6-K
Zhibao Technology Inc. (ZBAO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUERPURSUANT TO RULE 13a-16 OR 15d-16UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of July 2025
Commission File Number: 001-42000
Zhibao Technology Inc.
(Translation of registrant’s name intoEnglish)
Floor 3, Building 6, Wuxing Road, Lane 727
Pudong New Area, Shanghai, China, 201204
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Entry into a Material Definitive Agreement
On July 2, 2025, Zhibao Technology Inc. (the “Company”), a Cayman Islands exempted company, announced that one of its subsidiaries, Zhibao Technology Co., Ltd. (“Zhibao China”), a limited liability company incorporated under the laws of the People’s Republic of China (the “PRC” or “China”), entered into a Share Purchase Agreement (the “SPA”) with Xuegeng Zhao and Qin’er Ye (“Sellers”), the shareholders of Zhonglian Jinan Insurance Brokers Co., Ltd. (“Zhonglian” or “Target”), and the Target, 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 (the “AcquiredAssets”), including 23% of the equity interest from Xuegeng Zhao and 28% of the equity interest from Qin’er Ye, for a total purchase price of RMB25.5 million (approximately $3.5 million) (“Purchase Price”), subject to adjustment as provided in the SPA (the “Acquisition”).
The Purchase Price is based on an evaluation of RMB 50 million for the 100% of the equity interest in Zhonglian mutually agreed by Zhibao China and Sellers and shall be paid in four installments. The first three installments, each in the amount of RMB7.65 million (approximately $1.05 million), shall be payable on July 31, 2025, July 31, 2025 and January 31, 2026, respectively. The fourth installment, in the amount of RMB 2.55 million (approximately $0.35 million), is subject to adjustment in the event that the revenue generated by the Target is less than RMB 140 million (approximately $19.18 million) within one year following the full payment of the first instalment of the Purchase Price (the “DeliveryDate”). The adjustment shall be calculated based on the following formula: RMB 25.5 million times (RMB 140 million minus 100% of the Target’s revenue within one year following the Delivery Date) divided by RMB 140 million, and shall be capped at a maximum adjustment amount of RMB 1 million (approximately $0.14 million). The fourth installment is payable within 30 days following the first anniversary of the Delivery Date. Failure to pay the Purchase Price on time as stipulated in the SPA will subject Zhibao China to liquidated damages at a rate of 0.05% of the unpaid amount for each overdue day. If payment is not made within 90 days of the due date, the Sellers may elect to demand continued performance, accelerated lump-sum payment, or retain amounts paid and convert such amounts, net of liquidated damages, into equity in Zhonglian based on a RMB 50 million valuation, plus additional compensation if the liquidated damages are insufficient to cover losses.
Under the SPA, Zhibao China also has a right of first refusal to acquire an additional 34% equity interests in Zhonglian by the end of 2027 (the “SubsequentAcquisition”), provided that the Sellers and Zhonglian have fulfilled their respective obligations under the SPA, and Zhibao China has not deliberately obstructed, whether through affirmative acts or passive omissions, the normal operation and management of Zhonglian. Notwithstanding the foregoing, if Zhibao China fails to complete the Subsequent Acquisition despite Zhonglian having fulfilled its obligations under the SPA, Zhibao China shall be deemed to be in breach of the SPA and shall be required to pay liquidated damages to the Sellers.
The SPA may be terminated by mutual agreement of the parties. In addition, the Sellers may unilaterally terminate the SPA if Zhibao China fails to pay the first installment within the timeline specified in the SPA.
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The Acquisition and related transactions shall be registered with the relevant PRC governmental authorities within a specified period following the Delivery Date, as set forth in the SPA. After such Acquisition, Zhonglian will become a PRC subsidiary of the Company, with Zhibao China directly holding 51% of its equity interest and Xuegeng Zhao holding the balance of 49%.
Zhonglian, established on June 8, 2005, is a professional insurance brokerage firm headquartered in Ningbo, China, primarily engaged in the provision of insurance brokerage services to end customers. As of the date of this filing, it has 58 branches nationwide, including 28 provincial-level branches across major regions such as Beijing, Shanghai, Guangdong, and Sichuan. Zhonglian’s business spans three primary segments: property insurance, life insurance, and internet-based e-commerce insurance. It has established close partnerships with over 30 leading domestic property insurance companies and more than 10 life insurance providers.
Zhonglian’s brokerage activities are primarily concentrated on non-auto insurance lines, including liability insurance, accident insurance, enterprise property insurance, cargo transportation insurance, and short-term health insurance. Its revenue is derived from brokerage commissions paid by insurance companies.
Zhonglian provides comprehensive services to policyholders, including risk identification and assessment, insurance plan design tailored to clients’ needs and budgets, multi-company policy comparison, and negotiation of underwriting terms. After engagement, Zhonglian assists with application submissions, policy renewals, amendments, and provides professional claims support and coordination. Its clientele includes large and medium-sized enterprises, business owners, government agencies, public institutions such as provincial emergency departments and municipal hospitals, high-net-worth individuals, and specialized industry groups.
The foregoing summary of the SPA is not complete and is qualified in its entirety by reference to the full text of the SPA, a copy of which is attached hereto as Exhibit 10.1 to this report on Form 6-K and is incorporated herein by reference.
Attached as Exhibit 99.1 to this report on Form 6-K is the unaudited pro forma condensed combined financial statements of the Company combining the financial statements of Company and Zhonglian Jinan as of December 31, 2024.
Attached as Exhibit 99.2 to this report on Form 6-K is the audited financial statements of Zhonglian for the years ended June 30, 2023 and 2024 (“Zhonglian’sAudited Financial Statements”).
Attached as Exhibit 99.3 to this report on Form 6-K is the unaudited financial statements of Zhonglian for the six months ended December 31, 2023 and 2024 (“Zhonglian’s Interim Financial Statements”).
Attached as Exhibit 99.4 to this report on Form 6-K is the Operating and Financial Review and Prospects of Zhonglian in connection with Zhonglian’s Audited Financial Statements and Zhonglian’s Interim Financial Statements.
On July 2, 2025, the Company issued a press release announcing the entry of the SPA. A copy of such release is furnished hereto as Exhibit 99.5 to this report on Form 6-K.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, 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: July 2, 2025
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EXHIBIT INDEX
4
Exhibit 10.1
| Share Purchase Agreement |
|---|
Share Purchase Agreement
Between
Zhibao Technology Co., Ltd.
and
Xuegeng Zhao, Qin’er Ye
concerning
Zhonglian Jinan Insurance Brokers Co., Ltd.
Date: July 2, 2025
| Share Purchase Agreement |
|---|
Table of Contents
| Article 1 | Definitions and definitions | 3 |
|---|---|---|
| Article 2 | Purchase and sale of Target Equity | 6 |
| Article 3 | Payment and delivery of the purchase price | 7 |
| Article 4 | Performance commitments | 12 |
| Article 5 | Follow-on acquisitions | 12 |
| Article 6 | Illustration of Zhonglian’s valuation | 13 |
| Article 7 | Report on changes in shareholders | 13 |
| Article 8 | Promises and warranties | 14 |
| Article 9 | Corporate governance | 16 |
| Article 10 | Liability for breach of contract | 19 |
| Article 11 | Notice | 21 |
| Article 12 | Miscellaneous | 22 |
| Appendix 1 Representations and warranties of the Target Company and the transferor | 26 | |
| Annex 2 Financial statements | 28 | |
| Appendix 3 List of major contracts of the Target Company | 29 | |
| Appendix 4 Liabilities and guarantees of the Target Company | 30 | |
| Appendix 5 List of personnel of the Target Company | 31 | |
| Appendix 6 Litigation, arbitration and administrative penalties of the Target Company | 32 |
i
| Share Purchase Agreement |
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SHARE PURCHASE AGREEMENT
This Share Purchase Agreement (the “Agreement”) is entered into by and between the parties on July 2, 2025 (the “Signing Date”).
| 1. | Zhibao Technology Co., Ltd. is a limited liability company established and validly existing in accordance with the laws of the People’s Republic of China. Unified social credit code: 91310000MA1K32U85W; Legal representative: Ma Botao; Residence: Building 10, No. 860, Xinyang Road, Lingang New Area, China (Shanghai) Pilot Free Trade Zone. (hereinafter referred to as the “Transferee” or “Zhibao Technology”). |
|---|---|
| 2. | Xuegeng Zhao is a Chinese natural person. ID number: 330822195703150015; Address: Room 604, No. 31, Lane 988, Zhongshan West Road, Haishu District, Ningbo City, Zhejiang Province; |
| --- | --- |
| 3. | Qin’er Ye is a Chinese natural person. ID number: 330501198101180626; Address: Room 202, Unit 1, Building 19, Huaxing Apartment, No. 230, Fengxi Road, Bottle Kiln Town, Yuhang District, Hangzhou City, Zhejiang Province. (Together with “Xuegeng Zhao”, the “Transferor”). |
| --- | --- |
| 4. | Zhonglian Jinan Insurance Brokers Co., Ltd. is a limited liability company established and validly existing in accordance with the laws of the PRC. Unified social credit code: 91330201773838737K; Legal representative: Xuegeng Zhao; Address: Room 410-9, Hon Hai Commercial Building, Ningbo Free Trade Zone, Zhejiang Province. (hereinafter referred to as “Zhonglian” or “Target Company”). |
| --- | --- |
In this Agreement, “Transferor”, “Transferee” and “Target Company” are collectively referred to as “Parties” and individually referred to as “Parties.”
PREFACE
| A. | As a leader in the digital transformation of China’s insurance brokerage industry, Zhibao Technology provides customized digital insurance solutions for B channel scenarios such as Internet platforms, large and medium-sized enterprises, and government agencies with the help of its 2B2C scenario embedded business model, embeds existing business processes in scenarios, and provides digital insurance brokerage services for C users in the scenarios. As a pioneer in the underwriting agency business (MGU) in China’s insurance industry, Zhibao Technology can assist insurance companies in completing all core insurance businesses in the field of health insurance, including insurance product design, underwriting, risk control, claims, reinsurance, sales and supplier management, and is one of the main providers of high-end medical insurance services in China’s insurance market. Since its establishment more than eight years ago, Zhibao Technology has cooperated with more than 1,500 B channel scenarios, and jointly provided professional insurance brokerage services for tens of millions of individuals and micro, small and medium-sized enterprise customers (C). The ultimate holding company of Zhibao Technology, Zhibao Technology Inc., a Cayman Island exempted company, has been listed on the NASDAQ since April 2024 under the ticker symbol ZBAO. |
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| B. | Zhonglian is a national insurance brokerage company registered in Ningbo in accordance with the laws of the People’s Republic of China and legally existing with the qualification to operate Internet insurance brokerage business. The registered capital is RMB 50,000,000 and the paid-in capital is RMB 50,000,000. As of the date of signing of this Agreement, the shareholding structure of Zhonglian is shown in the following table: | ||
| --- | --- | ||
| Name of shareholder | Paid-in capital contribution(RMB10,000) | Percentage of capitalcontribution | Method of funding |
| --- | --- | --- | --- |
| Xuegeng Zhao | 3600 | 72% | Cash |
| Qin’er Ye | 1400 | 28% | Cash |
| total | 5000 | 100% | - |
| C. | In order to achieve complementary advantages and cooperative development, the parties to this Agreement and related parties signed an Investment Agreement (the “Investment Agreement”) in November 2024, stipulating that the transferee will invest in Zhonglian and the business of Zhonglian will be gradually merged into the transferee. | ||
| --- | --- | ||
| D. | On the basis of the Investment Agreement, the parties to this Agreement intend to make supplementary arrangements on the acquisition of 51% equity interest in Zhonglian by Zhibao Technology and the corporate governance of Zhonglian after the acquisition. | ||
| --- | --- | ||
| E. | Prior to the signing of this Agreement, the transferee has conducted preliminary due diligence, is aware of the financial status of the Target Company and has no objection to it, and agrees to transfer the Target Equity according to the current situation disclosed by the transferor. | ||
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In view of this, and based on the mutual promises, agreements and undertakings set forth in this Agreement, the parties intend to be legally bound by it and hereby agree as follows:
ARTICLE I
DEFINITIONS AND DEFINITIONS
| 1.1 | Definitions. Unless otherwise agreed in the text of this Agreement or otherwise specified, the designations, abbreviations and terms used in the text of this Agreement shall be construed in accordance with the following definitions in this Article |
|---|---|
| “Zhibao Technology” or “Transferee” | Zhibao Technology Co., Ltd. |
| --- | --- |
| “Assignor” | Refers<br>to Xuegeng Zhao and Qin’er Ye. |
| “Zhibao Group” | Refers<br>to all holding subsidiaries (as of the date of signing this Agreement, including Sunshine Insurance Brokers, Shanghai Anyi Network Technology<br>Co., Ltd., and Shanghai Zhibao Health Management Co., Ltd., unless otherwise agreed by the parties), branches, branches or economic entities<br>over which the company can actually control or jointly control them in any form, directly or indirectly established by Zhibao Technology. |
| “Zhonglian” or “Target Company” | Refers to Zhonglian Jinan Insurance Brokers Limited. |
| “Zhonglian Business” | Refers to the business carried out by Zhonglian and proposed to be incorporated into the transferee. |
| “The Acquisition” | In accordance with the conditions agreed in this Agreement, Zhibao Technology transferred 51% of the equity interest in Zhonglian held by the Transferor at a valuation of RMB 50 million (post-investment valuation) for RMB 25.5 million. |
| “Target Equity” | Refers to the 51% equity of the Target Company that the transferor intends to transfer to Zhibao Technology in accordance with the provisions of this Agreement, corresponding to a registered capital of RMB25.5 million and a paid-in capital of RMB25.5 million. |
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| “Acquisition Money” | Refers to the purchase price of the Target Equity to be paid by the transferee to the Transferor in accordance with this Agreement, totaling RMB25.5 million. |
| --- | --- |
| “Performance Target” | Within one year from the delivery date, the brokerage fee (and service fee) incurred by the Zhonglian business (including the business carried out in the form of joint brokerage, the business for which premiums have been incurred but the brokerage fee has not yet been settled, and the revenue in the consolidated financial statements) that have been merged into the Group will not be less than RMB200 million. |
| “Related Parties” | It means, if any of the following circumstances exist between any two parties, either party will be deemed to be an affiliate of the other party: (i) either party directly or indirectly controls or has common control with the other party; (ii) either party exerts, directly or indirectly, significant influence over the decisions of the other party (including, but not limited to, being able to control or jointly control a party’s board of directors or governing body, directing or setting the direction of the other party’s management and policies, whether through voting rights, contracts, agreements, or otherwise); (iii) the parties are simultaneously controlled or under common control with third parties; (iv) either party is a close family member, concert party, nominee or beneficiary of the trust of the other party; or (v) an affiliate of either party has such a relationship with the other party. |
| “Investment Agreement” | Refers to the Investment Agreement signed by the parties to this Agreement in November 2024. |
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| “Delivery Date” | It refers to the date on which the transferee transfers the full amount of the first instalment of the purchase price to the bank account designated by the transferor. |
| --- | --- |
| “China” | means the People’s Republic of China, for the purposes of this Agreement only, excluding the Hong Kong Special Administrative Region of the People’s Republic of China, the Macao Special Administrative Region of the People’s Republic of China and the Taiwan Region. |
| “Weekdays” | Refers to any day other than Saturdays, Sundays and Chinese public holidays. |
| “Meta” | Refers to the Chinese Yuan. |
| 1.2 | Definitions. In this Agreement, unless otherwise specified, the following: |
| --- | --- |
| (1) | The persons mentioned include natural and legal persons, other social organizations and other legal entities; |
| --- | --- |
| (2) | any legal entity mentioned includes its successors and successors to its rights and obligations; |
| --- | --- |
| (3) | the contract or agreement referred to includes its annexes and any amendments and supplements; |
| --- | --- |
| (4) | References to terms and schedules refer only to the terms and schedules of this Agreement; |
| --- | --- |
| (5) | The headings of this Agreement are for convenience only and shall not be used to construed this Agreement; |
| --- | --- |
| (6) | Words such as “above”, “below”, “within”, “within”, “without” or similar words contain this number; |
| --- | --- |
| (7) | The words “greater than”, “less than”, “exceeding”, “under” or similar words do not contain this number. |
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ARTICLE II
PURCHASE AND SALE OF Target Equity
| 2.1 | Buy and sell. On the premise of complying with the terms and conditions of this Agreement, the transferor shall sell and transfer to the transferee, and the transferee shall purchase and transfer the Target Equity from the transferor, that is, 51% of the equity of the Target Company (corresponding to the registered capital of RMB25.5 million and paid-in capital of RMB25.5 million), of which Xuegeng Zhao shall Sell and transfer 23 % of the equity of the Target Company (corresponding to the registered capital of RMB11.50 million, paid-in capital contribution RMB11.50 million), and Qin’er Ye shall sell and transfer 28% of the equity of the Target Company (corresponding to the registered capital of RMB14 million, paid-in capital contribution RMB14 million ) to the transferee. | |||
|---|---|---|---|---|
| 2.2 | Purchase price. The transferee shall acquire the Target Equity for a total price of RMB 25.5 million (“Acquisition Money”) based on a valuation of RMB 50 million (post-investment valuation), which is subject to final adjustment and confirmation in accordance with Article 4 of this Agreement. Of the RMB 25.5 million, RMB 11.5 million will be paid to Xuegeng Zhao, and RMB 14 million will be paid to Qin’er Ye. | |||
| --- | --- | |||
| 2.3 | Share capital and shareholding structure. After the acquisition, the specific shareholding structure of the Target Company is as follows: | |||
| --- | --- | |||
| Name of shareholder | Subscribed capital contribution(10,000 yuan). | Paid-in capitalcontribution (10,000 yuan) | Percentageof capitalcontribution | Method of funding |
| --- | --- | --- | --- | --- |
| Zhibao Technology Co., Ltd | 2550 | 2550 | 51% | Cash |
| Xuegeng Zhao | 2450 | 2450 | 49% | Cash |
| total | 5000 | 5000 | 100% | - |
| 2.4 | Acquisition method. The parties agree that, unless otherwise agreed in this Agreement, the transferee shall pay the purchase price to the transferor in installments. For the avoidance of doubt, from the date on which the transferor receives the first instalment of the purchase price paid by the transferee, the transferee has obtained the shareholders’ rights and interests corresponding to the entire Target Equity (i.e. 51% equity of Zhonglian) regardless of whether the transferee has been registered as a shareholder of the company. | |||
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ARTICLE III
PAYMENT AND DELIVERY OF THE PURCHASE PRICE
| 3.1 | Prerequisites for the payment of the purchase price in each instalment. |
|---|---|
| 3.1.1 | The parties agree that payment of the first instalment of the purchase price shall be subject to the satisfaction of all of the following conditions or waiver of such conditions in writing by Zhibao Technology: |
| --- | --- |
| (1) | This Agreement has been validly signed and entered into force by all parties; |
| --- | --- |
| (2) | The shareholders’ meeting of Zhonglian passed the resolution on the acquisition (including the transfer of the Target Equity, the establishment of the board of directors in accordance with the corporate governance arrangements stipulated in Article 9 of this Agreement and the corresponding amendment to the articles of association), and other shareholders except the TransferorTransferor waived their pre-emptive rights; |
| --- | --- |
| (3) | The materials required for the registration of the Target Equity transfer (including but not limited to the equity transfer agreement, the resolution of the shareholders’ meeting, and the new articles of association/amendments to the articles of association) have been signed; |
| --- | --- |
| (4) | The representations and warranties made by the Target Company and the transferor in this Agreement and Annex 1 to this Agreement are true, complete and accurate as of the date of payment of the first instalment of the purchase price; |
| --- | --- |
| (5) | During the period from the signing of this Agreement to the payment of the first instalment of the purchase price, no new circumstances have occurred or may occur that have a material adverse impact on the Target Company (except for the circumstances agreed in this Agreement). |
| --- | --- |
| 3.1.2 | The parties agree that payment of the second instalment of the purchase price shall be subject to the satisfaction of all of the following conditions or waiver of such conditions in writing by Zhibao Technology: |
| --- | --- |
| (1) | The conditions precedent for the payment of the first instalment of the purchase price have been fully satisfied; |
| --- | --- |
| (2) | The Target Equity has been delivered, the post-closing obligations mentioned in Clause 3.5.1 and Clause 3.5.2 have been fully completed, except for the failure to complete the aforesaid post-closing obligations on time due to reasons attributable to the transferee; |
| --- | --- |
| (3) | The representations and warranties made by the Target Company and the transferor in this Agreement and Appendix 1 to this Agreement are true, complete and accurate as of the date of payment of the second instalment of the purchase price; |
| --- | --- |
| (4) | During the period from the signing of this Agreement to the payment of the second instalment of the purchase price, the Transferor shall comply with the restrictive obligations of the transitional period under Articles 8.4 and 8.5 of this Agreement, and no new circumstances have occurred or may occur that have a material adverse impact on the Target Company. |
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| 3.1.3 | The parties agree that payment of the third instalment of the purchase price shall be subject to the satisfaction of all of the following conditions or waiver of such conditions in writing by Zhibao Technology: |
| --- | --- |
| (1) | The conditions precedent for the payment of the second instalment of the purchase price have been fully satisfied; |
| --- | --- |
| (2) | The representations and warranties made by the Target Company and the transferor in this Agreement and Appendix 1 to this Agreement are true, complete and accurate as of the date of payment of the third instalment of the purchase price; |
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| (3) | During the period from the signing of this Agreement to the payment of the third instalment of the purchase price, the transferor shall comply with the restrictive obligations of the transition period under Articles 8.4 and 8.5 of this Agreement, and no new circumstances shall occur that may have a material adverse impact on the Target Company. |
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| 3.1.4 | The parties agree that payment of the fourth instalment of the purchase price shall be subject to the satisfaction of all of the following conditions or waiver of such conditions in writing by Zhibao Technology: |
| --- | --- |
| (1) | The conditions precedent for the payment of the third instalment of the purchase price have been fully satisfied; |
| --- | --- |
| (2) | The post-closing obligations referred to in Clause 3.5.3 have been fully completed, except for the failure to complete the aforesaid post-closing obligations on time due to reasons attributable to the transferee; |
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| (3) | Zhonglian has completed the Performance Target, that is, the brokerage fee (and service fee) generated by the Zhonglian business (including the business carried out in the form of joint brokerage, the business that has incurred premiums but the brokerage fee has not yet been settled, and the income from the consolidated financial statements) that have been merged into the Zhibao Group within one year from the date of delivery, or the equity purchase price has been adjusted in accordance with Article 4 although Zhonglian has not achieved the Performance Target. |
