Exhibit 99.1
LZ TECHNOLOGY HOLDINGS LIMITED
INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
F-1
LZ TECHNOLOGY HOLDINGS LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data or otherwise noted)
| As of December 31, | As of June 30, | |||||||||||
| 2024 | 2025 | 2025 | ||||||||||
| RMB | RMB | US$ Note2 (d) | ||||||||||
| (Unaudited) | ||||||||||||
| ASSETS | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | ||||||||||||
| Accounts receivable, net | ||||||||||||
| Advance to suppliers | ||||||||||||
| Prepaid expenses and other current assets, net | ||||||||||||
| Due from related parties | ||||||||||||
| Total current assets | ||||||||||||
| Non-current assets | ||||||||||||
| Property and equipment, net | ||||||||||||
| Deferred offering costs | ||||||||||||
| Operating lease right-of-use assets | ||||||||||||
| Intangible assets, net | ||||||||||||
| Other non-current assets | ||||||||||||
| Total non-current assets | ||||||||||||
| TOTAL ASSETS | ||||||||||||
| LIABILITIES AND EQUITY | ||||||||||||
| Current liabilities | ||||||||||||
| Short-term borrowings | ||||||||||||
| Accounts payable | ||||||||||||
| Accounts payable-a related party | ||||||||||||
| Contract liabilities | ||||||||||||
| Accrued expenses and other current liabilities | ||||||||||||
| Due to related parties | ||||||||||||
| Lease liability – current | ||||||||||||
| Total current liabilities | ||||||||||||
| Non-current liabilities | ||||||||||||
| Deferred tax liabilities, net | ||||||||||||
| Long-term Loan | ||||||||||||
| Lease liability – non-current | ||||||||||||
| Total non-current liabilities | ||||||||||||
| TOTAL LIABILITIES | ||||||||||||
| Commitments and contingencies (Note 12) | ||||||||||||
| Shareholders’ equity | ||||||||||||
| Class A ordinary shares (par value of US$ | ||||||||||||
| Class B ordinary shares (par value of US$ | ||||||||||||
| Additional paid in capital | ||||||||||||
| Accumulated deficit | ( | ) | ( | ) | ( | ) | ||||||
| Total LZ Technology Holdings Limited (the “Company” or “LZ Technology”) shareholders’ equity | ||||||||||||
| Non-controlling interests | ||||||||||||
| Total shareholders’ equity | ||||||||||||
| TOTAL LIABILITIES AND EQUITY | ||||||||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-2
LZ TECHNOLOGY HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
(In thousands, except share and per share data or otherwise noted)
| For the six months ended June 30, | ||||||||||||
| 2024 | 2025 | 2025 | ||||||||||
| RMB | RMB | US$ Note 2 (d) | ||||||||||
| Revenues: | ||||||||||||
| Revenues from services-third parties | ||||||||||||
| Revenues from sales of products-third parties | ||||||||||||
| Total revenues | ||||||||||||
| Cost of revenues: | ||||||||||||
| Cost of services- third parties | ( | ) | ( | ) | ( | ) | ||||||
| Cost of goods sold-third parties | ( | ) | ( | ) | ( | ) | ||||||
| Total Cost of revenues | ( | ) | ( | ) | ( | ) | ||||||
| Gross profit | ||||||||||||
| Operating expenses | ||||||||||||
| Selling and marketing expenses | ( | ) | ( | ) | ( | ) | ||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ||||||
| Research and development expenses | ( | ) | ( | ) | ( | ) | ||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ||||||
| Operating profit (loss) | ( | ) | ( | ) | ||||||||
| Other income (loss), net | ||||||||||||
| Financial expenses, net | ( | ) | ( | ) | ( | ) | ||||||
| Other income (loss), net | ( | ) | ( | ) | ||||||||
| Total other income (loss), net | ( | ) | ( | ) | ||||||||
| Income (loss) before income tax expenses | ( | ) | ( | ) | ||||||||
| Income tax expenses | ( | ) | ( | ) | ( | ) | ||||||
| Net income (loss) | ( | ) | ( | ) | ||||||||
| Deemed distribution | ( | ) | ||||||||||
| Less: net income (loss) attributable to non-controlling interests | ( | ) | ( | ) | ||||||||
| Net loss attributable to the Company’s ordinary shareholders | ( | ) | ( | ) | ( | ) | ||||||
| Total comprehensive income (loss) | ( | ) | ( | ) | ||||||||
| Less: total comprehensive income (loss) attributable to non-controlling interests | ( | ) | ( | ) | ||||||||
| Comprehensive loss attributable to the Company | ( | ) | ( | ) | ( | ) | ||||||
| Net loss per share - Basic and diluted | ( | ) | ( | ) | ( | ) | ||||||
| Weighted average shares outstanding used in calculating basic and diluted loss per share | ||||||||||||
| * | Ordinary shares and shares data are presented on a retroactive basis to reflect the reorganization (Note 1(b)) and the Share Subdivision and the Share Surrender implemented on July 15, 2024 (Note 11). |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-3
LZ TECHNOLOGY HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands, except share and per share data or otherwise noted)
| Class A Ordinary shares | Class B Ordinary shares | Additional paid-in | Accumulated | Total LZ Technology shareholders’ | Non-controlling | Total | ||||||||||||||||||||||||||||||
| Share* | Amount | Share* | Amount | capital | Deficit | equity | interests | equity | ||||||||||||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | RMB | RMB | ||||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | ( | ) | ||||||||||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||||||
| Issuance of shares in exchange for repurchase of non-controlling interests | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance as of June 30, 2024 (Unaudited) | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | ( | ) | ||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Issuance of ordinary shares upon IPO | - | |||||||||||||||||||||||||||||||||||
| Offering costs | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance as of June 30, 2025 (Unaudited) | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2025(US$) | ( | ) | ||||||||||||||||||||||||||||||||||
| * | Ordinary shares and shares data are presented on a retroactive basis to reflect the reorganization (Note 1(b)) and the Share Subdivision and the Share Surrender implemented on July 15, 2024 (Note 11). |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-4
LZ TECHNOLOGY HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except share and per share data or otherwise noted)
| For the six months ended June 30, | ||||||||||||
| 2024 | 2025 | 2025 | ||||||||||
| RMB | RMB | US$ Note 2 (d) | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income (loss) | ( |
) | ( |
) | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Allowance for credit losses | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Amortization of operating lease right-of-use asset | ||||||||||||
| Loss from disposal of property, equipment and software | ||||||||||||
| Deferred income taxes | ||||||||||||
| Changes in operating assets and liabilities: | - | |||||||||||
| Accounts receivable, net | ( |
) | ( |
) | ( |
) | ||||||
| Advance to suppliers | ( |
) | ( |
) | ( |
) | ||||||
| Prepaid expenses and other current assets, net | ( |
) | ||||||||||
| Due from related parties | ||||||||||||
| Accounts payable | ||||||||||||
| Accounts payable- a related party | ( |
) | ( |
) | ||||||||
| Contract liabilities | ||||||||||||
| Accrued expenses and other current liabilities | ||||||||||||
| Operating lease liabilities | ( |
) | ( |
) | ||||||||
| Due to related parties | ||||||||||||
| Net cash provided by/ (used in) operating activities | ( |
) | ( |
) | ||||||||
| Cash flows from investing activities: | ||||||||||||
| Purchase of property and equipment, net | ( |
) | ( |
) | ||||||||
| Purchases of Long-term investments | ( |
) | ( |
) | ||||||||
| Loans to related parties | ( |
) | ( |
) | ( |
