Zhibao Technology Inc 6-K/A, filed Apr 2, 2026
Zhibao Technology Inc. (ZBAO)
About this 6-K/A
Zhibao Technology Inc filed this 6-K/A on April 2, 2026.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Amendment No. 1
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of April
Commission File Number:
(Translation of registrant’s name into English)
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 ☐
EXPLANATORY NOTE
This Amendment to the Report on Form 6-K of Zhibao Technology Inc. (the “Company”) furnished on March 31, 2026 (the “Original Report”), is being furnished solely to (i) provide the Company’s Unaudited Condensed Consolidated Financial Statements of the Company for the Six Months Ended December 31, 2025 and 2024 (the “Financial Statements”), and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations (the “MDA”), using interactive data files in inline eXtensible Business Reporting Language (iXBRL), as attached to this Amendment, (ii) correct the accrued expenses and other liabilities in USD as of December 31, 2025 under the Condensed Consolidated Balance Sheets of the Financial Statements from $3,842,215 to $3,840,215, and (iii) correct the “$1.1 million” and “$1.5 million” figures under the section “A. Operating Results - Income tax expenses” of the MDA to “RMB1.1 million” and “RMB1.5 million,” respectfully. The Financial Statements and MDA were previously furnished as exhibits to the Original Report without iXBRL.
This Amendment is hereby incorporated by reference into the Company’s registration statements on Form S-8 (Registration No. 333-293537), to the extent not superseded by documents or reports subsequently filed or furnished by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as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: April 2, 2026
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EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
| 99.2 | Unaudited Condensed Consolidated Financial Statements for the Six Months Ended December 31, 2025 and 2024 | |
| 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
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
Overview
Zhibao Technology Inc. is an exempted company incorporated under the laws of the Cayman Islands on January 11, 2023. It operates as a holding company with 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, 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, through Zhibao China Group, 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 3,100 B channels, and secured more than 27 million end customers 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 represent 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 59.6 million (US$8.5 million), or 41% from approximately RMB 146.4 million for the six months ended December 31, 2024 to RMB 206.0 million (US$29.5 million) for the six months ended December 31, 2025. For the six months ended December 31, 2024 and 2025, we incurred net loss of approximately RMB 0.6 million and generated net income RMB 0.6 million (US$0.1 million), respectively.
Financing through issuance of convertible notes
On September 23, 2024, the Company entered into a L1 Securities Purchase Agreement with L1. The L1 Securities Purchase Agreement provides for loans in an aggregate principal amount of up to $8.0 million under up to three tranches.
As of December 31, 2025, the Company received net proceeds of approximately RMB 17.5 million (US$2.4 million), and the Company also settled the principal and interest of convertible notes of approximately RMB 19.4 million (US$2.7 million) through issuance of Class A ordinary shares, and approximately RMB 5.3 million (US$0.7 million) in cash, on an aggregate base in connection with the financings with L1.
On July 22, 2025, the Company received additional $270,000 from L1 (net of original issue discount of 10%) in the Second Closing of the Second Tranche. For the six months ended December 31, 2025, the Company settled the principal and interest of convertible notes of approximately RMB 3.7 million (US$0.5 million) in cash, and approximately RMB 0.4 million (US$50,920) through issuance of Class A ordinary shares.
As of December 31, 2025, the carrying amounts of the Company’s convertible notes are principal amount of RMB 1,438,550 ($205,710), net of unamortized debt discount of RMB 592,259 ($84,692).
Acquisition of a subsidiary
On September 30, 2025, Zhibao China closed a Share Purchase Agreement (the “SPA”) with the shareholders of Zhonglian, and Zhonglian, pursuant to which, subject to the terms and conditions set forth in the SPA, Zhibao China agreed to acquire an aggregate of 51% of the equity interest in Zhonglian for a total purchase price of RMB25.5 million (approximately $3.5 million), subject to adjustment as provided in the SPA. As of December 31, 2025, the Company made cash consideration of RMB 8.2 million to the shareholders of Zhonglian, with the remaining amount of RMB 17.3 million due before October 2026.
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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 expansion of 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 insurance technology 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.
Our ability to attract, incentivize and retain 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.
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Key Components of Results of Operations
Revenues
Our revenues consist of (i) Insurance Brokerage Fees Zhibao China Group receive from their digital insurance brokerage services, and (ii) MGU Service Fees Zhibao China Group receive from insurance companies for MGU services. For the six months ended December 31, 2024 and 2025, our revenues were approximately RMB 146.4 million and RMB 206.0 million (US$29.5 million), respectively. The following table sets forth a breakdown of our revenue by service type for the fiscal years indicated.
| For the Six Months Ended December 31, | ||||||||||||||||||||
| 2024 | 2025 | |||||||||||||||||||
| RMB | % | RMB | US$ | % | ||||||||||||||||
| Insurance Brokerage Fees | 144,964,797 | 99 | 204,026,259 | 29,175,367 | 99 | |||||||||||||||
| MGU Service Fees | 1,766,514 | 1 | 2,267,797 | 324,291 | 1 | |||||||||||||||
| Less: business taxes and surcharges | (360,026 | ) | — | (318,882 | ) | (45,600 | ) | — | ||||||||||||
| 146,371,285 | 100 | 205,975,174 | 29,454,058 | 100 | ||||||||||||||||
Insurance Brokerage
Insurance Brokerage services 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, 2024 and 2025, the revenues generated from the general digital insurance brokerage services were approximately RMB 145.0 and RMB 204.0 million (US$29.2 million), respectively, accounting for approximately 99% and 1%, respectively, of our total revenues. The increase in the insurance brokerage fees 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.
MGU Service Fees
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 our 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.
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For the six months ended December 31, 2024 and 2025, the revenues generated from the MGU services were approximately RMB 1.8 million and RMB2.3 million (US$0.3 million), respectively, accounting for approximately 1% 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 abrupt 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 and promotion cost incurred to increase our exposure to potential insured customers. These costs are charged to the unaudited condensed consolidated statements of operations and comprehensive loss as incurred.
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.
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; (iii) service fees and (iv) other miscellaneous expenses.
Taxation
Cayman Islands
The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax, gift tax or estate duty. There are no other taxes likely to be material to us levied by the Government of the Cayman Islands, except for stamp duties which may be applicable on instruments executed in, or after execution brought within the jurisdiction of the Cayman Islands. No stamp duty is payable in the Cayman Islands on the issue of shares by, or any transfers of shares of, Cayman Islands companies (except those which hold interests in land in the Cayman Islands). An instrument of transfer in respect of shares is stampable if executed or brought into the Cayman Islands There are no exchange control regulations or currency restrictions in the Cayman Islands.
Payments of dividends and capital in respect of our ordinary shares will not be subject to taxation in the Cayman Islands and no withholding will be required under Cayman Islands laws on the payment of a dividend or capital to any holder of ordinary shares, nor will gains derived from the disposal of our ordinary shares be subject to Cayman Islands income or corporation tax.
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British Virgin Islands (“BVI”)
Zhibao BVI is incorporated in the British Virgin Islands and is not subject to tax on income or capital gains under current British Virgin Islands law. In addition, upon payments of dividends by these entities to their shareholders, no British Virgin Islands withholding tax will be imposed.
Hong Kong
According to Tax (Amendment) (No. 3) Ordinance 2018 published by Hong Kong government, from April 1, 2018, under the two-tiered profits tax rates regime, the profits tax rate for the first HKD2 million of assessable profits will be lowered to 8.25% (half of the rate specified in Schedule 8 to the Inland Revenue Ordinance (IRO)) for corporations, and the profits tax rate for remaining profits will be subjected to 16.5%. Zhibao HK was not subject to Hong Kong profit tax for FY2025 as it did not have assessable profit in FY2025. There are no withholding taxes in Hong Kong on remittance of dividends.
Malaysia
Zhibao Labuan is incorporated in Malaysia and is subject to Malaysia Corporate Income Tax imposed on income accruing in or derived from Malaysia. Zhibao Labuan is subject to the standard corporate tax rate of 24% if in a taxable position. However, resident companies that qualify as small and medium-sized enterprises may benefit from a reduced tax rate of 15% on the first RM 150,000 of chargeable income and 17% on the next RM 450,000.
China
Zhibao China, Sunshine Insurance Brokers, Shanghai Anyi, Zhibao Health, Zhizhongbao and Zhonglian 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. Under the EIT Law in the PRC, the unified EIT rate for domestic enterprises and foreign invested enterprises is 25%, except for available preferential tax treatments.
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A. Operating Results
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 this 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, | ||||||||||||||||||||
| 2024 | 2025 | |||||||||||||||||||
| RMB | % | RMB | US$ | % | ||||||||||||||||
| Revenues | 146,371,285 | 100 | 205,975,174 | 29,454,058 | 100 | |||||||||||||||
| Cost of revenues | (103,811,688 | ) | (71 | ) | (134,286,878 | ) | (19,202,768 | ) | (65 | ) | ||||||||||
| 42,559,597 | 29 | 71,688,296 | 10,251,290 | 35 | ||||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Selling and marketing expenses | (18,564,666 | ) | (13 | ) | (41,447,497 | ) | (5,926,913 | ) | (20 | ) | ||||||||||
| General and administrative expenses | (14,282,228 | ) | (10 | ) | (20,919,236 | ) | (2,991,411 | ) | (10 | ) | ||||||||||
| Research and development expenses | (5,908,365 | ) | (3 | ) | (4,692,879 | ) | (671,073 | ) | (2 | ) | ||||||||||
| Total operating expenses | (38,755,259 | ) | (26 | ) | (67,059,612 | ) | (9,589,397 | ) | (32 | ) | ||||||||||
| Income from operations | 3,804,338 | 3 | 4,628,684 | 661,893 | 3 | |||||||||||||||
| Interest expense, net | (1,605,974 | ) | (1 | ) | (2,073,804 | ) | (296,550 | ) | (1 | ) | ||||||||||
| Other income, net | 533,414 | 0 | 1,846,294 | 264,017 | 1 | |||||||||||||||
| Loss on extinguishment of convertible notes | (4,438,430 | ) | (2 | ) | (592,990 | ) | (84,796 | ) | (0 | ) | ||||||||||
| Changes in fair value of derivative liabilities | 722,631 | 1 | 62,938 | 9,000 | 0 | |||||||||||||||
| Changes in fair value of warrant liabilities | 1,430,663 | 1 | (1,288,129 | ) | (184,200 | ) | (1 | ) | ||||||||||||
| Income Before Income Taxes | 446,642 | 1 | 2,582,993 | 369,364 | 2 | |||||||||||||||
| Income tax expenses | (1,091,247 | ) | (1 | ) | (2,028,478 | ) | (290,068 | ) | (1 | ) | ||||||||||
| Net Loss | (644,605 | ) | (0 | ) | 554,515 | 79,296 | 1 | |||||||||||||
Revenues
Our revenues increased by approximately RMB 59.6 million (US$8.5 million), or 41% to approximately RMB 206.0 million (US$29.5 million) for the six months ended December 31, 2025 from approximately RMB 146.4 million for the six months ended December 31, 2024. The increase was primarily driven by an increase of approximately RMB 59.1 million from the digital insurance brokerage, with an increase of approximately RMB 0.5 million from our MGU service fees, as more fully discussed below.
