Payable

Accounts payable are mainly intermediary fees and channel fees, which are calculated based on a certain percentage of the insurance broking revenue. The balance of accounts payable increased from approximately RMB 26.01 million as of June 30, 2023 to approximately RMB 28.53 million (US$ 3.91 million) as of June 30, 2024. The increase in accounts payable was attributed to the Company’s consideration of operating capital liquidity, as it has appropriately extended the payment cycle for some of its key suppliers.

6

Accrued Expenses and Other Liabilities

As of June 30, 2023 and 2024, Jinan accrued expenses and other liabilities were approximately RMB 31.03 million and RMB 22.18 million (US$ 3.04 million), respectively. The balance decreased by approximately RMB 8.85 million as of June 30, 2024, which were mainly due to a decrease of approximately RMB 10.19 million in insurance premium payable and a decrease of approximately RMB 0.55 million in payable for staff reimbursements. The decrease was partially offset by an increase of approximately RMB 0.41 million in accrued payroll and welfare expenses, an increase of approximately RMB 0.42 million in deposits payable and an increase of approximately RMB 1.07 million in other payable.

For the Six Months Ended December 31, 2023 and 2024

The following table sets forth selected information from the balance sheets as of December 31, 2023 and 2024. This information should be read together with the financial statements and related notes included elsewhere in this filing.

	June 30, 2024		December 31, 2024		December 31, 2024
	RMB		RMB		US$
ASSETS
Current Assets
Cash and cash equivalents		22,825,452		14,717,018		2,016,223
Restricted cash		3,770,651		2,687,118		368,134
Accounts receivable, net		16,236,635		23,413,972		3,207,701
Due from related parties		3,427,899		2,087,323		285,962
Prepaid expenses and other current assets, net		9,635,826		6,419,278		879,437
Total Current Assets		55,896,463		49,324,709		6,757,457
Property and equipment, net		6,121,029		6,173,990		845,833
Operating lease right of use assets		397,399		267,051		36,586
Restricted cash, noncurrent		5,000,000		5,000,000		684,997
Other non-current assets		-		1,022		140
Total Non-Current Assets		11,518,428		11,442,063		1,567,556
Total Assets		67,414,891		60,766,772		8,325,013
LIABILITIES
Current Liabilities
Accounts payable		28,526,879		47,738,519		6,540,150
Income tax payable		1,671,692		126,988		17,397
Operating lease liabilities, current		213,988		168,834		23,130
Accrued expenses and other liabilities		22,182,490		19,916,500		2,728,549
Total Current Liabilities		52,595,049		67,950,841		9,309,226
Operating lease liabilities, noncurrent		124,911		71,217		9,757
Deferred tax liabilities		1,424,323		2,538,641		347,792
Total Non-Current Liabilities		1,549,234		2,609,858		357,549
Total Liabilities		54,144,283		70,560,699		9,666,775

Cash and Cash Equivalents and Restricted Cash, Current and Noncurrent

The total balance of cash and cash equivalents and restricted cash (current and non-current) were approximately RMB 31.60 million and RMB 22.40 million (US$ 3.07 million) as of June 30, 2024 and December 31, 2024, respectively. The change in the balances of cash and cash equivalents and restricted cash (current and non-current) was due to cash used in operating activities.

7

Accounts Receivable, Net

As of June 30, 2024 and December 31, 2024, the balance of Accounts receivable, net were approximately RMB 16.23 million and RMB 23.41 million (US$ 3.21 million), respectively. The increase in accounts receivable is primarily due to the extended payment cycles of our customers, which is a result of the economic downturn and increased competitive pressures.

Due from Related Parties

As of June 30, 2024 and December 31, 2024, the balances due from related parties represented fund advance to director and senior management of Jinan, which are unsecured and interest-free. Refer to Note 9 – Related Party Transactions in the financial statements as of December 31, 2023 and 2024.

Prepaid Expenses and Other Current Assets, Net

The decrease in prepaid expenses and other current assets, net from RMB 9.64 million as of June 30, 2024 to RMB 6.42 million (US$ 0.88 million) as of December 31, 2024, was mainly due to a decrease in prepaid expenses.

