Equibles

6-K

Zhibao Technology Inc. (ZBAO)

6-K 2025-05-02 For: 2024-12-31
View Original
Added on April 06, 2026

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of May 2025

Commission File Number: 001-42000

Zhibao Technology Inc.

(Translation of registrant’s name intoEnglish)

Floor 3, Building 6, Wuxing Road, Lane 727

Pudong New Area, Shanghai, China, 201204

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F ☒            Form 40-F ☐

INFORMATION CONTAINED IN THIS FORM 6-K REPORT

As previously reported on a Form 6-K on April 15, 2025, Zhibao Technology Inc. (the “Company”) reported the Company’s Unaudited Condensed Consolidated Financial Statements for the Six Months Ended December 31, 2024 and 2023 (the “Original Interim Financial Statements”).

The Original Interim Financial Statements contains the error relating to the convertible notes and warrants issued to one institutional investor. The warrants were incorrectly accounted for and reported as equity, which should be reclassified as warrant liabilities. The Company revised the error for the six months ended December 31, 2024 in NOTE 10 – WARRANT LIABILITIES. On April 30, 2025, the audit committee of the Company held a meeting, discussed the misstatement with the Company’s management and the Company’s auditor, Marcum Asia CPAs LLP, and approved the changes.

Attached as Exhibit 99.1 to this report on Form 6-K (the “Report”) is the revised Unaudited Condensed Consolidated Financial Statements of the Company for the Six Months Ended December 31, 2024 and 2023 (the “Revised Interim Financial Statements”).

Attached as Exhibit 99.2 to this Report is the Operating and Financial Review and Prospects in connection with the Revised Interim Financial Statements.

On May 2, 2025, the Company issued a press release announcing its Revised Interim Financial Statements for the six months ended December 31, 2024. A copy of the press release is furnished as Exhibit 99.3 to this Report.

This Form 6-K is hereby incorporated by reference into the registration statement of the Company on Form F-1 (Registration No. 333-282423), to the extent not superseded by documents or reports subsequently filed or furnished by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Zhibao Technology Inc.
By: /s/ Botao Ma
Name: Botao Ma
Title: Chief Executive Officer

Date: May 2, 2025

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EXHIBIT INDEX

Exhibit No. Description
99.1 Unaudited Condensed Consolidated Financial Statements for the Six Months Ended December 31, 2024 and 2023
99.2 Operating and Financial Review and Prospects in connection with the Unaudited Condensed Consolidated Financial Statements for the Six Months Ended December 31, 2024 and 2023
99.3 Press Release on the Revised Unaudited Financial Results for the Six Months Ended December 31, 2024 and 2023
101.INS Inline XBRL Instance Document.
101.SCH Inline XBRL Taxonomy Extension Schema Document.
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

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Exhibit 99.1

ZHIBAO TECHNOLOGY INC.UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”), except for share and per share data)

December 31,<br> <br>2024
RMB
(unaudited) (unaudited)
ASSETS
Current Assets
Cash and cash equivalents 2,401,495 28,113,972
Restricted cash 38,743,831 105,800,332
Accounts receivable, net 130,354,429 135,313,361
Due from related parties 16,566,524 17,131,396
Prepaid expenses and other current assets, net 9,485,464 11,171,611
Total Current Assets 197,551,743 297,530,672
Prepayments for equity investments — 4,375,000
Property and equipment, net 233,375 188,131
Intangible assets, net 2,581,046 1,914,935
Operating lease right of use assets 3,313,215 5,885,455
Restricted cash, noncurrent 5,000,000 5,000,000
Deferred tax assets 57,257 43,192
Other non-current assets 51,004 41,004
Total Non-Current Assets 11,235,897 17,447,717
Total Assets 208,787,640 314,978,389
LIABILITIES, AND SHAREHOLDERS’ EQUITY
Current Liabilities
Short-term borrowings 26,814,237 33,800,000
Accounts payable 51,252,954 55,643,496
Insurance premium payable 38,376,850 111,448,220
Income tax payable 42,747 42,994
Due to related parties 6,166,067 8,561,749
Operating lease liabilities, current 2,425,135 2,537,123
Accrued expenses and other liabilities 15,990,970 15,278,258
Convertible notes — 6,452,341
Warrant liabilities — 1,239,814
Derivative liabilities — 14,598
Total Current Liabilities 141,068,960 235,018,593
Operating lease liabilities, noncurrent 1,044,068 3,427,331
Deferred tax liabilities 2,683,818 3,761,000
Total Non-Current Liabilities 3,727,886 7,188,331
Total Liabilities 144,796,846 242,206,924
Commitments and contingencies
Shareholders’ Equity
Class A ordinary shares (par value 0.0001 per share, 450,000,000 shares authorized, 14,707,073 and 15,231,387 shares issued and outstanding as of June 30, 2024 and December 31, 2024, respectively)* 9,922 10,304
Class B ordinary shares (par value 0.0001 per share, 50,000,000 shares authorized, 16,816,692 and 16,816,692 shares issued and outstanding as of June 30, 2024 and December 31, 2024, respectively)* 12,204 12,204
Additional paid-in capital 196,038,784 205,827,823
Accumulated deficit (131,841,244 ) (132,485,849 ) )
Accumulated other comprehensive loss (228,872 ) (593,017 ) )
Total Shareholders’ Equity 63,990,794 72,771,465
Total Liabilities and Shareholders’ Equity 208,787,640 314,978,389

All values are in US Dollars.

* The shares and per share information are presented on a retroactive<br>basis to reflect the reorganization and reclassification of Class A and Class B ordinary shares (Note 1 and Note 11).

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

ZHIBAO TECHNOLOGY INC.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”), except for share and per share data)

For the Six Months Ended December 31,
2023 2024 2024
RMB RMB
(unaudited) (unaudited) (unaudited)
Revenues 84,254,221 146,371,285
Cost of revenues (54,192,050 ) (103,811,688 ) )
Gross profit 30,062,171 42,559,597
Operating expenses
Selling and marketing expenses (20,993,374 ) (18,564,666 ) )
General and administrative expenses (10,153,441 ) (14,282,228 ) )
Research and development expenses (7,294,313 ) (5,908,365 ) )
Total operating expenses (38,441,128 ) (38,755,259 ) )
(Loss) income from operations (8,378,957 ) 3,804,338
Other (expense) income:
Interest expense, net (431,796 ) (1,605,974 ) )
Other income, net 127,399 533,414
Gain on fair value change of warrant liabilities — 1,430,663
Gain on fair value change of derivative liabilities — 722,631
Loss on settlement of convertible notes — (4,438,430 ) )
Total other expense, net (304,397 ) (3,357,696 ) )
(Loss) Income Before Income Taxes (8,683,354 ) 446,642
Income tax benefits (expenses) 137,354 (1,091,247 ) )
Net Loss (8,546,000 ) (644,605 ) )
Other comprehensive loss
Foreign currency translation adjustments (1,513 ) (364,145 ) )
Comprehensive loss (8,547,513 ) (1,008,750 ) )
Weighted average number of ordinary share outstanding*
Basic 30,000,000 31,587,188
Diluted 30,000,000 31,587,188
Earnings (loss) per share*
Basic (0.28 ) (0.02 ) )
Diluted (0.28 ) (0.02 ) )

All values are in US Dollars.

* The shares and per share information are presented on a retroactive<br>basis to reflect the reorganization and reclassification of Class A and Class B ordinary shares (Note 1 and Note 11).

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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ZHIBAO TECHNOLOGY INC.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITYFOR THE SIX MONTHS ENDED DECEMBER 31, 2023 and 2024(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”), except for share and per share data)

Class B Ordinary Shares Additional<br><br> <br>Paid-in Retained earnings<br><br> <br>(Accumulated **** Accumulated Other<br><br> <br>Comprehensive **** **** ****
Amount Shares Amount Capital Deficits) **** Income (Loss) **** Total ****
RMB RMB RMB RMB RMB RMB
As of June 30, 2023 13,183,308 8,820 16,816,692 12,204 168,973,780 (137,544,783 ) 5,118 31,455,139
Adjustments due to the adoption of ASC 326 — — — — — (7,548,214 ) — (7,548,214 )
As of July 1, 2023 13,183,308 8,820 16,816,692 12,204 168,973,780 (145,092,997 ) 5,118 23,906,925
Net loss — — — — — (8,546,000 ) — (8,546,000 )
Foreign exchange adjustments — — — — — — (1,513 ) (1,513 )
As of December 31, 2023 13,183,308 8,820 16,816,692 12,204 168,973,780 (153,638,997 ) 3,605 15,359,412
As of June 30, 2024 14,707,073 9,922 16,816,692 12,204 196,038,784 (131,841,244 ) (228,872 ) 63,990,794
Settlement of convertible notes with Class A ordinary shares 524,314 382 — — 9,789,039 — — 9,789,421
Net loss — — — — — (644,605 ) — (644,605 )
Foreign exchange adjustments — — — — — — (364,145 ) (364,145 )
As of December 31, 2024 15,231,387 10,304 16,816,692 12,204 205,827,823 (132,485,849 ) (593,017 ) 72,771,465
As of December 31, 2024 in 15,231,387 1,522 16,816,692 1,682 28,198,296 (18,150,609 ) (81,242 ) 9,969,649

All values are in US Dollars.

* The shares and per share information are presented on a retroactive<br>basis to reflect the reorganization and reclassification of Class A and Class B ordinary shares (Note 1 and Note 11).

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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ZHIBAO TECHNOLOGY INC.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

For the Years Ended
2023 2024 2024
RMB RMB
(unaudited) (unaudited) (unaudited)
Net cash provided by operating activities 85,607,856 74,197,711
Cash Flows From Investing Activities
Purchase of intangible assets (264,606 ) —
Prepayment for equity investments — (4,375,000 ) )
Net cash used in investing activities (264,606 ) (4,375,000 ) )
Cash Flows From Financing Activities
Proceeds from issuance of convertible notes, net of discount — 16,024,928
Payment of issuance costs for issuance of convertible noes — (2,483,924 ) )
Proceeds from short-term bank borrowings 25,000,000 32,000,000
Repayment of short-term bank borrowings (25,453,560 ) (25,014,237 ) )
Borrowings from related parties 26,500,000 2,500,000
Repayment of borrowings from related parties (15,000,000 ) —
Payment of offering cost (1,771,436 ) —
Net cash provided by financing activities 9,275,004 23,026,767
Effect of exchange rate changes on cash and cash equivalents (1,513 ) (80,500 ) )
Net increase in cash, cash equivalents and restricted cash 94,616,741 92,768,978
Cash, cash equivalents and restricted cash at beginning of the period 19,873,652 46,145,326
Cash, cash equivalents and restricted cash at end of the period 114,490,393 138,914,304

All values are in US Dollars.

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ZHIBAO TECHNOLOGY INC.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”))

For the Years Ended
2023 2024 2024
RMB RMB
(unaudited) (unaudited) (unaudited)
Supplemental Cash Flow Information
Cash paid for interest expense 507,297 556,776
Cash paid for income tax — —
Non-cash Investing and Financing activities
Operating lease right-of-use assets obtained in exchange for operating lease liabilities 81,674 5,013,830
Disposal of operating lease right-of-use assets — (1,508,268 ) )
Settlement of convertible notes by issuance of ordinary shares — 9,789,039
Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets
Cash and cash equivalents 2,401,495 28,113,972
Restricted cash 38,743,831 105,800,332
Restricted cash, noncurrent 5,000,000 5,000,000
46,145,326 138,914,304

All values are in US Dollars.

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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ZHIBAO

TECHNOLOGY INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1 — NATURE OF THE ORGANIZATIONAND BUSINESS

Zhibao Technology Inc. (the “Company” or “Zhibao”) was incorporated on January 11, 2023, under the laws of the Cayman Islands as an exempted company with limited liability. The Company commenced operations in November 2015, through its a wholly owned subsidiary Zhibao Technology Co., Ltd., (“Zhibao China”), which is a limited liability company established under the laws of the PRC. Zhibao China and its subsidiaries (collectively known as “Zhibao China Group”) are primarily engaged providing in digital insurance brokerage services to end customers.

The accompanying unaudited condensed consolidated financial statements reflect the activities of Zhibao and each of the following entities:

Name of Entity Date of Incorporation Place of Incorporation % of Ownership Principal Activities

| Parent company: | | | | |

| Zhibao | January 11, 2023 | Cayman Islands | Parent | Investment holding |

| Wholly owned subsidiaries of Zhibao | | | | |

| Zhibao Technology Holdings Limited (“Zhibao BVI”) | January 12, 2023 | British Virgin Islands | 100 | Investment holding |

| Zhibao Technology Limited (“Zhibao HK”) | January 19, 2023 | Hong Kong | 100 | Investment holding |

| Zhibao China | November 24, 2015 | PRC | 100 | Managing general underwriter (“MGU”) services |

| Shanghai Anyi Network Technology Co., Ltd. (“Shanghai Anyi”) | September 18, 2015 | PRC | 100 | R&D services |

| Sunshine Insurance Brokerss (Shanghai) Co., Ltd. (“Sunshine Insurance Brokers”) | November 17, 2011 | PRC | 100 | Digital insurance brokerage services and offline insurance brokerage consulting services |

| Shanghai Zhibao Health Management Co., Ltd. (“Zhibao Health”) | November 16, 2022 | PRC | 100 | Healthcare services |

Initial public offering (“IPO”)

On April 3, 2024, the Company closed its IPO of 1,500,000 Class A ordinary shares at a public offering price of $4.00 per Class A ordinary share for aggregate gross proceeds of $6,000,000, before deducting underwriting discounts and offering expenses. The Class A ordinary shares began trading on the Nasdaq Capital Market on April 2, 2024 under the symbol “ZBAO”.

On May 14, 2024, the Company issued an additional 23,765 Class A ordinary shares of the Company pursuant to the partial exercise of the underwriters’ over-allotment option in connection with the Company’s initial public offering at $4.00 per share, resulting in additional gross proceeds of $95,060.

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ZHIBAO

TECHNOLOGY INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1 — NATURE OF THE ORGANIZATIONAND BUSINESS (CONT.)

Reorganization

On February 16, 2023, Zhibao, through its wholly owned subsidiary Zhibao HK, entered into an equity transfer agreement with the shareholders of Zhibao China. Pursuant to the equity transfer agreement, each of the shareholders of Zhibao China transferred to Zhibao their respective equity interests in Zhibao China (“Equity Transfer”). Upon completion of the Equity Transfer, Zhibao China became a direct wholly-owned subsidiary of Zhibao.

On March 10, 2023, Zhibao completed the reorganization of entities under common control of its then existing shareholders, who collectively owned 100% of the equity interests of Zhibao China prior to the reorganization. Zhibao, Zhibao BVI, Zhibao HK were established as holding companies of Zhibao China and its subsidiaries, and all of these entities are under common control which results in the consolidation of Zhibao China and its subsidiaries, which have been accounted for as a reorganization of entities under common control at carrying value.

In March 2023, four preferred shareholders of Zhibao China surrendered their equity interest in Zhibao China. In April 2023, three of the four preferred shareholders determined to contribute the cash consideration to be received from Zhibao China in return for their equity surrender to Zhibao directly. In May 2023, Zhibao issued an aggregate of 2,287,360 ordinary shares to the three investors.