) | ||||||
| Collection of loans to related parties | ||||||||||||
| Net cash (used in)/ provided by investing activities | ( |
) | ||||||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from borrowings | ||||||||||||
| Repayments of borrowings | ( |
) | ( |
) | ( |
) | ||||||
| Payment for deferred offering cost | ( |
) | ( |
) | ( |
) | ||||||
| Proceeds of loans from related parties | ||||||||||||
| Repayment of loans from related parties | ( |
) | ( |
) | ( |
) | ||||||
| Deemed distribution to one shareholder | ( |
) | ||||||||||
| Proceeds from IPO | ||||||||||||
| Net cash (used in)/provided by financing activities | ( |
) | ||||||||||
| Net (decrease)/ increase in cash and cash equivalents: | ( |
) | ||||||||||
| Cash and cash equivalents at the beginning of the period | ||||||||||||
| Cash and cash equivalents at the end of the period | ||||||||||||
| Supplemental disclosure of cash flow information: | ||||||||||||
| Income tax paid | ||||||||||||
| Interest paid | ||||||||||||
| Supplemental schedule of non-cash financing activities: | ||||||||||||
| Repayments of short-term borrowings by a related party on behalf of the Company | ||||||||||||
| Issuance of shares in exchange for repurchase of non-controlling interests | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-5
LZ TECHNOLOGY HOLDINGS LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except for share and per share data)
| 1. | Organization and principal activities |
| (a) | Principal activities |
LZ Technology Holdings Limited (“LZ Technology”, “Company”) was incorporated under the law of the Cayman Islands as an exempted company with limited liability on November 30, 2022. The Company is a holding company and conducts its businesses primarily through its subsidiaries (collectively, the “Group”). The Group is an integrated advertising and promotion service provider with principal operations and geographic markets in the People’s Republic of China (“PRC”).
| (b) | Reorganization |
In anticipation of an initial public offering
(“IPO”) of its equity securities, the Company incorporated Dongrun Technology Holdings Limited (“Dongrun Technology”)
under the laws of British Virgin Islands, as its direct wholly-owned subsidiary, on December 5, 2022. Mr. Zhang Andong incorporated LZ
Digital Technology Group Limited (“LZ Digital”) under the laws of Hong Kong, PRC, on November 21, 2022. On March 10, 2023,
Mr. Zhang Andong transferred
On January 13, 2023, LZ Digital directly invested
in Lianzhang Menhu (Zhejiang) Holding Co., Ltd. (“LZ Menhu”), as its direct wholly-owned subsidiary. On June 23, 2023, shareholders
of Lianzhang Portal Internet Technology Co.,Ltd (“Lianzhang Portal”) transfer
Due to the fact that the Company and its subsidiaries were effectively controlled by the same shareholders immediately before and after the reorganization completed in August 2023, as described above, the reorganization was accounted for as a recapitalization. As a result, the Group’s consolidated financial statements have been prepared as if the current corporate structure has been in existence throughout the periods presented.
In
May 2024, Dongling Technology Co., Ltd. (“Dongling Technology”)
transferred
F-6
As of June 30, 2025, the Company’s principal subsidiaries are as follows.
| Date of incorporation/ acquisition | Place of incorporation | Percentage of direct or indirect economic interest | Principal activities | |||||
| Main subsidiaries: | ||||||||
| Dongrun Technology | ||||||||
| LZ Digital | ||||||||
| LZ Menhu | ||||||||
| Lianzhang Portal | ||||||||
| Xiamen Lianzhang Media Co.,Ltd (“Xiamen Media”) | ||||||||
| Lianzhang Media Co., Ltd | ||||||||
| Xiamen Lianzhanghui Intelligent Technology Co.,Ltd | ||||||||
| Xiamen Lianzhang Cultural Tourism Development Co., Ltd (formerly known as Xiamen Infinitism Internet Technology Co.,Ltd) | ||||||||
| Xiamen Lianzhuang Investment Co., Ltd. (formerly known as Xiamen Finitism Internet Technology Co.,Ltd) | ||||||||
| Lianzhang Digital Technology (Xiamen) Co., Ltd | ||||||||
| Lianzhang New Community Construction and Development(Jiangsu) Co.,Ltd |
| 2. | Summary of significant accounting policies |
| (a) | Basis of presentation |
The unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) to reflect the financial position, results of operations and cash flows of the Group. Significant accounting policies followed by the Group in the preparation of the accompanying unaudited condensed consolidated financial statements are summarized below. All amounts, except for share, per share data or otherwise noted, are rounded to the nearest thousand. The unaudited interim financial information should be read in conjunction with the audited financial statements and the notes thereto, included in the registration statements for the fiscal years ended December 31, 2023 and 2024.
In the opinion of the management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments, which are necessary for a fair statement of financial results for the interim periods presented. The Company believes that the disclosures are adequate to make the information presented not misleading. The accompanying unaudited condensed consolidated financial statements have been prepared using the same accounting policies as used in the preparation of the Group’s consolidated financial statements for the year ended December 31, 2024. The results of operations for the six months ended June 30, 2025 are not necessarily indicative of the results for the full year.
F-7
| (b) | Principles of consolidation |
The unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All transactions and balances among the Group have been eliminated upon consolidation. All intercompany transactions and balances among the Group have been eliminated upon consolidation.
| (c) | Use of estimates |
The preparation of the unaudited condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities at the balance sheet date, and the reported revenues and expenses during the reported periods in the unaudited condensed consolidated financial statements and accompanying notes. Significant accounting estimates include, but not limited to revenue recognition, allowance for credit losses, useful lives and impairment of long-lived assets, accounting for deferred income taxes and valuation allowance for deferred tax assets. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates, and as such, differences may be material to the unaudited condensed consolidated financial statements.
| (d) | Convenience translation |
Amounts in US$ are presented for the convenience
of the reader and are translated at the rate of US$
| (e) | Accounts receivable, net |
Accounts receivable, net are stated at their net
estimated realizable value. Accounts receivable is recognized in the period when the Group has provided services to its customers and
when its right to consideration is unconditional. The allowance for credit losses as of December 31, 2024 and June 30, 2025 was RMB
| (f) | Long-term investment |
The Group’s equity investments without readily determinable fair values, which do not qualify for the existing practical expedient in ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), to estimate fair value using the net asset value per share (or its equivalent) of the investment (“NAV practical expedient”), and over which the Group does not have the ability to exercise significant influence through the investments in common stock or in substance common stock, are accounted for under the measurement alternative upon the adoption of ASU 2016-01 (the “Measurement Alternative”).