| ● | Insurance Brokerage Fees. Our revenues from digital insurance brokerage services increased by approximately RMB 59.1 million, or 41%, to approximately RMB 204.0 million (US$29.2 million) for the six months ended December 31, 2025 from approximately RMB 145.0 million for the six months ended December 31, 2024. The increase was mainly attributable to combined effects of (i) an increase of gross written premiums (“GWP”) from approximately RMB 0.6 billion for the six months ended December 31, 2024 to approximately RMB 0.6 billion (US$0.1 billion) for the six months ended December 31, 2025, where the increase in GWP was primarily due to an increase of the number of insurance policies for property & casualty insurance products; and (ii) acquisition of Zhonglian, which contributed to an increase in insurance brokerage fees of approximately RMB 46.9 million. |
| ● | MGU Service Fees. MGU Service Fees increased by approximately RMB 0.5 million, or 28% to approximately RMB 2.3 million (US$0.3 million) for the six months ended December 31, 2025 from approximately RMB 1.8 million for the six months ended December 31, 2024. The increase was mainly attributable to increase in GWP for the MGU services from approximately RMB 17 million for the six months ended December 31, 2024 to approximately RMB 28 million for the six months ended December 31, 2025. |
Cost of revenues
Our cost of revenue increased by approximately 29% from RMB 103.8 million for the six months ended December 31, 2024 to approximately RMB 134.3 million (US$19.2 million) for the six months ended December 31, 2025. The increase of cost of revenues was in line with the increase of revenues. However the increase rate of cost of revenues was lower than the increase rate of revenue which was primarily because Zhonglian, the newly acquired subsidiary, earned a higher profit margin in insurance brokerage services than our existing subsidiaries.
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Gross margin
As a result of foregoing, our gross margin was 29.1% and 34.8%, respectively, for the six months ended December 31, 2024 and 2025, respectively.
Selling expenses
Our selling expenses increased by approximately RMB 22.9 million, or 123% from approximately RMB 18.6 million for the six months ended December 31, 2024 to approximately RMB 41.4 million (US$5.9 million) for the six months ended December 31, 2025. The increase was mainly due to an increase of approximately RMB 20.7 million in marketing service fees to gain an increase of GWP, an increase of approximately RMB 1.4 million in salary and welfare expenses and an increase of approximately RMB 0.5 million in entertainment expenses.
General and administrative expenses
Our general and administrative expenses increased by approximately RMB 6.6 million, or 46% from approximately RMB 14.3 million for the six months ended December 31, 2024 to approximately RMB 20.9 million (US$3.0 million) for the six months ended December 31, 2025. The increase was mainly due to an increase of approximately RMB 7.1 million in professional service expenses and an increase of approximately RMB 3.7 million in salary and welfare expenses.
Research and development expenses
Our research and development expenses decreased by approximately RMB 1.2 million, or 21% from approximately RMB 5.9 million for the six months ended December 31, 2024 to approximately RMB 4.7 million (US$0.7 million) for the six months ended December 31, 2025. The decrease was mainly due to a decrease in outsourcing expenses for the development of our online platform.
Loss on extinguishment of convertible notes
For the six months ended December 31, 2024, the Company settled the principal and interest of convertible notes of $1,050,000 through issuance of 524,314 Class A ordinary shares. For the six months ended December 31, 2025, the Company settled the principal and interest of convertible notes of approximately RMB 0.4 million (US$50,920) through issuance of 53,042 Class A ordinary shares. The difference between the fair value of Class A ordinary shares on settlement dates and the principal and interest of convertible notes was recognized as loss on extinguishment of convertible notes.
Changes in fair value of derivative liabilities
In connection with L1 Securities Purchase Agreement, we recognized conversion features as derivative liabilities which was measured at fair value. For the six months ended December 31, 2024 and 2025, we remeasured fair value of derivative liabilities and charged remeasurement loss of approximately RMB 0.7 million and RMB 63,000 (US$9,000), respectively, in the account of changes in fair value of derivative liabilities.
Changes in fair value of warrant liabilities
In connection with L1 Securities Purchase Agreement, we recognized warrants as liabilities measured at fair value. For the six months ended December 31, 2024 and 2025, we remeasured fair value of warrant liabilities and charged remeasurement gain of approximately RMB 1.4 million and remeasurement loss of approximately RMB 1.3 million (US$0.2 million) in the account of changes in fair value of warrant liabilities.
Income tax expenses
For the six months ended December 31, 2024, we recorded income tax expense of RMB 1.1 million which was primarily caused by deferred income tax expenses of approximately RMB 1.1 million. For the six months ended December 31, 2025, we recorded income tax expenses of RMB 2.0 million was comprised of current income tax expenses of approximately RMB 0.6 million arising from certain profit making subsidiaries and deferred income tax expenses of approximately RMB 1.5 million.
Net (loss) income
As a result of the foregoing, we had a net loss of approximately RMB 0.6 million and a net income of approximately RMB 0.6 million for the six months ended December 31, 2024 and 2025, respectively.
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B. 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 equity financing from institutional investors. As of December 31, 2025, we reported working capital deficits of approximately RMB 30.4 million (US$4.3 million) and accumulated deficits of approximately RMB 198.2 million (US$28.3 million), respectively. For the six months ended December 31, 2025, we had operating cash outflows of approximately RMB 12.2 million (US$1.7 million). As of June 30, 2025, we reported working capital of approximately RMB 0.4 million and accumulated deficits of approximately RMB 193.9 million, respectively.
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, | ||||||||||||
| 2024 | 2025 | 2025 | ||||||||||
| RMB | RMB | USD (Note 2) | ||||||||||
| Net cash used in operating activities | 74,197,711 | (12,235,789 | ) | (1,749,695 | ) | |||||||
| Net cash (used in) provided by investing activities | (4,375,000 | ) | 13,376,595 | 1,912,828 | ||||||||
| Net cash provided by financing activities | 23,026,767 | 26,002,215 | 3,718,268 | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | (80,500 | ) | (974,200 | ) | (139,310 | ) | ||||||
| Net increase in cash, cash equivalents and restricted cash | 92,768,978 | 26,168,820 | 3,742,091 | |||||||||
| Cash, cash equivalents and restricted cash at beginning of the period | 46,145,326 | 19,529,707 | 2,792,711 | |||||||||
| Cash, cash equivalents and restricted cash at end of the period | 138,914,304 | 45,698,527 | 6,534,802 | |||||||||
Operating activities
Net cash provided by operating activities for the six months ended December 31, 2024 was approximately RMB 74.2 million, primarily attributable to net loss of approximately RMB 0.6 million, adjusted for loss of approximately RMB 4.4 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 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 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 due to insurance carriers which would be settled by restricted cash.
Net cash used in operating activities for the six months ended December 31, 2025 was approximately RMB 12.2 million (US$1.7 million), primarily attributable to net income of approximately RMB 0.6 million (US$79,300), adjusted for amortization of right of use assets of approximately RMB 1.2 million (US$0.2 million), loss on extinguishment of convertible notes of approximately RMB 0.6 million (US$0.1 million), accretion of discounts and interest expenses of convertible notes of approximately RMB 1.5 million (US$0.2 million), deferred tax benefits of approximately RMB 1.5 million (US$0.2 million), and changes in fair value of warrants of approximately RMB 1.3 million (US$0.2 million), and changes in operating assets and liabilities, primarily consisting of (i) a decrease of approximately RMB 14.8 million (US$2.1 million) in accounts receivable as a result of improvement in collection from customers, (ii) an increase of approximately RMB14.6 million (US$2.1 million) in prepaid expenses and other current assets which was primarily contributed by addition of prepaid expenses and other current assets of Zhonglian, (iii) an increase of approximately RMB 14.6 million (US$2.1 million) in accounts payable as a result of increased service fees due to our business channels which was in line with increased revenues, and (iv) a decrease of approximately RMB 33.9 million (US$4.8 million) due to insurance carriers which was settled by restricted cash in the six months ended December 31, 2025.
| 9 |
Investing activities
For the six months ended December 31, 2024, we reported cash used in investing activities of approximately RMB 4.4 million, which was used as prepayment for three equity investees.
For the six months ended December 31, 2025, we reported cash provided by investing activities of approximately RMB 13.4 million (US$1.9 million), which was provided by cash of approximately RMB 22.3 million (US$3.2 million) acquired from acquisition of Zhonglian, partially offset by equity investments of approximately RMB 8.9 million (US$1.3 million).
Financing activities
For the six months ended December 31, 2024, we provided cash of approximately RMB 23.0 million in financing activities, which was primarily provided by proceeds of approximately 16.0 million from issuance of convertible notes, proceeds of approximately $32.0 million from short-term bank borrowings and borrowings of approximately RMB 2.5 million from a related party, partially offset by repayment of bank borrowings of approximately RMB 25.0 million, and payment of discount and issuance costs of approximately RMB 2.5 million in connection with issuance of convertible notes.
For the six months ended December 31, 2025, we provided cash of approximately RMB 26.0 million (US$3.7 million) in financing activities, which was primarily provided by proceeds of approximately 1.7 million (US$0.2 million) from issuance of convertible notes, proceeds of approximately $26.0 million (US$3.7 million) from short-term bank borrowings and borrowings of approximately $26.0 million (US$3.7 million) from related parties, partially offset by repayment of bank borrowings of approximately $12.3 million (US$1.8 million), repayment of related party borrowings of approximately $12.2 million (US$1.7 million) and payment of discount and issuance costs of approximately $3.7 million (US$0.5 million) in connection with issuance of convertible notes.
C. Research and Development
Research and development expenses consist primarily of staff cost, service fees for developing software 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, 2024 and 2025, we incurred research and development expenses of approximately RMB 5.9 million and RMB 4.7 million (US$0.7 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.