Reclassification of Class A and Class B ordinaryShares

On December 12, 2023, the shareholders of the Company passed a resolution to reclassify 5,605,564 ordinary shares held by three shareholders into Class B ordinary shares, with remaining ordinary shares as Class A ordinary shares. All of the Class B shareholders are controlled by Mr. Botao Ma, the founder and Chief Executive Officer of the Company.

Each of the Class A ordinary shares and Class B ordinary shares has the right to an equal share in any dividend paid by the Company and the right to an equal share in the distribution of the surplus assets of the Company. However Each Class A ordinary share has the right to one vote on any resolution, and each Class B ordinary share has the right to twenty (20) votes on any resolutions.

The Company believed that it was appropriate to reflect the above transactions on a retroactive basis pursuant to ASC 260, Earnings Per Share. The Company has retroactively adjusted all share and per share data for all periods presented.

The unaudited condensed consolidated financial statements are prepared on the basis as if the reorganization became effective as of the beginning of the first year presented in the unaudited condensed consolidated financial statements.

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ZHIBAO

TECHNOLOGY INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2 — SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES

Basis of Presentation

The interim unaudited condensed consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States (“US GAAP”).

The unaudited condensed consolidated financial information as of December 31, 2024 and for the six months ended December 31, 2023 and 2024 has been prepared without audit, pursuant to the rules and regulations of the Securities Exchange Commission (the “SEC”) and pursuant to Regulation S-X. Certain information and footnote disclosures, which are normally included in annual financial statements prepared in accordance with U.S. GAAP, have been omitted pursuant to those rules and regulations. 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 years ended June 30, 2022, 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 presentation 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 Company’s consolidated financial statements for the years ended June 30, 2022, 2023 and 2024. The results of loss for the six months ended December 31, 2024 are not necessarily indicative of the results for the full years.

Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly and majority owned subsidiaries. All transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation.

All intercompany transactions and balances have been eliminated upon consolidation.

Fair value of financial instruments

The Company’s financial instruments are accounted for at fair value on a recurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three levels of the fair value hierarchy are described below:

Level 1 — inputs to the valuation methodology are quoted prices (unadjusted)<br>for identical assets or liabilities in active markets.
Level 2 — inputs to the valuation methodology include<br>quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either<br>directly or indirectly, for substantially the full term of the financial instruments.
Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value.

Financial instruments of the Company primarily comprised current assets and current liabilities including cash and cash equivalents, restricted cash, accounts receivable, short-term borrowings, accounts payable, insurance premium payables, other payables, and due to related parties. The Company’s financial instruments approximate their fair values because of the short-term nature of these instruments. Warrants (Note 10 and Note 11) and derivative liabilities (Note 9) were measured at fair value using unobservable inputs and categorized in Level 3 of the fair value hierarchy.

Convenience translation

Translations of balances in the Group’s unaudited condensed consolidated balance sheets, unaudited condensed consolidated statements of comprehensive loss and unaudited condensed consolidated statements of cash flows from RMB into US$ as of and for the six months ended December 31, 2024 are solely for the convenience of the readers and were calculated at the rate of US$1.00=RMB 7.2993, representing the noon buying rate set forth in the H.10 statistical release of the U.S. Federal Reserve Board on December 31, 2024. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on December 31, 2024 or at any other rate.

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ZHIBAO

TECHNOLOGY INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2 — SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (CONT.)

Restricted Cash

In its capacity as an insurance broker, Sunshine Insurance Brokers collects “premiums” (unremitted insurance premiums) from certain insureds and remits the “premiums” to the appropriate insurance companies. Unremitted insurance premiums are held in custody until disbursed by Sunshine Insurance Brokers. The Company reports such amounts as current restricted cash in the consolidated balance sheets.

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.

Accounts Receivable, Net

Accounts receivable are recorded at the gross amount less an allowance for any uncollectible accounts and do not bear interest. Accounts receivable represented brokerage fees receivable from insurer carriers.

On July 1, 2023, the Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), using the modified retrospective transition method. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. Upon adoption, the Company changed the impairment model to utilize a forward-looking current expected credit losses (CECL) model in place of the incurred loss methodology for financial instruments measured at amortized cost and receivables resulting from the application of ASC 606, including contract assets. The adoption of the guidance resulted in an increase of RMB 8,821,129 in the allowance for credit losses for accounts receivable on July 1, 2023.

The Company uses the roll-rate method to measure the expected credit losses of accounts receivable. The Company assesses collectability by reviewing accounts receivable on aging schedules. In determining the amount of the allowance for credit losses, the Company considers historical collectability based on past due status, the age of the balances, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Company’s ability to collect from customers. Delinquent account balances are written-off against the allowance for expected credit loss after management has determined that the likelihood of collection is not probable. The estimated credit losses charged to the allowance is classified as “general and administrative expenses” in the unaudited condensed consolidated statements of operations and comprehensive loss. For the six months ended December 31, 2023 and 2024, the Company provided expected credit losses of RMB 1,315,635 and RMB 291,960 against accounts receivable.

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ZHIBAO

TECHNOLOGY INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2 — SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (CONT.)

Revenue Recognition

In accordance with ASC 606, revenue is recognized when the control of the promised goods or services is transferred to the customers, and the performance obligations under the contract have been satisfied, in an amount that reflects the consideration expected to be entitled to in exchange for those goods or services (excluding sales taxes collected on behalf of government authorities).

The Company determines revenue recognition through the following steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation.

The Company primarily generated revenues from contracts with customers:

Insurance brokerage services

The Company offers digital insurance brokerage services to end customers/the insured for placing insurance policies, and the Company 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. The insurance brokerage services are considered as a single performance obligation, as the insurer carriers cannot benefit until the Company sells an insurance policy. Commission fees are recognized when the Company completes the insurance brokerage services, at which point the Company successfully places an insurance policy for the end customers/the insured.

The Company recognizes insurance brokerage commissions net of return allowances. End customers/the insured are generally entitled to return insurance policies at any time under no conditions. Significant judgement is required to estimate return allowances. The Company reasonably estimates the possibility of return based on the historical experience, changes in judgments on these assumptions and estimates could materially impact the amount of net revenues recognized. During the six months ended December 31, 2023 and 2024, the Company did not record return allowance because the Company historically incurred minimal returns from end customers/the insured and the Company did not expect a significant reversal in the amount of cumulative revenue.

Management general underwriter (“MGU”)services

On behalf of the insurance carriers, the Company offers MGU services to end customers/the insured who pay insurance premiums to insurance carriers. The insurance carriers authorize the Company to assist them in certain underwriting, claims and risk control services. The Company earns MGU service fees from insurance carriers. MGU service fees are calculated on a predetermined percentage of insurance premium of each insurance policy.

The Company identifies two performance obligations in the MGU services which are comprised of i) underwriting services, the revenue of which are recognized at a point when the Company completes the underwriting services, and ii) claims and risk control services, the revenue of which are recognized ratably over the terms of insurance policies, generally one year. The Company used cost plus expected margin method to estimate and allocate the transaction prices between both performance obligations.

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ZHIBAO

TECHNOLOGY INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2 — SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (CONT.)

Revenue Recognition (cont.)

Contract balances

The Company classifies its right to consideration in exchange for services transferred to a customer as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional as compared to a contract asset which is a right to consideration that is conditional upon factors other than the passage of time. The Company recognizes accounts receivable in its consolidated balance sheets when it performs a service in advance of receiving consideration and it has the unconditional right to receive consideration. A contract asset is recorded when the Company has transferred services to the customer before payment is received or is due, and the Company’s right to consideration is conditional on future performance or other factors in the contract. As of June 30, 2024 and December 31, 2024, the Company did not record contract assets.

The Company capitalizes incremental costs incurred to fulfill contracts that (i) relate directly to the contract, (ii) are expected to generate resources that will be used to satisfy the performance obligation under the contract, and (iii) are expected to be recovered through revenue generated under the contract. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the current contract estimates. As of June 30, 2024 and December 31, 2024, the Company had no deferred contract costs.

Contract liabilities are recognized if the Company receives consideration prior to satisfying the performance obligations, which include customer advances and deferred revenue under service arrangements. As of June 30, 2024 and December 31, 2024, the Company had no customer advances.

Practical expedients

Payment terms and conditions vary by contract type; however, the Company’s terms generally include a requirement of payment within a period between 30 to 60 days after reconciliation of insurance premiums with insurer companies if not paid in advance. The Company has elected the practical expedient to not assess whether a significant financing component exists if the period between when we transfer a promised good or service to a customer and when the customer pays for that good or service is one year or less.

Additionally, the Company has applied the following practical expedients: 1) not to disclose the transaction price allocated to unsatisfied or partially unsatisfied performance obligations that are part of a contract that has an original expected duration of one year or less, and 2) to not capitalize incremental costs of obtaining a contract if the amortization would be less than 12 months.

Disaggregation of revenue

For the six months ended December 31, 2023 and 2024, substantially all of the Company’s revenue was generated in the PRC. The Company disaggregate revenue into two revenue streams as the following table:

For the Six Months Ended December 31,
2023 2024 2024
RMB RMB
Insurance brokerage service fees 75,354,494 144,964,797
MGU service fees 9,217,678 1,766,514
Less: business taxes and surcharges (317,951 ) (360,026 ) )
Total revenues 84,254,221 146,371,285

All values are in US Dollars.

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TECHNOLOGY INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2 — SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (CONT.)

Revenue Recognition (cont.)

The Company disaggregates revenue by transferal of services as the following table:

For the Six Months Ended December 31,
2023 2024 2024
RMB RMB
Services transferred at a point in time 82,900,740 146,284,524
Services transferred over time 1,671,432 446,787
Less: business taxes and surcharges (317,951 ) (360,026 ) )
Total revenues 84,254,221 146,371,285

All values are in US Dollars.

Income Taxes

The Company accounts for income taxes in accordance with the U.S. GAAP for income taxes. Under the asset and liability method as required by this accounting standard, the recognition of deferred income tax liabilities and assets for the expected future tax consequences of temporary differences between the income tax basis and financial reporting basis of assets and liabilities. Provision for income taxes consists of taxes currently due plus deferred taxes.

The charge for taxation is based on the results for the year as adjusted for items which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax basis. Deferred tax assets are recognized to the extent that it is more likely than not these items will be utilized against taxable income in the future. Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.

An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. As of December 31, 2024, income tax returns for the tax years ended December 31, 2019 through December 31, 2023 remain open for statutory examination.

Warrants

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter with changes in fair value recognized in the statements of operations in the period of change.

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TECHNOLOGY INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2 — SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (CONT.)

Concentration and Credit Risk

1) Credit risk

Assets that potentially subject the Company to significant concentration of credit risk primarily consist of cash and cash equivalents. The maximum exposure of such assets to credit risk is their carrying amount as at the balance sheet dates. As of June 30, 2024 and December 31, 2024, RMB 2,401,495 and RMB 26,919,011 (US$3,687,889) were deposited in financial institutions in the PRC, and each bank accounts is insured by the government authority with the maximum limit of RMB 500,000. To limit exposure to credit risk relating to deposits, the Company primarily place cash and cash equivalent deposits with large financial institutions in China which management believes are of high credit quality and the Company also continually monitors their credit worthiness.

The risk with respect to accounts receivable and amounts due from related parties is mitigated by credit evaluations the Company performs on its customers and its ongoing monitoring processes of outstanding balances.

The Company’s operations are carried out in China. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC as well as by the general state of the PRC’s economy. In addition, the Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, rates and methods of taxation among other factors.

2) Foreign currency risk

Substantially all of the Company’s operating activities that were conducted through the subsidiaries in China and related assets and liabilities are denominated in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the Peoples’ Bank of China (“PBOC”) or other authorized financial institutions at exchange rates quoted by PBOC. Approval of foreign currency payments by the PBOC or other regulatory institutions requires submitting a payment application form together with suppliers’ invoices and signed contracts. The value of RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market.

3) Concentration risks

Accounts receivable are typically unsecured and derived from goods sold and services rendered to customers that are located primarily in China, thereby exposed to credit risk. The risk is mitigated by the Company’s assessment of customers’ creditworthiness and its ongoing monitoring of outstanding balances. The Company has a concentration of its receivables and revenues with specific customers.

As of June 30, 2024, four customers accounted for 20%, 17%, 11% and 11% of accounts receivable, respectively.

As of December 31, 2024, two customers accounted for 20% and 18% of accounts receivable, respectively.

For the six months ended December 31, 2023, one key customer accounted for 15% of total revenue.

For the six months ended December 31, 2024, four key customer accounted for 20%, 14%, 12% and 10% of total revenue, respectively.

As of June 30, 2024, two vendors accounted for 27% and 14% of accounts payable, respectively. As of December 31, 2024, two vendors accounted for 20% and 15% of accounts payable, respectively.

For the six months ended December 31, 2023, two vendors accounted for 26% and 13% of total cost, respectively. For the six months ended December 31, 2024, two vendors accounted for 17% and 12% of total cost, respectively.

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TECHNOLOGY INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2 — SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (CONT.)

Recently Issued Accounting Standards

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic ASC 280) Improvements to Reportable Segment Disclosures (“ASU 2023-07”). The ASU improves reportable segment disclosure requirements, primarily through enhanced disclosure about significant segment expenses. The enhancements under this update require disclosure of significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss, require disclosure of other segment items by reportable segment and a description of the composition of other segment items, require annual disclosures under ASC 280 to be provided in interim periods, clarify use of more than one measure of segment profit or loss by the CODM, require that the title of the CODM be disclosed with an explanation of how the CODM uses the reported measures of segment profit or loss to make decisions, and require that entities with a single reportable segment provide all disclosures required by this update and required under ASC 280. The ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the potential impact of adopting this guidance on financial statements and does not expect the adoption to have a material impact.

In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income (Subtopic 220-40): Disaggregation of Income Statement Expenses.” This pronouncement introduces new disclosure requirements aimed at enhancing transparency in financial reporting by requiring disaggregation of specific income statement expense captions. Under the new guidance, entities are required to disclose a breakdown of certain expense categories, such as: employee compensation; depreciation; amortization, and other material components. The disaggregated information can be presented either on the face of the income statement or in the notes to the financial statements, often using a tabular format. The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of adopting this ASU on its financial statements.

In March 2024, the FASB issued ASU 2024-02, “Codification Improvements – Amendments to Remove References to the Concept Statements” (“ASU 2024-02”). ASU 2024-02 contains amendments to the FASB Accounting Standards Codification that remove references to various FASB Concepts Statements. In most instances, the references are extraneous and not required to understand or apply the guidance. In other instances, the references were used in prior Statements to provide guidance in certain topical areas. ASU 2024-02 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the potential impact of adopting this guidance on financial statements and does not expect the adoption to have a material impact.