Under the Measurement Alternative, the carrying value is measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. All gains and losses on these investments, realized and unrealized, are recognized in the consolidated statements of operations and comprehensive income. The Group makes assessment of whether an investment is impaired based on performance and financial position of the investee as well as other evidence of market value at each reporting date. Such assessment includes, but is not limited to, reviewing the investee’s cash position, recent financing, as well as the financial and business performance. The Group recognizes an impairment loss equal to the difference between the carrying value and fair value in the consolidated statements of operations and comprehensive income, if any.
F-8
In June 2025, the Group entered into an agreement
with Mimus Technology (Hangzhou) Co., Ltd (“Mimus Technology”) to acquired
| (g) | Impairment of long-lived assets |
The Group reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. When these events occur, the Group measures impairment by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Group would recognize an impairment loss, which is the excess of carrying amount over the fair value of the assets, using the expected future discounted cash flows. No impairments of long-lived assets were recognized as of December 31, 2024 and June 30, 2025.
| (h) | Revenue recognition |
The Group’s revenues are mainly generated from Out-of-Home Advertising and Local Life services.
The Group recognizes revenues pursuant to ASC 606, Revenue from Contracts with Customers (“ASC 606”). In accordance with ASC 606, revenues from contracts with customers are recognized when control of the promised goods or services is transferred to the Group’s customers, in an amount that reflects the consideration the Group expects to be entitled to in exchange for those goods or services, reduced by value added tax (“VAT”). To achieve the core principle of this standard, the Group applies the following five steps:
| 1. | Identification of the contract, or contracts, with the customer; |
| 2. | Identification of the performance obligations in the contract; |
| 3. | Determination of the transaction price; |
| 4. | Allocation of the transaction price to the performance obligations in the contract; and |
| 5. | Recognition of the revenue when, or as, a performance obligation is satisfied. |
F-9
Each of significant performance obligations and the application of ASC 606 to the Group’s revenue arrangements are discussed in further detail below.
Out-of-Home Advertising
The Group primarily generates revenues from providing Out-of-Home Advertising (i.e. advertising promotion) by displaying advertisements in its own community access control devices (“Channel One”) or via other channels provided by subcontractors (“Channel Two”). The arrangements might include advertising only on Channel One, or on both. The customers can benefit from advertising promotion provided through each channel promised in the contract on their own. Besides, the Group’s promise to perform services through each channel is separately identifiable from other promises in the contract. Therefore, Channel One and Channel Two are considered distinct and should be regarded as two performance obligations. The Group generates revenues by rendering advertising promotion services according to the specific advertising location, time and media agreed in the advertising release plan. The customer can simultaneously receive and consume the benefits provided by the Group during the scheduled period. Therefore, the Group recognizes revenue generated from Out-of-Home Advertising service over a period in time. The Group uses a time-elapsed basis ratably over the period from the beginning to the end of the advertising schedule, to measure progress as the fees are fixed for each advertising schedule and the advertisements are displayed evenly throughout the advertising schedule. The Group applies the expected cost plus a margin approach to estimate the standalone selling price for each performance obligation as there is no directly observable standalone selling price or similar market selling price. No significant returns, refund and other similar obligations during each reporting period.
For the six months ended June 30, 2024 and 2025,
the revenue generated from Channel One amounted to RMB
The Group considers itself the principal for transactions and recognizes revenues on a gross basis due to the Group’s: i) direct engagement with the customer and having sole responsibility for fulfilling the promises to provide advertising promotion, as well as its ability to subcontract based on its arrangements with or display effect requirement of the customers; ii) control of establishing the transaction price, irrespective of subcontracting costs; iii) being liable for the actions of the subcontractors for unsatisfied deliverables, including services performed by subcontractors; and iv) payment being paid to subcontractors regardless of receipt from customers.
Local Life-Retail Sales
Local Life-Retail Sales include sales of 1) Right to hotel service and 2) diversified products such as alcohol, sugar, eggs, meat, fruits, vegetables, and so on.
Sales of vouchers of hotel service
The Group sells vouchers of hotel service the Group owns. Such business has only one performance obligation, which is to transfer control of the vouchers of hotel service to the customer. The price for each voucher is fixed. The hotel vouchers are non-refundable once the order has been confirmed. The Group recognizes revenue from sales of vouchers of hotel service at a point in time when an order is confirmed and the vouchers have been transferred to the customer.
F-10
No significant returns, refund and other similar obligations during each reporting period.
The Group acts as a principal for sales of vouchers of hotel service, which is because, i) The Group is primarily responsible to ensure that the end users of the customer can use vouchers and enjoy corresponding services unobstructed; ii) The Group bears inventory risk of the vouchers and the Group can direct the use of vouchers before transferring it to the customer. Before sales of the vouchers, the Group enters into purchase agreements with suppliers of providing the underlying hotel service, which defined a minimum quantity of vouchers the Group is required to purchase and the Group faces penalty for not meeting the minimum required purchase quantity. Any losses resulted from expired vouchers are borne by the Group as well; iii) The Group has the discretion in setting up the price of the vouchers.
Sales of hotel room
The Group enters into buyout or pre-control agreements with hotels to obtain the right to use rooms for specific periods, which are then sold to end customers through its own platform or other partner channels. This business involves one performance obligation, which is to transfer control of the booked room to the customer and ensure their smooth check-in after order payment is completed.
The price of each booking is determined based on market supply and demand as well as dynamic pricing models. Once a customer places an order and completes payment, the transaction price becomes fixed and non-refundable (except in special circumstances). Therefore, during each reporting period, there are generally no significant returns, refunds, or similar obligations, and accordingly, the transaction price does not include material variable consideration.
The Group acts as the principal in the sale of hotel block rooms, bearing the responsibility for ensuring customers’ successful check-in, and holds the pricing authority as well as inventory risk related to the rooms. Revenue is recognized at the point in time when the customer completes the check-in process, at which point the full revenue from the sale of hotel block rooms is recognized.
The Group has discretion in setting the prices of the block room products.
Sales of diversified products
There is only one performance obligation which is to provide customers with the specific products explicitly stated in a sales contract at a fixed price. The Group recognizes revenue at a point in time when the control of the products is transferred to the customer upon the customer’s acceptance of products. The Group only provides assurance warranty for return and exchange for goods with quality issue within 7 days after the customer receives the goods and such promise is within the general requirement of the industry and cannot be purchased separately. No significant returns, refund and other similar obligations during each reporting period.