D. Trend Information
Other than as disclosed in this 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.
E. Quantitative and Qualitative Disclosures About Market 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.
| 10 |
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.
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.
| 11 |
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. 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 |
We use the roll-rate method to measure the expected credit losses of accounts receivable. We assess collectability by reviewing accounts receivable on aging schedules. In determining the amount of the allowance for credit losses, we consider 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 our 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 unaudited condensed consolidated statements of operations and comprehensive loss.
For the six months ended December 31, 2024 and 2025, we accrued provisions for credit losses of approximately RMB 0.3 million and reversed provision for credit losses of RMB 11,915, respectively.
| (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, 2025 and December 31, 2025. Thus, management recorded valuation allowance amounted to RMB 21.2 million and RMB 25.1 million (US$3.6 million) as of June 30, 2025 and December 31, 2025, 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.
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. 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.
| 12 |
As of June 30, 2025 and December 31, 2025, 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, 2025 and December 31, 2025. 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 and 2025, 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, 2025 and December 31, 2025, respectively.
| (c) | Valuation of convertible notes and derivative liabilities |
On September 23, 2024, the Company entered into the L1 Securities Purchase Agreement with L1, which provides for loans in an aggregate principal amount of up to $8.0 million under three tranches.
For the six months ended December 31, 2024, the Company consummated three closings of convertible notes and received $2.3 million (net of original issue discount of 10%) and incurred expenses and commissions of approximately $0.4 million. For the six months ended December 31, 2025, the Company consummated one closing of convertible notes and received approximately $0.3 million (net of original issue discount of 10%) in one closing and incurred expenses and commissions of approximately $56,500. 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 fixed conversion prices.
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 Company estimated a fair value of the derivative liability using the Binominal Tree Model at the date of issuance. The key factors used in Binominal Tree Model included risk-free interest rate, estimated volatility rate, dividend yield and bond yield.
For details of quantitative information regarding Level 3 fair value measurements inputs for the Company’s derivate liabilities at their measurement dates, please see Note 11 – Convertible Note to the unaudited condensed consolidated financial statements.
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.
Non-GAAP Financial Measures
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-cash and/or 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 share-based compensation expenses, gain from early termination of leases and provision of doubtful accounts,
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We believe Adjusted EBITDA can be important financial measures because they allow management, investors, and our board of directors to evaluate and compare our operating results, including our return on capital and operating efficiencies, from period-to-period by making such adjustments.
Adjusted EBITDA are provided in addition to and should not be considered to be a substitute for, or superior to net income (loss), the comparable measures under U.S. GAAP. Further, Adjusted EBITDA should not be considered as an alternative to revenue growth, net income (loss), diluted earnings (loss) per share or any other performance measure derived in accordance with U.S. GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity. Adjusted EBITDA have limitations as analytical tools, and you should not consider such measures either in isolation or as substitutes for analyzing our results as reported under U.S. GAAP.
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, | ||||||||||||
| 2024 | 2025 | 2025 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| Reconciliation of non-GAAP (loss) income from operations: | ||||||||||||
| Net (Loss) Income | (644,605 | ) | 554,515 | 79,297 | ||||||||
| Depreciation and amortization expenses | 711,355 | 846,488 | 121,046 | |||||||||
| Income tax (benefits) expenses | 1,091,247 | 2,028,478 | 290,068 | |||||||||
| Interest expenses | 1,605,974 | 2,073,804 | 296,550 | |||||||||
| EBITDA | 2,763,971 | 5,503,285 | 786,961 | |||||||||
| Adjustments: | ||||||||||||
| Gain from early termination of right-of-use assets | (53,714 | ) | — | — | ||||||||
| Loss on extinguishment of convertible notes | 4,438,430 | 592,990 | 84,796 | |||||||||
| Changes in fair value of derivative liabilities | (722,631 | ) | (62,938 | ) | (9,000 | ) | ||||||
| Changes in fair value of warrant liabilities | (1,430,663 | ) | 1,288,129 | 184,200 | ||||||||
| Adjusted EBITDA | 4,995,393 | 7,321,466 | 1,046,957 | |||||||||
| 14 |
Exhibit 99.2
ZHIBAO TECHNOLOGY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”), except for share and per share data)
| As of June 30, | As of December 31, | |||||||||||
| 2025 | 2025 | 2025 | ||||||||||
| RMB | RMB | USD (Note 2) | ||||||||||
| (audited) | (unaudited) | (unaudited) | ||||||||||
| ASSETS | ||||||||||||
| Current Assets | ||||||||||||
| Cash and cash equivalents | ||||||||||||
| Restricted cash | ||||||||||||
| Accounts receivable, net | ||||||||||||
| Due from related parties | ||||||||||||
| Prepaid expenses and other current assets, net | ||||||||||||
| Total Current Assets | ||||||||||||
| Deposit of long-term investments | ||||||||||||
| Long-term investments in equity investee | ||||||||||||
| Goodwill | ||||||||||||
| Property and equipment, net | ||||||||||||
| Intangible assets, net | ||||||||||||
| Operating lease right of use assets | ||||||||||||
| Restricted cash, noncurrent | ||||||||||||
| Other non-current assets | ||||||||||||
| Total Non-Current Assets | ||||||||||||
| Total Assets | ||||||||||||
| LIABILITIES, AND SHAREHOLDERS’ EQUITY | ||||||||||||
| Current Liabilities | ||||||||||||
| Short-term borrowings | ||||||||||||
| Accounts payable | ||||||||||||
| Insurance premium payable | ||||||||||||
| Income tax payable | ||||||||||||
| Due to related parties | ||||||||||||
| Operating lease liabilities, current | ||||||||||||
| Accrued expenses and other liabilities | ||||||||||||
| Payable for acquisition of a subsidiary | ||||||||||||
| Convertible notes | ||||||||||||
| Derivative liabilities | ||||||||||||
| Warrant liabilities | ||||||||||||
| Total Current Liabilities | ||||||||||||
| Deferred tax liabilities | ||||||||||||
| Operating lease liabilities, noncurrent | ||||||||||||
| Total Non-current Liabilities | ||||||||||||
| Total Liabilities | ||||||||||||
| Commitments and contingencies | ||||||||||||
| Shareholders’ Equity | ||||||||||||
| Class A ordinary shares (par value $ | ||||||||||||
| Class B ordinary shares (par value $ | ||||||||||||
| Additional paid-in capital | ||||||||||||
| Accumulated deficit | ( | ) | ( | ) | ( | ) | ||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ( | ) | ||||||
| Total Zhibao Technology Inc. Shareholders’ Equity | ||||||||||||
| Non-controlling interests | ||||||||||||
| Total Shareholders’ Equity | ||||||||||||
| Total Liabilities and Shareholders’ Equity | ||||||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
F-1
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, | ||||||||||||
| 2024 | 2025 | 2025 | ||||||||||
| RMB | RMB | USD (Note 2) | ||||||||||
| Revenues | ||||||||||||
| Cost of revenues | ( | ) | ( | ) | ( | ) | ||||||
| Gross profit | ||||||||||||
| Operating expenses | ||||||||||||
| Selling and marketing expenses | ( | ) | ( | ) | ( | ) | ||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ||||||
| Research and development expenses | ( | ) | ( | ) | ( | ) | ||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ||||||
| Income from operations | ||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ||||||
| Other income, net | ||||||||||||
| Loss on extinguishment of convertible notes | ( | ) | ( | ) | ( | ) | ||||||
| Changes in fair value of derivative liabilities | ||||||||||||
| Changes in fair value of warrant liabilities | ( | ) | ( | ) | ||||||||
| Income Before Income Taxes | ||||||||||||
| Income tax expenses | ( | ) | ( | ) | ( | ) | ||||||
| Net (Loss) Income | ( | ) | ||||||||||
| Less: net income attributable to non-controlling interests | ( | ) | ( | ) | ||||||||
| Net loss attributable to Zhibao Technology Inc.’s Shareholders | ( | ) | ( | ) | ( | ) | ||||||
| Net (Loss) Income | ( | ) | ||||||||||
| Other comprehensive income (loss) | ||||||||||||
| Foreign currency translation adjustments | ( | ) | ( | ) | ( | ) | ||||||
| Comprehensive loss | ( | ) | ( | ) | ( | ) | ||||||
| Less: net comprehensive income attributable to non-controlling interests | ( | ) | ( | ) | ||||||||
| Comprehensive loss attributable to Zhibao Technology Inc.’s Shareholders | ( | ) | ( | ) | ( | ) | ||||||
| Weighted average number of ordinary share outstanding | ||||||||||||
| Basic and diluted | ||||||||||||
| Loss per share | ||||||||||||
| Basic and diluted | ( | ) | ( | ) | ( | ) | ||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
F-2
ZHIBAO TECHNOLOGY INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED DECEMBER 31, 2024 and 2025
(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”), except for share and per share data)
| Attributable to Zhibao Technology Inc.’s Shareholders | ||||||||||||||||||||||||||||||||||||
| Class A Ordinary Shares | Class B Ordinary Shares | Additional Paid-in | Accumulated | Accumulated Other Comprehensive | Non-controlling | |||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficis | Income | interests | Total | ||||||||||||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||||||||||||||
| As of June 30, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Issuance of Class A Ordinary Shares pursuant to settlement of convertible notes | — | |||||||||||||||||||||||||||||||||||
| Net income | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Foreign exchange adjustments | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| As of December 31, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| As of June 30, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Issuance of Class A Ordinary Shares pursuant to settlement of convertible notes | — | |||||||||||||||||||||||||||||||||||
| Acquisition of a subsidiary | — | — | ||||||||||||||||||||||||||||||||||
| Net (loss) income | — | — | ( | ) | ||||||||||||||||||||||||||||||||
| Foreign exchange adjustments | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| As of December 31, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
F-3
ZHIBAO TECHNOLOGY INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”))
| For the Six Months Ended December 31, | ||||||||||||
| 2024 | 2025 | 2025 | ||||||||||
| RMB | RMB | USD (Note 2) | ||||||||||
| Net cash provided by (used in) operating activities | ( | ) | ( | ) | ||||||||
| Cash Flows From Investing Activities | ||||||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||||||
| Loans made to related parties | ( | ) | ( | ) | ||||||||
| Collection of loan to related parties | ||||||||||||
| Prepayment for equity investments | ( | ) | ( | ) | ( | ) | ||||||
| Investment in an equity investee | ( | ) | ( | ) | ||||||||
| Acquisition of a subsidiary | ( | ) | ( | ) | ||||||||
| Cash acquired from acquisition of a subsidiary | ||||||||||||
| Net cash (used in) provided by investing activities | ( | ) | ||||||||||
| Cash Flows From Financing Activities | ||||||||||||
| Net proceeds from issuance of convertible notes | ||||||||||||
| Repayment of convertible notes | ( | ) | ( | ) | ( | ) | ||||||
| Proceeds from short-term bank borrowings | ||||||||||||
| Repayment of short-term borrowings | ( | ) | ( | ) | ( | ) | ||||||
| Borrowings from related parties | ||||||||||||
| Repayment of borrowings to related parties | ( | ) | ( | ) | ||||||||
| Net cash provided by financing activities | ||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ( | ) | ( | ) | ||||||
| Net increase in cash, cash equivalents and restricted cash | ||||||||||||
| Cash, cash equivalents and restricted cash at beginning of the period | ||||||||||||