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| 3.2 | Arrangement of payment of Acquisition Money for each period. |
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| 3.2.1 | The parties agree that, unless otherwise agreed in this Agreement, Zhibao Technology shall pay the Acquisition Money in the following schedules: |
| --- | --- |
| ● | the first installment of the Acquisition Money of RMB7.65 million (i.e., 30% of the Acquisition Money) by July 31, 2025, subject to the satisfaction of the conditions precedent to the payment of the Acquisition Money for each instalment as stipulated in Clause 3.1 of this Agreement)； |
| --- | --- |
| ● | the second instalment of the purchase price of RMB7.65 million (i.e. 30% of the purchase price) by July 31, 2025; |
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| ● | the third instalment of the purchase price of RMB7.65 million (i.e. 30% of the purchase price) by January 31, 2026; |
| --- | --- |
| ● | The fourth installment of the purchase price (i.e. 10% of the purchase price) shall be paid within 30 days following the first anniversary of the delivery date, with a provisional estimate of RMB 2.55 million, which is subject to adjustment and confirmation in accordance with Article 4 of this Agreement, and along with the first three installments, adding together equal to 100% of the Acquisition Money. |
| --- | --- |
| 3.2.2 | The Target Company and the transferor shall issue written proof of the satisfaction of the conditions precedent and payment notice to the Target Company after all the conditions precedent for the payment of the purchase price mentioned in clause 3.1 of this Agreement have been fulfilled (except for the matters that need to be completed or confirmed on the date of payment, or otherwise waived or waived by Zhibao Technology in writing). |
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| 3.3 | Settlement arrangement. |
| --- | --- |
| 3.3.1 | Delivery date. The delivery date under this Agreement refers to the date on which the transferee transfers the full amount of the first instalment of the purchase price to the bank account designated by the transferor. |
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| 3.3.2 | The Target Company and the transferor shall issue to the transferee a scanned copy of the capital contribution certificate and the register of shareholders stamped by the Target Company and signed by the legal representative on the delivery date to prove that the transferee has become a shareholder of the Target Company and holds 51% of the equity of the Target Company. The Target Company and the transferor shall provide the transferee with an original signed copy of the capital contribution certificate and the register of shareholders within five (5) business days after the delivery date. |
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| 3.4 | Division of rights and responsibilities. |
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| 3.4.1 | From the delivery date, the transferee shall enjoy all the rights and interests of the Target Equity (including the right to dividends or bonus distribution), and at the same time bear the company’s operational risks and other shareholder obligations stipulated in the articles of association according to the proportion of the Target Equity; |
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| 3.4.2 | From the delivery date, the Target Company shall be governed and managed in accordance with the provisions of Article 9 of this Agreement; |
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| 3.4.3 | Liabilities, liabilities (loans, guarantees, expenses not incurred in the ordinary course of business), fines, penalties, claims, recourse, litigation and related attorneys’ fees and other legal costs incurred before the Delivery date or arising from the acts and events incurred before the Delivery date, undisclosed taxes and fees payable, related to the Target Equity, shall be borne by the Transferor. If such liabilities/liabilities cause the Target Company or the transferee to bear any payment obligations, the Transferor shall indemnify and hold harmless the Target Company and/or the Transferee for such liabilities/debts, as well as all related costs and losses arising therefrom, and the transferor shall be jointly and severally liable. The transferee shall have the right to make an equal deduction from the unpaid purchase price (if any) or separately require the transferor to bear it, and the transferor shall not require the transferee to bear the liability for breach of contract. However, the payables, tax payables and compliance fees of the Target Company arising from the normal operation of the Target Company that have been disclosed by the transferor and the Target Company to the transferee and have not been disputed shall still be borne by the Target Company. |
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| 3.4.4 | The parties confirm that the book profits and claims (if any) of Zhonglian are owned by the transferor before the delivery date, and the recovered money shall be enjoyed by the transferor, but the transferor shall also be responsible for the taxes and expenses incurred in handling the claims. The transferee/Target Company cooperates with the provision of authorization documents and other necessary procedures. However, the receivables and subsidies arising from normal operation are still enjoyed by the Target Company. |
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| 3.4.5 | For the avoidance of doubt, the transferor shall comply with Section 3.4.3, and 3.4.4. The changes in the financial statements of the Target Company caused by the agreement in Article 4 do not belong to the “any new circumstances that have a material adverse impact on the Target Company” in the conditions precedent for the payment of the Acquisition Money in each period in Article 3.1, nor do they belong to the corresponding “statement deviation” in the representations and warranties of the Target Company and the transferor in Annex 1, and do not affect the valuation of the Target Equity and the payment of the purchase price. |
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| 3.5 | Post-Delivery Obligations. |
| --- | --- |
| 3.5.1 | Within twenty (20) business days after the delivery date, the Target Company and the transferor shall go through the industrial and commercial change/industrial and commercial filing procedures for the adjustment of the composition of the board of directors of the Target Company in accordance with the corporate governance arrangements agreed in Article 9 of this Agreement and the corresponding amendments to the articles of association. |
| --- | --- |
Within thirty (30) business days after the date on which the transferor receives the third installment of the purchase price paid by the transferee, the industrial and commercial change registration procedures for the Target Equity shall be completed, and 5 1% of the equity shall be registered in the name of the transferee with the local government. However, failure to go through the industrial and commercial change registration formalities will not affect the delivery, nor will it affect the transferee’s rights as shareholders from the delivery date.
| 3.5.2 | After the delivery date,<br> before June 30, 2025, the Target Company and the transferor shall cooperate with the transferee to manage the accounts of the Target<br> Company and audit it in accordance with the acquisition standards of the U.S. listed company. The expenses incurred due to<br> bookkeeping and auditing shall be borne by the Target Company. The Transferor and the Target Company only cooperate in providing<br> information, and the transferee shall preside over and be responsible for the accounting and auditing, and if the<br> Transferor and the Target Company cannot complete the accounting or audit on time due to the cooperation of the<br> Transferor and the Target Company, the performance of this Agreement will not be affected. |
|---|---|
| 3.5.3 | The Target Company and the Transferor shall, within ten (10) business days after the date on which the Transferor receive the third installment of the Acquisition Money paid by the transferee, transfer the relevant documents and assets of Zhonglian Jinan to the personnel designated by Zhibao Technology for management and sign the “Handover List” to confirm the transfer matters, including but not limited to: |
| --- | --- |
| 1) | All seals (including but not limited to official seals, financial seals, contract seals, legal representative seals, and seals reserved by other banks), licenses (including but not limited to business licenses, business licenses/approvals/filing certificates), financial information (including but not limited to bank account opening certificates, bank UKey, bank account login and review account numbers, passwords, financial account books and vouchers); |
| --- | --- |
| 2) | Cheque book of the Target Company, or the parties (to be) void in an appropriate manner. |
| --- | --- |
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ARTICLE IV
PERFORMANCE COMMITMENTS
| 4.1 | The parties agree that if the brokerage fee (and service fee) of Zhonglian’s business (including the business carried out in the form of joint brokerage, the business whose premiums have been incurred but the brokerage fee has not yet been settled, and the income from the consolidated financial statements) that are actually incorporated into the Zhibao Group within one year after the delivery date deviate from the Performance Target by more than 30% (i.e., if the brokerage fee (and service fee) incurred by the business of Zhonglian, which is actually incorporated into Zhibao Group within one year after the delivery date, is less than RMB140 million, the transferee has the right to decide to adjust the purchase price in the following ways, and the Transferor shall compensate the transferee in cash, and the cash compensation calculation formula is: |
|---|
Cash compensation = acquisition money of RMB25.5 million × (RMB140 million - brokerage fee (and service fee) generated by the business of Zhonglian, which was actually merged into Zhibao Group within 1 year after the delivery date/ RMB140 million.
| 4.2 | The maximum amount of cash compensation stipulated in clause 4.1 of this Agreement is RMB1 million. |
|---|---|
| 4.2 | If the Transferor compensate the transferee in cash in accordance with Article 4.1 of this Agreement, the transferee has the right to deduct the cash compensation amount from the fourth instalment of the purchase price in priority. |
| --- | --- |
ARTICLE V
FOLLOW-ON ACQUISITIONS
| 5.1 | After the completion of the acquisition, if any transferor intends to continue to transfer the equity of the Target Company held by the transferor, the transferee shall have the right of first refusal (including priority over other shareholders) of the aforesaid equity to be transferred under the same conditions, and the Target Company and the transferor undertake and shall ensure the realization of such preemptive right of the transferee. |
|---|---|
| 5.2 | The transferee undertakes that if both the Transferor and the Target Company have fulfilled their obligations under this Agreement, and the transferee has not deliberately obstructed (including positive and passive obstruction) the normal operation and management of the Target Company, the transferee will further acquire 34% of the Transferor’ equity interest in the Target Company by the end of 2027 at a valuation not lower than the valuation of the Target Company (i.e. RMB 50 million), so that after the completion of the acquisition, Zhibao Technology will obtain 85% of the Target Company and Xuegeng Zhao holds 15% of the equity of the Target Company. |
| --- | --- |
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The parties confirm that the basic conditions for the subsequent equity acquisition shall be subject to this Agreement, and the specific details shall be agreed in a separate agreement between the parties at that time.
| 5.3 | In view of the fact that the subsequent acquisition of the transferee is a key consideration in the decision of the two parties to initiate the cooperation, if the transferee does not carry out the subsequent equity acquisition in accordance with the provisions of this Agreement, it is a material breach of contract, and the Transferee shall pay liquidated damages calculated at a rate of 10% based on a principal amount of RMB 17 million (RMB 50 million × 34%). . However, if the Target Company fails to meet the conditions for subsequent acquisition stipulated in this Agreement, or the transferee and the transferee fail to reach an agreement on the conditions for subsequent acquisition, the transferee shall not be liable for breach of contract. |
|---|---|
| 5.4 | Unless otherwise agreed by the parties, the transferee will pay each instalment of the acquisition of the equity interest of Zhonglian in cash. |
| --- | --- |
ARTICLE VI
ILLUSTRATION OF ZHONGLIAN’S VALUATION
| 6.1 | The Transferor and the Target Company undertake that before the signing of this Agreement, the Transferor and the Target Company have truthfully disclosed the latest financial statements of Zhonglian to the transferee (see Annex 2 for details), and the Target Company and the Transferor have truthfully disclosed to the transferee the amounts and reasons for the formation of the relevant subjects in the financial statements. |
|---|
ARTICLE VII
REPORT ON CHANGES IN SHAREHOLDERS
| 7.1 | Obligation to cooperate in reporting. The Target Company and the Transferor will report in writing to the Ningbo Supervision Bureau of the State Administration of Financial Supervision and Administration and log in to the insurance intermediary cloud platform to submit a report on the change of shareholders and shareholding structure within 5 days from the date of the change of industry and commerce, and the transferee agrees to provide reasonable cooperation in the reporting process. |
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ARTICLE VIII
PROMISES AND WARRANTIES
| 8.1 | The Target Company and the Transferor undertake: |
|---|---|
| 1) | After the acquisition, Zhonglian shall strictly abide by (and shall ensure that its holding subsidiaries strictly abide) the requirements of all PRC laws and regulations involved in the conduct of the company’s business, and in accordance with the requirements of the law, timely handle business qualifications and standardize daily business activities (including but not limited to taxation, labor, social security, etc.). |
| --- | --- |
| 2) | The governance structure of Zhonglian shall be subject to Article 9 of this Agreement, the Articles of Association, the amendments to the Articles of Association and the provisions of the law. However, in particular, if the shareholders’ meeting of Zhonglian makes a resolution not to distribute profits, dispose of the company’s equity or other assets held by Zhonglian, change the control of Zhonglian, and other resolutions of the shareholders’ meeting that lead to the dilution of the equity of Zhonglian held by the transferee, and other adverse effects on the shareholders’ rights and interests of the transferee, the consent vote of the transferee shall be included. |
| --- | --- |
| 8.2 | For the purposes of performing this Agreement, each party represents and warrants to the other parties that, as of the date of this Agreement: |
| --- | --- |
| 1) | This Agreement has been validly signed and entered into force by all parties; |
| --- | --- |
| 2) | Each party shall have the legal and full right and authority to enter into and perform this Agreement and any other transaction documents relating to the Acquisition, which, if executed, constitute valid and binding obligations for the parties in accordance with their respective terms. |
| --- | --- |
| 8.3 | Guarantee of the Target Company and the Transferor. The Target Company and the Transferor hereby warrant to Zhibao Technology that the statements and representations made in Annex 1 of this Agreement are true, complete and correct, effective from the date of signing this Agreement, and continue to be true, complete and correct until the payment date of the first, second and third installments of the acquisition. |
| --- | --- |
| 8.4 | Restrictive Obligations. In addition to the changes made for the acquisition, from the date of signing this Agreement to the completion of the transfer of documents and assets in accordance with Article 3.5.3 of this Agreement (the “Transition Period”), the Transferor undertakes that the Target Company shall maintain normal operations, the expense process shall comply with financial regulations, maintain the Target Company’s books and maintain normal operating funds, and the Target Company’s cash flow will be positive during the period from the signing of this Agreement to the end of the Transition Period. |
| --- | --- |
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| 8.5 | During the transition period, without the prior written consent or approval of the transferee (except as otherwise agreed in this Agreement), the Target Company and the Transferor shall not take any of the following actions: |
| --- | --- |
| (1) | The Target Company opens a new bank account; |
| --- | --- |
| (2) | Establish and cancel new branches, and change the cooperation mode with branches; |
| --- | --- |
| (3) | The Target Company enters into any agreement or undertaking on equity investment or fixed asset investment; |
| --- | --- |
| (4) | enter into any agreement for the disposal of the equity interest in the Target Company (including but not limited to the transfer of the equity interest in the Target Company or the interest in the equity interest, or the restriction of rights such as security in the equity interest in the Target Company or the equity interest) or make any undertaking in respect of the above matters; |
| --- | --- |
| (5) | Adoption of a new articles of association or amendments to the articles of association of the Target Company; |
| --- | --- |
| (6) | entering into any contract or undertaking other than the ordinary course of business; |
| --- | --- |
| (7) | increase any borrowings, including but not limited to bank loans, shareholder loans, other personal loans, etc., unless otherwise agreed in this Agreement; |
| --- | --- |
| (8) | the issuance of any equity or other securities or rights in the Target Company; |
| --- | --- |
| (9) | provide a security interest in any third party or create any encumbrance on the assets or business of the Target Company in respect of a third party’s debts; |
| --- | --- |
| (10) | to adjust the personal remuneration (including but not limited to salary, pension and other benefits) of any employee or to hire a new employee, except as required by applicable law or for the purpose of complying with laws and regulations; |
| --- | --- |
| (11) | change any policy on the supply and sale of services to the Target, except for the purpose of complying with applicable laws and regulations; |
| --- | --- |
| (12) | Modify or terminate any material business contract of the Target Company, except for the purpose of complying with the requirements of applicable laws and regulations; |
| --- | --- |
| (13) | announce, distribute or pay any dividends, expenses or other similar distributions to shareholders, except for the Transferor’ book profit dividends on the Target Company before the delivery date and the reimbursement of expenses advanced to the Target Company in the ordinary course of business; |
| --- | --- |
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| (14) | Take actions that may result in a change in the nature or scope of business of the Target Company; |
| --- | --- |
| (15) | dispose of, or agree to dispose of, fixed assets of more than RMB 50,000 individually or cumulatively; |
| --- | --- |
| (16) | capital reduction, liquidation, dissolution or liquidation of the Target Company, or any change or restructuring of the capital structure of the Target Company or any event resulting in a change in its shareholding; |
| --- | --- |
| (17) | Approval of the target’s annual operating budget and business plan, as well as the approval of the target’s related management, operational, compliance and similar plans and significant changes thereto; |
| --- | --- |
| (18) | make any changes to its current accounting application or policies, nor shall any action be taken in relation to amending the articles of association or constitutive documents of the company; |
| --- | --- |
| (19) | initiate, terminate or resolve any litigation, arbitration or other dispute resolution proceedings related to government agencies (other than disclosed litigation/arbitration/other dispute resolution matters), other than in the ordinary course of business; |
| --- | --- |
| (20) | any guarantee or any other form of guarantee provided by the Target Company; |
| --- | --- |
| (21) | Outside the normal operation of the Target Company, the Target Company is liable for liabilities of more than RMB200,000 in aggregate in a single transaction or during the transition period; and |
| --- | --- |
| (22) | Entering into any agreement or undertaking in relation to any of the foregoing. |
| --- | --- |
ARTICLE IX
CORPORATE GOVERNANCE
| 9.1 | Board of Directors. |
|---|---|
| 9.1.1 | From the delivery date, the Target Company will set up a board of directors, which will be composed of 3 directors (including a chairman), who will be elected by the shareholders’ meeting. Candidates for directors shall be selected in the following manner: the transferee shall have the right to nominate two candidates for director, and the Transferor shall have the right to nominate one candidate for director. |
| --- | --- |
| 9.1.2 | The parties hereby agree that the candidates nominated by each party as set out in clause 9.1.1 shall be appointed as directors of the target company and shall vote in favour of or procure the affirmative vote of their nominees and/or nominee directors in relation to the election of directors at the relevant shareholders’ meeting and/or board meeting, and that the shareholders’ meeting shall not replace the directors nominated by that party as stipulated in clause 9.1.1 without the prior written consent of the nominating party. |
| --- | --- |
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| 9.1.3 | The nominee party as stipulated in Clause 9.1.1 above shall have the right to replace the director nominated by the nominee, and all other shareholders of the company agree and vote in favour of the change of director nominated by the party at the relevant shareholders’ meeting and/or board of directors or procure its nominee and/or its nominee director to vote in favour. Directors shall be appointed for a term of three (3) years and may be re-elected upon re-nomination by the nominating shareholder and election by the shareholders’ meeting. |
| --- | --- |
| 9.1.4 | The company has a chairman of the board of directors and no vice chairman, and the chairman of the board of directors shall be a director nominated by Zhibao Technology, and all parties agree to vote in favor of the election of the director by the board of directors as chairman or to cause its agents and/or its nominee directors to vote in favor. The chairman of the board of directors shall exercise his powers within the scope of the resolution of the board of directors. The Chairman of the Board shall be responsible for convening and presiding over the meetings of the Board of Directors and informing the Board of Directors of the place and time of the meetings. If the chairman of the board of directors is unable to perform his duties for any reason, the chairman of the board of directors is obliged to appoint a director to perform his duties in place of the chairman of the board. The Board of Directors of the Company shall meet at least once a year. |
| --- | --- |
| 9.1.5 | The voting on the resolution of the board of directors shall be one person, one vote. The resolutions made by the board of directors shall be passed by more than half of all directors, and the decisions on the matters discussed shall be recorded, and the directors present at the meeting shall sign the minutes. |
| --- | --- |
| 9.1.6 | The transferee promised that by the end of 2027, the two directors nominated by it would not require any salary or fees from the Target Company. |
| --- | --- |
| 9.2 | Shareholders’ Meeting. |
| --- | --- |
| 9.2.1 | The shareholders’ meeting of the Target Company is composed of all shareholders. The shareholders’ meeting is the highest authority of the company and exercises the following functions and powers in accordance with the law: |
| --- | --- |
| (1) | Election and replacement of directors and supervisors, and determination of remuneration matters related to directors and supervisors; |
| --- | --- |
| (2) | review and approve the report of the Board of Directors; |
| --- | --- |
| (3) | deliberate and approve the report of the supervisors; |
| --- | --- |
| (4) | Review and approve the company’s profit distribution plan and loss recovery plan; |
| --- | --- |
| (5) | Make resolutions on the increase or decrease of the company’s registered capital; |
| --- | --- |
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| (6) | Resolution on the issuance of corporate bonds; |
| --- | --- |
| (7) | Resolutions on the merger, division, dissolution, liquidation or change of the form of the company; |
| --- | --- |
| (8) | amending the Articles of Association; |
| --- | --- |
| (9) | Other functions and powers stipulated in the articles of association. |
| --- | --- |
If the shareholders unanimously agree in writing on the matters listed in the preceding paragraph, they may make a decision directly without convening a shareholders’ meeting, and all shareholders shall sign or affix their seals to the decision document.