The Group determines whether it acts as principal or agent for sales of products on a case-by-case basis.
F-11
The Group acts as agent when the Group does not obtain control of the products at any time during the sales of the products.
The Group acts as principal for transactions and recognizes revenues on a gross basis when i) The Group is primarily responsible for ensuring the products that meet agreed-upon requirements; ii) The Group bears inventory risk, because the Group can direct the use of products before transferring it to the customer. Before sales of products, the Group enters into purchase agreements with suppliers of the products, which the Group undertook purchase obligations to certain quantity of products and faced penalty for not meeting the minimum quantity. Also, the Group is responsible for any damages during transit and decline in value; iii) The Group has the discretion in setting up the price, instead of accepting a fixed percentage of transaction amount imposed by the supplier.
For the six months ended June 30, 2024 and 2025,
the gross revenue from product sales amounted to RMB
Local Life-E-commerce promotion services
The Group also generates revenues by providing e-commerce promotion service to merchants through different channels operated by the Group, such as (1) WeChat mini programs operated by Henduoka and (2) self-owned official accounts on the third party’s platforms like WeChat or TikTok. For this type of service, the Group only identifies one performance obligation, which is to assist merchants to promote the sales of vouchers through e-commerce platforms, as services provided within each contract are considered a series of distinct goods that are substantially the same and that have the same pattern of transfer to customers. The Group adopts the practical expedient that allows it to recognize revenue in the amount to which the Group has a right to invoice the customer, as that amount corresponds directly with the value to the customer of the Group’s performance completed to date. No significant returns, refund and other similar obligations during each reporting period.
The Group considers itself the agent as (i) the inventory risk is controlled by the merchant, and (ii) the pricing right of the vouchers sold is controlled by the merchant. Therefore, such revenues are reported on a net basis, which are recognized based on a pre-determined percentage of the selling price for the merchandise purchased using redeemed vouchers (the fees earned from the merchant).
Others
The Group also provides other services including tourism service, software development, devices sales, advertisement design and production, operation service for the merchants’ online account and so on. The Group mainly recognizes the revenue at the fixed price at the time when the performance obligation is satisfied.
| For the six months ended June 30, | ||||||||
| 2024 | 2025 | |||||||
| RMB | RMB | |||||||
| (Unaudited) | ||||||||
| Revenue type: | ||||||||
| Out of Home Advertising | ||||||||
| Local Life - Retail Sales | ||||||||
| Local Life (non-retail) | ||||||||
| Others | ||||||||
| Total | ||||||||
F-12
Contract balances
Timing of revenue recognition may differ from the timing of invoicing the customers. Accounts receivable represent revenue recognized for the amounts invoiced and/or prior to invoicing when the Group has satisfied its performance obligation and has unconditional right to the payment. Contract assets represent the Group’s right to consideration in exchange for goods or services that the Group has transferred to a customer. The Group has no contract assets as of December 31, 2024 and June 30, 2025.
Contract liabilities represent the obligation to transfer goods or services to customers for which consideration has already been received. Contract liabilities of the Group mainly consist of advance payments from customers related to advertising services.
As of December 31, 2024 and June 30, 2025, the
Group recorded contract liabilities of RMB
Contract liabilities of RMB
All outstanding performance obligations as of June 30, 2025 are expected to be satisfied within 12 months and do not contain a significant financing component.
| (i) | Income taxes |
The Group accounts for current income taxes in accordance with the laws and regulations of the relevant tax jurisdictions. The charge for taxation is based on the results for the fiscal year as adjusted for items which are non-assessable or disallowed. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the end of the reporting period.
The Group accounts for income taxes under ASC 740, Income Taxes (“ASC 740”). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases (“Temporary differences”).
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. Deferred income tax is calculated at the tax rates that are expected to apply in the periods in which the asset or liability will be settled, based on rates enacted or substantively enacted at the end of the reporting period. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
F-13
The provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for consolidated 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 Group believes there were uncertain tax positions and unrecognized tax benefits at December 31, 2024 and June 30, 2025, respectively.
ASC 740 also provides guidance on derecognition 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, accounting for income taxes in interim periods, and income tax disclosures. Significant judgment is required in evaluating the Group’s uncertain tax positions and determining its provision for income taxes. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. The Group did recognize any interest and penalties associated with uncertain tax positions for the six months ended June 30, 2024 and 2025, respectively, as there were no uncertain tax positions.
The Group’s operating subsidiaries 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 ($13,959). 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.
| (j) | Segment reporting |
In November 2023, FASB issued ASU 2023-07, Segment Reporting (Topic 280):Improvements to Reportable Segment Disclosures, which expands public entities’ segment disclosures, among others, requiring disclosure of significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss; an amount and description of its composition for other segment items; and interim disclosures of a reportable segment’s profit or loss and assets. This new guidance was effective beginning on this annual report for the year ended December 31, 2024, and applied retrospectively to all prior periods presented. The impact of the adoption of this guidance was not material to the financial position or results of operations, as the requirements impact only segment reporting disclosures in the notes to financial statements.
The Group’s CODM relies upon the consolidated
results of operations as a whole when making decisions about allocating resources and assessing the performance of the Group. As a result
of the assessment made by CODM, the Group has only
F-14
The Group does not distinguish between markets or segments for the purpose of internal reporting. As all of the Group’s revenues were generated from customers in China and all of the Group’s long-lived assets are located in the China, no geographical segments are presented. The CODM makes decisions on resource allocation, evaluates operating performance, and monitors budget versus actual results using net loss. There is no reconciling items or adjustments between segment loss and net (loss) income as presented in our statements of operations. The CODM does not review assets in evaluating the segment results and therefore such information is not presented.
| (k) | Recent accounting pronouncements |
In December 2023, the FASB issued ASU 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 does not expect to adopt ASU No. 2023-09 early and does not expect that the adoption of this guidance will have a material impact on its financial position, results of operations and cash flows.
In March 2024, the FASB issued ASU 2024-01, Compensation - Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards. The amended guidance clarifies how an entity should determine whether a profits interest or similar award is within the scope of Topic 718. For public business entities, the amendments are effective for annual reporting periods beginning after December 15, 2024, and interim periods within those annual periods, with early adoption permitted. The Group has not early adopted this standard and does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). The amended guidance requires disaggregation of certain expense captions into specified natural expense categories in the disclosures within the notes to the financial statements. In addition, the guidance requires disclosure of selling expenses and its definition. The new guidance is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The guidance can be applied either prospectively or retrospectively. The Group does not expect to adopt ASU No. 2024-03 early and does not expect that the adoption of this guidance will have a material impact on its financial position, results of operations and cash flows.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments — Credit Losses (Topic 326) — Measurement of Credit Losses for Accounts Receivable and Contract Assets. It applies to entities that use the practical expedient and accounting policy election (if applicable) when estimating expected credit losses on current accounts receivable and/or current contract assets from transactions under Topic 606, including such assets acquired in a business combination accounted for under Topic 805. The amendments will be effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual periods. Early adoption is permitted. The Group does not expect to adopt this guidance early and does not expect the adoption of this ASU to have a material impact on its future consolidated financial statements.