| Cash, cash equivalents and restricted cash at end of the period | ||||||||||||
F-4
ZHIBAO TECHNOLOGY INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)
(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”))
| For the Six Months Ended December 31, | ||||||||||||
| 2024 | 2025 | 2025 | ||||||||||
| RMB | RMB | USD (Note 2) | ||||||||||
| Supplemental Cash Flow Information | ||||||||||||
| Cash paid for interest expense | ||||||||||||
| Cash paid for income tax | ||||||||||||
| Non-cash Investing and Financing activities | ||||||||||||
| Operating lease right-of-use assets obtained in exchange for operating lease liabilities | ||||||||||||
| Disposal of operating lease right-of-use assets | ( | ) | ||||||||||
| Issuance of shares to settlement convertible notes | ||||||||||||
| Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets | ||||||||||||
| As of June 30, | As of December 31, | |||||||||||
| 2025 | 2025 | 2025 | ||||||||||
| RMB | RMB | USD (Note 2) | ||||||||||
| (audited) | (unaudited) | (unaudited) | ||||||||||
| Cash and cash equivalents | ||||||||||||
| Restricted cash | ||||||||||||
| Restricted cash, noncurrent | ||||||||||||
| Total Assets | ||||||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
F-5
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1 — NATURE OF THE ORGANIZATION AND BUSINESS
Zhibao Technology Inc. (the
“Company” or “Zhibao”) was incorporated on
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”) | ||||||||
| Zhibao Technology Limited (“Zhibao HK”) | ||||||||
| Zhibao Labuan Reinsurance (“Zhibao Labuan”) | ||||||||
| Zhibao China | ||||||||
| Shanghai Anyi Network Technology Co., Ltd. (“Shanghai Anyi”) | ||||||||
| Sunshine Insurance Brokers (Shanghai) Co., Ltd. (“Sunshine Insurance Brokers”) | ||||||||
| Shanghai Zhibao Health Management Co., Ltd. (“Zhibao Health”) | ||||||||
| Shanghai Zhizhongbao Enterprise Management Co., Ltd. (“Zhizhongbao”) | ||||||||
| Shanghai Zhibao Yingshi Health Technology Co., Ltd. (“Zhibao Yingshi”) | ||||||||
| Zhonglian Jinan Insurance Brokers Co., Ltd. (“Zhonglian”) |
F-6
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1 — NATURE OF THE ORGANIZATION AND BUSINESS (cont.)
Initial public offering (“IPO”)
On April 3, 2024, the
Company closed its IPO of
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
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
Reclassification of Class A and Class B ordinary Shares
On December 12, 2023, the
shareholders of the Company passed a special resolution to reclassify
F-7
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1 — NATURE OF THE ORGANIZATION AND BUSINESS (cont.)
Reclassification of Class A and Class B ordinary Shares (cont.)
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
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.
Acquisition of Zhonglian
On September 30, 2025, Zhibao
China closed a Share Purchase Agreement (the “SPA”) with the shareholders of Zhonglian, and Zhonglian, pursuant to which,
subject to the terms and conditions set forth in the SPA, Zhibao China agreed to acquire an aggregate of
Variable interest in Shanghai GBG Enterprise Management Consulting Co., Ltd. (“Shanghai GBG”)
For the six months ended
December 31, 2024 and 2025, the Company was charged of service cost by Shanghai GBG, which is a major service provider engaged by the
Company to provide MGU services for the insurance carriers. As of June 30, 2025 and December 31, 2025, the Company had outstanding balances
of approximately RMB
F-8
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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, 2025 and for the six months ended December 31, 2024 and 2025 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 annual report on Form 20-F for the years ended June 30, 2025.
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, 2023, 2024 and 2025. The results of loss for the six months ended December 31, 2025 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.
Non-controlling interests
Non-controlling interests
represent the equity interests in the subsidiaries that are not attributable, either directly or indirectly, to the Company. For the Company’s
unaudited condensed consolidated financial statements, non-controlling interests represent a minority shareholder’s
F-9
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Liquidity Condition and Going Concern
As of December 31, 2025,
the Company reported working capital deficits of RMB
Furthermore, the Company has entered into multiple financing arrangements involving convertible notes and warrants that contain variable conversion and settlement features. Certain of these arrangements include variable conversion price mechanisms, anti-dilution protections, and repayment obligations that may exceed the stated principal amounts. As of December 31, 2025, certain of these financing arrangements remained outstanding and subject to future settlement.
These features and subsequent financing activities could adversely affect the Company’s liquidity and cash flows, particularly in circumstances where the Company is required to make cash payments in connection with settlements, redemptions, or default-related remedies. The potential issuance of a significant number of shares upon conversion or exercise may also limit the Company’s ability to raise additional capital on favorable terms, which could further constrain liquidity.
Accordingly, the Company’s ability to continue as a going concern is dependent, in part, on its ability to manage these financing arrangements, including outstanding and unsettled obligations, generate sufficient operating cash flows, and obtain additional financing as needed. Management’s plans include improving operating performance and maintaining access to external sources of financing to support the Company’s ongoing operations.
As of December 31, 2025,
the Company had cash of RMB
There can be no assurance that the Company future cashflows from operating activities or financing activities including borrowings and equity financing will be sufficient to support its ongoing operations, or that any additional financing will be available in a timely manner or on acceptable terms, if at all. If the Company is unable to raise sufficient financing or events or circumstances occur such that the Company does not meet its strategic plans, the Company will be required to reduce certain discretionary spending, alter or scale back its digital insurance brokerage services, or be unable to fund capital expenditures, which would have a material adverse effect on the Company’s financial position, results of operations, cash flows, and ability to achieve its intended business objectives. Given the Company’s existing cash balances and projected cash generated by, and used in, operating activities, the Company believes that it will have sufficient liquidity to fund its operating activities, and react as necessary to market changes, which may include working capital needs for at least twelve months from December 31, 2025, the Company has concluded that there is substantial doubt about its ability to continue as a going concern for a period of one year from the date that these unaudited condensed consolidated financial statements are issued.
F-10
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Liquidity Condition and Going Concern (cont.)
The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Accordingly, the consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.
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) for identical assets or liabilities in active markets. | ||
| Level 2 — | inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either 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, payable for acquisition of a subsidiary and due to related parties. The Company’s financial instruments approximate their fair values because of the short-term nature of these instruments. Warrants and derivative liabilities were measured at fair value using unobservable inputs and categorized in Level 3 of the fair value hierarchy (Note 11 and 12). Convertible notes were measured at amortized cost using unobservable inputs and categorized in Level 3 of the fair value hierarchy (Note 11).
Convenience Translation
Translations of balances
in the Group’s consolidated balance sheets, consolidated statements of comprehensive loss and consolidated statements of cash flows
from RMB into US$ as of and for six ended December 31, 2025 are solely for the convenience of the readers and were calculated at the rate
of US$
F-11
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Business Combination
Business combinations are recorded using the acquisition method of accounting. The Company uses a screen test to evaluate whether a transaction should be accounted for as an acquisition and/or disposal of a business versus assets. In order for a purchase to be considered an acquisition of a business, and receive business combination accounting treatment, the set of transferred assets and activities must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, then the set of transferred assets and activities is not a business.
The purchase price of business acquisition is allocated to the tangible assets, liabilities, identifiable intangible assets acquired and noncontrolling interest, if any, based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill. Acquisition-related expenses and restructuring costs are expensed as incurred.
Where the consideration in an acquisition includes contingent consideration and the payment of which depends on the achievement of certain specified conditions post-acquisition, the contingent consideration is recognized and measured at its fair value at the acquisition date and if recorded as a liability, it is subsequently carried at fair value with changes in fair value reflected in earnings.
Changes in the ownership interest that do not result in a change in control of the subsidiary that is a business are accounted for as equity transactions (i.e., no gain or loss is recognized in earnings) and are accounted for in accordance with ASC 810-10-45-22 through ASC 810-10-45-24. The carrying amount of the noncontrolling interest will be adjusted to reflect the change in the noncontrolling interest’s ownership interest in the subsidiary. Any difference between the amount by which the noncontrolling interest is adjusted and the fair value of the consideration paid or received is recognized in equity/additional paid-in capital and attributed to the equity holders of the parent in accordance with ASC 810-10-45-23.
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.
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, 2024 and 2025, the Company provided expected
credit losses of RMB
F-12
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Intangible assets
The intangible assets were comprised of (i) capitalization of certain software development costs related to the management general underwriter services during the application development stage, and (ii) customer relationships and license arose from business combination. The Company performs valuation of the intangible assets arising from business combination to determine the fair value to be assigned to each asset acquired. The Company determines the fair value using the appropriate approach which requires management to make significant estimates and assumptions. The acquired intangible assets are recognized and measured at fair value.
License is determined to
have an infinite useful life and is not subject to amortization and tested for impairment at least annually.
| Useful life | ||
| Customer relationships | ||
| Software |
Goodwill
Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations.
The Company assesses goodwill for impairment on annual basis as of June 30 or if indicators were noted for goodwill impairment. In accordance with ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”) issued by the Financial Accounting Standards Board (“FASB”) guidance on testing of goodwill for impairment, the Company will first assess qualitative factors to determine whether it is “more likely than not” that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative impairment test. If this is the case, the quantitative goodwill impairment test is required. If it is more likely-than-not that the fair value of a reporting unit is greater than its carrying amount, the quantitative goodwill impairment test is not required.
Quantitative goodwill impairment test is used to identify both the existence of impairment and the amount of impairment loss, comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit is greater than its carrying amount, goodwill is not considered impaired. If the fair value of the reporting unit is less than its carrying amount, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.