| 9.2.2 | At the shareholders’ meeting, shareholders shall exercise their voting rights in accordance with the proportion of their capital contributions. The resolution of the shareholders’ meeting to amend the articles of association of the company, as well as the resolution of the merger, division, dissolution or change of the form of the company, shall be passed by the shareholders representing more than two-thirds of the voting rights of all shareholders; The resolution of the shareholders’ meeting to increase or decrease the registered capital, or not to distribute profits, or to dispose of the company’s equity or other assets held by Zhonglian Corporation, or to lead to a change in the control of Zhonglian Corporation, or to dilute the equity of Zhonglian held by the Transferor, and other resolutions that adversely affect the shareholders’ rights and interests of the Transferor, shall be unanimously agreed by all shareholders. Resolutions on matters other than those mentioned in the preceding paragraph shall be passed by the shareholders representing more than half of the voting rights. |
|---|---|
| 9.3 | General Manager. The company has a general manager, who is appointed or dismissed by the board of directors. The term of office of the general manager is three years, and the term of office expires and can be re-elected. The legal representative of the company shall be the general manager. Based on the Transferor’ commitment to the Performance Target of the Target Company, the parties agree that until the end of 2027, Qin’er Ye will still serve as the general manager of the Target Company, but if Qin’er Ye uses her position as general manager to misappropriate the company’s funds, embezzle the company’s property, divulge the company’s trade secrets, violate non-compete obligations, conduct related party transactions without effective resolutions, and fail to implement the resolutions of the board of directors and other circumstances that harm the interests of the Target Company and the shareholders of the Target Company, the board of directors has the right to replace the general manager by resolution. |
| --- | --- |
| 9.4 | Head of Finance. The company has a person in charge of finance, who shall be appointed by Zhibao Technology after receiving the third installment of the Acquisition Money paid by the transferee. |
| --- | --- |
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| 9.5 | Conflicts. The parties to this Agreement shall cooperate in taking all necessary steps to make appropriate amendments to the Articles of Association of the Target Company so that, as from the Delivery date, the Articles of Association of the Target Company reflect the provisions of this Clause 9 as far as possible, and the parties hereby acknowledge and agree to refer to the provisions of this Agreement for the relevant governance provisions of the Target Company that are not specified in the Articles of Association of the Target Company. Without derogating from the foregoing, the parties agree that the articles of association and other relevant transaction documents (hereinafter collectively referred to as the “Confirmation Documents”) confirmed by the parties shall be submitted to the industrial and commercial bureau where the Target Company is located for filing and registration. If the local industrial and commercial bureau has other format requirements for any documents submitted by the company, the parties shall supplement a relevant document that meets the requirements of the local industrial and commercial bureau on the basis of full consultation in good faith and submit it to the industrial and commercial bureau. |
| --- | --- |
ARTICLE X
LIABILITY FOR BREACH OF CONTRACT
| 10.1 | Overview. Unless otherwise agreed in this Agreement on liability for breach of contract, if either party violates the provisions of this Agreement or delays in performing its obligations under this Agreement for any reason, the non-breaching party may require the breaching party to rectify the situation and compensate the non-breaching party for its losses. Such losses include, but are not limited to, the actual expenses incurred by the non-breaching party in performing its obligations under this Agreement, as well as reasonable rights protection expenses such as attorney fees and litigation costs. |
|---|---|
| 10.2 | Liability of the Transferor for breach of contract. |
| --- | --- |
| 10.2.1 | If the conditions precedent to the payment of the first purchase price stipulated in clause 3.1.1 of this Agreement are not completed by July 31, 2025, the transferee shall have the right to choose to terminate this Agreement, and this Agreement shall be terminated on the date of service of the notice of termination by the transferee. |
| --- | --- |
| 10.2.2 | If it is not attributable<br> to the transferee, the Transferor and the Target Company violate the post-closing obligations under Clause 3.5.1 and Clause 3.5.3 of<br> this Agreement, the Target Company and the Transferor shall pay overdue liquidated damages to the transferee at the rate of 5/10,000<br> of the purchase price paid by the transferee for each overdue day until the post-delivery obligations are completed. If the<br> post-closing obligations under Clause 3.5 remain unfulfilled after twenty (20) Business Days following the<br> deadline specified therein (the “Grace Period”), the Transferee shall have the right to terminate this Agreement upon<br> the expiration of the Grace Period. This Agreement shall be terminated on the date on which the transferee serves the notice of<br> termination. The Transferor shall return the full amount of the transfer price paid by the Transferee within three (3) business days<br> from the date of termination of this Agreement and pay liquidated damages to the Transferee at the rate of 10% of the purchase price<br> paid by the Transferee, and if such liquidated damages are insufficient to compensate the Transferee for its losses, the Transferor<br> will continue to indemnify the Transferee against the losses. |
| --- | --- |
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| 10.2.3 | Except as otherwise provided in this Agreement, the Transferor shall be entitled to terminate this Agreement upon the expiration of the Transferor’ Grace Period for Default if the Transferor breaches its obligations under this Agreement (including, but not limited to, breach of warranties under Exhibit 1, deviation from representations under Exhibit 1, breach of restrictive obligations during the transitional period under Sections 8.4 and 8.5) that by their nature cannot be remedied or is not remedied within twenty (20) business days after the Transferee serves written notice on the Transferor (the “Grace Period for Default of the Transferor”). This Agreement shall be terminated on the date on which the transferee serves the notice of termination. The Transferor shall return the full amount of the transfer price paid by the Transferee within three (3) business days from the date of termination of this Agreement and pay liquidated damages to the Transferee at the rate of 10% of the purchase price paid by the Transferee, and if such liquidated damages are insufficient to compensate the Transferee for its losses, the Transferor shall continue to indemnify and hold harmless the Transferee from and against any losses.. |
| --- | --- |
| 10.3 | Liability for breach of contract by the transferee. |
| --- | --- |
| 10.3.1 | If the transferee fails to pay the purchase price to the Transferor on time in accordance with Article 3.2 of this Agreement due to reasons attributable to the transferee, the transferee shall pay the Transferor overdue liquidated damages at the rate of 5/10,000 of the unpaid amount payable for each overdue day (hereinafter referred to as “overdue liquidated damages”). until the payment is complete. If the payment is not made within ninety (90) days after the due date, the Transferor shall have the right to choose one of the following according to the specific circumstances: (1) require the transferee to continue to perform the payment obligation of each instalment of the purchase price and pay the overdue liquidated damages until the actual payment date; or (2) require the transferee to pay all the equity Acquisition Money in a lump sum according to the amount agreed in this Agreement (based on the provisional purchase price of 25.5 million, if the adjustment amount can be determined by then, the adjusted amount shall prevail), and at the same time may require the transferee to pay overdue liquidated damages until the actual payment date; or (3) the equity Acquisition Money paid by the transferee shall be non-refundable, and the liquidated damages shall be calculated at 10% of the unpaid purchase price due from the transferee at that time, and after deducting the liquidated damages from the amount already paid by the transferee, the corresponding proportion of equity in Zhonglian shall be allocated to the transferee based on a valuation of RMB 50 million. If the above liquidated damages are insufficient to compensate the Transferor for its losses, the transferee will continue to compensate the Transferor to protect it from losses. |
| --- | --- |
| 10.3.2 | In the event of the occurrence of the above-mentioned 10.3.1 and the Transferor chooses to exercise the rights in paragraph (2), the Transferor shall complete the registration procedures for the industrial and commercial change of the Target Equity within thirty (30) business days after the transferee has paid all the equity Acquisition Money and the overdue liquidated damages, and the Transferor shall complete the registration procedures for the industrial and commercial change of the Target Equity, which will be 51%. The equity is registered in the name of the transferee; If the Transferor chooses to exercise the rights in paragraph (3), the Transferor shall, within thirty (30) business days after notifying the transferee in writing to convert the purchase money paid by the transferee into shares of Zhonglian, complete the registration procedures for the corresponding industrial and commercial change of equity, and register the converted equity in accordance with Article 10.3.1 to the name of the transferee. |
| --- | --- |
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| 10.3.3 | If the transferee fails to pay the first installment of the purchase price before July 31, 2025 as agreed before the delivery date, the Transferor has the right to choose to terminate this Agreement, and this Agreement shall be terminated on the date when the Transferor deliver the notice of termination. |
| --- | --- |
ARTICLE XI
NOTICE
| 11.1 | Delivery of Notices. |
|---|---|
| 11.1.1 | Notices, demands, or communications of information to any other party in connection with this Agreement shall be in writing and shall be delivered by hand, facsimile, telex, or post. Unless there is evidence that it has been received in advance: |
| --- | --- |
| (1) | In the case of personal delivery, the notice shall be deemed to have been given when it is delivered to the specified address; |
| --- | --- |
| (2) | In the case of courier, the notice shall be deemed to have been given within five (5) business days after the courier; |
| --- | --- |
| (3) | where sent by facsimile, the notice shall be deemed to have been given when the sender’s facsimile machine records the confirmation of transmission; and |
| --- | --- |
| (4) | In the case of e-mail, the notice is deemed to have been delivered when the sender’s e-mail system confirms that the delivery was successful. |
| --- | --- |
| 11.2 | Notification address. |
| --- | --- |
| 11.2.1 | Each party designates the address to receive the notice as follows, and either party may send notice in writing to the other party, and the other party shall promptly notify the other party of any change in the following contact information: |
| --- | --- |
| (1) | The notice to Zhibao Technology is sent to: |
| --- | --- |
Address: [3rd Floor, Lane 727, Wuxing Road, Pudong New Area, Shanghai]
Zip code:【201204】
Telephone:【******】
Fax:【/】
Email:【******】
Recipient: [Luo Xiao/Luo Min]
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| (2) | Notices to the Target Company and the Transferor should be sent to: |
| --- | --- |
Address: Room 1502, Block A, Herong Building, No. 189, Panhuo Road,
Yinzhou District, Ningbo City, Zhejiang Province
Zip code: 311115
Telephone: [******]
e-mail:[******]
To: Xuegeng Zhao/Qin’er Ye
The above service address agreed in this Agreement applies to the service of all kinds of notices, agreements and documents related to this Agreement, including but not limited to the service of all kinds of notices, agreements and other documents during the performance of the agreement, as well as the service of relevant documents and legal documents in the event of a dispute under the agreement, and also includes the service of relevant documents and legal documents in the first instance, second instance, retrial and enforcement procedures after the dispute enters into arbitration and civil litigation procedures, as well as other procedures.
ARTICLE XII
OTHER
| 12.1 | Force Majeure. |
|---|---|
| 12.1.1 | Force majeure means any objective event beyond the control of the parties to this Agreement, which is unforeseeable, or which is foreseeable but cannot be avoided or overcome, and which occurs after the date of this Agreement and renders it impossible for either party to perform this Agreement in whole or in part. Force majeure includes, but is not limited to, strikes, employee riots, explosions, fires, floods, earthquakes, typhoons or other natural disasters and wars, civil harassment, vandalism, expropriation, confiscation, acts of government sovereignty and changes in the law. |
| --- | --- |
| 12.1.2 | If either party fails to perform or delays in performing this Agreement due to the occurrence of the aforesaid force majeure, but has taken appropriate measures to avoid the expansion of losses, promptly notifies the other party, and provides the other party with details of the accident and valid proof within fifteen (15) days after the occurrence of the force majeure, the party that fails to perform or delays in performing its obligations under this Agreement shall not be liable for breach of contract. |
| --- | --- |
| 12.1.3 | After the occurrence of force majeure, the parties to the agreement shall continue to execute this Agreement to the greatest extent possible through friendly negotiation. |
| --- | --- |
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| 12.2 | Confidentiality. |
| --- | --- |
| 12.2.1 | Each party shall be obliged to take confidentiality measures for the content of this Agreement, the performance of this Agreement, all information related to the cooperation of all parties, and the trade secrets of the other party known as a result of this acquisition, and shall not disclose them to any third party without the written consent of one party, otherwise, the party that violates the confidentiality obligation shall compensate the non-breaching party for all losses suffered thereby. |
| --- | --- |
| 12.2.2 | If this Agreement is terminated for any reason, the provisions of Section 12.2 of this Agreement shall continue in effect until the Confidential Information becomes public information. |
| --- | --- |
| 12.3 | Modification and Termination of Agreement. |
| --- | --- |
| 12.3.1 | Any amendment or change to this Agreement shall be subject to separate negotiation between the parties and a written contract shall be signed by the parties on the modification or change before it can take effect. |
| --- | --- |
| 12.3.2 | Unless otherwise agreed in this Agreement, this Agreement shall be terminated by mutual agreement of the parties or in accordance with Article 10 of this Agreement. |
| --- | --- |
| 12.3.3 | According to the provisions of this Agreement, if the party entitled to terminate this Agreement proposes to terminate the Agreement, it shall notify the other party in writing to terminate the Agreement, and the notice shall take effect when it arrives at the address of the other party to receive the notice under this Agreement. For the avoidance of doubt, if Zhibao Technology issues a notice of termination to the Target Company and the Transferor, it shall take effect when the notice of termination reaches either the Target Company and the Transferor. |
| --- | --- |
| 12.3.4 | After the termination of this Agreement, unless otherwise agreed by the parties at that time, the parties to this Agreement shall, in accordance with the principles of fairness, reasonableness, good faith, try to restore to the state at the time of signing this Agreement, and return the equity under this Agreement obtained from the other parties within 30 days after the termination of this Agreement, but in no case shall it affect the right of the non-breaching party to require the breaching party to bear the liability for breach of contract and compensate for losses in accordance with the provisions of this Agreement. |
| --- | --- |
12.4 Taxes and Fees. Unless otherwise agreed in this Agreement, the taxes and fees arising from the transactions under this Agreement shall be borne by each party in accordance with the provisions of the law; If either party breaches the contract, resulting in an additional tax burden or the tax paid cannot be refunded, the defaulting party shall actually bear the corresponding tax in full.
12.5 Independence. If any provision of this Agreement or any other agreement or contract between the parties is invalid or unenforceable, or becomes invalid or unenforceable, due to reasons caused by the laws of the People’s Republic of China, the validity of the remaining provisions of this Agreement or any other agreement or contract between the parties shall not be affected; Each party shall endeavour to seek an alternative provision that is effective and enforceable and best reflects the commercial intent of the parties at the time of the contract.
12.6 Waiver. The failure or delay by a party in exercising any right or remedy under this Agreement shall not be deemed a waiver of such right or remedy. The single or partial exercise of any right or remedy shall not preclude the future exercise of that right or remedy.
23 / 32
| Share Purchase Agreement |
|---|
12.7 Governing Law and Dispute Resolution
| 12.7.1 | The conclusion, validity, interpretation and performance of this Agreement shall be governed by the laws of the People’s Republic of China (for the purposes of this Agreement, excluding the laws of the Hong Kong Special Administrative Region, the Macao Special Administrative Region and the Taiwan Region). |
|---|---|
| 12.7.2 | Any dispute, controversy or claim arising out of or in connection with this Agreement, including the validity, invalidity, performance, breach or termination of this Agreement, shall be settled by negotiation between the parties. If the negotiation fails, the parties shall submit such disputes, controversies or claims to the people’s court where the Target Company (Zhonglian Jinan Insurance Brokers Co., Ltd.) is located for litigation. |
| --- | --- |
| 12.7.3 | Litigation fees, attorney fees, property preservation fees, travel expenses, execution fees, appraisal fees, auction fees, service fees, announcement fees and other expenses arising from dispute resolution shall be borne by the party who loses the dispute award. During the litigation, each party shall continue to fully perform the other provisions of this Agreement, except for the matters in dispute. |
| --- | --- |
12.8 Effectiveness and Effect
| 12.8.1 | This Agreement shall be established and enter into force upon signature by the parties. This Agreement shall be executed in one (4) copies, one (1) copy by each party, each of which shall have the same legal effect. |
|---|---|
| 12.8.2 | In the event of any conflict between the contents of this Agreement and the Investment Agreement and the Articles of Association, the contents of this Agreement shall prevail, and if there is no provision in this Agreement, the contents of the Investment Agreement shall apply. |
| --- | --- |
(No text below)
24 / 32
| Share Purchase Agreement |
|---|
(This page is the Acquisition Agreement Signing page.) In good faith that each party to this
Agreement has signed or procured that its duly authorized representatives have signed this
Agreement on the date set forth at the beginning of this Agreement. )
Zhibao Technology Co., Ltd (Seal)
| /s/ Botao Ma | |
|---|---|
| Signature/seal of the legal representative (or authorized representative) | |
| Xuegeng Zhao | |
| --- | --- |
| By: | /s/ Xuegeng Zhao |
| Signature/Signature | |
| Qin’er Ye | |
| --- | --- |
| By: | /s/ Qin’er Ye |
| Signature/Signature |
Zhonglian Jinan Insurance Brokers Co.,Ltd (Seal)
| /s/ Xuegeng Zhao |
|---|
| Signature/seal of the legal representative (or authorized representative) |
25 / 32
| Share Purchase Agreement |
|---|
Appendix 1 Representations and warranties ofthe Target Company and the Transferor
Unless otherwise specified in this Agreement, the Target Company and the Transferor hereby jointly and severally represent and warrant to Zhibao Technology that the following statements and representations are true, complete and correct, effective from the date of signing this Agreement, and continue to be true, complete and correct until the delivery date, the second and third installment payment dates (for the avoidance of doubt, unless otherwise expressed, the “Zhonglian” in the following representations and warranties also includes the holding subsidiary of Zhonglian).
| 1. | Organizational structure |
|---|
Zhonglian is a legally incorporated and validly existing company under the laws of the People’s Republic of China and has the right to operate its business in accordance with its business license, articles of association or relevant approval documents, and to fulfill all its obligations under each of its commitments as a party to this Agreement.
Zhonglian has been authorized to enter into and perform this Agreement and has full legal right, capacity, power and all necessary authorizations to conclude, sign and deliver this Agreement and fully perform its obligations under this Agreement.
| 2. | Registered capital and shareholders |
|---|
As of the date of signing this Agreement, the registered capital, shareholders and shareholding ratio of each shareholder of Zhonglian Financial Security include its registration information with the market supervision and administration department. All shareholders of Zhonglian Jinan have completed their paid-in capital contributions to Zhonglian Jinan in cash within the time limit stipulated in the Articles of Association of Zhonglian. There is no pledge, freezing or other restriction of rights on the equity of Zhonglian held by the shareholders of Zhonglian, and there are no other equity or other securities that have been granted or issued by Zhonglian Jinan.
| 3. | Business qualifications |
|---|
Zhonglian operates in accordance with the provisions of laws and regulations, and all business qualifications and approval or filing procedures that have been obtained are fully valid, and there are no pending or potential legal procedures that will lead to the revocation, termination, suspension or modification of any business qualifications and approval or filing procedures.
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| Share Purchase Agreement | |
|---|---|
| 4. | There are no undisclosed litigations, arbitrations and administrative penalties |
| --- | --- |
As of the date of signing this Agreement, except for the circumstances disclosed in writing by Zhonglian and the Transferor to Zhibao Technology (Appendix 6), there are no pending and potential claims, administrative penalties, administrative investigations (except routine investigations), litigation or arbitration proceedings against Zhonglian, regardless of whether such proceedings are legally initiated or initiated by any central, provincial, local or other government departments, commissions, offices, management bureaus, agencies or other individuals or economic organizations. and its foreseeable circumstances.
Zhonglian is not restricted by any decision, judgment, ruling or award made by any court, arbitration commission or other administrative authority that affects the normal operation of Zhonglian or involves the assets of Zhonglian, and it is foreseeable.
During the transition period, if there is any litigation, arbitration or administrative penalty of Zhonglian, or if there are any potential claims, administrative penalties, administrative investigations, litigation or arbitration proceedings against Zhonglian Financial as far as the Target Company and the Transferor are aware, the Transferor and the Target Company shall promptly notify the transferee in writing.
| 5. | Major contracts |
|---|
As of December 31, 2024, the list of all material contracts signed as a party is attached to Annex 3.
| 6. | Liabilities and Guarantees |
|---|
As of the date of signing of this Agreement, the liabilities and guarantee information of Zhonglian are shown in Appendix 4.
| 7. | Staffing |
|---|
As of the date of signing of this Agreement, the number of employees of Zhonglian, and the specific personnel information is shown in Annex 5.