Other accounting standards that have been issued by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Group does not discuss recent standards that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures.
F-15
| 3. | Accounts receivable, net |
The accounts receivable, net consists of the following:
| As of December 31, | As of June 30, | |||||||
| 2024 | 2025 | |||||||
| RMB | RMB | |||||||
| (Unaudited) | ||||||||
| Accounts receivables | ||||||||
| Less: allowance for credit losses | ( | ) | ( | ) | ||||
| Total accounts receivable, net | ||||||||
The movements in the allowance for credit losses were as follows:
| For the six months ended June 30, | ||||||||
| 2024 | 2025 | |||||||
| RMB | RMB | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Balance at the beginning of the period | ( | ) | ( | ) | ||||
| Addition in allowance for credit losses | ( | ) | ( | ) | ||||
| Balance at the end of the period | ( | ) | ( | ) | ||||
The Group’s recognized credit losses were
RMB
| 4. | Prepaid expenses and other current assets, net |
Prepaid expenses and other current assets, net consist of the following:
| As of December 31, | As of June 30, | |||||||
| 2024 | 2025 | |||||||
| RMB | RMB | |||||||
| (Unaudited) | ||||||||
| Deductible input tax | ||||||||
| Prepaid expenses (1) | ||||||||
| Deposits | ||||||||
| Receivable from third party | ||||||||
| Others | ||||||||
| Subtotal | ||||||||
| Less: Allowance for credit losses (2) | ( | ) | ( | ) | ||||
| Total prepaid expenses and other current assets, net | ||||||||
| (1) |
| (2) |
F-16
| 5. | Property and equipment, net |
Property and equipment, net consists of the following:
| As of December 31, | As of June 30, | |||||||
| 2024 | 2025 | |||||||
| RMB | RMB | |||||||
| (Unaudited) | ||||||||
| Machinery and equipment | ||||||||
| Office equipment | ||||||||
| Vehicles | ||||||||
| Leasehold improvements | ||||||||
| Total cost | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Less: Amortization of leasehold improvements | ( | ) | ( | ) | ||||
| Total property and Equipment, net | ||||||||
| (1) | The balance includes community access control equipment that has been installed but not yet sold. |
| (2) | Depreciation
expense was RMB |
| 6. | Operating lease |
The Group has several lease agreements whereby the Group agreed to lease offices in the PRC. The Group measured and recorded right-of-use asset and corresponding operating lease liability at the lease commencement date.
The Group has made operating lease payments in the amount of and
RMB
The following table summarizes the classification of right-of-use assets and lease liabilities in the Group’s consolidated balance sheets:
| As of December 31, | As of June 30, | |||||||
| 2024 | 2025 | |||||||
| RMB | RMB | |||||||
| (Unaudited) | ||||||||
| Cost | ||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| Right of use assets, net | ||||||||
F-17
Lease liabilities consist of the following:
| As of December 31, | As of June 30, | |||||||
| 2024 | 2025 | |||||||
| RMB | RMB | |||||||
| (Unaudited) | ||||||||
| Current | ||||||||
| Lease liabilities | ||||||||
| Non-current | ||||||||
| Lease liabilities | ||||||||
| Total lease liabilities | ||||||||
| For the six months ended June 30, | ||||||||
| 2024 | 2025 | |||||||
| RMB | RMB | |||||||
| （Unaudited） | ||||||||
| Weighted discount rate for the operating lease | % | |||||||
| Weighted average remaining lease term | ||||||||
The following is a schedule of future minimum payments under the Group’s operating leases as of June 30, 2025:
| Amount | ||||
| For the six months ended June 30, 2025 | RMB | |||
| Remainder of 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Total lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Total lease liabilities, net of interest | ||||
| 7. | Short-term borrowings |
The balance of short-term borrowings as of December 31, 2024 and June 30, 2025, were as follows:
| (1) |
| As of December 31, | As of June 30, | |||||||
| 2024 | 2025 | |||||||
| RMB | RMB | |||||||
| (Unaudited) | ||||||||
| Short-term borrowings | ||||||||
| Industrial Bank Co., Ltd. Xiamen Branch (a) | ||||||||
| Agricultural Bank of China, Xiamen Software Park Sub-branch (b) | ||||||||
| China Construction Bank Corporation Limited Shanghai Jiading Sub-Branch (c) | ||||||||
| Subtotal – Bank Loans | ||||||||
| Short-term borrowings from several third-party investors (the “Investors”) | ||||||||
| Total | ||||||||
F-18
Short-term borrowings from banks represent amounts due to various banks to be matured within one year. The principal of the borrowings is due at maturity. Accrued interest is due either monthly or quarterly. The bank borrowings are for working capital and capital expenditure purposes.
| (a) | On June 21, 2024, the Group entered into two one-year loan agreements with Industrial Bank Co., Ltd Xiamen Branch for RMB3,000 each, bearing interest at the one-year LPR of
On September 14, 2024, the Group entered into a one-year loan agreement with the same bank for RMB
On June 17, 2025, the Group entered into three new one-year loan agreements with the same bank, including one loan of RMB
All the above loans remained outstanding as of June 30, 2025, and are scheduled to be repaid upon maturity. |
| (b) |
| (c) |
Interest expenses were RMB
| (2) | Short-term borrowings from third-party cooperators |
In 2020 and 2021,
the Group entered into joint operating agreements with 89 third-party companies facilitated by an investment institution named Tianjiu
Shared Intelligent Enterprise Service (“Tianjiu”), who was responsible for brand promotion and identifying parties with whom
the Group could cooperate with to provide advertising promotion services to customers (“Cooperators”), which resulted in generating
a total of RMB
F-19
The Group considers the funds, in substance, as interest-free investments payable to the Cooperators on their demand based on the following reasons: i) the Cooperators signed the joint operating agreements with the intention to invest in the Group; ii) the Group maintains the control over the Devices and enjoy the economic benefits of the Devices; iii) the Group repaid the Original Subscription Amount in the form of revenue sharing distribution. No conversion feature nor redemption feature was specified in the joint operating agreements. Therefore, the Group recognized the Original Subscription Amount as liabilities and classified as short-term borrowing as of December 31, 2024 and June 30, 2025. There was no revenue recognized for the sale of Devices as the control of Devices has never been transferred to the Cooperators but resided within the Group as machinery equity. Instead, the proceeds received was accounted for as short-term borrowings, which were expected to be repaid or to be converted into equity, on the demand of the Cooperators.