In September 30, 2025, the
Company recognized goodwill of $
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 fees 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.
F-13
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Revenue Recognition (cont.)
Insurance brokerage services (cont.)
The Company recognizes insurance brokerage fees 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, 2024 and 2025, 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.
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 2025, the Company did 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, 2025 and December 31, 2025, the Company had 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, 2025 and December 31, 2025, the Company had contract liabilities.
F-14
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
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, 2024 and 2025, substantially all of the Company’s revenue was generated in the PRC.
| For the Six Months Ended December 31, | ||||||||
| 2024 | 2025 | |||||||
| RMB | RMB | |||||||
| Insurance brokerage service fees | ||||||||
| MGU service fees | ||||||||
| Less: business taxes and surcharges | ( | ) | ( | ) | ||||
| Total revenues | ||||||||
The Company disaggregates revenue by transferal of services as the following table:
| For the Six Months Ended December 31, | ||||||||
| 2024 | 2025 | |||||||
| RMB | RMB | |||||||
| Services transferred at a point in time | ||||||||
| Services transferred over time | ||||||||
| Less: business taxes and surcharges | ( | ) | ( | ) | ||||
| Total revenues | ||||||||
F-15
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Segment Reporting
ASC 280, Segment Reporting,
establishes standards for companies to report in their financial statements information about operating segments, products, services,
geographic areas, and major customers. Operating segments are defined as components of an enterprise engaging in businesses activities
for which separate financial information is available that is regularly evaluated by the Company’s chief operating decision makers
in deciding how to allocate resources and assess performance.
Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision making group, in deciding how to allocate resources and in assessing performance. The Company’s CODM is the Chief Executive Officer.
The Company’s CODM
relies upon the consolidated results of operations as a whole when making decisions about allocating resources and assessing the performance
of the Company. As a result of the assessment made by CODM, the Company has only one principal reportable segment as defined by ASC 280.
The Company has concluded that unaudited condensed consolidated net (loss) income is the measure of segment profitability.
| For the six months ended December 31, | ||||||||||||
| 2024 | 2025 | 2025 | ||||||||||
| RMB | RMB | USD (Note 2) | ||||||||||
| Revenues | ||||||||||||
| Cost of revenues | ( | ) | ( | ) | ( | ) | ||||||
| Other operating expenses | ( | ) | ( | ) | ( | ) | ||||||
| Other income expenses, net | ( | ) | ( | ) | ( | ) | ||||||
| Income tax expenses | ( | ) | ( | ) | ( | ) | ||||||
| Net (loss) income | ( | ) | ||||||||||
The Company does not distinguish between markets or segments for the purpose of internal reporting. The Company’s long-lived assets are all located in the PRC and substantially all of the Company’s revenues are derived from the PRC. Therefore, no geographical segments are presented.
F-16
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (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, 2025 and December 31, 2025, RMB
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, 2025, one customer accounted
for
For the six months ended
December 31, 2024, four customer accounted for
As of June 30, 2025, one
vendor accounted for
For the six months
ended December 31, 2024, two vendors accounted for
F-17
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Concentration and Credit Risk (cont.)
| 4) | Other risks |
The Company’s business, financial condition and results of operations may also be negatively impacted by risks related to natural disasters, extreme weather conditions, health epidemics and other catastrophic incidents, such as the COVID-19 outbreak and spread, which could significantly disrupt the Company’s operations.
Recently Issued Accounting Standards
The Company is an “emerging growth company” (“EGC”) as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, EGC can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. As a result, the Company’s operating results and financial statements may not be comparable to the operating results and financial statements of other companies who have adopted the new or revised accounting standards.
In December 2025, the FASB issued ASU 2025-12, which is to correct, clarify, and otherwise improve U.S. GAAP. ASU 2025-12 includes 33 improvements that span a wide range of topics, including Clarifying diluted earnings per share (EPS) calculation when a loss from continuing operations exists, Clarifying disclosure requirements for lease receivables from sales-type or direct financing leases, Revising the calculation of the reference amount for beneficial interests to prevent double counting credit losses, Clarifying the permissible methods to account for treasury stock retirements, and Clarifying the guidance for transfers of receivables from contracts with customers. The amendments in this Update are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. If an entity adopts the amendments in this Update in an interim period, it must adopt them as of the beginning of the annual reporting period that includes that interim reporting period. An entity may elect to early adopt the amendments on an issue-by-issue basis. For example, an entity may decide to early adopt certain amendments and adopt the remaining amendments at the effective date. An entity should apply the amendments in this Update (except for the amendments to Topic 260, Earnings Per Share, related to Issue 4) using one of the following transition methods: (i) Prospectively to all transactions recognized on or after the date that the entity first applies the amendments, or (ii) Retrospectively to the beginning of the earliest comparative period presented. An entity should adjust the opening balance of retained earnings (or other appropriate components of equity or net assets in the statement of financial position) as of the beginning of the earliest comparative period presented. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.
In December 2025, the FASB issued ASU 2025-11, which is intended to improve the navigability of the guidance in ASC 270 and clarify when it applies. Under the amendments, an entity is subject to ASC 270 if it provides interim financial statements and notes in accordance with GAAP. The ASU also addresses the form and content of such financial statements, adds lists to ASC 270 of the interim disclosures required by all other Codification topics, and establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material impact on the entity. As the Board stated in the proposed guidance and reiterates in the ASU, the amendments are not intended to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements. For public business entities, the amendments in ASU 2025-11 are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. For entities other than public business entities, for interim reporting periods within annual reporting periods beginning after December 15, 2028. Early adoption is permitted for all entities. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.
F-18
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Recently Issued Accounting Standards (cont.)
On September 29, 2025, the FASB issued ASU 2025-07, “Derivatives and Hedging (“Topic 815”) and Revenue from Contracts with Customers (“Topic 606”)”, which (1) refines the scope of the guidance on derivatives in ASC 815 (“Issue 1”) and (2) clarifies the guidance on share-based payments from a customer in ASC 606 (“Issue 2”). The ASU is intended to address concerns about the application of derivative accounting to contracts that have features based on the operations or activities of one of the parties to the contract and to reduce diversity in the accounting for share-based payments in revenue contracts. ASU 2025-07 is effective for annual reporting periods beginning after December 15, 2026, including interim reporting periods within those annual reporting periods. Early adoption of the standard is permitted in an interim or annual reporting period for which financial statements have not been issued or made available for issuance. If an entity elects to early adopt the standard in an interim period, the entity must apply the standard as of the beginning of the fiscal year that includes the interim period. Further, an entity that elects to early adopt the ASU is required to early adopt the guidance for both Issue 1 and Issue 2 in the standard.
On July 30, 2025, the FASB issued ASU 2025-05 , “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets”, which amends ASC 326-20 to provide a practical expedient for all entities which elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset in developing reasonable and supportable forecasts as part of estimating expected credit losses, and an accounting policy election for all entities, other than a public business entity, that elect the practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. Under ASU 2025-05, an entity is required to disclose whether it has elected to use the practical expedient and, if so, whether it has also applied the accounting policy election. An entity that makes the accounting policy election is required to disclose the date through which subsequent cash collections are evaluated. ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. Entities should apply the new guidance prospectively. The Company is currently evaluating these new disclosure requirements 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. In January 2025, the FASB issued ASU 2025-01, “Income Statement – Comprehensive Income – Expense Disaggregation Disclosure (Subtopic 220-40): Clarifying the Effective Date.” This pronouncement revises the effective date of ASU 2024-03 and clarifies that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Entities within the ASU’s scope are permitted to early adopt the accounting standard update. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.
F-19
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Recently Issued Accounting Standards (cont.)
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 (the “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 in the process of evaluating the impact of ASU 2023-09 on the consolidated financial statements.
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 the 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 in the process of evaluating the impact of ASU 2023-06 on the consolidated financial statements.
In March 2024, the FASB issued ASU 2024-01, “Compensation - Stock Compensation (Topic 718) - Scope Application of Profits Interest and Similar Awards” (“ASU 2024-01”), which intends to improve clarity and operability without changing the existing guidance. ASU 2024-01 provides an illustrative example intended to demonstrate how entities that account for profits interest and similar awards would determine whether a profits interest award should be accounted for in accordance with Topic 718. Entities can apply the guidance either retrospectively to all prior periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date of adoption. ASU 2024-01 is effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company is in the process of evaluating the impact of ASU 2023-06 on the consolidated financial statements.
Other accounting standards that have been issued by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the unaudited condensed consolidated balance sheets, unaudited condensed consolidated statements of operations and comprehensive loss, and unaudited condensed consolidated statements of cash flows.
F-20
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3 — ACQUISITION OF ZHONGLIAN
On September 30, 2025, the
Company closed acquisition of
The Company has allocated
the purchase price of Zhonglian based upon the fair value of the identifiable assets acquired and liabilities assumed on the acquisition
date. The Company estimated the fair values of the assets acquired and liabilities assumed at the acquisition date in accordance with
the business combination standard issued by FASB. The Company used carrying amount of assets and liabilities as fair value, which approximate
the fair value, and used cost approach to estimate the fair value of content assets which was primarily comprised software and copyrights.