In December 2023, the FASB issued ASU 2023-09, which is an update to Topic 740, Income Taxes. The amendments in this update related to the rate reconciliation and income taxes paid disclosures improve the transparency of income tax disclosures by requiring (1) adding disclosures of pretax income (or loss) and income tax expense (or benefit) to be consistent with U.S. Securities and Exchange Commission (SEC) Regulation S-X 210.4-08(h), Rules of General Application—General Notes to Financial Statements: Income Tax Expense, and (2) removing disclosures that no longer are considered cost beneficial or relevant. For public business entities, the amendments in this Update are effective for annual periods beginning after December 15, 2024. For entities other than public business entities, the amendments are effective for annual periods beginning after December 15, 2025. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The amendments in this Update should be applied on a prospective basis. Retrospective application is permitted. The Company is currently evaluating the potential impact of adopting this guidance on financial statements and does not expect the adoption to have a material impact.

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements — Codification Amendments in Response to SEC’s Disclosure Update and Simplification initiative which amend the disclosure or presentation requirements of codification subtopic 230-10 Statement of Cash Flows—Overall, 250-10 Accounting Changes and Error Corrections— Overall, 260-10 Earnings Per Share— Overall, 270-10 Interim Reporting— Overall, 440-10 Commitments—Overall, 470-10 Debt—Overall, 505-10 Equity—Overall, 815-10 Derivatives and Hedging—Overall, 860-30 Transfers and Servicing—Secured Borrowing and Collateral, 932-235 Extractive Activities— Oil and Gas—Notes to Financial Statements, 946-20 Financial Services— Investment Companies— Investment Company Activities, and 974-10 Real Estate—Real Estate Investment Trusts—Overall. The amendments represent changes to clarify or improve disclosure and presentation requirements of above subtopics. Many of the amendments allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the SEC’s requirements. Also, the amendments align the requirements in the codification with the SEC’s regulations. For entities subject to existing SEC disclosure requirements or those that must provide financial statements to the SEC for securities purposes without contractual transfer restrictions, the effective date aligns with the date when the SEC removes the related disclosure from Regulation S-X or Regulation S-K. Early adoption is not allowed. For all other entities, the amendments will be effective two years later from the date of the SEC’s removal. The Company is currently evaluating the potential impact of adopting this guidance on financial statements and does not expect the adoption to have a material impact.

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 unaudited condensed consolidated financial statements upon adoption. The Company does not discuss recent standards that are not anticipated to have an impact on or are unrelated to its unaudited condensed consolidated financial condition, results of operations, cash flows or disclosures.

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TECHNOLOGY INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3 — ACCOUNTS RECEIVABLE

As of June 30, 2024 and December 31, 2024, accounts receivable consisted of the following:

June 30,<br> 2024 December 31,<br> 2024
RMB RMB
Accounts receivable 144,670,083 149,920,975
Less: Allowance for credit losses (14,315,654 ) (14,607,614 )
130,354,429 135,313,361

For the six months ended December 31, 2023 and 2024, the movement of allowance against expected credit losses was as the following:

June 30,<br> 2024 December 31,<br> 2024
RMB RMB
Opening balance 1,852,816 14,315,654
Adjustment of opening balance due to adoption of ASU 2016-13 8,821,129 —
Provision of expected credit losses 4,031,265 291,960
Writing off accounts receivable (389,556 ) —
Ending balance 14,315,654 14,607,614

4 — PREPAID EXPENSES AND OTHER CURRENTASSETS, NET

As of June 30, 2024 and December 31, 2024, prepaid expenses and other current assets, net consisted of the following:

June 30,<br> 2024 December 31,<br> 2024
RMB RMB
Advance to staff 2,087,034 1,852,599
Employee loan 1,900,000 300,000
Government grants receivable 1,800,000 —
Deposits^(a)^ 1,600,863 2,101,464
Value-added tax recoverable 1,210,092 547,764
Prepaid expenses 610,404 4,229,691
Others 629,026 2,492,048
9,837,419 11,523,566
Less: Provision against other receivables (351,955 ) (351,955 )
Total prepayments and other current assets, net 9,485,464 11,171,611
(a) The balance of deposits primarily consisted of office rental deposits and deposits made with distribution channels.

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TECHNOLOGY INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

4 — PREPAID EXPENSES AND OTHER CURRENTASSETS, NET (CONT.)

The movement of the expected credit loss against prepaid expenses and other receivables as of June 30, 2024 and December 31, 2024 is as follows:

June 30,<br> 2024 December 31,<br> 2024
RMB RMB
Beginning balance 264,888 351,955
Addition 87,067 1,800,000
Writing off - (1,800,000 )
Ending balance 351,955 351,955

5 — INTANGIBLE ASSETS, NET

As of June 30, 2024 and December 31, 2024, intangible assets, net consisted of the following:

June 30,<br> 2024 December 31,<br> 2024
RMB RMB
Software 6,167,067 6,167,067
Less: accumulated amortization (3,586,021 ) (4,252,132 )
2,581,046 1,914,935

For the six months ended December 31, 2023 and 2024, amortization expenses were RMB495,575 and RMB666,111 ($91,257), respectively.

The following is a schedule, by years, of amortization of intangible assets as of December 31, 2024:

December 31,<br> 2024
RMB
For the six months ending June 30, 2025 420,509
For the year ending June 30, 2026 540,134
For the year ending June 30, 2027 540,134
For the year ending June 30, 2028 292,346
For the year ending June 30, 2029 121,812
1,914,935

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TECHNOLOGY INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6 — LEASES

As of June 30, 2024 and December 31, 2024, Zhibao China Group leases office spaces in different cities in the PRC under non-cancelable operating leases, with terms ranging between 24 months and 60 months. The Company considers those renewal or termination options that are reasonably certain to be exercised in the determination of the lease term and initial measurement of right of use assets and lease liabilities. Lease expense for lease payment is recognized on a straight-line basis over the lease term.

The Company determines whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the leases do not provide a readily determinable implicit rate. Therefore, the Company discount lease payments based on an estimate of the incremental borrowing rate.

For operating leases that include rent holidays and rent escalation clauses, the Company recognizes lease expense on a straight-line basis over the lease term from the date it takes possession of the leased property. The Company records the straight-line lease expense and any contingent rent, if applicable, in general and administrative expenses on the unaudited condensed consolidated statements of operations and comprehensive loss. The corporate office lease also requires the Company to pay real estate taxes, common area maintenance costs and other occupancy costs which are included in the general and administrative expenses on the unaudited condensed consolidated statements of operations and comprehensive loss.

The lease agreements do not contain any material residual value guarantees or material restrictive covenants.

For short-term leases, the Company records operating lease expense in its consolidated statements of operations and comprehensive income on a straight-line basis over the lease term and record variable lease payments as incurred.

The table below presents the operating lease related assets and liabilities recorded on the consolidated balance sheets.

June 30,<br> 2024 December 31,<br> 2024
RMB RMB
Right of use assets 3,313,215 5,885,455
Operating lease liabilities, current 2,425,135 2,537,123
Operating lease liabilities, noncurrent 1,044,068 3,427,331
Total operating lease liabilities 3,469,203 5,964,454

Other information about the Company’s leases is as follows:

For the Six Months Ended

| | 2023 | | | 2024 | | |

| | RMB | | | RMB | | |

| Operating cash flows used in operating leases | | 1,077,983 | | | 1,165,849 | |

| Weighted average remaining lease term (years) | | 1.69 | | | 2.59 | |

| Weighted average discount rate | | 4.55 | % | | 3.74 | % |

Operating lease expenses were RMB 1,175,294 and RMB 1,303,514 (US$178,581), respectively, for the six months ended December 31, 2023 and 2024. RMB 62,545 and RMB 149,019 (US$20,416) were incurred for short-term lease arrangements for the six months ended December 31, 2023 and 2024, respectively.

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TECHNOLOGY INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6 — LEASES (CONT.)

The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2024:

December 31,<br> 2024
RMB
For the six months ending June 30, 2025 1,336,435
For the year ending June 30, 2026 2,365,790
For the year ending June 30, 2027 1,936,012
For the year ending June 30, 2028 427,745
Total lease payments 6,065,982
Less: Imputed interest (101,528 )
Present value of lease liabilities 5,964,454

7 — SHORT-TERM BANK BORROWINGS

As of June 30, 2024 and December 31, 2024, short-term bank borrowings consisted of the following:

June 30,<br> 2024 December 31,<br> 2024
RMB RMB
China Merchant Bank Lianyang Branch (“CMBLY”)^(a)^ 20,000,000 20,000,000
China Merchant Bank Shanghai Branch (“CMBSH”)^(b)^ — 12,000,000
Bank of Shanghai (“BOS”)^(c)^ 5,000,000 —
China Construction Bank (“CCB”)^(c)^ 1,814,237 1,800,000
26,814,237 33,800,000
(a) On September 18, 2019, Zhibao China Group entered into an extended three-year bank credit facility with CMBLY under which Zhibao China Group can draw-down up to RMB 15,000,000 by September 17, 2022. The interest rate for this credit facility was determined on the draw-down date. The credit facility was collateralized by properties owned by Mr. Botao Ma, the founder and Chief Executive Officer of the Company. In October 2020, Zhibao China Group entered into an extended three-year bank credit facility with CMBLY under which Zhibao China Group can draw-down up to RMB 30,000,000 by October 14, 2023. In October 2023, Zhibao China Group entered into an extended three-year bank credit facility with CMBLY under which Zhibao China Group can draw-down up to RMB 30,000,000 by October 2026. The borrowings bore interest rate of 3.45% and 3.00% per annum as of June 30, 2024 and December 31, 2024, respectively. The term for each borrowing is one year.

For the six months ended December 31, 2023 and 2024, the Company has drawn down RMB 20,000,000 and RMB 20,000,000 ($2,739,989) from CMBLY. For the six months ended December 31, 2023 and 2024, the Company has repaid RMB 20,000,000 and RMB 20,000,000 ($2,739,989) to CMBLY.

(b) On July 7, 2024, Zhibao China Group entered into a one-year bank borrowing agreement with CMBSH under which Zhibao China Group borrowed RMB 12,000,000 (US$1,643,993). The interest rate is 3.80% per annum. The bank borrowing was guaranteed by letter of indemnity of the Company..
(c) In September 2023, Zhibao China Group borrowed RMB 5,000,000 from BOS with maturity date due in September 2024. The borrowings bore interest rate of 3.65% per annum.<br> <br><br> <br>For the six months ended December 31, 2024, the Company fully repaid the borrowing on due date.
(d) On November 27, 2020, Zhibao China Group draw down<br>a one-year borrowing amounted to RMB 3,000,000 from CCB with original maturity date due on November 27, 2021. Following the initial draft<br>down, Zhibao China Group recurringly repaid and drew down the borrowing from CCB. On November 14, 2024, Zhibao China Group extended the<br>maturity date to November 5, 2025. The borrowings bore interest rate was 3.90% and 3.85% per annum as of June 30, 2024 and December 31,<br>2024, respectively.  During the six months ended December 31, 2023 and 2024, the Company repaid borrowings of RMB 85,763 and RMB<br>14,237 ($1,950), respectively.

Interest expenses were RMB507,297 and RMB556,776 ($76,278) for short-term borrowings for the six months ended December 31, 2023 and 2024, respectively. The weighted average interest rates of bank borrowings were 3.52% and 3.37% per annum as of June 30, 2024 and December 31, 2024, respectively.

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TECHNOLOGY INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

8 — ACCRUED EXPENSES AND OTHER LIABILITIES

As of June 30, 2024 and December 31, 2024, accrued expenses and other liabilities consisted of the following:

June 30,<br> 2024 December 31,<br> 2024
RMB RMB
Accrued payroll and welfare 3,148,555 3,381,670
VAT and other taxes payable 5,462,014 5,284,937
Deposits payable 995,778 1,113,778
Due to insurance carriers 1,357,228 1,212,329
Other payables to suppliers (1) 5,027,395 4,285,544
15,990,970 15,278,258
(1) Other payable mainly includes payable to suppliers for promotion service, daily operation, IPO service<br>and other service.
--- ---

9 — CONVERTIBLE NOTE

On September 23, 2024, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with an institutional investor (the “Investor”), which provides for loans in an aggregate principal amount of up to $8.0 million under three tranches (the “Financing”).

On September 23, 2024, the Company consummated the first closing of the first tranche (the “First Closing of First Tranche”) and issued to the Investor, (A) a convertible promissory note in the aggregate principal amount of up to $750,000, (B) a warrant to purchase up to 74,451 Class A ordinary shares at an initial exercise price of $4.71 per share, subject to certain adjustments (the “Purchase Warrants”), and (C) a pre-funded warrant to purchase up to 191,522 shares at a nominal exercise price of $0.0001 per share, subject to certain adjustments (the “Pre-Funded Warrant”). Pre-Funded Warrants may only be exercised upon occurrence of an Event of Default. In return, the Company received $675,000 (net of original issue discount of 10%) on September 24, 2024 in the First Closing of First Tranche, excluding expenses and commissions.

On October 1, 2024, the Company and the Investor consummated the second closing of the First Tranche. The Company received additional $675,000 (net of original issue discount of 10%) on October 7, 2024 in a second closing of the First Tranche, excluding expenses and commissions (the “Second Closing of First Tranche”). In the Second Closing of First Tranche, the Company issued to the Investor Purchase Warrants to purchase up to 79,599 shares at an initial exercise price of $4.47 per share, subject to certain adjustments.

On December 11, 2024, pursuant to the terms of the Securities Purchase Agreement and the Letter Agreement, the Company and the Investor consummated the third closing of the First Tranche (the “Third Closing of the First Tranche”). The Company received additional $900,000 (net of original issue discount of 10%) on December 12, 2024, in the Third Closing of the First Tranche, excluding expenses and commissions, and issued to the Investor Purchase Warrants to purchase up to 160,020 shares at an initial exercise price of $3.25 per share, subject to certain adjustments.

For the six months ended December 31, 2024, the

Company received net proceeds of $2,250,000 in exchange for issuance of convertible note (the “Note”) with principal value of $2,5000,000 and an aggregated 314,070 Purchase Warrants to purchase up to 314,070 shares.

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TECHNOLOGY INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

9 — CONVERTIBLE NOTE (CONT.)

The key terms of the Notes are as follows:

The Notes will mature on the first anniversary from its issuance. No interest is charged to the Notes.

Conversion

The holder of the Notes shall have the right, at such holder’s sole discretion, to convert all or any portion of the convertible notes into Class A ordinary shares at anytime after September 23, 2024 at following fixed conversion prices.

Conversion Price
US
First Closing of First Tranche
Second Closing of First Tranche
Third Closing of First Tranche

All values are in US Dollars.

Effective upon each of the Second Closing of First Tranche and the Third Closing of First Tranche, the conversion price of the First Closing of First Tranche shall be decreased, but in no event increased, to equal the lowest 120% of the average three-day VWAP calculated prior to each applicable First Tranche Closing Date.

Effective upon the Third Closing of First Tranche, the conversion price of the Second Closing of First Tranche shall be decreased, but in no event increased, to equal the lowest 120% of the average three-day VWAP calculated prior to each applicable First Tranche Closing Date.

If the Company receives a conversion notice at a time at which the conversion price is less than $0.7616, the Company shall issue a number of shares equal to the conversion amount divided by $0.7616 and pay the economic difference between the conversion price and $0.7616 in cash.

The conversion price is subject to adjustments in the events of i) share splits and combinations, ii) Class A ordinary share dividends and distributions, iii) reclassifications, exchanges, substitutions, and iv) issuance of common stocks, issuance of options, issuance of convertible stocks, change in option price or rate of conversion and issuance of units.