27 / 32
| Share Purchase Agreement |
|---|
Annex 2 Financial statements
28 / 32
| Share Purchase Agreement |
|---|
Appendix 3 List of major contracts of the TargetCompany
“Material Contract” means a contract (oral or written) to which the Target Company is a party or bound by it, which has not yet been fulfilled and which meets one of thefollowing conditions:
A. The total value, cost, or amount exceeds【】or cause the total amount of debts or contingent liabilities incurred by the Target Company to exceed【】Yuan contracts;
B. Contracts relating to the sale, issuance, gift, purchase, repurchase or redemption of equity interests in the Target Company;
C. Contracts involving mortgages, guarantees, pledges, or other forms of grant of security interests in the Target Company;
D. Acquisitions or sales involving the target’s current and proposed businesses, or contracts involving mergers, consolidations, consortia, partnerships, joint ventures or similar arrangements;
And. Contracts involving the transfer or licensing of any intellectual property by a third party to the Target, or the assignment or licensing of any intellectual property by the Target to a third party, or the obligation of the Target Company to share or jointly develop any intellectual property with any third party;
F. Contracts that have significant restrictions on the Target Company (including but not limited to non-competition contracts, contracts restricting sales and market segmentation, etc.).
| Contract number | The name of the contract | Signatory Subject | Signing time | Duration of the contract | Contract amount (if there is no fixed amount, it is recommended to specify the specific fee arrangement) | Performance of the contract | Whether there is a breach of contract (if so, a description of the breach of contract and the handling of the breach) |
|---|
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| Share Purchase Agreement |
|---|
Appendix 4 Liabilities and guarantees of theTarget Company
(1) List of liabilities
| Basis of debt generation (name of the contract, if there is no contract, indicating the background in which the debt was incurred) | Name of creditor | Total debt amount (i.e. contract amount) | Remaining outstanding amount | Interest rate (if involved) | Debt maturity date | Debt performance | Whether to set up a guarantee (if so, please specify the information of the guarantee entity and the type of guarantee) | Whether there is a breach of contract (if so, a description of the breach of contract and the handling of the breach) |
|---|
(2) List of guarantees
| Type of security (guarantee, pledge, mortgage, etc.) | Encumbered property (if involved) | The name of the contract guaranteeing the principal claim | Name of the principal creditor | The name of the principal creditor debtor | The amount of the secured principal claim | Duration of the Guarantee | Guarantee the performance of the principal creditor’s right | Whether the main claim is in default (if so, a description of the default and the handling of the default) | Whether it is asserted to perform the guarantee liability |
|---|
30 / 32
| Share Purchase Agreement |
|---|
Appendix 5 List of personnel of the Target Company
| name | gender | age | posts | Onboarding time | The expiration date of the employment contract is stipulated |
|---|
31 / 32
| Share Purchase Agreement |
|---|
Appendix 6 Litigation, Arbitration and AdministrativePenalties of the Target Company
None.
32 / 32
Exhibit 23.1
Consent of Independent Registered Public AccountingFirm
We consent to the use of our report dated July 2, 2025, with respect to the financial statements of Zhonglian Jinan Insurance Brokerage Co., Ltd. included in the Current Report on Form 6-K and incorporated by reference in the Registration Statement (Form F-1 No. 333-286140) and related Prospectus of Zhibao Technology Inc. for the registration of up to 8,865,249 Class A Ordinary Shares issuable upon conversion of a senior secured convertible promissory note and up to 686,677 Class A Ordinary Shares issuable upon exercise of warrants.
/s/ HYYH CPA. LLC
Baltimore, Maryland
July 2, 2025
Exhibit 99.1
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
On July 2, 2025, Zhibao Technology Co., Ltd. (“Zhibao China”), a limited liability company incorporated under the laws of the People’s Republic of China (the “PRC” or “China”), one of the PRC subsidiary of Zhibao Technology Inc. (the “Company”), a Cayman Islands exempted company, entered into a share purchase agreement (the “SPA”) with Xuegeng Zhao and Qin’er Ye, the shareholders of Zhonglian Jinan Insurance Brokers Co., Ltd. (“Zhonglian Jinan”) and Zhonglian Jinan, to acquire an aggregate of 51% of the equity interest in Zhonglian Jinan, including 23% of the equity interest from Xuegeng Zhao and 28% of the equity interest from Qin’er Ye, for a total purchase price of RMB25.5 million (approximately US$3.5 million), subject to adjustment as provided in the SPA (the “Acquisition”).
The unaudited pro forma condensed combined balance sheet combines the Company's and Zhonglian Jinan’s balance sheets as of December 31, 2024, giving pro forma effect to the above transaction as if it had occurred on December 31, 2024. The unaudited pro forma condensed combined statement of operations combines the Company's and Zhonglian Jinan’s operations for the year ended June 30, 2024 and for the six months ended December 31, 2024, giving effect to the transaction as described on a pro forma basis as if the transaction had been completed on July 1, 2023.
The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X. These pro forma financial statements should be read in conjunction with the audited historical financial statements of the Company and the related financial statements for Zhonglian Jinan, which are included elsewhere in this current report on Form 6-K.
The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred had the acquisition of Zhonglian Jinan by the Company occurred on the indicated date, or during the operational periods presented, nor is it necessarily indicative of the future financial position or operating results.
A preliminary allocation of the purchase price has been made to major categories of assets and liabilities in the accompanying pro forma financial statements based on available information. The actual allocation of the purchase price and the resulting effect on income from operations may differ significantly from the pro forma amounts included herein. These pro forma adjustments represent the Company’s preliminary determination of purchase accounting adjustments and are based upon available information and certain assumptions that the Company believes to be reasonable. Consequently, the amounts reflected in the pro forma financial statements are subject to change, and the final amounts may differ substantially.
ZHIBAO TECHNOLOGY INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS
AS OF DECEMBER 31, 2024
(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”),except for share and per share data)
| Zhonglian Jinan Insurance Brokerage Co., Ltd. | Adjustments | Note-3<br><br><br><br>Proforma | Combined<br><br> Pro Forma | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| RMB | RMB | Adjustments | RMB | |||||||||
| ASSETS | ||||||||||||
| Current Assets | ||||||||||||
| Cash and cash equivalents | 28,113,972 | 14,717,018 | - | 42,830,990 | ||||||||
| Restricted cash | 105,800,332 | 2,687,118 | - | 108,487,450 | ||||||||
| Accounts receivable, net | 135,313,361 | 23,413,972 | (24,133,784 | )(b) | 134,593,549 | |||||||
| Due from related parties | 17,131,396 | 2,087,323 | - | 19,218,719 | ||||||||
| Prepaid expenses and other current assets, net | 11,171,611 | 6,419,278 | - | 17,590,889 | ||||||||
| Total Current Assets | 297,530,672 | 49,324,709 | -24,133,784 | 322,721,597 | ||||||||
| Prepayments for equity investments | 4,375,000 | - | - | 4,375,000 | ||||||||
| Property and equipment, net | 188,131 | 6,173,990 | - | 6,362,121 | ||||||||
| Intangible assets, net | 1,914,935 | - | - | 1,914,935 | ||||||||
| Operating lease right of use assets | 5,885,455 | 267,051 | - | 6,152,506 | ||||||||
| Goodwill | - | - | 30,494,903 | (a) | 30,494,903 | |||||||
| Restricted cash, noncurrent | 5,000,000 | 5,000,000 | - | 10,000,000 | ||||||||
| Deferred tax assets | 43,192 | - | - | 43,192 | ||||||||
| Other non-current assets | 41,004 | 1,022 | - | 42,026 | ||||||||
| Total Non-Current Assets | 17,447,717 | 11,442,063 | 30,494,903 | 59,384,683 | ||||||||
| Total Assets | 314,978,389 | 60,766,772 | 6,361,119 | 382,106,280 | ||||||||
| LIABILITIES, AND SHAREHOLDERS’ EQUITY | ||||||||||||
| Current Liabilities | ||||||||||||
| Short-term borrowings | 33,800,000 | - | - | 33,800,000 | ||||||||
| Accounts payable | 55,643,496 | 47,738,519 | (24,133,784 | )(b) | 79,248,231 | |||||||
| Insurance premium payable | 111,448,220 | - | - | 111,448,220 | ||||||||
| Income tax payable | 42,994 | 126,988 | - | 169,982 | ||||||||
| Due to related parties | 8,561,749 | - | - | 8,561,749 | ||||||||
| Operating lease liabilities, current | 2,537,123 | 168,834 | - | 2,705,957 | ||||||||
| Accrued expenses and other liabilities | 15,278,258 | 19,916,500 | 25,500,000 | (a) | 60,694,758 | |||||||
| Convertible notes | 6,452,341 | - | - | 6,452,341 | ||||||||
| Warrant liabilities | 1,239,814 | - | - | 1,239,814 | ||||||||
| Derivative liabilities | 14,598 | - | - | 14,598 | ||||||||
| Subscription fees advanced from one investor | - | - | - | - | ||||||||
| Total Current Liabilities | 235,018,593 | 67,950,841 | 1,366,216 | 304,335,650 | ||||||||
| Operating lease liabilities, noncurrent | 3,427,331 | 71,217 | - | 3,498,548 | ||||||||
| Deferred tax liabilities | 3,761,000 | 2,538,641 | - | 6,299,641 | ||||||||
| Total Non-current Liabilities | 7,188,331 | 2,609,858 | - | 9,798,189 | ||||||||
| Total Liabilities | 242,206,924 | 70,560,699 | 1,366,216 | 314,133,839 | ||||||||
| Shareholders’ Equity | ||||||||||||
| Class A ordinary shares (par value 0.0001 per share, 450,000,000 shares authorized, 14,707,073 and 15,231,387 shares issued and outstanding as of June 30, 2024 and December 31, 2024, respectively) | 10,304 | - | - | 10,304 | ||||||||
| Class B ordinary shares (par value 0.0001 per share, 50,000,000 shares authorized, 16,816,692 and 16,816,692 shares issued and outstanding as of June 30, 2024 and December 31, 2024, respectively) | 12,204 | - | - | 12,204 | ||||||||
| Paid-in capital | 50,000,000 | (50,000,000 | )(a) | - | ||||||||
| Additional paid-in capital | 205,827,823 | - | - | 205,827,823 | ||||||||
| Accumulated deficit | (132,485,849 | ) | (59,793,927 | ) | 59,793,927 | (a) | (132,485,849 | ) | ||||
| Accumulated other comprehensive income (loss) | (593,017 | ) | - | - | (593,017 | ) | ||||||
| Non-controlling interest | - | - | (4,799,024 | )(a) | (4,799,024 | ) | ||||||
| Total Shareholders’ Equity | 72,771,465 | (9,793,927 | ) | 4,994,903 | 67,972,441 | |||||||
| Total Liabilities and Shareholders’ Equity | 314,978,389 | 60,766,772 | 6,361,119 | 382,106,280 |
All values are in US Dollars.
2
ZHIBAO TECHNOLOGY INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONSAND COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED DECEMBER 31, 2024
(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”),except for share and per share data)
| Zhibao Technology Inc. | Zhonglian Jinan Insurance Brokerage Co., Ltd. | Adjustments | Combined<br> Pro Forma | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| RMB | RMB | RMB | RMB | |||||||||
| Revenues | 146,371,285 | 91,924,671 | (29,784,453 | )(b) | 208,511,503 | |||||||
| Cost of revenues | (103,811,688 | ) | (80,896,153 | ) | 29,784,453 | (b) | (154,923,388 | ) | ||||
| Gross profit | 42,559,597 | 11,028,518 | - | 53,588,115 | ||||||||
| Operating expenses | ||||||||||||
| Selling and marketing expenses | (18,564,666 | ) | (19,092,457 | ) | - | (37,657,123 | ) | |||||
| General and administrative expenses | (14,282,228 | ) | (15,051,486 | ) | - | (29,333,714 | ) | |||||
| Research and development expenses | (5,908,365 | ) | - | (5,908,365 | ) | |||||||
| Total operating expenses | (38,755,259 | ) | (34,143,943 | ) | - | (72,899,202 | ) | |||||
| Income (loss) from operations | 3,804,338 | (23,115,425 | ) | - | (19,311,087 | ) | ||||||
| Other (expense) income | ||||||||||||
| Interest income, net | (1,605,974 | ) | 11,142 | - | (1,594,832 | ) | ||||||
| Other income, net | 533,414 | 151,705 | - | 685,119 | ||||||||
| Gain on fair value change of warrant liabilities | 1,430,663 | - | - | 1,430,663 | ||||||||
| Gain on fair value change of derivative liabilities | 722,631 | - | - | 722,631 | ||||||||
| Loss on settlement of convertible notes | (4,438,430 | ) | - | - | (4,438,430 | ) | ||||||
| Total other expense, net | (3,357,696 | ) | 162,847 | - | (3,194,849 | ) | ||||||
| Income (Loss) Before Income Taxes | 446,642 | (22,952,578 | ) | - | (22,505,936 | ) | ||||||
| Income tax expenses | (1,091,247 | ) | (111,957 | ) | - | (1,203,204 | ) | |||||
| Net Loss | (644,605 | ) | (23,064,535 | ) | - | (23,709,140 | ) | |||||
| Other comprehensive income (loss) | ||||||||||||
| Foreign currency translation adjustments | (364,145 | ) | - | - | (364,145 | ) | ||||||
| Comprehensive income (loss) | (1,008,750 | ) | (23,064,535 | ) | - | (24,073,285 | ) | |||||
| Weighted average number of ordinary share outstanding | ||||||||||||
| Basic | 31,587,188 | N/A | - | 31,587,188 | ||||||||
| Diluted | 31,587,188 | N/A | - | 31,587,188 | ||||||||
| Earnings (loss) per share | ||||||||||||
| Basic | (0.02 | ) | N/A | - | (0.75 | ) | ||||||
| Diluted | (0.02 | ) | N/A | - | (0.75 | ) |
3
ZHIBAO TECHNOLOGY INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONSAND COMPREHENSIVE INCOME
FOR THE YEAR ENDED JUNE 30, 2024
(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”),except for share and per share data)
| Zhibao Technology Inc. | Zhonglian Jinan Insurance Brokerage Co., Ltd. | Adjustments | Combined<br> Pro Forma | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| RMB | RMB | RMB | RMB | ||||||||
| Revenues | 183,669,326 | 191,705,510 | - | 375,374,836 | |||||||
| Cost of revenues | (108,908,547 | ) | (143,433,635 | ) | - | (252,342,182 | ) | ||||
| Gross profit | 74,760,779 | 48,271,875 | - | 123,032,654 | |||||||
| Operating expenses | |||||||||||
| Selling and marketing expenses | (31,606,719 | ) | (15,706,108 | ) | - | (47,312,827 | ) | ||||
| General and administrative expenses | (17,954,289 | ) | (32,973,455 | ) | - | (50,927,744 | ) | ||||
| Research and development expenses | (15,092,620 | ) | - | - | (15,092,620 | ) | |||||
| Total operating expenses | (64,653,628 | ) | (48,679,563 | ) | - | (113,333,191 | ) | ||||
| Income (loss) from operations | 10,107,151 | (407,688 | ) | - | 9,699,463 | ||||||
| Other (expense) income | |||||||||||
| Interest income, net | (848,575 | ) | 85,193 | - | (763,382 | ) | |||||
| Other income, net | 507,609 | 310,316 | - | 817,925 | |||||||
| Gain on extinguishment of liability | 8,996,341 | - | - | 8,996,341 | |||||||
| Gain on fair value change of warrant liabilities | - | - | - | - | |||||||
| Gain on fair value change of derivative liabilities | - | - | - | - | |||||||
| Loss on settlement of convertible notes | - | - | - | - | |||||||
| Total other expense, net | 8,655,375 | 395,509 | - | 9,050,884 | |||||||
| Income (Loss) Before Income Taxes | 18,762,526 | (12,179 | ) | - | 18,750,347 | ||||||
| Income tax expenses | (5,510,773 | ) | (1,223,385 | ) | - | (6,734,158 | ) | ||||
| Net Income (Loss) | 13,251,753 | (1,235,564 | ) | - | 12,016,189 | ||||||
| Other comprehensive income (loss) | |||||||||||
| Foreign currency translation adjustments | (233,990 | ) | - | - | (233,990 | ) | |||||
| Comprehensive income (loss) | 13,017,763 | (1,235,564 | ) | - | 11,782,199 | ||||||
| Weighted average number of ordinary share outstanding | |||||||||||
| Basic | 30,367,806 | N/A | - | 30,367,806 | |||||||
| Diluted | 30,367,806 | N/A | - | 30,367,806 | |||||||
| Earnings (loss) per share | |||||||||||
| Basic | 0.44 | N/A | - | 0.40 | |||||||
| Diluted | 0.44 | N/A | - | 0.40 |
4
ZHIBAO TECHNOLOGY INC.
Notes to Unaudited Pro Forma Condensed Combined Financial Statements
1. Basis of Presentation
The unaudited pro forma condensed combined financial statements were prepared using the acquisition method of accounting under the provision of ASC 805 on the basis of the Company as the accounting acquirer of Zhonglian Jinan. Under the acquisition method, the acquisition date fair value of the gross consideration paid by the Company to close the Acquisition was allocated to the assets acquired and liabilities assumed based on their estimated fair value. Management of the Company has made significant estimates and assumptions in determining the preliminary allocation of the gross consideration transferred in the unaudited pro forma condensed combined financial information. As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final amount recorded may differ materially from the information presented.
The pro forma adjustments reflecting the consummation of the acquisition are based on certain currently available information and certain assumptions and methodologies that the Company believes are reasonable under the circumstances. The unaudited condensed pro forma adjustments may be revised as additional information becomes available and alternative valuation methodologies are evaluated. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments and it is possible the differences may be material. The Company believes that its assumptions and methodologies provided a reasonable basis for presenting all the significant effects of the acquisition contemplated based on information available to management at the time and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial information.
The unaudited pro forma condensed combined balance sheet combines the Company’s and Zhonglian Jinan’s balance sheets as of December 31, 2024 as if the acquisition had occurred on December 31, 2024. The unaudited pro forma condensed combined statement of operations combines the Company’s and Zhonglian Jinan’s operations for the year ended June 30, 2024 and for the six months ended December 31, 2024, giving effect to the transaction as described on a pro forma basis as if the acquisition had been completed on July 1, 2023. These unaudited pro forma combined condensed financial statements are based upon the historical financial statements of the Company and Zhonglian Jinan after considering the effect of the adjustments described in these footnotes.
The accompanying unaudited pro forma combined financial statements do not give effect to any cost savings, revenue synergies or restructuring costs which may result from the integration of the Company and Zhonglian Jinan operations. Further, actual results may be different from these unaudited pro forma combined financial statements. They should be read in conjunction with the historical financial statements and notes thereto of the Company and Zhonglian Jinan.
5
2. Estimated Preliminary Purchase Price Allocation
The preliminary consideration and allocation of the purchase price to the fair value of Zhonglian Jinan’s assets acquired and liabilities assumed as if the acquisition date was December 31, 2024 is presented below:
| RMB | |||
|---|---|---|---|
| Consideration per the share purchase agreement | 25,500,000 | ||
| Recognized amounts of identifiable assets acquired and liabilities assumed | |||
| Cash and cash equivalents | 14,717,018 | ||
| Restricted cash | 2,687,118 | ||
| Accounts receivable, net | 23,413,972 | ||
| Due from related parties | 2,087,323 | ||
| Prepaid expenses and other current assets, net | 6,419,278 | ||
| Property and equipment, net | 6,173,990 | ||
| Operating lease right of use assets | 267,051 | ||
| Restricted cash, noncurrent | 5,000,000 | ||
| Other non-current assets | 1,022 | ||
| Accounts payable | (47,738,519 | ) | |
| Income tax payable | (126,988 | ) | |
| Due to related parties | - | ||
| Operating lease liabilities, current | (168,834 | ) | |
| Accrued expenses and other liabilities | (19,916,500 | ) | |
| Operating lease liabilities, noncurrent | (71,217 | ) | |
| Deferred tax liabilities | (2,538,641 | ) | |
| Total identifiable net assets (liabilities) | (9,793,927 | ) | |
| Fair Value allocated to 49% non-controlling interest | (4,799,024 | ) | |
| Goodwill | 30,494,903 |
Goodwill represents the excess of the purchase price over the amounts assigned to the fair value of the assets acquired and the liabilities assumed of Zhonglian Jinan.
The Company has not completed the detailed valuation necessary to estimate the fair value of the assets acquired and the liabilities assumed and, accordingly, the adjustments to record the assets acquired and liabilities assumed at fair value reflect the best estimate of the Company based on the information currently available and are subject to change once additional analyses are completed.
As the goodwill calculation above assumed full payment of the purchase price, the final amount recorded may differ materially from the information presented.
3. Proforma Adjustments
The unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the acquisition and has been prepared for informational purposed only.
The historical financial statements have been adjusted in the unaudited pro forma condensed combined financial information to give pro forma effect to events that are directly attributable to the acquisition, factually supportable, and with respect to the statements of operations, expected to have a continuing impact on the results of the Company.
The pro forma adjustments are comprised of the following elements:
| (a) | Represents the Company’s accrual for the consideration payable<br>as a result of the acquisition and the elimination of Zhonglian Jinan’s historical equity balances. |
|---|---|
| (b) | Elimination for transactions between the Company and Zhonglian<br>Jinan. |
| --- | --- |
6
Exhibit 99.2
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
INDEX TO FINANCIAL INFORMATION
| Page | |
|---|---|
| Report<br> of Independent Registered Public Accounting Firm (PCAOB ID: 7302) | F-2 |
| Balance<br> Sheets as of June 30, 2023 and 2024 | F-3 |
| Statements<br> of Operations and Comprehensive Loss for the Years Ended June 30, 2023 and 2024 | F-4 |
| Statements<br> of Changes in Shareholders’ (Deficit) Equity for the Years Ended June 30, 2023 and 2024 | F-5 |
| Statements<br> of Cash Flows for the Years Ended June 30, 2023 and 2024 | F-6 |
| Notes<br> to the Financial Statements | F-7 |
F-1
R****EPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Zhonglian Jinan Insurance Brokerage Co., Ltd.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Zhonglian Jinan Insurance Brokerage Co., Ltd. (the “Company”) as of June 30, 2024 and 2023, the related statements of operations and comprehensive loss, changes in shareholders’ (deficit) equity and cash flows the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at June 30, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
The Company’s Ability to Continue asa Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has incurred recurring losses from operations, has negative cash flow from operations, and was in an accumulated deficit position. Given the Company’s financial position, there is substantial doubt about the Company’s ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ HYYH CPA. LLC
We have served as the Company’s auditor since 2025.