In 2022, 45 of the Cooperators decided
to terminate their joint operating agreements, and among which 41 (the “Investors”) entered into investment agreements (the
“Investment Agreements”) with the Group and its shareholder, and 4 needed to be repaid with the Original Subscription Amount.
Under the Investment Agreements, the Investors would invest in the Group in exchange for equity interests of the Group, directly or indirectly.
The total amount of investment was RMB
In 2023, 20 of the Cooperators decided
to terminate their joint operating agreements and invested into the Group in exchange for
In 2024, eight additional partners
elected to terminate their joint operation agreements and made indirect equity investments in the Group. The equity interests were acquired
from existing shareholders, and the Group paid RMB
For the six months ended June 30, 2025,
nine partners elected to terminate their joint operation agreements and made indirect equity investments in the Group. The equity interests
were acquired from existing shareholders, and the Group paid RMB
As of June 30, 2025, seven partners
had yet to sign the investment or termination agreements. As of June 30, 2025, the Group had repaid a total of RMB
F-20
| 8. | Accrued expenses and other current liabilities |
Accrued expenses and other current liabilities consist of the following:
| As of December 31, | As of June 30, | |||||||
| 2024 | 2025 | |||||||
| RMB | RMB | |||||||
| (Unaudited) | ||||||||
| Accrued service fees(1) | ||||||||
| Payables to employees | ||||||||
| Accrued payroll and welfare | ||||||||
| Other tax payables(2) | ||||||||
| Deposit payables | ||||||||
| Payables for equipment(3) | ||||||||
| Others(4) | ||||||||
| Total accrued expenses and other current liabilities | ||||||||
| (1) |
| (2) |
| (3) |
| (4) |
| 9. | Related party transactions |
The table below sets forth the major related parties and their relationships with the Group as of December 31, 2024 and June 30, 2025:
| Names of related parties (in English) | Relationship | |
| Xiamen Yinshan Longchang Investment Partnership (Limited Partnership) | ||
| Cheng’s Investment Group Co., LTD. (Hainan) | ||
| Tianjiu Shared Intelligent Enterprise Service | ||
| Zhang Andong | ||
| Xiamen Yiju Tianxia Investment Partnership (Limited Partnership) | ||
| Xiamen Qiushi Intelligent Network Equipment Co., LTD | ||
| Fujian Qiushi Intelligent Co., LTD | ||
| Xiamen Qiushi Intelligent Network Technology Co., LTD | ||
| Zhang Hongwei | ||
| Xiamen Rongguang Information Technology Co., Ltd. | ||
| Fujian Henduoka Network Technology Co., Ltd. | ||
| Xiamen Xueyoubang Network Technology Co. | ||
| Xiamen Qiushi intelligence software co., LTD | ||
| Xiamen Dongling Weiye investment partnership (limited partnership) | ||
| Xiamen Zhanghui investment co., LTD | ||
| Zhang Runzhe | ||
| Bengbu Yigong Digital Technology Co., Ltd. |
F-21
The following table sets forth the major related parties and the Group’s transactions with them for the six months ended June 30, 2024 and 2025:
(a) Purchases from related Parties
Equipment Purchases
| For the six months ended June 30, | ||||||||
| 2024 | 2025 | |||||||
| RMB | RMB | |||||||
| Related Party | (Unaudited) | |||||||
| Xiamen Qiushi Intelligent Network Technology Co., LTD | ( | ) | ( | ) | ||||
| Total | ( | ) | ( | ) | ||||
Sub-contract cost
| For the six months ended June 30, | ||||||||
| 2024 | 2025 | |||||||
| RMB | RMB | |||||||
| Related Party | (Unaudited) | |||||||
| Xiamen Qiushi Intelligent Network Technology Co., LTD | ( | ) | ||||||
| Fujian Henduoka Network Technology Co., Ltd. | ( | ) | ||||||
| Total | ( | ) | ||||||
(b)
| For the six months ended June 30, | ||||||||
| 2024 | 2025 | |||||||
| RMB | RMB | |||||||
| Related Party | (Unaudited) | |||||||
| Xiamen Qiushi Intelligent Network Equipment Co., LTD | ( | ) | ( | ) | ||||
| Total | ( | ) | ( | ) | ||||
F-22
(c) Related party balances
Accounts payable- a related party
| As of December 31, | As of June 30, | |||||||||
| 2024 | 2025 | |||||||||
| RMB | RMB | |||||||||
| Related Party | Nature | (Unaudited) | ||||||||
| Xiamen Qiushi Intelligent Network Technology Co., Ltd. | ||||||||||
| Accounts payable- a related party | ||||||||||
Due from related parties
| As of December 31, | As of June 30, | |||||||||
| 2024 | 2025 | |||||||||
| RMB | RMB | |||||||||
| Related Party | Nature | (Unaudited) | ||||||||
| Fujian Qiushi Intelligent Co., Ltd. | ||||||||||
| Xiamen Xueyoubang Network Technology Co., Ltd. | ||||||||||
| Bengbu Yigong Digital Technology Co., Ltd. | ||||||||||
| Xiamen Qiushi Intelligent Network Technology Co., Ltd. | ||||||||||
| Zhang Runzhe | ||||||||||
| Fujian Henduoka Network Technology Co., Ltd. | ||||||||||
| Xiamen Zhanghui investment co., LTD | ||||||||||
| Bengbu Yigong Digital Technology Co., Ltd. | ||||||||||
| Xiamen Qiushi Intelligent Network Technology Co., Ltd. | ||||||||||
| Xiamen Qiushi Intelligent Network Equipment Co., Ltd. | ||||||||||
| Zhang Runzhe | ||||||||||
| Fujian Henduoka Network Technology Co., Ltd. | ||||||||||
| Total due from related parties | ||||||||||
F-23
Due to related parties
| As of December 31, | As of June 30, | |||||||||
| 2024 | 2025 | |||||||||
| RMB | RMB | |||||||||
| Related Party | Nature | (Unaudited) | ||||||||
| Zhang Andong | ||||||||||
| Xiamen Qiushi Intelligent Network Equipment Co., LTD | ||||||||||
| Zhang Andong | ||||||||||
| Fujian Qiushi Intelligent Technology Co., Ltd. | ||||||||||
| Tianjiu Shared Intelligent Enterprise Service | ||||||||||
| Xiamen Qiushi Intelligent Network Equipment Co., LTD | ||||||||||
| Fujian Henduoka Network Technology Co., Ltd. | ||||||||||
| Amounts due to related parties | ||||||||||
The amount due to a related party are unsecured interest-free and repayable on demand.