Repayment

Commencing on the earlier of (i) the 60-day anniversary of September 23, 2024 and (ii) the date on which the Resale Registration Statement registering the conversion shares issuable under this Note shall have been declared effective by the SEC, the Company shall pay 105% of the total principal in monthly installments to the Holder of the Notes.

The monthly payments shall be payable in cash; provided, however, that  the Company may elect to pay all or part of a monthly payment in the form of conversion shares in the following formula: (A) the monthly payment for such month shall be 100% of the total principal amount multiplied by the quotient determined by dividing one by the remaining number of months divided by (B) a price per share equal to the lesser of (i) the fixed conversion price then in effect, and (ii) 93.5% of the average of the four (4) lowest daily VWAPs during the 15 Trading Day period immediately preceding the applicable payment date, provided that such price shall not be less than $0.7616.

The Company is also obliged to transfer make whole shares in the event that the 93.5% of market price prevailing on 15 trading days succeeding the payment dates is less than the conversion price. The number of make whole shares equals to the difference between the number of conversion shares the Holder received in monthly payment and the number of conversion shares which the Holder would have received had the succeeding market price applied to such monthly payment.

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TECHNOLOGY INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

9 — CONVERTIBLE NOTE (CONT.)

As of December 31, 2024, the Company has fully settled the note issued in First Closing of First Tranche with principal amount of $750,000 and partially settled the note issued in the Second closing of Frist Tranche with principal amount of $400,000 by issuance of an aggregate of 524,314 shares of Class A ordinary shares to the Investor.

Accounting for the Convertible Notes

The Company has classified the convertible notes as liabilities under ASC 470 because it is a debt in its legal form. The Company determined that the conversion feature within the Notes meet the definition of embedded derivatives and the Group estimated a fair value of the derivative liability using the Binominal Tree Model at the date of issuance.

The convertible note is initially recognized at residual value after allocating net proceeds to warrant liabilities (Note 10) and derivative liabilities. On the three closings of First Tranche, the Company issued convertible notes at fair value of $784,000, $785,000 and $1,045,000, respectively. The Company allocated net proceeds of $370,328, $420,000 and $633,000 to convertible notes.

Subsequently, the Company accretes interest on convertible notes based on effective interest rate. The interest expenses was charged to the account of interest expenses on the consolidated statements of operations and comprehensive loss. For the six months ended December 31, 2024, the Company recognized interest expenses of RMB 1,144,478 ($197,893) on convertible notes.

On settlement of the Notes, the Company adopted extinguishment accounting to derecognize the convertible notes. The Company charged the difference between the carrying amount of the convertible notes in addition to the fair value of related derivative liabilities and the fair value of Class A ordinary shares on payment dates into the account of “loss on settlement of convertible notes“ on the condensed consolidated statements of operations and comprehensive loss. For the six months ended December 31, 2024, the Company recognized loss on settlement of convertible notes of RMB 4,438,430 ($608,062).

The conversion feature is accounted for as a derivative liability at fair value, with changes in fair value charged to condensed consolidated statements of operations and comprehensive loss. For the six months ended December 31, 2024, the Company recognized changes in fair value of RMB 722,631 ($99,000) of conversion feature.

As of December 31, 2024, the carrying amounts of the Company’s convertible notes are RMB 6,452,341 ($883,967), net of unamortized debt discount of RMB 3,401,714 ($466,033).

The following table provides quantitative information regarding Level 3 fair value measurements inputs for the Company’s derivate liabilities at their measurement dates:

First Closing Second Closing Third Closing
Issuance Date On September 24,<br><br> 2024 On October 7,<br><br> 2024 On December 12,<br><br> 2024
Risk-free rate 3.86%~ 4.02 % 4.28%~ 4.41 % 4.34%~ 4.35 %
Estimated volatility rate 37.57%~ 42.09 % 38.86%~ 45.27 % 38.52%~ 43.00 %
Dividend yield 0 % 0 % 0 %
Bond yield 8.32 % 8.62 % 8.66 %
First<br> <br>Closing First<br> <br>Closing Second<br> <br>Closing Second<br> <br>Closing Second<br> <br>Closing Third<br> <br>Closing
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Extinguishment date or Balance sheet date On November 22, 2024 **** On December 6, 2024 **** On December 6, 2024 **** On December 23, 2024 **** On December 31, 2024 **** On December 31, 2024 ****
Risk-free rate 4.53 % 4.32%~4.42 % 4.41 % 4.39%~4.41 % 4.33%~4.41 % 4.30%~4.32 %
Estimated volatility rate 37.60 % 38.04%~43.99 % 39.17%~48.45 % 44.96%~49.86 % 42.25%~45.65 % 41.23%~49.31 %
Dividend yield 0 % 0 % 0 % 0 % 0 % 0 %
Bond yield 8.32 % 8.64 % 8.64 % 8.81 % 8.75 % 8.75 %

10 — WARRANT LIABILITIES

In connection with convertible notes (Note 9), the Company issued Purchase Warrants to the Holder to purchase up to 74,451 Class A ordinary shares , 79,599 Class A ordinary shares and 160,020 Class A ordinary shares, respectively, in the First Closing of First Tranche, Second Closing of First Tranche and Third Closing of First Tranche. Each of the Purchase Warrants will mature on the fifth anniversary since its issuance.

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10 — WARRANT LIABILITIES (CONT.)

The Purchase Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Purchase Warrants. The exercise prices of the Purchase Warrants are subject to adjustments in the events of i) share splits and combinations, ii) ordinary share dividends and distributions, iii) reclassifications, exchanges, substitutions, and iv) issuance of Class A ordinary shares, issuance of options, issuance of convertible stocks, change in option price or rate of conversion and issuance of units. If at any time after 90 days after the Initial Exercise Date there is no effective registration statement registering the Purchase Warrant Shares, or the prospectus contained therein is not available for the issuance of the Purchase Warrant Shares to the Holder, then this Purchase Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise”.

On December 16, 2024, the Company entered into a waiver agreement (the “Waiver Agreement”) with the Holder in connection with the Share Subscription Facility. Pursuant to the Waiver Agreement, in connection with the Share Subscription Facility, the Holder agreed to waive its rights arising under the Securities Purchase Agreement and the Note in connection with the Share Subscription Facility.

The above mentioned Waiver Warrant triggered the adjustments of exercise prices for Purchase Warrants issued in the three closings of First Tranche. The Company adjusted the Purchase Warrants to the Holder to purchase up to 124,597 Class A ordinary shares , 126,424 Class A ordinary shares and 184,788 Class A ordinary shares , respectively, in the First Closing of First Tranche, Second Closing of First Tranche and Third Closing of First Tranche. The exercise price was decreased to $2.8144 for all Purchase Warrants.

As the Purchase Warrants are not indexed to the Company’s stock according to ASC 815, therefore, the Purchase Warrants are classified as liability. The Company accounted for warrant liability with fair value changes charged to the account of “changes in fair value of warrant liabilities” on the condensed consolidated statements of operations and comprehensive loss.

On issuance dates, the Company recognized the Purchase Warrants at fair value of $106,000, $120,000 and $149,000, respectively. For the six months ended December 31, 2024, the Company recognized gain on fair value change of warrant liabilities aggregating $196,000.

The fair value of Purchase Warrant was estimated using Black-Scholes model. The following table provides quantitative information regarding Level 3 fair value measurements inputs for the Company’s warrants at their measurement dates:

Second Closing Third Closing
Issuance Date On October 7, 2024 On December 12, 2024
Risk-free rate 3.62 % 4.00 % 4.37 %
Estimated volatility rate 43.79 % 43.88 % 44.39 %
Dividend yield 0 % 0 % 0 %
Spot price of underling ordinary share 3.87 3.86 2.53
Exercise price 4.71 4.47 3.25
Fair value of Purchase Warrant in 106,000 120,000 149,000

All values are in US Dollars.

Balance sheet date
Second<br><br> Closing Third<br><br> Closing
Risk-free rate 4.56 % 4.57 % 4.58 %
Estimated volatility rate 42.38 % 42.61 % 44.78 %
Dividend yield 0 % 0 % 0 %
Spot price of underling ordinary share 1.57 1.57 1.57
Exercise price 2.81 2.81 2.81
Fair value of Purchase Warrant in 51,000 48,000 80,000

All values are in US Dollars.

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10 — WARRANT LIABILITIES (CONT.)

In connection with the preparation of this unaudited interim condensed consolidated financial statements for the six months ended December 31, 2024, the Management corrected the errors relating to the convertible notes and warrants issued to the Investor mentioned in Note 9. The warrants were incorrectly accounted for and reported as equity in the Form 6-K that was filed on April 15, 2025, which should be reclassified as warrant liabilities. The error as of December 31, 2024 and for the six months ended December 31, 2024 is revised as below in the unaudited condensed consolidated balance sheet and unaudited condensed consolidated statements of operations and comprehensive loss. ****

Unaudited Condensed Consolidated Balance Sheet

As of December 31, 2024
As Originally
**** Reported **** Adjustment **** As Adjusted ****
RMB RMB RMB
Convertible notes 6,888,414 (436,073 ) 6,452,341
Warrant liabilities — 1,239,814 1,239,814
Total Current Liabilities 234,214,852 803,741 235,018,593
Total Liabilities 241,403,183 803,741 242,206,924
Additional paid-in capital 207,528,841 (1,701,018 ) 205,827,823
Accumulated deficit (133,356,964 ) 871,115 (132,485,849 )
Accumulated other comprehensive loss (619,179 ) 26,162 (593,017 )
Total Shareholders’ Equity 73,575,206 (803,741 ) 72,771,465

Unaudited Condensed Consolidated Statementsof Operations and Comprehensive Loss

**** For the six months ended December 31, 2024 ****
**** As Originally **** **** ****
**** Reported **** Adjustment **** As Adjusted ****
RMB RMB RMB
Interest expense, net (1,423,313 ) (182,661 ) (1,605,974 )
Gain on fair value change of warrant liabilities — 1,430,663 1,430,663
Loss on settlement of convertible notes (4,061,543 ) (376,887 ) (4,438,430 )
Total other expenses, net (4,228,811 ) 871,115 (3,357,696 )
(Loss) Income Before Income Taxes (424,473 ) 871,115 446,642
Net Loss (1,515,720 ) 871,115 (644,605 )
Foreign currency translation adjustments (390,307 ) 26,162 (364,145 )
Comprehensive loss (1,906,027 ) 897,277 (1,008,750 )
Loss per share
Basic (0.05 ) 0.03 (0.02 )
Diluted (0.05 ) 0.03 (0.02 )

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TECHNOLOGY INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

11 — EQUITY

Ordinary shares

As of June 30, 2024, the Company had 450,000,000 authorized Class A ordinary shares, par value of US$0.0001, of which 14,707,073 Class A ordinary shares were issued and outstanding as of June 30, 2024. The Company had 50,000,000 authorized Class B ordinary shares, par value of US$0.0001, of which 16,816,692 Class B ordinary shares were issued and outstanding as of June 30, 2024.

In connection with the convertible notes (Note 9), the Company settled portion of the notes in ordinary shares. For the six months ended December 31, 2024, the Company issued 524,314 shares of Class A ordinary shares to the Note Holder.

As of December 31, 2024, the Company had 450,000,000 authorized Class A ordinary shares, par value of US$0.0001, of which 15,231,387 Class A ordinary shares were issued and outstanding as of December 31, 2024. The Company had 50,000,000 authorized Class B ordinary shares, par value of US$0.0001, of which 16,816,692 Class B ordinary shares were issued and outstanding as of December 31, 2024.

Warrants

On April 3, 2024, the Company issued 75,000 warrants to EF Hutton LLC, the representative of the underwriters, as compensation for the services in connection with the IPO (“IPO warrants”). On May 14, 2024, the Company issued 1,188 warrants to EF Hutton LLC as compensation for the services in connection with the over-allotment (“Over-allotment Warrants”).

EF Hutton LLC is entitled to exercise each warrant by purchase of one Class A ordinary share at an exercise price of $4.4 at any time from September 25, 2024 to March 29, 2029. The warrants can be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the warrants. The warrants are subject to adjustments in the event of (i) share dividends, (ii) aggregation of shares, (iii) subsequent right offerings, (iv) replacement of securities upon reorganization, and (v) changes in the form of warrants. The warrants may be exercised on “cashless basis” unless there is no effective registration statement registering, or no current prospectus available for, the issuance or resale of the shares by EF Hutton LLC at any time after September 29, 2024.

In accordance with ASC 815, the Company determined that the warrants meet the conditions necessary to be classified as equity because the consideration is indexed to the Company’s own equity, there are no exercise contingencies based on an observable market not based on its stock or operations, settlement is consistent with a fixed-for-fixed equity instrument, the agreement contains an explicit number of shares and there are no cash payment provisions.

The fair value of the IPO Warrants and Over-allotment Warrants were estimated at RMB 617,554 (US$85,406) and RMB 9,786 (US$1,353), respectively, using the Black-Scholes model. Inherent in these valuations are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its ordinary shares based on historical and implied volatilities of selected peer companies as well as its own that match the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates it to remain at zero.

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11 — EQUITY (CONT.)

Warrants (Cont.)

The following table provides quantitative information regarding Level 3 fair value measurements inputs for the Company’s warrants at their measurement dates:

US
Exercise price
Stock price
Expected life of the warrants (in years)
Risk free rate %
Dividend yield %
Volatility %

All values are in US Dollars.

Restricted net assets

The Company’s ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiaries. Relevant PRC statutory laws and regulations permit payments of dividends by the Company’s PRC subsidiaries only out of its 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 Company will not pay dividends until it has a retained earning on its consolidated balance sheets. Paid in capital of the PRC subsidiaries included in the Company’s consolidated net assets are also non-distributable for dividend purposes. The results of operations reflected in the accompanying consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of the PRC subsidiaries. The Company’s PRC subsidiaries are required to set aside at least 10% of their after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital. In addition, the Company’s PRC subsidiaries may allocate a portion of its after-tax profits based on PRC accounting standards to enterprise expansion fund and staff bonus and welfare fund at its discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends.

As of December 31, 2024, the Company’s PRC subsidiaries did not set aside statutory reserves. As of December 31, 2024, the Company had RMB 106,075,009 restricted net assets.

12 — INCOME TAX

Cayman Islands

Under the current and applicable laws of the Cayman Islands, the Company is not subject to tax on income or capital gain. Additionally, upon payments of dividends by the Company to its shareholders, no Cayman Islands withholding tax will be imposed.

British Virgin Islands

Under the current and applicable laws of BVI, Zhibao BVI is not subject to tax on income or capital gains.

Hong Kong

Zhibao HK is incorporated in Hong Kong and is subject to Hong Kong Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Hong Kong tax laws. The applicable tax rate for the first Hong Kong Dollar (“HKD$”) 2 million of assessable profits is 8.25% and assessable profits above HKD$2 million will continue to be subject to the rate of 16.5% for corporations in Hong Kong, effective from the year of assessment 2018/2019. Before that, the applicable tax rate was 16.5% for corporations in Hong Kong.

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12 — INCOME TAX (CONT.)