Management of the Company is responsible for determining the fair value of assets acquired, liabilities assumed and content assets identified
as of the acquisition date and considered a number of factors including valuations from an independent appraiser firm. Acquisition-related
costs incurred for the acquisitions are not material and have been expensed as incurred in other operating expenses.
| As of September 30, | ||||
| 2025 | ||||
| RMB | ||||
| (unaudited) | ||||
| Net tangible assets (1) | ||||
| Customer relationships (2) | ||||
| License (3) | ||||
| Goodwill | ||||
| Deferred tax liabilities recognized | ( | ) | ||
| Less: non-controlling interest | ( | ) | ||
| Total purchase consideration | ||||
| (1) | |
| (2) | |
| (3) |
The Company has included the financial results
of Zhonglian in its condensed consolidated statements of operations and comprehensive loss from the date of acquisition. Zhonglian’s revenues
and net income from the acquisition date through December 31, 2025, as included in the Company’s condensed consolidated statements of
operations and comprehensive loss, were RMB
F-21
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3 — ACQUISITION OF ZHONGLIAN (cont.)
| As of September 30, | ||||
| 2025 | ||||
| RMB | ||||
| ASSETS | ||||
| Current Assets | ||||
| Cash and cash equivalents | ||||
| Restricted cash | ||||
| Accounts receivable, net | ||||
| Income tax recoverable | ||||
| Prepaid expenses and other current assets, net | ||||
| Total Current Assets | ||||
| Property and equipment, net | ||||
| Operating lease right of use assets | ||||
| Restricted cash, noncurrent | ||||
| Deferred tax assets | ||||
| Total Non-Current Assets | ||||
| Total Assets | ||||
| LIABILITIES, AND SHAREHOLDERS’ EQUITY | ||||
| Current Liabilities | ||||
| Accounts payable | ||||
| Operating lease liabilities, current | ||||
| Accrued expenses and other liabilities | ||||
| Total Current Liabilities | ||||
| Deferred tax liabilities | ||||
| Operating lease liabilities, noncurrent | ||||
| Total Non-current Liabilities | ||||
| Total Liabilities | ||||
| Net tangible assets | ||||
F-22
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4 — ACCOUNTS RECEIVABLE
As of June 30, 2025 and December 31, 2025, accounts receivable consisted of the following:
| As of June 30, 2025 | As of December 31, 2025 | |||||||
| RMB | RMB | |||||||
| Accounts receivable | ||||||||
| Less: Allowance for credit losses | ( | ) | ( | ) | ||||
For the six months ended December 31, 2024 and 2025, the movement of allowance against expected credit losses was as the following:
| For the Six Months Ended December 31, | ||||||||
| 2024 | 2025 | |||||||
| RMB | RMB | |||||||
| Opening balance | ||||||||
| Provision (reversal of provision) of expected credit losses | ||||||||
| Ending balance | ||||||||
5 — PREPAID EXPENSES AND OTHER CURRENT ASSETS, NET
As of June 30, 2024 and 2025, prepaid expenses and other current assets, net consisted of the following:
| As of June 30, 2025 | As of December 31, 2025 | |||||||
| RMB | RMB | |||||||
| Prepayments | ||||||||
| Employee loan | ||||||||
| Advance to staff | ||||||||
| Deposits(a) | ||||||||
| Prepaid expenses | ||||||||
| Value-added tax recoverable | ||||||||
| Others | ||||||||
| Less: Allowance for credit losses | ( | ) | ( | ) | ||||
| Total prepayments and other current assets, net | ||||||||
| (a) |
F-23
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5 — PREPAID EXPENSES AND OTHER CURRENT ASSETS, NET (cont.)
The movement of the expected credit loss against prepaid expenses and other receivables for the years ended June 30, 2023, 2024 and 2025 is as follows:
| For the Six Months Ended December 31, | ||||||||
| 2024 | 2025 | |||||||
| RMB | RMB | |||||||
| Opening balance | ||||||||
| Provision (reversal of provision) of expected credit losses | ||||||||
| Writing off against other receivable | ) | |||||||
| Ending balance | ||||||||
6 — INTANGIBLE ASSETS, NET
As of June 30, 2025 and December 31, 2025, intangible assets, net consisted of the following:
| As of June 30, 2025 | As of December 31, 2025 | |||||||
| RMB | RMB | |||||||
| Intangible asset with infinite useful life | ||||||||
| License | ||||||||
| Intangible assets with finite useful lives | ||||||||
| Customer relationship | ||||||||
| Software | ||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
License and customer relationship
were recognized in acquisition of Zhonglian (Note 3) in September 2025. For the six months ended December 31, 2024 and 2025, amortization
expenses were RMB
The following is a schedule, by years, of amortization of intangible assets as of December 31, 2025:
| December 31, 2025 | ||||
| RMB | ||||
| For the six months ending June 30, 2026 | ||||
| For the year ending June 30, 2027 | ||||
| For the year ending June 30, 2028 | ||||
| For the year ending June 30, 2029 | ||||
| For the year ending June 30, 2030 and thereafter | ||||
F-24
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7 — LEASES
As of June 30, 2025
and December 31, 2025, Zhibao China Group leases office spaces in different cities in the PRC under non-cancelable operating leases, with
terms ranging between
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 unaudited condensed consolidated statements of operations and comprehensive loss 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 unaudited condensed consolidated balance sheets.
| As of June 30, 2025 | As of December 31, 2025 | |||||||
| RMB | RMB | |||||||
| Right of use assets | ||||||||
| Operating lease liabilities, current | ||||||||
| Operating lease liabilities, noncurrent | ||||||||
| Total operating lease liabilities | ||||||||
Other information about the Company’s leases is as follows:
| For the Six Months Ended December 31, 2025 | ||||||||
| 2024 | 2025 | |||||||
| RMB | RMB | |||||||
| Operating cash flows used in operating leases | ||||||||
| Weighted average remaining lease term (years) | ||||||||
| Weighted average discount rate | % | % | ||||||
F-25
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7 — LEASES (cont.)
Operating lease expenses
were RMB
The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2025:
| December 31, 2025 | ||||
| RMB | ||||
| For the six months ending June 30, 2026 | ||||
| For the year ending June 30, 2027 | ||||
| For the year ending June 30, 2028 | ||||
| For the year ending June 30, 2029 | ||||
| Total lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Present value of lease liabilities | ||||
8 — DEPOSIT OF LONG-TERM INVESTMENTS
Deposit of long-term investments
represented cash consideration advanced to the shareholders of certain equity investees.
| As of June 30, 2025 | As of December 31, 2025 | |||||||
| RMB | RMB | |||||||
| Deposit of investment in Zhonglian – deposit related to an acquisition in progress (a) | ||||||||
| Deposit for non-controlling interests in other investees (b) | ||||||||
| (a) |
| (b) |
F-26
ZHIBAO TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
9 — SHORT-TERM BANK BORROWINGS
As of June 30, 2025 and December 31, 2025, short-term bank borrowings consisted of the following:
| As of June 30, 2025 |
As of December 31, 2025 |
|||||||
| RMB | RMB | |||||||
| China Merchant Bank (“CMB”)(a) | ||||||||
| Bank of Nanjing (“NJCB”)(b) | ||||||||
| China Citic Bank (“Citic”)(c) | ||||||||
| China Construction Bank (“CCB”)(d) | ||||||||
| (a) | In
October 2023, Zhibao China Group entered into an extended three-year bank credit facility with CMB under which Zhibao China
Group can draw-down up to RMB |
For the six months ended December 31,
2024 and 2025, the Company has drawn down RMB
On July 7, 2024, Zhibao China Group
entered into a one-year bank borrowing agreement with CMB to borrow RMB
| (b) |
| (c) |
| (d) | Zhibao China Group borrowed loans of RMB |
Interest expenses were RMB
F-27
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
10 — ACCRUED EXPENSES AND OTHER LIABILITIES
As of June 30, 2025 and December 31, 2025, accrued expenses and other liabilities consisted of the following:
| As of June 30, 2025 | As of December 31, 2025 | |||||||
| RMB | RMB | |||||||
| VAT and other taxes payable | ||||||||
| Accrued payroll and welfare | ||||||||
| Due to insurance carriers | ||||||||
| Deposits payable | ||||||||
| Other payables to suppliers (1) | ||||||||
| (1) |
11 — CONVERTIBLE NOTES
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 $
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 $
On October 1, 2024, the Company
and the Investor consummated the second closing of the First Tranche. The Company received $
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 $
On February 14, 2025, pursuant
to the terms of the Securities Purchase Agreement and the Letter Agreement, the Company and the Investor consummated the first closing
of the Second Tranche (the “First Closing of the Second Tranche”). The Company received $
F-28
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
11 — CONVERTIBLE NOTES (cont.)
On July 22, 2025, pursuant
to the terms of the Securities Purchase Agreement and the Letter Agreement, the Company and the Investor consummated the first closing
of the Second Tranche (the “Second Closing of the Second Tranche”). The Company received $
For the six months ended
December 31, 2024, the Company received $
The Notes will mature on the first anniversary from its issuance. No interest is charged to the Notes. The key terms of the Notes are as follows:
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 any time after September 23, 2024 at following fixed conversion prices.
| Initial Conversion Price | ||||
| US$ | ||||
| First Closing of First Tranche | ||||
| Second Closing of First Tranche | ||||
| Third Closing of First Tranche | ||||
| First Closing of Second Tranche | ||||
| Second Closing of Second Tranche | ||||
Effective upon each
of the second Closing and third Closing of First Tranche and Second Tranche, as applicable, the Fixed Conversion Price shall be decreased,
but in no event increased, to an amount equal to the lowest of
If the Company receives a
conversion notice to convert the First Tranche convertible notes at a time at which the conversion price is less than $
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. In addition, the conversion price is also subject to down-round adjustments including adjustments for issuance of common stocks, issuance of options, issuance of convertible stocks, change in option price or rate of conversion and issuance of units.
F-29
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
11 — CONVERTIBLE NOTES (cont.)
Acceleration
Upon two trading days’ notice to the Company (the date of such notice, the “Monthly Payment Adjustment Notice Date”), the Investor may elect at its sole option, to defer or accelerate up to five (5) Monthly Payments or any portion of a Monthly Payment, to any Trading Day succeeding such Monthly Payment Adjustment Notice Date provided such date precedes the next monthly Payment Date, provided, however, that any such accelerations shall be payable in shares rather than cash. In addition, the Investor and the Company may mutually agree to additional accelerations or deferrals in excess of the up to five (5) accelerations or deferrals provided for above.
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
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
The Company is also obliged
to transfer make whole shares in the event that the
As of June 30, 2025, the
Company has fully settled the note issued in First Closing of First Tranche with principal amount of $
For the six months ended
December 31, 2025, the Company settled the note issued in the First closing of Second Tranche with principal amount of $
As of December 31, 2025,
the Company had outstanding notes issued in the First closing of Second Tranche with principal amount of $
F-30
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
11 — CONVERTIBLE NOTES (cont.)
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 notes were
issued in multiple closings. The Company initially recognized each convertible note at its residual value after allocating the net proceeds
of each issuance to the related warrant liabilities (Note 12) and embedded derivative liabilities. Accordingly, the Company allocated
net proceeds of $
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 unaudited condensed consolidated statements of operations and comprehensive loss. For the six months ended December 31,
2024 and 2025, the Company recognized interest expenses of $
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 unaudited condensed consolidated
statements of operations and comprehensive (loss) income. For the six months ended December 31, 2024 and 2025, the Company recognized
loss on settlement of convertible notes of $
The conversion feature is
accounted for as a derivative liability at fair value, with changes in fair value charged to unaudited condensed consolidated statements
of operations and comprehensive (loss) income. For the six months ended December 31, 2024 and 2025, the Company recognized an increase
in fair value of derivative liability of $
As of December 31, 2025,
the carrying amounts of the Company’s convertible notes are principal amount of RMB
F-31
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
11 — CONVERTIBLE NOTES (cont.)