| (d) | Guarantee |
On August 3, 2022, Zhang Andong, Zhang Hongling,
Xiamen Lianzhang Media Co.,Ltd and Xiamen Lianzhanghui Intelligent Technology Co.,Ltd. provided joint guarantees for the loans and borrowings
of Fujian Qiushi Intelligent from July 25, 2022 to July 25, 2025. The total principal amount of the creditor’s rights does not exceed
the credit limit of RMB
On August 15, 2022, Fujian Qiushi Intelligent
withdrew RMB
On November 2, 2022, Zhang Andong, Xiamen Qiushi
Intelligent Network Equipment Co., LTD, and Xiamen Lianzhanghui Intelligent Technology Co.,Ltd. provided joint guarantees for the loans
and borrowings of Fujian Qiushi Intelligent from November 4, 2022 to November 4, 2025. The total principal amount of the creditor’s
rights does not exceed the credit limit of RMB
Fujian Qiushi drew RMB
F-24
On July 18, 2025, Lianzhang Media Co.,Ltd and
Xiamen Lianzhang Media Co.,Ltd provided guarantee for the loans and borrowings of Fujian Qiushi Intelligent from July 18, 2025 to July
18, 2035. The total principal amount of the creditor’s rights does not exceed the credit limit of RMB
| 10. | Income tax |
Cayman Islands
The Company is incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, the Company is not subject to income or capital gains taxes. Additionally, upon payments of dividends by the Company to its shareholders, no Cayman withholding tax will be imposed.
British Virgin Islands (“BVI”)
Dongrun Technology is incorporated in the British Virgin Islands. Under the current laws of the British Virgin Islands, Dongrun Technology is not subject to tax on income or capital gains. Additionally, upon payments of dividends by the Company to its shareholders, no BVI withholding tax will be imposed.
Hong Kong
The Company’s subsidiary incorporated in
Hong Kong is subject to profits tax in Hong Kong at the rate of
PRC
Under the PRC Enterprise Income Tax Law (the “EIT
Law”), the standard enterprise income tax rate for domestic enterprises and foreign invested enterprises is
F-25
The EIT Law also provides that an enterprise established
under the laws of a foreign country or region but whose “de facto management body” is located in the PRC be treated as a resident
enterprise for PRC tax purposes and consequently be subject to the PRC income tax at the rate of
According to Circular 82, a Chinese-controlled
offshore incorporated enterprise will be regarded as a PRC tax resident by virtue of having a “de facto management body” in
the PRC and will be subject to PRC EIT on its worldwide income only if all of the following criteria are met: (1) the primary location
of the day-to-day operational management is in the PRC; (2) decisions relating to the enterprise’s financial and human resource
matters are made or are subject to approval by organizations or personnel in the PRC; (3) the enterprise’s primary assets, accounting
books and records, company seals, and board and shareholders meeting minutes are located or maintained in the PRC; and (4)
Based on a review of surrounding facts and circumstances,
the Group does not believe that it should be considered as a resident enterprise for the PRC tax purposes for the six months ended June
30, 2024 and 2025. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties
remain with respect to the interpretation of the term “de facto management body.” If the PRC tax authorities determine that
the Group is a PRC resident enterprise for enterprise income tax purposes, the Group could be subject to PRC tax at a rate of
For qualified small and low-profit enterprises,
from January 1, 2023 to December 31, 2027,
F-26
The components of income tax expense for the six months ended June 30, 2024 and 2025 are as follows::
| For the six months ended June 30, | ||||||||
| 2024 | 2025 | |||||||
| RMB | RMB | |||||||
| (Unaudited) | ||||||||
| Current income tax expenses | ||||||||
| Deferred income tax expenses | ||||||||
| Total | ||||||||
A reconciliation of the actual income tax expense
to the amount computed by applying the PRC statutory income tax rate of
| For the six months ended June 30, | ||||||||
| 2024 | 2025 | |||||||
| RMB | RMB | |||||||
| (Unaudited) | ||||||||
| (Income)/loss before income tax | ( | ) | ||||||
| Expected taxation at PRC statutory tax rate | ( | ) | ||||||
| Parent-subsidiary tax rate differential | ||||||||
| Effect of tax rate differences | ( | ) | ( | ) | ||||
| Additional deduction for R&D expenses | ( | ) | ( | ) | ||||
| Impact of tax rate change on deferred taxes | ||||||||
| Non-deductible expenses | ||||||||
| Prior year income tax differences | ||||||||
| Change in valuation allowance | ||||||||
| Income tax expenses | ||||||||
The components of deferred tax assets and liabilities as of December 31, 2024 and June 30, 2025 are as follows:
Deferred Tax Assets:
| As of December 31, | As of June 30, | |||||||
| 2024 | 2025 | |||||||
| RMB | RMB | |||||||
| (Unaudited) | ||||||||
| Deferred tax assets: | ||||||||
| Net operating loss carryforward | ||||||||
| Advertisement expense | ||||||||
| Impairment/disposal of property and equipment | ||||||||
| Deferred revenue | ||||||||
| GAAP difference-others | ( | ) | ( | ) | ||||
| Allowance for credit losses | ||||||||
| Net deferred tax liabilities offset | ( | ) | ( | ) | ||||
| Less: Valuation allowance | ( | ) | ( | ) | ||||
| Total deferred tax assets, net | ||||||||
Deferred Tax Liabilities:
| As of December 31, | As of June 30, | |||||||
| 2024 | 2025 | |||||||
| RMB | RMB | |||||||
| (Unaudited) | ||||||||
| Unbilled revenue | ( | ) | ( | ) | ||||
| Total deferred tax liabilities | ( | ) | ( | ) | ||||
| Deferred tax assets offset | ||||||||
| Net deferred tax liabilities | ( | ) | ( | ) | ||||
F-27
The Group operates through subsidiaries and valuation
allowance is considered for each of the entities on an individual basis. The Group recorded valuation allowance against deferred tax assets
of those entities that are in a cumulative financial loss position and are not forecasting profits in the near future as of December 31,
2024 and June 30, 2025. In making such determination, the Group also evaluates a variety of factors including the Group’s operating
history, accumulated deficit, existence of taxable temporary differences and reversal periods. The Group has recognized a valuation allowance
of RMB
Changes in valuation allowance are as follows:
| As of December 31, | As of June 30, | |||||||
| 2024 | 2025 | |||||||
| RMB | RMB | |||||||
| (Unaudited) | ||||||||
| Beginning balance | ||||||||
| Additions | ||||||||
| Decreases | ( | ) | ( | ) | ||||
| Ending balance | ||||||||
As of June 30, 2025, net operating loss (“NOL”) carryforwards from PRC will expire, if unused, in the following amounts:
| NOL Carryforward | ||||
| Expiry Year | (RMB in thousands) | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 2031 | ||||
| 2032 | ||||
| 2033 | ||||
| 2034 | ||||
| 2035 | ||||
| Total | ||||
As of December 31, 2024 and June 30, 2025, the Group did not have any significant unrecognized uncertain tax positions and the Group does not believe that its unrecognized tax benefits will change over the next twelve months. For the six months ended June 30, 2024 and 2025, the Group did not have any significant interest or penalties associated with uncertain tax positions. As of June 30, 2025, the Group’s PRC subsidiaries are subject to examination by the PRC tax authorities for tax years from December 31, 2018 through December 31, 2024.