PRC

Zhibao China, Sunshine Insurance Brokers, Shanghai Anyi, and Zhibao Health were incorporated in the PRC and are subject to PRC Enterprise Income Tax (“EIT”) on the taxable income in accordance with the relevant PRC income tax laws. On March 16, 2007, the National People’s Congress enacted a new enterprise income tax law, which took effect on January 1, 2008. The law applies a uniform 25% enterprise income tax rate to both foreign invested enterprises and domestic enterprises.

The income tax benefits (expenses) for the six months ended December 31, 2023 and 2024 were comprised of the following:

For the Six Months Ended
2023 2024
RMB RMB
Current income tax expenses — —
Deferred income tax benefits (expenses) 137,354 (1,091,247 )
137,354 (1,091,247 )

Below is a reconciliation of the statutory tax rate to the effective tax rate:

For the Six Months Ended
2023 2024
RMB RMB
(Loss) Income before income tax expenses (8,683,354 ) 446,642
Income tax computed at statutory EIT rate (25%) 2,170,839 (111,661 )
Effect of entertainment expense (274,349 ) (192,796 )
Effect of staff welfare expense - (507,162 )
Effect of different tax rate (8,531 ) (1,335,323 )
Change in valuation allowance (1,750,605 ) 1,055,695
Income tax benefits (expenses) 137,354 (1,091,247 )

The components of deferred tax assets and deferred tax liabilities are as follows:

June 30,<br> 2024 December 31,<br> 2024
RMB RMB
Deferred tax assets
Net operating loss carrying forwards 10,523,266 9,458,883
Allowance against doubtful accounts 3,578,914 3,651,904
Operating lease liabilities 4,517,779 4,980,865
Total deferred tax assets 18,619,959 18,091,652
Net off against deferred tax liabilities (8,196,650 ) (8,738,103 )
Less: Valuation allowance (10,366,052 ) (9,310,357 )
Total Deferred tax assets, net 57,257 43,192
June 30,<br> 2024 December 31,<br> 2024
--- --- --- --- --- --- ---
RMB RMB
Deferred tax liabilities
Operating lease right of use assets 4,498,450 5,017,049
GAAP difference - unbilled revenue 6,382,018 7,482,054
Total deferred tax liabilities 10,880,468 12,499,103
Net off against deferred tax assets (8,196,650 ) (8,738,103 )
Deferred tax liabilities, net 2,683,818 3,761,000

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12 — INCOME TAX (CONT.)

PRC (Cont.)

The rollforward of valuation allowances of deferred tax assets were as follows:

June 30,<br> 2024 December 31,<br> 2024
RMB RMB
Balance at beginning of the period 7,046,758 10,366,052
Adjustment of opening balance due to adoption of ASU 2016-13 932,367 —
Additions of valuation allowance 2,778,382 791,267
Reversal of valuation allowance — (1,846,962 )
Expiration of NOLs (391,455 ) —
Balance at end of the period 10,366,052 9,310,357

The Company evaluates its valuation allowance requirements at end of each reporting period by reviewing all available evidence, both positive and negative, and considering whether, based on the weight of that evidence, a valuation allowance is needed. When circumstances cause a change in management’s judgement about the realizability of deferred tax assets, the impact of the change on the valuation allowance is generally reflected in income from operations. The future realization of the tax benefit of an existing deductible temporary difference ultimately depends on the existence of sufficient taxable income of the appropriate character within the carryforward period available under applicable tax law.

As of June 30, 2024 and December 31, 2024, the Company had net operating losses of RMB 40,527,246 and RMB 37,870,435, respectively, which will be available to offset future taxable income. If not used, these carryforwards will expire from 2025 through 2029.

For the six months ended December 31, 2023 and 2024, the Company reversed valuation allowance of RMB nil and RMB 1,846,962, respectively as the Company made taxable income in certain subsidiaries during the year and expected to further generate net income in the next few years.

As of June 30, 2024 and December 31, 2024, due to uncertainties surrounding future utilization on PRC subsidiaries, the Company had valuation allowance of RMB 10,366,052 and RMB 9,310,357, respectively, against the deferred tax assets based upon management’s assessment as to their realization.

Unrecognized tax benefits

The aggregate change in the balance of gross unrecognized tax benefits for the six months ended December 31, 2023 and 2024 was as follows:

For the Six Months Ended December 31,
2023 2024
RMB RMB
Balance at beginning of the period 1,026,964 1,026,964
Increases related to tax positions change — —
Balance at end of the period 1,026,964 1,026,964

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12 — INCOME TAX (CONT.)

Unrecognized tax benefits (cont.)

As of June 30, 2024 and December 31, 2024, there was RMB 1,026,964 and RMB 1,026,964 of unrecognized tax benefits, respectively, which would affect the annual effective tax rate if recognized. The unrecognized tax benefit was presented as a reduction of the Deferred tax assets — Net operating loss carrying forwards in the consolidated financial statements as of June 30, 2024. For the six months ended December 31, 2023 and 2024, the Company did not record unrecognized tax benefits as a reduction of the deferred tax assets.

The Company recognizes interest and penalty charges related to uncertain tax positions as necessary in the provision for income taxes. For the six months ended December 31, 2023 and 2024, no interest expense or penalty was accrued in relation to the unrecognized tax benefit. The Company has a liability for accrued interest of nil as of June 30, 2024 and December 31, 2024, respectively.

ASC 740 states that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. The Company records unrecognized tax benefits as liabilities or a reduction of deferred tax assets in accordance with ASC 740 and adjusts these amounts when our judgment changes as a result of the evaluation of new information not previously available. However, due to the uncertain and complex application of tax regulations, it is possible that the ultimate resolution of uncertain tax positions may result in liabilities which could be materially different from these estimates. In such an event, the Company will record additional tax expense or tax benefit in the period in which such resolution occurs.

According to 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 withholding agent. The statute of limitations will be extended five years under special circumstances, which are not clearly defined (but an underpayment of tax liability exceeding RMB0.1 million is specifically listed as a special circumstance). In the case of a related party transaction, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion.

13 — LOSS PER SHARE

The following table sets forth the computation of basic and diluted loss per share for the six months ended December 31, 2023 and 2024:

For the Six Months Ended December 31,
2023 2024 2024
RMB RMB
Net Loss (8,546,000 ) (644,605 ) )
Weighted average number of ordinary share outstanding
Basic and Diluted 30,000,000 31,587,188
Earnings (loss) per share
Basic and Diluted (0.28 ) (0.02 ) )

All values are in US Dollars.

Pursuant to ASC 260, Earnings Per Share, the Company has retroactively restated all shares and per share data for all periods presented. For the six months ended December 31, 2024, the 75,000 IPO warrants, 1,188 over-allotment warrants and 435,809 Purchase Warrants were excluded from calculation of dilutive earnings per share because the warrants were antidilutive.

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14 — COMMITMENTS AND CONTINGENCIES

From time to time, the Company are parties to various legal actions arising in the ordinary course of business. The Company accrues costs associated with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.

Legal proceedings

On June 28, 2024, Shanghai Chenxi Technology Group Co., Ltd. (“Shanghai Chenxi”) filed a lawsuit against Sunshine Insurance Brokers and Zhibao China at Shanghai Pudong New Area People’s Court, in connection with the breach of contract pursuant to Internet Insurance Marketing Promotion Cooperation Agreement. In this lawsuit, Shanghai Chenxi requested Sunshine Insurance Brokers and Zhibao China to be jointly liable in repaying promotion service fees of approximately RMB 14.2 million, together with a penalty of approximately RMB 10,883, litigation costs and litigation preservation fees pursuant to such Internet Insurance Marketing Promotion Cooperation Agreement. On December 5, 2024 and February 26, 2025, Shanghai Pudong New Area People's Court separately issued two civil mediation documents, confirming that Shanghai Chenxi reached mediation agreements with Sunshine Insurance Brokers and Zhibao China. In the mediation agreement, Sunshine Insurance Brokers agreed to pay Shanghai Chenxi a total promotion service fees of RMB 13,257,049, along with case acceptance fees and litigation preservation fees of RMB 26,577. Sunshine Insurance Brokers has made the first due payment of RMB 2,370,484 on December 11, 2024.

On June 28, 2024, Guangdong Zhongkang Yongdao Insurance Brokerage Co., Ltd. filed a lawsuit against Sunshine Insurance Brokers and Zhibao China at Shanghai Pudong New Area People’s Court, in connection with the breach of contract pursuant to Joint Brokerage Cooperation Agreement. In this lawsuit, Guangdong Zhongkang requested Sunshine Insurance Brokers & Zhibao China to bear joint liability in repaying joint brokerage commission fees of approximately RMB 1.4 million, together with a penalty of approximately RMB 9,690 and litigation costs, litigation preservation fees pursuant to such Joint Brokerage Cooperation Agreement. On September 5, 2024, Sunshine Insurance Brokers filed a counterclaim lawsuit at Shanghai Pudong New Area People's Court against Guangdong Zhongkang (Zhibao China as the third party) in connection with the aforementioned dispute. In this lawsuit, Sunshine Insurance Brokers requested Guangdong Zhongkang to return payments of RMB 4.5 million, together with a penalty of approximately RMB 65,126 and court acceptance fees. As of the date of this report, the case is still pending.

On June 3, 2024, Beijing Tiantan Puhua International Hospital (“Tiantan Puhua”) filed a lawsuit at Shanghai Pudong New Area People’s Court against Taiping Property Insurance Co., Ltd. Shanghai Branch (“Taiping Shanghai”), Shanghai Jibeiji Enterprise Management Consulting Co., Ltd. (“Jibeiji”) & Zhibao China (Peter William Anthony Hogg as the third party), in connection with exercise of subrogation rights regarding the third party’s outstanding medical expenses to Tiantan Puhua. In this lawsuit, Tiantan Puhua requested Taiping Shanghai to repay medical expenses of approximately RMB 1.4 million, together with relevant interests and all litigation costs. Tiantan Puhua requested Jibeiji & Zhibao China to bear joint liability in repaying the aforementioned medical expenses and relevant interests. As of the date of this report, the case is still pending.

Other than the above, the Company did not have other significant commitments, long-term obligations, significant contingencies or guarantees as of June 30, 2024 and December 31, 2024.

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15 — RELATED PARTY TRANSACTIONS

1) Nature of relationships with related parties
Name Relationship with the Company

| Botao Ma | Chairman of the Board, Chief Executive Officer |

| Yuanwen Xia | Chief Financial Officer |

| Shanghai Xinhui Investment Consulting Co., Ltd. (“Shanghai Xinhui”) | Controlled by Botao Ma |

| Shanghai GBG Enterprise Management Consulting Co., Ltd. (“Shanghai GBG”) | Mr. Botao Ma is legal representative of Shanghai GBG |

| Shanghai Shenbao | Controlled by Botao Ma |

Ningbo Shen’an Enterprise Management Center LLP (“Ningbo Shen’an) Controlled by Botao Ma
--- ---

During the six months ended December 31, 2023 and 2024, the transactions with related parties were as follows:

For the Six Months Ended December 31,
2023 2024
RMB RMB
Shanghai GBG 993,637 353,307

Borrowings from (Repayment of Borrowings to)related parties

For the Six Months Ended December 31,
2023 2024
Borrowings Repayments Borrowings Repayments
RMB RMB RMB RMB
Shanghai Xinhui 26,500,000 (15,000,000 ) 2,500,000 —
3) Balances with related parties
--- ---

As of June 30, 2024 and December 31, 2024, the balances with related parties were as follows:

June 30,<br> 2024 December 31,<br> 2024
RMB RMB
Due from a related party
Shanghai GBG 16,566,524 17,131,396
(a) As of June 30, 2024 and December 31, 2024, the balances due from Shanghai GBG represented advances to the related party, which the related party would settle the outstanding balances by providing MGU services to the Company.

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15 — RELATED PARTY TRANSACTIONS (CONT.)

3) Balances with related parties (cont.)
June 30,<br> 2024 December 31,<br> 2024
--- --- --- --- ---
RMB RMB
Due to related parties
Shanghai Xinhui^(a)^ 6,003,659 8,561,749
Botao Ma^(b)^ 162,408 —
6,166,067 8,561,749
(a) As of June 30, 2024, the balance due to Shanghai Xinhui represented the amount paid by the related party<br>on behalf of the Company to settle the subscription fees liabilities due to an investor.
--- ---

As of December 31, 2024, the balance due to Shanghai Xinhui represented (i) the amount of RMB 6,061,749 paid by the related party on behalf of the Company to settle the subscription fees liabilities due to an investor, and (ii) interest free borrowing of RMB 2,500,000 from the related party.

The balances due to Shanghai Xinhui were interest free and payable on demand.

(b) As of June 30, 2024, the balance due to Mr. Botao Ma represented the operating expenses paid by Mr. Botao<br>Ma on behalf of the Company. The expenses were interest free and payable on demand. For the six months ended December 31, 2024, the Company<br>fully repaid the balance.

16 — SUBSEQUENT EVENTS

The Company evaluated the subsequent events through May 2, 2025, and concluded that there are no other material reportable subsequent events except disclosed below that would have required adjustment or disclosure in the financial statements.

Issuance of convertible notes

On February 14, 2025, the Company and the Investor entered into a letter agreement (the “February 2025 Letter Agreement”), pursuant to which the Company and the Investor amended the original securities purchase agreement (as amended, the “A&R Securities Purchase Agreement”) to provide for up to three closings in the second tranche (each closing, the “Second Tranche Closing”; collectively, the “Second Tranche Closings”), including (i) the initial Second Tranche Closing for $700,000 in face value of Second Tranche Note (as defined below) and accompanying warrants to occur immediately upon execution of the February 2025 Letter Agreement (subject to satisfaction of other conditions set forth in the A&R Securities Purchase Agreement and the February 2025 Letter Agreement); (ii) the Second Tranche Closing to be for an additional $300,000 in face value of Second Tranche Note and accompanying warrants to occur upon the SEC declaring effective the Company’s resale registration statement covering the underlying shares with respect to the Second Tranche Closings (the “Second Tranche Resale Registration Statement”); and (iii) the third Second Tranche Closing to be for an additional $1,500,000 in face value of Second Tranche Note and accompanying warrants to occur on the trading day following the closing price of the Company’s Class A ordinary shares at the time of such subsequent Second Tranche Closing equaling or exceeding least $2.50 per share (subject to adjustment for any reverse stock split or similar corporate event), if such closing price threshold is met within 120 days following November 22, 2024, which is the effectiveness date of the initial First Tranche Resale Registration Statement (which 120-day period may be extended by an additional 60 days at the election of the Investor), provided, that each Second Tranche Closing shall be subject to satisfaction of the Equity Conditions (as defined in the Second Tranche Note) and the other conditions and requirements set forth in the Original Securities Purchase Agreement.

32

ZHIBAO

TECHNOLOGY INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

16 — SUBSEQUENT EVENTS (CONT.)

Issuance of convertible notes (cont.)