Accounting for the Convertible Notes (cont.)
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 of First Tranche | Second Closing of First Tranche | Third Closing of First Tranche | First Closing of Second Tranche | Second Closing of Second Tranche | ||||||||||||||||
| Issuance Date | On September 24, 2024 | On October 7, 2024 | On December 12, 2024 | On February 20, 2025 | On July 22, 2025 | |||||||||||||||
| Risk-free rate | % | % | % | % | % | |||||||||||||||
| Estimated volatility rate | % | % | % | % | % | |||||||||||||||
| Dividend yield | % | % | % | % | % | |||||||||||||||
| Bond yield | % | % | % | % | % | |||||||||||||||
| First Closing of First Tranche | First Closing of First Tranche | Second Closing of First Tranche | Second Closing of First Tranche | Second Closing of First Tranche | Second Closing of First Tranche | |||||||||||||||||||
| Extinguishment date or Balance sheet date | On November 22, 2024 | On December 6, 2024 | On December 6, 2024 | On December 23, 2024 | On January 23, 2025 | On February 24, 2025 | ||||||||||||||||||
| Risk-free rate | % | % | % | % | % | % | ||||||||||||||||||
| Estimated volatility rate | % | % | % | % | % | % | ||||||||||||||||||
| Dividend yield | % | % | % | % | % | % | ||||||||||||||||||
| Bond yield | % | % | % | % | % | % | ||||||||||||||||||
| Third Closing of First Tranche | Third Closing of First Tranche | Third Closing of First Tranche | Third Closing of First Tranche | Third Closing of First Tranche | ||||||||||||||||
| Extinguishment date or Balance sheet date | On February 24, 2025 | On April 1, 2025 | On April 23, 2025 | On May 23, 2025 | On June 23, 2025 | |||||||||||||||
| Risk-free rate | % | % | % | % | % | |||||||||||||||
| Estimated volatility rate | % | % | % | % | % | |||||||||||||||
| Dividend yield | % | % | % | % | % | |||||||||||||||
| Bond yield | % | % | % | % | % | |||||||||||||||
| First Closing of Second Tranche | First Closing of Second Tranche | First Closing of Second Tranche | First Closing of Second Tranche | First and Second Closing of Second Tranche | First and Second Closing of Second Tranche | |||||||||||||||||||
| Extinguishment date or Balance sheet date | On April 15, 2025 | On June 3, 2025 | On June 16, 2025 | On July 16, 2025 | On August 16, 2025 | On September 25, 2025 | ||||||||||||||||||
| Risk-free rate | % | % | % | % | % | % | ||||||||||||||||||
| Estimated volatility rate | % | % | % | % | % | % | ||||||||||||||||||
| Dividend yield | % | % | % | % | % | % | ||||||||||||||||||
| Bond yield | % | % | % | % | % | % | ||||||||||||||||||
F-32
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
11 — CONVERTIBLE NOTES (cont.)
Accounting for the Convertible Notes (cont.)
| First and Second Closing of Second Tranche | First and Second Closing of Second Tranche | First and Second Closing of Second Tranche | First Closing of Second Tranche | First and Second Closing of Second Tranche | ||||||||||||||||
| Extinguishment date or Balance sheet date | On October 20, 2025 | On November 17, 2025 | On December 17, 2025 | On June 30, 2025 | On December 31, 2025 | |||||||||||||||
| Risk-free rate | % | % | % | % | % | |||||||||||||||
| Estimated volatility rate | % | % | % | % | % | |||||||||||||||
| Dividend yield | % | % | % | % | % | |||||||||||||||
| Bond yield | % | % | % | % | % | |||||||||||||||
12 — WARRANT LIABILITIES
In connection with convertible
notes (Note 11), the Company issued Purchase Warrants to the Holder to purchase up to
The exercise price for each Purchase Warrants were as the following:
| Exercise Price | ||||
| US$ | ||||
| First Closing of First Tranche | ||||
| Second Closing of First Tranche | ||||
| Third Closing of First Tranche | ||||
| First Closing of Second Tranche | ||||
| Second Closing of Second Tranche | ||||
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 share subscription facility (the “Share Subscription Facility”), pursuant to which a third-party investor agreed, subject to certain conditions, to subscribe for the Company’s Class A ordinary shares. In connection with the Share Subscription Facility, the Company entered into a waiver agreement (the “Waiver Agreement”) with the Holder of the Company’s convertible notes and purchase warrants. Pursuant to the Waiver Agreement, the Holder agreed to waive certain rights arising under the Securities Purchase Agreement and the related convertible notes, including rights related to price adjustments and other protective provisions, that could otherwise have been triggered by the Company’s entry into equity financing arrangements.
F-33
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
12 — WARRANT LIABILITIES (cont.)
On June 22, 2025, upon the
Company’s entry into an equity purchase agreement with Hudson Global Ventures, LLC, which constituted a triggering event under the
Waiver Agreement, the Company issued
In addition, pursuant to
the anti-dilution and price adjustment provisions of the Purchase Warrants, subsequent financing transactions at prices below the then-current
exercise prices resulted in a downward adjustment of the exercise prices of all outstanding Purchase Warrants and Waiver Warrants to $
The issuance of Purchase
Warrants triggered the adjustments of exercise prices for Purchase Warrants issued in the three closings of First Tranche and one closing
of Second Tranche. The Company adjusted the Purchase Warrants to the Holder to purchase up to
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 unaudited condensed consolidated statements of operations and comprehensive loss.
On issuance dates, the Company
recognized the Purchase Warrants at fair value of $
The Waiver Warrants were determined to be derivative liabilities under ASC 815-40, as they are not considered indexed to the Company’s own stock due to their variable settlement provisions. The Waiver Warrants constituted newly issued derivative instruments and were initially recognized at fair value on the issuance date.
The issuance of the Waiver Warrants did not result in the replacement or cancellation of the existing convertible notes issued in the first three closings, nor did it modify the notes’ principal amounts, stated interest rates, or contractual maturity dates. Instead, the Waiver Warrants were issued as consideration to the holder in exchange for the waiver of certain rights under the existing convertible notes. Accordingly, the Company concluded that the issuance of the Waiver Warrants represented a modification of the existing convertible notes rather than an extinguishment under ASC 470-50.
The fair value of the Waiver Warrants was recorded as an additional debt discount and is amortized over the remaining term of the related credit facility using the effective interest method. As the convertible notes issued in the first three closings were fully repaid on June 23, 2025, the remaining unamortized debt discount related to the Waiver Warrants was expensed immediately upon issuance.
For the year ended June 30,
2025, the Company recognized $
F-34
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
12 — WARRANT LIABILITIES (cont.)
The fair value of Purchase Warrant and Waiver Warrants 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:
| First Closing of First Tranche | Second Closing of First Tranche | Third Closing of First Tranche | First Closing of Second Tranche | Waiver Warrants | Second Closing of Second Tranche | |||||||||||||||||||
| Issuance Date | On September 24, 2024 | On October 7, 2024 | On December 12, 2024 | On February 20, 2025 | On June 22, 2025 | On July 22, 2025 | ||||||||||||||||||
| Risk-free rate | % | % | % | % | % | % | ||||||||||||||||||
| Estimated volatility rate | % | % | % | % | % | % | ||||||||||||||||||
| Dividend yield | % | % | % | % | % | % | ||||||||||||||||||
| Spot price of underling ordinary share | ||||||||||||||||||||||||
| Exercise price | ||||||||||||||||||||||||
| Fair value of Purchase Warrant in USD | ||||||||||||||||||||||||
| First Closing of First Tranche | Second Closing of First Tranche | Third Closing of First Tranche | First Closing of Second Tranche | Waiver Warrants | ||||||||||||||||
| Balance Sheet Date | On June 30, 2025 | On June 30, 2025 | On June 30, 2025 | On June 30, 2025 | On June 30, 2025 | |||||||||||||||
| Risk-free rate | % | % | % | % | % | |||||||||||||||
| Estimated volatility rate | % | % | % | % | % | |||||||||||||||
| Dividend yield | % | % | % | % | % | |||||||||||||||
| Spot price of underling ordinary share | % | |||||||||||||||||||
| Exercise price | ||||||||||||||||||||
| Fair value of Purchase Warrant in USD | ||||||||||||||||||||
| First Closing of First Tranche | Second Closing of First Tranche | Third Closing of First Tranche | First Closing of Second Tranche | Waiver Warrants | Second Closing of Second Tranche | |||||||||||||||||||
| Balance Sheet Date | On December 31, 2025 | On December 31, 2025 | On December 31, 2025 | On December 31, 2025 | On December 31, 2025 | On December 31, 2025 | ||||||||||||||||||
| Risk-free rate | % | % | % | % | % | % | ||||||||||||||||||
| Estimated volatility rate | % | % | % | % | % | % | ||||||||||||||||||
| Dividend yield | % | % | % | % | % | % | ||||||||||||||||||
| Spot price of underling ordinary share | ||||||||||||||||||||||||
| Exercise price | ||||||||||||||||||||||||
| Fair value of Purchase Warrant in USD | ||||||||||||||||||||||||
F-35
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
13 — EQUITY
Ordinary shares
The Company’s authorized
share capital is US$
As of June 30, 2025, the
Company had
On February 4, 2024,
the Company’s shareholders and Board of Directors approved: (i) the reclassification of
During the six months ended
December 31, 2025, the Company issued an aggregated
As a result of the issuances
and reclassification stated above, the Company had
Warrants
On April 3, 2024, the Company
issued
EF Hutton LLC is entitled
to exercise each warrant by purchase of one Class A Ordinary Share at an exercise price of $
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.
F-36
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
13 — EQUITY (cont.)
Warrants (cont.)
The fair value of the IPO
Warrants and Over-allotment Warrants were estimated at RMB
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 | % | |||
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 unaudited condensed 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
As of June 30, 2025
and December 31, 2025, the Company’s PRC subsidiaries did not set aside statutory reserves. As of December 31, 2025, the Company
had restricted net assets of approximately RMB
F-37
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
14 — 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
Zhibao BVI is incorporated in the British Virgin Islands and is not subject to tax on income or capital gains under current British Virgin Islands law. In addition, upon payments of dividends by these entities to their shareholders, no British Virgin Islands withholding tax will be imposed.