F-28
| 11. | Equity |
Ordinary shares
On June 23, 2023, the Company issued
In May 2024, Dongling Technology Co., Ltd. (“Dongling
Technology”) acquired
On May 24, 2025, the Group issued (i)
Upon completion of the acquisition, the Company
controls
On July 15, 2024, the Company effected a subdivision
of each of its existing issued and unissued Ordinary Shares with a par value of $
Immediately upon the completion of the Share Subdivision,
the shareholders of the Company surrendered the following Ordinary Shares for no consideration and for cancellation: (i)
Upon the completion of the Share Surrender, the
total number of issued and outstanding Class A Ordinary Shares of the Company was reduced from
F-29
On February 28, 2025, the Group successfully completed its initial
public offering (“IPO”) of
In connection with the offering, the Group granted
the underwriters an over-allotment option (greenshoe mechanism) to purchase up to an additional
As of June 30, 2025, there are
Restricted net assets
A significant portion of the Group’s operations
are conducted through its PRC (excluding Hong Kong) subsidiaries, the Company’s ability to pay dividends is primarily dependent
on receiving distributions of funds from subsidiaries. Relevant PRC statutory laws and regulations permit payments of dividends by subsidiaries
only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations, and after it has
met the PRC requirements for appropriation to statutory reserves. The Group is required to make appropriations to certain reserve funds,
comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance
with generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations to the statutory surplus reserve are
required to be at least
As a result of these PRC laws and regulations,
the Company’s PRC subsidiaries are restricted in their ability to transfer a portion of their net assets to the Company. As of December
31, 2024 and June 30, 2025, the amount of restricted net assets, including paid-in capital and additional paid-in capital of the
Company’s subsidiaries, was RMB
| 12. | Commitments and contingencies |
| (a) | Operating lease commitments |
As of June 30, 2025, there were no unconditional purchase obligations, such as future lease payment under non-cancelable agreements, that have not been recognized on the balance sheet.
F-30
| (b) | Contingencies |
In the ordinary course of business, the Group may be subject to legal proceedings regarding contractual and employment relationships and a variety of other matters. The Group records contingent liabilities resulting from such claims, when a loss is assessed to be probable and the amount of the loss is reasonably estimable. In the opinion of management, there were no significant pending or threatened claims and litigation as of June 30, 2025 and through the issuance date of these consolidated financial statements.
| (c) | Unconditional purchase obligations |
For the Retail Sales vertical, the Group entered into agreement with unconditional purchase obligations with suppliers. Details were as follows:
| Products | Minimum purchase amounts | Period for completion | ||||
| RMB’000 | ||||||
| Hotel rooms | ||||||
| Hotel rooms | ||||||
| Hotel rooms | ||||||
| Hotel rooms | ||||||
As of June 30, 2025, the Group had fulfilled purchase amounts of vouchers
of hotel service amounting to RMB
| 13. | Concentration of credit risk |
Assets that potentially subject the Group to a
significant concentration of credit risk primarily consist of cash, accounts receivable and other current assets. The maximum exposure
of such assets to credit risk is their carrying amounts as at the balance sheet dates. As of December 31, 2024 and June 30, 2025, the
aggregate amount of cash of RMB
The following table sets forth a summary of single customers who represent 10% or more of the Group’s total accounts receivable:
| As of December 31, | As of June 30, | |||||||
| 2024 | 2025 | |||||||
| (Unaudited) | ||||||||
| Percentage of the Group’s accounts receivables | ||||||||
| Customer A | % | |||||||
| Customer B | % | |||||||
| * |
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The following table sets forth a summary of single customers who represent 10% or more of the Group’s total revenue.
| For the six months ended June 30, | ||||||||
| 2024 | 2025 | |||||||
| (Unaudited) | ||||||||
| Percentage of the Group’s total revenue | ||||||||
| Customer A | % | |||||||
| Customer B | % | |||||||
| Customer C | % | |||||||
| * | Represented the percentage below 10% |
The following table sets forth a summary of single suppliers who represent 10% or more of the Group’s total purchases:
| For the six months ended June 30, | ||||||||
| 2024 | 2025 | |||||||
| (Unaudited) | ||||||||
| Percentage of the Group’s total purchase | ||||||||
| Supplier A | % | % | ||||||
| Supplier B | % | % | ||||||
| Supplier C | % | |||||||
| Supplier D | % | |||||||
| Supplier E | % | |||||||
| Supplier F | % | |||||||
| * | Represented the percentage below 10% |
| As of December 31, | As of June 30, | |||||||
| 2024 | 2025 | |||||||
| (Unaudited) | ||||||||
| Percentage of the Group’s accounts payable | ||||||||
| Supplier A | % | % | ||||||
| Supplier B | % | % | ||||||
| Supplier D | % | |||||||
| Supplier E | % | % | ||||||
| Supplier C | % | |||||||
| * | Represented the percentage below 10% |
| 14. | Subsequent events |
The Group has evaluated subsequent events through November 21, 2025, the date of issuance of the unaudited condensed consolidated financial statements, except for the events mentioned below, the Group did not identify any subsequent events with material financial impact on the Group’s consolidated financial statements.
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Acquisition of a Controlling Interest
On July 1, 2025, the Group entered into an equity
transfer agreement and obtained the shareholder approval to acquire
New bank borrowings
Subsequent to June 30, 2025, the Group entered
into three new borrowings totaling RMB
Guarantees Provided to a Related Party
On July 18, 2025, Xiamen Lianzhang Media Co.,Ltd
and Lianzhang Media Co., Ltd. entered into two guarantee agreements to provide guarantees for Fujian Qiushi Intelligent in connection
with its bank credit facilities obtained from Xiamen Bank Co., Ltd. The credit limits under the two facilities were RMB
Incorporation of a New Subsidiary
On September 26, 2025, Lianzhang Life Services
Co., Ltd., a subsidiary of the Group, jointly established Huzhou Lianzhang Youpin Supply Chain Co., Ltd. in the PRC with five third-party
investors. Lianzhang Life Services Co., Ltd. holds a
Share-based Compensation
On August 6, 2025, the Group granted share-based
compensation awards covering a total of
Acquisition of a long-term investment
In June 2025, the Group entered into an agreement
with Mimus Technology to acquired
F-33