Accounts Payable

The balance of accounts payable increased from approximately RMB 28.53 million as of June 30, 2024 to approximately RMB 47.74 million (US$ 6.54 million) as of December 31, 2024. The increase was mainly due to the extension of the payment cycle to adjust its working capital management strategy based on the consideration of liquidity.

Accrued Expenses and Other Liabilities

As of June 30, 2024 and December 31, 2024, Jinan accrued expenses and other liabilities were approximately RMB 22.18 million and RMB 19.92 million (US$ 2.73 million), respectively. The balance decreased by approximately RMB 2.26 million as of December 31, 2024, which were mainly due to RMB 2.13 million settlement of litigation indemnity-related provision by December 31, 2024.

Liquidity and Capital Resources

The primary sources of liquidity consist of existing cash balances and cash flows provided by operations, proceeds from capital contributions from shareholders. The change from net cash provided by operating activities to an outflow between the years ended June 30, 2023, and 2024, was primarily due to heightened settlement pressures from operational costs and expenses. This increase in financial obligations has adversely affected the capacity to generate positive cash flow from its core business operations.

Cash flows

The following table sets forth a summary of the cash flows for the  years presented:

	For the year Ended June 30,
	2023			2024			2024
	RMB			RMB			US$
Net cash provided by (used in) operating activities		21,337,623			(9,789,330	)		(1,341,133	)
Net cash used in investing activities		(1,190,502	)		(91,665	)		(12,558	)
Net increase in cash, cash equivalents and restricted cash		20,147,121			(9,880,995	)		(1,353,691	)
Cash, cash equivalents and restricted cash at beginning of the year		21,329,977			41,477,098			5,682,339
Cash, cash equivalents and restricted cash at end of the year		41,477,098			31,596,103			4,328,648

8

Operating activities

For the year ended June 30, 2023，Net cash provided by operating activities was approximately RMB 21.34 million (US$ 2.92 million), primarily attributable to a net loss of RMB 5.28 million (US$ 0.72 million), non-cash adjustments including depreciation and amortization of RMB 0.99 million (US$ 0.13 million), amortization of operating lease right-of-use assets of RMB 0.21 million (US$ 0.03 million), and provision for doubtful receivables of RMB 0.81 million (US$ 0.11 million), along with working capital changes comprising: (i) a RMB 2.66 million (US$ 0.36 million) decrease in accounts receivable; (ii) a RMB 3.14 million (US$ 0.43 million) decrease in due from related parties; (iii) a RMB 1.23 million (US$ 0.16 million) decrease in prepaid expenses and other current assets; (iv) a RMB 6.06 million (US$ 0.83 million) increase in accounts payable; (v) a RMB 0.84 million (US$ 0.12 million) increase in income tax payable; (vi) a RMB 1.59 million (US$ 0.22 million) increase in deferred tax liabilities. (vii) a RMB 0.20 million (US$ 0.03 million) decrease in operating lease liabilities; and (ⅷ) a RMB 9.29 million (US$ 1.27 million) increase in accrued expenses and other liabilities.

For the year ended June 30, 2024, Net cash used in operating activities was approximately RMB 9.79 million (US$ 1.34 million), primarily attributable to a net loss of RMB 1.24 million (US$ 0.17 million), non-cash adjustments including depreciation and amortization of RMB 1.25 million (US$ 0.17 million), amortization of operating lease right-of-use assets of RMB 0.27 million (US$ 0.04 million), and provision for doubtful receivables of RMB 0.38 million (US$ 0.05 million), along with working capital changes comprising: (i) a RMB 1.51 million (US$ 0.21 million) increase in accounts receivable; (iii) a RMB 2.98 million (US$ 0.41 million) increase in due from related parties; (iii) a RMB 0.13 million (US$ 0.02 million) decrease in prepaid expenses and other current assets; (iv) a RMB 2.52 million (US$ 0.35 million) increase in accounts payable; (v) a RMB 0.71 million (US$ 0.1 million) increase in income tax payable; (vi) a RMB 9.56 million (US$ 1.31 million) decrease in operating lease liabilities; and ;(vii) a RMB 0.41 million (US$ 0.06 million) increase in accrued expenses and other liabilities driven by rising operating expenses; (viii) a RMB 0.17 million (US$ 0.02 million) decrease in deferred tax liabilities.