In addition, pursuant to the February 2025 Letter Agreement, the A&R Securities Purchase Agreement also provides that the Second Tranche Note and, if applicable, a third tranche note (the “Third Tranche Note”) shall have the following new or amended terms: (i) the number of deferrals or accelerations in the third paragraph of Section 1.3 of the original securities purchase agreement shall by increased from five to six, (ii) the holder of the Second Tranche Note and, if applicable, the Third Tranche Note may accelerate any Monthly Payment (as defined in the Second Tranche Note) on or following any day on which the trading value (determined by multiplying the VWAP by the trading volume on such day) of the Class A ordinary shares is at least $5 million, and any such accelerations will not count against the six total accelerations referred to in (i) above, and (iii) the Floor Price (as defined below) will be subject to reduction (but not increase) on the six-month anniversary of the applicable closing date, and on every succeeding six-month anniversary thereafter, to equal 20% of the average VWAP during the five trading days immediately preceding each such date.

On February 14, 2025, pursuant to the terms of the A&R Securities Purchase Agreement and the February 2025 Letter Agreement, the Company and the Investor consummated the First Closing of the Second Tranche, and the Company received $630,000 (net of original issue discount of 10%) in the First Closing of the Second Tranche, excluding expenses and commissions. In connection with the consummation of the First Closing of Second Tranche, the Company paid $44,100 (representing 7% of gross proceeds) to the Placement Agent and $6,300 expenses pursuant to an engagement letter.

In consideration for the Investor’s funding of the First Closing of Second Tranche, on February 14, 2025, the Company issued and sold to the Investor, in a private placement, (i) a convertible promissory note in the aggregate principal amount of up to $2,500,000 (the “Second Tranche Note”), having an initial principal amount of $700,000 reflecting the funding of the First Closing of the Second Tranche and giving effect to the 10% original issue discount, and (ii) a warrant to purchase up to 202,459 Class A ordinary shares at an initial exercise price of $1.69964 per share, subject to certain adjustments (the “First Closing of Second Tranche Warrant”).

The Second Tranche Note is initially convertible into Class A ordinary shares at conversion price of $1.69964 per share, subject to certain adjustments (the “Conversion Price”), provided that the Conversion Price shall not be reduced below $0.282 (the “Floor Price”). The Second Tranche Note does not bear any interest and matures on February 14, 2026.

Termination of a share purchase agreement

On December 16, 2024, the Company entered into certain share purchase agreement (the “GEM Share Purchase Agreement”) and certain registration rights agreement (the “GEM Registration Rights Agreement”, together with the GEM Share Purchase Agreement, the “GEM Agreements”) with GEM Global Yield LLC SCS (“GEM”) and GEM Yield Bahamas Limited (“GYBL”), in connection with setting up certain share subscription facility. Pursuant to the Share Purchase Agreement, GEM agreed to purchase up to $50,000,000 of the Company’s Class A ordinary shares during a three-year period. On December 16, 2024, the Company issued to GYBL a warrant to purchase 467,800 Class A ordinary shares at an exercise price of $3.95 per share (the “GEM Warrant”, collectively with the GEM Agreements, the “GEM Transaction Documents”).

On March 11, 2025, the Company terminated the GEM Transaction Documents, including the GEM Warrant. No Class A ordinary shares have been issued under the GEM Transaction Documents as of the date of this Report.

Settlement of convertible notes with ClassA ordinary shares

From January 17, 2025 to April 24, 2025, the Company has subsequently fully settled the note issued in the Second Closing of First Tranche with principal amount of $350,000 and partially settled the note issued in the Third closing of Frist Tranche with principal amount of an aggregate of $650,000 by issuance of 605,392 Class A ordinary shares to the Investor.

33

Exhibit 99.2

ITEM 2. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Overview

Zhibao Technology Inc. (the “Company”, “we”, “us” and “our”) is a holding company incorporated as an exempted company on January 11, 2023 under the laws of the Cayman Islands. It operates substantially all of its business through its PRC Subsidiaries, or Zhibao China Group, in particular Zhibao China and Sunshine Insurance Brokers.

We are a leading and high growth InsurTech company primarily engaging in providing digital insurance brokerage services through Zhibao China Group in China. 2B2C digital embedded insurance is our innovative business model, which Zhibao China Group pioneered in China. Zhibao China Group launched the first digital insurance brokerage platform in China in 2020, which is powered by their proprietary PaaS.

2B2C digital embedded insurance refers to our one-stop customized insurance brokerage model conducted through Zhibao China Group, under which we provide proprietary and customized insurance solutions to be digitally embedded in the existing customer engagement matrix of our B channels to reach and serve such B channels’ existing pool of end customers. Each B channel encompasses a specific scenario where its end customers also have potential, untapped insurance needs. For example, a Chinese travel agency (our B channel) has an average of 100,000 Chinese tourists traveling to the U.S. for tourism every year. We believe this presents an untapped scenario-specific opportunity for international travel accident insurance needs for a pool of 100,000 Chinese tourists as end customers. These end customers might otherwise have to search for and purchase insurance separately or might not purchase insurance at all. After Zhibao China Group reaching an agreement with such travel agency to become one of our B channels, they build and embed a travel insurance solution across this travel agency’s matrix of digital channels, including its website, App, Douyin (the Chinese equivalent of TikTok), WeChat Mini Program, and other social media accounts. Consequently, we, through Zhibao China Group, may pinpoint the 100,000-strong customer base and provide insurance brokerage services which are specifically and accurately tailored to the insurance needs of these end customers.

Our service portfolio through Zhibao China Group includes (1) insurance brokerage services, and (2) MGU services, a specialized insurance brokerage service whereby the insurance companies authorize us to assist them in underwriting, claims and risk control services. It broadly covers insurance product design and customization, selection of insurance companies, technology system interconnection and delivery, customer AARRR operation, customer service, compliance management, and data analysis, all of which are integrated in each of our insurance solutions. Each insurance solution generally applies to one specific scenario in a particular sector, with customized product design and services relevant for that scenario and sector. As of the date of this report on Form 6-K (the “Report”) , we, through Zhibao China Group, have developed more than 40 proprietary and innovative digital insurance solutions addressing different scenarios in a wide range of industries, including but not limited to travel, sports, logistics, utilities (i.e., gas and electricity), and e-commerce. Zhibao China Group acquire and analyze customer data, utilize big data and AI technology to continually iterate and enhance our digital insurance solutions. This iterative process, in addition to continually improving our digital insurance solutions, will keep us abreast of the new trends and customer preferences in the market.

Zhibao China Group secure and serve our end customers through our B channels. Our B channels cover a wide range of industries and organizations, including but not limited to internet platforms, large and medium-sized enterprises, and government agencies. While B channels have end customers with potential insurance needs relevant and specific to their primary operations, they usually do not have the experience and expertise to effectively provide insurance related services. In order to address this pain-point, we provide them with our customized digital insurance solutions specifically tailored to their business. Our 2B2C model thrives because our relationship with B channels is mutually beneficial and sustainable for all participants. Our B channels view us as a valuable partner as we empower them to provide insurance as a value-added service to their end customers, a potential competitive advantage for them. By embedding our digital insurance solutions into our B channels’ online matrix to reach their customer base, we maintain a captive, stable and sustainable source of end customers at low cost. The end customers, as a result, can conveniently and efficiently access quality brokerage services and suitable insurance products tailored to their actual needs. As of the date of this Report, we, through Zhibao China Group, have cooperated with more than 2,000 B channels, and secured more than 20 million end customer through them. We will expand the number of B channels as a key growth strategy of our business.

Under our business model, Zhibao China Group represents end customers as their authorized insurance broker to negotiate with insurance companies and select the most suitable insurance products for our end customers. As of the date of this Report, we have partnered with over 100  insurance companies (including their subsidiaries and branches) through Zhibao China Group.

While embedded insurance brokerage is still at an early stage of development in China, we believe it is the future of insurance brokerage industry.

Our revenue increased by RMB 62.1 million (US$8.5 million), or 74% from approximately RMB 84.3 million for the six months ended December 31, 2023 to RMB 146.4 million (US$20.1 million) for the six months ended December 31, 2024. For the six months ended December 31, 2023 and 2024, we incurred net loss of approximately RMB 8.5 million and RMB 0.6 million (US$0.1 million).

Private Placement - First Tranche Financing with an InstitutionalInvestor

On September 23, 2024, the Company entered into a securities purchase agreement, as amended by a letter agreement dated as of February 14, 2025, (the “Securities Purchase Agreement”) with an institutional investor (the “Investor”), which provides for loans in an aggregate principal amount of up to $8.0 million under three tranches (the “Financing”).

Accordingly, on September 23, 2024, the Company consummated the first closing of the first tranche and issued to the Investor, (i) a convertible promissory note in the aggregate principal amount of up to $750,000 (the “First Tranche Note”), (ii) a warrant to purchase up to 74,451 Class A ordinary shares at an initial exercise price of $4.71 per share, subject to certain adjustments, and (iii) a pre-funded warrant to purchase up to 191,522 Class A ordinary shares at a nominal exercise price of $0.0001 per share, subject to certain adjustments. In return, the Company received $675,000 (net of original issue discount of 10%) on September 24, 2024, excluding expenses and commissions.

On October 1, 2024, the Company and the Investor consummated the second closing of the first tranche. The Company received additional $675,000 (net of original issue discount of 10%) on October 7, 2024, excluding expenses and commissions, and issued to the Investor a warrant to purchase up to 79,599 Class A ordinary shares at an initial exercise price of $4.47 per share, subject to certain adjustments.

On December 11, 2024, pursuant to the terms of the Securities Purchase Agreement and a letter agreement dated as of December 11, 2024, the Company and Investor waived certain pre-conditions to the third closing of the first tranche, the Company and the Investor consummated the third closing of the first tranche, and the Company received additional $900,000 (net of original issue discount of 10%) on December 12, 2024, excluding expenses and commissions, and issued to the Investor a warrant to purchase up to 160,020 Class A ordinary at an initial exercise price of $3.25 per share, subject to certain adjustments.

Private Placement - Second Tranche Financingwith the Investor

On February 14, 2025, the Company and the Investor entered into a letter agreement (the “February 2025 Letter Agreement”), pursuant to which the Company and the Investor amended the Securities Purchase Agreement (as amended, the “A&R Securities Purchase Agreement”) to provide for up to three closings in the second tranche (each closing, the “Second Tranche Closing”; collectively, the “Second Tranche Closings”), including (i) the initial Second Tranche Closing for $700,000 in face value of Second Tranche Note (as defined below) and accompanying warrants to occur immediately upon execution of the February 2025 Letter Agreement (subject to satisfaction of other conditions set forth in the A&R Securities Purchase Agreement and the February 2025 Letter Agreement); (ii) the second Second Tranche Closing to be for an additional $300,000 in face value of Second Tranche Note and accompanying warrants to occur upon the SEC declaring effective the Company’s resale registration statement covering the underlying shares with respect to the Second Tranche Closings (the “Second Tranche Resale Registration Statement”); and (iii) the third Second Tranche Closing to be for an additional $1,500,000 in face value of Second Tranche Note and accompanying warrants to occur on the trading day following the closing price of the Company’s Class A ordinary shares at the time of such subsequent Second Tranche Closing equaling or exceeding least $2.50 per share (subject to adjustment for any reverse stock split or similar corporate event), if such closing price threshold is met within 120 days following November 22, 2024, which is the effectiveness date of the initial First Tranche Resale Registration Statement (which 120-day period may be extended by an additional 60 days at the election of the Investor), provided, that each Second Tranche Closing shall be subject to satisfaction of the Equity Conditions (as defined in the Second Tranche Note) and the other conditions and requirements set forth in the A&R Securities Purchase Agreement.

2

On February 14, 2025, pursuant to the terms of the Securities Purchase Agreement, the Company and the Investor consummated the first closing of the second tranche, and the Company received $630,000 (net of original issue discount of 10%) on February 20, 2025, excluding expenses and commissions. The Second Tranche of convertible promissory note (the “Second Tranche Note”) in the aggregate principal amount of up to $2,500,000 has an initial principal amount of $700,000 reflecting the funding of the first closing of the second tranche and giving effect to the 10% original issue discount. The Company also issued to the Investor a warrant to purchase up to 202,459 Class A ordinary shares at an initial exercise price of $1.69964 per share, subject to certain adjustments.

The Second Tranche Note is initially convertible into Class A ordinary shares at conversion price of $1.69964 per share, subject to certain adjustments, provided that the conversion price shall not be reduced below $0.282. The Second Tranche Note does not bear any interest and matures on February 14, 2026.

Initial Public Offering (“IPO”)

On April 3, 2024, the Company closed its IPO of 1,500,000 Class A ordinary shares at a public offering price of $4.00 per Class A ordinary share for aggregate gross proceeds of $6,000,000, before deducting underwriting discounts and offering expenses. The Class A ordinary shares began trading on the Nasdaq Capital Market on April 2, 2024 under the symbol “ZBAO”.

On May 14, 2024, the Company issued an additional 23,765 Class A ordinary shares of the Company pursuant to the partial exercise of the underwriters’ over-allotment option in connection with the Company’s initial public offering at $4.00 per share, resulting in additional gross proceeds of $95,060.

Key Factors that Affect Operating Results

Our business, financial condition and results of operations have been, and are expected to continue to be, affected by a number of factors, which primarily include the following:

Our ability to accelerate the expansionof 2B2C business and drive additional conversion for end customers

Our future growth depends on our ability to sustain the expansion of our 2B2C business and drive additional conversion for end customers. With our strong position as a first mover in the 2B2C embedded insurance market, we aim to further broaden our B channels base through expansion of our sales teams and independent sales partners with resources to B channels. We also plan to strengthen our 2C business by targeting our existing customer base to meet the additional needs of each end customer. To achieve the goal, we will offer personalized insurance consultations to end customers through multiple channels, such as WeChat Mini Program, phone, or face-to-face meetings. Our aim is to steer their attention towards comprehensive family security plans, leading to long-term insurance commitments with us. Besides, we will also provide targeted consulting services to guide end customers towards suitable insurance options and facilitate short-term policy conversions.

Our ability to utilize innovative insurancetechnology and infrastructure

We regard insurance technology and infrastructure as critical to our ability to optimize our insurance solutions provided to our business channels and end customers. We have invested substantial resources in developing the sophisticated and innovative technology systems that we use for optimizing our insurance solutions. We will continually upgrade and enhance our insurance technologies to upgrade and enrich our digital insurance solutions to keep us abreast of the new trends and customer preferences in the market. Our aim is to develop solutions across every sector of the economy, and ultimately cover every aspect of the end customers’ daily life.

3

Our ability to attract, incentivize andretain talented professionals

We believe our success greatly depends on our ability to attract, incentivize and retain talented professionals. To maintain and improve our competitive advantage in the market, we intend to implement several initiatives to retain and attract more mid- to high-level personnel. These include formulating a market-oriented compensation structure for our employees and implementing a standardized multi-level performance review mechanism. We also plan to invest more time and resources in training to increase the value of our employees. We need more talented professionals for the expansion of our business.

Key Components of Results of Operations

Revenues

Our revenues consist of (i) Service fee for digital insurance brokerage service, and (ii) Service fee for MGU(Managing General Underwriter) service. For the six months ended December 31, 2023 and 2024, our revenues were approximately RMB 84.3 million (US$11.5 million) and RMB 146.4 million (US$20.1 million), respectively. The following table sets forth a breakdown of our revenue by service type for the fiscal years indicated.

For the Six Months Ended December 31,
2023 2024
RMB % RMB %
Insurance brokerage service 75,354,494 89 144,964,797 99
MGU service 9,217,678 11 1,766,514 1
Less: business taxes and surcharges (317,951 ) — (360,026 ) ) —
84,254,221 100 146,371,285 100

All values are in US Dollars.