Baltimore, Maryland
July 2, 2025
F-2
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
BALANCE SHEETS
AS OF JUNE 30, 2023 AND 2024
(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”), except for share and per share data)
| As of June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2023 | 2024 | 2024 | ||||||
| RMB | RMB | US (Note 2) | ||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | 23,512,267 | 22,825,452 | ||||||
| Restricted cash | 12,964,831 | 3,770,651 | ||||||
| Accounts receivable, net | 15,323,982 | 16,236,635 | ||||||
| Due from related parties | 450,000 | 3,427,899 | ||||||
| Prepaid expenses and other current assets, net | 9,551,102 | 9,635,826 | ||||||
| Total Current Assets | 61,802,182 | 55,896,463 | ||||||
| Property and equipment, net | 7,277,357 | 6,121,029 | ||||||
| Operating lease right of use assets | 323,751 | 397,399 | ||||||
| Restricted cash, noncurrent | 5,000,000 | 5,000,000 | ||||||
| Total Non-Current Assets | 12,601,108 | 11,518,428 | ||||||
| Total Assets | 74,403,290 | 67,414,891 | ||||||
| LIABILITIES, AND SHAREHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | 26,008,204 | 28,526,879 | ||||||
| Income tax payable | 957,839 | 1,671,692 | ||||||
| Due to related parties | 6,000 | - | ||||||
| Operating lease liabilities, current | 194,564 | 213,988 | ||||||
| Accrued expenses and other liabilities | 31,027,874 | 22,182,490 | ||||||
| Total Current Liabilities | 58,194,481 | 52,595,049 | ||||||
| Operating lease liabilities, noncurrent | 108,617 | 124,911 | ||||||
| Deferred tax liabilities | 1,594,020 | 1,424,323 | ||||||
| Total Non-current Liabilities | 1,702,637 | 1,549,234 | ||||||
| Total Liabilities | 59,897,118 | 54,144,283 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders’ Equity | ||||||||
| Paid-in capital | 50,000,000 | 50,000,000 | ||||||
| Accumulated deficit | (35,493,828 | ) | (36,729,392 | ) | ) | |||
| Total Shareholders’ Equity | 14,506,172 | 13,270,608 | ||||||
| Total Liabilities and Shareholders’ Equity | 74,403,290 | 67,414,891 |
All values are in US Dollars.
The accompanying notes are an integral part of the audited financial statements.
F-3
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE YEARS ENDED JUNE 30, 2023 AND 2024
(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”), except for share and per share data)
| For the Year Ended June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2023 | 2024 | 2024 | ||||||
| RMB | RMB | US (Note 2) | ||||||
| Revenues | 191,824,330 | 191,705,510 | ||||||
| Cost of revenues | (147,153,737 | ) | (143,433,635 | ) | ) | |||
| Gross profit | 44,670,593 | 48,271,875 | ||||||
| Operating expenses | ||||||||
| Selling and marketing expenses | (17,780,712 | ) | (15,706,108 | ) | ) | |||
| General and administrative expenses | (30,792,109 | ) | (32,973,455 | ) | ) | |||
| Total operating expenses | (48,572,821 | ) | (48,679,563 | ) | ) | |||
| Loss from operations | (3,902,228 | ) | (407,688 | ) | ) | |||
| Interest income, net | 78,473 | 85,193 | ||||||
| Other income, net | 1,033,074 | 310,316 | ||||||
| Loss Before Income Taxes | (2,790,681 | ) | (12,179 | ) | ) | |||
| Income tax expenses | (2,491,540 | ) | (1,223,385 | ) | ) | |||
| Net Loss | (5,282,221 | ) | (1,235,564 | ) | ) | |||
| Comprehensive loss | (5,282,221 | ) | (1,235,564 | ) | ) |
All values are in US Dollars.
The accompanying notes are an integral part of the audited financial statements.
F-4
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
STATEMENTS OF CHANGES IN SHAREHOLDERS’(DEFICITS) EQUITYFOR THE YEARS ENDED JUNE 30, 2023 AND 2024(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”), except for share and per share data)
| Paid-in Capital | Retained earnings (Accumulated Deficits) | Total | ||||||
|---|---|---|---|---|---|---|---|---|
| RMB | RMB | RMB | ||||||
| As of June 30, 2022 | 50,000,000 | (30,211,607 | ) | 19,788,393 | ||||
| Net loss | - | (5,282,221 | ) | (5,282,221 | ) | |||
| As of June 30, 2023 | 50,000,000 | (35,493,828 | ) | 14,506,172 | ||||
| Net loss | - | (1,235,564 | ) | (1,235,564 | ) | |||
| As of June 30, 2024 | 50,000,000 | (36,729,392 | ) | 13,270,608 |
The accompanying notes are an integral part of the audited financial statements.
F-5
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2023 and 2024
(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”))
| For the Year Ended June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2023 | 2024 | 2024 | ||||||
| RMB | RMB | US (Note 2) | ||||||
| Cash Flows From Operating Activities: | ||||||||
| Net loss | (5,282,221 | ) | (1,235,564 | ) | ) | |||
| Adjustments to reconcile net loss to net cash provided by (used in)<br> operating activities: | ||||||||
| Depreciation and amortization expenses | 985,143 | 1,247,993 | ||||||
| Amortization of operating lease right-of-use assets | 208,429 | 267,167 | ||||||
| Provision for doubtful receivables | 809,275 | 384,273 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 2,662,145 | (1,507,159 | ) | ) | ||||
| Due from related parties | 3,142,920 | (2,977,899 | ) | ) | ||||
| Prepaid expenses and other current assets | 1,232,596 | 125,509 | ||||||
| Accounts payable | 6,056,407 | 2,518,675 | ||||||
| Due to related parties | - | (6,000 | ) | ) | ||||
| Income tax payable | 841,665 | 713,853 | ||||||
| Deferred tax liabilities | 1,594,020 | (169,697 | ) | ) | ||||
| Operating lease liabilities | (200,770 | ) | (9,555,897 | ) | ) | |||
| Accrued expenses and other liabilities | 9,288,014 | 405,416 | ||||||
| Net cash provided by (used in) operating activities | 21,337,623 | (9,789,330 | ) | ) | ||||
| Cash Flows From Investing Activities | ||||||||
| Purchase of property and equipment | (1,190,502 | ) | (91,665 | ) | ) | |||
| Net cash used in investing activities | (1,190,502 | ) | (91,665 | ) | ) | |||
| Net increase (decrease) in cash, cash equivalents and restricted<br> cash | 20,147,121 | (9,880,995 | ) | ) | ||||
| Cash, cash equivalents and restricted cash at beginning of the year | 21,329,977 | 41,477,098 | ||||||
| Cash, cash equivalents and restricted cash at end of the year | 41,477,098 | 31,596,103 | ||||||
| Supplemental Cash Flow Information | ||||||||
| Cash paid for income tax | 295,357 | 470,821 | ||||||
| Non-cash Investing and Financing activities | ||||||||
| Operating lease right-of-use assets obtained in exchange for operating lease liabilities | 301,673 | 340,815 |
All values are in US Dollars.
Reconciliation of cash, cash equivalents and restrictedcash to the balance sheets
| As of June 30, | |||||
|---|---|---|---|---|---|
| 2023 | 2024 | 2024 | |||
| RMB | RMB | US (Note 2) | |||
| Cash and cash equivalents | 23,512,267 | 22,825,452 | |||
| Restricted cash | 17,964,831 | 8,770,651 | |||
| 41,477,098 | 31,596,103 |
All values are in US Dollars.
The accompanying notes are an integral part of the audited financial statements.
F-6
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
NOTESTO FINANCIAL STATEMENTS
1 — THE ORGANIZATION AND NATUREOF BUSINESS
Zhonglian Jinan Insurance Brokerage Co., Ltd. (the “Company”) was incorporated on June 8, 2005, under the laws of the People’s Republic of China (“PRC”) as a liability company. The Company is primarily engaged in providing insurance brokerage services to end customers.
2 — SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES
Basis of Presentation
The accompanying financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
For the year ended June 30, 2023, the Company incurred an operating loss of RMB 5,282,221 and generated cash flows from operating activities of RMB 21,337,623. For the year ended June 30, 2024, the Company’s operating loss decreased to RMB 1,235,564 (US$ 169,272), while its cash flows from operating activities turned negative, amounting to RMB 9,789,330 (US$ 1,341,133). As of June 30, 2023 and 2024, the Company had an accumulated deficit position of RMB 35,493,828 and RMB 36,729,392 (US$ 5,031,906), respectively.
There is substantial doubt regarding the Company’s ability to continue as a going concern. Management plans to gradually mitigate operating losses in the foreseeable future through strengthening its customer cash collection efforts and extending the payment cycle of major suppliers. The Company has implemented cost saving plans to reduce discretionary operational expenses and secure additional financing including but not limited to, raising equity financing, and obtaining additional credit facilities from banks in the normal course of business. However, there are uncertainties as to whether, and there can be no assurance that the aforesaid plans can be successfully executed. Accordingly, the substantial doubt of the Company’s ability to continue as a going concern has not been alleviated for the next twelve months from the date of issuance of these financial statements. The accompanying financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classifications of liabilities that may be necessary should the Company be unable to continue as a going concern.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities on the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, management reviews these estimates and assumptions using the currently available information. Changes in facts and circumstances may cause the Company to revise its estimates. The Company bases its estimates on past experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Estimates are used when accounting for items and matters including, but not limited to, determinations of the useful lives and valuation of long-lived assets, estimates of allowances for doubtful accounts, valuation of deferred tax assets, and other provisions and contingencies.
F-7
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
NOTESTO FINANCIAL STATEMENTS
2 — SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (cont.)
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 comprise current assets and current liabilities including cash and cash equivalents, restricted cash, accounts receivable, due from related parties, other receivables, accounts payable, other payables and due to related parties. The Company’s financial instruments approximate their fair values because of the short-term nature of these instruments.
Convenience Translation
Translations of balances in the Company’s balance sheets, statements of operation and comprehensive loss and statements of cash flows from RMB into US$ as of and for year ended June 30, 2024 are solely for the convenience of the readers and were calculated at the rate of US$1.00=RMB 7.2993, representing the noon buying rate set forth in the H.10 statistical release of the U.S. Federal Reserve Board on December 31, 2024. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on December 31, 2024 or at any other rate.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, bank deposits, which are unrestricted as to withdrawal or use.
Restricted Cash
Restricted cash represents cash and cash equivalents legally or contractually restricted as to withdrawal or usage. As of June 30, 2024, the restricted cash of RMB 1,000,000 was held in escrow due to pending legal proceedings in which the Company is a defendant.
In its capacity as an insurance broker, the Company collects “premiums” (unremitted insurance premiums) from certain insureds and remits the “premiums” to the appropriate insurance companies. Unremitted insurance premiums are held in custody until disbursed by the Company. The Company reports such amounts as current restricted cash in the balance sheets.
Restricted cash, noncurrent represented guarantee deposits are required by China Banking and Insurance Regulatory Commission (“CBIRC”) in order to protect insurance premium appropriation by insurance broker.
Accounts Receivable, Net
Accounts receivable are recorded at the gross amount less an allowance for any uncollectible accounts and do not bear interest. Accounts receivable represented brokerage fees receivable from insurer carriers.
The Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), utilize a forward-looking current expected credit losses (CECL) model for financial instruments measured at amortized cost and receivables resulting from the application of ASC 606, including contract assets.
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 statements of operations and comprehensive loss.
F-8
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
NOTESTO FINANCIAL STATEMENTS
2 — SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (cont.)
Property and Equipment, Net
Property and equipment are stated at cost less accumulated depreciation. Depreciation is provided using the straight-line method with the residual value based on the estimated useful lives of the class of asset, which range as follows:
| Estimated | ||||
|---|---|---|---|---|
| Category | Useful Life | Residual | ||
| Office and electronic equipment | 3-10 years | Nil%-10 | % | |
| Vehicles | 3-4 years | Nil%-5 | % | |
| Building | 20 years | 5 | % | |
| Leasehold improvements | Over the shorter of the expected life of leasehold improvements or the lease term | Nil | % |
Costs of repairs and maintenance are expensed as incurred and asset improvements are capitalized. The cost and related accumulated depreciation of assets disposed of or retired are removed from the accounts, and any resulting gain or loss is reflected in the statement of operations and comprehensive loss.
Impairment of Long-lived Assets
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. No impairment of long-lived assets was recognized for the years ended June 30, 2023 and 2024.
Operating Leases
The Company leases its offices, which are classified as operating leases in accordance with Topic 842. Operating leases are required to record in the balance sheet as right-of-use assets and lease liabilities, initially measured at the present value of the lease payments. The Company has elected the package of practical expedients, which allows the Company not to reassess (1) whether any expired or existing contracts as of the adoption date are or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date, and (3) initial direct costs for any expired or existing leases as of the adoption date. The Company elected the short-term lease exemption as the lease terms are 12 months or less.
At the commencement date, the Company recognizes the lease liability at the present value of the lease payments not yet paid, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate for the same term as the underlying lease.
The right-of-use asset is recognized initially at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received.
F-9
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
NOTESTO FINANCIAL STATEMENTS
2 — SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (cont.)
Revenue Recognition
In accordance with ASC 606, revenue is recognized when the control of the promised goods or services is transferred to the customers, and the performance obligations under the contract have been satisfied, in an amount that reflects the consideration expected to be entitled to in exchange for those goods or services (excluding sales taxes collected on behalf of government authorities).
The Company determines revenue recognition through the following steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation.
The Company primarily generated revenues from contracts with customers:
Insurance brokerage services
The Company offers insurance brokerage services to end customers/the insured for placing insurance policies, and the Company earns insurance brokerage commission from insurance carriers upon completing insurance brokerage services. The commission fees are calculated on a predetermined percentage of insurance premium of each insurance policy. The insurance brokerage services are considered as a single performance obligation, as the insurer carriers cannot benefit until the Company sells an insurance policy. Commission fees are recognized when the Company completes the insurance brokerage services, at which point the Company successfully places an insurance policy for the end customers/the insured.
The Company recognizes insurance brokerage commissions net of return allowances. End customers/the insured are generally entitled to return insurance policies at any time under no conditions. During the years ended June 30, 2023 and 2024, the Company did not record return allowance because the Company historically incurred minimal returns from end customers/the insured and the Company did not expect a significant reversal in the amount of cumulative revenue.
Others
The Company offers various advisory services to institutional customers who seek insurance coverage for their employees, assets, and business operations. These services mainly include designing insurance plans, handling claims, and conducting risk assessments. The Company generally charges a fixed amount for service fee and recognized revenue upon completion of service delivery.
F-10
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
NOTESTO FINANCIAL STATEMENTS
2 — SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (cont.)
Contract balances
The Company classifies its right to consideration in exchange for services transferred to a customer as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional as compared to a contract asset which is a right to consideration that is conditional upon factors other than the passage of time. The Company recognizes accounts receivable in its 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, 2023 and 2024, the Company did not record contract assets.
The Company capitalizes incremental costs incurred to fulfill contracts that (i) relate directly to the contract, (ii) are expected to generate resources that will be used to satisfy the performance obligation under the contract, and (iii) are expected to be recovered through revenue generated under the contract. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the current contract estimates. As of June 30, 2023 and 2024, the Company had no deferred contract costs.
Contract liabilities are recognized if the Company receives consideration prior to satisfying the performance obligations, which include customer advances and deferred revenue under service arrangements. As of June 30, 2023 and 2024, the Company had no contract liabilities.
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.
F-11
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
NOTESTO FINANCIAL STATEMENTS
2 — SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (cont.)
Disaggregation of revenue
For the years ended June 30, 2023 and 2024, substantially all of the Company’s revenue was generated in the PRC. The Company disaggregated revenue as shown in the following table:
| For the Years Ended June 30, | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2024 | |||||
| RMB | RMB | |||||
| Insurance brokerage service fees | 191,994,079 | 191,620,150 | ||||
| Others | 461,687 | 651,379 | ||||
| Less: business taxes and surcharges | (631,436 | ) | (566,019 | ) | ||
| Total revenues | 191,824,330 | 191,705,510 |
The Company disaggregated revenue by transferal of services as shown in the following table:
| For the Years Ended June 30, | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2024 | |||||
| RMB | RMB | |||||
| Services transferred at a point in time | 192,455,766 | 192,271,529 | ||||
| Less: business taxes and surcharges | (631,436 | ) | (566,019 | ) | ||
| Total revenues | 191,824,330 | 191,705,510 |
Cost of Revenues
Cost of revenue consists primarily of insurance policy acquisition costs, which are service fees paid to various channels for successful sales of insurance policies and labor cost. These costs are charged to the statements of operations and comprehensive loss as incurred.
Selling and Marketing Expenses
Selling and marketing expenses consist primarily of payroll and related expenses for employees involved in selling and marketing activities, rental, brokerage service-related promotion and consulting service fee and other expenses.
General and Administrative Expenses
General and administrative expenses primarily consist of employee related expenses for administrative functions, costs associated with these functions including facilities and equipment depreciation expenses, rental and other general corporate related expenses.
F-12
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
NOTESTO FINANCIAL STATEMENTS
2 — SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (cont.)
Research and Development Expenses
Research and development expenses primarily consist of employee related expenses for research and development functions, and outsourced research service expenses.
Value Added Taxes
The Company is subject to VAT and related surcharges in China for providing services. The applicable VAT rate is 6% for general taxpayers. The amount of VAT liability is determined by applying the applicable tax rate to the invoiced amount of services provided (output VAT) less VAT paid on purchases made with the relevant supporting invoices (input VAT). VAT liability is recorded in the line item of accrued expenses and other current liabilities on the balance sheets. Under the commercial practice of the PRC, the Company pays VAT based on tax invoices issued.
According to the Announcement No. 19 of 2023 issued by the Ministry of Finance and State Administration of Taxation, for small-scale VAT taxpayers, the taxable sales revenue subject to a 3% collection rate will be levied at a reduced rate of 1% until December 31, 2027.
Income Taxes
The Company accounts for income taxes in accordance with the U.S. GAAP for income taxes. Under the asset and liability method as required by this accounting standard, the recognition of deferred income tax liabilities and assets for the expected future tax consequences of temporary differences between the income tax basis and financial reporting basis of assets and liabilities. Provision for income taxes consists of taxes currently due plus deferred taxes.
The charge for taxation is based on the results for the year as adjusted for items which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis. Deferred tax assets are recognized to the extent that it is more likely than not these items will be utilized against taxable income in the future. Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.
An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. As of June 30, 2024, income tax returns for the tax years ended December 31, 2019 through December 31, 2023 remain open for statutory examination.
F-13
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
NOTESTO FINANCIAL STATEMENTS
2 — SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (cont.)
Government Grants
Government grants include cash subsidies as well as other subsidies receivable from various government agencies by the Company. Government grants are recognized as other income when all conditions attached to the grants are fulfilled and recorded in the statements of operations and comprehensive loss. For the years ended June 30, 2023 and 2024, the Company received and recognized government grants of RMB 530,000 and RMB 380,000, respectively.
Commitments and Contingencies
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.
F-14
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
NOTESTO FINANCIAL STATEMENTS
2 — SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (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. The Company’s chief operating decision maker (“CODM”) has been identified as the Chief Executive Officer, who reviews results including revenue, gross profit and operating profit at the whole company level only. The Company does not distinguish between markets for the purpose of making decisions about resources allocation and performance assessment. Therefore, the Company has only one operating segment and one reportable segment.
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 and restricted cash. The maximum exposure of such assets to credit risk is their carrying amount as at the balance sheet dates. As of June 30, 2023 and 2024, RMB 41,477,098 and RMB 31,596,103 (US$ 4,328,648) were held on hands by the Company and deposited in financial institutions in the PRC, and each bank accounts is insured by the government authority with the maximum limit of RMB 500,000. To limit exposure to credit risk relating to deposits, the Company primarily place cash and cash equivalent deposits with large financial institutions in China which management believe are of high credit quality and the Company also continually monitors their credit worthiness.
The risk with respect to accounts receivable and amounts due from related parties is mitigated by credit evaluations the Company performs on its customers and its ongoing monitoring processes of outstanding balances.
The Company’s operations are carried out in China. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC as well as by the general state of the PRC’s economy. In addition, the Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, rates and methods of taxation among other factors.
| 2) | Foreign currency risk |
|---|
All the Company’s operating activities that were conducted 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, 2023, two customers accounted for approximately 18% and 15% of accounts receivable, respectively. As of June 30, 2024, four customers accounted for approximately 19%, 15%, 12% and 12% of accounts receivable, respectively.