Investing activities

For the years ended June 30, 2023 and 2024, all cash used in investing activities was solely for the purchase of property and equipment.

Trend Information

Other than as disclosed in this filing, the management of Jinan are not aware of any trends, uncertainties, demands, commitments or events for the current year that are reasonably likely to have a material effect on the net revenues, income, profitability, liquidity or capital reserves, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.

Quantitative and Qualitative Disclosures About Market Risk

Foreign exchange risk

Jinan operates its business in mainland China is not exposed to any significant foreign exchange risk as there are no significant financial assets or liabilities of these subsidiaries denominated in the currencies other than the functional currency.

Interest rate risk

Jinan exposures to interest rate risk primarily relates to the interest income generated by excess cash, which is mostly held in interest-bearing bank deposits. Interest-earning instruments carry a degree of interest rate risk. Jinan has not been exposed to material risks due to changes in interest rates, and it has not used any derivative financial instruments to manage the interest risk exposure.

9

Critical Accounting Estimates

Jinan prepares the financial statements in accordance with U.S. GAAP, which requires management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, the financial condition or results of operations would be affected. Jinan base its estimates on historical experience and other assumptions that management believes are reasonable after taking account of circumstances and expectations for the future based on available information. Jinan evaluates these estimates on an ongoing basis.

Jinan’s expectations regarding the future are based on available information and assumptions that it believes to be reasonable, which together form the basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, the actual results could differ from those estimates. Some of the accounting policies require a higher degree of judgment than others in their application.

An accounting estimate to be critical if: (i) the accounting estimate requires to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that reasonably could have used in the current period, would have a material impact on the financial condition or results of operations. When reading the financial statements, you should consider the selection of critical accounting policies, the judgment and other uncertainties affecting the application of such policies and the sensitivity of reported results to changes in conditions and assumptions.

The critical accounting policies and practices include the following: (i) revenue recognition; (ii) accounts receivable, net; and (iii) income taxes. See Note 2 — Summary of Significant Accounting Policies to the financial statements for the disclosure of these accounting policies.

(a) Allowance for credit losses

Accounts receivable, net are stated at the original amount less an allowance for credit losses.

Jinan utilizes a forward-looking current expected credit losses (CECL) model for financial instruments measured at amortized cost and receivables resulting from the application of ASC 606, including contract assets.

For the years ended June 30, 2023 and 2024, Jinan accrued provisions for credit losses of approximately RMB 0.22 million, and provisions for credit losses of approximately RMB 0.59 million (US$ 0.08 million), respectively. As of June 30, 2023 and 2024, Jinan wrote off the allowance of approximately RMB 0.02 million and RMB 1.95 million (US$ 0.27 million), respectively, against accounts receivable because the chance of collection is deemed to be remote.

(b) Valuation of deferred tax assets

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Current income taxes are provided in accordance with the laws of the relevant taxing authorities.

Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are recoverable, management estimated that it is more likely than not that the results of future operations will not generate sufficient taxable income to realize the deferred tax assets as June 30, 2023 and 2024. Thus, management recorded valuation allowance amounted to RMB 3.23 million and RMB 4.12 million (US$ 0.56 million) as of June 30, 2023 and 2024, respectively. The deferred tax assets could be utilized in the future years if the Company makes profits in the future, the valuation allowance shall be reversed.

The provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for the financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. The PRC operating entities in PRC are subject to examination by the relevant tax authorities. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent. The statute of limitations is extended to five years under special circumstances, where the underpayment of taxes is more than RMB 100,000 ($13,800). In the case of transfer pricing issues, the statute of limitation is ten years. There is no statute of limitation in the case of tax evasion. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred.

Recently Issued Accounting Pronouncements

A list of recently issued accounting pronouncements that are relevant to us is included in note 2 to the financial statements included elsewhere in this filing.

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