Insurance Brokerage service

Insurance Brokerage service is our PRC Subsidiaries’ primary business line. We provide embedded digital insurance brokerage services through our PRC Subsidiaries to end customers through B channels supported by the digital insurance brokerage platform — a proprietary platform of our PRC Subsidiaries providing insurance solutions embedded in the customer engagement matrix of our B channels, including their websites, App, Wechat Mini Programs, Douyin (the Chinese equivalent of TikTok) and other social media accounts. An insurance solution refers to an insurance brokerage service specially designed for a B channel and its end customers, which integrates online operations, systems, insurance products and customer services.

The commission fees are calculated on a predetermined percentage of insurance premium of each insurance policy. Commission fees are recognized when our PRC Subsidiaries complete the insurance brokerage services, at which point our PRC Subsidiaries successfully place an insurance policy for the end customers.

For the six months ended December 31, 2023 and 2024, the revenues generated from the general digital insurance brokerage services were approximately RMB 75.4 million (US$10.3 million) and RMB 145.0 (US$ 19.9 million), respectively, accounting for approximately 89% and 99%, respectively, of our total revenues. The increase in the insurance brokerage commissions as a percentage of total revenues for such periods was mainly due to the increase in volume of transactions on our platform, primarily contributed by larger customer base and more selection of production.

4

MGU Service

Our PRC Subsidiaries provide MGU services to our end customers on behalf of the insurance companies and our PRC Subsidiaries are authorized to assist the insurance companies in product design, underwriting, reinsurance, claims and risk control services within specific product or market segments. Our PRC Subsidiaries’ MGU service is powered by its MGU system, which is customized and developed specifically for their MGU business and constitutes part of their digital insurance brokerage platform. For the MGU business, our PRC Subsidiaries act as a third-party administrator for the insurance companies, and an insurance license is not required for this business model.

Our PRC Subsidiaries receive MGU Service Fees from insurance companies. MGU Service Fees are calculated on a predetermined percentage of insurance premium of each insurance policy. MGU Service Fees are generally comprised of i) underwriting services, the revenue of which are recognized at a point when the PRC Subsidiaries complete the underwriting services, and ii) claims and risk control services, the revenue of which are recognized ratably over the terms of insurance policies.

For the six months ended December 31, 2023 and 2024, the revenues generated from the MGU services were approximately RMB 9.2 (US$1.3 million) and RMB 1.8 million (US$0.2 million), respectively, accounting for approximately 11% and 1%, respectively, of our total revenues. The decrease in the MGU Service Fees as a percentage of total revenues for such periods was mainly due to closure of business by a reinsurance partner in the high-end medical sector. The PRC Subsidiaries’ MGU services focus on health insurance products for high-value individuals, which was a relatively small market and therefore the growth in MGU service was slower than that of insurance brokerage services.

Cost of revenues

Our cost of revenue primarily consists of intermediary fees paid to our B channels for allowing our insurance solutions to be embedded in the platforms of our B channels and other services to facilitate the insurance brokerage and MGU services.

Selling expenses

Selling expenses primarily consist of (i) staff costs, consisting of salaries, social insurance, and housing funds for our personnel in our sales departments; (ii) service fees; (iii) entertainment expenses and (iv) other miscellaneous expenses.

5

General and administrative expenses

General and administrative expenses primarily consist of (i) staff costs, consisting of salaries, social insurance, housing funds and share-based compensation for our personnel in our finance and human resource departments; (ii) professional service fees, such as legal fees for our daily operations; (iii) rental and property management expenses for our offices in headquarter and branches, (iv) provision against doubtful accounts and (iv) other miscellaneous expenses.

Research and development expenses

Research and development expenses primarily consist of (i) staff costs, consisting of salaries, social insurance, and housing funds for our personnel in our research and development departments; (ii) our sourcing labor cost which were incurred to improve our digital insurance brokerage platform primarily embedded in the platforms of our B channels; and (iii) other miscellaneous expenses.

Taxation

Cayman Islands

Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gains. Additionally, upon payments of dividends by the Company in the Cayman Islands to its shareholders, no withholding tax will be imposed.

British Virgin Islands (“BVI”)

Under the current and applicable laws of BVI, the subsidiary in BVI is not subject to tax on income or capital gains.

Hong Kong

Under the Hong Kong tax laws, subsidiary in Hong Kong is subject to Hong Kong Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Hong Kong tax laws. The applicable tax rate for the first HKD$2 million of assessable profits is 8.25% and assessable profits above HKD$2 million will continue to be subject to the rate of 16.5% for corporations in Hong Kong, effective from the year of assessment 2018/2019.

China

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

6

Results of Operations

The following table sets forth a summary of our results of operations for the years/periods indicated, both in dollar amounts and as percentages of total revenue. This information should be read together with our unaudited condensed consolidated financial statements and related notes included elsewhere in the Report. 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 84,254,221 100 146,371,285 100
Cost of revenues (54,192,050 ) (64 ) (103,811,688 ) ) (71 )
30,062,171 36 42,559,597 29
Operating expenses
Selling and marketing expenses (20,993,374 ) (25 ) (18,564,666 ) ) (13 )
General and administrative expenses (10,153,441 ) (12 ) (14,282,228 ) ) (10 )
Research and development expenses (7,294,313 ) (9 ) (5,908,365 ) ) (3 )
Total operating expenses (38,441,128 ) (46 ) (38,755,259 ) ) (26 )
(Loss) income from operations (8,378,957 ) (10 ) 3,804,338 3
Other (expense) income
Interest expense, net (431,796 ) (1 ) (1,605,974 ) ) (1 )
Other income, net 127,399 0 533,414 0
Gain on fair value change of warrant liabilities — — 1,430,663 1
Gain on fair value change of derivative liabilities — — 722,631 1
Loss on settlement of convertible notes — — (4,438,430 ) ) (2 )
Total other expense, net (304,397 ) (1 ) (3,357,696 ) ) (2 )
(Loss) Income Before Income Taxes (8,683,354 ) (11 ) 446,642 1
Income tax benefits 137,354 0 (1,091,247 ) ) (1 )
Net Loss (8,546,000 ) (11 ) (644,605 ) ) 0

All values are in US Dollars.

Revenues

Total revenues in the six months ended December 31, 2024 were approximately RMB 146.4 million ($20.1 million), compared with approximately RMB84.3 million in the same period of 2023, an increase of approximately RMB 62.1 million, or 73.7%, primarily due to increase of approximately RMB 73.6 million in insurance brokerage service fees, partially offset by a decrease of approximately RMB 7.5 million in managing general underwriting (“MGU”) services. The increase in insurance brokerage service fees was due to securing new customers in the six months ended December 31, 2024, while the decrease in MGU service fees was due to the closure of business by a reinsurance partner in the high-end medical sector in the year of 2023.

Revenues for the six months ended December 31, 2024 were comprised of insurance brokerage service fees of RMB 145.0 million and MGU service fees of RMB 1.8 million, respectively, partially net off against business taxes and surcharges of approximately RMB 0.4 million. Revenues for the six months ended December 31, 2023 were comprised of insurance brokerage service fees of approximately RMB 71.4 million and MGU service fees of approximately RMB 9.2 million, respectively, partially net off against business taxes and surcharges of approximately RMB 0.3 million.

7

Cost of Revenues

Cost of revenues for the six months ended December 31, 2024 increased to approximately RMB 103.8 million ($14.2 million) from approximately RMB 54.2 million in the same period of 2023, an increase of approximately RMB 49.6 million which was in line with increase in revenues.

Operating Expenses

- Selling and marketing expenses for the six months ended<br>December 31, 2024 decreased to approximately RMB 18.6 million ($2.5 million) from approximately RMB 21.0 million in the<br>same period of 2023. The decrease was primarily attributable to decreased expenditures incurred in advertising and promotional campaigns<br>for our digital insurance solutions as we are establishing our reputation among customers and reducing our spending on advertising<br>and promotional campaigns.
- General and administrative expenses for the six months ended<br>December 31, 2024 increased to approximately RMB 14.3 million ($2.0 million) from approximately RMB 10.2 million in the same period of<br>2023, an increase of approximately RMB 4.1 million. The increase of general and administrative expenses was primarily due to an increase<br>in professional service expenses after our listing on Nasdaq. The ratio of general and administrative expenses to revenue decreased to<br>9.8% from 12.1% in the same period of 2023.
--- ---
- Research and development expenses for the six months<br>ended December 31, 2024 decreased to approximately RMB 5.9 million ($0.8 million) from approximately RMB 7.3 million in the same<br>period of 2023, a decrease of approximately RMB 1.4 million, which was mainly due to a decrease in headcounts of personnel<br>in our research and development department.
--- ---

Income (Loss) from Operations

As a result of foregoing, income from operations for the six months ended December 31, 2024 was approximately RMB 3.8 million ($0.5 million) compared to loss from operations of approximately RMB 8.4 million in the same period of 2023.

Gain on fair value change of warrant liabilities

In connection with the First Tranche Note issued in the six months ended December 31, 2024, the Company issued warrants at to the Investor. The warrants were accounted for liabilities with changes in fair value charged to the unaudited condensed consolidated statements of operations and comprehensive loss. For the six months ended December 31, 2024, the gain on fair value change of warrant liabilities represented the decrease of fair value of warrant liabilities between the warrant issuance date and December 31, 2024.

Gain on fair value change of derivativeliabilities

The conversion feature of the convertible notes was bifurcated from the debt host and was classified as derivative liabilities with changes in fair value charged to the unaudited condensed consolidated statements of operations and comprehensive loss. For the six months ended December 31, 2024, the Company recognized gain on fair value change of derivative liabilities of RMB 722,631 ($99,000).

8

Loss on settlement of convertible notes

For the six months ended December 31, 2024, the Company has fully settled the First Closing of First Tranche with principal amount of $750,000 and partially settled the Second closing of Frist Tranche with principal amount of $400,000 by issuance of 524,314 shares of Class A ordinary shares to the Investor.

On settlement of conversion notes, the Company adopted extinguishment accounting to derecognize the convertible notes because the conversion option is separately accounted for. The Company charged the difference between the carrying amount of the convertible notes in addition to the fair value of related derivative liabilities and the fair value of Class A ordinary shares on payment dates into the account of “loss on settlement of convertible notes” on the unaudited condensed consolidated statements of operations and comprehensive loss. For the six months ended December 31, 2024, the Company recognized loss on settlement of convertible notes of RMB 4,438,430 ($608,062).

Net Loss and Loss per Share

Net loss for the six months ended December 31, 2024 was approximately RMB 0.6 million ($0.09 million), compared to net loss of RMB 8.5 million in the same period of 2023. Non-GAAP adjusted net income for the six months ended December 31, 2024 was approximately RMB 5.7 million ($0.8 million).

Basic and diluted net loss per share for the six months ended December 31, 2024 were RMB 0.02 ($0.00) and RMB 0.02 ($0.00), respectively.

Liquidity and Capital Resources

To date, we have financed our operating and investing activities primarily through cash generated from operating activities, initial public offering and debt and equity financing from institutional investors. As of December 31, 2024, we reported working capital of approximately RMB 62.5 million (US$8.6 million) and accumulated deficits of approximately RMB 132.5 million (US$18.2 million), respectively. For the six months ended December 31, 2024, we had operating cash inflows of approximately RMB 74.2 million (US$10.2 million).

For the six months ended December 31, 2024, we received net proceeds of $2,250,000 in exchange for issuance of convertible notes with principal value of $2,5000,000 and warrants to purchase up to 314,070 shares of Class A ordinary shares. For the period from January 1, 2025 through the date of this Report, we have received $630,000 in exchange for issuance of convertible notes with principal value of $700,000 and warrants to purchase up to 202,459 shares of Class A ordinary shares.

9

Cash flows

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

For the Six Months Ended December 31,
2023 2024 2024
RMB RMB
Net cash provided by operating activities 85,607,856 74,197,711
Net cash used in investing activities (264,606 ) (4,375,000 ) )
Net cash provided by financing activities 9,275,004 23,026,767
Effect of exchange rate changes on cash and cash equivalents (1,513 ) (80,500 ) )
Net increase in cash, cash equivalents and restricted cash 94,616,741 92,768,978
Cash, cash equivalents and restricted cash at beginning of the period 19,873,652 46,145,326
Cash, cash equivalents and restricted cash at end of the period 114,490,393 138,914,304

All values are in US Dollars.

Operating activities

Net cash provided by operating activities for the six months ended December 31, 2023 was approximately RMB85.6 million (US$12.1 million), primarily attributable to net loss of approximately RMB 8.5 million (US$1.2 million), adjusted for non-cash for provision of expected credit loss of approximately RMB 1.3 million (US$0.2 million), and changes in operating assets and liabilities, primarily consisting of (i) an increase of approximately RMB 15.8 million (US$2.2 million) in accounts receivable as a result of increase in revenues, (ii) an increase of approximately RMB 3.2 million (US$0.5 million) in prepaid expenses and other current assets which was primarily attributable to an increase of RMB 1.9 million in advance to staff for various operating expenses and an increase of RMB 1.8 million in government grant receivable, (iii) an increase of approximately RMB 13.2 million (US$1.9 million) in accounts payable as a result of increase in revenues, which is the base we calculate the service change for our business channels, (iv) an increase of approximately RMB 103.8 million (US$14.6 million) due to insurance carriers which would be settled by restricted cash, and (v) a decrease of approximately RMB 4.9 million (US$0.7 million) in accrued expenses and other liabilities.

Net cash provided by operating activities for the six months ended December 31, 2024 was approximately RMB 74.2 million (US$10.2 million), primarily attributable to net loss of approximately RMB 0.6 million (US$0.1 million), adjusted for loss of approximately RMB 4.4 million (US$0.6 million) on settlement of convertible notes and changes in operating assets and liabilities, primarily consisting of (i) an increase of approximately RMB 5.3 million (US$0.7 million) in accounts receivable as a result of increase in revenues from insurance brokerage services for the six months ended December 31, 2024, (ii) an increase of approximately RMB 4.4 million (US$0.6 million) in accounts payable which was caused by an increase in sales commission fees incurred for the expansion of our insurance brokerage services, and (iii) an increase of approximately RMB 73.1 million (US$10.0 million) due to insurance carriers which would be settled by restricted cash.

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Investing activities

For the six months ended December 31, 2023, we reported cash used in investing activities of approximately RMB 0.3 million (US$37,269), which was used in purchase of intangible assets of approximately RMB 0.3 million.

For the six months ended December 31, 2024, we reported cash used in investing activities of approximately RMB 4.4 million (US$0.6 million), which was used as prepayment for three equity investees.

Financing activities

For the six months ended December 31, 2023, we provided cash of approximately RMB 9.3 million (US$1.3 million) in financing activities, which was primarily provided by proceeds of approximately 25.0 million (US$3.5 million) from short-term bank borrowings and borrowings of approximately RMB 26.5 million (US$3.7 million) from a related party, partially offset by repayment of bank borrowings of approximately RMB 25.5 million (US$3.6 million), repayment of related party borrowings of approximately RMB 15.0 million (US$2.1 million), and payment of offering costs of approximately RMB 1.8 million (US$0.2 million).