For the year ended June 30, 2023, three customers accounted for approximately 16%,12% and 10% of the total revenues. For the year ended June 30, 2024, three customers accounted for approximately 20%, 12% and 11% of the total revenues.
As of June 30, 2023, two suppliers accounted for approximately 27% and 12% of accounts payable, respectively. As of June 30, 2024, three suppliers accounted for approximately 39%, 15% and 12% of accounts payable, respectively.
For the year ended June 30, 2023, there were no suppliers that accounted for more than 10% of the cost of revenues. For the year ended June 30, 2024, one supplier accounted for approximately 13% of the cost of revenues.
F-15
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
NOTESTO FINANCIAL STATEMENTS
2 — SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (cont.)
Recently Issued Accounting Standards
In March 2023, the FASB issued new accounting guidance, ASU 2023-01, for leasehold improvements associated with common control leases, which is effective for years beginning after December 15, 2023, including interim periods within those years. Early adoption is permitted for both interim and annual financial statements that have not yet been made available for issuance. The new guidance introduced two issues: terms and conditions to be considered with leases between related parties under common control and accounting for leasehold improvements. The goals for the new issues are to reduce the cost associated with implementing and applying Topic 842 and to promote diversity in practice by entities within the scope when applying lease accounting requirements. The Company assessed that the adoption of ASU 2023-01 had no significant impact on the 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 financial statements.
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures. The amendments in ASU 2023-07 are intended to improve reportable segment disclosure primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for years beginning after December 15, 2023, and interim periods within years beginning after December 15, 2024. The amendments ASU 2023-07 should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is permitted. The Company is currently evaluating the disclosure impact that ASU 2023-07 may have on its condensed financial statement presentation and disclosures.
In December 2023, the FASB issued ASU 2023-09, Improvement to Income Tax Disclosure, 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 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 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 balance sheets, statements of operations and comprehensive loss, and statements of cash flows.
F-16
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
NOTESTO FINANCIAL STATEMENTS
3 — ACCOUNTS RECEIVABLE
As of June 30, 2023 and 2024, accounts receivable consisted of the following:
| June 30,<br> 2023 | June 30,<br> 2024 | |||||
|---|---|---|---|---|---|---|
| RMB | RMB | |||||
| Accounts receivable | 16,988,606 | 16,543,950 | ||||
| Less: Allowance for credit losses | (1,664,624 | ) | (307,315 | ) | ||
| 15,323,982 | 16,236,635 |
For the years ended June 30, 2023 and 2024, the movement of allowance against expected credit losses was as the following:
| June 30, <br> 2023 | June 30, <br> 2024 | |||||
|---|---|---|---|---|---|---|
| RMB | RMB | |||||
| Opening balance | 1,466,986 | 1,664,624 | ||||
| Provision of expected credit losses | 216,425 | 594,506 | ||||
| Writing off accounts receivable | (18,787 | ) | (1,951,815 | ) | ||
| Ending balance | 1,664,624 | 307,315 |
4 — PREPAID EXPENSES AND OTHER CURRENTASSETS, NET
As of June 30, 2023 and 2024, prepaid expenses and other current assets, net consisted of the following:
| June 30,<br> 2023 | June 30,<br> 2024 | |||||
|---|---|---|---|---|---|---|
| RMB | RMB | |||||
| Advance to staff | 3,111,599 | 4,975,573 | ||||
| Deposits^(a)^ | 247,880 | 270,366 | ||||
| Prepaid expenses | 5,751,964 | 3,891,678 | ||||
| Others | 1,064,814 | 913,131 | ||||
| Less: Provision against other receivables | (625,155 | ) | (414,922 | ) | ||
| Total prepayments and other current assets, net | **** | 9,551,102 | **** | **** | 9,635,826 | **** |
| (a) | The balance of deposits primarily consisted of rental deposits and bidding deposits. | |||||
| --- | --- |
F-17
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
NOTESTO FINANCIAL STATEMENTS
4 — PREPAID EXPENSES AND OTHER CURRENTASSETS, NET (cont.)
The movement of the expected credit loss against prepaid expenses and other receivables for the years ended June 30, 2023 and 2024 is as follows:
| June 30,<br> 2023 | June 30,<br> 2024 | ||||
|---|---|---|---|---|---|
| RMB | RMB | ||||
| Beginning balance | 32,305 | 625,155 | |||
| Addition | 592,850 | (210,233 | ) | ||
| Writing off | - | - | |||
| Ending balance | **** | 625,155 | **** | 414,922 | **** |
5 — PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consisted of the following:
| June 30,<br> 2023 | June 30,<br> 2024 | |||||
|---|---|---|---|---|---|---|
| RMB | RMB | |||||
| Building | 7,049,530 | 7,049,530 | ||||
| Office and electronic equipment | 588,830 | 680,495 | ||||
| Vehicles | 3,129,713 | 3,129,713 | ||||
| Total | **** | 10,768,073 | **** | **** | 10,859,738 | **** |
| Less: accumulated depreciation | (3,490,716 | ) | (4,738,709 | ) | ||
| Total property and equipment, net | **** | 7,277,357 | **** | **** | 6,121,029 | **** |
The Company recorded depreciation expenses of property and equipment of RMB 985,143 and RMB 1,247,993 (US$ 170,974) for the years ended June 30, 2023 and 2024, respectively.
F-18
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
NOTESTO FINANCIAL STATEMENTS
6 — LEASES
As of June 30, 2023 and 2024, the Company leases office spaces in different cities in the PRC under non-cancelable operating leases, with terms ranging between 24 months and 36 months. The Company considers those renewal or termination options that are reasonably certain to be exercised in the determination of the lease term and initial measurement of right of use assets and lease liabilities. Lease expense for lease payment is recognized on a straight-line basis over the lease term.
The Company determines whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the leases do not provide a readily determinable implicit rate. Therefore, the Company discount lease payments based on an estimate of the incremental borrowing rate.
For operating leases that include rent holidays and rent escalation clauses, the Company recognizes lease expense on a straight-line basis over the lease term from the date it takes possession of the leased property. The Company records the straight-line lease expense and any contingent rent, if applicable, in general and administrative expenses on the 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 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 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 balance sheets.
| June 30,<br> 2023 | June 30,<br> 2024 | |||
|---|---|---|---|---|
| RMB | RMB | |||
| Right of use assets | 323,751 | 397,399 | ||
| Operating lease liabilities, current | 194,564 | 213,988 | ||
| Operating lease liabilities, noncurrent | 108,617 | 124,911 | ||
| Total operating lease liabilities | 303,181 | 338,899 |
F-19
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
NOTESTO FINANCIAL STATEMENTS
6 — LEASES (cont.)
Other information about the Company’s leases is as follows:
| For the Years Ended<br> June 30, | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2024 | |||||
| RMB | RMB | |||||
| Operating cash flows used in operating leases | 208,429 | 267,167 | ||||
| Weighted average remaining lease term (years) | 1.75 | 2.03 | ||||
| Weighted average discount rate | 3.51 | % | 3.07 | % |
Operating lease expenses were RMB 208,429 and RMB 267,167 (US$ 36,602), respectively, for the years ended June 30, 2023 and 2024.
The following is a schedule, by years, of maturities of lease liabilities as of June 30, 2024:
| June 30,<br> 2024 | |||
|---|---|---|---|
| RMB | |||
| For the year ending June 30, 2025 | 221,286 | ||
| For the year ending June 30, 2026 | 127,143 | ||
| For the year ending June 30, 2027 | - | ||
| Total lease payments | **** | 348,429 | **** |
| Less: Imputed interest | (9,530 | ) | |
| Present value of lease liabilities | **** | 338,899 | **** |
7 — ACCRUED EXPENSES AND OTHER LIABILITIES
As of June 30, 2023 and 2024, accrued expenses and other liabilities consisted of the following:
| June 30,<br> 2023 | June 30,<br> 2024 | |||
|---|---|---|---|---|
| RMB | RMB | |||
| Accrued payroll and welfare | 2,149,597 | 2,555,013 | ||
| Provisions (Note 9) | 4,643,040 | 4,643,040 | ||
| Deposits payable | 2,729,262 | 3,151,875 | ||
| D Payable for staff reimbursements | 7,440,874 | 6,887,877 | ||
| Insurance premium payable | 12,964,831 | 2,770,651 | ||
| Other payables | 1,100,270 | 2,174,034 | ||
| 31,027,874 | 22,182,490 |
F-20
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
NOTESTO FINANCIAL STATEMENTS
8 — INCOME TAX
PRC
The Company was incorporated in the PRC and are subject to PRC Enterprise Income Tax (“EIT”) on the taxable income in accordance with the relevant PRC income tax laws. On March 16, 2007, the National People’s Congress enacted a new enterprise income tax law, which took effect on January 1, 2008. The law applies a uniform 25% enterprise income tax rate to both foreign invested enterprises and domestic enterprises.
The income tax benefits (expenses) for the years ended June 30, 2023 and 2024 were comprised of the following:
| For the Years Ended<br> June 30, | |||||
|---|---|---|---|---|---|
| 2023 | 2024 | ||||
| RMB | RMB | ||||
| Current income tax expenses | 897,520 | 1,393,082 | |||
| Deferred income tax expenses (benefits) | 1,594,020 | (169,697 | ) | ||
| **** | **** | 2,491,540 | **** | 1,223,385 | **** |
The loss before income taxes of the Company are all derived in PRC.
Below is a reconciliation of the statutory tax rate to the effective tax rate:
| For the Years Ended <br> June 30, | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2024 | |||||
| RMB | RMB | |||||
| Income (Loss) before income tax expenses | (2,790,680 | ) | (12,177 | ) | ||
| Income tax expenses/(benefits) computed at statutory EIT rate (25%) | (697,670 | ) | (3,044 | ) | ||
| Effect of entertainment expense | 388,297 | 201,027 | ||||
| Effect of staff welfare expense | 8,152 | 21,162 | ||||
| Effect of overdue fine | 1,125 | 106,998 | ||||
| Effect of change in valuation allowance | 2,791,636 | 897,242 | ||||
| Income tax expenses | **** | 2,491,540 | **** | **** | 1,223,385 | **** |
F-21
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
NOTESTO FINANCIAL STATEMENTS
8 — INCOME TAX (cont.)
PRC (cont.)
The principle components of deferred tax assets and deferred tax liabilities are as follows:
| June 30,<br> 2023 | June 30, <br> 2024 | |||||
|---|---|---|---|---|---|---|
| RMB | RMB | |||||
| Deferred tax assets | ||||||
| Net operating loss (“NOLs”) carrying forwards | 2,421,518 | 3,753,244 | ||||
| Allowance against doubtful accounts | 809,275 | 384,273 | ||||
| Operating lease liabilities | 75,795 | 84,725 | ||||
| Total deferred tax assets | 3,306,588 | 4,222,242 | ||||
| Net off against deferred tax liabilities | (80,938 | ) | (99,350 | ) | ||
| Less: Valuation allowance | (3,225,650 | ) | (4,122,892 | ) | ||
| Total Deferred tax assets, net | - | - | ||||
| June 30,<br> 2023 | June 30, <br> 2024 | |||||
| --- | --- | --- | --- | --- | --- | --- |
| RMB | RMB | |||||
| Deferred tax liabilities | ||||||
| Operating lease right of use assets | 80,938 | 99,350 | ||||
| GAAP difference - unbilled revenue | 1,594,020 | 1,424,323 | ||||
| Total deferred tax liabilities | 1,674,958 | 1,523,673 | ||||
| Net off against deferred tax assets | (80,938 | ) | (99,350 | ) | ||
| Deferred tax liabilities, net | 1,594,020 | 1,424,323 |
The Company evaluates its valuation allowance requirements at end of each reporting period by reviewing all available evidence, both positive and negative, and considering whether, based on the weight of that evidence, a valuation allowance is needed. When circumstances cause a change in management’s judgement about the realizability of deferred tax assets, the impact of the change on the valuation allowance is generally reflected in income from operations. The future realization of the tax benefit of an existing deductible temporary difference ultimately depends on the existence of sufficient taxable income of the appropriate character within the carryforward period available under applicable tax law.
F-22
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
NOTESTO FINANCIAL STATEMENTS
8 — INCOME TAX (cont.)
PRC (cont.)
As of June 30, 2023 and 2024, the Company had net operating losses of RMB 11,531,692 and RMB 15,012,977, respectively, which will be available to offset future taxable income. If not used, these carryforwards will expire from 2025 through 2029.
As of June 30, 2023 and 2024, due to uncertainties surrounding future utilization, the Company had valuation allowance of RMB 3,225,650 and RMB 4,122,892, respectively, against the deferred tax assets based upon management’s assessment as to their realization.
For the years ended June 30, 2023 and 2024, no interest expense or penalty was accrued in relation to the unrecognized tax benefit. The Company has a liability for accrued interest of nil and nil as of June 30, 2023 and 2024, respectively.
ASC 740 states that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. The Company records unrecognized tax benefits as liabilities or a reduction of deferred tax assets in accordance with ASC 740 and adjusts these amounts when our judgment changes as a result of the evaluation of new information not previously available. However, due to the uncertain and complex application of tax regulations, it is possible that the ultimate resolution of uncertain tax positions may result in liabilities which could be materially different from these estimates. In such an event, the Company will record additional tax expense or tax benefit in the period in which such resolution occurs.
According to PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or withholding agent. The statute of limitations will be extended five years under special circumstances, which are not clearly defined (but an underpayment of tax liability exceeding RMB 0.1 million is specifically listed as a special circumstance). In the case of a related party transaction, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion.
9 — 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
As of June 30, 2024, four customers had filed breach-of-contract lawsuits against the Company following unresolved disputes, seeking monetary settlements totaling approximately RMB 7.8 million. The claims cover compensation for losses, refunds, penalties, legal fees, and litigation costs.
As of June 30, 2023 and 2024, the total provision amount accrued for these lawsuits remained the same at RMB 4,643,040. Other than the above, the Company did not have other significant commitments, long-term obligations, significant contingencies or guarantees as of June 30, 2023 and 2024.
F-23
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
NOTESTO FINANCIAL STATEMENTS
10 — RELATED PARTY TRANSACTIONS
| 1) | Nature of relationships with related parties |
|---|---|
| Name | Relationship with the Company |
| --- | --- |
| Xuegeng Zhao | Chairman of the Board, Chief Executive Officer |
| Qin’er Ye | The General Manager |
| 2) | Balances with related parties |
| --- | --- |
As of June 30, 2023 and 2024, the balances with related parties were as follows:
| June 30,<br> 2023 | June 30,<br> 2024 | |||
|---|---|---|---|---|
| RMB | RMB | |||
| Due from related parties | ||||
| Xuegeng Zhao ^(a)^ | 450,000 | 1,400,000 | ||
| Qin’er Ye ^(a)^ | - | 2,027,899 | ||
| Total | **** | 450,000 | **** | 3,427,899 |
| (a) | The balances due from related parties represented fund advance to the director and senior management of the Company, which are unsecured and interest-free. By the date of this report, the related parties have repaid approximately RMB 3.12 million to the Company. | |||
| --- | --- | |||
| June 30,<br> 2023 | June 30,<br> 2024 | |||
| --- | --- | --- | --- | --- |
| RMB | RMB | |||
| Due to related parties | ||||
| Qin’er Ye ^(b)^ | 6,000 | - | ||
| Total | **** | 6,000 | **** | - |
| (b) | The balance due to related parties represented the operating expenses paid on behalf of the Company, which is unsecured, interest-free and payable on demand. | |||
| --- | --- |
11 — SUBSEQUENT EVENTS
On July 2, 2025, the Company entered into a share purchase agreement (“the SPA”) with Zhibao Technology Co., Ltd. (“Zhibao China”), a PRC subsidiary of Zhibao Technology Inc. (“Zhibao”), a NASDAQ listed company. Pursuant to the Agreement, Zhibao China will purchase 51% of the issued and outstanding equity interests in the Company in consideration of RMB 25.50 million, subject to the adjustment and confirmation as set forth in the SPA. The entire purchase consideration will be paid in cash.
By the date of this report, there are three of the lawsuits referred to in Note 9 that have been closed with total settlement payment of RMB 3,653,945.
F-24
Exhibit 99.3
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
INDEX TO FINANCIAL INFORMATION
| Page | |
|---|---|
| Unaudited<br> Interim Condensed Balance Sheets as of December 31,2024 | F-2 |
| Unaudited<br> Interim Condensed Statements of Operations and Comprehensive Loss for the Six Months Ended December 31, 2023 and 2024 | F-3 |
| Notes<br> to Unaudited Interim Condensed Financial Statements | F-4 |
F-1
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
UNAUDITED INTERIM CONDENSED BALANCE SHEETS
AS OF DECEMBER 31, 2024
(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”))
| As of <br> June 30,<br><br> 2024 | As of<br> December 31,<br><br> 2024 | As of December 31,<br> 2024 | ||||||
|---|---|---|---|---|---|---|---|---|
| RMB | RMB | US (Note 2) | ||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | 22,825,452 | 14,717,018 | ||||||
| Restricted cash | 3,770,651 | 2,687,118 | ||||||
| Accounts receivable, net | 16,236,635 | 23,413,972 | ||||||
| Due from related parties | 3,427,899 | 2,087,323 | ||||||
| Prepaid expenses and other current assets, net | 9,635,826 | 6,419,278 | ||||||
| Total Current Assets | 55,896,463 | 49,324,709 | ||||||
| Property and equipment, net | 6,121,029 | 6,173,990 | ||||||
| Operating lease right of use assets | 397,399 | 267,051 | ||||||
| Restricted cash, noncurrent | 5,000,000 | 5,000,000 | ||||||
| Other non-current assets | - | 1,022 | ||||||
| Total Non-Current Assets | 11,518,428 | 11,442,063 | ||||||
| Total Assets | 67,414,891 | 60,766,772 | ||||||
| LIABILITIES, AND SHAREHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | 28,526,879 | 47,738,519 | ||||||
| Income tax payable | 1,671,692 | 126,988 | ||||||
| Operating lease liabilities, current | 213,988 | 168,834 | ||||||
| Accrued expenses and other liabilities | 22,182,490 | 19,916,500 | ||||||
| Total Current Liabilities | 52,595,049 | 67,950,841 | ||||||
| Operating lease liabilities, noncurrent | 124,911 | 71,217 | ||||||
| Deferred tax liabilities | 1,424,323 | 2,538,641 | ||||||
| Total Non-current Liabilities | 1,549,234 | 2,609,858 | ||||||
| Total Liabilities | 54,144,283 | 70,560,699 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders’ Equity | ||||||||
| Paid-in capital | 50,000,000 | 50,000,000 | ||||||
| Accumulated deficit | (36,729,392 | ) | (59,793,927 | ) | ) | |||
| Total Shareholders’ Equity | 13,270,608 | (9,793,927 | ) | ) | ||||
| Total Liabilities and Shareholders’ Equity | 67,414,891 | 60,766,772 |
All values are in US Dollars.
The accompanying notes are an integral part of the unaudited interim condensed financial statements.
F-2
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
UNAUDITED INTERIM CONDENSED STATEMENTS OF OPERATIONSAND COMPREHENSIVE LOSS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2023and 2024
(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”))
| For the Six Months Ended December 31, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2023 | 2024 | 2024 | ||||||
| RMB | RMB | US (Note 2) | ||||||
| Revenues | 94,188,367 | 91,924,671 | ||||||
| Cost of revenues | (75,480,159 | ) | (80,896,153 | ) | ) | |||
| Gross profit | 18,708,208 | 11,028,518 | ||||||
| Operating expenses | ||||||||
| Selling and marketing expenses | (7,723,400 | ) | (19,092,457 | ) | ) | |||
| General and administrative expenses | (16,776,860 | ) | (15,051,486 | ) | ) | |||
| Total operating expenses | (24,500,260 | ) | (34,143,943 | ) | ) | |||
| Loss from operations | (5,792,052 | ) | (23,115,425 | ) | ) | |||
| Interest income, net | 35,870 | 11,142 | ||||||
| Other income, net | 112,660 | 151,705 | ||||||
| Loss Before Income Taxes | (5,643,522 | ) | (22,952,578 | ) | ) | |||
| Income tax expenses | (442,965 | ) | (111,957 | ) | ) | |||
| Net Loss | (6,086,487 | ) | (23,064,535 | ) | ) | |||
| Comprehensive loss | (6,086,487 | ) | (23,064,535 | ) | ) |
All values are in US Dollars.
The accompanying notes are an integral part of the unaudited interim condensed financial statements.
F-3
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
NOTESTO UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
1 — THE ORGANIZATION AND NATUREOF BUSINESS
Zhonglian Jinan Insurance Brokerage Co., Ltd. (the “Company”) was incorporated on June 8, 2005, under the laws of the People’s Republic of China (“PRC”) as a liability company. The Company is primarily engaged in providing insurance brokerage services to end customers.
2 — BASIS OF PRESENTATION
The accompanying unaudited interim condensed balance sheet as of December 31, 2024, the unaudited interim condensed statements of operations and comprehensive loss for the six months ended December 31, 2023 and 2024, and the related footnote disclosures are unaudited. These unaudited interim condensed financial statements of the Company are prepared in accordance with U.S. GAAP for interim financial statements using accounting policies that are consistent with those used in the preparation of the Company’s audited financial statements for the year ended June 30, 2024. These unaudited interim condensed financial statements do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited interim condensed financial statements contain all normal recurring adjustments necessary to present fairly the financial position and operating results of the Company for each of the periods presented. These unaudited interim condensed financial statements should be read in conjunction with the Company’s financial statements for the year ended June 30, 2024.