Hong Kong
According to Tax (Amendment)
(No. 3) Ordinance 2018 published by Hong Kong government, from April 1, 2018, under the two-tiered profits tax rates regime, the profits
tax rate for the first HKD
Malaysia
Zhibao Labuan is incorporated
in Malaysia and is subject to Malaysia Corporate Income Tax imposed on income accruing in or derived from Malaysia. Zhibao Labuan is subject
to the standard corporate tax rate of
PRC
Zhibao China, Sunshine Insurance
Brokers, Shanghai Anyi, Zhibao Health, Zhizhongbao and Zhonglian 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. Under the EIT Law in the PRC, the unified
EIT rate for domestic enterprises and foreign invested enterprises is
The income tax expenses for the six months ended December 31, 2024 and 2025 were comprised of the following:
| For the Six Months Ended December 31, | ||||||||
| 2024 | 2025 | |||||||
| RMB | RMB | |||||||
| Current income tax expenses | ( | ) | ||||||
| Deferred income tax expenses | ( | ) | ( | ) | ||||
| Total income tax expenses | ( | ) | ( | ) | ||||
F-38
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
14 — INCOME TAX (cont.)
PRC (cont.)
The significant components of deferred taxes were as follows:
| As of June 30, 2025 | As of December 31, 2025 | |||||||
| RMB | RMB | |||||||
| Deferred tax assets | ||||||||
| Net operating loss carrying forwards | ||||||||
| Allowance against doubtful accounts | ||||||||
| Operating lease liabilities | ||||||||
| Total deferred tax assets | ||||||||
| Less: Valuation allowance | ( | ) | ( | ) | ||||
| Total deferred tax assets, net of valuation allowance | ||||||||
| Net off against deferred tax liabilities | ( | ) | ( | ) | ||||
| Total Deferred tax assets, net | ||||||||
| As of June 30, 2025 | As of December 31, 2025 | |||||||
| RMB | RMB | |||||||
| Deferred tax liabilities | ||||||||
| Timing difference - revenue recognized prior to issuance of PRC VAT invoices | ||||||||
| Recognition of intangible assets arising from business combination (Note 3) | ||||||||
| Operating lease right of use assets | ||||||||
| Total deferred tax liabilities | ||||||||
| Net off against deferred tax assets | ( | ) | ( | ) | ||||
| Deferred tax liabilities, net | ||||||||
The effective tax rate for the interim period differs from the prior year primarily due to changes in projected earnings, including the impact of current income tax expenses attributable to profitable subsidiaries of the acquired entity, the utilization of net operating loss carryforwards, changes in valuation allowance, and the impact of deferred tax liabilities arising from intangible assets recognized in the business combination.
According to PRC tax regulations, the PRC enterprise net operating loss can generally carry forward for no longer than five years, starting from the year subsequent to the year in which the loss was incurred. Carryback of losses is not permitted.
Total net operating losses
carryforwards of the Company’s subsidiaries in mainland China is RMB
The Company considers positive
and negative evidence to determine whether some portion or all of the deferred tax assets will more likely than not be realized. This
assessment considers, among other matters, the nature, frequency and severity of recent losses, forecasts of future profitability, the
duration of statutory carry forward periods, the Company’s experience with tax attributes expiring unused and tax planning alternatives.
Valuation allowances have been established for deferred tax assets based on a more-likely-than-not threshold. Under the applicable accounting
standards, management has considered the Company’s history of losses and the uncertainty of future profitability, and concluded
that it is more likely than not that the Company will not generate future taxable income to utilize the deferred tax assets prior to the
expiration of the majority of net operating losses. Accordingly, as of June 30, 2025 and December 31, 2025, a valuation allowance of RMB
F-39
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
14 — INCOME TAX (cont.)
Unrecognized tax benefits
As of June 30, 2025 and December
31, 2025, the Company had unrecognized tax benefits of RMB
The Company recognizes interest and penalties, where applicable, as a component of income tax expense.
As of June 30, 2025 and December 31, 2025, the Company did accrue interest related to unrecognized tax benefits. For the six months ended December 31, 2024 and 2025, the Company did reverse any interest related to unrecognized tax benefits. The Company did record any penalties related to unrecognized tax benefits.
15 — LOSS PER SHARE
The following table sets forth the computation of basic and diluted loss per share for the six months ended December 31, 2024 and 2025:
| For the six months ended December 31, | ||||||||||||
| 2024 | 2025 | 2025 | ||||||||||
| RMB | RMB | USD (Note 2) | ||||||||||
| Net loss attributable to Zhibao Technology Inc.’s Shareholders | ( | ) | ( | ) | ( | ) | ||||||
| Weighted average number of ordinary share outstanding | ||||||||||||
| Basic and diluted | ||||||||||||
| Loss per share | ||||||||||||
| Basic and diluted | ( | ) | ( | ) | ( | ) | ||||||
F-40
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
15 — LOSS PER SHARE (cont.)
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 and 2025, the Company incurred net losses. Accordingly, all potentially dilutive securities were anti-dilutive and were excluded from the calculation of diluted loss per share. The weighted-average number of potentially anti-dilutive shares excluded from calculation of dilutive earnings per share are as follows:
| For the Six Months Ended December 31, | ||||||||
| 2024 | 2025 | |||||||
| RMB | RMB | |||||||
| IPO warrants | ||||||||
| Over-allotment warrants | ||||||||
| Convertible notes (note 11) | ||||||||
| Total | ||||||||
16 — 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 3, 2024, Zhibao China,
the plaintiff, filed a lawsuit at Shenzhen Futian District People’s Court against Taiping General Insurance Company Limited (“Taiping
Insurance”), in connection with the breach of contract pursuant to Third Party Management Service Cooperation Agreements. In this
lawsuit, Zhibao China requested Taiping Insurance to repay management service fees of RMB
F-41
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
16 — COMMITMENTS AND CONTINGENCIES (cont.)
Legal proceedings (cont.)
On July 20, 2025, Zhonglian,
as the plaintiff, filed a lawsuit at Ningbo Yinzhou District People’s Court against Hangzhou Fuxiaoyun Technology Co., Ltd. (“Fuxiaoyun”),
alleging breach of contract under a recommendation and consulting service agreement. In this action, Zhonglian seeks compensation from
Fuxiaoyun for losses amounting to RMB
On January 26, 2026, Lianren
Health Medical Big Data Technology Co., Ltd. (“Lianren Health”) filed a lawsuit at Shanghai Pudong New Area People’s Court against
Sunshine Insurance Brokers, in connection with the defendant’s outstanding service fees under an Internet Insurance Marketing and Promotion
Cooperation Agreement. In this lawsuit. Lianren Health requested Sunshine Insurance Brokers to repay service fees of RMB
Other than the above, the Company did not have other significant commitments, long-term obligations, significant contingencies or guarantees as of December 31, 2025.
17 — RELATED PARTY TRANSACTIONS
| 1) |
| Name | Relationship with the Company | |
| Botao Ma | ||
| Shanghai Xinhui Investment Consulting Co., Ltd. (“Shanghai Xinhui”) | ||
| Shanghai GBG Enterprise Management Consulting Co., Ltd. (“Shanghai GBG”) | ||
| Beijing Zhongfan Zhibao Technology Co., Ltd. | ||
| Yuanwen Xia | ||
| Minghua Li | ||
| Xiaowei Le |
F-42
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
17 — RELATED PARTY TRANSACTIONS (cont.)
| 2) | Transactions with related parties |
During the six months ended December 31, 2024 and 2025, the transactions with related parties were as follows:
Purchases of services from related parties
| For the Six Months Ended December 31, | ||||||||
| 2024 | 2025 | |||||||
| RMB | RMB | |||||||
| Shanghai GBG | ||||||||
Borrowings from (Repayment of Borrowings to) related parties
| For the Six Months Ended December 31, | ||||||||||||||||
| 2024 | 2025 | |||||||||||||||
| Borrowings | Repayments | Borrowings | Repayments | |||||||||||||
| RMB | RMB | RMB | RMB | |||||||||||||
| Shanghai Xinhui | ( | ) | ||||||||||||||
| Zhongfang Zhibao | ( | ) | ||||||||||||||
| Botao Ma | ( | ) | ||||||||||||||
| Yuanwen Xia | ( | ) | ||||||||||||||
| Xiaowei Ren | ( | ) | ||||||||||||||
| Others | ( | ) | ||||||||||||||
(Loans made to) Collection of loans from related parties
| For the Six Months Ended December 31, | ||||||||||||||||
| 2024 | 2025 | |||||||||||||||
| Advance to | Collection | Advance to | Collection | |||||||||||||
| RMB | RMB | RMB | RMB | |||||||||||||
| Shanghai GBG | ( | ) | ||||||||||||||
| Botao Ma | ( | ) | ||||||||||||||
| Minghua Li | ( | ) | ||||||||||||||
| ( | ) | |||||||||||||||
F-43
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
17 — RELATED PARTY TRANSACTIONS (cont.)
| 3) | Balances with related parties |
As of June 30, 2025 and December 31, 2025, the balances with related parties were as follows:
| As of June 30, 2025 | As of December 31, 2025 | |||||||
| RMB | RMB | |||||||
| Due from related parties | ||||||||
| Shanghai GBG(a) | ||||||||
| Botao Ma(b) | ||||||||
| Minghua Li(b) | ||||||||
| Less: Allowance against advances to Shanghai GBG | ( | ) | ( | ) | ||||
| (a) |
| (b) |
F-44
ZHIBAO
TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
17 — RELATED PARTY TRANSACTIONS (cont.)
| 3) | Balances with related parties (cont.) |
| As of June 30, 2025 | As of December 31, 2025 | |||||||
| RMB | RMB | |||||||
| Due to related parties | ||||||||
| Shanghai Xinhui(a) | ||||||||
| Botao Ma(b) | ||||||||
| Zhongfang Zhibao(c) | ||||||||
| Yuanwen Xia | ||||||||
| Xiaowei Le | ||||||||
| Others | ||||||||
| (a) | As of June 30, 2025, the balance due to Shanghai Xinhui consisted of (i) borrowing of RMB
As of December 31, 2025, the balance due to Shanghai Xinhui consisted of (i) borrowing of RMB |
| (b) | |
| (c) |
18 — SUBSEQUENT EVENTS
Effective on February 16,
2026, the Company adopted the 2026 Equity Incentive Plan (the “Plan”). Unless the Board terminates the Plan earlier, it has
a term of
Other than the above, the Company evaluated the subsequent event through the date of this report and concluded that there are no material reportable subsequent events need to be disclosed.
F-45