For the six months ended December 31, 2024, we provided cash of approximately RMB 23.0 million (US$3.2 million) in financing activities, which was primarily provided by proceeds of approximately 16.0 million (US$2.3 million) from issuance of convertible notes, proceeds of approximately $32.0 million (US$4.4 million) from short-term bank borrowings and borrowings of approximately RMB 2.5 million (US$0.3 million) from a related party, partially offset by repayment of bank borrowings of approximately RMB 25.0 million (US$3.4 million), and payment of discount and issuance costs of approximately RMB 2.5 million (US$0.4 million) in connection with issuance of convertible notes.

Trend Information

Other than as disclosed in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the current fiscal year that are reasonably likely to have a material effect on our 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.

Research and Development

Research and development expenses consist primarily of staff cost and outsourced labor cost for the research and development of our platform, including technology innovations, development and updates, and system function and feature updates and upgrades. Our R&D efforts also involve research and development on our insurance solutions’ development, replacement, updates, upgrades, and innovations.

During the six months ended December 31, 2023 and 2024, we incurred research and development expenses of approximately RMB 7.3 million and RMB 5.9 million (US$0.8 million), respectively.

We will continue to work on the development of our platform. We may need to devote more resources and funds to improve/add functions as our business develops. We plan to fund the further development of our platform through equity and/or debt financing, if cash generated from our operations is insufficient.

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Quantitative and Qualitative Disclosures AboutMarket Risk

Foreign Exchange Risk

Foreign currency risk is the risk of loss resulting from changes in foreign currency exchange rates. Fluctuations in exchange rates between the RMB and other currencies in which we conduct business may affect our financial position and results of operations.

Our subsidiaries are operating in mainland China and Hong Kong with substantially all of their transactions settled in RMB. As a result of, we are mainly exposed to foreign exchange risk arising from our cash and cash equivalents denominated in RMB.

However, we consider that our 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

Our exposure to interest rate risk primarily relates to the interest income generated by excess cash, which is mostly held in interest-bearing bank deposits and financial products purchased from financial institutions. Interest-earning instruments carry a degree of interest rate risk. We have not been exposed to material risks due to changes in interest rates, and we have not used any derivative financial instruments to manage our interest risk exposure.

Holding Company Structure

All of our revenues have been, and we expect they are likely to continue to be, in the form of Renminbi. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior SAFE approval as long as certain routine procedural requirements are fulfilled. Therefore, our PRC Subsidiaries are allowed to pay dividends in foreign currencies to us without prior SAFE approval by following certain routine procedural requirements and clearance of taxes. However, current PRC regulations permit our PRC subsidiaries to pay dividends to us only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. Our PRC Subsidiaries are required to set aside at least 10% of their after-tax profits after making up previous years’ accumulated losses each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of its registered capital. These reserves are not distributable as cash dividends. Historically, our PRC Subsidiaries have not paid dividends to us, and they will not be able to pay dividends until they generate accumulated profits. Furthermore, capital account transactions, which include foreign direct investment in and loans to our PRC Subsidiaries, must be approved by and/or registered with SAFE, its local branches and certain local banks, as the case may be.

As a Cayman Islands exempted company and offshore holding company, we are permitted under PRC laws and regulations to provide funding to our PRC Subsidiaries only through loans or capital contributions, subject to the approval, filings or registration of government authorities and limits on the amount of capital contributions and loans. This may delay us from using the proceeds from any offerings to make loans or capital contributions to our PRC Subsidiaries. We expect to invest substantially all of the proceeds from any offerings in our PRC operations within the business scopes of our PRC Subsidiaries.

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Critical Accounting Estimates

We prepare our unaudited condensed consolidated financial statements in accordance with U.S. GAAP, which requires our 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, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.

Our expectations regarding the future are based on available information and assumptions that we believe to be reasonable, which together form our 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, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application.

We consider an accounting estimate to be critical if: (i) the accounting estimate requires us 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 we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. When reading our unaudited condensed consolidated financial statements, you should consider our 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.

When reading our unaudited condensed consolidated financial statements, you should consider our 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. Our 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 our unaudited condensed consolidated financial statements for the disclosure of these accounting policies. We believe the following accounting estimates involve the most significant judgments used in the preparation of our financial statements.

While management believes its judgments, estimates and assumptions are reasonable, they are based on information presently available and actual results may differ significantly from those estimates under different assumptions and conditions. We believe that the following critical accounting estimates involve the most significant judgments used in the preparation of our financial statements.

(a) Allowance for credit losses

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

On July 1, 2023, we adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), using the modified retrospective transition method. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. Upon adoption, we changed the impairment model to utilize a forward-looking current expected credit losses (CECL) model in place of the incurred loss methodology for financial instruments measured at amortized cost and receivables resulting from the application of ASC 606, including contract assets. The adoption of the guidance resulted in an increase of RMB 8,821,129 in the allowance for credit losses for accounts receivable on July 1, 2023.

For the six months ended December 31, 2023 and 2024, the Company provided expected credit losses of RMB 1,315,635 and RMB 291,960 against accounts receivable.

(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 for 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, 2024. Thus, management recorded valuation allowance amounted to RMB 10.4 million and RMB 9.3 million (US$1.3 million) as of June 30, 2024 and December 31, 2024, respectively. The projections of future income qualified tax-planning strategies may be changed due to the macroeconomic conditions and the business development. The deferred tax assets could be utilized in the future years if the Company make profits in the future, the valuation allowance shall be reversed.

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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 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 ($13,700). 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.

As of June 30, 2024 and December 31, 2024, there were RMB1.0 million and RMB1.0 million of unrecognized tax benefits, respectively, that would affect the annual effective tax rate if recognized. The unrecognized tax benefit was presented as a reduction of the Deferred tax assets — Net operating loss carrying forwards in the unaudited condensed consolidated financial statements as of June 30, 2024 and December 31, 2024. The Company recognizes interest and penalty charges related to uncertain tax positions as necessary in the provision for income taxes. For the six months ended December 31, 2024, no interest expense or penalty was accrued in relation to the unrecognized tax benefit. The Company has a liability for accrued interest of nil as of June 30, 2024 and December 31, 2024, respectively.

Recently Issued Accounting Pronouncements

A list of recently issued accounting pronouncements that are relevant to us is included in note 2 to our unaudited condensed consolidated financial statements included elsewhere in this Report.

Use of Non-GAAP Financial Measure

In addition to consolidated U.S. GAAP financial measures, we consistently evaluate our use of and calculation of the non-GAAP financial measures, “Adjusted EBITDA”.

Adjusted EBITDA is a financial measure defined as our EBITDA, adjusted to eliminate the effects of certain non-recurring items, that do not reflect our ongoing strategic business operations. EBITDA is computed as net income (loss) before interest, taxes, depreciation, and amortization. Adjusted EBITDA is EBITDA further adjusted for certain income and expenses, which management believes results in a performance measurement that represents a key indicator of the Company’s core business operations of digital insurance brokerage services. The adjustments currently include gain from early termination of leases, loss from settlement of convertible notes, and changes in fair value of derivative liabilities and warrant liabilities.

Reconciliations of Adjusted EBITDA to the most comparable U.S. GAAP financial metric for historical periods are presented in the table below:

For the Six Months Ended December 31,
2023 2024 2024
RMB RMB
Reconciliation of non-GAAP (loss) income from operations:
Net Loss (8,546,000 ) (644,605 ) )
Depreciation and amortization expenses 587,085 711,355
Income tax (benefits) expenses (137,354 ) 1,091,247
Interest expenses 431,796 1,605,974
EBITDA (7,664,473 ) 2,763,971
Adjustments:
Gain from early termination of operating lease arrangements — (53,714 ) )
Loss from settlement of convertible notes — 4,438,430
Changes in fair value of derivative liabilities — (722,631 ) )
Changes in fair value of warrant liabilities — (1,430,663 ) )
Adjusted EBITDA (7,664,473 ) 4,995,393

All values are in US Dollars.

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Exhibit 99.3

ZhibaoTechnology Inc. Announces Revised Financial Results for the Six Months Ended December 31, 2024

Shanghai, China--(Newsfile Corp. – May 2, 2025) - Zhibao Technology Inc. (NASDAQ: ZBAO) (“Zhibao,” “we,” or the “Company”), a leading and high growth InsurTech company primarily engaging in providing digital insurance brokerage services through its operating entities in China, today announced revised financial results for the six months ended December 31, 2024.

Recently, the Company made updates to the results that were announced on April 15, 2025, in a few of the other expense and income lines that are below the (loss) gain from operations section in the income statement. The items that were adjusted included net interest expense, an addition of a gain on fair value of warrant liabilities, and a loss on settlement of convertible notes.

Below are the adjustments that were made to the income statement:

● The net interest expense increased from RMB1.4 million ($0.2 million) to<br>RMB1.6 million ($0.2 million).
● Added gain from fair value change of warrant liabilities of RMB1.4 million<br>($0.2 million).
--- ---
● The loss on settlement of convertible notes increased from RMB4.1 million<br>($0.5 million) to RMB4.4 million ($0.6 million).
--- ---

Due to these adjustments, net loss decreased to RMB0.6 million ($0.09 million) for the six months ended December 31, 2024, compared to the amount reported on April 15, 2025 of a net loss of RMB1.5 million ($0.2 million) for the same period. Further, the adjusted basic and diluted GAAP loss per share was RMB0.02 ($0.00) for the six months ended December 31, 2024, versus the previous reported RMB0.05 ($0.01).

In connection with the preparation of the unaudited interim condensed consolidated financial statements for the six months ended December 31, 2024, the management corrected the errors relating to the convertible notes and warrants issued to the Investor mentioned. The warrants were incorrectly accounted for and reported as equity in the Form 6-K that was filed on April 15, 2025, which should be reclassified as warrant liabilities. The errors as of December 31, 2024 and for the six months ended December 31, 2024 are revised as below in the revised unaudited condensed consolidated balance sheet and revised unaudited condensed consolidated statements of operations and comprehensive loss.

Unaudited Condensed Consolidated Balance Sheet

As of December 31, 2024
As Originally
Reported Adjustment As Adjusted
RMB RMB RMB
Convertible notes 6,888,414 (436,073 ) 6,452,341
Warrant liabilities — 1,239,814 1,239,814
Total Current Liabilities 234,214,852 803,741 235,018,593
Total Liabilities 241,403,183 803,741 242,206,924
Additional paid-in capital 207,528,841 (1,701,018 ) 205,827,823
Accumulated deficit (133,356,964 ) 871,115 (132,485,849 )
Accumulated other comprehensive loss (619,179 ) 26,162 (593,017 )
Total Shareholders’ Equity 73,575,206 (803,741 ) 72,771,465

Unaudited Condensed Consolidated Statementsof Operations and Comprehensive Loss

For the six months ended December 31, 2024
As Originally
Reported Adjustment As Adjusted
RMB RMB RMB
Interest expense, net (1,423,313 ) (182,661 ) (1,605,974 )
Gain on fair value change of warrant liabilities — 1,430,663 1,430,663
Loss on settlement of convertible notes (4,061,543 ) (376,887 ) (4,438,430 )
Total other expenses, net (4,228,811 ) 871,115 (3,357,696 )
(Loss) Income Before Income Taxes (424,473 ) 871,115 446,642
Net Loss (1,515,720 ) 871,115 (644,605 )
Foreign currency translation adjustments (390,307 ) 26,162 (364,145 )
Comprehensive loss (1,906,027 ) 897,277 (1,008,750 )
Loss per share
Basic (0.05 ) 0.03 (0.02 )
Diluted (0.05 ) 0.03 (0.02 )

The Company projects 70% revenue growth and improvement in gross profit, profit from operations, and net income for fiscal year ending June 30, 2025 compared to the same period last year.

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Non-GAAP Net Income

Non-GAAP adjusted net income excludes the impact of gain from early termination of operating lease arrangements, loss from settlement of convertible notes, changes in fair value of derivative liabilities, and changes in fair value of warrant liabilities. For further information, see “Use of Non-GAAP Financial Measure” below.

About Zhibao Technology Inc.

Zhibao Technology Inc. (NASDAQ: ZBAO) is a leading and high growth InsurTech company primarily engaging in providing digital insurance brokerage services through its operating entities (“Zhibao China Group”) in China. 2B2C (“to-business-to-customer”) digital embedded insurance is the Company’s innovative business model, which Zhibao China Group pioneered in China. Zhibao China Group launched the first digital insurance brokerage platform in China in 2020, which is powered by their proprietary PaaS (“Platform as a Service”).

Zhibao has developed over 40 innovative digital insurance solutions addressing different scenarios in a wide range of industries, including but not limited to travel, sports, logistics, utilities, and e-commerce. Zhibao has partnered with over 2,000 business channels, through which it has already served the various insurance needs of more than 20 million end customers.

For more information, please visit: www.zhibao-tech.com.

Use of Non-GAAP Financial Measure

In addition to consolidated U.S. GAAP financial measures, we consistently evaluate our use of and calculation of the non-GAAP financial measures, “Adjusted EBITDA.”

Adjusted EBITDA is a financial measure defined as our EBITDA, adjusted to eliminate the effects of certain non-recurring items, that do not reflect our ongoing strategic business operations. EBITDA is computed as net income (loss) before interest, taxes, depreciation, and amortization. Adjusted EBITDA is EBITDA further adjusted for certain income and expenses, which management believes results in a performance measurement that represents a key indicator of the Company’s core business operations of digital insurance brokerage services. The adjustments currently include gain from early termination of operating lease arrangements, loss from settlement of convertible notes, changes in fair value of derivative liabilities, and changes in fair value of warrant liabilities.

Reconciliations of Adjusted EBITDA to the most comparable U.S. GAAP financial metric for historical periods are presented in the table below:

Exchange Rate Information

This press release contains translations of certain RMB amounts into U.S. dollars (“US$”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB7.2993 to US$1.00, the noon buying rate in effect on December 31, 2024, as set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

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Safe Harbor Statement

This press release contains forward-looking statements. These statements are made under the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Statements that are not historical facts, including statements about Zhibao’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, including, but not limited to, the uncertainties related to market conditions, and other factors discussed in the “Risk Factors” section of the Company’s filings with the SEC. A number of additional factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Zhibao’s goal and strategies; Zhibao’s expansion plans; Zhibao’s future business development, financial condition and results of operations; Zhibao’s expectations regarding demand for, and market acceptance of, its solutions and services; Zhibao’s expectations regarding keeping and strengthening its relationships with insurance companies, financial institutions, and insured parties; general economic and business conditions; and assumptions underlying or related to any of the foregoing. All information provided in this press release and in the attachments is as of the date of this press release, and Zhibao does not undertake any obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations that arise after the date hereof, except as required under applicable law. Although Zhibao believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and Zhibao cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s registration statement and other filings with the SEC. Additional factors are discussed in the Company’s filings with the SEC, which are available for review at www.sec.gov.

Investor Relations Contact

Zhibao Technology Inc.

Investor Relations Office

Email: ir@zhibao-tech.com

Skyline Corporate Communications Group, LLC

Scott Powell, President

Avenues Tower

1177 Avenue of the Americas, 5th floor

New York, NY 10036

Office: (646) 893-5835

Email: info@skylineccg.com

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