For the six months ended December 31, 2024, the Company incurred an operating loss of RMB 23,064,535 (US$ 3,159,830). As of December 31, 2024, the Company had an accumulated deficit position of RMB 59,793,927 (US$ 8,191,734) and a net current liability of RMB 18,626,132 (US$ 2,551,770).
There is substantial doubt regarding the Company’s ability to continue as a going concern. Management plans to gradually mitigate operating losses in the foreseeable future through strengthening its customer cash collection efforts and extending the payment cycle of major suppliers. The Company has implemented cost saving plans to reduce discretionary operational expenses and secure additional financing including but not limited to, raising equity financing, and obtaining additional credit facilities from banks in the normal course of business. However, there are uncertainties as to whether, and there can be no assurance that the aforesaid plans can be successfully executed. Accordingly, the substantial doubt of the Company’s ability to continue as a going concern has not been alleviated for the next twelve months from the date of issuance of these financial statements. The accompanying financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classifications of liabilities that may be necessary should the Company be unable to continue as a going concern.
3 — CONVENIENCE TRANSLATION
Translations of balances in the Company’s balance sheets, statements of operation and comprehensive loss from RMB into US$ as of and for year ended December 31, 2024 are solely for the convenience of the readers and were calculated at the rate of US$1.00=RMB 7.2993, representing the noon buying rate set forth in the H.10 statistical release of the U.S. Federal Reserve Board on December 31, 2024. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on December 31, 2024 or at any other rate.
F-4
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
NOTESTO UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
4 — REVENUE RECOGNITION
The Company’s revenues are 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.
For the six months ended December 31, 2023 and 2024, substantially all of the Company’s revenue was generated in the PRC. The Company disaggregate revenue as the following table:
| For the Six Months Ended December 31, | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2024 | |||||
| RMB | RMB | |||||
| Insurance brokerage service fees | 93,721,914 | 92,069,890 | ||||
| Others | 684,358 | 24,763 | ||||
| Less: business taxes and surcharges | (217,905 | ) | (169,982 | ) | ||
| Total revenues | 94,188,367 | 91,924,671 |
The Company disaggregates revenue by transferal of services as the following table:
| For the Six Months Ended December 31, | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2024 | |||||
| RMB | RMB | |||||
| Services transferred at a point in time | 94,406,272 | 92,094,653 | ||||
| Less: business taxes and surcharges | (217,905 | ) | (169,982 | ) | ||
| Total revenues | 94,188,367 | 91,924,671 |
F-5
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
NOTESTO UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
5 — ACCOUNTS RECEIVABLE
As of June 30, 2024 and December 31, 2024, accounts receivable consisted of the following:
| June 30,<br> 2024 | December 31,<br> 2024 | |||||
|---|---|---|---|---|---|---|
| RMB | RMB | |||||
| Accounts receivable | 16,543,950 | 23,848,315 | ||||
| Less: Allowance for credit losses | (307,315 | ) | (434,343 | ) | ||
| 16,236,635 | 23,413,972 |
For the year ended June 30, 2024 and for the six months ended December 31, 2024, the movement of allowance against expected credit losses were as the following:
| June 30,<br> <br>2024 | December 31, <br> 2024 | |||||
|---|---|---|---|---|---|---|
| RMB | RMB | |||||
| Opening balance | 1,664,624 | 307,315 | ||||
| Provision of expected credit losses | 594,506 | 240,557 | ||||
| Writing off accounts receivable | (1,951,815 | ) | (113,529 | ) | ||
| Ending balance | 307,315 | 434,343 |
F-6
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
NOTESTO UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
6 — PREPAID EXPENSES AND OTHER CURRENTASSETS, NET
As of June 30, 2024 and December 31, 2024, prepaid expenses and other current assets, net consisted of the following:
| June 30,<br> 2024 | December 31,<br> 2024 | |||||
|---|---|---|---|---|---|---|
| RMB | RMB | |||||
| Advance to staff | 4,975,573 | 4,048,058 | ||||
| Deposits^(a)^ | 270,366 | 461,221 | ||||
| Prepaid expenses | 3,891,678 | 1,569,344 | ||||
| Others | 913,131 | 815,408 | ||||
| Less: Provision against other receivables | (414,922 | ) | (474,753 | ) | ||
| Total prepayments and other current assets, net | 9,635,826 | 6,419,278 | ||||
| (a) | The balance of deposits primarily consisted of office rental deposits and bidding deposits. | |||||
| --- | --- |
The movement of the expected credit loss against prepaid expenses and other receivables for the year ended June 30, 2024 and for the six months ended December 31, 2024 were as follows:
| June 30, <br> 2024 | December 31, <br> 2024 | ||||
|---|---|---|---|---|---|
| RMB | RMB | ||||
| Beginning balance | 625,155 | 414,922 | |||
| Addition | (210,233 | ) | 59,831 | ||
| Ending balance | 414,922 | 474,753 |
7 — ACCRUED EXPENSES AND OTHER LIABILITIES
As of June 30, 2024 and December 31, 2024, accrued expenses and other liabilities consisted of the following:
| June 30,<br> 2024 | December 31,<br> 2024 | |||
|---|---|---|---|---|
| RMB | RMB | |||
| Accrued payroll and welfare | 2,555,013 | 3,771,002 | ||
| Provisions (Note 9) | 4,643,040 | 2,989,095 | ||
| D Payable for staff reimbursements | 6,887,877 | 6,908,374 | ||
| Deposits payable | 3,151,875 | 3,076,875 | ||
| Insurance premium payable | 2,770,651 | 1,687,118 | ||
| Other payables | 2,174,034 | 1,484,036 | ||
| 22,182,490 | 19,916,500 |
F-7
ZHONGLIAN JINAN INSURANCE BROKERAGE CO., LTD.
NOTESTO UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
8 — 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
As of December 31, 2024, two customers filed breach-of-contract lawsuits against the Company following unresolved disputes, seeking monetary settlements totaling approximately RMB 4.8 million. The claims cover compensation for losses, refunds, penalties, legal fees, and litigation costs.
As of December 31, 2024, the total provision amount accrued for these lawsuits is RMB 2,989,095. Other than the above, the Company did not have other significant commitments, long-term obligations, significant contingencies or guarantees as of December 31, 2024.
9 — RELATED PARTY TRANSACTIONS
| 1) | Nature of relationships with related parties |
|---|---|
| Name | Relationship with the Company |
| --- | --- |
| Xuegeng Zhao | Chairman of the Board, Chief Executive Officer |
| Qin’er Ye | The General Manager |
| 2) | Balances with related parties |
| --- | --- |
As of June 30, 2024 and December 31, 2024, the balances with related parties were as follows:
| June 30,<br> 2024 | December 31,<br> 2024 | |||
|---|---|---|---|---|
| RMB | RMB | |||
| Due from related parties | ||||
| Xuegeng Zhao | 1,400,000 | 1,374,424 | ||
| Qin’er Ye | 2,027,899 | 712,899 | ||
| 3,427,899 | 2,087,323 |
10 — SUBSEQUENT EVENTS
On July 2, 2025, the Company entered into a share purchase agreement (“the SPA”) with Zhibao Technology Co., Ltd. (“Zhibao China”), a PRC subsidiary of Zhibao Technology Inc. (“Zhibao”), a NASDAQ listed company. Pursuant to the Agreement, Zhibao China will purchase 51% of the issued and outstanding equity interests in the Company in consideration of RMB 25.50 million, subject to the adjustment and confirmation as set forth in the SPA. The entire purchase consideration will be paid in cash.
By the date of this report, there is one of the lawsuits referred to in Note 8 that has been closed with a settlement payment of RMB 2,000,000.
F-8
Exhibit 99.4
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
You should read the followingdiscussion and analysis of the financial condition and results of operations in conjunction with the financial statements and the relatednotes of Zhonglian Jinan Insurance Brokerage Co., Ltd. (“Jinan”). This discussion contains forward-looking statements thatinvolve risks and uncertainties. The actual results and the timing of selected events could differ materially from those anticipatedin these forward-looking statements as a result of various factors. All amounts included herein with respect to the years ended June30, 2023 and 2024 are derived from audited financial statements of Jinan, which have been prepared in accordance with U.S. GenerallyAccepted Accounting Principles, or U.S. GAAP.
Key Components of Results of Operations
Revenues
Jinan derives its revenue primarily from insurance brokerage business. For the years ended June 30, 2023 and 2024, the revenues were approximately RMB 191.82 million and RMB 191.71 million (US$26.26 million), respectively. The following table sets forth a breakdown of the revenue by service type for the years indicated.
| For the Years Ended June 30, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2024 | |||||||||||
| RMB | % | RMB | US | % | ||||||||
| Insurance Brokerage | 191,994,079 | 100 | 191,620,150 | 100 | ||||||||
| Others | 461,687 | - | 651,379 | - | ||||||||
| Less: business taxes and surcharges | (631,436 | ) | - | (566,019 | ) | ) | - | |||||
| 191,824,330 | 100 | 191,705,510 | 100 |
All values are in US Dollars.
For the years ended June 30, 2023 and 2024, all insurance applications submitted by end customers were fully approved by insurance companies without any denial. The following table sets forth the breakdown of the revenues disaggregated by product types.
| For the Years Ended June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2023 | 2024 | |||||||
| RMB | RMB | US | ||||||
| Insurance Brokerage | ||||||||
| Property & casualty insurance products | 176,302,439 | 170,849,805 | ||||||
| Life insurance products | 8,463,762 | 7,050,354 | ||||||
| Health insurance product | 6,923,633 | 13,457,163 | ||||||
| Others | 304,245 | 262,828 | ||||||
| Subtotal | 191,994,079 | 191,620,150 | ||||||
| Others | 461,687 | 651,379 | ||||||
| Less: business taxes and surcharges | (631,436 | ) | (566,019 | ) | ) | |||
| Total | 191,824,330 | 191,705,510 |
All values are in US Dollars.
Insurance Brokerage
Jinan offers insurance brokerage services to end customers/the insured for placing insurance policies, and earns insurance brokerage commission from insurance carriers upon completing insurance brokerage services. The commission fees are calculated on a predetermined percentage of insurance premium of each insurance policy.
For the years ended June 30, 2023 and 2024, the revenues generated from the insurance brokerage services fees were approximately RMB 191.99 million and RMB 191.62 million (US$26.25 million), respectively. The income has remained stable over the past two years.
Others
Jinan offers various advisory services to institutional customers who seek insurance coverage for their employees, assets, and business operations. These services mainly include designing insurance plans, handling claims, and conducting risk assessments. The Company generally charges a fixed amount for service fee. For the years ended June 30, 2023 and 2024, such revenue accounts for an immaterial portion of total revenues.
Cost of Revenues
Cost of revenue consists primarily of insurance policy acquisition costs, which are service fees paid to various channels for successful sales of insurance policies and labor cost.
Selling and Marketing Expenses
Selling and marketing expenses consist primarily of payroll and related expenses for employees involved in selling and marketing activities, rental, brokerage service-related promotion and consulting service fee and other expenses.
General and Administrative Expenses
General and administrative expenses primarily consist of employee related expenses for administrative functions, costs associated with these functions including facilities and equipment depreciation expenses, rental and other general corporate related expenses.
Taxation
China
Effective from January 1, 2008, the PRC’s statutory EIT rate is 25%.
Results of Operations
For Years ended June 30, 2023and 2024
The following table sets forth a summary of the results of operations for the years indicated, both in dollar amounts and as percentages of total revenue. This information should be read together with financial statements and related notes included elsewhere in this filing. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.
| For the Year Ended June 30, | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2024 | |||||||||||||
| RMB | % | RMB | US | % | ||||||||||
| Revenues | 191,824,330 | 100 | 191,705,510 | 100 | ||||||||||
| Cost of revenues | (147,153,737 | ) | (77 | ) | (143,433,635 | ) | ) | (75 | ) | |||||
| 44,670,593 | 23 | 48,271,875 | 25 | |||||||||||
| Operating expenses | ||||||||||||||
| Selling and marketing expenses | (17,780,712 | ) | (9 | ) | (15,706,108 | ) | ) | (8 | ) | |||||
| General and administrative expenses | (30,792,109 | ) | (16 | ) | (32,973,455 | ) | ) | (17 | ) | |||||
| Total operating expenses | (48,572,821 | ) | (25 | ) | (48,679,563 | ) | ) | (25 | ) | |||||
| Loss from operations | (3,902,228 | ) | (2 | ) | (407,688 | ) | ) | - | ||||||
| Interest expense, net | 78,473 | - | 85,193 | - | ||||||||||
| Other income, net | 1,033,074 | 1 | 310,316 | - | ||||||||||
| Loss before Income Taxes | (2,790,681 | ) | (1 | ) | (12,179 | ) | ) | - | ||||||
| Income tax expenses | (2,491,540 | ) | (1 | ) | (1,223,385 | ) | ) | (1 | ) | |||||
| Net Loss | (5,282,221 | ) | (3 | ) | (1,235,564 | ) | ) | (1 | ) |
All values are in US Dollars.
2
Revenues
The revenues slightly decreased by approximately RMB 0.11 million to approximately RMB 191.71 million (US$26.26 million) for the year ended June 30, 2024 from approximately RMB 191.82 million for the year ended June 30, 2023. The decrease was primarily driven by macroeconomic downturns and escalated competitive pressures, which in turn led to a decline in our order prices.
Cost of revenues
The cost of revenue decreased by approximately 2.53% from RMB 147.15 million for the year ended 30 June 2023 to approximately RMB 143.43 million (US$ 19.65 million) for the year ended 30 June 2024. The decrease in cost of revenue was primarily driven by certain cost optimization and efficiency enhancement initiatives.
Gross margin
As a result of foregoing, the gross margin increased from 23.29% to 25.18% for the years ended June 30, 2023 and 2024.
Selling and marketing expenses
The selling expenses decreased by approximately RMB 2.07 million, from approximately RMB 17.78 million for the year ended June 30, 2023 to approximately RMB 15.71 million (US$ 2.15 million) for the year ended June 30, 2024. The decrease was primarily driven by a decrease in salary and welfare expenses, attributable to a decrease in the number of employees.
General and administrativeexpenses
The general and administrative expenses increased by approximately RMB 2.18 million, from approximately RMB 30.79 million for the year ended June 30, 2023 to approximately RMB 32.97 million (US$ 4.52 million) for the year ended June 30, 2024. The increase was primarily driven by an increase in salary and welfare expenses, as a result of an increase in the headcount of employees.
Income tax expenses
Jinan operates nationwide through its established branches, each of which is required to file tax returns. Consequently, income tax expenses are incurred by several profitable branches, even though the head office’s substantial operating expenses result in an overall company loss.
The decrease in income tax expense from RMB 2.49 million for the year ended June 30, 2023 to RMB 1.22 million for the year ended June 30, 2024, primarily reflects reduced profitability among the branches.
Net loss
As a result of the foregoing, there was a net loss of approximately RMB 5.28 million for the year ended June 30, 2023, and a net loss of approximately RMB 1.24 million for the year ended June 30, 2024.
3
For the six months ended December 31, 2023and 2024
The following table sets forth a summary of the results of operations for the years indicated, both in dollar amounts and as percentages of total revenue. This information should be read together with financial statements and related notes included elsewhere in this filing. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.
| For the Six Months Ended December 31, | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2024 | |||||||||||||
| RMB | % | RMB | US | % | ||||||||||
| Revenues | 94,188,367 | 100 | 91,924,671 | 100 | ||||||||||
| Cost of revenues | (75,480,159 | ) | (80 | ) | (80,896,153 | ) | ) | (88 | ) | |||||
| 18,708,208 | 20 | 11,028,518 | 12 | |||||||||||
| Operating expenses | ||||||||||||||
| Selling and marketing expenses | (7,723,400 | ) | (8 | ) | (19,092,457 | ) | ) | (21 | ) | |||||
| General and administrative expenses | (16,776,860 | ) | (18 | ) | (15,051,486 | ) | ) | (16 | ) | |||||
| Total operating expenses | (24,500,260 | ) | (26 | ) | (34,143,943 | ) | ) | (37 | ) | |||||
| Loss from operations | (5,792,052 | ) | (6 | ) | (23,115,425 | ) | ) | (25 | ) | |||||
| Interest expense, net | 35,870 | - | 11,142 | - | ||||||||||
| Other income, net | 112,660 | - | 151,705 | - | ||||||||||
| Loss before Income Taxes | (5,643,522 | ) | (6 | ) | (22,952,578 | ) | ) | (25 | ) | |||||
| Income tax expenses | (442,965 | ) | - | (111,957 | ) | ) | - | |||||||
| Net Income Loss | (6,086,487 | ) | (6 | ) | (23,064,535 | ) | ) | (25 | ) |
All values are in US Dollars.
Revenues
The revenues decreased by approximately RMB 2.27 million to approximately RMB 91.92 million (US$12.59 million) for the six months ended December 31, 2024 from approximately RMB 94.19 million for the six months ended December 31, 2023. The decrease was primarily driven by macroeconomic downturns and escalated competitive pressures, which in turn led to a decline in our order prices.
Cost of revenues
The cost of revenue increased by approximately 7.18% from RMB 75.48 million for the six months ended December 31, 2023 to approximately RMB 80.90 million (US$ 11.08 million) for the six months ended December 31, 2024. The increase in cost of revenue was mainly due to escalated competitive pressures which led to the sharp increase in the cost of revenues.
Gross margin
As a result of foregoing, the gross margin decreased from 19.86% to 12.00% for the six months ended December 31, 2024.
Selling and marketing expenses
The selling expenses increased by approximately RMB 11.37 million, from approximately RMB 7.72 million for the six months ended December 31, 2023 to approximately RMB 19.09 million (US$ 2.62 million) for the six months ended December 31, 2024. The increase was mainly due to increase in the expenditure on business promotion and marketing expenses.
4
General and administrativeexpenses
The general and administrative expenses decreased by approximately RMB 1.73 million, from approximately RMB 16.78 million for the six months ended December 31, 2023 to approximately RMB 15.05 million (US$ 2.06 million) for the six months ended December 31, 2024. The decrease was mainly due to a decrease in business entertainment expenses, which was attributed to effective cost control measures implemented in the period.
Income tax expenses
Jinan operates nationwide through its established branches, each of which is required to file tax returns. Consequently, income tax expenses are incurred by several profitable branches, even though the head office’s substantial operating expenses result in an overall company-level loss.
The decrease in income tax expense from RMB 0.44 million for the six months ended December 31, 2023 to RMB 0.11 million for the six months ended December 31, 2024, primarily reflects reduced profitability among the branches.
Net loss
As a result of the foregoing, there was a net loss of approximately RMB 6.09 million for the six months ended December 31, 2023, and a net loss of approximately RMB 23.06 million for the six months ended December 31, 2024.
Discussion of Certain Balance Sheet Items
For Years ended June 30, 2023and 2024
The following table sets forth selected information from the balance sheets as of June 30, 2023 and 2024. This information should be read together with the financial statements and related notes included elsewhere in this filing.
| June 30,<br> 2023 | June 30,<br> 2024 | June 30, 2024 | |||
|---|---|---|---|---|---|
| RMB | RMB | US | |||
| ASSETS | |||||
| Current Assets | |||||
| Cash and cash equivalents | 23,512,267 | 22,825,452 | |||
| Restricted cash | 12,964,831 | 3,770,651 | |||
| Accounts receivable, net | 15,323,982 | 16,236,635 | |||
| Due from related parties | 450,000 | 3,427,899 | |||
| Prepaid expenses and other current assets, net | 9,551,102 | 9,635,826 | |||
| Total Current Assets | 61,802,182 | 55,896,463 | |||
| Property and equipment, net | 7,277,357 | 6,121,029 | |||
| Operating lease right of use assets | 323,751 | 397,399 | |||
| Restricted cash, noncurrent | 5,000,000 | 5,000,000 | |||
| Total Non-Current Assets | 12,601,108 | 11,518,428 | |||
| Total Assets | 74,403,290 | 67,414,891 | |||
| LIABILITIES | |||||
| Current Liabilities | |||||
| Accounts payable | 26,008,204 | 28,526,879 | |||
| Income tax payable | 957,839 | 1,671,692 | |||
| Due to related parties | 6,000 | - | |||
| Operating lease liabilities, current | 194,564 | 213,988 | |||
| Accrued expenses and other liabilities | 31,027,874 | 22,182,490 | |||
| Total Current Liabilities | 58,194,481 | 52,595,049 | |||
| Operating lease liabilities, noncurrent | 108,617 | 124,911 | |||
| Deferred tax liabilities | 1,594,020 | 1,424,323 | |||
| Total Non-Current Liabilities | 1,702,637 | 1,549,234 | |||
| Total Liabilities | 59,897,118 | 54,144,283 |
All values are in US Dollars.
5
Cash and Cash Equivalents and RestrictedCash, Current and Noncurrent
Cash and cash equivalents consist of funds deposited with banks, which are highly liquid and are unrestricted as to withdrawal or use. Restricted cash mainly represents cash and cash equivalents legally or contractually restricted as to withdrawal or usage. In addition, restricted cash, noncurrent represented guarantee deposits are required by China Banking and Insurance Regulatory Commission (“CBIRC”) in order to protect insurance premium appropriation by insurance broker.
The total balance of cash and cash equivalents and restricted cash (current and non-current) were approximately RMB 41.47 million and RMB 31.60 million (US$4.33 million) as of June 30, 2023 and 2024, respectively. The change in the balances of cash and cash equivalents and restricted cash (current and non-current) for the financial year ended 30 June 2024 was due to approximately RMB 9.79 million used in operating activities and approximately RMB 0.09 million used in investing activities.
Accounts Receivable, Net
Jinan generally grants credit term of up to 60 days for its customers. As of June 30, 2023 and 2024, the turnover days of accounts receivable were approximately 35 days and 32 days, respectively. The turnover remained relatively stable with no significant changes. The turnover days for accounts receivable as of June 30, 2023 and 2024 was calculated as the average of the beginning and ending balance of the gross carrying amount of accounts receivable for the year, divided by the revenues for the year, multiplied by 365 days.
For the years ended June 30, 2023 and 2024, the balance of allowance for accounts receivable were approximately RMB 1.66 million and RMB 0.30 million (US$ 0.04 million), respectively. For the years ended June 30, 2023 and 2024, Jinan wrote off doubtful allowance of approximately RMB 0.02 million and RMB 1.95 million, respectively, against accounts receivable whose collection of which was remote.
Due from Related Parties
As of June 30, 2023 and 2024, The balances due from related parties represented fund advance to director and senior management of Jinan, which are unsecured and interest-free. Refer to Note 10 – Related Party Transactions in the financial statements as of June 30, 2023 and 2024.
Prepaid Expenses and Other Current Assets,Net
The increase in prepaid expenses and other current assets, net from RMB 9.55 million as of June 30, 2023, to RMB 9.64 million (US$ 1.32 million) as of June 30, 2024, was primarily due to an RMB 1.86 million increase in advances to staff. This aligns with the strategic initiatives to enhance employee engagement and operational efficiency. However, this increase was offset by a decrease of RMB 1.86 million in prepaid expenses and a decrease of RMB 0.15 million in others.
Accounts Payable
Accounts payable are mainly intermediary fees and channel fees, which are calculated based on a certain percentage of the insurance broking revenue. The balance of accounts payable increased from approximately RMB 26.01 million as of June 30, 2023 to approximately RMB 28.53 million (US$ 3.91 million) as of June 30, 2024. The increase in accounts payable was attributed to the Company’s consideration of operating capital liquidity, as it has appropriately extended the payment cycle for some of its key suppliers.
6
Accrued Expenses and Other Liabilities
As of June 30, 2023 and 2024, Jinan accrued expenses and other liabilities were approximately RMB 31.03 million and RMB 22.18 million (US$ 3.04 million), respectively. The balance decreased by approximately RMB 8.85 million as of June 30, 2024, which were mainly due to a decrease of approximately RMB 10.19 million in insurance premium payable and a decrease of approximately RMB 0.55 million in payable for staff reimbursements. The decrease was partially offset by an increase of approximately RMB 0.41 million in accrued payroll and welfare expenses, an increase of approximately RMB 0.42 million in deposits payable and an increase of approximately RMB 1.07 million in other payable.
For the Six Months Ended December 31, 2023and 2024
The following table sets forth selected information from the balance sheets as of December 31, 2023 and 2024. This information should be read together with the financial statements and related notes included elsewhere in this filing.
| June 30,<br> 2024 | December 31,<br> 2024 | December 31, 2024 | |||
|---|---|---|---|---|---|
| RMB | RMB | US | |||
| ASSETS | |||||
| Current Assets | |||||
| Cash and cash equivalents | 22,825,452 | 14,717,018 | |||
| Restricted cash | 3,770,651 | 2,687,118 | |||
| Accounts receivable, net | 16,236,635 | 23,413,972 | |||
| Due from related parties | 3,427,899 | 2,087,323 | |||
| Prepaid expenses and other current assets, net | 9,635,826 | 6,419,278 | |||
| Total Current Assets | 55,896,463 | 49,324,709 | |||
| Property and equipment, net | 6,121,029 | 6,173,990 | |||
| Operating lease right of use assets | 397,399 | 267,051 | |||
| Restricted cash, noncurrent | 5,000,000 | 5,000,000 | |||
| Other non-current assets | - | 1,022 | |||
| Total Non-Current Assets | 11,518,428 | 11,442,063 | |||
| Total Assets | 67,414,891 | 60,766,772 | |||
| LIABILITIES | |||||
| Current Liabilities | |||||
| Accounts payable | 28,526,879 | 47,738,519 | |||
| Income tax payable | 1,671,692 | 126,988 | |||
| Operating lease liabilities, current | 213,988 | 168,834 | |||
| Accrued expenses and other liabilities | 22,182,490 | 19,916,500 | |||
| Total Current Liabilities | 52,595,049 | 67,950,841 | |||
| Operating lease liabilities, noncurrent | 124,911 | 71,217 | |||
| Deferred tax liabilities | 1,424,323 | 2,538,641 | |||
| Total Non-Current Liabilities | 1,549,234 | 2,609,858 | |||
| Total Liabilities | 54,144,283 | 70,560,699 |
All values are in US Dollars.
Cash and Cash Equivalents and RestrictedCash, Current and Noncurrent
The total balance of cash and cash equivalents and restricted cash (current and non-current) were approximately RMB 31.60 million and RMB 22.40 million (US$ 3.07 million) as of June 30, 2024 and December 31, 2024, respectively. The change in the balances of cash and cash equivalents and restricted cash (current and non-current) was due to cash used in operating activities.
7
Accounts Receivable, Net
As of June 30, 2024 and December 31, 2024, the balance of Accounts receivable, net were approximately RMB 16.23 million and RMB 23.41 million (US$ 3.21 million), respectively. The increase in accounts receivable is primarily due to the extended payment cycles of our customers, which is a result of the economic downturn and increased competitive pressures.
Due from Related Parties
As of June 30, 2024 and December 31, 2024, the balances due from related parties represented fund advance to director and senior management of Jinan, which are unsecured and interest-free. Refer to Note 9 – Related Party Transactions in the financial statements as of December 31, 2023 and 2024.
Prepaid Expenses and Other Current Assets,Net
The decrease in prepaid expenses and other current assets, net from RMB 9.64 million as of June 30, 2024 to RMB 6.42 million (US$ 0.88 million) as of December 31, 2024, was mainly due to a decrease in prepaid expenses.
Accounts Payable
The balance of accounts payable increased from approximately RMB 28.53 million as of June 30, 2024 to approximately RMB 47.74 million (US$ 6.54 million) as of December 31, 2024. The increase was mainly due to the extension of the payment cycle to adjust its working capital management strategy based on the consideration of liquidity.
Accrued Expenses and Other Liabilities
As of June 30, 2024 and December 31, 2024, Jinan accrued expenses and other liabilities were approximately RMB 22.18 million and RMB 19.92 million (US$ 2.73 million), respectively. The balance decreased by approximately RMB 2.26 million as of December 31, 2024, which were mainly due to RMB 2.13 million settlement of litigation indemnity-related provision by December 31, 2024.
Liquidity and Capital Resources
The primary sources of liquidity consist of existing cash balances and cash flows provided by operations, proceeds from capital contributions from shareholders. The change from net cash provided by operating activities to an outflow between the years ended June 30, 2023, and 2024, was primarily due to heightened settlement pressures from operational costs and expenses. This increase in financial obligations has adversely affected the capacity to generate positive cash flow from its core business operations.
Cash flows
The following table sets forth a summary of the cash flows for the years presented:
| For the year Ended June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2023 | 2024 | 2024 | ||||||
| RMB | RMB | US | ||||||
| Net cash provided by (used in) operating activities | 21,337,623 | (9,789,330 | ) | ) | ||||
| Net cash used in investing activities | (1,190,502 | ) | (91,665 | ) | ) | |||
| Net increase in cash, cash equivalents and restricted cash | 20,147,121 | (9,880,995 | ) | ) | ||||
| Cash, cash equivalents and restricted cash at beginning of the year | 21,329,977 | 41,477,098 | ||||||
| Cash, cash equivalents and restricted cash at end of the year | 41,477,098 | 31,596,103 |
All values are in US Dollars.
8
Operating activities
For the year ended June 30, 2023，Net cash provided by operating activities was approximately RMB 21.34 million (US$ 2.92 million), primarily attributable to a net loss of RMB 5.28 million (US$ 0.72 million), non-cash adjustments including depreciation and amortization of RMB 0.99 million (US$ 0.13 million), amortization of operating lease right-of-use assets of RMB 0.21 million (US$ 0.03 million), and provision for doubtful receivables of RMB 0.81 million (US$ 0.11 million), along with working capital changes comprising: (i) a RMB 2.66 million (US$ 0.36 million) decrease in accounts receivable; (ii) a RMB 3.14 million (US$ 0.43 million) decrease in due from related parties; (iii) a RMB 1.23 million (US$ 0.16 million) decrease in prepaid expenses and other current assets; (iv) a RMB 6.06 million (US$ 0.83 million) increase in accounts payable; (v) a RMB 0.84 million (US$ 0.12 million) increase in income tax payable; (vi) a RMB 1.59 million (US$ 0.22 million) increase in deferred tax liabilities. (vii) a RMB 0.20 million (US$ 0.03 million) decrease in operating lease liabilities; and (ⅷ) a RMB 9.29 million (US$ 1.27 million) increase in accrued expenses and other liabilities.
For the year ended June 30, 2024, Net cash used in operating activities was approximately RMB 9.79 million (US$ 1.34 million), primarily attributable to a net loss of RMB 1.24 million (US$ 0.17 million), non-cash adjustments including depreciation and amortization of RMB 1.25 million (US$ 0.17 million), amortization of operating lease right-of-use assets of RMB 0.27 million (US$ 0.04 million), and provision for doubtful receivables of RMB 0.38 million (US$ 0.05 million), along with working capital changes comprising: (i) a RMB 1.51 million (US$ 0.21 million) increase in accounts receivable; (iii) a RMB 2.98 million (US$ 0.41 million) increase in due from related parties; (iii) a RMB 0.13 million (US$ 0.02 million) decrease in prepaid expenses and other current assets; (iv) a RMB 2.52 million (US$ 0.35 million) increase in accounts payable; (v) a RMB 0.71 million (US$ 0.1 million) increase in income tax payable; (vi) a RMB 9.56 million (US$ 1.31 million) decrease in operating lease liabilities; and ;(vii) a RMB 0.41 million (US$ 0.06 million) increase in accrued expenses and other liabilities driven by rising operating expenses; (viii) a RMB 0.17 million (US$ 0.02 million) decrease in deferred tax liabilities.
Investing activities
For the years ended June 30, 2023 and 2024, all cash used in investing activities was solely for the purchase of property and equipment.
Trend Information
Other than as disclosed in this filing, the management of Jinan are not aware of any trends, uncertainties, demands, commitments or events for the current year that are reasonably likely to have a material effect on the net revenues, income, profitability, liquidity or capital reserves, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.
Quantitative and Qualitative Disclosures AboutMarket Risk
Foreign exchange risk
Jinan operates its business in mainland China is not exposed to any significant foreign exchange risk as there are no significant financial assets or liabilities of these subsidiaries denominated in the currencies other than the functional currency.
Interest rate risk
Jinan exposures to interest rate risk primarily relates to the interest income generated by excess cash, which is mostly held in interest-bearing bank deposits. Interest-earning instruments carry a degree of interest rate risk. Jinan has not been exposed to material risks due to changes in interest rates, and it has not used any derivative financial instruments to manage the interest risk exposure.
9
Critical Accounting Estimates
Jinan prepares the financial statements in accordance with U.S. GAAP, which requires management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, the financial condition or results of operations would be affected. Jinan base its estimates on historical experience and other assumptions that management believes are reasonable after taking account of circumstances and expectations for the future based on available information. Jinan evaluates these estimates on an ongoing basis.
Jinan’s expectations regarding the future are based on available information and assumptions that it believes to be reasonable, which together form the basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, the actual results could differ from those estimates. Some of the accounting policies require a higher degree of judgment than others in their application.
An accounting estimate to be critical if: (i) the accounting estimate requires to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that reasonably could have used in the current period, would have a material impact on the financial condition or results of operations. When reading the financial statements, you should consider the selection of critical accounting policies, the judgment and other uncertainties affecting the application of such policies and the sensitivity of reported results to changes in conditions and assumptions.
The critical accounting policies and practices include the following: (i) revenue recognition; (ii) accounts receivable, net; and (iii) income taxes. See Note 2 — Summary of Significant Accounting Policies to the financial statements for the disclosure of these accounting policies.
| (a) | Allowance for credit losses |
|---|
Accounts receivable, net are stated at the original amount less an allowance for credit losses.
Jinan utilizes a forward-looking current expected credit losses (CECL) model for financial instruments measured at amortized cost and receivables resulting from the application of ASC 606, including contract assets.
For the years ended June 30, 2023 and 2024, Jinan accrued provisions for credit losses of approximately RMB 0.22 million, and provisions for credit losses of approximately RMB 0.59 million (US$ 0.08 million), respectively. As of June 30, 2023 and 2024, Jinan wrote off the allowance of approximately RMB 0.02 million and RMB 1.95 million (US$ 0.27 million), respectively, against accounts receivable because the chance of collection is deemed to be remote.
| (b) | Valuation of deferred tax assets |
|---|
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Current income taxes are provided in accordance with the laws of the relevant taxing authorities.
Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are recoverable, management estimated that it is more likely than not that the results of future operations will not generate sufficient taxable income to realize the deferred tax assets as June 30, 2023 and 2024. Thus, management recorded valuation allowance amounted to RMB 3.23 million and RMB 4.12 million (US$ 0.56 million) as of June 30, 2023 and 2024, respectively. The deferred tax assets could be utilized in the future years if the Company makes profits in the future, the valuation allowance shall be reversed.
The provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for the financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. The PRC operating entities in PRC are subject to examination by the relevant tax authorities. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent. The statute of limitations is extended to five years under special circumstances, where the underpayment of taxes is more than RMB 100,000 ($13,800). In the case of transfer pricing issues, the statute of limitation is ten years. There is no statute of limitation in the case of tax evasion. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred.
Recently Issued Accounting Pronouncements
A list of recently issued accounting pronouncements that are relevant to us is included in note 2 to the financial statements included elsewhere in this filing.
10
Exhibit 99.5
Zhibao Technology Accelerates National Expansion with Strategic Acquisition of Insurance Broker Zhonglian Jinan
Zhibao Technology Acquires Controlling Interest in Zhonglian Jinan,More than Doubling its Branch Network and Strengthening Its Nationwide Insurance Brokerage Capabilities.
Shanghai, China--(Newsfile Corp. – July 2, 2025) - Zhibao Technology Inc. (NASDAQ: ZBAO) ("Zhibao," "we," or the "Company"), a leading and high growth InsurTech company primarily engaging in providing digital insurance brokerage services through its operating entities in China, today announced that one of its subsidiaries, Zhibao Technology Co., Ltd. (“Zhibao China”), has entered into a share purchase agreement (“Agreement”) with two shareholders (“Sellers”) of Zhonglian Jinan Insurance Brokers Co., Ltd. (“Zhonglian Jinan” or “Target”), and the Target, pursuant to which, subject to the terms and conditions set forth in the Agreement, Zhibao China agreed to acquire an aggregate of 51% of the equity interest in Zhonglian Jinan (the “Acquired Assets”) for a total purchase price of RMB25.5 million (approximately $3.5 million) (“Purchase Price”), subject to adjustment as provided in the Agreement (the “Acquisition”).
Transaction Structure andTerms
Under the Agreement, the Purchase Price is based on an evaluation of RMB 50 million for the 100% of the equity interest in Zhonglian Jinan mutually agreed by Zhibao China and Sellers and shall be paid in four installments. The first three installments, each in the amount of RMB7.65 million (approximately $1.05 million), shall be payable on July 31, 2025, July 31, 2025 and January 31, 2026, respectively. The fourth installment, in the amount of RMB 2.55 million (approximately $0.35 million), is subject to adjustment in the event that the revenue generated by the Target is less than RMB 140 million (approximately $19.18 million) within one year following the full payment of the first instalment of the Purchase Price (the “Delivery Date”). The fourth installment is payable within 30 days following the first anniversary of the Delivery Date. Additionally, Zhibao China also has a right of first refusal to acquire an additional 34% equity interests in Zhonglian Jinan by the end of 2027 (the “Subsequent Acquisition”), contingent upon Jinan achieving ongoing performance goals.
Founded in June 2015 and headquartered in Ningbo, Zhejiang, Zhonglian Jinan is a licensed insurance brokerage with a nationwide footprint comprising 28 province-level and 30 city-level branches.
During the year ended June 30, 2024, Zhonglian Jinan generated revenue of approximately RMB191.7 million ($26.3 million).
Strategic Acquisition Positionedto Expand Zhibao’s Reach, Product Portfolio, and Profitability
The acquisition delivers comprehensive strategic value, positioning Zhibao for accelerated growth and market leadership:
Geographic Expansion: This controlling interest and majority ownership structure is anticipated to more than double the number of branch offices operated by Zhibao’s various operating entities.
Licensing and Regulatory Advantages: Securing new insurance brokerage licenses or expanding business operations in China typically requires regulatory approval, which may take several years to obtain. Though this Agreement, Zhibao gains immediate access to the flexibility and nationwide applicability of Zhonglian Jinan’s existing brokerage licenses.
Product Portfolio Integration: Zhonglian Jinan’s existing product portfolio enhances and complements Zhibao's product offerings in areas such as liability, accident and health, commercial property, and logistics. In sectors where Zhibao and Zhonglian Jinan are both active engaged, such as travel, natural gas, medical, and home property insurance, the integration is expected to increase business scale and operational synergies.
Following the Acquisition, Zhonglian Jinan became a PRC subsidiary of the Company.
“We are very excited to announce our partnership with Zhonglian Jinan through this majority acquisition, which we believe will create long-term value for both companies and our shareholders,” said Mr. Botao Ma, CEO of the Company. “Zhonglian Jinan’s customer base, service portfolio, and strong online platform align well with Zhibao’s growth strategy. Together, we aim to capitalize on and enhance the impressive online capabilities of Zhonglian Jinan to drive customer growth, offer specialized target customer marketing and service, and increase customer support and servicing options, strengthening both companies position in the rapidly evolving digital insurance landscape in China.”
“I see opportunities for potential future collaboration with other similar entities,” continued Mr. Ma. “The insurance brokerage industry in China is evolving, and we believe there may be room for further integration over time. With its strong foundation and experienced team, Zhibao is well-positioned to contribute meaningfully to this ongoing development.”
About Zhibao Technology Inc.
Zhibao Technology Inc. (NASDAQ: ZBAO) is a leading and high growth InsurTech company primarily engaging in providing digital insurance brokerage services through its operating entities ("Zhibao China Group") in China. 2B2C ("to-business-to-customer") digital embedded insurance is the Company's innovative business model, which Zhibao China Group pioneered in China. Zhibao China Group launched the first digital insurance brokerage platform in China in 2020, which is powered by their proprietary PaaS ("Platform as a Service").
Zhibao has developed over 40 proprietary and innovative digital insurance solutions addressing different scenarios in a wide range of industries, including but not limited to travel, sports, logistics, utilities, and e-commerce. Zhibao acquires and analyzes customer data, utilize big data and AI technology to continually iterate and enhance its digital insurance solutions. This iterative process, in addition to continually improving its digital insurance solutions, will keep it abreast of the new trends and customer preferences in the market. For more information, please visit: ir.zhibao-tech.com.
About Zhonglian Jinan
Founded in June 2015 and headquartered in Ningbo, Zhejiang, Zhonglian Jinan is a licensed insurance brokerage company with operations across China, primarily engaged in the provision of insurance brokerage services to end customers. It operates 28 province-level and 30 city-level branches, primarily concentrated on non-auto insurance lines, including liability insurance, accident insurance, enterprise property insurance, cargo transportation insurance, and short-term health insurance. It also provides comprehensive services to policyholders, including risk identification and assessment, insurance plan design tailored to clients’ needs and budgets, multi-company policy comparison, and negotiation of underwriting terms.
Forward-Looking Statements
Statements in this press release about future expectations, plans and prospects, as well as any other statements regarding matters that are not historical facts, may constitute "forward-looking statements" within the meaning of The Private Securities Litigation Reform Act of 1995. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "is/are likely to," "potential," "predict," "project," "should," "target," "will," "would" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations that arise after the date hereof, except as may be required by law. These statements are subject to uncertainties and risks including, but not limited to, the uncertainties related to market conditions, and other factors discussed in the "Risk Factors" section of the registration statement filed with the SEC. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company's registration statement and other filings with the SEC. Additional factors are discussed in the Company's filings with the SEC, which are available for review at www.sec.gov.
Investor Relations Contact
Zhibao Technology Inc.
Investor Relations Office
Email: ir@zhibao-tech.com
Skyline Corporate Communications Group, LLC
Scott Powell, President
Avenues Tower
1177 Avenue of the Americas, 5th floor
New York, NY 10036
Office: (646) 893-5835
Email: info@skylineccg.com